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Cite as: [2000] EWHC Admin 388

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QUEEN ON APPLICATION OF MAYER PARRY RECYCLING LTD V ENVIRONMENT AGENCY and SECRETARY OF STATE FOR ENVIRONMENT [2000] EWHC Admin 388 (8th September, 2000)

Case No: CO/0512/2000

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
ROYAL COURTS OF JUSTICE
STRAND, LONDON, WC2A 2LL
THURSDAY 9^TH NOVEMBER 2000

BE F O R E :
MR JUSTICE COLLINS

	THE QUEEN
	ON THE APPLICATION OF
	MAYER PARRY RECYCLING LTD
	V
	(1)ENVIRONMENT AGENCY
	(2) SECRETARY OF STATE FOR THE ENVIRONMENT

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(TRANSCRIPT OF THE HANDED DOWN JUDGMENT OF
SMITH BERNAL REPORTING LIMITED, 190 FLEET STREET
LONDON EC4A 2AG
TEL NO: 020 7421 4040, FAX NO: 020 7831 8838
OFFICIAL SHORTHAND WRITERS TO THE COURT)
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Michael Fordham, for the Applicant
Tom De La Mare and Philip Sales for the Secretary of State
John Howell Q.C and Mary Hoskins for the Environment Agency
Tim Ward and Rabinder Singh for Corus & ASW
Jessica Simor and Javan Herberg for Valpak Ltd

