Max Recycle (trading name for The Durham Company Ltd), argues that commercial waste collections undertaken by the council breach state aid rules as they are carried out using the same staff and vehicles as the council’s household waste collections, which are paid for by the taxpayer.
The local authority says it carried out commercial waste collections legally.
We have operated our commercial waste service in accordance with our statutory duties
– Durham Council
Appeal
In the November 2020 ruling, Judge Keyser backed the council and threw out the case, determining that it had “no prospect of success”.
Max Recycle then brought the case to the Court of Appeal, where three judges had to decide whether Judge Keyser had erred in his ruling.
After a hearing earlier this month (see letsrecycle.com story), a decision was handed down by the judges on Tuesday (1 February), who ruled 2-1 in favour of the council.
The appeal has therefore been dismissed.
Oliver Sherratt, head of environment at Durham County Council, said: “We are pleased with the judgment in this case. We have operated our commercial waste service in accordance with our statutory duties and obligations and will continue to do so.”
A spokesperson for Max Recycle said: “We are very disappointed that whilst in our understanding there appeared to be a consensus understanding that there has been an apparent breach of State Aid rules by DCC, that this case seems to have been technically dismissed by way of a 2 to 1 split verdict”.
Max Recycle’s full statement can be seen here (opens as PDF).
There appeared to be a consensus understanding that there has been an apparent breach of State Aid rules
– Max Recycle
Appeal
In August 2018, the company took its case to the European Commission, reporting Durham county council for allegedly breaching state aid rules (see letsrecycle.com story).
However, according to Max Recycle, it brought the case before British courts as “seemingly, having made a complaint to the European Commission, it was taking an interminable amount of time to receive any feedback from them”.
The latest appeal relates to the council’s claim to have this thrown out.
Case
Details of the case were outlined during the hearing earlier this month.
The appeal was heard before Lord Justice Coulson, Lord Justice Arnold and Lord Justice Edis.
Max Recycle’s appeal had three grounds. The first was that the judge made two errors of law when considering if the council’s alleged breach was serious enough to award Francovich damages, which are “damages against an EU member state for failure to implement or breach EU law”.
The second related to whether the council should have been able to rely upon an argument in which it didn’t give the required 14 days notice.
The third said the judge was wrong to hold that it had no real prospect of obtaining a declaration that the council had acted in breach of the State aid rules.
Ruling
Lord Justice Arnold ruled that the appeal should be dismissed, concluding that “the present case is a long way from the kind of egregious, wilful, deliberate or at least manifest breach of EU law that is required for an award of Francovich damages”.
While Lord Justice Edis said grounds 2 and 3 should be dismissed, overall said he would allow the appeal.
He said: “With regret, I have come to the conclusion that I do not agree that the judge was right to enter judgment in favour of the council…. The Council did not deal with the seriousness of an assumed breach in its defence or evidence”.
Just Edis added: “There is an (assumed) act of unlawfulness sustained over a number of years causing significant financial loss to TDC. That triggers the application of the Negassi test, which requires the court to be fully informed about all relevant factors”.
Lord Justice Coulson ruled in favour of the council, saying: “Although I accept that it is a strong thing to strike out a claimant’s case at an early stage, it is important to take a step back and look at this claim in the round. As my Lord has noted, there has never been a successful Francovich claim in respect of State aid.
“Was this claim really going to be the first ever, when to win [Max Recycle] would have had to… persuade a court that it was a reasonable and sensible solution for the council’s bin lorries to ignore the commercial waste left out on the street, and leave that waste for a second fleet of bin lorries, this time operated by [Max Recycle], to pick up instead? The answer must be a resounding ‘No’.”
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