For smoking in what is basically your own property you shouldn't be fined in the first place. I mean you're only smoking, you're not taking a dump on a policemans lap.
Maybe things are different around here but no one has ever really stopped me from smoking in their house until recent years.
The problem is, that you then get the problem with employers smoking when most of their staff don't, thus forcing them to put up with it.
The law makes it an offence to smoke in a place of work (with I believe a couple of very specific common sense exceptions*), as smoking in such a situation very often affects those who don't smoke in an adverse manner.
A car/van/bus owned by a company falls under that law because the same thing happens when you've got several people who have to be in the same vehicle for work purposes.
I suspect they don't make a specific exemption under these cases is because it would be more complicated to admin, and probably open to abuse...(also as someone has suggested if the van is "owned" in the company name, it's not strictly his personal property, but belongs to the company in the eyes of the law etc).
Of course, he could have avoided it by not stopping for the council worker who in the eyes of the law has little or no power to request a driver to stop/pull over (no more than my great Aunt Edna of the Blue Rinse) in the first place...
My dad has been a smoker for as long as I can remember (although he has stopped a few times for a year or two at a time), and he's always had to "not smoke" in some people's houses if they don't smoke, or has out of courtesy gone outside to light up depending on who he's visiting.
And yes, for non smokers, smoking is often a fairly filthy, smelly habit that can be very offensive, especially when you get people who ignore the fact that others don't smoke and show little or no consideration for them (but some non smokers are just as bad in their anti smoking tirades/behaviour towards smokers).
*IIRC certain institutions are exempt because residents might smoke (I think psychiatric hospitals etc still have the exemption).