UK: Environment and Health & Safety Digest, Autumn 2006

Last Updated: 8 December 2006
Article by Aidan Thomson

Companies Act 2006 ushers in new environmental responsibilities for directors

At the time of going to press, the final text of the Act was not available. However, on the basis of the contents of earlier versions of the Companies Bill, the Act introduces a new statutory statement of directors' duties. As before, directors are required to act in the way that they consider would be the most likely to promote the success of the company. However, the revised statement specifically requires that, in doing so, they must have regard to six specified factors, one of which is "the impact of the company's operations on the community and the environment".

There is no formal guidance available as to how directors should go about balancing environmental impacts against most companies’ overriding purpose of serving their shareholders and making a profit.

The Act also requires companies to produce an expanded "business review" so as to inform members of the company and help them to assess how the directors have performed the above duty. Quoted companies must specifically include "information about environmental matters" in their business review.

In addition, the Act expands the existing procedure for shareholders to initiate and pursue claims against individual directors in the name of the company. It is anticipated that the expanded procedure might be used by environmental groups to put pressure on directors in respect of decisions affecting the environment.

Environment: UK developments

Cases

Statutory Nuisance

On 27 April, in R (Robinson) v Torridge District Council and Devon County Council, the High Court gave its views on when a watercourse could be said to be "choked".

The Public Health Act 1936 s.259(1)(b) provides that a statutory nuisance exists for the purposes of the Environmental Protection Act 1990 ("EPA 1990") where "any part of a watercourse is so choked or silted up as to obstruct or impede the proper flow of water and thereby cause a nuisance".

The Court was asked to make a declaration that the word "choked" in this context was capable in law of including an obstruction to the proper flow of a river by a bridge constructed in and over it.

For procedural reasons, the Court could not make the declaration but confirmed that where there was an obstruction or an artificial obstruction in a watercourse causing a statutory nuisance, the watercourse could be said to be choked within the meaning of the section. The phrase "so choked" did not mean that the statutory nuisance caused by the choking had to be ever-present and continuous. The subsection in question had to be capable of addressing an intermittent state or a series of events or occurrences. By its nature the "proper flow of water" in a watercourse was not itself a constant. The piers of a bridge and other parts of a bridge were capable of being artificial obstructions in a watercourse or river.

EIA

On 5 May, in Atkinson v Secretary of State for Transport and Tyne and Wear Passenger Transport Authority, the High Court considered whether the information contained in an environmental statement was adequate.

The claimant applied to quash the River Tyne (Tunnels) Order 2005. This had been made by the Secretary of State to enable the construction of a new road tunnel. He alleged that the Secretary of State acted unlawfully in making the order without there being an environmental statement that complied with the Transport and Works (Applications and Objections Procedure) (England and Wales) Rules 2000 and/or Directive 85/337/EEC as amended (the "EIA Directive").

The claimant contended that the environmental statement failed to specify how the large volume of waste material that construction of the tunnel would produce would be dealt with or the environmental effects of handling and disposal. According to the claimant, it left to subsequent procedures the determination of where the waste should be disposed of and by what routes it should be taken to the disposal sites, and failed to give the requisite information to enable the evaluation of the effects of disposal and the traffic that would be generated.

It was held that the decision maker must make his decision in the light of an environmental statement that describes the likely significant effects of the project and the measures to be taken to avoid, reduce or remedy any significant adverse effects. In determining whether the statement does provide the necessary description, the decision maker is not entitled, in relation to a particular area of potential impact, to take the view, simply because subsequent consent from some other responsible body will be required, that no consideration needs to be given as to whether there are likely to be significant effects in that area or what they will be or what mitigation measures are needed. What the decision maker is entitled to do, however, is to reach the conclusion, on the basis of such information that is of relevance to the particular area of potential impact, and in the light of the need for subsequent consent from the other responsible body, that the effects in that area are unlikely to be significant or that appropriate mitigation measures will be taken. In other words, the decision maker must have some information before him that, when coupled with the need for subsequent consent, enables a conclusion to be reached that the effects will not be significant or that appropriate mitigation measures will be taken.

The Secretary of State had information on the maximum volume of spoil that might require removal and the routes that lorries would take to gain access to the primary road network. He knew that it was not possible to identify so far in advance where the spoil would be taken to or, therefore, the haul routes. He proposed to impose conditions on the deemed planning permission requiring the production and agreement of a code of construction practice and a waste management plan that would control such things as the routing of the lorries and the frequency of movements. The Court did not think that the Secretary of State was manifestly unreasonable in accepting that the information in the environmental statement was adequate for these purposes.

