Council-owned waste business secures judgment for £460k over refuse removal contract

A waste company wholly-owned by Neath Port Talbot Borough Council has been awarded damages exceeding £460,000 against a firm it contracted to remove waste from its refuse sites.

In Neath Port Talbot (Recycling) Ltd v James Heys & Sons Ltd [2021] EWHC 3157 (Comm) HHJ Keyser found that James Heys & Sons had breached contracts with Neath Port Talbot (Recycling) (NPTR) concerning the removal of refuse derived fuel (RDF) - a fuel made from unrecyclable wastes - green waste and recyclable materials.

NPTR contracted Heys in 2017 for an RDF disposal contract, and another, known as the LOTS contract for the recyclables and green waste.

Heys was contractually bound to remove 30,000 tonnes of RDF but shifted only 6,139.92 tonnes.

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NPTR said this was a breach of contract and claimed damages for the costs of disposing of the remaining 23,862.84 tonnes using other firms.

Heys denied it breached the contract. It said NPTR never provided it with the RDF and instead chose to use other firms for this. It counter claimed for damages from NPTR’s alleged failure to provide the RDF.

NPTR said it ended the LOTS contract prematurely in October 2018 because of breaches by Heys including failure to collect some kinds of recyclables at agreed prices. It claimed damages from Heys for the additional expenditure it said resulted from these failings.

Heys counter claimed damages for the profit it said it lost through early contract termination.

It said the RDF contract contained an ‘implied term’ that NPTR would give Heys notice of when the RDF was available for collection but NPTR instead chose to use other contractors.

Keyser J said: “In my judgment, there was no implied term of the RDF contract that the claimant would provide adequate warning of its requirement for collection.

“The alleged term was entirely unnecessary. The nature and source of the material to be collected - RDF produced from domestic waste that the local authority collected from the kerbside according to its weekly rota - were such that there would obviously be a regular and broadly consistent need for collections each week.”

He added: “All that was required for the contract to work was for the claimant to maintain steady production of RDF and for the parties to cooperate like sensible commercial entities.”

The judge said Heys knew RDF was available but failed to collect it for its own commercial reasons and rejected its claim that NPTR chose to use other more costly contractors instead, saying this happened “only because [Heys] was unable to remove the quantities required of it.

HHJ Keyser said it was “not plausible” that NPTR would award Heys a contract on the basis of the lowest price but then choose to use more costly firms instead.

“I find, without hesitation, that [NPTR’s] account is the correct one. [Heys’s] explanation makes no practical sense.”

NPTR had also been entitled to terminate the LOTS contract because of Heys’s failures to dispose of plastics as required..

“The fundamental operational purpose of the contract was the removal of waste materials that had been received into the site,” Keyser J said.

“The plastics were a very significant component of those materials. The breach was persistent and deliberate. [Heys] had decided to stop the removal of plastics while it was uneconomic for it to remove them and instead to store them.

“This led not only to a build-up of baled plastics but, consequently, to a serious and unsanitary build-up of unbaled plastics on the site.”

The judge concluded that NPTR was entitled to £313,282.85 for damages for breach of the RDF contract, £103,398.05 for breach of the LOTS contract and £51,386.21 in net debt.

Heys was though won damages of £4,237.80 for a dispute over scrap iron values in the contract.

Mark Smulian