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Lord Northbourne: I am most grateful to the noble Viscount for what he has said. I beg leave to withdraw the amendment.

31 Jan 1995 : Column 1462

Amendment, by leave, withdrawn.

[Amendments Nos. 238C to 238E not moved.]

Lord Stanley of Alderley had given notice of his intention to move Amendment No. 238F:

Page 51, line 20, at end insert:
("( ) Subsection (3) above shall not apply where compulsory powers exist to compel the owner or occupier to grant any interest in the land related to the activity or activities which gave rise to the contamination of the land, whether or not such compulsory powers were used.".").

The noble Lord said: I listened carefully to my noble friend's reply to the noble Lord, Lord Northbourne. Bearing in mind that my noble friend is taking the matter away and looking at it very carefully, at this stage I shall not move my amendment and shall wait until my noble friend comes back, I hope on Report, with an answer to the noble Lord, Lord Northbourne.

[Amendment No. 238F not moved.]

[Amendment No. 239 had been withdrawn from the Marshalled List.]

Lord Northbourne moved Amendment No. 239A:

Page 51, line 32, leave out ("guidance") and insert ("regulations").

The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 239B, 239D and 242A. This is mercifully the last of my groups of amendments. Amendment No. 239A imposes a more appropriate framework of regulations rather than guidance. It is suggested that it is unconstitutional that onerous liabilities worth millions of pounds should depend on administrative guidance rather than on legal principles.

With regard to Amendment No. 239B, a person who simply appears to have caused or knowingly permitted contamination would be caught but for this amendment as well as a person who had done things. That is tantamount to saying that a person who looks guilty is guilty. The definition of "appear" in new Section 78F(6) makes it clear that the decision is to be an entirely subjective judgment by the authority and presumably not subject to appeal. Amendment No. 239D introduces a defence that the best possible practicable means had been used to prevent pollution. Amendment No. 242A enables appropriate persons to seek a contribution from any other appropriate person who caused the presence of contaminating substances in the land. In other words, where the authority goes for one person, that person can recover an appropriate part of the cost from other polluters, if he can find them. I beg to move.

Baroness Hilton of Eggardon: I rise briefly to address Amendments Nos. 240 and 241, which are intended to be helpful. They suggest that the regulations which relate to appeals against the serving of remediation notices should be subject to regulations which make clear on what grounds those appeals may be made so that people know that information when they appeal and do not make mischievous appeals. The amendments provide that there shall be uniform procedures and generally attempt to tighten the grounds

31 Jan 1995 : Column 1463

upon which regulations are made. They are intended to be helpful and to prevent appeals being too widely and mischievously drawn.

Lord Annaly: I rise briefly to support Amendment No. 242A in the name of the noble Lord, Lord Northbourne. In its present form, new Section 78E(4) relies on the Secretary of State's guidance as to whether the enforcing authority should serve a remediation notice on two or more owners. That raises the spectre of joint and several liability under which deep pockets may be unfairly forced to pay for damage caused by others. In order to promote the best investment in remediation, it is important for business to have reasonable certainty about the chain of responsibility where there is more than one appropriate person. At the very least, the principles by which a contribution to the costs can be recovered should be expressly stated in the Bill.

The noble Lord's amendment provides for a reasonable apportionment of costs so that a person is liable only to the extent of the damage for which he had responsibility. That is an equitable principle which is stated in the legislation. The Government's assurance is sought that the principle of apportionment of costs will be stated in the Bill and not left exclusively to guidance.

Baroness Hamwee: Amendment No. 243 in the names of my noble friend Lord Beaumont and myself is one to which I can speak far more briefly than may appear from the length of the amendment. It is essentially an anti-avoidance provision and seeks to deal with a situation where a disposal site is run through a company which is then wound up voluntarily, for instance as soon as the last load of waste is deposited on the site. It would make the owner liable for any remediation expenses—recovery could be quite expensive—and seeks to deal with the use of a shell company as the owner of a site in similar circumstances.

Viscount Ullswater: Amendments Nos. 239A and 242A, both of which were moved by the noble Lord, Lord Northbourne, relate to circumstances where two or more people may be responsible for the contamination on a single site.

Amendment No. 239A would replace guidance from the Secretary of State with regulations. The Government understand the concern that questions of this importance as to the determination of the potential liabilities of individuals and companies should be set out in guidance. That is why the provisions already include the strict requirement that the enforcing authorities act in accordance with such guidance and that it be subject to parliamentary scrutiny in its draft form through a negative resolution procedure, before it can come into effect.

The number of different circumstances which the guidance will have to address is potentially so great, however, that the Government believe that it would be all but impossible to frame it in the form of regulations.

