Neal Soil Suppliers Ltd v Environment Agency

LORD JUSTICE KEENE: This appeal by way of case stated raises some short, but not unimportant, points about waste removal notices served under section 59 of the Environmental Protection Act 1990 ("the 1990 Act"). That provision applies when controlled waste has been deposited in or on land without authorisation under a waste management licence, thereby contravening section 33(1) of the 1990 Act.

By section 33(6) a person contravening section 33(1) commits a criminal offence. But quite apart from that, the relevant authority may serve a notice on the occupier of the land under section 59(1) requiring the waste to be removed and/or other steps to be taken, and failure to comply within the specified period without reasonable excuse will itself give rise to an offence: see section 59(5). The authority itself may carry out the requirements of the notice and recover the expenses reasonably incurred in so doing. That is a structure not unfamiliar to those involved in the field of town and country planning law.

That is a brief thumbnail sketch of the most important statutory provisions relevant to this appeal. It is, however, necessary to set out the detailed terms of section 59(1) of the 1990 Act, which I now do:

That same section also makes provision for an appeal to a Magistrates' Court against the requirements of such a notice. In certain circumstances, the Magistrates' Court can quash the notice, but such circumstances do not exist in the present case; otherwise, according to section 59(3), it "shall either modify the requirements or dismiss the appeal". There is then a further right of appeal under section 73 to the Crown Court. It is the Cardiff Crown Court which has stated a case for this court to determine.

The facts can be put relatively shortly. The controlled waste concerned here was soil contaminated with Japanese Knotweed. Japanese Knotweed was imported to Britain and has been described as the most problematic invasive weed in the country, and it is a particular problem in South Wales. The Environment Agency has produced a Code of Practice advising on how to control Japanese Knotweed, including by means of the use of herbicides.

The appellant contracted to remove soil containing Japanese Knotweed from a development site in Cardiff, knowing that though the soil had been treated with a herbicide, it was still contaminated with Japanese Knotweed. At the time, it appears the appellant was negotiating with the Environment Agency for a licence to treat such soil on its land, but no such licence had been granted, and indeed ultimately, in 2006, the appellant dropped its application for such a licence.

The soil was deposited in 2004 on the appellant's land. The appellant's intention was ultimately to recycle and reuse the soil as part of its overall soil business. This deposit was in breach of section 33 of the 1990 Act, and indeed under that section, the appellant and the developer, McAlpines, were eventually prosecuted. Both pleaded guilty and the appellant was fined in June 2005 the sum of £4,500. A director of the appellant company was also fined.

Before then, a section 59 notice, dated 1 July 2004, had been served on the appellant. This notice required the removal of the waste within 28 days. The notice did not specify to where the waste should be removed. According to the case stated, there is no waste managed facility licensed to deal with soil contaminated with Japanese Knotweed, and so it would have had to have been removed to an appropriate landfill site. It was not removed, and the appellant appealed against removal to the Magistrates' Court.

What the appellant proposed was that the requirements of the section 59 notice should be modified so as to require treatment on site by way of rotovation and the application of glyphosate, followed by testing for eradication. If in due course it was found that the knotweed had not been eradicated, then the soil would at that stage be removed to landfill.

The Magistrates' Court dismissed the appeal. The Crown Court in stating a case noted that there is a Code of Practice for treating such soil when found upon a site, there being three options available. Two of those involved leaving it upon the original site and treating it there with appropriate pesticides. In such circumstances, the soil would not have been discarded and would not constitute waste, and would not therefore come within the waste management regime. But the third option was removal from the original site to a licensed facility, which in fact did not exist, or to landfill. The Crown Court observed at paragraph 18 of the case stated:

However, the Crown Court was not persuaded to modify the section 59 notice to substitute such treatment for the requirement of removal. Its reasoning for that decision is contained in paragraphs 26 and 27 of the case, which read as follows:

The question then posed for the opinion of this court is:

On behalf of the appellant, Mr Hockman QC submits that the Crown Court's approach was legally flawed. He draws attention to the fact that the court clearly saw his client's proposals as "sensible": see paragraph 27 of the case to which I have just referred. But the Environment Agency had submitted that the absence of a licence to treat waste was a good reason for refusing to modify the section 59 notice so as to allow treatment. It is argued on behalf of the appellant that the Crown Court seem to have accepted that proposition. Mr Hockman referred to paragraph 26 of the case set out earlier, and also to a passage in the judgment of the court, of which we have a transcript at page 49 of the bundle.

