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Viscount Ullswater moved Amendment No. 129G:

Page 46, line 28, leave out from ("any") to end of line 31 and insert ("significant harm, or any pollution of controlled waters, by reason of which the contaminated land is such land; or").

On Question, amendment agreed to.

[Amendment No. 129H not moved.]

Lord Jenkin of Roding moved Amendment No. 129J:

Page 47, leave out lines 34 to 48 and insert:
(""owner", in relation to any land in England and Wales, means a person who is entitled to receive the rack rent of the land, or, where the land is not let at a rack rent, would be so entitled if it were so let, but does not include a mortgagee not in physical possession of the land or one who is in possession of the land for the purpose of

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preserving, protecting, repairing, securing or investigating the condition of it, or otherwise protecting a security interest pertaining to it, and otherwise performs no operational function in respect of it; nor does it include a trustee who has no beneficial interest in the land; nor a beneficiary who is not entitled to ask for the trust property to be vested in him;
"owner", in relation to any land in Scotland, means the person for the time being who is entitled to receive, or who would, if the land were let, be entitled to receive the rents of the land, and includes a factor, guardian or curator and in the case of public or municipal land, includes the persons to whom the management of the land is entrusted, but does not include a person who holds a security over the land (whether heritable or otherwise) not in physical possession or who exercises his rights as security holder for the purpose of preserving, protecting, repairing, securing or investigating the condition of it, or otherwise protecting a security interest pertaining to it, and otherwise performs no operational function in respect of it; nor does it include a bare trustee; nor a beneficiary who is not entitled to ask for the trust property to be vested in him;").

The noble Lord said: My Lords, we return to this issue, which we discussed in Committee on 31st January, about the extent to which lenders should become subject to the various powers and regulations in the Bill affecting contaminated land. In response to the amendment which I moved on that occasion, my noble friend said two things which have gladdened the hearts of the banks and building societies. He said:

    "The Government are committed to the view that banks and others should not be treated as 'deep pockets' to pay for the restoration of environmental damage for which they bear no real responsibility. The Government accept that any attempt to treat financial institutions in that way would serve only to threaten the supply of normal financial services to many sectors of the economy".

In the next column he went on to say—and this was even more welcome:

    "The Government are willing to consider this question further, and to examine whether changes to the definition of 'owner' are justified to deal with the possibility of mortgagees finding themselves involuntarily in possession of land".—[Official Report, 31/1/95; cols. 1448-1449.]

No amendments were tabled, whether late on Friday or at any other time, by my noble friend on this matter. We are left with the very unsatisfactory position that the definition of "owner" as it stands in the Bill will make these lenders liable if their property has been abandoned, the keys have been returned and they simply go in to make the place secure and perhaps take certain immediate remedial actions to minimise or even abolish the possibility that there might be contamination. As I said in Committee, one is dealing with properties such as petrol stations, dry cleaning establishments and other small establishments of that kind which handle potentially contaminating materials. I do not want to go over the arguments again because the Government have accepted the substance of the case: lenders should not be liable in these circumstances and they want to do something about it.

Without an amendment to the Bill action could be taken by the courts to make the lender a mortgagee in possession and thus liable as owner to clean up the site. If that position is left, lenders will simply walk away from a site. They will not make it secure. They will not take the steps perhaps to seal off and close valves and

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do other things which they might do to minimise the damage. I cannot believe that that is what the Government want.

It is important to deal, as I do in this amendment, with the point concerning trustees. As the Bill is drafted, trustees, including those who hold only bare legal title to the land—they have no beneficial interest in the trust assets—are presently caught by the definition of "owner" and personally held liable. That is the point. Trustees may be liable in certain circumstances, but why should they be personally liable in circumstances such as these?

I am grateful to the noble Lords, Lord Carmichael and Lord Williams of Elvel, because their amendment seeks to bring the Scottish provisions into line with those of England. However, it is fair to point out—my amendment covers the Scottish position as well as my advisers can draft it—that, while it is important that there is an exemption for "a heritable creditor" as well as for a mortgagee in possession, the overall position for lenders in relation to the definition of "owner" remains unsatisfactory.

