The case, which was heard in the Scottish Court of Session on October 20, relates to a two-year period when Patersons Waste Disposal Ltd was constructing “fluff layers” over cells at its landfill site in Greenoakhill, Glasgow.
Patersons submitted a landfill tax rebate claim for the work, undertaken between 2007 and 2009, arguing that it should be classified as being for engineering purposes. Following negotiations, HMRC repaid the sum of £529,946.
At the time of the engineering work, Patersons was engaged in a 15-year disposal contract with Biffa – which was depositing waste at the landfill site at an agreed rate per tonne, plus an additional VAT and Tax rate.
Learning of the negotiations, court papers explain that Biffa wished to find out whether it had a right to a share of the repayment and asked Patersons to disclose where any of its materials had been used in construction of the fluff layers.
Summons
Biffa served a summons on the action in 2013 after it claims Patersons declined to provide the information. The firm now seeks an order to recover sums that can be attributed to its landfill tax rebates.
The court papers note: “Failing an accounting, Biffa seeks payment of £2 million”. This, says the documents, is “well above” the £529,956 as the company believes that further repayments may have been made to Patersons by HMRC.
Patersons defends its claim that Biffa’s waste materials were not used to construct the fluff layers and argues Biffa has “waived its right” to make the claim on four legal points:
- The parties were not in an agency relationship as Biffa was a taxpayer;
- On proper construction of the agreements, Patersons has no duty to repay any sums to Biffa;
- No claim lies in unjust enrichment, and;
- Part of the claim has been prescribed.
However assessing the case, Lord Woolman dismissed all four legal points.
He noted that on construction of tipping agreements, a reasonable commercial person would not hold that Biffa had agreed to confer a ‘windfall benefit’ on Patersons.
Lord Woolman also maintained ‘a degree of scepticism’ over Patersons’ argument that if there had been unjustifiable enrichment, HMRC would have resisted repayment or directed part of the sums to Biffa.
He also chose to overrule the point of prescription because Biffa had first sent a query to Patersons in 2009 – which had been “hampered” because Patersons only supplied relevant information relating to the repayment in late 2014 and early 2015.
Deciding to allow the case to proceed, Lord Woolman concluded: “I shall fix a by order hearing to determine further procedure in the light of this opinion. I wish counsel for Biffa to address me on the basis upon which it claims an alternative monetary sum above the repayment figure mentioned in the joint minute.”
Disagreement
The dispute is the latest legal disagreement between the two companies, after Patersons brought proceedings against Biffa in 2013.
This related to a contested clause within the 15-year contract between the two firms, which observed Biffa would have to deliver 80% of commercial and industrial waste from within its collection area to the landfill site from the sixth year.
In the latest hearing, Lord Woolman noted: “I should add that the commercial relationship between the parties has been under strain from time to time.”
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