Environment: When England falls into the sea, who picks up the bill?

Landowners and their insurers face the prospect of huge bills for natural disasters following a High Court judgment. Nicholas Schoon, Environment Correspondent, explains.

When the grandiose Holbeck Hall Hotel on the North Yorkshire coast plunged down a cliffside a few years ago it was only the beginning. That spectacular and expensive landslide in 1993 resulted in a legal earthquake yesterday.

Scarborough borough council was held liable for the destruction of the four star Victorian hotel, and its insurers are facing a bill of about pounds 2m. A judge in London ruled that the authority broke its duty of care to maintain the land and cliffs which it owned between the hotel's surroundings and the sea.

One night in June 1993 part of the Holbeck Hall's gently sloping lawn collapsed. A second slide in the early hours removed most of the remaining lawn. After guests and staff were evacuated, further collapses took out the hotel's conservatory and almost its entire seaward wing.

What was left of the building, which had enjoyed panoramic views of the seaside town and coastline, was unsafe and had to be demolished.

The disaster was headline news, and the late John Smith used it as a potent metaphor for Britain's decline under the Conservatives in his leader's speech to the Labour Party conference a few months later.

The decision of Judge John Hicks QC is highly controversial, and in giving his judgment he invited an appeal against it. Unless it is over-ruled by a higher court, the complex judgment - following a 36 day hearing - leaves landowners liable for any damage caused to their neighbours by natural phenomena like erosion and landslides.

"The liabilities could be phenomenal and the consequences serious," said William Howarth, Professor of environmental law at Kent University. "It goes against the general principle that landowners can't be held responsible for natural hazards, and I hope there is a successful appeal."

The case hinges on the council's duties as a landowner holding the land next to the hotel, and not on its responsibilities to combat coastal erosion. Judge Hicks said he felt bound by a principle established in an earlier, equally controversial case - Leakey versus the National Trust.

In that Court of Appeal judgment in 1980, the National Trust was held liable for the damage done when rocks tumbled off one of its properties and smashed into a house.

"I regard the Leakey versus National Trust decision as a blot on our jurisprudence," said Professor Howarth. "I know of no instance when it has been applied, until now."

In court, the hotel's insurers' lawyers had alleged that the council's engineering department failed to heed expert advice when it was trying to alleviate the risk of a deep-seated slip of Holbeck cliff.

Lawyers acting for the council's insurers said the stabilising work it planned for the cliffs was based on the recommendations of its geotechnical experts, GEN, who had surveyed the cliff and liability rested with them. They also argued that these works, carried out in 1989, were reasonable and the collapse of the 200ft high cliff could not have been foreseen.

Judge Hicks said it should have been clear that a more far-reaching land stabilisation scheme was necessary. Scarborough had breached a common law duty to take steps to prevent or minimise damage to its neighbour.

John Trebble, Scarborough's chief executive, said there would be an appeal. "The judgment comes as a serious shock to all concerned. It breaks totally new ground as it seeks to create a new duty on landowners, the implications of which are quite startling, based on very nebulous principles."

Coastal councils do have statutory responsibilities for protecting land against sea erosion, but these are framed as legal powers rather than duties. By and large, if a property is being eroded by the sea, that is the landowner's problem.