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Independent ‘personal’ liability of directors

AUTHOR(S): Nicola Dunleavy, Stuart Margetson
PRACTICE AREA GROUP: Commercial Real Estate, Environmental, Planning and Safety
DATE: 27.10.2011

Independent ‘personal’ liability of directors

The regulator and the landlord argued that a “fall back” order should be made against the directors, despite the finding in the March 2011 decision that there was no specific basis in law for these orders. 

Judge Clarke avoided re-opening this issue by holding that the directors could in any event be held to be independently liable for the clean up as ‘holders’ of the waste. The waste management legislation provides that orders for clean up can be made against ‘the person holding, recovering or disposing of waste’. This is despite the fact that the polluting business was carried on by the limited liability company.

When can a director be a ‘holder’ of waste?

While much of the judgement related to a statutory definition of ‘holder’ of waste which has since been replaced, Judge Clarke also considered the current definition in Irish law of a “holder” of waste.

Previously, a holder expressly included a ‘manager, supervisor or operator’ of an activity giving rise to the holding of waste, which included directors where appropriate. However, a ‘holder’ is now defined in Irish law as “the producer of the waste or the natural or legal person who is in possession of it”. 

Judge Clarke held that the test of being “in possession” may require a greater degree of connection with the waste than had applied under the previous definition. Under the previous law, someone might be said to be a “manager”, “supervisor” or (less likely) an “operator” of an activity in respect of waste without actually being in possession of the relevant waste. 

However, Judge Clarke held that where a director had a “hands on” role it could be fairly said that any waste on the site was in his possession and that he was therefore a holder of the waste. Judge Clarke felt that “possession” was not the same thing as “ownership”.  He noted that the majority of the directors concerned had a significant personal supervisory role over the operations being carried out, were fully aware of what was going on and made the relevant policy decision and directions as to how activities were to be carried out.

In contrast, Judge Clarke held that a director who held a position of little actual authority and was mostly involved with sweeping and site maintenance could not be regarded as a “holder” of waste. He also noted that there ‘might’ be a question as to whether a “pure non-executive director” could be regarded as a holder of waste. However, he did not come to any conclusion on this, as it did not arise on the facts.

In reaching his conclusion as to liability of the individual directors, Judge Clarke examined the period during which each individual was a director of Clean Build and determined the extent of waste accumulation and the individual director’s role in allowing that accumulation. By analysing the facts in this manner Judge Clarke attributed liability for clean up to each director in direct proportion to their role in the pollution of the site.

To read full article, please click here.

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