Waste management licence — Condition of licence that trust fund established to make financial provision for obligations under licence — Trust fund held in joint names of defendant and agency — Defendant’s liquidators disclaiming licence — Whether agency or anyone else entitled to fund — Held, trust funds vested in Crown
In 1994, the first defendant (H) was granted a waste management licence that was governed by Part II of the Environmental Protection Act 1990. The claimant agency subsequently agreed to a variation of the licence, on condition that a trust was established to make financial provision in respect of H’s obligations under the licence. The trust funds were held in a joint bank account in the names of both H and the agency. Clause 3.2.1 of the trust deed provided that the trust fund should be held as security for expenses incurred by the agency in respect of any work undertaken by it pursuant to section 42(3) of the 1990 Act. In 2001, H entered into voluntary liquidation, and its liquidators disclaimed the licence. The agency brought proceedings to determine what should happen to the trust fund.
Held: A declaration was made that the trust funds vested in the Crown.
1. The financial provision established by the trust deed was an integral part of the terms upon which the waste management licence was held. Accordingly, in disclaiming the licence and any liabilities in respect of it, the liquidators were to be taken also to have disclaimed H’s interest in the fund established to ensure that those liabilities were met. This was in accordance with the general principle in insolvency cases that a company could not fairly keep property and yet be freed from its liabilities in respect of it: Hindcastle Ltd v Barbara Attenborough Associates Ltd [1996] 1 EGLR 94 applied.
2. On a proper construction, the trust deed did not provide for the fund to become payable to H in the present circumstances. However, the fact that H was not entitled to the fund did not mean that the agency could have recourse to it to discharge all or any of the obligations to which H would have remained subject if the licence had continued in force. Clause 3.2.1 was limited to works undertaken in pursuance of the powers in section 42(3), and the agency could undertake works under that provision only while a licence was in force. Since the disclaimer had caused the licence to come to an end, it followed that the agency could no longer incur expenses in connection with any work referred to in clause 3.2.1 in respect of which it would have a right of recourse against the fund.
3. The money in the account was no longer required to be held on trust for the purposes of clause 3.2. It no longer had an owner and no-one else was able to assert any claim to it: the money therefore became property vesting in the Crown as bona vacantia.
John Howell QC and Adam Lewis (instructed by the solicitor to the Environment Agency) appeared for the claimant; the defendants did not appear and were not represented.
Sally Dobson, barrister