Derby City Council and Derbyshire County Council have paid a joint total of £93.5m to settle a legal dispute over a waste management contract.
The authorities terminated a contract with Resource Recovery Solutions (RRS) in 2019 to manage their residual waste and to design, build, commission and operate a waste treatment facility.
Derby City and Derbyshire County councils said the termination was lawful, as RRS failed to pass commissioning tests by an agreed date. The legal dispute arose over determining the level of compensation due as part of an Adjusted Estimated Fair Value (AEFV) process.
The £93.5m settlement sum was paid to RRS’ administrators, who had said £187m was owed, following “several months” of negotiations.
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The councils said the settlement would “protect council taxpayers from the risk of further significant costs”. They stated: “If a sum had not been agreed through negotiation, the dispute would have been resolved through the courts, and formal litigation – a lengthy process with unknown outcomes and additional costs. With this settlement, litigation ends, and RRS has no further involvement.”
The total sum of £93.5m has been split by the councils in accordance with their agreed split; 50:50 up to £50m, and all sums thereafter split proportionately; 73.4% by the county council and 26.6% by the city council.
Derby City Council therefore paid £36.57m, and Derbyshire County Council paid £56.93m.
In anticipation of litigation, or a settlement, finances were earmarked as part of Derby City Council’s medium-term finance planning process for 2023 to 2024, while Derbyshire County Council said it had earmarked reserves to cover the settlement costs.
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