Mr Hockman contends that the court was relying upon the fact that to modify the notice so as to allow treatment would be condoning an offence. Consequently, the amendment of the notice to allow for the proposed treatment seems to have been rejected on the basis that there was no licence available for the treatment of the waste. This, it is contended, amounts to a legal flaw because section 59 clearly contemplates acts under such a notice, which would in the absence of a section 59 notice otherwise be an offence. Even if there were other factors influencing the court and its decision, one cannot say, submits Mr Hockman, that the decision would have been the same if the court had adopted the correct approach on this particular issue.

Insofar as "policy" is referred to by the Crown Court, it is said that the policy referred to is that of having a waste licensing system, and that, it is argued, does not take one any further. Consequently, the Crown Court was wrong to work on the basis that it could not amend the notice because to do so would be to allow the commission of a criminal offence.

For the respondent, Mr Harris accepts that a court dealing with a section 59 appeal cannot rule out the option of treatment merely because it would be an offence under section 33. It is accepted that no offence would be committed in complying with a section 59 notice. But he submits that the Crown Court did not see itself as barred from modifying the notice on that basis. It was simply saying that it was not appropriate to let this appellant treat the waste on his land.

This appellant, it is emphasised, brought waste on to this site under a commercial transaction. If he had succeeded in modifying the notice, his breach of the licensing regime would have been meant that he was treating waste on his own unlicensed site, and indeed at a profit. The court, says Mr Harris, was really only saying that, if they allowed him to do that, he would undermine the licensing regime. He would gain commercial advantage by so doing and the court should not let him get away with such a course of action. The wrong message would be sent out to other people, namely that the system could be circumvented by this method with commercial gain at the end of it. That, it is said, was an entirely legitimate approach.

On the other hand, Mr Harris does accept that the court, in imposing a fine under section 33 when a prosecution is brought, can lawfully reflect the financial benefit obtained by the defendant through the unlawful deposit of waste. His ill-gotten gains, in other words, can be removed from him on such a prosecution.

It seems to me that the Crown Court's reasoning displays two considerations at work leading to its decision, those two not always being clearly separated in the case stated or indeed in the judgment. The first strand is that, if the notice were modified to require the appellant to treat the contaminated soil on its land, the appellant would be committing an offence under section 33(1)(b) of the 1990 Act. Such treatment "must be carried out under licence" and the appellant did not have such a licence, therefore the court could not allow such a modification to the section 59 notice.

The second element in the reasoning seems to be that there were and are good policy reasons for not allowing such a course of action because it would be contrary to the purpose of the 1990 Act and the European Directive; that is, the Directive usually known as the Waste Framework Directive 75/442/EC.

It does seem to me, on a fair reading of both the case stated and the judgment, that the Crown Court probably was saying something along these lines: "We cannot modify the notice so as to permit a criminal offence to be carried out". I say that because there are repeated references to the treatment on site being such an offence under section 33. It follows, as Mr Harris acknowledges, that insofar as the first of those strands in the Crown Court's thinking is concerned, there is an obvious legal flaw.

