The Durham Company Ltd (trading as Max Recycle) v Durham County Council

JurisdictionEngland & Wales
Judgment Date25 November 2020
Neutral Citation[2020] EWHC 3200 (Ch)
Date25 November 2020
Docket NumberCase No: CP-2020-000004
CourtChancery Division

[2020] EWHC 3200 (Ch)




Royal Courts of Justice

Rolls Building, Fetter Lane

London, EC4A 1NL




Case No: CP-2020-000004

The Durham Company Limited (trading as Max Recycle)
Durham County Council

Michael Bowsher QC and Ligia Osepciu (instructed by Tilly Bailey & Irvine LLP) for the Claimant

Aidan Robertson QC (instructed by DWF Law LLP) for the Defendant

Hearing date: 18 November 2020

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.


JUDGE Keyser QC:


By an application notice filed on 20 May 2020 the defendant, Durham County Council (“the Council”), applies for an order that the claim brought against it by the claimant, The Durham Company Limited (“TDC”), be struck out pursuant to CPR r. 3.4(2)(a) because there are no reasonable grounds for bringing the claim, or in the alternative for an order for summary judgment on the claim pursuant to CPR r. 24.2(a)(i) because TDC has no real prospect of succeeding on the claim.


The claim, which was commenced by the issue of a claim form on 22 January 2020, seeks remedies, including a permanent injunction to regulate the Council's future conduct, for what is alleged to be a long-term and continuing breach by the Council of the European Union's State aid rules. The application was heard 43 days before those rules cease to be applicable to Great Britain on 31 December 2020 and at a time when it is unclear what regime will replace them. The House of Commons Library's Briefing Paper No. 9025, dated 19 October 2020, UK subsidy policy: first steps, states in its Summary section:

“As an EU Member State, the UK was part of the EU state aid regime that limits trade-distorting government support to businesses. Having left the EU, the government is setting up for an independent UK state aid or ‘subsidy control’ regime, based on WTO rules. The EU state aid framework will cease to apply after the end of transition on 31 December 2020, but the discussion is ongoing about what will replace it.

This briefing describes how the UK government's approach has shifted from remaining in step with EU state aid rules under Theresa May's Government towards regulatory sovereignty and a focus on WTO rules under Boris Johnson's leadership.

The UK government's position in the negotiations with the EU has been that developing domestic subsidy controls is separate from a free trade agreement with the EU. UK's international commitments, based on the WTO rules, should only catch subsidies that can distort trade. It's up to the government to tailor the domestic rules, to choose which policy priorities to support and to decide how much funding will be available. But the government has recognised that its domestic choices are influenced by the ongoing negotiations on the UK future relationship with the EU.

As confirmed in the Government statement of 9 September 2020, the UK will follow the WTO subsidy rules. On 29 September the government has laid a statutory instrument which disapplies EU state aid law that would otherwise be retained in the UK by the EU Withdrawal Act 2018. The details of the new regime will be decided after a consultation, which the government has planned for the end of 2020 or 2021.

It is not yet known whether the government will legislate to go further with domestic regulation than required under its international commitments on subsidies.”


In the course of argument, Mr Michael Bowsher QC happily observed that the picture might be clearer by the time that the appeal from this judgment is heard. Nonetheless, I am grateful to him and Ms Ligia Osepciu, who appeared for TDC, and to Mr Aidan Robertson QC, who appeared for the Council, for their very helpful and remarkably succinct oral and written submissions.

Summary of the facts and of the claim


TDC carries on the business of the provision of commercial waste services in Northern England and Scotland, and in particular within County Durham. TDC's evidence is that its costs and charges for such services vary, depending on the nature of the commercial waste, the frequency of collection, the number and volume of the waste receptacles to be collected, and the weight of the waste collected and disposed of; and that it calculates its charges on the basis of its costs and using estimated profit margins of up to 5%.


