A landlord which took no positive action following its tenant ceasing trading has been convicted of a criminal offence under the Environmental Permitting (England and Wales) Regulations 2010.
The landlord was guilty of knowingly permitting a regulated activity, namely a waste operation for the storage of waste, without being authorised by an environmental permit.
The case is a stark reminder to landlords of their responsibilities under environmental law. It will not be sufficient for landlords to sit back and do nothing, even where the regulated activity in question was commenced by a tenant who later becomes insolvent, disappears or otherwise ceases trading. Further, directors of corporate landlords may also bear personal criminal liability if they do not act appropriately.
The tenant had been carrying out a mattress recycling business on a site it leased from the landlord, but it ceased trading shortly after being served with an enforcement notice by the Environment Agency on 24 August 2015. The tenant left over 20,000 mattresses on the site constituting approximately 471 tonnes of waste.
The landlord and its director were charged with knowingly permitting a waste storage operation without a permit in the period between 24 August 2015 and 8 June 2016. It was accepted by both sides that 10 per cent of the waste on the site had been removed by the tenant shortly after service of the enforcement notice, but that the vast majority of the waste remained.
Following conviction in the magistrates' court, the landlord and director appealed to the High Court by way of case stated, a procedure by which the High Court is asked to determine questions of law or excess of jurisdiction.
The issues and decision
The questions raised for the High Court to determine were:
- Were the magistrates entitled to find that there was a continuing "waste operation" as defined in the 2010 Regulations?
- Were the magistrates entitled to find that the "knowingly permitting" offence was made out where no positive act of the landlord or its director had been identified, but that they simply knew that a waste operation was taking place?
The landlord and its directors argued that there had been no waste operation on the site following the tenant ceasing trading. In their view, the recycling business had been that of the tenant and what was done after 24 August 2015 should be viewed as a clean-up operation rather than continuing waste storage activities. Alternatively, they contended that even if the mattresses remaining on the site constituted such activities, they had not knowingly permitted them, since the director had been abroad when the enforcement notice had been served and had cooperated with the Environment Agency on his return.
In response, the Environment Agency contended that the storage of the mattresses met the statutory meaning of a waste operation and that the "knowingly permitting" offence simply required the landlord and director to be aware of the waste operation and to have failed to prevent it.
The High Court preferred the arguments of the Environment Agency. There was a waste operation as set out in the legislative framework. "Knowingly permitting" required knowledge of a waste operation along with having taken no action to prevent it, both of which applied to the landlord company and its director.
The implications of the decision
No doubt already aware of the burden they face under environmental law, this decision is a stark reminder to landowners of their potential liabilities. In particular, a landowner cannot hide behind the actions of its tenants or other third parties to evade liability itself.
Company directors also need to pay close attention to the requirements given that they are open to potential personal criminal liability.
The decision comes close to imposing strict liability on landlords whose commercial tenants have ceased trading and abandoned waste on their sites. However, landlords will be able to avoid liability by engaging with the relevant authorities and agreeing on a course of action which they then implement without delay. Landlords who find themselves in this position should seek early professional advice in order to guide them through the potential minefield of environmental law and minimise the inevitable financial cost to them of the clean-up operation.
Whilst the 2010 Regulations have been replaced by the Environmental Permitting (England and Wales) Regulations 2016, similar offences remain under the 2016 Regulations.