FORMER directors of a Monmouthshire recycling facility which allowed polluted waste to leak into the land will not be liable to pay personally for clean up costs of £1.1m, the Court of Appeal has ruled.

Jacqueline Powell, in her capacity as director of a composting company in Caerwent - Wormtech Ltd - was found guilty in January 2014 for breaching the conditions of the company’s environmental permit and storing waste in a manner likely to cause harm to human health or pollution to the environment.

In a proceeds of crime act hearing last year Powell was ordered to pay £200,000 in compensation but prosecutors, Natural Resources Wales (NRW), pursued further confiscation proceedings as they were dissatisfied with the judge’s ruling that Powell and company director Jonathan Westwood could not be held liable for the cleaning up costs.

The company was put into administration in 2012.

The cost to the public purse for the clean up of the Ministry of Defence owned site is around £1.125 million to deal with the leachate and resultant pollution.

NRW estimate to dispose of the waste at landfill could bring that cost up to £1.6 million but said other disposal and recovery options may be possible with further treatment of the waste.

A hearing took place earlier this month at Cardiff Crown Court and the Court of Appeal today ruled that neither Powell or Westwood can be pursued personally for the clean up costs.

Lord Justice Treacy, sitting with Mr Justice Hickinbottom and Mr Justice Holgate, said the company had "failed to observe the necessary regulations".

Lord Justice Treacy said: "It was a lawful operation which had become unlawful through breaches of conditions."

He said attempts to make structural changes to the site had also been hampered by the MoD's reluctance to allow them.

NRW barristers were asking for the “corporate veil” to be pierced, going behind the protection of a company which is afforded to any directors and allowing for the directors to be made responsible.

Lord Justice Treacy said Powell and Westwood had not tried to "conceal" their wrong-doing behind the corporate veil and dismissed the appeal.

A spokesman for NRW said they regulate sites like these in order to 'protect the environment and people from harm.'

He said: "The site was operated poorly in this instance and that lead to pollution that had to be cleared up at the expense of the tax payer.

“Not only did the site's activity cause environmental damage but also a risk to public health with high and harmful levels of E.coli and salmonella found at the site."

He added: “Although the pollution on site is now low level and contained there is still a lot of work to do and we feel it’s unfair that the tax payer has to bear the financial burden for this.”

Solicitor Advocate Emma Harris, acting on behalf of the defendant, said this case has a 'profound impact' on the way that company directors can be held responsible when a company is alleged to have committed a criminal offence.

She said: “Our client is pleased that the court has reached a sensible decision in respect of the financial responsibility which any director can hold in the event that a company finds itself in criminal or regulatory proceedings.

“Mrs Powell has served her sentence in accordance with the court’s directions and attributed the failure of the company to the heavy handed approach which Natural Resources Wales had taken in regulating the site.

"Her case has indicated the difficulties which many company directors in the recycling sector have.”