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Council awarded indemnity costs after High Court waste dispute win

A High Court judge has awarded Essex County Council indemnity costs after ruling earlier this year that the local authority had been entitled as of 13 June 2019 to terminate a 25-year contract with UBB for the processing of household waste.

Mr Justice Pepperall had found in Essex County Council v UBB Waste (Essex) Ltd [2020] EWHC 1581 (TCC) that the fundamental problem with the project involving the Tovi Eco Park waste disposal facility in Basildon was that UBB had made a number of serious design errors. He awarded Essex more than £10m in damages.

The judge has now issued a further ruling in Essex County Council v UBB Waste (Essex) Ltd (No. 3) [2020] EWHC 2387 (TCC) on the basis on which Essex could recover its legal costs from UBB, as the losing party, and the rate of interest to be awarded on the costs and damages owed to the authority.

UBB had also requested permission to appeal certain points of the judgment.

Mr Justice Pepperall noted that Essex had spent some £15m in pursuing the claim and defending itself against UBB’s counterclaims. “Such expenditure is enormous, but needs to be seen against the legal and factual complexity of this case and the fact that it concerned fundamental questions as to the future of a 25-year contract valued at some £800 million.”

The judge said that it had been a core plank of UBB’s case at trial that Essex had not acted in good faith, although there were allegations of sharp practice rather than necessarily dishonest conduct.

He concluded that UBB’s conduct in making widespread allegations of a lack of good faith against the authority and its officers without proper foundation was “out of the norm” and, of itself, justified an order for costs on the indemnity basis.

Mr Justice Pepperall also found that counterclaims made by UBB could properly be described as speculative, weak, opportunistic and thin. “I infer that its determined prosecution by UBB combined with its unfounded allegations of a lack of good faith were designed to bring commercial and political pressure to bear on the authority not to press its own claims to trial. Such conduct was ‘out of the norm’ and, of itself, justifies an order for costs on the indemnity basis.”

The judge added: “I should, however, make plain that I reject the suggestion that counsel who then appeared for UBB might have been party to any impropriety in comments made about costs in an earlier hearing before Waksman J which were subsequently reported by the press.”

The judge said that the "proper and fair" order for costs in the case was to award Essex its costs throughout on the indemnity basis.

Mr Justice Pepperall accepted counsel for UBB’s argument that the most appropriate way to give effect to UBB's partial success on its counterclaim was not to make an issue-based costs order, but instead to make some proportionate reduction in the costs recovered by the authority.

Taking all matters into account, he said that in his judgment the fair reduction in the authority's costs was 5%. He accordingly made the following orders:

  • UBB will pay 95% of the authority's costs incurred to 29 March 2019, such costs to be assessed on the indemnity basis.
  • Thereafter, Essex will recover its costs on the indemnity basis pursuant to r.36.17 without any proportionate deduction. “(The Part 36 offer sought to settle both the claim and counterclaim. Since the Authority achieved a judgment that was at least as advantageous as its offer, it should recover costs without deduction from the end of the relevant period.)”

Mr Justice Pepperall also refused UBB permission to appeal, meaning it will have to approach the Court of Appeal for permission.

Cllr Simon Walsh, Cabinet Member for Environment and Climate Change Action at Essex, said: “We are delighted that once again the judge has made orders favourable to Essex County Council in this case.

“The judge ordered that UBB should pay the highest possible level of the council’s recoverable costs and interest on the costs and damages it owes the authority.

“This is an excellent outcome for the council and the taxpayers of Essex and further justifies our decision to commence legal proceedings.”

Cllr Walsh added: “We would like to reassure residents that they will see no difference in how their bins are collected as a result of this latest judgment.”

The operator of the Tovi Eco Park facility stopped accepting deliveries of waste to the facility on 29 June 2020 – no further waste has been delivered to the facility since then.

Essex said its contract with UBB remained in place and the facility continued to process the remaining waste already within it.

At the end of July, Essex was informed that UBB had entered into administrative receivership. The council said it was engaging with the administrative receivers in relation to their plans for the facility and the recovery of the costs and damages owed to it.