A local authority has won a legal claim to factor inflation into a 15-year waste contract it had previously signed off.
Milton Keynes Council agreed a shared-risk deal with Viridor in 2009 to operate its MRF (pictured), which included a fixed £500,000 annual payment to the authority.
There was also a 70/30 split on profits made from sales of recyclates in favour of the operator.
Viridor’s final bid included a stipulation that the fixed sum would be “indexed for inflation” but the deal the two parties subsequently signed, drawn up by PwC, did not include this.
The council then began a legal bid to have the clause reinstated on the grounds of both a “common and unilateral mistake”.
Viridor argued that both parties had agreed to the deal, and there had been a delay between the contract being signed and the council seeking rectification.
But at the High Court, Justice Coulson concluded that the council had sufficient grounds for the contract to be changed on both common and unilateral mistake claims.
Coulson said the contract would be rectified by replacing its income-generating payment mechanism with that in Viridor’s final bid.
He said: “I am confident that the contract will then properly record the parties’ rights and liabilities, including the defendant’s entitlement to calculate the profit share by deducting the £5 per tonne before the 30%-70% split.”
Viridor’s principal negotiator himself described the gaps between the original bid and signed deal as “unacceptable” because they rendered the contract inoperable, Coulson said.
“On this basis, therefore, I conclude that there was a common mistake and that all of the ingredients are in place to permit rectification.”
He added that some of the blame for the mistake in the final contract lay with PwC.
“PwC’s error is perhaps a sad reflection of the fact that modern day contracts of this kind are so complicated that nobody, not even the consultants, bothers to check the actual documentation being signed,” he said.
In response to an MRW request, the local authority said in a statement: “Milton Keynes Council is pleased that the recent judgement…in the High Court of Justice acknowledges the rights of the council under its contract with Viridor Community Recycling Limited.
“The council looks forward to its continuing partnership with Viridor in the maintenance and operation of its successful MRF.”