A  recent  Court  of  Appeal  case  has  provided  helpful  guidance  on  the  concept  of   “knowingly permitting” in environmental law. This legal test is used as the basis for criminal, covering  offences and regulatory liability in waste legislation, water pollution, environmental permitting  and the contaminated land regime. The meaning the Court of Appeal applied in this case, combined  with new sentencing guidelines for environmental offences, reinforces the importance of contractor  due diligence and awareness of contractors’ activities on site and their compliance with  environmental law.

The judgement serves as a reminder of the implications companies may face as a result of  contractors’ activities on their sites.  Even limited knowledge of operations could result in  criminal liability, the consequences of which are considered further below.

WALKER     AND     SONS     (HAULIERS)    LTD     V ENVIRONMENT AGENCY (COURT OF APPEAL (CIVIL DIVISION) [2014] EWCA CRIM 100)

The case in question was a prosecution by the Environment Agency of Walker and Sons (Hauliers) Ltd, a haulage company undertaking a site  redevelopment project. Walker and Sons subcontracted the demolition work at the site to Bloom  (Plant) Limited who, in the course of carrying out the contracted work, were transferring third  party waste to the site and burning it without a suitable permit. Bloom was found guilty of  operating illegal waste activities and Walker and Sons was subsequently charged under the  Environmental Permitting Regulations 2007 with “knowingly permitting” the illegal waste operations.

The managing director of Walker and Sons was aware of fires at the site but did not know that not  all activities related to the contracted work and further that they were not authorised by an  environmental permit. The Court of Appeal had to determine whether “knowingly permitting” illegal  waste activities required the defendant (a) to have knowledge that the waste operation was not  authorised by an environmental permit or (b) whether all that was required was knowledge of the  offending activities occurring at the site, this clearly being a substantially lower standard to prove.

The Court of Appeal found in favour of the prosecution and agreed that in order to commit the offence all that had to be proved was that the defendant company had knowledge of the waste  operation in question. It was considered unnecessary to show that a defendant knew that the  activities were not permitted. Ignorance of a permit or permit conditions does not offer a company  any defence. The offence, pursuant to which the charge was laid, was knowingly permitting the  contravention of Regulation 12 of the Environmental Permitting (England and Wales) Regulations  2007. Regulation 12 provides that no person may operate a regulated facility except under and to  the extent authorised without an environmental permit.

The judgement confirmed that companies can no longer rely on the notion of taking all reasonable  precautions and exercising all due diligence to avoid commission of a criminal offence. This  defence was available in the preceding permitting legislation and also still applies to other  aspects of environmental law. However, this recent Court of Appeal decision retains   the   strict    liability   approach   in  this legislation, thereby increasing the likelihood of a  successful prosecution in this field.

SENTENCING

Notwithstanding this  ruling there are still  mechanisms by which a Judge can, and should, take into account care and due diligence by a  company where a  waste offence has been  committed.  However, in light of this decision, this is now relevant only to mitigation of  sentence.  

It should be noted that English courts must now  consider the Sentencing Council’s new  sentencing guideline for environmental crimes.   This is expected to  result in higher fines for  corporate defendants and serious offenders.   The guideline aims to encourage courts to make  more use of higher fines and particularly where these offences are motivated by making a profit  or saving money.   In the case of individuals,  where imprisonment is also an option, custody  remains the starting point for the most serious  types of offenders who deliberately commit a  crime that causes, or presents a serious risk of,  significant harm. 

This guideline, the first environmental  sentencing guideline published, covers a number of offences under the Environmental  Protection Act 1990 and Environmental  Permitting (England and Wales) Regulations  2010.   It officially comes into force from 1 July  2014 although we are already seeing courts  applying its principles.

IMPLICATIONS

Although mitigation of  sentence may be  available  if involvement in illegal activities is  limited, courts are being encouraged to impose  higher fines on companies where appropriate.   We are likely to see fines for environmental  offences increasing, particularly where there is  active culpability.   Breaches of environmental  law can result in a criminal conviction which, as  well as a potentially significant fine, may impact  on  a company's ability to raise finance and  in  tendering processes.  Any trial would be public  so media reporting and adverse reputational  impact could follow.  Finally, any criminal  conviction may attract an application for  recovery of benefit gained from illegal operations  through a Proceeds of Crime Act 2002  confiscation order, a tool the Environment  Agency is increasingly using.