England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		ATC/14/0162 Royal Courts of Justice Strand, London, WC2A 2LL
		21 July 2014

Sir David Eady:

1. These committal applications were drawn out over a series of hearings from May to July. The factual background centres upon the operation of a waste transfer station by the Second Defendant in Cornwall Drive, St Paul's Cray, Orpington, Kent, pursuant to permit number EPR/BB3836RS granted under the Environmental Permitting (England and Wales) Regulations 2010. The Environment Agency has been troubled for some time about the management of the site by the Second Defendant, and by the various individuals responsible from time to time for its management, and various steps were taken in an attempt to ameliorate the situation. A suspension notice was issued in April 2013, whereby it was sought to reduce the accumulated pile of waste on the site by imposing conditions. These included limits upon new waste to be admitted to the site and minimum amounts which had to be removed week by week. Although it has varied in size from time to time, the stockpile has been estimated at between 12,000 and 15,000 tonnes during the spring and summer of this year. From the photographs it appears to dwarf the nearby houses and is quite out of proportion to its residential environment. The mountain of waste is clearly an eyesore and has proved also over considerable periods of time to be a fire hazard. The local fire services are regular visitors and have invested enormous amounts of time and resources in putting out fires and monitoring the state of the pile, which is inclined to spontaneous combustion. It also represents a health hazard, since it naturally attracts rats and causes a foul odour which causes discomfort to those living nearby and discourages them from opening their windows or going into their own gardens. It must be a constant source of anxiety for the local residents.
2. The primary public interest must surely be in minimising the stockpile as quickly and effectively as possible, or even eliminating it altogether. The Environment Agency has a supervisory responsibility for ensuring that it is managed in accordance with the permit. But its attempts to discharge those responsibilities may perhaps be thought not to have been as focused or effective as most people in the vicinity would wish. It was decided early on that criminal proceedings for offences of non-compliance would have been ineffective and so the strategy was adopted of obtaining various court orders, in August and November 2013, and thereafter, when they too proved wholly ineffective, to pursue contempt proceedings, launched on 7 March 2014, which have no doubt taken up a good deal of valuable time and public money. So far, however, little progress has been made towards the primary objective, which was to have the site cleared of combustible material altogether by 1 May of this year. That deadline has now passed and the company has clearly failed to comply with it – although this does not form any part of these contempt proceedings.
3. As to the site itself, there has been more or less a complete change of personnel over the past six months or so – the only constant being the rather fragile corporate entity Waste4Fuel Limited. This was one of the original Defendants in the proceedings when the relevant undertakings were given and orders made. It is now the Second Respondent to the committal application. It struggles to pay its bills and to make enough money to bring about effective compliance with the orders made and, if a fine were to be imposed, it would almost certainly cease to function altogether. As I observed on 30 June, when the company applied for the November order to be varied, finances are so tight that the sole director Shelley Hurst (formerly the Third Defendant) does not even take a salary.
4. The individual Respondents, who I must suppose are the principal targets in these contempt applications, are long gone from the site itself and have nothing now to do with the day to day management of the company. The First Respondent is Mr Bryan Hughes, who left at the beginning of February, apparently having been eased out of the site by Mr Jonathan Beckson, the Fourth Respondent, who came in as a "new broom" at that point along with Ms Hurst. He is and was employed by a different company, Recoverable Energy Solutions Ltd ("RES"), whose services were engaged by Waste4Fuel as an independent contractor. When this application was launched, he was joined as the Fourth Respondent, but he left the site a day or two after the first hearing on 7 May. He has been represented by Mr Peter Martin, who told me that his client had made a very generous offer to Waste4Fuel and the Environment Agency with proposals as to how the site could effectively now be brought under control. That is for them to consider, however, and is not directly relevant to the issues arising on this committal application.
5. The one person remaining at the site is Ms Shelley Hurst, who was brought in for "back room" duties by Mr Beckson and became the sole director on 1 February of this year. Despite her lack of experience in the waste management industry, she has stayed there and has provided the court with evidence as to the company's circumstances and how she proposes to manage the company in such a way that the objectives of the Environment Agency could, eventually, be achieved, including that of removing combustibles altogether – albeit on a much longer timescale. She was originally made the Third Respondent to these proceedings but, after the first day of the hearing in May, the application against her was quite rightly dropped.
6. There is a good deal of evidence from the Environment Agency staff as to the background leading up to the issue of proceedings last year. The main witnesses were Mr Peter Clark and Mr Roger Griffin.
7. Since the Environment Agency chose to go down the committal route, it became necessary to apply strictly the law and practice which governs this quasi-criminal jurisdiction. Each breach of the relevant court order (or undertaking) needs to be identified with clarity and proved to the criminal standard. On an application for committal, the court is confined to addressing the breaches alleged in the application notice itself and, correspondingly, to evidence of acts or omissions up to the date of the application (7 March). What happens later is irrelevant (save to the issue of what, if any, penalty should be imposed if contempt is proved). In particular, as I have already made clear, I am not concerned at the moment with an allegation of contempt based on the wholesale failure of the Second Defendant to remove combustible waste by 1 May of this year.
8. The contempt(s) are alleged to have been committed by Mr Hughes and the corporate Defendant. They were parties directly bound by the undertakings given to the court in August last year and by the final order made the following November. Mr Beckson, on the other hand, has been brought into these proceedings pursuant to the enforcement mechanism, now provided for in CPR 81.4, whereby punishment in respect of a company's breach can be visited, in certain specified circumstances, upon a director or other officer of that corporate entity. It is important to note that sometimes a director or officer can, like anyone else, be guilty of criminal contempt in the sense of aiding or abetting a company to breach an order, or setting out deliberately to frustrate such an order, but that is not relied upon here. It is sought to enforce the order against the company through Mr Beckson purely on the basis that he is said to have been an "officer" of the Second Defendant.
9. This mechanism was introduced long ago in the hope of rendering orders against corporate entities more effective by exerting pressure on the persons responsible for mismanagement: see e.g. Dar Al Arkan Real Estate Development Co v Majid Al Sayed Bader Hashim Al Refai [2014] EWCA Civ 715 at [33]. The rules, therefore, provide safeguards for those individuals whose liberty and/or assets may be at stake in respect of a corporate breach. This presents a further set of hurdles for an applicant to overcome. A potentially important question to be considered in relation to Mr Beckson was whether the Environment Agency has managed to surmount those hurdles in this case.
10. Logically, however, the starting point is to determine whether the alleged breaches have been proved against the company since, if not, the case will fall away in relation to Mr Beckson as well, since any liability on his part would be wholly dependent on the primary contempt of the company.
11. I turn first to the circumstances in which the relevant orders came to be made.
12. The history is set out in the evidence of Mr Paul Clark, an environment officer employed by the Agency, to whom I have already referred. An environment permit was granted to the company on 11 November 2011 against a background of unsatisfactory stewardship of the site by previous operators. There was then, at the time it took over, a volume of abandoned waste which needed to be cleared. Some progress was made by February 2012, but thereafter compliance was regarded as poor and, in due course, a statutory suspension notice was served on 22 April 2013. This required all combustible material to be removed by 20 June 2013 and, meanwhile, there was to be no further delivery of waste to the site. Unfortunately, this notice was not complied with and the Agency decided to apply for a court order in accordance with Regulation 42 of the 2010 Regulations in an attempt to secure compliance with the 22 April notice. Accordingly, a Part 8 claim was issued on 21 August last year. The terms of Regulation 42 are as follows:

