City faces $21M lawsuit from its own recycler

Move comes months after city closed its compost plant over complaints of stench

It’s not easy being green.

The city now faces a $21-million lawsuit from its recycling contractor — and a separate plea for wage relief from its blue box collector — just months after closing its own inexplicably stinky compost plant.

Hamilton and other cities were left scrambling in January when a crackdown on imported recyclables effectively eliminated market giant China as a buyer for Canadian paper and plastics.

The market collapse has so far cost the city $1.2 million in lost revenue — and also convinced Hamilton to ban items like Styrofoam, black plastic and coffee cup lids from the blue box. Blue box options shrank for eco-conscious residents around the same time Hamilton shut down its compost plant over odour concerns — a move which temporarily forced the city to landfill collected food waste.

Now, Canada Fibers Ltd. has launched a $20-million legal claim alleging “oppressive and high-handed” breaches of contract by the city have resulted in the recycler “hemorrhaging money.” The company, which sorts and markets blue box recyclables at a city-owned plant, is also seeking $1 million in punitive damages.

The statement of claim, which has not been tested in court, alleges out-of-date city sorting equipment and a spike in nonrecyclable material — including “hazardous” items like needles.

problems, the firm claims, contribute to a contaminated recycled product that is difficult to sell.

The city has filed a notice of intent to defend the lawsuit. Councillors discussed the legal dispute behind closed doors Monday, including the prospect of banning Canada Fibers from bidding on a new recycling contract required after 2019.

Local politicians would not publicly comment on the brewing legal dispute. The Spectator could not reach a staffer to comment on the allegations about city equipment or a spike in recycling contamination Monday. But earlier this year, the city’s own statistics showed the blue box “contamination rate” — the amount of ruined or unrecyclable items that need to be trashed — rose from seven to 14 per cent over five years.

Canada Fibers runs several similar facilities in Ontario, including in Toronto. An unspecified recycling dispute between the firm and that city resulted in renegotiated terms for more money about three years into a long-term contract in 2017. A lawyer for Canada Fibers showed up at a city finance committee meeting Monday urging members to drop the idea of banning the firm from bidding on future recycling contracts. Scott Hutchison said despite the court action, the company and city staff still have an “excellent working relationship.” He also warned the city would only hurt itself by cutting out one of the biggest players.

“If you want to sabotage Hamilton’s ability to get the most efficient and cost-effective contract in this area, the surest way to do it is to say you will not do business with the biggest and most efficient provider of these services,” he said.

At the same meeting, a repreThose sentative with Green For Life, the private collector of all curbside recyclables, pleaded for financial help to offset the provincial hike in the minimum wage. Regional director Mike Canal said the wage hike has made it difficult for the company to hold on to mid-level collection workers, seven of whom have jumped ship to take unionized positions with the city’s garbage collection department this year.

“It makes it a struggle every day to get that done,” he said.

City staff reportedthe paper recycling market downturn will result in $1.2 million drop in revenue this year. The cost of the unanticipated closure of the compost plant, and a new, temporary plan to send collected organics to an out-of-town composter, will likely cost another $1 million. The city hopes to restart the Burlington Street plant as early as November.