Avoided costs of removing waste from land are proceeds of crime

The Court of Appeal has ruled that the avoided costs of removing illegally stored waste can be the subject of a proceeds of crime confiscation order. This has implications for landowners who fall victim to waste crime or tenant insolvency.

In the case of Ryder and Green v Environment Agency [2020] EWCA Crim 1110 the Court of Appeal had to consider appeals against confiscation orders obtained by the Environment Agency (EA) against two individuals under the Proceeds of Crime Act 2002 (POCA) for obtaining a “pecuniary advantage” in the form of the avoided costs of removing waste stored on a site owned and controlled by them. Messrs Ryder and Green owned a site near Barnsley, which they let to a company called Grantscope Limited. They were also directors of Grantscope.

Grantscope held an environmental permit for the storage and treatment of waste from skips. It failed to comply with its permit and the EA served an enforcement notice on it. It also failed to comply with that, so the EA revoked its permit. Following the revocation of its permit, it failed to clear the site of waste. It subsequently went into liquidation and its lease was either forfeited or disclaimed. However, waste activities on the site continued, in particular the production of ‘trommel fines’, which were sold as topsoil.

The EA prosecuted Messrs Ryder and Green for various offences under the Environmental Permitting (England and Wales) Regulations 2010 (which were the relevant regulations in force at the time of the offences), including operating a regulated facility without an environmental permit. They were convicted following a trial at Sheffield Crown Court. The EA also pursued confiscation proceedings against them under POCA, arguing that they had benefitted from criminal conduct by obtaining a pecuniary advantage from avoiding the costs of removing the illegally stored waste from the site.

Messrs Ryder and Green argued that they were under no obligation to remove the waste, as they had not been served with any notice requiring them to do so. They also argued that they had obtained no pecuniary advantage because the potential liability to remove the waste remained and the potential removal costs depreciated the value of the site. Both the Crown Court and the Court of Appeal rejected those arguments, which the latter described as a “balance-sheet approach” to liability. Once Grantscope’s permit had been revoked, the storage of waste pending recovery or disposal was no longer permitted at the site and so, as a matter of law and fact, Messrs Ryder and Green were responsible for clearing the site of waste. That inevitably had costs implications. The benefit to them (being the estimated costs of removing the waste) was calculated to be £276,004.

Messrs Ryder and Green were ordered to satisfy a confiscation order in that amount. It should be noted that this did not discharge their liability for removing the waste, which remained their legal responsibility, albeit the EA gave an assurance to the court that it did not propose to take further steps to require this.

The Court also considered its decision to be consistent with the decision in the case of Stone v Environment Agency [2018] EWHC 994 (Admin), in which the Administrative Court ruled that the owner of a site formerly occupied by a tenant that went insolvent leaving waste on the site was guilty of carrying on a waste storage operation without an environmental permit. Although the defendant in that case did not control the former tenant, unlike Messrs Ryder and Green, who had both been directors of Grantscope, the principle that emerges from both cases is clear – a landowner carrying on a waste storage operation without an environmental permit not only commits an environmental permitting offence, but also obtains a pecuniary advantage for the purposes of POCA by avoiding the costs of removing the waste.

Landowners may unwittingly end up storing waste on their land without an environmental permit for several reasons, for example because they have fallen victim to waste criminals or because a legitimate operator has gone insolvent and the liquidators have disclaimed its permit. The fact that in such situations they may now be viewed by regulators as obtaining a pecuniary advantage for the purposes of POCA, as well as committing an environmental permitting offence, is a stark reminder to landowners to take appropriate precautions to protect themselves against those eventualities before allowing their land to be used for waste management activities.

Where the worst has happened, we advise any landowner finding itself left responsible for abandoned waste to take legal advice, and above all to co-operate with the regulatory authorities in agreeing an approach, and a timescale, for the management or removal of that waste.

Although regulatory authorities have the power to take enforcement action against a landowner, and ultimately bring a prosecution which could result in costly confiscation proceedings, this is (fortunately) usually considered only as an option of last resort.

A shorter version of this article was published in the ENDS Report November 2020 issue.