Biffa Waste Services Ltd & Anor v Maschinenfabrik Ernst Hese GMBH & Ors

In assessing tort damages for delay, the court must identify the loss actually caused by the tort and must not treat unexplained differences in expenditure as savings without satisfactory evidence. Lost production may be assessed by reference to the long-term operation reasonably anticipated for the plant, rather than temporary defects or emergency conditions. A liability to a third party may constitute recoverable loss before payment, but no damages are recoverable for remedial services provided by the tortfeasor in mitigation where the claimant suffers no compensable loss. Conditional or trust-based awards may prevent a windfall, but should be refused where the claimant would retain the money without compensating the third party.

The judgment concerned the quantum hearing following an earlier liability judgment arising from a fire at a waste-recycling facility. The fire delayed operation of the plant for approximately seven months, and the court had already held the second defendant liable in tort.

The remaining issues concerned lost electricity sales, recycled-metal income, operating-cost savings at two sites, and uninsured costs, including an invoice from an insolvent co-defendant and project-management expenses. The central questions were the proper method of assessing lost production, whether alleged savings had been proved, and whether an unpaid third-party liability constituted recoverable loss.

1. Damages for lost electricity sales. The proper assessment was the electricity production lost during the seven-month delay, treated as a period of steady-state operation within the plant’s intended 25-year operating life. Temporary defects causing gas flaring were not given undue weight. The calculation assumed that both CHP units and the gas-storage system would operate as anticipated, so gas would not ordinarily be flared. A conversion rate of 2.27 Kwh/m³ was adopted, producing damages of £176,223.
2. A new contention raised only in closing submissions, that two months should be deducted for commissioning and seeding, was rejected both because it was procedurally unfair and because the same preparatory period would have occurred after reinstatement. The court declined to entertain the late submission based on Spartan Steel v. Martin & Co [1973] QB 27.
3. Proof of savings. A difference between global operating costs in two accounting periods did not create a presumption of savings. The claimant had to establish that the difference represented costs avoided because of the fire. The court accepted savings of £420,354 at Bursom and £504,173 at Wanlip, and rejected further alleged savings for internal hire, agency labour, sub-contracting and rent.
4. Unpaid third-party liability. A liability to a third party can be recoverable without prior payment. However, where the tortfeasor itself provides remedial services gratuitously or under a contractual obligation to mitigate its own tort, the victim suffers no compensable loss in respect of those services. The MEH invoice therefore generated no recoverable damages. Although a conditional or trust-based order may prevent a windfall in an appropriate case, no such order was justified where the claimant would never pay the insolvent third party.
5. The claim against OT was assessed at £140,249. MEH’s unproved claim for damages or contribution against OT was dismissed.