R (on the application of National Grid Gas plc (formerly Transco plc)) (Appellants) v. Environment Agency (Respondents) (Civil Appeal from Her Majesty's High Court of Justice)

Under Part IIA of the Environmental Protection Act 1990, an “appropriate person” who caused or knowingly permitted contaminating substances to be present is the actual polluter. The expression does not extend to a company merely because it acquired the polluter’s business or became its ultimate statutory successor.

A statutory transfer of liabilities existing “immediately before” a transfer date includes then-existing contingent liabilities. It does not include liabilities which had no existence, even in principle, until later legislation created them. Legislation imposing present liability for historic acts does not, without clear words, deem that liability to have existed before its enactment.

Coal tar from a former gasworks was buried beneath land later developed as 11 residences. The Environment Agency carried out remediation works and decided that National Grid Gas plc, formerly Transco plc, was an “appropriate person” from whom the costs could be recovered under Part IIA of the Environmental Protection Act 1990.

National Grid had never owned or contaminated the land. The Agency nevertheless argued that it had inherited the polluters’ liability through successive statutory transfers under the Gas Act 1948, the Gas Act 1972 and the Gas Act 1986.

Forbes J dismissed National Grid’s application to quash the Agency’s decision: [2006] EWHC 1083 (Admin). A leapfrog appeal asked whether a statutory successor could be treated as the polluter and whether the transferred “liabilities” included environmental liabilities created only in 1995.

1. The appeal was allowed unanimously, and the Agency’s decision was quashed. Lord Scott delivered the leading speech. Lord Hoffmann, Lord Walker, Lord Mance and Lord Neuberger agreed that the appeal should be allowed.

2. Per Lord Scott, section 78F(2) and (3) of the Environmental Protection Act 1990 uses uncomplicated language directed to the actual person who caused or knowingly permitted the contaminating substances to be present. National Grid had done neither. Treating a statutory successor to a polluter’s business as that person would redefine the provision rather than interpret it. Clear statutory language would be required to impose remediation liability upon a company which had neither polluted nor owned the land.

3. Per Lord Hoffmann and Lord Scott, the successive statutory transfers did not transmit the liability created by Part IIA. Sections 17(1) of the Gas Act 1948 and 49(1) of the Gas Act 1986 transferred only liabilities existing “immediately before” their respective transfer dates. No remediation liability then existed, even contingently. Part IIA, inserted in 1995, imposed potential present liability for historic acts; it did not deem that liability to have existed at the earlier transfer dates.

4. Lord Neuberger agreed that “liabilities” could include contingent liabilities existing at the relevant time, but not liabilities which then had no existence in fact or principle. Extending the polluter-pays principle to business successors raised questions of policy for Parliament. The courts could not supply the necessary extension through interpretation.

5. Per Lord Scott, Pepper v Hart [1993] AC 593 permits recourse to Hansard to resolve ambiguity. It provides no authority for using parliamentary material to alter plain and unambiguous statutory language. Section 78F contained no relevant ambiguity.

1. House of Lords: The appeal was allowed unanimously. The Agency’s decision that National Grid was an “appropriate person” was quashed: [2007] UKHL 30.
2. High Court, Administrative Court: Forbes J dismissed National Grid’s application to quash the Agency’s decision, with no order as to costs: [2006] EWHC 1083 (Admin). The case reached the House of Lords by the leapfrog procedure.