Case Nos: CA-2024-002136 - [2025] EWCA Civ 921

Discussion

“Third Party Income” is defined to encompass “income [of FCCB, FCCR and FCCWS] … associated with the Project including without limitation that derived from Third Party Waste, Electricity Output and Recyclates Output”.

In a judgment from which, as I have said, there was no appeal, O’Farrell J held that the definition provides a “broad description”, is “capable of extending to income from ancillary activities of collecting waste at a site remote from the Facilities and transporting it to the Facilities for the purpose of treatment and disposal” and “extends to all income arising from waste that is ultimately received at the Facilities, regardless of the point in time at which the sums from which the income is derived become payable”: see paragraphs 84 and 85. “If the waste is in fact delivered to the Facilities for treatment or disposal”, O’Farrell J said in paragraph 92, “then the income derived from such waste, whenever generated, is Third Party Income”.

While the Luton contract did not form part of the proceedings before O’Farrell J, on the face of it her words are applicable in relation to it. The unitary charge which Luton BC paid was in part attributable to waste which was ultimately delivered to Greatmoor, and it matters not that it was FCCR rather than FCCB which was entitled to the unitary charge or that FCCR collected the waste at a site remote from the Facilities.

Further, FCCB cannot, in my view, escape any liability by arguing that the unitary charge is indivisible. The contention implies that none of the unitary charge would be Third Party Income even if the services for which it was being paid overwhelmingly related to waste which went to Greatmoor. It might have been argued that, if the unitary charge is “indivisible”, it should be treated as Third Party Income in its entirety, on the footing that it represents income “associated with the Project” to at least a significant extent. Plainly, the “simple solution” which the Judge endorsed provides a fairer answer. In any case, on the basis of the “objective meaning of the language” of the definition and the meaning which would be conveyed to a “reasonable person”, I do not think that income from third parties which is “associated with the Project” to some degree falls to be discounted entirely because it is also derived from activities unrelated to those which are the subject of the Project Agreement.

I would therefore dismiss this ground of appeal.