In this latest Environmental Law News Update, Christopher Badger, Charles Morgan and Mark Davies consider the penalties imposed on an owner of a waste and recycling company, the law on the duty of care held by a parent company, and Client Earth’s plan to renew its air quality challenge.
Waste boss to pay £1.99 million or be jailed for 8 years
The owner of a Wiltshire scrapyard and recycling company has been ordered to pay a confiscation order of £1.99 million as a result of his involvement in running an illegal waste site in Melksham. If he doesn’t pay, then he has been warned he will face an 8-year prison sentence.
Lee Hazel was the owner and sole director of Melksham Metals Recycling Ltd. He and his company illegally dumped stone off-cuts and sludge at a farm on the outskirts of Melksham beside an old canal, as well as carrying out unauthorised activities at the company’s premises.
Mr Hazel and the company were convicted in 2014 at Swindon Crown Court and pleaded guilty to a number of other offences in November 2015.
The case demonstrates the following:
- the Environment Agency is still quite prepared to pursue confiscation orders in appropriate cases. This report follows hot on the heels of another prosecution by the Environment Agency where a confiscation order was used as a means of compensating a landowner who faced the costs of site clearance for an illegal waste site (see more here)
- Resolving confiscation proceedings can still take an inordinate amount of time, given that the original conviction dates back to 2014;
- There is still scope for careful consideration of the legal issues in confiscation proceedings. In this case, the confiscation order was reduced from £2.74 million to £1.99 million because the Environment Agency had wrongly included a figure for VAT when calculating the value of the benefit figure.
The Environment Agency’s press release can be found here
The law on the duty of care held by a parent company and resulting jurisdiction of the English Courts
In Lungowe and others v Vedanta Resources plc  EWCA Civ 1528 the Court of Appeal upheld the decision of Coulson J. permitting group litigation concerning the activities of the Nchanga copper mine in Zambia to proceed in the English High Court.
The mine is owned and operated by Konkola Copper Mines plc (“KCM”) a company incorporated in Zambia and its largest private employer. Local residents claim that its activities have polluted watercourses in a manner which renders KCM liable to them in Zambian law in negligence, nuisance, Rylands v Fletcher, trespass and under Zambian legislation imposing strict liability. As both Coulson J. and the Court of Appeal observed, the claims against KCM were the obvious ones to be pursued and the courts of Zambia were the obvious ones in which to pursue them:
“The claimants are all Zambian citizens, resident in Zambia. The claims involve personal injury or damage to land; the injuries were suffered in Zambia and the land that was damaged is also in Zambia; the alleged discharges into the waterways occurred in Zambia, so the place of the commission of the alleged tort is Zambia; the Nchanga mine is owned and operated by KCM, a Zambian company, operated pursuant to the terms of a Zambian licence; the proper regulation of the mine would have to be considered by reference to Zambian statutes and regulations; and the applicable law is Zambian law.”
The only connection between these events and circumstances and England was that the ultimate holding company of KCM, Vedanta Resources plc, is incorporated and thus domiciled in England. It employs 19 people and has assets worth c. £37 billion.
The local residents sued both Vedanta and KCM in the English High Court. Against Vedanta, they alleged breach of a duty of care arising essentially from an assumption of responsibility over the operations of KCM and relied upon Vedanta’s domicile as founding mandatory jurisdiction under the Recast Brussels Regulation. Vedanta challenged jurisdiction and further sought a discretionary stay even if jurisdiction existed. KCM also challenged jurisdiction on the basis of forum non conveniens and sought to set aside service upon it out of the jurisdiction. The Court of Appeal upheld the decision of Coulson J. to allow the claims to proceed against both Vedanta and KCM.
The Court of Appeal (Simon LJ, with whom Asplin and Jackson LJJ agreed) first held, crucially, that the High Court had mandatory jurisdiction over Vedanta under the Regulation. The court then concluded (1) that the claimants had a real prospect of success against KCM (2) that there were real issues between the claimants and Vedanta arising out of both the statutory claims and the alleged duty of care (3) that it was reasonable for the High Court to try those issues (4) that KCM was a necessary and proper party to the claims against Vedanta, the two being “broadly equivalent defendants” (5) that (entirely because of the claim against Vedanta) England was the appropriate place to try the claims. Further, there were real concerns over the claimants’ access to justice in Zambia given their means and the potential cost, although Simon LJ also noted that “There must come a time when access to justice in this type of case will not be achieved by exporting cases, but by the availability of local lawyers, experts, and sufficient funding to enable the cases to be tried locally.”
This decision (which repays full reading) turned emphatically on the mandatory jurisdiction over Vedanta under the Recast Brussels Regulation. The court rejected Vedanta’s residual argument that its invocation amounted in the circumstances to an abuse of EU law. Once jurisdiction against Vedanta was established (which the Court of Appeal considered to be the logical starting point), the fate of the claims against KCM was effectively inevitable.
The judgment contains a useful summary at appellate level of the principles governing liability of parent companies for the acts of their subsidiaries:
“(1) The starting point is the three-part test of foreseeability, proximity and reasonableness. (2) A duty may be owed by a parent company to the employee of a subsidiary, or a party directly affected by the operations of that subsidiary, in certain circumstances. (3) Those circumstances may arise where the parent company (a) has taken direct responsibility for devising a material health and safety policy the adequacy of which is the subject of the claim, or (b) controls the operations which give rise to the claim. (4) Chandler v Cape Plc and Thompson v The Renwick Group Plc describe some of the circumstances in which the three-part test may, or may not, be satisfied so as to impose on a parent company responsibility for the health and safety of a subsidiary’s employee. (5) The first of the four indicia in Chandler v. Cape Plc, requires not simply that the businesses of the parent and the subsidiary are in the relevant respect the same, but that the parent is well placed, because of its knowledge and expertise to protect the employees of the subsidiary … (6) Such a duty may be owed in analogous situations, not only to employees of the subsidiary but to those affected by the operations of the subsidiary. (7) The evidence sufficient to establish the duty may not be available at the early stages of the case.”
The full judgment is available here
ClientEarth plans to renew its air quality challenge
The latest shots have been fired in the ongoing battle between ClientEarth and the Government over air quality.
On 9 October it was reported that ClientEarth had sent a letter to the Government under the judicial review pre-action protocol, stating its intention to challenge, once more, the failures by the Government to produce an adequate air quality plan (“AQP”) or to ensure compliance with NO2 limits.
ClientEarth requested more information from the Government on 16 August 2017 following the publication of the third AQP on 26 July 2017 (pursuant to the 22 November 2016 ruling of the High Court); it must be presumed that the Government’s response to that request was not satisfactory in light of the 9 October letter.
It is perhaps notable that ClientEarth’s letter comes only weeks after the publication of Defra’s ‘Air Pollution in the UK 2016’ report (discussed by this blog two weeks ago). That report revealed that out of 391 local authorities, 278 now have Air Quality Management Areas (“AQMA”), showing a rise from 2010 when the number was 258. Local authorities are only required to designate AQMAs when air quality objectives are not being, or likely to not be, met.
The Government had until 20 October to respond to ClientEarth’s 9 October letter; given that the AQP was published on 26 July 2017, ClientEarth will have to act fast to avoid being accused of undue delay.
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