Landlord’s expensive lesson in waste management

The High Court gave its decision in Stone and another v Environment Agency [2018] EWHC 994, on 1 May 2018. This case serves as a stark reminder to landowners (and agents) concerning the level of due diligence and care that is prudent prior to and during the leasing of property to small waste management entities. If a tenant vacates a site leaving unauthorised waste then there are a number of ways in which landowners can incur criminally liability and be responsible for the costs of removal (which can be significant).

Facts

A company owned a site, which it leased to an individual who ran a waste mattress recycling company. The Environment Agency served an enforcement notice on the tenant and consequently, he ceased trading. When he vacated the site, the tenant left over twenty thousand waste mattresses behind.

The landlord claimed they had been unaware of the enforcement notice because the director had been out of the country when it had been served.

The landlord company did not remove the mattresses, which led to the Environment Agency bringing a charge against the company and one of its directors for knowingly permitting the unauthorised storage of waste.

The Magistrates' Court convicted the landlord company and its director of the offence and stated two questions for the High Court to consider.

The appeal

The High Court considered the following questions:

1. Were the Magistrates entitled to find that there was a continuing 'waste operation' between the dates charged?
2. Were the Magistrates entitled to find that the offence of 'knowingly permitting' the operation of a regulated facility did not require the prosecution to establish that the accused took a positive act within the period covered by the charges, but simply knew such a waste operation (as defined) was taking place?

The High Court agreed with the Magistrates that the act of storing waste pending disposal or recovery was a "waste operation".

Further, the Environment Agency was correct to contend that "knowingly permitting" did not require the prosecution to prove that the defendant had taken a positive act. Despite being out of the country when the first enforcement notice was served, the court found that it was enough that the defendant knew about the waste operation and did nothing to prevent it. Therefore the charge against the landlord under the Environmental Permitting Regulations was upheld and the landlord received a fine and was ordered to pay the EA’s costs.

In real terms the decision of the High Court was quite predictable. The exposure of landlords to waste management liabilities of tenants is a very real risk. This is a risk that has been in existence for several decades but sadly has come to the fore in recent years as the incidence of insolvency and disappearance of small waste management tenants has increased. Managing Agents are no doubt carefully considering risk management measures to reduce such risks.