Tuesday, 4 March 2008

A stink in County Durham

by Cobbler's apprentice

A council-owned waste management company faces a claim for £10m compensation for loss of business from a private company it previously employed to recycle waste.

Premier Waste Management, part-owned by Durham County Council, is in dispute with private company Delta Reclamation Ltd. Graham Brown, Paul Bennett and Chris Grindell set up Delta in 2006 to recycle waste tyres for Premier. The two companies have been in dispute since October last year, since when, claim Delta, Premier have effectively stopped them from operating.

This followed a meeting at which Delta made allegations that some of Premier’s operations fell below required legal standards for the treatment and disposal of waste.

Following an investigation, last month (January) Premier admitted that over 400 tonnes of waste which should have been recycled had been buried on a landfill site. 70 tonnes of compost-like material for use on brownfield sites had been buried, and a further 370 tonnes had been used to cover the landfill site. Delta directors Brown and Bennett claim there have been many more breaches of regulations by Premier who deny these allegations.

Another company run by Brown and Bennett, Delta Recycling Ltd, is also claiming against Premier for £70,000 worth of unpaid work done up to the end of 2007, as well as Delta Reclamation’s claim for the loss of potential profit of half a million pounds a year for 15-20 years. In addition, they are disputing Premier’s valuation for machinery which was to be transferred from Delta to Premier. Delta value the machinery they have installed on Premier’s site at Coxhoe at £1m.

Brown and Bennett both have over fifteen years experience of the waste disposal industry. In 2005 they set up Delta Recycling to recycle household waste, and in 2006 they set up Delta Reclamation to recycle used tyres. Both companies had only one customer – Premier Waste.

At first Delta Recycling operated from a site at Walker in the Newcastle area, but after a disastrous fire there in December 2006 they moved to the Joint Stocks waste disposal site at Coxhoe, becoming tenants of Premier Waste. Delta Recycling set up their own machinery to deal with plastic and other difficult waste and turn it into material suitable for recycling/recovery. In a separate arrangement, Delta Reclamation shred waste tyres which can then be used as a drainage layer on landfill sites.

“When Premier increased its throughput of domestic waste through its aerobic digestion process at Thornley by over 60%, we realised that we would need to invest in bigger machinery,” said Brown, “up to this point, Premier had encouraged us, even to the extent of writing a letter to our bank supporting our request for further borrowings. Although we had a long-term contract with Premier for the treatment of tyres, we did not have one for the waste treatment.

“To justify our spending a further good deal of money – around £150,000 - on new machinery, we asked Premier for the long-term contract that they had been discussing with us for some time. This was for the work we had been doing for Premier, dealing with domestic waste. We already had a substantial investment in the business including overdrafts, finance and personal monies, and Premier was our only client. Instead, they suggested we set up a joint venture between the two companies, and this was still under consideration when there was a serious disagreement between us and a complete breakdown of relations.”

The disagreement occurred at a meeting at Premier’s Aykley Heads headquarters near Durham City in October last year. The meeting broke up acrimoniously after Brown alleged that some of Premier’s operations breached government regulations. “From our point of view, we were trying to help Premier by pointing out certain deficiencies, which they dismissed out of hand. It was only when we realised that Premier were in effect trying to put us out of business that we started to investigate further,” said Brown.

“The very next wagon that arrived on site to deliver waste to our plant was stopped at the gate,” said Brown, “although we were able to continue working for a few more weeks, Premier made it virtually impossible for us to run our business. In the end it seemed to everybody that the only way forward was to seek an exit strategy acceptable to both sides. So far, there has been no such agreement and we will take it all the way to a full court case if all else fails.”

In an attempt to keep their business going, the Delta Reclamation directors sought an injunction on Premier to get them to honour their agreements, but this failed. Delta was ordered to pay Premier £25,000 costs, which Brown has paid. Now Brown and his fellow-directors face the long-drawn-out process of arbitration and possible legal action. “The two Delta companies are not operating at present, but we are attempting to avoid going into administration by paying off company creditors from our own resources,” said Brown.

Dr Les Grant, Group Chief Executive of Premier Waste Management Ltd, has refused to comment on Delta’s claims.

The allegations against Premier Waste are the subject of a BBC television programme to be broadcast this Friday March 7, “Inside Out” on BBC1, 7.30pm.: “The causes of an unpleasant odour in a County Durham village” (Radio Times).

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