It is right that section 33 makes the treatment of controlled waste without a licence a criminal offence. Section 33(1), insofar as relevant for present purposes, provides that a person shall not:

I have set out the terms of section 59(1) earlier, but what is obvious is that that latter provision not only empowers the service of a notice to require both removal of the waste and specified steps to eliminate or reduce the consequences of the deposit; a notice can also require either of those two things; that is to say, it can require merely removal of the waste, or it can require merely the taking of "specified steps" under section 59(1)(b). In other words, a section 59 notice may perfectly lawfully allow the waste to remain deposited on the land in question, albeit that the deposit breached section 33, and the notice may simply require some steps short of removal to be taken.

It is self-evident that this last course of action must normally involve allowing the occupier to "keep" the waste on his land, even though that in itself would otherwise be an offence under section 31(1)(b). Likewise, it must be the case that the notice under section 59 can require the occupier to "treat" the waste in some way. "Treat", it should be noted, has a wide meaning under the 1990 Act: see section 29(6). Consequently, section 33(1) must be read subject to the provisions of section 59(1). Action taken in compliance with the requirements of the section 59(1) notice will not amount to a criminal offence under section 33(1). That is entirely accepted, as I have indicated earlier, by the respondent. Insofar as the judgment of the Crown Court was based on the contrary view, as it seems to me that it was, it was erroneous.

That by itself is enough to warrant allowing this appeal and remitting the matter to the Crown Court for reconsideration. We have had the benefit not only of the case stated, but, as I have said earlier, also of a transcript of the detailed reasoned judgment of the Crown Court. It is to my mind apparent that that court was powerfully influenced by this first strand of thinking, and one cannot therefore say that its decision would have been the same had it approached that first matter in the correct fashion. However, since we have heard argument on the other aspect of the court's reasoning, I will make some observations on that aspect because they may be of assistance to the court which ultimately has to deal with this matter.

The second strand, as I have called it, in that reasoning refers to policy reasons and the purpose of the Directive. Part of the purpose of the Directive can be found in the recitals to it in the third and seventh paragraphs in particular, which indicate, perhaps unsurprisingly, that it was seeking to protect human health and to protect the environment. Insofar as that purpose points to any appropriate test for a court to apply when faced with an appeal against a section 59 notice, it does not seem to me to point strongly in favour of removal or against treatment.

I accept that part of the policy approach also is to set up a waste management licensing system. It may be that the Crown Court was influenced by the desire to prevent evasion of the waste licensing system, and by the feeling that the appellant should not be allowed to get away with a less expensive solution than removal to landfill. It may be that the court believed that to allow on site treatment would encourage others to adopt a similar approach, although it does not make that explicit in its reasoning. But, as the respondent puts it, the appellant should not be allowed to benefit commercially by evading the licensing system.

These are essentially considerations of punishment of the offender and deterrence of others. If these considerations were what influenced the Crown Court, then, in my judgment, they were inappropriate. The section 59 procedures are not there to achieve punishment of an offender under the Act or to deter others. Section 33 exists to achieve that. The section 33 penalties are very extensive, particularly if the prosecution is brought on indictment when there is provision for an unlimited fine. Section 59 therefore does not need to be used to deter or to punish. Its purpose, to my mind, is remedial. It is there to deal with a situation which has arisen, and to deal with it in the most appropriate way for the protection of the environment.

The object of section 59 is not to make good any deficiencies in the penalties imposed in the course of criminal proceedings. Those penalties can prevent a person obtaining any commercial advantage from breaching the licensing system, and they are adequate to do so. Indeed, for my part, I would encourage Magistrates' Courts before whom prosecutions are brought, or for that matter Crown Courts before which any prosecution comes on indictment, to reflect in any financial penalty imposed the amount of commercial advantage which has been obtained by a person through the unlawful deposit of controlled waste. But having said that, the task of the court on a section 59 appeal is to decide the most appropriate remedial steps in the context of protecting human health and protecting the environment. That is the approach which it should adopt. After all, in any such appeal an offence would have been committed, and if there was to be the sort of approach adopted by the Crown Court here, then in almost every case one could find the court preferring, on no other good or pragmatic grounds, the course of removal rather than treatment. No such presumption seems to me to be implied in the provisions of section 59.

