Buckinghamshire Council (Respondent) v FCC Buckinghamshire Limited (Appellant)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

UKSC/2025/0174

Parties

Appellant(s)

FCC Buckinghamshire Limited

Respondent(s)

Buckinghamshire Council

Issue

Did the Judge and/or the Court of Appeal err in their respective interpretations of a long-term public private partnership contract?

Facts

This appeal concerns the interpretation and financial consequences of a waste management project agreement (“the Agreement”) between Buckinghamshire Council (“the Council”) and FCC Buckinghamshire Limited (“FCCB”). The Council has a statutory responsibility for the disposal of household waste from Buckinghamshire. FCCB is part of the FCC group of companies which undertakes waste disposal. The Agreement governed a waste management project which involved the construction and operation of facilities for processing waste, including an energy from waste plant (“Greatmoor”) and waste transfer stations (collectively, “the Facilities”). Under the Agreement, FCCB undertook to receive and process waste for which the Council was responsible (“Contract Waste”). The parties also included provisions in the Agreement to permit FCCB to use the Facilities to handle waste from other sources (“Third Party Waste”). The Council paid 85% of the costs of constructing the Facilities, which became operational in 2016. The FCC group provided the remaining 15%, but the cost of its doing so was factored into the calculation of the “Unitary Charge” which the Council had to pay to FCCB. The Unitary Charge was calculated by reference to a “Base Case,” and there was also provision for adjustments to be made for “Third Party Income Share.” In summary, Third Party Income (“TPI”) was defined as FCCB’s (and FCCB’s affiliates’) income from third parties “associated with the project.” Moreover, FCCB (or its affiliates) were entitled to deduct from such income the costs “directly incurred” in generating the income, provided that three (cumulative) provisos were satisfied. FCCB entered into a sub-contract with another of the companies in the FCC group (“FCCR”) under which FCCR would supply third party waste to FCCB. In turn, FCCR concluded a contract with Luton Borough Council (“Luton BC”) pursuant to which FCCR agreed to provide waste management services in return for a unitary charge. The contract with Luton BC provided for waste to go to Greatmoor. In 2020, the Council issued proceedings seeking declarations as to the meaning and effect of the Agreement. One issue was whether TPI included income derived by other companies in the FCC group from contracts with third parties under which they would accept waste that was ultimately treated at Greatmoor. The matter came before O’Farrell J, who concluded that “the Contractor’s…income” in the definition of TPI included income received by FCCR and added that “if the waste is in fact delivered to the Facilities for treatment or disposal, then the income derived from such waste, whenever generated, is Third Party Income.” There was no appeal from O’Farrell J’s judgment. However, the Council issued further proceedings in August 2022 on the basis that it had not been paid its full share of TPI. The Judge accepted that the need for costs to be “directly incurred” imposed a requirement that there must be “some immediate relationship between the winning of the income and the outlay.” Applying this requirement, he found that haulage costs were “directly incurred” but other costs claimed by FCCB were not shown to have been “directly incurred.” The Judge also held that the income generated by FCCR’s contract with Luton BC was TPI. On appeal, FCCB argued that the Judge had misconstrued “costs directly incurred” within the definition of TPI, and that he was wrong to conclude that the unitary charge received from Luton BC was “income from third parties associated with the protect as derived from third party waste.” The Council challenged the judge’s conclusion as regards the deductibility of haulage costs and contended that the costs which were the subject of FCCB’s appeal were not only not “directly incurred” but also fell within one or more of the provisos to the definition of TPI. The Court of Appeal (“CA”) dismissed FCCB’s appeal. However, the CA allowed the Council’s appeal in part, finding that the FCCB’s purported deductions in respect of haulage costs were barred. FCCB now seeks permission to appeal to the Supreme Court.