The Council is the waste collection authority for County Durham for the purposes of the Environmental Protection Act 1990 (“ EPA 1990”). Section 45 of the EPA 1990 provides, so far as material, as follows:

“(1) It shall be the duty of each waste collection authority—

(a) to arrange for the collection of household waste in its area except waste—

(i) which is situated at a place which in the opinion of the authority is so isolated or inaccessible that the cost of collecting it would be unreasonably high, and

(ii) as to which the authority is satisfied that adequate arrangements for its disposal have been or can reasonably be expected to be made by a person who controls the waste;

(b) if requested by the occupier of premises in its area to collect any commercial waste from the premises, to arrange for the collection of the waste; …

(3) No charge shall be made for the collection of household waste except in cases prescribed in regulations made by the Secretary of State; and in any of those cases—

(a) the duty to arrange for the collection of the waste shall not arise until a person who controls the waste requests the authority to collect it; and

(b) the authority may recover a reasonable charge for the collection of the waste from the person who made the request.

(4) A person at whose request waste other than household waste is collected under this section shall be liable to pay a reasonable charge for the collection and disposal of the waste to the authority which arranged for its collection; and it shall be the duty of that authority to recover the charge unless in the case of a charge in respect of commercial waste the authority considers it inappropriate to do so.”


At all times relevant to this case, the Council has discharged its duty in respect of household waste by providing household waste collection services directly rather than by outsourcing them to a third party. It has also provided commercial waste collection services directly to premises in County Durham. The Council has not charged for its household waste collection services, except in the limited cases where a charge is permitted. It has charged for its commercial waste collection services. The Council has a single fleet of 86 waste collection vehicles and a relevant workforce of 275 employees, which it says is the number of vehicles and staff required to provide its household waste collection services. For the purpose of providing its commercial waste collection services, the Council uses vehicles from the fleet, as well as assets and personnel that are also used for the provision of household waste collection services. The Council has disposed of household and commercial waste together, using the same long-term disposal contracts. The Council has not kept separate accounts of its costs and revenues for providing household waste collection services and commercial waste collection services.


TDC asserts that its charges for commercial waste collection services of a given nature, frequency and volume were and remain higher than the Council's charges for commercial waste collection services of a similar nature, frequency and volume. It contends that over the course of the last six years it has lost significant business from customers who have begun to purchase commercial waste collection services from the Council instead of from it. The solicitor with conduct of the case on behalf of TDC puts the matter as follows in her witness statement dated 10 November 2020 in answer to the Council's application:

“The Claimant has informed me that the prices offered by the Defendant are simply unsustainable for a private company given the costs and overheads involved in waste collection and disposal. The Claimant is not able to compete with the Defendant on price, despite having attempted to do so on countless occasions. The Claimant believes that the reason that the Defendant is able to offer such low prices and therefore win business is due to the fact that it utilises the same infrastructure and resources for collection of commercial waste as it does for household waste; infrastructure and resources which are at least in part, if not entirely, funded by the tax payer. In addition to the infrastructure, the Defendant also benefits from a further tax advantage which is attractive to certain categories of customers, which is the VAT exemption granted to the provision of its services by HMRC.”


The final sentence in the passage just cited is a reference to the decision of Warren J, sitting as a judge of the Upper Tribunal (Tax and Chancery Chamber), in proceedings brought by TDC against HM Revenue and Customs and HM Treasury, whereby the Company sought judicial review of the VAT treatment being afforded to local authorities carrying out commercial waste collection and disposal services. TDC contended that such services provided by local authorities were properly subject to VAT. On 19 July 2016 Warren J handed down judgment on a preliminary issue, [2016] UKUT 417 (TCC), holding that the...

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    ...a claim against the Council in 2020 alleging a ‘ Francovich’ breach of EU state aid law. The claim failed in the Chancery Division ( [2020] EWHC 3200 (Ch)) and in the Court of Appeal ( [2022] EWCA Civ 66), in consequence of which Max Recycle was ordered to pay the Council's substantial co......
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