"If the regulator considers that proceedings against a person for an offence under regulation 38(3) would afford an ineffectual remedy against the person, the regulator may take proceedings in the High Court for the purpose of securing compliance with the enforcement notice, suspension notice, prohibition notice, landfill closure notice or mining waste facility closure notice."

As I noted earlier, the decision was taken in the circumstances of this particular case that no useful purpose would be served by pursuing criminal proceedings under Regulation 38.

13. It is possible now to say, with the benefit of hindsight, that the strategy adopted foundered at two stages; first, in not identifying with sufficient clarity the obligations to be imposed upon the relevant Respondents and, secondly, in not being able to establish a breach or breaches to the criminal standard.
14. When the proceedings were launched, an application was made for an interim injunction but, on 29 August 2013, the First and Second Defendants offered undertakings which were accepted by Sweeney J. These included the provision of firebreaks. Originally, when the present committal application came before the court in May of this year, reliance was placed upon alleged breaches of those undertakings. This contention was, however, withdrawn by letter dated 19 May. Since the undertakings had been expressed to remain effective until further order, they had ceased to operate on the making of a final order by Holroyde J on 11 November last year by way of consent. This order made no provision for firebreaks, since by that date the Agency was not sure that they were required or would be effective and was awaiting advice from the Fire Service. It should have been clear, therefore, that any attempt to rely thereafter on a breach of the undertakings, as to firebreaks or anything else, would be misconceived.
15. The focus of the committal application has more recently been narrowed to allegations of breach in respect of certain terms of the final order. I need to set the terms out in full, so that the criticisms made of it can be properly understood:

