ON APPEAL FROM THE HIGH COURT OF JUSTICE
Sir Edward Evans-Lombe (sitting as a Judge of the High Court)
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HOOPER
LORD JUSTICE RIMER
| (1) MICHAEL RALPH WINWOOD
(2) HUGH BAMPFIELD CARSLAKE
(3) THE MARSH TRUST LIMITED
|- and -
|(1) BIFFA WASTE SERVICES LIMITED
(2) BIFFA HOLDINGS LIMITED
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Mr David Hart QC (instructed by Dundas & Wilson LLP) for the Respondents
Hearing date: 23 November 2010
Crown Copyright ©
Lord Justice Rimer :
The background facts at the date of the grant of the lease
'Materials deposited within the site shall be restricted to commercial and industrial wastes, excavated material, builders wastes and clean dry pervious material at a maximum rate of 400 tonnes per day of which not more than 100 tonnes per day shall comprise commercial and industrial wastes.'
'20. Unless otherwise agreed in writing with the County Planning Authority, the whole of the site … shall be restored to forestry use by 31st December, 2003, in general accordance with the following stages:
(i) The excavation shall be filled with imported waste material in accordance with the phasing indicated on Plan D and Table 4 "Operations Schedule" attached.
(ii) On completion of filling within each Phase, topsoil, subsoil and soil making material shall be replaced on the top of the tipped material, so as to achieve a minimum thickness of 1 metre cover over the whole of the tipped surface.
(iii) The final contours of the restored surface, including the respread soil cover, shall generally conform with the contours indicated on Plan D attached.
(iv) In the first available planting season following the completion of topsoil spreading on each and every restoration phase, trees shall be planted in accordance with a specification previously approved by the County Planning Authority, setting out details of … [and the details follow, which it is unnecessary to cite].'
I have emphasised condition 20(iii) as it is of particular relevance. The restoration was to be carried out in five phases shown on plan D, starting at the northern end.
'At the time of entry into the Lease, (i) the contours approved under the 1987 planning permission did not tie in with adjacent ground levels and left a step of several metres between existing adjacent land and the level of the infilled area; (ii) [Biffa] had told [the landlord] that [Biffa] might obtain an increase in waste volumes capable of being received on site via an amendment to the contours provided for in the existing site planning permission and site licence.'
Biffa's case is that the clause in the lease that is in issue was included so as to require and enable this to be done.
'Within … 12 months … to apply for and use all reasonable endeavours to obtain a Planning Permission and a Site Licence in respect of the Demised Land … in its discretion acceptable to the Tenant in accordance with Clause 6(5) Provided that if any application is refused or is not determined within any statutory period the Tenant may but shall not be obliged to make or proceed with any appeal against refusal or non determination thereof The Tenant shall keep the Landlord fully informed of any such applications or approvals and progress thereon and the eventual outcome thereof.'
Clause 6(5), summarised in  above, was the one that increased the rents if Biffa obtained a licence for the deposit of additional types of waste not permitted under the current site licence. It is unnecessary to set the provisions out, but it is relevant to note that, if Biffa did obtain any such planning permission and site licence as is referred to in clause 8(5)(a), clause 8(5)(b) then required it to carry out the waste disposal operations necessary to implement them and not to apply to vary them without the landlord's consent; and clause 8(5)(c) provided that if the authorities should propose any variations, Biffa was to notify the landlord which was then to be entitled to make representations relating to its interest in the site.
'(a) To use all reasonable endeavours to procure the carrying-out of the Extraction Operations as quickly as is economically viable and feasible and to do so in such a way as to create the maximum practicable Void Space in the Demised Land.
(b) To compact the Waste Materials in such a way as to make the best practicable use of the Void Space
(c) Subject to subclause (d) next following to carry out the Landfill Activities within the Term so as to achieve restoration in accordance with the Site Licence and the Planning Permission
(d) At the Tenant's cost to apply for and use all reasonable endeavours to obtain a Planning Permission and Site Licence to enable the Tenant to carry out the Landfill Activities to the highest practicable contours
(e) Not to deposit or permit to be deposited any radioactive waste on the Demised Land.'
Events subsequent to the grant of the lease
'16. … The determination of this application was much delayed and was only finally made, granting Biffa's request, on 13th July 2001. By this date Biffa's application was governed by new rules, the Pollution Prevention and Control (England and Wales) Regulations 2000 ("the PPCRs"). These rules were made under section 2 of the Pollution Prevention and Control Act 1999 which was legislated to give effect to a European Directive on integrated pollution prevention and control (96/61/EC). The PPCRs did not directly apply to existing landfill sites until 2007. However, new sites and sites which were proposing a "substantial change in operation" were to be regulated from an earlier date. Critically it became unlawful to extend the operations on an existing licensed site after January 2001 so as to bring about a "substantial change" in those operations without a permit granted under the PPCRs (PPC permit). By this stage also the waste regulator had ceased to be the County Council and had become the Environment Agency. Biffa's application involving a widening of the ranges of wastes to be deposited in phases 3, 4 and 5 was considered by the Environment Agency to involve a "substantial change". Thus Biffa required a PPC permit to be able to deposit wastes of the type it wished to deposit.
17. To complete the legislative picture, the PPCRs themselves were substantially amended and replaced by the Landfill (England and Wales) Regulations 2002 which carried into effect a further European Directive adopted in 1999, Council Directive 99/31/EC, which imposed a series of technical requirements and prohibitions on landfill sites. To operate the site as it wished it was still necessary for Biffa to obtain a fresh site licence.
18. The Void Space on phases 1 and 2 of the Site has now been filled and restoration works to the surface have been completed. No fresh licence in respect of the Site has been applied for by Biffa under the 2002 Regulations which now apply. Accordingly, backfilling phases 3, 4 and 5 with waste has not been and cannot now be undertaken. Biffa have operated clauses 6(3) and 7(6) and ceased to pay the "certain rent" and percentage of gross landfill revenue which they were bound to pay had they continued to operate the site with effect from 25 December 2000. Thereafter, the Claimants commenced these proceedings for breach of contract, being breach of the provisions of clause 8(6)(d) of the Lease. ….'
The preliminary issues
The judge's decision
'25. I can well imagine that a site owner, negotiating the provisions of a lease to a waste disposal contractor, might wish to include in that lease a provision having the effect of paragraph 29 of the Particulars of Claim. Against a background of continually changing regulation, there would be real commercial advantage in obtaining from the site operator tenant a covenant so to arrange his operations and/or to apply for or vary licences so as to enable "Landfill Activities" to continue on the site for as long as they profitably might. I do not detect from the matrix of fact, existing at the date this Lease was made, any compelling reason why I should give the words of sub-clause 8(6)(d) the stretched meaning which the Claimants' submissions require having regard to the words used and their place in the provision of the Lease: - contrast the background facts in the ICS case ibid [Investors Compensation Scheme Limited v. West Bromwich Building Society  1 WLR 896, 912-913]. This is particularly so where there exists on Biffa's case on accepted facts (see para. 6 above), an explanation for the presence of this sub-clause where it appears in the Lease and using the terms which it does. In my judgment, Biffa's explanation for the provisions of sub-clause (d) and their position in the Lease is to be preferred to that of the Lessors.'
'… would have construed the words "reasonable endeavours" in sub-clause 8(6)(d) so as not to impose upon Biffa an obligation to pursue an application for a site licence where it was reasonable for Biffa to suppose that the conditions or other limitations attached to the grant of such licence would make any operations covered by the licence unprofitable.'
Discussion and conclusion
Lord Justice Hooper :
Lord Justice Jacob :