Judgment
As Approved by the Court
©CROWN COPYWRIGHT
MR JUSTICE COLLINS:
1. This application for judicial review came before me on 8 September 2000. I then decided that to enable me to determine it I needed to ask some questions of the European Court of Justice. I adjourned the case so that the terms of the reference to the Court could be discussed by the parties and, unless they could agree them, it would come back before me as soon as practicable. In addition, since the reference to the European Court of Justice would mean a delay of about 18 months, the applicant indicated that they were intending to apply for interim relief. Since that application would affect third parties who were not then before the court, it was accepted that the application would have to be adjourned to enable service to be effected on those third parties. On 31 October 2000 applications to settle the reference and for interim relief came before me.
2. This judgment only concerns the application for interim relief. It is unnecessary to set out the background in any detail; I have dealt with it in my judgment given on 8 September 2000 and do not intend to repeat what I then said. All I need say to make sense of this judgment is that the applicant's business involves the rendering of scrap metal into a form whereby it can be used by steel manufacturers as feedstock for their furnaces in order to make for example ingots. The issue is whether for the purposes of the relevant European Directives applicable to the disposal of waste, namely the Waste Framework Directive and the Packaging Waste Directive, the applicant's activities cause the waste which comes to them to be reprocessed and recycled so that on leaving them it has ceased to be waste. The Environment Agency (`the Agency') and the Secretary of State, who is involved because he has the overall responsibility for complying with the recycling requirements of the Packaging Waste Directive in particular, argue that it is not until the material is made into ingots after being processed in the furnaces of the steel manufacturers that the recycling under the Packaging Waste Directive is achieved and the waste ceases to be waste.
3. The applicants have in their favour a decision of Carnwath J in Mayer Parry Recycling Ltd v Environment Agency [1999] Env.L.R. 489 (referred to before me as MPR1). Carnwath J decided in that case that for the purposes of the Waste Framework Directive when this waste was transformed into feedstock for the furnaces by the applicant it ceased to be waste. In reaching that conclusion, Carnwath J considered the relevant decisions of the European Court of Justice. However, no argument was put before him to the contrary and he did not consider, because he was not referred to, the Packaging Waste Directive. Nevertheless, that decision which was not appealed, establishes that for the purposes of the Waste Framework Directive the applicant reprocessed the waste so that when it left it having been sold as feedstock to the steel manufacturers it was no longer to be regarded as waste.
4. Prior to this decision, the Agency had accredited the steel manufacturers rather than the applicant as the processors and recyclers of the relevant waste. Those accredited are entitled to issue Packaging Waste Recovery Notes (PRNs) which establish the amount of packaging waste materials which have been delivered to a reprocessor; the reprocessor being required to keep records showing that he has reprocessed those materials or what else he has done with them. Thus the United Kingdom through the Secretary of State is able to certify that it has complied with the relevant terms of the Packaging Waste Directive which requires that a particular percentage of the waste is recycled. Those requirements aim to protect the environment by avoiding the need to dump or otherwise dispose of packaging waste. PRNs have a substantial value and so there is a considerable advantage in financial terms in being accredited.
5. The Agency did not change their accreditation of the steel manufacturers following MPR1. This was because it was advised that the decision did not apply to the Packaging Waste Directive. This argument is no longer espoused by those advising the Agency who now say that Carnwath J was wrong and that the waste is not finally reprocessed until it goes through the steel manufacturers' furnaces. But the Secretary of State disagrees and argues that there is a difference between the Waste Framework and the Packaging Waste Directives. Both of course submit that the steel manufacturers have been correctly accredited as opposed to the applicants.
6. My preliminary view, as I said in the judgment which I delivered on 8 September, was that the applicant had a very strong case. But I was at pains to say that that was only a provisional view. The result is that the applicant has established a strong arguable case so that the principles set out in American Cyanamid Co v Ethicon Ltd [1975] AC 396 are engaged. My observations cannot be relied on to produce any further advantage to the applicant and certainly it cannot be assumed that the balance of convenience should for that reason be tipped in favour of the applicants. It was because I could not be satisfied that the applicant would succeed that I felt it necessary to seek the assistance of the European Court of Justice.
7. Since the steel manufacturers who are customers of the applicant would inevitably be affected, they have appeared before me and have sought and obtained leave to be joined in the proceedings. There are two, Corus U.K. Limited (Corus) and ASW Limited (ASW). However, it transpired that only ASW was a customer of the applicant as opposed to other companies within the same group and so Mr. Fordham was constrained to accept that he could only seek relief in respect of sales to them. They involved some 250,000 tonnes per annum to a value, so far as the PRNs are concerned, of approximately £100,000. The accreditation is annual and the deadline for next year for making applications has probably now expired. I say probably because the Agency was unable to tell me when precisely the cut off date was, although I was informed by the applicant that it was 30 September last. In addition to the customers I have had representations on behalf of Valpak Limited (Valpak). Valpak is a company limited by guarantee which provides compliance services for the purposes of the relevant regulations which, broadly speaking, impose obligations upon producers of packaging waste to recover and recycle a particular percentage of that waste. To that end Valpak purchases PRNs from the accredited reprocessors (in this case, ASW), thus enabling those subject to producer responsibility obligations, who pay a levy for the service, to comply with their statutory obligations. Valpak are understandably concerned that if the applicant are accredited instead of ASW, the contract which they have with ASW should not be jeopardised. Recognising this, the applicant was prepared to undertake to continue the contracts by in effect stepping into ASW's shoes, but could not do so until aware of volume and price, matters which were confidential and which ASW was not prepared to disclose voluntarily.
8. The intervention of ASW, Corus and Valpak has resulted in further evidence being put before me, some of which has a bearing on the application for judicial review and the facts which will be material for the purposes of the reference. In particular, it is clear that the proceeds obtained from the PRNs cannot be used as the recipient might wish. They must be applied in such a way as will assist in developing recycling and recovery capacity and will promote recycling. The contracts with Valpak contain provisions to ensure that the proceeds are put to such use. Naturally, ASW will spend the money on projects which increase its efficiency and so benefit it as well as promote recycling. The applicant want to have that benefit for itself. In addition, it questions whether the way the proceeds are being spent does meet the requirements in that some are to fund an oxy-fuel burner, which will it is accepted, increase efficiency, and some on enabling the purchase of 3B material such as the feedstock produced by the applicants, which, it is argued, will not.
