R Cheshire East Borough Council Cheshire West and Chester Borough Council (Claimant) The Secretary of State for Environment Food and Rural Affairs (Defendant) HM Treasury—Interested Party (Interested Party)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Langstaff |
| Judgment Date | 26 July 2011 |
| Neutral Citation | [2011] EWHC 1975 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/461/2011 |
| Date | 26 July 2011 |
[2011] EWHC 1975 (Admin)
Mr Justice Langstaff
Case No: CO/461/2011
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Manchester District Registry
Leeds Combined Court Centre 1 Oxford Row Leeds
Mr Nigel Giffin Q.C. and Mr Tom Cross (instructed by Trowers and Hamlins) for the Claimant's
Mr James Maurici and Sasha Blackmore (instructed by DEFRA Legal) for the Defendant
Hearing dates: 16–17 th June 2011
Waste collected by municipal authorities, such as household refuse, contains much which is biodegradable. If left to degrade naturally, as where the waste is placed in a landfill site, methane may be produced. It is thought that this has serious adverse environmental effects, not least in contributing to global warming. The policy of the European Union has thus been to seek to minimise the amount of biodegradable municipal waste ("BMW") which is placed in landfill. Council Directive 1999/31/EC required member states to set up a national strategy to reduce the amount of BMW going to landfill; and (by Article 5(2) taken with Article 18(1)) that the amount of BMW going into landfill was to be reduced to 50% of the total amount by weight of BMW produced in 1995, and to 35% by 2020.
The Waste and Emissions Trading Act 2003 (summarising its provisions) by Section 1 obliges the Secretary of State to specify the maximum amount by weight of BMW to be allowed to go from England to landfill in a way consistent with the obligations under the Directive. Section 17(1)(a) requires the Secretary of State to have a strategy for reducing the amount of biodegradable waste going to landfill in England.
The strategy adopted to achieve this reduction has involved both carrot and stick. The stick is to ensure a rise in the cost of landfill, by escalating charges and taxes. The carrot has been to offer Government support for PFI schemes to be run by Local Authorities, to enable those authorities more easily to finance those projects which by a variety of means seek to avoid BMW going to landfill. Thus in May 2006 the Department for Environment Food and Rural Affairs ("DEFRA") issued revised criteria relating to the giving of PFI credits to Local Authorities. Materially, they stated at paragraphs 2 and 3:—
"PFI credits are awarded to authorities primarily to deliver increased diversion of biodegradable municipal waste from landfill. Proposals should demonstrate how the schemes:—
-contribute to or complement longer–term national targets for recycling and composting as well as diversion of biodegradable and other municipal waste from landfill, indicating the amount of biodegradable and other municipal waste expected to be diverted from landfill over the whole life of the project;
-support or complement the authorities' plans for recycling set out in their Municipal Waste Management Strategies.
3. Proposals should show how schemes will provide additional contribution to national landfill diversion during the contract period and up to 2020 as required under the Landfill Directive, where appropriate."
The context is not, therefore, support for one local authority project taken in isolation, but as part of the national obligation to fulfil the targets in the 2003 Act and 1999 Directive.
Also of note is the reference at paragraph 9 of the same criteria to the need for "residual disposal solutions" such as refuse derived fuel to "demonstrate the destination of any residual output."
The 2006 criteria are additional to those general criteria which must be met by all PFI projects. The Office of the Deputy Prime Minister in its introduction to the "PFI Project Support Guide (2006 to 2007)" recorded that notification that grant would be paid, and the conditions and level of capital investment which would be supported, would be set out by issuing a "PFI credit" in the form of a letter from the sponsoring department. Administrative arrangements for central government support, annexed to that paper, envisage a multi-stage process beginning with the submission of an outline business case, followed by a procurement exercise which progressively eliminates those who bid to perform the contract until reaching a preferred bidder, then proceeding to a final business case, and written confirmation that financial close has been reached, after which a PFI credit letter is to be issued.
In July 2005 Cheshire County Council submitted its outline business case ("OBC") for PFI support for a waste diversion project. The project proposed two mechanical biological treatment ("MBT") plants, of 300,000 tonnes capacity per year ("300ktpa") together with an Energy from Waste facility ("EfW") to cope with 120ktpa.
In December 2005, DEFRA Ministers approved the OBC and an interdepartmental review group ("PRG") endorsed the DEFRA recommendation that the project should receive central government support. Approval was expressly subject to conditions set out in a letter dated 20 th June 2006. DEFRA said it "expected" the PFI credits to be £40 million. Support was said to be conditional upon the project continuing to meet all the published criteria in the PFI Project Support Guide and a detailed timetable. The approval said (amongst other matters):—
"Once you are clear about the value of eligible expenditure under the contract you may request a promissory note confirming the level of support you can expect to receive from the Department.
