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

The parties’ positions

The Council’s case is that the costs which the Judge held not to be deductible as “directly incurred” also failed to satisfy the requirements of proviso (a). Mr Mort argued that the costs in question were not incurred “specifically and solely” in generating additional Third Party Income but were either wholly or in part simply ordinary costs of running the group and/or costs of generating the large quantities of guaranteed Third Party Income. Mr Mort stressed the need for costs to be “specifically and solely” related to extra Third Party Income and argued that the Judge did not explain how the costs at issue could be said to have met that condition.

Mr Mort observed that paragraph 214 of the Judgment, from which I have quoted in paragraph 58 above, has to be read in the light of paragraph 88 of O’Farrell J’s judgment of 26 October 2021. O’Farrell J concluded in that paragraph that “gate fee revenue”, as used in paragraph 11.4 of schedule 15 to the Project Agreement, refers to “revenue from charges for waste received for treatment or disposal at the Facilities” and that the “mere reference to gate fee revenue” does “not displace the clear and express definition of Third Party Income in Appendix A of the Project Agreement”.

For her part, Ms Parkin argued that it is important to identify the species of Third Party Income Share which is relevant and, in particular, whether it is “Third Party Waste Excess TPI Share” or “Other Excess TPI Share”. Income will be “Third Party Waste Excess TPI Share”, Ms Parkin said, where it arises from the sale of spare capacity at Greatmoor and gate fees received by FCCR. Where, on the other hand, FCCWS receives income as a result of handling Third Party Waste elsewhere than at the Facilities, the income is “Other Excess TPI Share” and the costs incurred in generating it will, by definition, meet proviso (a). They are necessarily, Ms Parkin submitted, costs “specifically and solely related to the generation of Third Party Income additional to that modelled in the Base Case”.