"THE ORDER

UPON the Application made by the Applicant

AND BY CONSENT IT IS ORDERED that the Defendants must until further Order of the Court

THE INJUNCTION

1. Comply with the terms of the Suspension Notice dated 22 April 2013 served by the Claimant, in respect of the regulated facility at Cornwall Drive, St Paul's Cray, Orpington. Kent, BR5 3JB, shown on the Plan attached to this Order marked 'Plan A', namely:

(i) From 25^th November 2013 no more than 150 tonnes of waste (not including plastic wastes) to be accepted into the facility per week; thereafter from 1^st January 2014 no more than 75 tonnes of waste (not including plastic wastes) to be accepted into the facility per week;

(ii) Notwithstanding paragraph 1(i) above, no more than 50 tonnes of plastic waste may be accepted into the facility per week, such plastic waste to be stored in a separate area, clearly identifiable and segregated from other wastes, such plastic wastes to be contained within the walls of a breeze-block bay situated within the cross-hatched area shown on 'Plan A' attached, such bay walls not to exceed 3m in height;

(iii) Remove all combustible waste from Site by 1^st May 2014

(iv) In addition to the Claimant's power to inspect, the Defendants to provide photographs of the facility to the Claimants on a monthly basis from point marked 'A' in the directions of the three arrows, shown on 'Plan A' attached, first photographs to be provided by 4pm on 25^th November 2013;

(v) In addition to the Claimant's power to inspect, the First Defendant to arrange joint site inspections for the Claimant's officers, to take place each month, when the First Defendant will be present on site, first such joint site inspection to take place by 4pm on 29^th November 2013;

(vi) Maintain a 24 hour site presence and continue to dampen down the stockpile of waste as required until all combustible waste has been removed from Site;

(vii) Provide a report weekly to the Claimant detailing the amount of waste that has been accepted and removed from the facilities, until all combustible waste has been removed from Site;

(viii) All waste accepted onto Site is to be stored in a separate area, clearly identifiable and segregated from other wastes, specifically created for the storage of wastes accepted onto Site for treatment in accordance with the terms of this Order … "

In effect, by the conclusion of the hearing, the allegations against the First and Second Defendants were confined to an alleged failure to comply with paragraph 1(viii) of the order.