We will formally issue PFI credits on the basis of an approved final business case (FBC) and a letter confirming the date the contract was signed. The FBC should be sent to the Department once you are confident that its contents will not markedly change further. It should be a full business case, at the same time referring back to the OBC and noting where it has changed."
By early 2008, four bidders had been identified in the course of procurement in accordance with the Public Contracts Regulations of 2006. They were invited to submit detailed solutions. At that time, however, local government was about to be re-organised. The relevant responsibilities of Cheshire County Council were to be adopted by Cheshire East Borough Council, and Cheshire West and Chester Borough Council, together the claimants. In answer to a question whether this might affect the availability of PFI finance, DEFRA wrote to Mr Collin of the Claimants of the 3 rd June 2008 to say, amongst other matters:—
"I can confirm that the credits will not be withdrawn solely as the result of the reorganisation and, subject to the following points, can either be assigned to one of the two New Authorities or split between them in a ratio to be agreed between the New Authorities. The PFI credit award will be subject to the usual condition that a satisfactory Final Business Case must be submitted to, and approved by, DEFRA before the final confirmation of the allocation."
On 13 th January 2009 DEFRA agreed to waive the initial requirement to reach financial close by 31 st March 2009: but this was subject to two conditions. The first was the achievement of key milestones including entry into an Inter Authority Agreement recording that the procurement of the Project would continue as a joint project between the New Authorities, and secondly a clear and deliverable timetable.
In December 2009, the claimants approached DEFRA to request additional PFI credits. They recognised that "in the current climate public finances are under even greater pressure". In its response (29 th December 2009) DEFRA summarised the position that PFI credit allocations were made on a provisional basis on approval of the OBC and then confirmed at financial close, but that it was prepared to consider applications for further credits. On 19 th February 2010 DEFRA wrote to Mr Collin to say that it was not currently possible to confirm a formal provisional allocation:—
"However I can confirm that EWT…" [An acronym for the Executive Board of the Waste Infrastructure Delivery Programme ("WIDP")] "…is broadly sympathetic to the case you have outlined and is prepared to hold £30m PFI credits in reserve for the Cheshire project until 30 September 2010."
It was expressly noted that this did not commit DEFRA to making an additional PFI credit allocation, which could only be done after the submission and evaluation of an appropriate Business Case and ultimately ministerial and PRG approval. It was also subject to various other conditions. In a part of the letter under the heading "Process" it was said:—
"An award of this scale will be subject to both DEFRA Ministerial and PRG approval. The project is also subject to a Second Stage Review by PRG, as well as the new three stage FBC approval process…." (emphasis added)
The defendant (correctly) points out that this reference is to the whole project, and is not limited merely to the application for additional PFI credit.
In May 2010 the Coalition Government took office, replacing the previous administration. A Comprehensive Spending Review was planned for October, the details of which were to be announced on the 20 th October. When it became apparent that both the two bidders who had been invited to submit final tenders had been refused planning permission for their proposals, an email of June 2010 (to Mr Collin) reminded the claimants that:—
"…the strongest prospect of maintaining additional credits is to present a...
To continue reading
Request your trial
-
[1] Hon. Shawn K. Richards [2] Hon. Timothy Harris [3] Hon. Eugene A. Hamilton [4] Hon. Mark Brantley Applicants v [1] The Constituency Boundaries Commission [2] His Excellency the Governor General [3] The Prime Minister of St. Christopher and Nevis [4] Attorney General of St Christopher and Nevis Respondents [ECSC]
...would be no duty to consult." (See R v (Cheshire East Borough Council) v Secretary of State for Environment, Food and Rural Affairs [2011] EWHC 1975 (Admin) ([68– 82] esp. [72]). [Emphasis supplied] 230 The question that will arise is whether the second and the fourth questions are only re......
-
The King (on the Application of HL) v Secretary of State for Health and Social Care
...on a public body to consult ( R (Cheshire East Borough Council) v. Secretary of State for Environment, Food and Rural Affairs [2011] EWHC 1975 (Admin) at paragraphs [68–82], especially at [72]). (3) The common law will be slow to require a public body to engage in consultation where there ......
-
Miriam Binder, Jean Eveleigh, Victoria Hon and Douglas Paulley v Secretary of State for Work and Pensions
...on a public body to consult ( R (Cheshire East Borough Council) v. Secretary of State for Environment, Food and Rural Affairs [2011] EWHC 1975 (Admin) at paragraphs [68–82], especially at [72]). 3. The Common Law will be slow to require a public body to engage in consultation where there h......
-
Fire Brigades Union v HM Treasury
...on a public body to consult ( R (Cheshire East Borough Council) v. Secretary of State for Environment, Food and Rural Affairs [2011] EWHC 1975 (Admin) at paragraphs [68–82], especially at [72]). 3. The Common Law will be slow to require a public body to engage in consultation where there h......