Court dismisses £50m Biffa claim against failed bottle return scheme

A judge has ruled against a firm pursuing a £51.4m compensation claim against the Scottish Government over its doomed deposit return scheme.

Lord Sandison dismissed the compensation claim brought by Biffa Waste Services Ltd over a policy championed by former Green Party politician Lorna Slater.

The firm instructed lawyers to go to the Court of Session in Edinburgh. It sued Scottish ministers for £51.4m in damages – the firm was set to be a key commercial partner in the environmental initiative by delivering infrastructure for it to function.

Under the scheme, a 20p deposit would be added to all single-use drinks containers made from PET plastic, metal or glass – the fee could be reclaimed when the containers were returned to retailers or reverse vending machines.

The initiative, which had already been delayed, was due to go live in August 2023.

However, the plans were shelved weeks before the launch date following a dispute with the UK Government, which would have been required to grant the scheme an exemption from a piece of legislation called the Internal Market Act.

Its case centred on claims that were allegedly contained in a letter sent to Biffa from Lorna Slater MSP, the former minister for green skills, circular economy and biodiversity from 2021 to 2024, which was key to its decision to partner with Holyrood.

Michael Topham – the chief executive officer of Biffa Waste Services – told the Court of Session that he thought the letter provided his firm with “unambiguous” and “unequivocal” assurances that its recycling initiative would go ahead in 2023.

Last year, Biffa’s lawyer Roddy Dunlop KC said the letter, which was sent to Biffa in May 2022, misrepresented the true level of risk facing the project.

He said that at the time the letter was sent, Biffa had been “reluctant” to agree to become the scheme’s logistics partner due to concerns it could be cancelled or delayed. He said the contents of the letter were key to understanding why Biffa committed itself to the scheme.

He added: “It’s being written to try and persuade Biffa to get past the mental roadblock they have got of not wanting to expose themselves to a risk of cancellation and delay.”

He described the letter as “foundational” in Biffa’s decision to commit millions of pounds of its budget to the scheme.

He added: “It was important.”

Judge ruling

However, in a written judgment issued by Lord Sandison on Friday, the judge dismissed the case brought by Biffa. He concluded that the Scottish Government’s letter hadn’t misrepresented the risks facing the policy.

Lord Sandison wrote: “Taking all of these matters into account, I do not accept that a reasonable person could have looked at the words used in the letter and taken them either as amounting to a general statement that there was no risk that the scheme would not be proceeding and that all would be well, or to the more nuanced statement about legislative sufficiency which Mr Topham maintained that he in fact took from the words used.

“It is, indeed, difficult to see how such a person could have taken that the message being conveyed was anything more than was being frankly stated.

“Something much more than the wishful thinking upon which the pursuer’s case appears to proceed in this regard would be required, indeed something approaching the alchemy capable of transmuting base metal into gold, so far are the words used from the meaning which the pursuer requires.

“It was common ground between the parties that a further requirement for the pursuer to succeed in this branch of its case is that any reliance which it placed on the terms of the letter was reasonable in the circumstances.

“Given that the pursuer’s case depends on a construction of the letter which I have held could not have been entertained by a reasonable person, any reliance which might have been placed on that construction could not have been reasonable in nature and the questions of (a) what impression could have been taken from the terms of the letter by a reasonable person and (b) what could reasonably have been done in reliance on its terms, become in effect different ways of expressing the same enquiry.”

During proceedings last year, the court heard that Circularity Scotland (CSL), which was set up to administer the Scottish DRS, fell into administration in June 2023, and Biffa’s contract was terminated.

Mr Dunlop spoke of the letter in his closing submissions to Lord Sandison.

He said a key point in Biffa’s case was that it failed to mention the issues surrounding the Internal Market Act – a piece of legislation designed to standardise commercial practices in the different parts of the UK.

The Scottish Government’s lawyer, Gerry Moynihan KC, told the court that the case law in the matter showed that the Scottish Government didn’t have to tell Biffa about issues such as the Internal Market Act. He said that Biffa could have done its own research about the challenges surrounding the scheme.

He added: “The ministers did not have a duty to Biffa – Biffa should have sought its own counsel.

“Biffa could have but did not ask additional questions.”

In evidence, the Conservative politician who was the secretary of state for Scotland at the time of the DRS proposals – Alistair Jack – accused the Scottish Government of being “utterly irresponsible” in the way it tried to introduce the scheme north of the border.

He also said there was a “degree of incompetence” in the actions of the Scottish ministers.

Lord Jack said: “I had French wine producers telling me that they were going to stop selling their wine in Scotland.”

Lorna Slater told Mr Dunlop that she didn’t envisage the UK Government using the Internal Market Act to block the scheme.

She said that there were several “existential” issues which could have stopped the scheme from coming into being.

She said that addressing concerns about the Internal Market Act was another such issue, and the Scottish Government’s thinking was that the UK government wanted the scheme to go ahead.

Ms Slater added: “We had obtained an exclusion from the IMA before. We were fully confident that the process would be used again.”

On Friday, Lord Sandison ruled in favour of the government.

He added: “For the reasons stated, I shall repel the pleas-in-law for the pursuer, sustain the third plea-in-law for the defenders, and grant decree of absolvitor accordingly.”