Waste management company Biffa has been given the greenlight to sue the Scottish Government for £166m over its dealing of the Deposit Return Scheme (DRS). The decision was made by Judge Lord Clark at the Court of Session in Edinburgh.
Biffa was named as the Scottish scheme’s official logistics service provider in July 2022 and had committed significant funds towards implementation of the DRS. The contract between Biffa and DRS administrator Circularity Scotland was for an initial period of 10 years and was anticipated by Biffa to generate profit of £114.8m.
Biffa invested £51.4m in preparing for the launch of the DRS, including: (i) purchasing counting and sorting machines, containers, vehicles for collection and machinery to recycle; (ii) entering into leases for sites; (iii) recruitment; and (iv) negotiation of sub-contracts. The company had anticipated that the sum would be recouped once the DRS was in operation.
The scheme was due to be implemented on March 1 2024, but was delayed in June 2023 with then Circular Economy Minister, Lorna Slater, blaming the UK Government for refusing to agree a full exclusion from the Internal Market Act. The scheme was then put back until ‘at least October 2025’ before being further delayed until October 2027.
The waste management firm argued that the Scottish Ministers were liable for the loss of those investment and management costs, amounting to £51.4m, and also for the loss of profits that would have been generated, said to be £114.8m.
Biffa has accused the government of negligence for claiming that the scheme was viable and of breaching a duty of care.
The alleged breaches of duty are, firstly, ministers failed to alert Biffa that Internal Market Approval was required, had not been sought and had not been granted. Secondly, Biffa alleged that Scottish Ministers failed to apply to the UK Government for Internal Market Act approval timeously. It is alleged that they ought to have applied for approval at an earlier stage, and in particular before encouraging the Biffa to enter into the contract. By not applying for approval until March 2023, the Scottish Ministers created a situation in which there was insufficient time for them to implement the DRS with any changes necessitated by the approval process, claims the firm.
The allegations were denied by the Scottish Ministers, who had sought for the case to be dismissed.