16. It is alleged against the First Defendant, who was bound personally by the terms of the final order, that between 10 December 2013 and 1 February 2014 he accepted waste on to the site which is not stored in the separate area, clearly identified and segregated from other wastes. So too, it is alleged that the Second Defendant was liable for a similar breach – albeit over a different period; namely between 10 December 2013 and the date of the issue of the application notice on 7 March 2014. The distinction between the two Defendants is, obviously, that the First Defendant ceased to be a director on 1 February 2014, when Ms Shelley Hurst stepped into those shoes. Since the First Defendant had no control over matters from that date onwards, no allegation is made against him relating to the period thereafter.
17. There are problems arising from the lack of clarity in the relevant obligation supposedly imposed upon the Defendants, which impact upon their potential liability for contempt of court. It is fundamental that, if it is to be enforceable by process of contempt, then an order of the court must be clear and unambiguous: see e.g. Redwing Ltd v Redwing Forest Products Ltd (1947) 1 77 LT 387, 390; Re Jones [2013] EWHC 2579 (Fam). Furthermore, where a mandatory injunction is granted, it should normally specify a time for compliance. (Unlike the former Sch 1, Ord 45.6, the new provisions contained in CPR 81, which came into effect in October 2012, do not expressly contemplate the possibility that such an order would ever be made without specifying a time for compliance.) Where it is unclear precisely what a respondent is required to do, or by when, the courts have traditionally been reluctant to allow enforcement by process of contempt. Here, the relevant terms of the order are criticised for both reasons. Those criticisms seem to me to be well founded.
18. Whereas an order prohibiting certain conduct may understandably be of indefinite duration or, in the case of an interim order, granted "until further order", such wording will not be appropriate in the case of a requirement to carry out a specific task (as opposed, for example, to maintaining a state of affairs). Here, the material order is to the effect that "all waste is to be stored in a separate area, clearly identifiable and segregated from other wastes …". It thus appears to require the setting aside of a separate area for storage "… of wastes accepted onto site for treatment in accordance with the terms of this order". There is scope for real confusion here. Indeed, the breach alleged in the application notice is not expressed by reference to not setting aside a separate area (as one might expect in relation to a mandatory order) – but rather by reference to the acceptance of waste on to the site which was not thereafter stored in a separate area. Obviously, at the time of any such acceptance (not specified in this case), it would not be possible to identify a breach since it would apparently depend (according to the wording of the notice) upon later events (i.e. where it was or was not stored following acceptance).
19. It is also quite apparent that no attempt has been made to allege, or prove, when, or on how many occasions, such "acceptance" took place. A notice of application in committal proceedings is, in certain important respects, analogous to an indictment in criminal proceedings. Judged by that standard, of course, the allegation of breach is woefully lacking in particularity. By the same token, when it came to discharging the burden of proof, it was sought to rely on formulaic assertions contained in the witness statement of Mr Paul Clark which recorded supposed breaches on certain of his visits by regurgitating the words contained in paragraph 1(viii) of the order. He simply adopts the same formula on each occasion: "There was no longer a separate area, clearly identifiable and segregated from other wastes for the storage of wastes accepted onto Site for treatment in accordance with the terms of paragraph 1(viii) of the Final Order, having previously been in-filled with waste".
20. It is unclear, for example, when such a separate area was to be set aside; how it was to be delineated or what its dimensions should be. What counts as "storage"? Does it last only until some processing task takes place, or does it continue thereafter? If there are two or more deliveries on one day, is it necessary for the first delivery of waste to be cleared from the separate storage site before the second consignment is accepted?
21. These are not theoretical problems by any means. Mr Hughes, in his evidence, made it quite clear that he thought he had complied with the separate storage requirement. He indicated on a plan three separate areas where a reception area had been located. The changes were necessitated by occurrences at the site such as, for example, when waste had to be moved from the top of the pile as a matter of urgency and was placed in what was supposed to be the designated acceptance area. Yet the position was simply unclear. Was the order complied with on the first occasion when an area was set aside, or did the order require a separate area to be designated on a continuing basis?
22. There is also confusion as to what "waste" meant in the context of paragraph 1(viii), since it is necessary to compare it with paragraph 1(ii), which distinguishes between plastic waste and non-plastic waste. On the face of it, the word "waste" in paragraph 1(viii) would be wide enough to embrace both, but it is by no means clear whether plastic waste is supposed to have been sorted from other waste which was to be stored in the designated and separate area.
23. Quite apart from the requirement in a mandatory order that a time for compliance should be specified, there is the confusing introductory wording in the final order which adopts the formula "until further Order of the Court". It is almost as though this had been cut and pasted from an interim order, since it makes no sense in a final injunction. On the other hand, Mr Banwell, on behalf of the Claimant, places reliance upon it, suggesting that it actually fulfils the requirement for a mandatory order that a time should be specified. He argues that "until further order" is a sufficiently clear temporal requirement. I would guess that the words were included in the final order purely by way of oversight, but nevertheless the scope for confusion is obviously clear – not least because Mr Banwell himself places positive reliance upon that formula.
