Published: 29/11/2018 By Pam OpreyPotential impact on directors: personal liability; damage to continuance of business.
There has been recent case law which goes some way to clarify who pays for damage caused when a breach under The Environmental Protection Act 1990 and the Waste Management License has occurred but the Company is now in Liquidation.
The view is that the “polluter should pay” BUT who is the polluter, the Company (now in Liquidation) or the director(s) personally?
In such circumstances, if funds are held by a Liquidator any costs of remedy would more than likely take priority over the payment of the costs of Liquidation and any potential distribution that may be available to the creditors.
In such circumstances, the Liquidator would firstly need to consider making an application to court in order to ensure that the costs of the Liquidation should take priority over the remedial costs.
Secondly, the Liquidator would have to consider if the polluter is the Company or the director(s) personally. It is considered that the director(s) are the entities who actually control the Company and so the blame may rest with them.
The Liquidator would have the ability to consider issuing proceedings against the director(s) personally under Section 212 of the Insolvency Act 1986. If such action was successful any recovery would be utilised to pay the remedial costs of the breach leaving funds held by the liquidator to be utilised against the costs of liquidation and potential distribution to the Company’s creditors.
If such action were to be successful it should be noted that the director(s) may well be deemed as unfit to be provided with a Waste Management License to continue future business.