Wednesday, 18 September 2019

WHITIANGA WEATHER

What we know about TCDC and Smart Environmental

A recent spate of comments on our Facebook page necessitated the publication of this article on what we know about the relationship between Thames-Coromandel District Council and Smart Environmental.

Smart holds the contract for the kerbside collection of household rubbish (blue rubbish bags on the Coromandel) and recycling in the Thames-Coromandel, Hauraki and Matamata-Piako Districts. Smart is also contracted by TCDC to operate their (council’s) transfer stations.

In the middle of February this year, we were supplied with information indicating the possibility that Smart was not declaring all the commercial waste they disposed of at the TCDC transfer stations. The information also intimated that Smart was disposing of commercial waste outside the transfer stations’ normal operating hours and at a significantly cheaper rate than other users of the transfer stations.

In addition to its collection contract with TCDC, Smart is also collecting and disposing of household waste in wheelie bins, waste generated by commercial businesses and skip bin waste (“commercial waste” for purposes of this article).

Smart has several commercial waste competitors across the Coromandel Peninsula. The Information supplied to us in February came from Murray Bain, the owner of Coastal Bins, one of the Smart commercial waste competitors. “When my business partner and I started trading as Coastal Bins in June last year, we were under the impression that the playing field was even with regard to the disposal of commercial waste at the TCDC transfer stations,” said Bain. “We expected that all waste disposal businesses would dump their commercial waste within the transfer station hours and at the rates set by TCDC. No different from any Coromandel property owner cleaning out their garage over a weekend. It was a real worry when we became aware that Smart may have a more beneficial arrangement than anyone else. Being able to dump at a cheaper rate and not being restricted by the transfer stations’ operating hours, means Smart would be able to offer a better deal than their competitors to all the commercial waste customers on the Coromandel.”

There is no love lost between Bain and Smart. Bain is a former Smart employee and the parties came up against each other in the Employment Relations Authority (ERA) in early November last year. Bain alleged Smart did not pay him what he was due in terms of a settlement reached when his employment with Smart ended and also that Grahame Christian, the former Smart CEO, breached the settlement agreement by making disparaging comments about him (Bain). Smart, in return alleged that Bain breached his restraint of trade by establishing Coastal Bins and that Bain made disparaging remarks against Christian.

The parties had mixed success. In a determination released on 20 February this year, ERA member, Nicola Craig, found that Smart paid Bain in full, that Christian made disparaging comments against Bain, that Bain did not make disparaging comments against Christian and that Bain did not breach his restraint of trade.

In determining Smart’s penalty for Christian’s disparaging comments against Bain, Ms Craig said, “Recent cases regarding non-disparagement clauses provide a range of penalties from $250 to $8,500. I consider that there is a need for specific deterrence against Smart as well as general deterrence. This is a serious breach, which warrants a penalty towards the higher level. A penalty of $8,000 is appropriate, which should be paid to Mr Bain.”

Ms Craig also set a timetable for the resolution of legal costs. The parties could not come to an arrangement between themselves and on 9 May this year, Ms Craig issued a cost determination, ordering Smart to contribute $8,871.56 to Bain’s legal costs.

Smart initially appealed Ms Craig’s determination of 20 February, but the appeal has since been withdrawn.

On 23 February, we requested TCDC to comment on the information Bain supplied us with. On 3 March, we requested Christian, who was still the Smart CEO at the time, to confirm to us whether Smart was indeed enjoying a competitive advantage from TCDC. In addition, we obtained an opinion form John Cox, litigation partner of Rennie Cox, a law firm with offices in Auckland and Whitianga.

Mr Cox confirmed to us that any competitive advantage bestowed on Smart by TCDC may result in the lessening of competition and, if so, will be in breach of section 27 of the Commerce Act.

The replies we received from TCDC and Smart were disappointing. “We’re currently in legal negotiations with SMART around some contractual matters and won't be making any comment until this has been resolved,” Bruce Hinson, the TCDC Infrastructure Delivery Group Manager, told us. Christian replied to us that there was no wrongdoing on the part of Smart and he, unfortunately, also hinted at legal action against us, a threat a small business like The Informer had to take seriously.

