Minister for Environment v Irish ISPAT Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judgment Date: 29 July 2004
• Docket Number: [2002]
• Date: 29 July 2004

Minister for Environment v. Irish Ispat Ltd.

In the matter of Irish Ispat Limited (in

and

oluntary liquidation) and in the matter of the Companies Acts 1963 to 2001 and in the matter of an application by Ray Jackson, Applicant, pursuant to s. 290 of the Companies Act 1963

In the matter of s. 58 of the Waste Management Act 1996 and in the matter of an application by the Minister for the Environment and Local Government, Minister for Defence and the Minister for Communications, Marine and Natural Resources. Minister for the Environment and Local Government, Minister for Defence and Minister for Communications, Marine and Natural Resources

Applicants

and

Irish Ispat Limited (in voluntary liquidation) and Ray Jackson

Respondents

[2004] IEHC 278

[2002] No. 270 COS]

High Court

Company law - Winding up - Liquidator - Burdened property - Disclaimer - Integrated pollution control licence - Company unable to meet costs of complying with conditions of licence - Whether licence could be regarded as property - Whether licence was unsaleable or not readily saleable - Whether disclaimer should be permitted - Companies Act 1963 (No. 33), s. 290.

Company law - Environment - Waste management - "Polluter pays" principle - Whether respondents liable for environmental pollution on premises previously occupied by company - Whether costs of remedying pollution constitute costs incurred in winding up - Companies Act 1963 (No. 33), s. 281 - Waste Management Act 1996 (No. 10), s. 58.

Section 290(1) of the Companies Act 1963 provides as follows:-

"Subject to subsections (2) and (5), where any part of the property of a company which is being wound up consists of land of any tenure burdened with onerous covenants, of shares or stock in companies, of unprofitable contracts, or of any other property which is unsaleable or not readily saleable by reason of its binding the possessor thereof to the performance of any onerous act or to the payment of any sum of money, the liquidator of the company, notwithstanding that he has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation thereto, may, with the leave of the court and subject to the provisions of this section, by writing signed by him, at any time within 12 months after the commencement of the winding up or such extended period as may be allowed by the court, disclaim the property."

Section 58 of the Waste Management Act 1996 provides as follows:-

"Where, on application by any person to the appropriate court, that court is satisfied that another person is holding, recovering or disposing of, or has held, recovered or disposed of, waste, in a manner that is causing, or has caused, environmental pollution, that court may make an order requiring that other person to do one or more of the following, that is to say:

• (i) to discontinue the said holding, recovery or disposal of waste within a specified period, or

• (ii) to mitigate or remedy any effects of the said holding, recovery or disposal of waste in a specified manner and within a specified period."

The company had occupied premises pursuant to an indenture of lease. In the first proceedings, the liquidator sought leave, pursuant to s. 290 of the Companies Act 1963, to disclaim an integrated pollution control licence granted to the company by the Environmental Protection Agency. In the second proceedings, the applicants sought orders against the respondents pursuant to s. 58 of the Waste Management Act 1996, inter alia, to mitigate or remedy the effects of holding waste on the premises formerly occupied by the company.

In relation to the application pursuant to s. 290 of the Act of 1963, counsel for the liquidator submitted that the company's interest in the licence which, he contended, had been granted after the company had ceased production, constituted property which was either unsaleable or not readily saleable by reason of binding the company to the performance of onerous conditions. Alternatively, it was sufficient if the licence was unsaleable simpliciter. In response, the Environmental Protection Agency submitted, inter alia, that the licence did not fall within any of the categories of property listed in s. 290 and could not be disclaimed, though if it did constitute property, it was not onerous property. To grant the relief sought under s. 290 would infringe the "polluter pays" principle of European Community law, as implemented in the Act of 1996. The State similarly submitted that the licence did not constitute property as alleged and contended that, even if this were not so, s. 290 had no applicability as, firstly, it was unsaleable because the activity it affected had ceased and, secondly, any onerous obligations arising from its conditions were due to default on the part of the company. Furthermore, the obligations which the liquidator sought to disclaim were imposed on him by the Act of 1996 and therefore it would not be appropriate to grant the s. 290 relief.

In the proceedings pursuant to s. 58 of the Act of 1996, the State submitted that the company had caused environmental pollution and should mitigate or remedy the effects of same. Any such remedial work should be considered a cost, charge or expense properly incurred in the winding up within the meaning of s. 281 of the Act of 1963. Such an interpretation would accord with the "polluter pays" principle of European Community law. In response, the liquidator argued that granting the relief sought would render nugatory the provisions of the Companies Acts in respect of the distribution of assets to the company's creditors, who would be prejudiced as a result.

