James Waste Management LLP v Essex County Council
| Jurisdiction | England & Wales |
| Judge | Mr Justice Waksman |
| Judgment Date | 19 May 2023 |
| Neutral Citation | [2023] EWHC 1157 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Claim No: HT-2021-000226 |
[2023] EWHC 1157 (TCC)
Mr Justice Waksman
Claim No: HT-2021-000226
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT
KING'S BENCH DIVISION
Nigel Giffin KC and Stephen Kosmin (instructed by Nexa Law Limited, Solicitors) for the Claimant
Azeem Suterwalla (instructed by Essex Legal Services, Solicitors) for the Defendant
Hearing dates: 17–18 and 23–25 January 2023
REDACTED JUDGMENT – REDACTIONS HAVE BEEN MADE TO THIS PUBLIC VERSION OF THIS JUDGMENT TO TAKE ACCOUNT OF CONFIDENTIAL MATTERS
Note: text which has been redacted is replaced by “XX”
Table of Contents
| INTRODUCTION | 3 |
| THE EVIDENCE. | 3 |
| BACKGROUND | 3 |
| THE ISSUES FOR DETERMINATION | 8 |
| THE SUBSTANTIAL MODIFICATION ISSUE | 9 |
| The Law | 9 |
| The Facts in Detail | 14 |
| The Descriptive Document | 14 |
| The OJEU Notice | 15 |
| Invitation to Final Tender (“ITT”) | 15 |
| The IWHC Competition | 15 |
| The IWHC | 16 |
| Events of Summer 2019 | 17 |
| Events of 2020 | 17 |
| Events in 2021 | 18 |
| Material Difference in Character | 21 |
| Extended Scope. | 23 |
| A Different Tender | 23 |
| Change of Economic Balance | 29 |
| Introduction | 29 |
| The Law | 29 |
| Analysis | 30 |
| Conclusions on Substantial Modification. | 33 |
| THE SCHEDULE 21 ISSUE. | 33 |
| Schedule 21 itself | 33 |
| The Requirements of Reg 72 (1) (A). | 36 |
| Analysis | 37 |
| The Relevant Clauses | 37 |
| Compliant Procedure | 38 |
| Conclusion. | 39 |
| ISSUE 3 | 39 |
| Introduction | 39 |
| Relevant Facts. | 39 |
| The Law | 41 |
| The Scope of the Dispute on Issue 3 | 42 |
| Analysis | 43 |
| ISSUE 4 | 47 |
| ISSUE 5 — SUFFICIENTLY SERIOUS BREACH | 48 |
| ISSUE 6 — CAUSATION | 48 |
| ISSUE 7 — CIVIL PENALTIES | 49 |
| CONCLUSION | 52 |
INTRODUCTION
This is a claim brought by James Waste Management LLP (“JW”) against Essex County Council (“the Council”). In it, JW alleges that in 2021, the Council acted in breach of the Public Contracts Regulations 2015 (“the PCR”) in two respects, which caused loss to JW. First, the Council modified its Integrated Waste Handling Contract with Veolia ES (UK) Ltd (“Veolia”) made on or about 28 March 2013 (“the IWHC”). The modification is itself contained in or evidenced by an Authorised Change Request (“ACR”) dated 25 June 2021 (“the Modification”). Second, the Council awarded a contract to Enovert South Limited (“Enovert”) pursuant to a Service Order made on or about 25 March 2021 (“the Enovert Service Order”). The Enovert Service Order itself was made following a “mini-competition” between contractors who were party to an underlying Framework Waste Agreement made with the Council on or about 11 October 2017 (“the FWA”).
JW was also a party to the FWA. From June 2020 until 7 June 2021 it provided certain waste services to the Council. JW contends that in the absence of the Council's breaches of procurement law, it would have continued to provide those services until 31 October 2021. That is the date when the Modification in fact ended and after which, it is accepted, JW could have no valid claim against the Council.
The only substantive relief claimed is damages. Given that it earned over £10 million for the provision of its services in the year to 7 June 2021, the value of a further 5 months services is substantial.
This trial is not concerned with the quantum of any damages claimed. It is, however, concerned with liability, causation and whether any proven breaches are “sufficiently serious” to warrant an award of damages at all.
THE EVIDENCE
I have heard from three witnesses. For JW, I heard from Stephen Barthaud, its General Manager. For the Council, I heard from Jason Searles, its Head of Waste Strategy and Circular Economy, and Catherine Martin, it's Procurement Manager. I was to have heard also from James Egan, the Council's Waste Manager. However, he was unable to attend for medical reasons, and so his witness statement (“WS”) stands as a hearsay statement. Supplemental WSs from both Mr Searles and Ms Martin sought to address and confirm from their own knowledge, numerous points made in Mr Egan's WS after it became clear that he would not be attending Court.
