In addition, if an operator does not make adequate financial provision then that operator will not be ‘fit and proper’ to hold a licence in the future. These powers have been used to require operators to set aside funds to cover environmental clean-up costs in the future, and those funds are generally being held in escrow or trust accounts.

However, it seems there is a lacuna in the legislation, because it does not address the situation of what happens when the holder of the waste- management licence becomes insolvent. One would have assumed that the licence would remain in force and that the EA would have a first claim on the funds set aside for discharging the outstanding environmental obligations. However, in Celtic [1999] it was held that a liquidator could disclaim a waste-management licence and that decision has now been followed by Hillridge [2003] where £367,000 had been placed in trust. It was held that the disclaimer meant that the former licence holder no longer had any rights in respect of the disclaimed property and therefore no rights over the £367,000. More importantly, however, the wording of the trust deed meant that the EA would only be able to access those funds if the licence remained operational – but since the disclaimer had brought the licence to an end, neither the landowner nor the EA could claim the money (which therefore passed to the Crown as bona vacantia).

It is possible that this outcome could have been avoided if different wording had been used in the trust deed, and also if different statutory powers had been used by the LA involved. However, what does seem quite clear is that there are major question marks over the status of waste-management licences once they have been disclaimed. Further details in [2004] EG 17 April 105. © Practical Lawyer