On 22 July 2009 the Secretary of State for Environment, Food and Rural Affairs published its decision letter dismissing appeals by Redland Minerals Limited (Redland) and Crest Nicholson Residential Plc (Crest) against the remediation notice served on them under Part IIA of the Environmental Protection Act 1990 (EPA). This is the first appeal against a remediation notice heard by The Secretary of State under Part IIA of the EPA.

St Leonard's Court, near Hatfield, is a leafy residential estate. However, underneath it lies a plume of contamination which is believed to be the largest point source plume in the UK.

Contamination in the groundwater below the estate recently measured 500 times the acceptable level of bromate and 70 times the acceptable level of bromide.

As a result of contamination of the ground and groundwater from this site, the Three Valleys Water Bishops Rise abstraction has not been used for public supply since May 2000 and the contamination has restricted the use of Thames Water's Northern New River wells (some 20km away).

Crest faces not only remediation costs in respect of the site, but also potential claims from water companies (Three Valleys Water PLC has incurred estimated costs of over £13 million to date).

So what went wrong?

Background

The site was operated as a chemical works between 1955 and 1980, producing various substances including bromides and bromates. This resulted in contamination of the soil under the site, in particular, underneath a number of large bricklined sumps which had been sunk into the floors of various buildings on the site.

In 1983, Crest became interested in purchasing the site from Redland (the then owner). In July of that year, Crest's solicitors wrote to the Environmental Health department at the local authority, seeking information as to "possible site contamination", together with any available test results.

The local authority gave some details of the processes carried out by the chemical manufacturer, noting particularly that "bromide aqueous waste, costic aqueous bromide and solid bromide" were known to have been waste produced by the processes. The reply also stated that "if the developer is to avoid unexpected contamination at unexpected expense, he should be advised to critically examine the past use of the site and if in the slightest doubt arrange for expert survey".

A chemical analysis was carried out by environmental consultancy STATS in August 1983. STATS reported that "based on the results of this limited investigation areas of significant contamination have been identified and disposal of soil is recommended".

Crest exchanged contracts for the purchase of the site in September. Between exchange and completion it instructed STATS to carry out a soils grid test, which was primarily for the purposes of determining how the soil would take building foundations. The results of the soil grid test were not known until after Crest completed its purchase.

The results revealed high levels of bromide in a significant number of boreholes made and often down to the full depth of the borehole, with bromide concentrations many more than three or four times above normal background level.

Demolition

By 1985, the buildings had been demolished. Crest left the site with a layer of rubble about half a metre thick. Sumps and preparation areas previously inside buildings with a roof (although probably filled with rubble) were now acting as soakaways.

Development and remediation

In 1986, planning permission was granted for 66 dwellings. These were built and sold by the following year. Some 15 years later, in 2002, the site was declared to be "contaminated land", and subsequently designated as a "special site" under Part IIA of the EPA.

A remediation notice was served in 2005 on both Redland and Crest. In 2007, Redland and Crest appealed against the notice. This appeal has been dismissed by the Secretary of State.

Findings

The Secretary of State concluded that Crest was responsible for 55% of the liability for bromide and 15% of the liability for bromate. Redland was responsible for 45% of the liability for bromide and 85% of the liability for bromate. The Secretary of State made the following findings:

  • The "suitable for use" approach to remediation of contaminated land extended to water polluted by contaminated land, as well as the land itself. The objective of the remediation should be to allow the aquifer to be used again for the potable supply of safe drinking water.
  • The remediation notice did not need to specify the specific concentration-levels of bromide and bromate to which the aquifer should be remediated. These will need to be established when the long-term method of remediating the site is specified in subsequent remediation notices.
  • Both Redland and Crest had caused bromide and bromate to be on, in or under the site. Crest had suggested that it could not be considered to have caused the substances to be present because it did not cause either contaminant to enter the site. This argument was dismissed. A party does not need to have introduced a contaminant to a site to have caused it to be in, on or under it. Crest's action and inaction in the way it dealt with the site caused contaminants that would have otherwise been removed to be flushed deeper and faster into the ground.
  • Crest's actions affected the existing contamination at the site. Crest knew that bromide was in the ground before it purchased the land. It was aware of the need to remove contaminated soil. Following the purchase Crest then found bromide contamination in the groundwater below. By demolishing the site and breaking up the concrete floors, contaminated soils were exposed to rainfall for two and a half years, resulting in migration of contamination.
  • Crest and Redland could not escape fully from liability by applying any of the Part IIA statutory exclusion tests. Redland's liability for the bromide contamination was only partly reduced by the application of the "sold with information" test (which excludes from liability those who have disposed of land in circumstances where it is reasonable that another member of the liability group who has purchased the land from them should bear liability).

Comments and Conclusions

  1. This case is a good example of a buyer underestimating the extent of contamination. It highlights the need to carry out satisfactory due diligence, particularly when buying sites known to have been historically contaminated. This is particularly the case where sites are situated on a chalk aquifer and/or near sensitive receptors. The case serves as a reminder to ensure that developers carrying out demolition, or altering a site, take appropriate action to avoid migration of contamination. This may be achieved by clearing the site out or by interim protective measures.
  2. Sale contracts should make clear the extent to which the seller has provided information as to the level of contamination of a site. It is also essential that, in appropriate circumstances, the buyer gives the seller a full indemnity if the seller is to avoid liability.
  3. One element of the "sold with information" test is that the buyer must have been aware of the relevant pollutant and the "broad measure of its presence" before the buyer became contractually bound to purchase the land in question. The test is a subjective one, depending on the buyer's characteristics. Knowledge of the contamination is deemed to exist where the buyer is a "large commercial organisation" or a "public body", and permission has been given to the buyer to carry out investigations. It is not entirely clear what a "large commercial organisation" means in this context.
  4. Crest also faces a potential claim for the clean-up costs incurred by the local water companies. The cost of this claim should not be underestimated. As noted above, the water companies have had to close some of their abstraction boreholes and undertake additional monitoring and remediation.