Held by the High Court (Carroll J.), in allowing disclaimer of the licence pursuant to s. 290 and in refusing the application pursuant to s. 58, 1, that the property referred to in s. 290 was required to be unsaleable either by reason of having to perform onerous acts or the payment of money, or not readily saleable for the same reasons. It was not sufficient that it be unsaleablesimpliciter.

2. That, taken together, the rights under the licence and the activity under the licence constituted property within the meaning of s. 290 of the Act of 1963.

In re Celtic Extraction Ltd. [2001] Ch. 475;In re Mineral Resources [1999] 1 All E.R. 746;Hempenstall v. Minister for Environment[1994] 2 I.R. 20; Maher v. Minister for Agriculture[2001] 2 I.R. 139 and The State (Pheasantry Ltd.) v. Donnelly[1982] I.L.R.M. 512 considered.

3. That, having regard to the interests of all the parties, the liquidator should be allowed to disclaim the licence, which disclaimer occurred on the date notice thereof was given.

Tempany v. Royal Liver Trustees Ltd. [1984] I.L.R.M. 273considered.

4. That the costs of mitigating or remedying the effects of holding waste could not be considered charges properly incurred in the winding up. Accordingly, it was not possible to direct that the costs of remedial work be paid pursuant to s. 281 of the Act of 1963.

In re A. Noyek & Sons Ltd. [1988] I.R. 772considered.

5. That, in the exercise of its discretion under s. 58, the court would not order the liquidator to expend money which was available for creditors in mitigating or remedying pollution. The licence had been granted to the company after it had ceased production, the company had no assets and there was no money over for contributories. The "polluter pays" principle could not be achieved insofar as the company was concerned.

In re Celtic Extraction Ltd. [2001] Ch. 475 considered.

Cases mentioned in this report:-

In re A. Noyek & Sons Ltd. [1988] I.R. 772; [1989] I.L.R.M. 155.

In re Celtic Extraction Ltd. [2001] Ch. 475; [2000] 2 W.L.R. 991; [1999] 4 All E.R. 684.

Hempenstall v. Minister for Environment [1994] 2 I.R. 20; [1993] I.L.R.M. 318.

In re Irish Attested Sales Ltd. [1962] I.R. 70.

Maher v. Minister for Agriculture [2001] 2 I.R. 139; [2001] 2 I.L.R.M. 481.

In re Mineral Resources [1999] 1 All E.R. 746.

In re Ranks (Ireland) Ltd. (In liquidation) [1989] I.R. 1; [1988] I.L.R.M. 751.

The State (Pheasantry Ltd.) v. Donnelly [1982] I.L.R.M. 512.

Tempany v. Royal Liver Trustees Ltd. [1984] I.L.R.M. 273.

Wicklow County Council v. Fenton (No. 2) [2002] 4 I.R. 44; [2003] 1 I.L.R.M. 279.

Originating notice of motion and special summons

The facts have been summarised in the headnote and are more fully set out in the judgment of Carroll J., infra.

The s. 290 proceedings were commenced by originating notice of motion dated the 27th June, 2002. The s. 58 proceedings were commenced by special summons dated the 27th February, 2003. Both matters were heard consecutively before the High Court (Carroll J.) on the 20th, 21st, 25th and 26th November, 2003.

Cur. adv. vult

Carroll J. 29th July, 2004

1 This case concerns two interrelated cases which were heard consecutively. The first concerns an application dated the 27th June, 2002, by Ray Jackson, the liquidator of Irish Ispat Ltd. (in voluntary liquidation) (hereafter "the company") for an order pursuant to s. 290 of the Companies Act, 1963 for leave to disclaim:-

• 1. an indenture of lease dated the 22nd May, 1996, between the Minister for Finance, the Minister for the Marine, and the company, of part of Haulbowline Island, Cobh, County Cork and part of the foreshore and bed of the sea adjacent to Haulbowline Island as described in the schedule and delineated on the map annexed to the lease; and

• 2. an integrated pollution control licence, register 498, granted to the company on the 2nd June, 2001, by the Environmental Protection Agency. The notice parties are the Minister for Finance, the Minister for Defence, the Minister for Communications, Marine and Natural Resources and the Environmental Protection Agency.

The three Ministers were jointly represented and the Environmental Protection Agency was separately represented.

2 When the application came on for hearing the...