Waste company's £51 million claim thrown out after judge finds ministerial letter expressing "unwavering commitment" to deposit return scheme was political rhetoric, not a legal guarantee that induced investment.
Biffa has lost its attempt to recover £51.4 million from the Scottish Government over the collapse of Scotland's deposit return scheme in 2023.
A judgment published on 16 January by Scotland's highest civil court rejected both of the company's legal arguments: that Scottish Ministers had misled Biffa in a letter, and that they should have warned the company about risks to the scheme before it signed up.
Biffa was appointed in July 2022 as the sole logistics provider for Scotland's DRS under a 10-year contract with Circularity Scotland Limited (CSL), the industry-funded scheme administrator. To fulfil this, it invested around £51.4 million in vehicles, equipment, a depot in Motherwell and staff ahead of the scheme's planned August 2023 launch, anticipating profits of £114.8 million over the contract's duration.
At the heart of the case was a letter sent by then Circular Economy Minister Lorna Slater to Biffa Chief Executive Michael Topham on 17 May 2022. The letter stated the Scottish Government's commitment to delivering the DRS by August 2023 "remains unwavering" – but said nothing about a crucial hurdle, that the scheme still needed an exclusion from the UK Internal Market Act 2020 to operate legally.
The Internal Market Act problem
Without an IMA exclusion, drinks producers complying with English regulations could sell products in Scotland without meeting Scottish DRS requirements, undermining the whole scheme.
The Scottish Government only began the formal exclusion process in October 2022, some 29 months after the DRS Regulations were passed. Westminster received the formal request on 6 March 2023 – just five months before the scheduled launch.
On 26 May 2023, the UK Government granted only a partial exclusion, requiring glass to be removed from the scheme, prompting Scottish Ministers to announce a delay on 7 June. Major drinks firms then withdrew funding from CSL, which entered administration on 20 June with debts of approximately £86 million, with around £65 million of this owed to Biffa.
The company argued the Slater letter was a "half-truth" that induced it to sign its contract with CSL, claiming the letter provided assurances about the scheme's viability without disclosing that an IMA exclusion was still needed and might not be granted.
Court verdict
Lord Sandison, the presiding judge, found that no reasonable person could have read the letter as a guarantee that all legislative requirements had been satisfied. He said it was "properly construed" as expressing political commitment to the scheme and providing reassurance about CSL's status – nothing more.
Topham had told the court he treated the letter as an "absolute rock-solid commitment" and "akin to a guarantee." However, the judge was unconvinced, finding this interpretation was more likely developed with the benefit of hindsight. Furthermore, Lord Sandison concluded, there was no documentary evidence that Biffa read the letter this way at the time.
In fact, internal Biffa emails told a different story. The company's CFO described the letter as an "irrelevance" on 17 May 2022, the day it arrived. In addition, the company went on to secure insurance covering legislative delay, negotiated advanced producer fees, and obtained a longstop date providing termination rights – all before signing its contract two months later.
On Biffa's second argument – that Scottish Ministers owed the company a duty of care – the judge found that any responsibility they assumed extended only to what was actually stated in the letter, not to a broader obligation to share everything they knew about IMA risks.
Former Scottish Secretary Lord Alister Jack, who gave evidence during the hearing in October 2025, described the Scottish Government's handling of the scheme as "utterly irresponsible" and "farcical." Jack was the UK minister who refused to grant a full IMA exclusion in 2023.
In her testimony, Slater told the court she knew from 2021 that an IMA exclusion would be needed but believed it would be obtained "fairly straightforwardly" through the common frameworks process between UK and devolved governments.
Lord Sandison was clear that his judgment addressed only the legal questions before him. The court was "not concerned with the question of who (if anyone) ought to be regarded as bearing political responsibility" for the scheme's failure, he noted.
Scotland's DRS is now scheduled to launch in October 2027, aligned with planned schemes for England and Northern Ireland.
In response to the judgement, Biffa has said it is currently reviewing its position with its legal team.
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How will the government and DMOs address the challenges of including glass in DRS while ensuring a level playing field across the UK?
There's no easy solution to include glass in the DRS while maintaining a level playing field. Potential approaches include a phased introduction of glass, potentially with higher deposits to reflect its logistical challenges. The government and DMOs could incentivise innovation in glass packaging design and subsidise dedicated return points for glass-handling. Exemptions for smaller businesses unable to handle glass might also be necessary. Any successful solution will likely blend several approaches. It must address the differing priorities of devolved administrations, balance environmental benefits with logistical and cost implications, and be supported by robust consumer education campaigns emphasizing the importance of glass recycling.