Waste not, want not: High Court rejects £600 million crypto landfill recovery claim

The High Court has dismissed a claim to retrieve a hard drive from a Welsh landfill containing the key required to access more than £600 million worth of Bitcoin.  This article explores the Court’s ruling in James Howells v Newport City Council [2025] EWHC 22 (Ch), a case which sheds light on the legal complexities surrounding the ownership of digital assets.

Background

James Howells mined 8,000 Bitcoin in 2009, storing the private key needed to access his cryptocurrency on a hard drive.  In 2013, his partner inadvertently discarded the hard drive during a household clear-out, leaving it buried at Docksway Landfill Site, operated by Newport City Council.

Mr Howells had made several requests that Newport City Council allow him access to the landfill site so he could find and retrieve the hard drive.  His requests were largely ignored and so he issued a claim against Newport City Council in May 2024, seeking legal declarations of ownership over the hard drive and its contents, an order to allow Mr Howells to retrieve the hard drive, or compensation equivalent to the value of the Bitcoin which he claimed had ballooned in value to more than £600 million.

In June 2024, Newport City Council applied to strike out Mr Howells’ claim or alternatively for summary judgment.  The judgment on this application was handed down in January 2025.

The judgment

Ownership of the Bitcoin

The Court clarified the distinction between tangible and intangible property, and explained, citing Tulip Trading Limited v Van Der Laan [2023] EWCA Civ 83 and the Law Commission’s Digital Assets: Final Report (Law Com No. 412, 2023), that cryptocurrency, such as Bitcoin, is recognised as property under English law, despite not fitting within either traditional category of tangible or intangible property.  As such, cryptocurrency is commonly said to fall within a "third category" of personal property.  While Bitcoin is recognised as property in English law, it has no physical location – a characteristic it shares with other forms of intangible property and assets in this third category.

The Bitcoin cannot be located on a hard drive or in a landfill.  Instead, the hard drive contained a file (a record of the private key) necessary to access the Bitcoin.  The Court therefore concluded that the ownership of the Bitcoin was not in issue.  Rather, the relevant question concerned the ownership and recovery of the physical hard drive.

Ownership of the hard drive

Newport City Council cited s14(6)(c) of the Control of Pollution Act 1974 (CPA) in support of its case that it owns the hard drive.  It provides that “anything delivered to the authority by another person in the course of using the facilities shall belong to the authority and may be dealt with accordingly.”

Mr Howells advanced three counterarguments to this: (a) that the word “belong” is a factual rather than a legal term; (b) that s14 of the CPA does not preclude the possibility of concurrent ownership; and (c) that the words "in the course of using the facilities" do not apply in circumstances where Mr Howells claims his partner disposed of the hard drive without his consent.

Each of these arguments was given short shrift by the Court which concluded that s14(6)(c) of the CPA provided a sufficient answer to the question, namely that as soon as the hard drive was deposited at the landfill, it became the council’s property.

Proprietary restitutionary claim

Mr Howells advanced a personal claim against Newport City Council for the restitution of the value of the Bitcoin.

However, considering Armstrong DLW GmbH v Winnington Networks Ltd [2012] EWHC 10 (Ch), and the analysis above, the Court concluded that it did not accept Mr Howells’ case.  This was because: (a) the requirement that the claimant have subsisting property rights in an asset held by the defendant could not be satisfied (as the Court had concluded that Newport City Council owned the hard drive pursuant to s14(6)(c) of the CPA); and (b) a proprietary restitutionary claim is a common law claim based on the retention of legal title and so the remedy is not available where the asset (here, the hard drive) is tangible.

Equitable proprietary claim

Mr Howells also advanced an equitable claim, arguing that, if Newport City Council did in fact own the hard drive, then it held it on constructive trust[1] for him.  Mr Howells argued that a constructive trust arose when the Newport City Council became aware in 2013 that it held the hard drive without his consent.

However, considering Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, the Court considered that this claim faced three major obstacles.  Firstly, the requirement that the claimant have an equitable interest in an asset held by the defendant could not be satisfied (as above, Newport City Council owned the hard drive).  Secondly, the retention of the hard drive by Newport City Council could not realistically be deemed unconscionable (because the hard drive was buried under thousands of tonnes of waste on a landfill site and retrieving it would require breaching environmental laws and obtaining permits that Newport City Council had declined to pursue for the practical and legal reasons set out in the judgment).  Finally, the claim was time-barred under the Limitation Act 1980 (a claim by a beneficiary under a trust to recover trust property or in respect of a breach of trust is subject to a six-year limitation period).

Comment

The Court was unmoved by Mr Howells’ offer to give to the city of Newport 10% of any recovered Bitcoin.  Instead, the Court’s analysis focused squarely on the legal fundamentals of property ownership.

The judgment highlights a crucial distinction that illuminates the nature of digital assets.  Mr Howells had not lost his Bitcoin, just the means to access it (the hard drive containing his private key).  Whilst a lost key might be viewed as equivalent to lost cryptocurrency, the law draws a sharper line – the Bitcoin exists independently of any physical device used to access it.

Footnote

[1] A constructive trust is a trust which arises by operation of law (rather than by agreement) where one person would otherwise wrongfully obtain or retain an asset which rightfully belongs to another person.