Beware of mistakenly binning valuables. Once collected and transferred to the statutory waste authority, they become the authority’s property and irretrievable. Why? Section 14(6)(c) of the Control of Pollution Act 1974 provides that anything delivered to the relevant waste collection or disposal authority ‘by another person in the course of using the facilities shall belong to the authority and may be dealt with accordingly’.
So, when a computer hard drive belonging to James Howells, containing his private bitcoin key was deposited in error at Newport City Council’s Docksway Landfill Site, it became council property. When the council refused to enable or permit retrieval of the hard drive, Howells brought Chancery Division proceedings. He sought declarations that he owned the hard drive and everything on it and an order that the defendant council either deliver the hard drive to him or allow his expert team to excavate and retrieve it. Alternatively, compensation equivalent to the value of the now inaccessible bitcoin (said to exceed £600m).
Unfortunately for Howells, on 9 January 2025 in Howells v Newport City Council [2025] EWHC 22 (Ch) [2025] EWHC 22 (Ch), His Honour Judge Keyser KC (sitting as a High Court judge) found that the particulars of claim showed no reasonable grounds for bringing this case and that the claim would have no realistic prospect of succeeding if it went to trial. Also, that there was no other compelling reason why it should be disposed of at trial. The case was therefore struck out under Part 24 of the Civil Procedure Rules (summary judgment).
The particulars of claim had raised three heads of claim: a proprietary restitutionary claim; an equitable proprietary claim; and a claim for declarations that the claimant is the legal owner of the hard drive and all tangible and intangible property upon it. According to Investopedia: ‘A cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Most cryptocurrencies exist on decentralised networks using blockchain technology – a distributed ledger enforced by a disparate network of computers.’ And bitcoin is ‘a cryptocurrency (a virtual currency) designed to act as money and a form of payment outside the control of any one person, group, or entity. This removes the need for trusted third-party involvement (e.g. a mint or bank) in financial transactions’. It is also ‘rivalrous’ whereby its holding by one person prevents another from holding it simultaneously. Paragraph 11 of the instant judgment contains a useful summary of how bitcoin works.
The court noted that the law of England and Wales has historically recognised two different kinds of personal property: things in possession (tangible property); and things in action (intangible property). However, it was ‘now generally recognised that cryptocurrency, such as bitcoin, is also property, although it does not fit within what the law recognises as tangible or intangible property; as such, it is commonly said to constitute, or to be within, a “third category” of personal property’.
While the claimant sought a declaration that he was the legal owner of both the tangible and intangible property on the hard drive, the tangible property is simply the hard drive that went to landfill. However, bitcoin is also not intangible property. For, as the Law Commission has indicated: ‘Crypto-tokens would continue to exist even if the law were to fail to recognise them as objects of personal property rights and even were a law to prohibit their existence’ (Law Com No 416). The court also noted (among other authorities) the dictum of Lord Browne-Wilkinson in Westdeutsche Landesbank Girozentrale v Islington LBC [1996] A.C. 669 at 706 that: ‘A person solely entitled to the full beneficial ownership of money or property, both at law and in equity, does not enjoy an equitable interest in that property. The legal title carries with it all rights. Unless and until there is a separation of the legal and equitable estates, there is no separate equitable interest’.
In the instant case, the claimant’s contention (as the judge understood it) was that if the council was the legal owner of the hard drive, it held the hard drive on trust for the claimant since it had learned that it received the hard drive without the knowledge or consent of the claimant, because he did not know of its disposal, and so holds it on trust for him. However, such a claim would have no realistic prospect of success for the claimant since the existence of the necessary equitable interest on the part of the claimant is precluded by section 14(6)(c) of CPA 1974. As the court indicated, this is the critical point, because it rules out any trusts claim, however formulated. So, since by section 14(6)(c) the hard drive had become the property of the authority, the defendant’s argument based on section 14(6)(c) was a sufficient answer to the claim.
At paragraph 54 of the judgment, the judge gave headline reasons for the council’s refusal to allow the claimant to retrieve the hard drive. These were: breach of its licence from the Natural Resources Body for Wales; escape of harmful substances into the environment; damage caused by excavation ground movement; risk to site staff health and safety; risk to local resident health and safety; exposure of council residents to potentially serious public health risks and environmental concerns and the inability of the council to discharge its statutory waste disposal functions while the site is excavated.
So, as indicated above, the court concluded that no reasonable grounds had been shown for bringing this case.
Nicholas Dobson writes on local government, public law and governance
