Duty of Care in Public Authority Contracts: Insights from Biffa Waste Services Ltd v Scottish Ministers

Introduction

The case of Biffa Waste Services Limited against the Scottish Ministers ([2025] CSOH 9) adjudicated in the Scottish Court of Session on January 28, 2025, presents a pivotal examination of the duty of care owed by public authorities in the context of commercial contracts. This commentary offers an in-depth analysis of the judgment delivered by Lord Clark, delving into the intricacies of the case, the legal principles applied, and the potential implications for future jurisprudence.

Parties Involved:

Pursuer: Biffa Waste Services Limited, represented by Dean of Faculty KC, McWhirter, DLA Piper Scotland LLP.
Defenders: The Scottish Ministers, represented by Moynihan KC, Reid KC, Arnott; Scottish Government.

Background: Biffa Waste Services Limited engaged in substantial financial investments to implement the Scottish Government's Deposit Return Scheme (DRS). The Scottish Ministers' subsequent delays in activating the DRS led Biffa to seek damages for lost investments and anticipated profits.

Summary of the Judgment

In this commercial dispute, Biffa Waste Services Limited claims that the Scottish Ministers breached a duty of care and engaged in negligent misrepresentation, resulting in significant financial losses amounting to £166.2 million. The Scottish Ministers, however, contest these claims, arguing the absence of such a duty and asserting that the decisions involved fall within non-justiciable political judgments.

Lord Clark, delivering the opinion, analyzed the arguments regarding duty of care and negligent misrepresentation. He concluded that the defendants' plea that the duty of care owed by the Scottish Ministers must be dismissed at this preliminary stage was unpersuasive. Instead, Lord Clark allowed the case to proceed to a full trial, emphasizing that the determination of duty of care and negligent misrepresentation would require a detailed examination of the evidence presented.

Analysis

Precedents Cited

The judgment references a multitude of precedents that have shaped the current understanding of duty of care, especially concerning public authorities. Notably:

Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964): Established the foundation for negligent misrepresentation, emphasizing the duty owed by parties with special skills who provide information or assurances.
Caparo Industries Plc v Dickman (1990): Introduced the tripartite test for duty of care, assessing foreseeability, proximity, and whether it is fair, just, and reasonable to impose such a duty.
N v Poole Borough Council (2020): Clarified that public authorities are subject to the same negligence principles as private entities unless explicitly excluded by statute.
Spring v Guardian Assurance PLC (1995): Reinforced the broad interpretation of "special skill" in assumption of responsibility cases.

These precedents collectively influenced Lord Clark's assessment, ensuring that the principles applied were consistent with established law while addressing novel aspects introduced by this case.

Legal Reasoning

Lord Clark's legal reasoning hinged on the nuanced relationship between Biffa and the Scottish Ministers. The critical examination focused on whether the Ministers assumed responsibility toward Biffa in a manner that established a duty of care. This was assessed through the lens of:

Assumption of Responsibility: Determining if the Ministers' actions, particularly the letter dated May 17, 2022, created an expectation of care and reliability that Biffa could justifiably rely upon.
Negligent Misrepresentation: Evaluating whether the assurances provided by the Ministers in the aforementioned letter constituted misrepresentations that Biffa reasonably relied upon, leading to financial loss.
Justiciability: Analyzing whether the Ministers' decisions involved non-justiciable political judgments or if they fell within the ambit of legal scrutiny.

Lord Clark emphasized the importance of context and the proceedings' need to proceed to a full trial for a comprehensive examination of the evidence, rather than making a premature dismissal based on the pleadings.

Impact

The implications of this judgment are multifaceted:

Clarification of Duty of Care: Enhances the understanding of when public authorities may owe a duty of care to private entities, especially in scenarios involving substantial financial commitments based on governmental assurances.
Public Authority Accountability: Sets a precedent that public bodies may face legal liability similar to private entities when their actions or omissions cause foreseeable harm to private parties.
Negligent Misrepresentation: Reinforces the accountability of public officials in ensuring that communications and assurances are accurate and not misleading, particularly in contexts that influence significant financial decisions.
Procedural Considerations: Illustrates the judicial approach towards complex commercial disputes involving public authorities, emphasizing a balanced consideration of legal principles and factual evidence.

Future cases involving similar dynamics between public authorities and private entities will likely reference this judgment, particularly concerning the establishment of duty of care and the parameters of negligent misrepresentation.

Complex Concepts Simplified

Duty of Care

A duty of care is a legal obligation requiring adherence to a standard of reasonable care while performing any acts that could foreseeably harm others. In this case, Biffa contends that the Scottish Ministers had such a duty towards them in the context of the DRS implementation.

Assumption of Responsibility

This concept arises when one party takes on responsibility for another's welfare or interests, creating a special relationship. Here, Biffa argues that the Ministers assumed responsibility by assuring them of the DRS's viability, leading Biffa to make significant investments based on those assurances.

Negligent Misrepresentation

This occurs when false information is provided carelessly, leading another party to suffer a loss due to reliance on that misinformation. Biffa claims that the Ministers' letter contained misleading assurances about the DRS's deliverability.

Justiciability

Justiciability refers to whether a court can adjudicate on a particular issue or dispute. The Scottish Ministers argue that the decisions in question involve political judgments unsuitable for court intervention.

Conclusion

The Biffa Waste Services Ltd v Scottish Ministers case serves as a significant indicator of how courts may approach the duty of care owed by public authorities in commercial contexts. While the judgment did not reach a final resolution on liability, Lord Clark's decision to allow the case to proceed underscores the judiciary's willingness to scrutinize the responsibilities and assurances provided by governmental bodies to private entities.

The case emphasizes the delicate balance between enabling public authorities to perform their functions without undue interference and ensuring they remain accountable when their actions lead to private losses. As this case advances to trial, its outcomes will likely influence the development of negligence law, particularly in delineating the boundaries of duty of care in interactions between public bodies and the private sector.

Key Takeaway: This judgment highlights the evolving landscape of negligence law concerning public authorities, potentially expanding the circumstances under which such bodies may be held liable for assurances and representations made to private entities.