Harry A Coff Ltd., R (on the application of) v Environment Agency

1. MR JUSTICE MAURICE KAY: This is an appeal by case stated, the statement of the case being by a District Judge for the county of Berkshire in respect of an adjudication at the Magistrates' Court in Reading on 26th November 2002.

2. The background is as follows. On 17th December 2001, informations were preferred by the Environment Agency against Harry A Coff Limited, to which I shall refer as "the company", and Michael Coff. The allegations contained in those informations were of offences under sections 35 and 59(5) of the Environment Protection Act 1990. The allegations under section 35 (coupled with section 36) were that in each case the defendant had:

"knowingly caused controlled waste to be deposited on land at Sandford Farm ... when there was not in force a waste management licence authorising the said deposit".

In relation to section 59, it is alleged that the defendant had:

"failed without reasonable excuse to comply with a requirement in a notice dated 19th April 2001 to remove that controlled waste from the land".

3. On 4th July 2002, the Environment Agency offered no evidence against the company, and the case against it was dismissed in relation to both informations. At that time, the case against Michael Coff stood adjourned for trial, which was expected to take place in November 2002. However, shortly before the hearing date, the court was notified that Michael Coff was going to plead guilty to the two offences. He did so plead and, on 26th November 2002, he was fined £3,000 and ordered to pay £2,630 by way of costs to the Environment Agency. At the end of the proceedings, counsel representing the company, who had also represented Michael Coff, applied for an order for costs in favour of the company out of central funds in relation to the dismissed informations. The case stated says:

"I do not recall the precise amount applied for but I do recall that it was well in excess of £6000.

"As the application concerns the public purse I took the view that the court had a responsibility to consider such an application on behalf of the defendant against whom a prosecution had been dismissed, but not to grant an application that was unreasonable and not to allow costs that reflect extravagance."

4. The District Judge then proceeded to set out certain findings of fact in the case stated in the following terms:

"a) The amount sought was unreasonable on its face. The defendant was claiming, for part of a case, more than double the amount claimed by the prosecution for the whole case against ... Michael Coff.

"b) [The company] did not own the land on which the waste had been deposited or have any interest in it. Clearly the prosecutor had made a mistake in identifying the correct defendant. However, since the summonses were issued in identical terms for both defendants, the corporate defendant was never in any danger of being convicted. It was, as I understand it, never in any real jeopardy of such an outcome. Incurring costs of such magnitude was, I therefore consider, quite unreasonable.

"c) Michael Coff was the directing mind of [the company]. I think that Harry was Michael's father and the interests of this family company and Michael Coff are identical. As Michael Coff owned the land personally, he was the appropriate person to summons. However, because the two are effectively one and the same and the charges were identical -- even if I am wrong that [the company] did not need to incur costs -- any work done on behalf of [the company] would also be relevant to Michael Coff. As Michael Coff was guilty he should not be able to recover costs through the sidewind of apportioning them to the company. As the amount is so large I drew the inference that that was precisely what was occurring.

"d) I saw a letter written by the prosecution to [the company] about the position of the ownership of the land. As I recall it was not addressed to the defendant Michael Coff but was replied to by him. He replied by saying that 'our Company does not own any land on Sandford Farm'. Bearing in mind that he owned the land himself I thought this economical with the truth. It illustrates that the two parties were effectively the same.

"e) I refused the application on the basis that the large amount claimed was unreasonable and extravagant; that [the company] stood in no danger of conviction and that any costs incurred reasonably were minimal. I believe that any costs incurred by [the company] would have essentially been relevant to the case of the guilty defendant who should not receive reimbursement from the public unjustifiably."

The District Judge added:

"In finding these facts I drew inferences that I felt were appropriate. I paid particular attention to what I regarded as the extremely high amount of costs applied for in the simple and short case of [the company] when compared to the prosecution costs for the whole case."

5. Later in the case stated, the District Judge recorded his opinion as being that:

"i) [The company] sought an unreasonable amount of costs out of central funds in relation to a prosecution against them that was dismissed on 4th July 2002.

"ii)These costs were not legitimately incurred as any work done on behalf of [the company] would also be relevant to Michael Coff.

"iii)Michael Coff misled the Environment Agency with regard to who owned the land at Sandford Farm, Woodley.

