Environmental - Waste Management Licence
The Problem:
Whilst previously represented by another firm of solicitors, our client, the owner of a scrap yard, had sold his business and in the process transferred the waste management licence necessary to operate it. Rather than selling the site, however, our client had leased it to the purchaser. In addition to failing to provide for sufficiently robust compliance and remediation obligations under the terms of the Lease, the arrangement failed to provide the owner of the site with any degree of control over the fate of the licence.
With the passage of time, the character of the local area changed as did the regulatory position in relation to the licence. The result was that simultaneously the site had become a location which was potentially attractive to residential developers whilst SEPA and the local council were pressing for remedial action on the condition of the site.
Although the lease had come to an end, because the owner of the site was not in control of the licence, he was unable to procure its surrender and this in turn prevented an onward sale to developers. The holder of the licence was reluctant to seek its surrender due to the remediation liabilities which would crystallise upon doing so.
Therefore, none of the parties were in a position to move forward. The owner of the site was unable to realise the value of the site and just as importantly, the redevelopment and remediation of the site was held in abeyance.
The Solution:
Having considered the site owner’s options in light of the applicable environmental law, we simultaneously entered into negotiations on his behalf with the prospective developer, the local authority and SEPA and the then holders of the waste management licence.
In doing so, we sought to explain to each party how it could benefit from co-operating with the others to find a mutually acceptable solution. Whilst doing so, we contrasted the potential benefits with the likely outcome of failing to co-operate.
In essence, we sought to make progress on behalf of our client by appealing for enlightened self interest on the part of all parties to work together for a solution.
The solution which we sought and were able to put in place was a sale of the site by the owner to the developer for a full residential site price. The sale proceeded only once the developer had obtained detailed planning permission which itself was conditional upon remediation of the site so as to render it suitable for residential use.
The requirements for that remediation were agreed with the local authority and SEPA on the basis that the developer would have the waste management licence transferred to it and that SEPA would only accept surrender of the waste management licence upon SEPA being satisfied that the requisite remediation had been carried out. The developer accepted the transfer of the waste management licence from the previous holder of it in exchange of payment of a contribution towards the remediation costs from the previous holder of the licence.
That capital contribution, however, was only a proportion of the estimated remediation costs and thus the then holder of the licence was prepared to make the contribution in exchange of the developer undertaking to seek to surrender the licence (and thus trigger a regulatory requirement to remediate due to the licence terms) immediately after the licence was transferred.
The Outcome:
Our client succeeded in realising the full value of his site without the need to either incur substantial remediation costs or to pursue his former tenant to either carry out the works or to make a payment in respect of such works to him. It should be remembered that it was perceived that our client’s ability to make any such claim against his former tenant was at best weak.
For the wider community and the regulatory bodies, a problematic brown field contaminated site was, after suitable remediation, put to beneficial use and in the process contributed to the regeneration of the local area.
The former tenant did make a contribution towards remediation costs, however, this was a fixed sum which was only a fraction of the potential liability which it faced and payment was made in circumstances where the tenant obtained comfort (in the form of SEPA acceptance of the licence transfer and surrender) that it would be relieved of its liabilities.
The developer acquired a valuable development site, together with a contribution to the cost of remediation works which the developer had from the outset anticipated it may have had to carry out.