24. Another general principle to be borne in mind in the drafting of a court order, if it is proposed that it should be enforced by process of contempt, is that it should set out its requirements with clarity and be self-sufficient, in the sense that the person bound by the order should not be required to go to another document in order to understand it: see e.g. Harris v Harris; Att.-Gen. v Harris [2001] 2 FLR 895, at [288]-[295]; Re Jones [2013] EWHC 2579 (Fam), at [18]-[24]. Yet here, because of the background of Regulation 42, the final order is introduced by reference to the earlier "Suspension Notice dated 22 April 2013". The question was, therefore, debated between counsel as to whether the terms of the suspension notice were to be taken as incorporated in the order itself. I would be inclined to think not, since the specific requirements of the order are set out in the succeeding sub-paragraphs introduced by the word "namely" (which would appear to suggest that the reader need go no further than those numbered requirements). Nevertheless, there is undoubtedly scope for confusion or ambiguity.
25. Furthermore, the words "in accordance with the terms of this Order" in paragraph 1(viii) might suggest that the storage area, as separately identified, should be used to "store" no more than the weekly tonnage permitted. It may be, therefore, that the order contemplates a number of separate areas, each identified and segregated from the others, so that no one such area should carry more than the permitted tonnage. But it simply remains unclear.
26. I am afraid that there is too much uncertainty, as to when and how the requirement in paragraph 1(viii) was to be complied with, for it to be enforced by process of contempt. Moreover, the alleged breach set out in the application notice is too imprecise to be capable of proof beyond reasonable doubt. The nature of the breach alleged is simply too vague. As with an indictment, if it is to be alleged that "acceptance" constituted a breach (as opposed, for example, to not setting aside an identified area), then the number of such acceptances and the dates should be set out with particularity.
27. It follows that the applications in respect of the First and Second Defendants must fail.
28. There remains an allegation against Mr Jonathan Beckson, who went into the witness box and gave an account of his understanding of the orders made against the company and what he had done, and what he proposed might be done, to achieve compliance so far as possible. The accusation against him is that he was continually in breach of the order from 10 February 2014 to the date of the application notice (7 March). This is conceptually unsustainable, however, since unlike the First Defendant Mr Beckson was not himself subject directly to the order of 11 November at all. He was only on the scene for a relatively brief period between 1 February and 10 May 2014. If he were to be liable to any penalty for contempt, it could only be on the basis of the statutory regime which allows directors or other officers, in certain specified circumstances, to be punished in respect of a contempt by the relevant corporate entity: see now CPR 81.4. Since I have rejected the application against the company in this case, it follows that Mr Beckson cannot be liable either. Nevertheless, I shall consider the arguments raised against him.
29. Mr Banwell seeks to bring Mr Beckson into the proceedings on the basis that he was an "officer" of the Second Defendant. This was because during the relevant period he exercised a general management role for what happened, or did not happen, on site. Various authorities were cited in support of this proposition: see e.g. In Re a Company [1980] Ch 138, 143; R v Boal [1992] QB 591, 597. But it will all depend in the end upon the facts of the particular case: see the observations of Blair J in Munib Masri v Consolidated Contractors International [2010] EWHC 2458 (Comm) at [24].
30. As it happens, Mr Beckson was never an employee of the Second Defendant. As he explained to the Environment Agency during an interview on or about 7 March 2014, he was employed by a different company ("RES"), which itself had entered into a contract of that date with the Second Defendant in order to clear the site. Ironically, perhaps, this represented an attempt on the part of the Second Defendant to fulfil some of its obligations under the November order. At all events, Mr Beckson was clearly there in his capacity as the representative of RES, to carry out those services for the Second Defendant. Though he had a management role for that purpose, it did not in my view render him an "officer" of the Second Defendant for the purposes of CPR 81.4. He did not have "real authority" within that company; nor did he hold a "superior position". (These were phrases used in the cases cited as possible tests for whether someone could be characterised as an "officer" within a company.) He was there, as Mr Martin submitted, as an employee of an independent contractor.
31. In any event, even if Mr Beckson had been an officer, there was a notable lack of compliance with the requirements of CPR 81.8 and 81.9. The order in question was never served upon him. Had he known of the possibility that he might be made personally liable for contempt, by way of imprisonment and/or sequestration of assets, he would never have taken on the job in the first place. He was certainly never served with a notice which drew those risks to his attention, as the relevant rules require. It is true that the court has the power to dispense, in certain circumstances, with the requirement for such a notice, but I have no doubt that it would be wholly inappropriate to exercise it retrospectively in this case. I entirely accept Mr Beckson's evidence that he had never had any understanding of the law whereby he could personally be made liable as an "officer" of the Second Defendant. He would have needed a very sophisticated understanding of the law of contempt (and in my view an inaccurate one) for him to have grasped any such thing. He would certainly at that stage have had no familiarity with CPR 81.4 or CPR 81.8.
32. In these circumstances, therefore, the application must fail with regard to Mr Beckson also.
33. I indicated the outcome of the applications at the conclusion of the hearing and I have now set out my reasons in this judgment. Obviously, it should not be thought that this outcome in any way vindicates the conduct of any of the Defendants so far as the management of the site is concerned. That is quite a separate matter. I have been concerned only with the formulation of the final order of last November and the allegations of breach contained in the application notice of 7 March 2014. Those issues fell within a very narrow compass indeed. Of course, it is right that the Second Defendant has failed to clear the site of combustible waste by 1 May 2014, as required in paragraph 1(iii), but that was not the subject of these contempt proceedings; nor could it have been, since reliance was placed only on the circumstances leading up to 7 March of this year.