Real Estate

Imagine the following scenario: you've bought that dream home in the country you promised yourself all these years… only to discover now that the land is contaminated. The local council says it has to be cleaned up. No matter, because under the UK's new contaminated land regime, liability falls primarily on those who “cause or knowingly permit contamination”, a so-called 'class A' person. So you are off the hook… except that in this instance, Mr X has long since disappeared. The contamination, you discover, dates back to the Industrial Revolution. Suddenly, you become a 'class B' person. As the owner of the land, liability falls on you, Mr Y. And cleaning it up is going to cost you more than the value of the property itself. Feeling angry yet? Well, dare I say it in present company, you could think about suing your solicitor, who failed to ask the right questions about the previous use of the land. Now there's an idea…
As the UK's new contaminated land regime starts to bite, it could have just this kind of impact.
Smaller firms without environmental expertise will be particularly vulnerable to professional negligence claims, but they are not the only ones that should be wary of litigious clients. The City's corporate and banking lawyers, for example, will need to get to know their planning and environmental colleagues rather better and will need to convince less-informed clients that the extra cost is worth it. In 1990, a US case involving Fleet Factors Corporation opened up the possibility that a lender could be held liable for cleaning up a contaminated site if it had participated in the financial management of the polluter. This concept has yet to be tested in UK courts, but under our new regime, lenders could fall into class A, while the class B bracket includes lenders in possession.
Law Society groups had just these kind of scenarios in mind when they recently issued a green 'warning card' for solicitors in response to the UK Government's introduction of the contaminated land regime, whereby people who cause pollution are responsible for cleaning it up. The legislation is contained in Part IIa of the Environmental Protection Act 1990 and in regulations and statutory guidance issued under it. It was only brought into effect on 1 April 2000 and adds to other environmental legislation and common law liabilities and, of course, the UK's planning regime.
So far, local authorities have served relatively few notices requiring clean-ups. But the situation has just moved on another step. Local authorities had to publish their strategy for implementing the new legislation on contaminated land by July this year. Where land has been identified as contaminated, they have a basic duty to require appropriate remediation. Word on the market is that around three-quarters of all local authorities have so far published their strategies, so it will not be long before the new regime starts to bite.
Local authority lawyers face a double whammy, with their employer acting as both regulator, and in some cases, as the landowner too.
Members of the Law Society's committees which are involved in the green card initiative include Norton Rose head of planning and environmental Brian Greenwood. What he is particularly keen to emphasise is that this is not just a property message. The implications of the regime are important for all lawyers who come into contact with property in a deal, whether they sit in property, banking or corporate. The green card really underscores for everybody that considering contaminated land liabilities is a must. Berwin Leighton Paisner environmental specialist Andrew Waite likens it to the importance of considering tax implications. So you get the picture.
There are also wider problems for lawyers. For example, all the necessary search systems that they will require are not yet in place. The Law Society is currently working with the Environment Agency to set up a system which will enable searches to be conducted, questioning the Environment Agency about the condition of land. But the green card, at least, makes a start at tackling the problem.