Contaminated Land

On 17 May, in R (on the application of National Grid Gas plc) v Environment Agency, the High Court gave an important decision in relation to the contaminated land regime.

The High Court confirmed that under the regime, set out in Part IIA of the EPA 1990, successor organisations can be required to step into the shoes of their predecessors and be held liable for contamination caused or knowingly permitted by their predecessors.

The case is summarised in a Briefing Note available on our website .

PPC

On 19 May, in United Utilities v Environment Agency, the Court of Appeal upheld the recent decision of the High Court.

The decision related to whether PPC permits were required in respect of six of United Utilities waste water treatment plants. The High Court decision was summarised in the Spring 2006 issue of this digest.

EIA

On 15 June, in R (Catt) v Brighton & Hove City Council and Brighton & Hove Albion Football Club, the High Court considered the legality of a local authority screening opinion.

In 1998, the football club started to use a local athletics stadium for its home matches. Use of the stadium was intended to be an interim measure whilst a permanent home for the club was found. Permission was first granted to use the stadium until June 2001. An extension was granted until June 2003, at which time permission was also granted to increase seating capacity by 960 seats.

In 2003, an application for further extension was approved in principle, subject to the implementation of a Section 106 Agreement. The application included a proposal for further increased seating coupled with construction works.

A screening opinion by the Council concluded that the proposed development would not result in any significant effects on the environment and was not, therefore, an "EIA development".

The claimant attacked the screening opinion. He considered that the Council had only considered the effect of the proposals for additional seating and works rather than the wider effect of use as a football stadium. He also considered that it was wrong to have regard to measures which might mitigate any adverse effects in deciding whether the development was an EIA development.

The Court held that a fair reading of the screening opinion showed that the Council did consider the overall impacts of what was proposed and the use of the stadium generally. There had been no failure to have regard to material considerations.

In addition, the Court held that mitigation measures had been taken into account by the Council when making the screening decision. However, it was entitled to do so in the circumstances. The Council had experience of how the mitigation measures in question worked in practice and they could therefore be taken into account when determining whether there would be significant environmental effects.

Waste

On 3 July, in Camden London Borough Council v Mortgage Times Group, the High Court clarified an important point in relation to the waste "duty of care".

Section 34(1)(b) of the EPA 1990 provides that a person who produces controlled waste is under a duty to take all such measures as are reasonable in the circumstances to prevent the escape of waste from his control or that of any other person. Breach of the duty is an offence.

The Council had told the defendant that waste was collected from the defendant's street at 10.30 and that waste should only be put out for collection between 09.00 and 10.30. Nevertheless, on three occasions the defendant had apparently left bags of rubbish on the public highway outside its shop for collection at 07.00.

The defendant was summonsed on the basis that, as a producer of controlled waste, it had failed to take such measures as were reasonable to prevent the escape of controlled waste from its control.

The Magistrates Court dismissed the summonses on the basis that putting the waste on the highway did not constitute an "escape" for the purposes of Section 34 EPA 1990.

On appeal by way of case stated, the High Court agreed that putting waste on the highway did not constitute an "escape". However, it considered that no escape of waste was actually required for this offence to be committed. It was the failure to take reasonable measures to prevent an escape that constituted the offence. In determining whether reasonable steps had been taken, the Court was required to look at all of the circumstances of the case, for example the period of time that the bags were left unattended on the highway prior to collection.

Consultant's Negligence

On 5 July, in Sutradhar v Natural Environment Research Council, the House of Lords decided that the claimant, who lives in Bangladesh, had no reasonable prospect of success against the defendant in negligence. The House of Lords therefore agreed with the Court of Appeal that the case should be struck out.

In 1992, the British Geological Survey ("BGS"), a department of the defendant, produced a report into the hydrochemical character of the main aquifers of Bangladesh and possible toxicity of groundwater to fish and humans. The report was commissioned in the context of a groundwater crop irrigation project. The study tested for a number of elements but did not test for arsenic.

At the same time, large numbers of shallow groundwater wells were being sunk in Bangladesh as part of a different project to provide drinking water. It was later discovered that many of these wells were contaminated with arsenic. The claimant was one of many people to suffer from arsenic-related health effects.

The claimant alleged that the BGS had materially contributed to his illness, either by failing to draw attention to the presence of arsenic or by issuing a report which represented that the water was safe to drink. Had the report said that the water contained arsenic or not given the impression that the water was safe, he claimed that the public health authorities in Bangladesh would have taken steps to ensure that it was.

The House of Lords considered that the case fell at the first hurdle of showing, in the circumstances, an arguable case that a duty of care was owed.

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