"iv)Furthermore, having been convicted of the offences himself Michael Coff sought reimbursement through the family company.

"and accordingly I refused the application for costs made on behalf of [the company]."

The case stated then posed the single question for this court, namely:

"Whether the District Judge was wrong in law in refusing to make a costs order in favour of [the company]."

6. When this case was prepared by Mr Levinson on behalf of the company, he indicated an application for an order remitting the matter to the District Judge for the amendment of the case stated because, it was said, some of the findings in the case stated were not supported by evidence. In his skeleton argument, Mr Levinson referred to the findings:

"a) Mr Coff was the directing mind of the company...

"b) The interests of Mr Coff and [the company] are identical...

"c) Mr Coff and [the company] are effectively one and the same...

"d) If an order were made in favour of [the company], Mr Coff would be recovering costs through the sidewind of apportioning them to the company...

"e) Any costs incurred by [the company] would have been relevant to the case of Mr Coff ..."

7. It is a great good fortune that both Mr Levinson and Mr Atkinson, who represents the Environment Agency, each discharged those same roles before the District Judge. It has been possible for me to obtain agreed clarification as to what was and was not before the District Judge without the need to trouble him to amend the case stated. I am most grateful to both counsel in this regard. In one sense, the Environment Agency has no direct interest in the outcome of this appeal because it was not to be the paying party of any costs had the application before the District Judge on behalf of the company been successful. It was simply a central funds application. However, Mr Atkinson has properly been instructed to attend and has, if I may say so, been extremely helpful.

8. The legal framework within which this dispute about costs takes place begins with section 16 of the Prosecution of Offences Act 1985. Section 16(1)(c) provides:

"Where a magistrates' court dealing summarily with an offence dismisses the information; that court ... may make an order in favour of the accused for a payment to be made out of central funds in respect of its cost ('a defendant's costs order')."

Section 16(6) provides:

"A defendant's costs order shall, subject to the following provisions of this section, be for the payment out of central funds, to the person in whose favour the order is made, of such amount as the court considers reasonably sufficient to compensate him for any expenses properly incurred by him in the proceedings."

Section 16(7) sets out the circumstances in which the court can assess the amount of costs in the absence of agreement. It is in these terms:

"Where a court makes a defendant's costs order but it is of the opinion that there are circumstances which make it inappropriate that the person in whose favour the order is made should recover the full amount mentioned in subsection (6) above, the court shall -

"(a)assess what amount would, in its opinion, be just and reasonable; and

"(b)specify that amount in the order."

9. In addition to the provisions of the 1985 Act, the matter has been dealt with in Practice Directions, the relevant one of which is Practice Direction (Costs in Criminal Proceedings) reported in [1991] 93 Cr.App.R. 89. In dealing with defence costs from central funds in a Magistrates' Court, the Practice Direction provides in paragraph 2.1 that such an order "should normally be made unless there are positive reasons for not doing so." There is a cross-reference to the provisions which apply in the Crown Court, where examples of such positive reasons are stated to be:

"(a)the defendant's own conduct has brought suspicion on himself and has misled the prosecution into thinking that the case against him is stronger than it is.

"(b)there is ample evidence to support a conviction but the defendant is acquitted on a technicality which has no merit."

10. On behalf of the company, Mr Levinson puts this appeal on two bases. First, he submits that the District Judge erred when he refused to make a defendant's costs order because of the amount which was being claimed, that is "well in excess of £6000". It is agreed between Mr Levinson and Mr Atkinson that what actually occurred was that at the conclusion of the proceedings, Mr Levinson simply asked for a defendant's costs order in favour of the company in relation to the two informations against it which had been dismissed. At that stage, he did not put forward a figure, nor was he in a position on the day to submit a schedule with a detailed quantification of the company's costs. In the course of submissions, he was asked by the District Judge about the amount involved, and he did put forward, no doubt on instructions, the figure of £6,000 plus, albeit on the basis that this represented all the defence costs incurred by the same legal representatives on behalf of both the company and Mr Coff. It will be remembered that Mr Coff's case was being prepared for trial until a very late stage and that, in any event, his costs were being incurred months after the informations against the company had been dismissed.

