Environmental Agency v Clark
Encyclopedia
Environment Agency v Clark [2001] Ch 57 (also, Re Rhondda Waste Disposal Ltd) is a UK insolvency law
case concerning the right of creditors to bring proceedings against insolvent companies in administration. It concerned s.10, Insolvency Act 1986
, now Schedule B1, para. 43(6) whereby a moratorium on legal proceedings is effected after an administration order takes place.
ran a landfill site under a waste management licence in Nant-y-Gwyddon
, Rhondda Valley
. The Environment Agency
served an enforcement notice against Rhondda, telling it to comply with its licence terms, under s.33(6), Environmental Protection Act 1990. It then got an injunction. Rhondda failed to change in the next six months. So Rhondda petitioned for an administration order. The administrator asked the court to clarify whether the Environment Agency needed leave under the Insolvency Act 1986, s.10(1)(c) ands.11(3)(d) to bring criminal prosecutions.
Judge Moseley QC, Deputy High Court Judge of the Chancery Division, held it did. The Environment Agency appealed, arguing the words "other proceedings" in the sections were not intended to cover environmental and criminal proceedings, but only recovery of money.
The purpose of the Insolvency Act 1986
was to give a window of opportunity for the company to make proposals to creditors. Both criminal and civil proceedings would frustrate that. Moreover the broad range of offences could mean such an exception would work against creditors' interests. Courts concerned with administration are well placed to balance the arguments for and against leave. Scott Baker J also referred to remarks by Morritt J in the Re Celtic Extraction case, on the “polluter pays” principle. This should not be applied so that unsecured creditors pay to the whole extend of the available assets.
However, the judge had erred in refusing leave. The allegations of Rhondda's serious and long standing breaches of the Environmental Protection Act should not be overridden by creditors' interests.
Here, any fine that might be imposed on the company could only be paid at the expense of the creditors, since, although the company could pay, it could only do so out of assets available for distribution to the creditors.
UK insolvency law
United Kingdom insolvency law deals with the insolvency of firms and individuals in the United Kingdom. The important statutes are the Insolvency Act 1986, as amended by the Enterprise Act 2002, as well as the Company Director Disqualification Act 1986 and the Companies Act 2006.Insolvency is a...
case concerning the right of creditors to bring proceedings against insolvent companies in administration. It concerned s.10, Insolvency Act 1986
Insolvency Act 1986
The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.-History:...
, now Schedule B1, para. 43(6) whereby a moratorium on legal proceedings is effected after an administration order takes place.
Facts
Rhondda Waste Disposal Ltd, a company wholly owned by Rhondda Cynon Taf County Borough CouncilRhondda Cynon Taf County Borough Council
Rhondda Cynon Taf County Borough Council is the governing body for Rhondda Cynon Taf, one of the Principal Areas of Wales. The council headquarters are located in the town of Tonypandy.- Current composition :- Historic results :...
ran a landfill site under a waste management licence in Nant-y-Gwyddon
Gelli, Rhondda
Gelli is a village in the Rhondda Fawr valley, in the county borough of Rhondda Cynon Taff, Wales, situated on the southern bank of the Rhondda Fawr River...
, Rhondda Valley
Rhondda
Rhondda , or the Rhondda Valley , is a former coal mining valley in Wales, formerly a local government district, consisting of 16 communities built around the River Rhondda. The valley is made up of two valleys, the larger Rhondda Fawr valley and the smaller Rhondda Fach valley...
. The Environment Agency
Environment Agency
The Environment Agency is a British non-departmental public body of the Department for Environment, Food and Rural Affairs and an Assembly Government Sponsored Body of the Welsh Assembly Government that serves England and Wales.-Purpose:...
served an enforcement notice against Rhondda, telling it to comply with its licence terms, under s.33(6), Environmental Protection Act 1990. It then got an injunction. Rhondda failed to change in the next six months. So Rhondda petitioned for an administration order. The administrator asked the court to clarify whether the Environment Agency needed leave under the Insolvency Act 1986, s.10(1)(c) ands.11(3)(d) to bring criminal prosecutions.
Judge Moseley QC, Deputy High Court Judge of the Chancery Division, held it did. The Environment Agency appealed, arguing the words "other proceedings" in the sections were not intended to cover environmental and criminal proceedings, but only recovery of money.
Judgment
Scott Baker J, speaking for the Court of Appeal (Henry LJ and Robert Walker LJ) held that the moratorium on "other proceedings" plainly meant all proceedings, including criminal proceedings. So the Environment Agency needed permission before prosecuting. This was because other sections in the Act referred to criminal offences, so on a proper construction, criminal proceedings would have been excluded specifically if that had been intended.The purpose of the Insolvency Act 1986
Insolvency Act 1986
The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.-History:...
was to give a window of opportunity for the company to make proposals to creditors. Both criminal and civil proceedings would frustrate that. Moreover the broad range of offences could mean such an exception would work against creditors' interests. Courts concerned with administration are well placed to balance the arguments for and against leave. Scott Baker J also referred to remarks by Morritt J in the Re Celtic Extraction case, on the “polluter pays” principle. This should not be applied so that unsecured creditors pay to the whole extend of the available assets.
However, the judge had erred in refusing leave. The allegations of Rhondda's serious and long standing breaches of the Environmental Protection Act should not be overridden by creditors' interests.
Here, any fine that might be imposed on the company could only be paid at the expense of the creditors, since, although the company could pay, it could only do so out of assets available for distribution to the creditors.