A recent ruling of theScottish Court of Session in essence applied the EU Treaty obligations of the UK to override what many considered to be ‘safe’ precedence for UK insolvency law principles, with the effect that a waste removal notice was not avoided by the liquidation of the relevant waste operator but had to be met from the expenses of the liquidation

In the case of Re Doonin Plant Limited[2018] ScotCS CSOH 89, 28thAugust 2018, an insolvent waste management company had illegally dumped waste on a site without the appropriate permit under the Environmental Protection Act 1990 and had been served by the Scottish Environment Protection Agency (SEPA) with removal notices under section 59 of that Act both before and after the date of liquidation. To the surprise of most commentators, the Court ruled that the liability for the relevant statutory clean-up obligation continued ‘beyond the grave’ as it were of liquidation and until such time as the company was dissolved.

Although there are complex insolvency laws at the heart of the case, and it was these that the Court was primarily applying, and whilst also there are subtle differences of approach between the respective insolvency laws of England/Wales and Scotland, the interest for us here is the manner in which the Scottish judge applied in a purposive manner (and in so doing therefore followed the jurisprudence of the CJEU) the relevant EU legislation transposed by the relevant provisions of the 1990 Act – the Waste Framework Directive 2008/98/EU – and two of the core EU law principles enshrined within it – the polluter pays principle and the high level of environmental protection principle. By so doing, the judge reached the conclusion that these considerations effectively ‘trumped’ what might have been the ‘received wisdom’ of domestic insolvency law.

The practical decision reached by the Court was that the liability of the company imposed under both section 59 notices continued, notwithstanding its entry into liquidation. The court also considered that it must reasonably have been intended by the legislature that a liquidator’s costs of complying with a section 59 notice should be a liquidation expense ranking ahead of provable debts, on the basis of the aims and objectives of section 59 and the underlying Waste Framework Directive. This is a basic principle of EU law, and the Scottish Court cited some of the CJEU authorities. It might also have cited, but didn’t (at least not explicitly, maybe the judge considered it so obvious as to go without saying) Article 4.3 on the Treaty on the Functioning of the EU and the extensive case law of the CJEU thereon as regards the absolute duty of the member states courts and public authorities to ensure the effectivenessof relevant EU law.

It remains to be seen whether the Scottish case will be appealed and/or whether the same decision would be reached in the English courts, especially in these anti-EU times and given also some of the differences between the two legal systems’ insolvency laws. However, (a) the differences between the two systems are not as wide in cases of administration, (b) the Scottish judge applied EU law in accordance with the rule of law, and (c) the terms of the European Union (Withdrawal) Act 2018 appear to be such that, in the short to medium term at least (and subject to the perennial ‘wait and see’ caveat necessarily applied to ‘all things Brexit’) the case law of the CJEU applied by the Scottish judge will carry over into UK law after exit day.