I hope that my noble friend will be able to go a little further than he did at Committee stage and give us an assurance that there will be an amendment to deal with this problem which he says he does not want to arise in the circumstances that we have been considering. I beg to move.

6 p.m.

Lord Boardman: My Lords, I support my noble friend. There is no doubt that, unless the Bill is amended on the lines he suggests, it will become almost impossible for any owner of a site which has a high risk of being contaminated—such as near a petrol station or the like—to get a loan because the lender will be so conscious of the risk to which he is exposed that he will refuse to lend money. That would exclude from borrowing a very large band of people who are rather important to the economy. In so far as a loan was obtained, I am quite sure that the lender who is prepared to take the risk would insert terms requiring periodic inspections of sites to make sure that they are being looked after, at the borrower's cost. I hope that my noble friend will be prepared to accept an amendment, if not in the words put forward by my noble friend Lord Jenkin, then in terms which will carry out the intent of these amendments.

The Earl of Kintore: My Lords, I speak to Amendments Nos. 130 and 133 which are grouped with Amendment No. 129J. The purpose of these amendments, which clarify the definition of "owner", is to ensure that a surface owner who does not own the underground mineral seams or mines, cannot be held responsible for contamination in those mineral seams or mines. It may be bad enough for unlimited responsibility to be placed on innocent owners and occupiers of contaminated land, but it must be quite contrary to what anyone can consider just or reasonable for a person to be held strictly liable for property which he has not polluted; from which he has not received any benefit; which he does not own and does not occupy. The clause

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in the Bill provides just such a liability. It is hoped that the Government will agree to these amendments which remove this very serious potential for injustice.

Viscount Ullswater: My Lords, Amendment No. 129J moved by my noble friend Lord Jenkin of Roding seeks to make particular changes to the definition of "owner" so as to protect the position of mortgagees who have taken possession of land only in order to secure and protect it, to protect the value of their security interests.

Following our discussion on a similar amendment moved by my noble friend at Committee stage, I undertook to consider whether any changes were needed to these provisions to deal with the situation where a secured lender found himself involuntarily in possession of land which might be contaminated.

On balance, I have concluded that no changes are justified to the definition of "owner" to deal with this question. Banks already have developed procedures to ensure that, wherever possible, they do not find themselves in possession of a mortgaged property. This reflects the general position in property law that where they are in possession, they are potentially liable to pay the outgoings of the property and also they are liable under various other statutory provisions such as the highways Acts, public health Acts and the building Acts. I can see no real case why we should depart from normal property law in a case of this particular kind of potential liability. Of course, banks will still retain the right not to go into possession of land over which they hold security if they believe that the land could have a negative net value.

This amendment would seek to go further, by specifically allowing the mortgagee to secure the property and take possession without being held to be the owner for the purposes of receiving a remediation notice. I do not believe that this would be justified, as it could prevent suitably prompt action to deal with contamination on a site. We have yet to reach a view as to whether trustees with no beneficial interest in the land should be exempt from any liabilities, as would also be suggested by this amendment. The problem of exemption for trustees is that it would open up an avenue through which people could seek unfairly, we believe, to evade liabilities by transferring their land into trust companies.

The noble Earl, Lord Kintore, spoke to Amendments Nos. 130 and 133 which seek to amend the definition of "owner" for both England and Wales and Scotland to specify that where contaminated land comprises substrata the "owner" would be the person who had the right to receive the full commercial rent in that substrata. This would have the practical effect of making the owner of the mineral rights or of a mine the "owner" for the purposes of the provisions where they comprised contaminated land and where ownership of such mine or mineral rights was distinct from that of the surface.

It is certainly the Government's intention that this should generally be the case and that it should be the owner of the mine or of the mineral rights in these cases who should potentially be liable if he is not already liable as a polluter.

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We believe this is already the position under the existing provisions in that the definition of "land" in the Interpretation Act 1978 includes any,

    "estate, interest, easement, servitude or right in or over land"

so that the owner of mineral rights would already be identified as an owner of land. This would mean that where the only contaminated land was the mine itself, the person who would be potentially liable as owner would be the owner of the mine or of the mineral rights and not the owner of the surface. On that basis I hope that my noble friend will agree to withdraw his amendment and that the noble Earl will not seek to press his.

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