Since then, Bain put us in possession of an email Layne Sefton, Smart’s Central Region Manager, wrote to him (Bain) on 22 May, confirming, “Any commercial rate that Smart pays for disposal [of commercial waste] is a private and commercial arrangement with Council and therefore one that Coastal Bins [is] not able to use.”

Bain raised his concerns not only with us, but also with some national media outlets and the Office of the Auditor-General (OAG). On 26 July, an OAG inquiries specialist confirmed in an email to Bain that the relationship between TCDC and Smart warranted further investigation. However, the OAG understood that TCDC had “some work in progress” regarding Bain’s concerns and deemed it appropriate for TCDC to “complete the work currently underway and consider the findings” and to provide them (the OAG) with “a further update at an agreed date.”

We were the week before last presented with video evidence indicating that Smart may still be accessing TCDC transfer stations outside normal operating hours. That, and the OAG’s email to Bain of 26 July, caused us to inquire from TCDC again if Smart is disposing of commercial waste at the council-owned transfer stations at a cheaper rate than anyone else and if they are allowed to dispose of third party waste outside of the transfer stations’ normal operating hours. We made the same enquiry from Todd McLeay, the current Smart CEO.

TCDC replied to us that the contract between TCDC and Smart is - still, six months on - the subject of “commercial negotiations.” They also confirmed to us that a number of issues in relation to the contract is being investigated and they are unable to comment until the negotiations and investigations have been completed. “Notwithstanding this, we wish to take this opportunity to continue to assure the public that we take our fiscal responsibilities and contract management extremely seriously and our utmost intention is to meet those commitments,” Laurna White, TCDC’s Economic Development and Communications Group Manager, said. “We also want to emphasise that kerbside collections throughout the district are not being affected and our contractual relationships remain very professional in that regard.”

McLeay responded that he was happy to talk to us, but was busy and asked if the matter was something “we could pick up” a few days on. We requested from McLeay a suitable time to phone him, but are still, more than a week later, waiting for him to get back to us.

In an additional twist, we became last week aware of clause 25.2 of the kerbside collection contract between Smart, TCDC, Hauraki District Council and Matamata-Piako District Council. The last part of the clause reads, “The parties agree that in the event that a third party is carrying out an aggressive campaign within the Councils’ territorial boundaries the purpose of which is to obtain refuse collection contracts, the parties shall discuss and agree acceptable courses of action through the Partnering Forum.” The partnering forum is made up of representatives of all the parties to the contract.

We asked TCDC if the clause means that they can “collude” (for lack of a better word) with Smart to put the likes of Coastal Bins out of business. Council responded saying that they are not required to give opinions under the Local Government Official Information and Meetings Act. That was another disappointing reply from TCDC. We did not ask for an “opinion.” All we wanted to know was whether we are correctly interpreting a clause in a contract the ratepayers of the Coromandel are, in essence, a party to.

“If I knew what I know now, that there’s a possibility that Smart can do business with TCDC on better terms than anyone else and that there’s also possibly an avenue for Smart to have TCDC’s support to grow at the expense of their (Smart’s) competitors, my business partner and I would never have started our business,” said Bain. “Business on the Coromandel is hard enough as it is. To play uphill makes it pretty much impossible to survive.”

This article covered a lot of ground. If TCDC or Smart is concerned about the accuracy or portrayal of any of the information in this article, we will happily publish what they have to say. The fact that TCDC is still negotiating their kerbside collection contract with Smart is not the only thing that has not changed the past six months. The Informer is still a small business and we are still afraid of legal action.

Pictured: The entrance to Thames-Coromandel Distrct Council’s transfer station in Whitianga. The entrance to Thames-Coromandel Distrct Council’s transfer station in Whitianga. The Informer has been looking into allegations of Smart Environmental disposing of “commercial waste” at the TCDC-owned transfer stations on the Coromandel Peninsula outside normal operating hours and at a significantly cheaper rate than other users of the transfer stations.

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The Mercury Bay Informer is a highly popular community newspaper, based in Whitianga. The paper is distributed throughout the Coromandel Peninsula, coast to coast from Thames to north of Colville.