29 April 2021 by James Langley

Max Recycle granted appeal in Durham council dispute

The Durham Company, trading as Max Recycle, has been granted permission to appeal a court order striking off a claim it brought against Durham county council for allegedly breaching state aid rules. 

Max Recycle arguethat 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.

In a court order dated 27 April, Lord Justice Nugee granted Max Recycle permission to appeal a ruling last year dismissing its case

Durham council says it carries out commercial waste collections legally. 

In November 2020 Judge Gregory Keyser dismissed Max Recycle’s claim, saying it was “merely arguable” and had “no realistic prospect of success” (see letsrecycle.com story). 

However, in a court order dated 27 April, Lord Justice Nugee granted Max Recycle permission to appeal Judge Keyser’s decision. 

Max Recycle said it was “obviously absolutely delighted” by Lord Justice Nugee’s decision. In a statement issued yesterday (28 April), the company said: “Our claim is neither vindictive or spurious in nature, nor given the volume of evidence could it legitimately ever be described as a ‘fishing trip.” 

It added: “If the facts were explained to 100 ordinary people in the street, 99 of them would agree with us and the other one would work for the council.” 

Oliver Sherratt, Durham county council’s head of environment, told letsrecycle.com: “We can confirm we have been made aware of the Court of Appeal’s decision but as proceedings are ongoing it would not be appropriate for us to comment at this time.” 

‘State aid’ 

The long-running dispute has a chequered past, dating back to 2011 when HM Revenue and Customs (HMRC) introduced VAT exemptions for councils. Max Recycle said the move was anti-competitive and gave councils a commercial advantage over private waste businesses offering the same type of services. 

Max Recycle reported the council to the European Commission for breaching state aid rules in 2018

In June 2018, Max Recycle was denied permission to appeal a 2016 ruling stating VAT exemptions provided to local authorities for waste collections were not anti-competitive (see letsrecycle.com story). 

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).

Max Recycle then brought separate proceedings against the council through British courts in January 2020, saying the Commision was taking “an interminable amount of time” to issue feedback. 

After Judge Keyser dismissed Max Recycle’s claim in November 2020, the company put forward three grounds of appeal.

“I take the view that the grounds of appeal are sufficiently arguable to have real prospects of success”

Lord Justice Nugee

In his most recent court order, Lord Justice Nugee said: “Although HHJ Keyser QC’s judgement is on the face of it well-reasoned and cogent, I take the view that the grounds of appeal are sufficiently arguable to have real prospects of success for the reasons set out in the appellant’s skeleton argument.” 

‘Absolutely delighted’ 

Max Recycle’s statement reads: “Further to the Court of Appeal’s Order granting permission to appeal the original decision to strike out our state aid claim against Durham county council, we are obviously absolutely delighted with the outcome, especially as permission was granted on all three grounds put forward. 

“From the outset of the original application by Durham county council to strike out our claim, and indeed throughout correspondence, it has been highly apparent to us that Durham county council and their advisors have tactically sought to prevent any actual evidence from being heard, as it would be at a full hearing in the normal course of proceedings. 

“We are  absolutely delighted with the outcome, especially as permission was granted on all three grounds put forward”

Max Recycle

“Perhaps the evidential absurdity of the situation is very well illustrated by the diametrically opposed arguments that Durham county council makes to the EU Commission; that of bone fide commercial activity, albeit one that uses state assets to deliver a profit twice that of the UK sector average, and the very different argument that they choose to put before the UK court, which is that commercial waste collection is merely a statutory function, irrespective of state aid and competition rules.  

“That being the case, we felt it was extremely difficult to accept the decision to strike out our claim in the absence of the court having any chance to hear the volume of evidence.” 

Max Recycle also used its statement to appeal to the “big five/six waste firms” to throw their weight behind “a problem that we all know to exist”. 

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