R (on the application of National Grid Gas plc) v The Environment Agency

The House of Lords held that National Grid Gas plc (Transco) was not an "appropriate person" within the meaning of section 78F of the Environmental Protection Act 1990 and quashed the Environment Agency's decision which had treated it as such. The court emphasised the ordinary meaning of the statutory phrase "person who caused or knowingly permitted" in section 78F(2) and rejected an extended construction that would treat a later statutory or corporate successor as the original polluter.

The Lords further held that statutory transfer provisions in the Gas Act 1948 (section 17(1)) and the Gas Act 1986 (section 49(1)) transferred only assets and liabilities existing "immediately before" the transfer dates and could not be read to include liabilities created by Parliament in 1995 by the insertion of Part IIA into the 1990 Act. As a result, liabilities for remediation under Part IIA could not be imposed retrospectively on a company that had not caused or knowingly permitted the contamination.

This case concerned remediation costs of contaminated land at Bawtry where coal tar residues from historic coal gas production were found beneath gardens of 11 residences. The Environment Agency carried out remediation and sought to recover costs from National Grid Gas plc (Transco) on the basis that Transco was a statutory successor to the original polluters and therefore an "appropriate person" under section 78F of the Environmental Protection Act 1990 (as amended by the Environment Act 1995).

Parties and procedural history:

• Applicant/ appellant: National Grid Gas plc (formerly Transco plc).
• Respondent: The Environment Agency.
• First instance: Forbes J in the High Court (Administrative Court) dismissed Transco's application to quash the Agency's decision ([2006] EWHC 1083 (Admin)).
• Appeal to House of Lords by leapfrog procedure under the Administration of Justice Act 1969.

Nature of the application: Transco sought judicial review/quashing of the Agency's decision of 13 September 2005 that Transco was an "appropriate person" for the purposes of serving a remediation notice under Part IIA of the Environmental Protection Act 1990.

Issues framed by the court:

• Whether the definition of an "appropriate person" in section 78F(2) extends to a statutory or corporate successor who did not cause or knowingly permit the contamination.
• Whether statutory transfer provisions in the Gas Act 1948 and Gas Act 1986 could be interpreted to pass on liabilities which did not exist "immediately before" the respective transfer dates, in particular liabilities created by the 1995 insertion of Part IIA into the 1990 Act.

Reasoning: The Lords applied ordinary principles of statutory interpretation. They held that the language of section 78F(2) points to the actual polluter (the person who "caused or knowingly permitted") and does not naturally include persons who merely succeed to a business. The court also observed that the 1948 and 1986 transfer provisions explicitly limited transferred liabilities to those existing "immediately before" the transfer dates; a liability created in 1995 therefore could not be treated as having existed for the purpose of those earlier statutes. Recourse to Parliamentary materials under Pepper v Hart was considered unnecessary because the statutory language was plain.

Legal significance: The decision confines the class of persons who can be treated as appropriate persons under Part IIA to those who meet the statutory test and limits retroactive imposition of liabilities on statutory successors where transfer statutes refer to liabilities existing immediately prior to transfer.

Appeal allowed. The House of Lords quashed the Environment Agency's decision that National Grid Gas plc was an "appropriate person" under section 78F of the Environmental Protection Act 1990. The Lords held that Transco did not "cause or knowingly permit" the contamination and that the 1948 and 1986 statutory transfer provisions could not be read to include liabilities created later by the 1995 insertion of Part IIA into the 1990 Act.

First instance: Forbes J, Administrative Court, Judicial review dismissed ([2006] EWHC 1083 (Admin)). Appeal to House of Lords by leapfrog procedure under the Administration of Justice Act 1969; House of Lords allowed the appeal ([2007] UKHL 30).