We can at this stage give some indication of the basic principles which will underlie the guidance. First, where different people have separately contributed to the

31 Jan 1995 : Column 1464

problems on a contaminated site, liability should be shared among them in proportion to their share of the overall responsibility for the contamination. This would be an explicit rejection of an approach based on joint and several liability, in which all of the liability could pass on to the shoulders of a smaller group of those responsible, or even on to one person. Similar principles could also apply where two or more owners each owned a part of a contaminated site.

The second overall principle would be that, where effective control over the same contamination had passed from one person to another, for example from the person who caused it to be present to another who knowingly permitted it to remain, liability should rest with the person who most recently could have exerted control over the contamination.

Those principles should give some comfort in respect of the concerns which appear to lie behind Amendment No. 242A. That would enable a person who has complied with a remediation notice to recover contributions to his reasonable costs from anyone else who caused the contamination to be present. However, as the provisions currently stand, any of those other persons would in any case be themselves potentially appropriate persons. That would mean that the Secretary of State's guidance would apply, and would govern the apportionment of the liability where that was necessary. If the recipient of a remediation notice thought that the system had not been followed correctly, he would be able to appeal against that aspect of the remediation notice.

Amendments Nos. 240 and 241 relate also to the question of regulations, in this case concerning appeals against remediation notices. Amendment No. 240 would make it a duty on the Secretary of state to make regulations with respect to the grounds for, and procedures on, such appeals. I point out that in any event the right of appeal against a remediation notice is not conditional upon such regulations being made. The effect of the amendment would also be to remove any discretion over whether the regulations had to set out any particular procedures for appeals. In most instances, those would be to the magistrates' courts, and there may be no need for new procedures to be established to deal with such appeals.

Amendment No. 241 would have the effect of making the indicative contents set out in the Bill for the scope of these regulations into required elements. It is important to maintain some discretion, particularly in respect of the contents of the regulations, so that the Government are not required to make regulations which may, at some time in the future, be deemed unnecessary.

The list of items for possible inclusion in these regulations, which is provided in the proposed new Section 78G(5) is deliberately drawn very widely, both to indicate what general issues are intended to be covered and to ensure that problems of vires do not arise. However, it might be neither necessary nor sensible in some circumstances to include provisions in the regulations dealing with all of the areas identified in that subsection. Amendment No. 241 would remove the necessary discretion to make that decision.

31 Jan 1995 : Column 1465

Amendment No. 243, moved by the noble Baroness, Lady Hamwee, would enable the court to declare that any director or officer of a body corporate which was dissolved to avoid liabilities in respect of contaminated land could himself be treated as the appropriate person to receive a remediation notice. The court could also declare that an enforcing authority could recover its costs or expenses from a holding company where it had set up a subsidiary company to avoid liability for contamination caused or knowingly permitted by the subsidiary company.

Like the noble Baroness, Lady Hamwee, the Government wish to ensure, so far as is practicable and reasonable, that people and companies are not able to evade what should be their responsibilities under this clause. However, the Government have severe reservations about the precise effects which would be brought about by this amendment.

The provisions in the first subsection could, for example, place individual directors in an impossible position if potential liabilities in respect of contaminated land were threatening the solvency of their companies. If they kept their companies in business, they could be found guilty of "wrongful trading" under the provisions of the Section 214 of the Insolvency Act 1986. But if they put those companies into voluntary liquidation in order to avoid questions of wrongful trading, they could be held personally liable for the costs of any remediation work required under these contaminated land provisions.

The second subsection would clearly "pierce the corporate veil", and run against the fundamental principles of limited liability for company ownership. The effect of the amendment would be to make shareholders, in this case holding companies, legally responsible for some of the liabilities of the companies in which they held shares.

I hope that I can reassure the Committee, however, that errant directors will not escape completely under the existing provisions of this clause. The new powers in respect of contaminated land which we are discussing here will, of course, sit within the wider provisions of the Environmental Protection Act 1990. Section 157 of that Act provides that where any offences under the Act are committed with the

    "consent or connivance of, or are attributable to the neglect of, any director, manager, secretary or other similar officer"

those persons shall be themselves guilty of the offence and thus liable to be punished accordingly.

Amendment No. 239B, spoken to by the noble Lord, Lord Northbourne, is somewhat simpler. It seeks to replace a reference to someone appearing to have caused or knowingly permitted contamination with a stronger test of their having done so. This would reflect the wording used elsewhere in the provisions.

Rather than seeking to dispute the issue, the Government suggest that there may be a small number of other instances in the proposed new Section 78F to which the amendment applies. Having had these brought to their attention, they would wish to bring forward their own amendments to correct them at a later stage.

31 Jan 1995 : Column 1466

Amendment No. 239D, also spoken to by the noble Lord, Lord Northbourne, is similar. I ask Members of the Committee to withdraw their amendments.

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