11. The error which Mr Levinson seeks to identify is that the District Judge was wrong to refuse to make a defendant's costs order at all simply because he recoiled from the figure that was put forward, albeit with the explanation to which I have referred. In my judgment, that was an error. Not only, it is agreed, was the application not being made on the basis of £6,000 in respect of the company; the application was being made in terms for a defendant's costs order for costs to be assessed. On that basis, if it is granted the person subsequently assessing the costs would be able to take into account the fact, for such it is, that there was undoubtedly some duplication of costs between the company and Mr Coff, and that person would, no doubt, take into account in every detail the extent to which any bill of costs did properly reflect work done on behalf of the company. One does not need a crystal ball to predict that the company's costs, in the event, would be very much less than Mr Coff's, but all this is a matter for assessment and not for refusal on principle.

12. The second basis upon which Mr Levinson seeks to put the case goes to the findings of fact which I set out earlier in this judgment, and the submission that they were wholly unsupported by any evidence that was before the District Judge. I have the benefit not only of the unanimous recollection of both counsel, but also the opening note by reference to which Mr Atkinson presented the Environment Agency's case against Michael Coff. It contains scarcely any reference at all to the company.

13. I have been concerned to establish precisely what was and was not before the District Judge in relation to the findings with which Mr Levinson takes issue. Where a court makes a finding that a particular person was "the directing mind" of a company, that conveys a special meaning in law. I am satisfied, and it is agreed, that there was no material before the District Judge that would justify his conclusion that Mr Coff was "the directing mind" of the company. There was before him, and he referred to it, a letter dated 26th January 2001, in which Mr Coff wrote to the Environment Agency on company notepaper and informed the agency that the company "does not own any land on Sandford Farm". He wrote in his capacity as managing director of the company but that does not make him in law "the directing mind" of it. The notepaper itself discloses that he is one of three directors. The letter dated 26th January was, in fact, a reply to a letter from the Environment Agency dated 23rd January, addressed to a different Mr Coff as company secretary, although that different Mr Coff is also one of the directors of the company. There was no evidence before the District Judge about shareholdings in the company, or the division of responsibility between the directors, save that Michael Coff is the Managing Director. In any event, this exchange of correspondence took place about ten months before the informations were laid. Although the District Judge took a dim view of Michael Coff's "economy with the truth", it is not akin to the situation which sometimes arises where, following arrest, a defendant misleads the prosecuting authorities in the manner referred to in the Practice Direction.

14. Accordingly, it seems to me that there was no evidence upon which the "directing mind" finding could properly be based. The same applies to the finding that Michael Coff and the company "are effectively one and the same". There are, of course, circumstances in which a man and his company may be assimilated for purposes such as this. There was no evidence that this was such a case. Indeed, the naming of the other directors on the company notepaper was, if anything, evidence to the contrary. In my view, the same was also true of the finding that if a defendant's costs order were made in favour of the company, Michael Coff would be recovering costs through the sidewind of apportioning them to the company. The process of assessment would ensure that did not occur in quite that way.

15. In my judgment, this second ground of appeal must also succeed. By reference to the two grounds of appeal, individually and cumulatively, I conclude in answer to the question posed that the District Judge was wrong in refusing to make a defendant's costs order in favour of the company.

16. There has been some debate, initiated by me, as to whether that should lead not only to the quashing of the refusal to make the order, but to a remission to the District Judge so that he can reconsider the matter. I am persuaded by Mr Levinson's submissions, and encouraged by Mr Atkinson's candid acceptance that no injustice would be caused by this course, that it is not necessary to remit this matter to the District Judge.

17. I have come to the conclusion, on the basis of those submissions and with that encouragement, that in the particular circumstances of this case, it was simply wrong to refuse to make a defendant's costs order in favour of the company. In those circumstances, it would be wasteful of further costs if the matter had to be remitted to the District Judge. Accordingly, I shall not only quash that part of his decision, I shall substitute for it a defendant's costs order in favour of the company. Those costs will have to be assessed. I do not underestimate the difficulty of the task of the person who will have to assess them. I well understand the District Judge's instinct, which was almost certainly correct, that the costs of the company form but a small part of the overall defence costs that were incurred in this case. However, all that must be a matter for assessment. It will no doubt be of some assistance to the assessor if a copy of this judgment is made available to him.

18. Thank you both very much. Do you want the costs from central funds for this hearing?

19. MR LEVINSON: Yes, please, my Lord.

20. MR JUSTICE MAURICE KAY: Yes.