9. The applicant's case for interim relief is straightforward and attractive. Mr. Fordham rightly submits that MPR1 is the law and so for the purposes of the Waste Framework Directive the scrap metal is finally reprocessed and ceases to be waste when it is sold by the applicant to ASW as feedstock. The Agency could not disregard that decision and, since it is now apparently accepted by the Agency that the argument that a different result flows from the terms of the Packaging Waste Directive is not a good one, the Agency ought to accredit the applicant. In any event, the applicant has a strong case and it is hardly fair that it should have to wait for two more years before reaping the benefits of the situation which should have been settled in its favour long ago, particularly as it is offering cross-undertakings to protect ASW's losses should it not succeed in the end. The accreditation will only be for the contracts with ASW, that being the only domestic sale of feedstock: some is sold abroad, but that is dealt with by a different process which it is unnecessary for me to detail. Suffice it to say that there is a rigorous audit trail designed to ensure that the waste is recycled to the extent required.
10. The Agency and the Secretary of State, supported by the interveners, seek to meet this argument in a number of ways. They point out that the court had in considering the balance of convenience to take into account the interests of the public to whom a duty is owed: see R v Transport Secretary ex parte Factortame (No2) [1991] 1 AC 603 at p.673B, approving observations of Browne, L.J. in Smith v ILEA [1978] 1 All E.R. 411 at p.422. In Factortame the House of Lords was able to lay particular stress on the importance of upholding the law of the land, but the principle applies even where the question at issue is `what is the law of the land?'. It is submitted that if the change of accreditation is permitted there is a real danger that others in a similar position to the applicant would seek similar relief perhaps not for 2001 but certainly for 2002. This will lead to confusion and the possibility, perhaps likelihood, that the U.K.'s obligations in relation to recycling will be put in jeopardy. Furthermore the Agency's present policy is supported by the existing Regulations which concentrate on the materials going to the accredited person. This means that it is easy to ensure that the recycling is achieved and there are relatively few accredited persons (one must remember that the Packaging Waste Directive applies not only to metal but also to other materials such as glass and paper). Even if only one relatively small enterprise such as the applicant's was accredited instead of ASW, administrative difficulties would result and there would be problems in ensuring that there was no duplication of PRNs since the applicant might sell to someone who then sold on instead of reprocessing himself. I was told by Mr. Fordham that this could be prevented, but it would clearly involve extra bureaucracy and checks. Mr. Howell argued that there was no power in the court to direct accreditation of a body who had no right to it in accordance with the policy of the Agency which should until the issue was decided be regarded as lawful. He drew my attention to observations of Lord Scarman in R v Barnet LBC ex p. Shah 1983 2 AC 309 at p.350F. Having, in the context of a statute imposing a duty on a local authority to pay grant to a student ordinarily resident in the area, decided that Mr. Shah was a resident, Lord Scarman stated that the appropriate remedies were certiorari to quash the refusal to pay and mandamus to require the authority to reconsider. He continued:-
"I think that is the appropriate relief: for it avoids any semblance of the courts assuming the function assigned by Parliament to the local education authority, namely the power to decide whether to make or to refuse an award ... Declarations are appropriate to declare an entitlement or a right or a duty. But this is exactly what the court cannot, and must not, do in these cases".
11. That argument coupled with the pointlessness of the exercise satisfies me that an interim declaration, which Mr. Fordham was urging me to grant, is both undesirable and unnecessary. I am not persuaded that Lord Scarman's observations would necessarily deprive me of the power to grant relief as requested by the applicant since the scope of judicial review has expanded and developed since 1982, but it must certainly inhibit me.
12. Despite Mr. Fordham's submission that copycat applications are unlikely, indeed unrealistic, I am persuaded that there is force in the concerns that administrative difficulties will be likely to result. In addition, I think there is considerable force in Mr. Sales' submission that it is essential in the public interest that the revenue derived from the PRNs be applied effectively to enable the Secretary of State to meet his obligations under the Directives. This can best be achieved by increasing the efficiency of the steel manufacturers. Increasing the applicant's efficiency means the production of feedstock, but that is not as clear a recycling as when it is put through the furnace and made into another product. Incidentally, it is clear that it is not merely a question of putting it in and getting an ingot out. It has to have some impurities removed as part of the process. In all the circumstances, it is desirable to ensure continuity of investment. Despite the criticism of at least one of the projects into which the proceeds have been put, I am persuaded that Mr. Sales is correct that this is an important consideration. I bear in mind that I am being asked to grant a mandatory injunction by way of interim relief, something the court is always reluctant to do unless persuaded that it is clearly needed.
13. Finally, I must bear in mind that the applicant could have applied for this issue to be determined at a much earlier stage. There was no reason why it should not have been raised as part of MPR1. If it had, in all probability the European Court of Justice would by now have reached a decision had there been a timely reference.
14. All these considerations satisfy me that it would be inappropriate to grant any relief which had the effect of requiring that the applicant be accredited in the place of ASW and I decline to do so.
15. Mr. Fordham has submitted that in the alternative I should make an order against ASW which required them to pay the applicant the amount obtained for the PRNs if the applicant in due course succeeded. While I could not require an undertaking to be given, I think a form of injunction could be designed to achieve the result requested if I thought it right that such relief should be granted. I have the power to grant an injunction against a third party such as ASW: see R v Licensing Authority ex p. Rhone Poulenc Raver Ltd [1998] Eu. L.R. 127. While I have no doubt of the existence of the power, I think it should only be exercised sparingly and where the Court is satisfied it is really necessary. I am far from satisfied that that situation applies in this case. The delay is relevant, as is the public interest reflected in the submission of Mr. Sales upon which Mr. Rabinder Singh particularly relied and which I have rehearsed in Paragraph 12 above. While £100,000 is a substantial sum of money, in the context of the total business done by the applicants and their associated companies it is not large. I do not think the applicant will suffer unduly if it has to wait until the European Court of Justice and then this court reaches their decisions before getting the benefit of PRNs, assuming that it wins. I am satisfied that the public interest is in favour of retaining the status quo and I accordingly decline to grant any interim relief.