WASTE from a recycling site near Chepstow leaked into a ditch from a lagoon intended to contain it, Cardiff Crown Court heard yesterday.

Wormtech Ltd ran a site in Caerwent treating thousands of tons of food and garden rubbish from houses in Gwent each year, but the company admitted polluting a watercourse in 2010 and was served a notice from the government that it had to make changes.

It continued trading but the Environment Agency suspended its licence in July 2012 after becoming aware of a leak of a black liquid containing salmonella and E.coli from a composting building, a jury heard.

Former director Jacqueline Powell, of Manor Road, Cardiff, is standing trial for alleged breaches of an environment permit.

David Jones, a geologist tasked with inspecting the site in July 2012 to see if the water supply could be contaminated, gave evidence at the trial yesterday.

In a report, Mr Jones described how a lagoon intended to store the potentially contaminating fluid was lined with what looked like plastic sheeting. A nearby ditch should not have been affected but he concluded: “The ditch was around three quarters full of leachate along an approximate hundred metre stretch. There was also evidence that the level had been higher and had spread to the surrounding areas.”

Grass near the ditch appeared scorched, and Mr Jones also noted the liquid appeared to be escaping from piles of compost which were stood on cracked concrete. In his report Mr Jones advised the issues should be addressed as soon as possible.

Mr Jones said leachate was “clearly visible” coming from the doors of the building: “It was quite a lot. You could almost see running water of leachate, but I couldn’t give you an exact figure.

Earlier in the trial Kelly Jarman, a permit regulator, described the site on MoD land as probably “the worst site I had been to. I was taken aback by the smell on site and the state of the site. Not only the amount of waste which was there, but the lack of management on site.”

In July 2012 the company’s licence was suspended. But Wormtech Ltd, originally licensed to compost up to 75,000 tons of food and garden waste, was unable to take on more waste or generate any income owing to the suspension and the company left the site with £40,000 debts, the court was told on Tuesday.

Powell denies three counts of consenting to or conniving as a director of a company of failing to comply with an environmental permit.

She also denies one count of consenting to or conniving as a director of treating, keeping or disposing controlled waste on land in a manner likely to cause pollution.