For my part, therefore, I would allow this appeal. I would answer the question posed in the case stated "no", and would remit the matter to the Crown Court to reconsider the appellant's appeal. I do not regard this as a case where this court is in a position to substitute its own pragmatic judgment for that which the Crown Court is required to exercise.

MR JUSTICE GIBBS: I agree that the appeal should be allowed for the reasons given by my Lord, Keene LJ, and I also agree with his additional observations on the issue of the effect of policy considerations.

LORD JUSTICE KEENE: Yes, Mr Hockman?

MR HOCKMAN: My Lord, thank you. May I ask therefore that the appeal be allowed? My Lord, if I could invite your Lordships to page 59 of the bundle, which contains what I think is a summary of the Crown Court's decision.

LORD JUSTICE KEENE: Yes, let me have a look.

MR HOCKMAN: My Lord, it seems to me that, in addition to what your Lordship has already kindly said, allowing the appeal and remitting the matter to the Crown Court for re-determination, I think perhaps I ought to ask your Lordship formally to quash the order of the Crown Court. I see the learned associate nodding.

LORD JUSTICE KEENE: That will cover the costs part of it as well.

MR HOCKMAN: It will cover the costs part, and of course the effect of that would be that all matters, including the revised, if any, form of the notice and the costs below generally would be for reconsideration by the Crown Court, which I am sure is in harmony with what your Lordships had in mind. I think, therefore, that so far as that is concerned, all your Lordships need say is that the Crown Court's order be quashed and the matter be remitted. As I understand it, and I am sure my learned friend will correct me if he disagrees with this, the effect of the continuing appellate process is that the obligation under the notice is suspended and therefore --

LORD JUSTICE KEENE: That is my understanding. It is provided for in the legislation.

MR HOCKMAN: Indeed so, and therefore I do not need to ask your Lordship for, as it were, continuing relief. I think that would leave only the costs of this appeal to the Administrative Court. My Lord, I would ask for an order for those costs against the respondent. In my respectful submission, costs should follow the event in the normal way. My Lord, my learned friend will indicate in a moment his position on that as a matter of principle. Can I indicate to your Lordship that there has been, as it were, an exchange of summary assessment documents, but I think as a result of discussion between us, and provided that your Lordships were happy with this, subject to the principle of an order being made, we would probably be happier if your Lordships were to be prepared to say that there should be a detailed assessment. Although the hearing itself has been quite short, the background is a little more complicated, and I think there would be a consensus in favour of that. Can I come back to that point if your Lordship is in any way troubled by it having heard my learned friend. But at all events, I do certainly ask for an order please in favour of the appellant in the light of the outcome of the appeal.

LORD JUSTICE KEENE: Thank you. Yes, Mr Harris?

MR HARRIS: My Lord, I simply have to ask the court to exercise its discretion here. Here the Environment Agency is fulfilling effectively its enforcement role. It is seeking to defend effectively the position of the Crown Court where the Crown Court does not have an independent role to come before this court and protect its position. There are circumstances for example, as the court no doubt well knows, where the justices come before the court separately represented, and the order for costs on those occasions is dealt with somewhat differently. In my submission, here the Environment Agency is fulfilling a role analogous -- not directly but similar -- to, for example, a Chief Constable who is exercising a regulatory role in respect of something like firearms, and under those circumstances, I respectfully ask the court to say that the normal rule that costs follow the event should not apply here.

So far as assessment is concerned, may I simply concur with what my learned friend says, if the court is minded to make an order. (pause)

LORD JUSTICE KEENE: We need not trouble you, Mr Hockman. We think it is an appropriate case where the respondent should pay the appellant's costs. The respondent did not have to appear today and defend the position of the Crown Court, and we think that the appellant should therefore have his costs of this appeal. We will make an order for detailed assessment as the parties wish. Thank you.