Council tax payers could have to pay the cost of a failed prosecution against an animal rendering company accused of plaguing local residents with sickening smells.

The cost of the four-week trial at Carlisle Crown Court - at the end of which Fats & Proteins (UK) Ltd was cleared of breaching one of the terms of its operating conditions - is estimated to run into several hundred thousand pounds.

A judge will now have to decide who pays the costs of the case.

The bill could be met out of public funds, which means tax payers nationally would end up paying it.

Or it could be met by Lancaster City Council, which brought the prosecution through its environmental health department - in which case the cost would fall on Lancaster's council tax payers.

Fats & Proteins (UK) Ltd was taken to court after local people complained of "sickening, disgusting and nauseous" smells from the animal rendering factory it runs at Nightingale Hall Farm, in Quernmore Road, in Lancaster.

The council claimed the company broke one of the conditions of its operating licence, which stipulates that no offensive odours should be detectable outside the boundaries of its plant.

It said the company broke that condition, and thereby committed a criminal offence, by allowing offensive smells to escape from the plant on every day from Tuesday, May 8 to Saturday, May 12 in 2001 - at the height of the foot-and-mouth crisis.

But the company pleaded not guilty, saying that the smells were caused by government officials insisting the plant cut corners.

Edwin Metcalfe, managing director of Fats and Proteins (UK) Ltd in May 2001, said MAFF officials decided that the speedy destruction of possibly infected animal carcases - some of which had apparently been dug up after previously being buried - was more important than maintaining an odour-free environment.

He said the Intervention Board set up during the epidemic effectively took responsibility for his factory out of his hands.

And defence counsel Rex Tedd QC said: "The company was no longer master in its own house. Odour control was being sacrificed in the interests of controlling the virus."