Commercial Landlords beware – criminal convictions, environmental perm

Unlawful waste operations are, sadly, nothing new. The Environment Agency regularly investigates and prosecutes companies which flout the Environmental Permitting Regulations, either by breaching their permit, or failing to obtain one in the first place. However, recent cases have shown that landlords can be left facing the cost of cleaning up the mess left behind, and can face criminal prosecution and conviction in their own right.

When are Landlord’s prosecuted for their Tenant’s breach?

A recent Environment Agency case is a helpful example. The background is as follows:

The Defendant Landlord owned land which he leased to a waste recycling company;
That business had to comply with the Environmental Permitting Regulations 2016. The Landlord was assured that the company had the necessary permits to bring waste onto site;
However, those permits had a 1,000 tonne limit, which was rapidly exceeded;
In addition, the waste brought on to site was not just of the approved sorts – other un-permitted forms of waste were found on site;
The waste business closed and the landlord locked the site and took back possession;
Considerable waste was left on site, which needed to be dealt with lawfully.

The Landlord was quoted a high six figure sum to clear the site of waste. Following this, a large fire occurred at the site, which burned for multiple days, and required substantial fire service resources to extinguish.

Most will have concluded that the main fault lies with the waste recycling company, who were prosecuted separately for operating an illegal waste operation.

However, The Landlord was also prosecuted. Under the Environmental Permitting Act 1990, it is an offence to “knowingly permit” the keeping of controlled waste on land which has no appropriate environmental permit.

The wording of “knowingly permit” is crucial – a landlord does not have to be directly involved with the waste itself – they only need to have an awareness of the unlawful waste activity, and allow it to continue. Crucially, it is no defence for a Landlord to say that they didn’t know a waste activity was illegal, if they knew it was taking place and allowed it to continue.

In this example case, the Landlord was convicted, ordered to pay £12,250 in fines and costs, and will now have a criminal record. The Environment Agency also has the right to take further action to recover the costs of cleaning up the site.

The above case is a valuable lesson for landlords who rent to commercial operators. It is now clear that regulators will look beyond the tenant where waste offences have occurred. Landlords may also represent a better target from which to recover the cost of remediating the land.

What can Landlords do to mitigate the risk?

The key principle is to do advanced due diligence on tenants from the start. Consider the following:

What history, skills, knowledge and experience does a tenant have in their area of operation?
Can you positively verify their identity and residential address?
Can they provide evidence of the permits they hold?
Can those permits be verified with the Environment Agency as genuine and in force?
Does the company or its directors have any enforcement, prosecution or insolvency history?
Is the tenant a newly-incorporated Company, with little credit history?
Is the registered office of the Company in an unusual location, not obviously associated with the tenant’s business?

After that, Landlords should be very conscious of their knowledge of operations on site. Visiting sites can be a good idea, after all, if a tenant abandons waste, the Landlord may be liable for clean-up and site visits may help to identify and prevent such problems.

However, if Landlords do visit sites, they may become aware of waste activities that are unlawful. There is a risk therefore in undertaking detailed or regular audits of sites and landlords should be wary of this unless they have the expertise and resources to deal with any issues that may become apparent.

If they do discover issues, they must take action immediately to demonstrate that they will not permit such activities to continue. This could include taking action under the lease to require tenants to rectify matters within a reasonable time and following-through to ensure this is carried out.

Where the issues relate to the deposit of waste of a nature or quantity that is unlawful, landlords should make it clear to their tenants that they are prohibiting any further acceptance of such wastes on site.

Finally, you should consider what to do if the worst happens.

What steps are available to you under the lease if a site deteriorates?
Could you regain possession quickly, and nip any problems in the bud?
Is site security and surveillance adequate? Often waste criminals will set fire to abandoned waste to obscure its origin. Unfortunately, this often has the consequence of rendering the residue ‘hazardous’ which means that disposal costs will rise very significantly. Good site security and surveillance (CCTV) may be helpful in avoiding this complication.
How would you recover the costs of site clean up from the tenant if necessary?
What will you do if you are contacted by the Environment Agency?

If you have any concerns regarding environmental permitting, waste offences or Environment Agency action, please contact our Business Risk and Regulation team on 0117 321 8014