As one would expect, there is a considerable amount of contemporaneous documentation which essentially tells the relevant stories.
BACKGROUND
The Council is a Waste Disposal Authority (“WDA”). It has statutory responsibilities for disposing of waste collected by and for the borough and district councils in its area, themselves designated as Waste Collection Authorities (“WCA”s). The WDA gives directions to the WCAs as to where they are to deliver their waste. There are various possible destinations, depending on the waste concerned. It could be delivered to a waste treatment facility of some kind or to a landfill site or to a third-party for disposal thereafter. Or it could be taken to a waste transfer station (“WTS”) at which it will be processed in some way and then taken to its ultimate disposal point.
The WCAs under the direction of the Council are 12 borough and district councils in Essex. There are three with whose waste this case is concerned. They are Basildon, Castle Point and Rochford District Councils, which are referred to collectively as BCPR.
Following a competitive dialogue procurement process, Veolia was awarded the IWHC whose duration was 8 years and 5 months with an option to extend for a further 7 years. In fact, it expired on 31 March 2022.
Under the IWHC, Veolia was responsible for
(1) managing the Council's Recycling Centres for Household Waste (“recycling centres”) i.e. the recycling centres for domestic waste used by the public;
(2) managing the Council's WTSs; as already noted, these were staging points where waste would be delivered and then bulked for efficient onward transport; and
(3) the haulage of waste from the recycling centres, the WTSs and some district waste depots, to various treatment and disposal points, including landfill sites.
At the time of the IWHC, the Council owned or intended to build 5 particular WTSs. It also holds the leasehold or freehold of 21 recycling centres.
At this time, it was also anticipated that in the near future, the ultimate disposal point for all of the Council's residual waste would be a mechanical biological treatment facility (“MBT”) located in Basildon. Once onstream, this would replace the various landfill sites then being used by the Council which were themselves filling up and therefore causing a capacity problem.
The MBT was intended to alleviate these problems. First, it would produce RDF (refuse derived fuel) from municipal solid waste (MSW) delivered to it. That process would not dispose of the entirety of the waste delivered, but it would reduce the mass, and the output would go to landfill or used to generate electricity.
The construction and operation of the MBT was the subject of a 25 year PFI contract made between the Council and UBB Waste (Essex) Ltd (“UBB”) in May 2012. Under that agreement (“the UBB Agreement”), the Council was obliged to provide all residual waste requested by the MBT operator.
Reflecting the contemplated operation of the MBT, it was specifically referred to in the IWHC in terms of Veolia's haulage responsibilities in transporting waste to and from the MBT. But the latter was not an exclusive destination or starting point for Veolia's transportation of waste which included taking it to any landfill site or other location directed by the Council. The IWHC also contemplated that the WCAs would transport their waste to particular WTSs within the 5 new or existing WTSs although that allocation was not fixed. However, BCPR would not transport waste to a WTS. One reason was their close proximity to the MBT so they could, if required, transfer their waste directly there.
Once constructed, the MBT would then require a significant commissioning and testing period during which the Council would deliver (through Veolia) waste to it and collect waste from it.
However, the MBT never got past the commissioning stage. It became the subject of a claim brought by the Council against UBB. In a judgment dated 18 June 2020, Pepperall J upheld that claim (see [2020] EWHC 1581 (TCC)). He declared that the Council had been entitled to terminate the UBB Agreement as at 13 June 2019 because the MBT could not pass the relevant tests. Nor could it be appropriately modified. Despite that ruling, it appears that the UBB Agreement (or parts of it) was not in fact terminated, such that in the future, there was a theoretical possibility that UBB could call for waste to be transported to the MBT once again. However, that was not a likely possibility as at June 2020. In fact, on 29 June, UBB told Mr Egan that the MBT would stop accepting waste that day and that UBB itself had gone into administration.
At this point, I need to pause the chronology and deal with the making of the FWA between the Council and various suppliers (“Nominated Suppliers”). This was itself the product of a procurement process. It gave the Council the option to enter into specific agreements with Nominated Suppliers which were contained in issued “Service Orders” which covered the transfer, haulage and disposal of waste. The FWA was intended to complement the IWHC and help the Council manage any capacity issues. Nominated Suppliers were eligible to provide services under one or more of 5 different “Lots”. There is an issue about the relative scope of these Lots but for present purposes, I simply note that the description of the Lots is to be found in Schedule 1 to the FWA. I set that out in context,...
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