Limits of Government “Comfort Letter” Liability: No Assumed Responsibility to Disclose Regulatory Approval Risks

Introduction

Court: Outer House, Court of Session (Commercial Action)
Judge: Lord Sandison
Citation: [2026] CSOH 3 (Opinion dated 16 January 2026)
Parties: Biffa Waste Services Limited (pursuer) v The Scottish Ministers (defenders)

The pursuer, a waste management company, sought payment of £51.4 million for losses said to have been incurred after Scotland’s planned deposit return scheme (“DRS”) for single-use drinks containers was postponed and the scheme administrator, Circularity Scotland Limited (“CSL”), entered administration, resulting in termination of Biffa’s logistics-provider contract.

The DRS depended on an exclusion under section 10 of the Internal Market Act 2020 (“IMA”) to avoid UK internal market rules impeding the scheme’s enforcement (particularly during a period of divergence from other UK nations). Biffa’s central complaint was that, when it was being pressed to contract, it received a letter dated 17 May 2022 from the relevant Minister (Lorna Slater MSP) reassuring it of governmental “unwavering commitment” to launch by 16 August 2023, but the letter did not mention the IMA exclusion risk. Biffa alleged:

1. Negligent misrepresentation (a “half-truth”): the reassurance was misleading by omission; and
2. Breach of a broader duty of care grounded in assumption of responsibility, said to arise because only the Scottish Ministers could seek the IMA exclusion and they uniquely knew its status.

Proof before answer was restricted to whether any relevant duty of care existed, and if so, breach and causation (quantum reserved).

Summary of the Judgment

Lord Sandison assoilzied the Scottish Ministers. The court held:

• The 17 May 2022 letter contained no untrue statement and did not, objectively construed in context, create the false impression asserted by Biffa; therefore no negligent misrepresentation was established.
• The Ministers’ act of sending the letter could generate only a limited assumption of responsibility (to take care as to what they actually stated), but it did not expand into a general duty to volunteer broader project/legal risks such as the IMA exclusion status.
• As to any alleged post-contract “failure to warn”, the contract was already signed and Biffa led insufficient evidence of causation (what it could lawfully or practically have done and what loss that would have avoided).

Accordingly, the court repelled the pursuer’s pleas and granted decree of absolvitor.

Analysis

Precedents Cited

1) Public authority liability in negligence: no blanket immunity, but no general duty to protect

• Poole Borough Council v GN [2019] UKSC 25, [2020] AC 780
  Lord Sandison treated Poole as the modern starting point: public authorities may owe duties where private-law principles would impose them, unless inconsistent with statute; but public powers/duties do not themselves create a common law duty merely because harm could be prevented. Importantly, Poole identifies “assumption of responsibility” as a recognised route to duty, but not an automatic consequence of statutory function.
• Robinson v Chief Constable of West Yorkshire [2018] UKSC 4, [2018] AC 736
  Used (via submissions and the court’s framing) to emphasise that the analysis should begin with established principles rather than abstract “public policy” and that the question of inconsistency with statutory scheme may matter. The court accepted public authorities can be sued but insisted on orthodox duty analysis.
• Gorringe v Calderdale Metropolitan Borough Council [2004] UKHL 15, [2004] 1 WLR 1057 and Barrett v Enfield London Borough Council [2001] 2 AC 550
  These were invoked to show that even where discretionary statutory functions exist, negligence is not automatically excluded; the key is whether a common-law duty arises on orthodox grounds and whether statute excludes it. Lord Sandison treated these as relevant background but found the necessary assumption of responsibility did not extend as claimed.
• Jain v Trent Strategic Health Authority [2009] UKHL 4, [2009] 1 AC 853
  Relied on by the defenders to resist any “free-standing” duty to warn arising from statutory functions designed for public benefit. The court’s ultimate reasoning aligned with the caution in Jain: the Ministers’ general statutory role did not translate into a private-law obligation to protect a contractor’s economic interests by volunteering legal-risk advice.

2) Negligent misstatement / “assumption of responsibility”

• Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, [1963] 3 WLR 101
  The foundational authority for liability for negligent misstatement causing pure economic loss where a “special relationship” exists (now typically analysed as assumption of responsibility plus reliance). Lord Sandison accepted that, in principle, issuing a comfort-type letter can create a limited assumption of responsibility for the accuracy/care of what is actually said.
• Spring v Guardian Assurance plc [1995] 2 AC 296 and Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, [1994] 3 WLR 761
  Cited for the breadth of “special skill” encompassing “special knowledge”, and for the conceptualisation of assumption of responsibility beyond strict contract. This supported Biffa’s attempt to characterise Ministers as uniquely knowledgeable about the IMA exclusion process. However, the court held the assumption did not extend beyond the letter’s actual content and the invitation to ask further questions.
• Customs and Excise Commissioners v Barclays Bank [2006] UKHL 28, [2007] 1 AC 181
  Used for the objective nature of assumption-of-responsibility analysis: what responsibility is reasonably inferred from conduct in context, not subjective intention. Lord Sandison’s key move was exactly this: objectively, the Ministers assumed responsibility only for the truth/care of what they stated, not for a wider duty to disclose all potentially material risks.
• JP SPC4 v Royal Bank International Ltd [2022] UKPC 18, [2023] AC 461, [2023] 3 WLR 261
  Provided a structured, non-exhaustive set of factors for assumption-of-responsibility: purpose/benefit; defendant’s knowledge of reliance; and reasonableness of reliance. Lord Sandison accepted the framework’s relevance but held the objective scope of any assumed responsibility remained confined to the letter’s terms.
• Steel v NRAM Ltd [2018] UKSC 13, 2018 SC (UKSC) 141, 2018 SLT 835
  Cited for the requirement that reliance be reasonable and foreseeable in negligent-misstatement cases. The court’s conclusion that the alleged “legislative certainty” meaning was not one a reasonable recipient could draw effectively defeated reasonableness of reliance on that supposed meaning.
• HXA v Surrey County Council [2023] UKSC 52 , [2024] 1 WLR 335
  The defenders relied on it to stress specificity: ask what, precisely, the defender assumed responsibility to do. Lord Sandison used that approach to narrow any assumed responsibility to the letter’s actual content and not to an unbounded obligation to supply project “risk updates”.
• Batchelor v Opel Automobile GmbH [2025] CSOH 93
  Cited as a modern Scottish discussion of Hedley Byrne “touchstone” and factors indicating assumption of responsibility. The court accepted the doctrinal frame but found the necessary misleading impression (and thus the alleged negligent misrepresentation) was not established.

3) “Half-truths” and misleading impressions

• Gluckstein v Barnes [1900] AC 240, R v Lord Kylsant [1932] 1 KB 442, Park's of Hamilton (Holdings) Limited v Campbell [2008] CSOH 177
  These authorities were used by Biffa to argue that statements can mislead by omission even if literally true. Lord Sandison accepted the general proposition but held that, properly construed in context, the letter did not convey the alleged false impression.
• Royal Bank of Scotland plc v O'Donnell [2014] CSIH 84, 2015 SC 258 and Cramaso LLP v Earl of Seafield [2014] UKSC 9
  Cited to support continuing responsibility for pre-contract representations and the danger of half-truths. Lord Sandison did not dispute those principles but found no qualifying omission that made the letter misleading in the way asserted.
• Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 and Cassa Di Risparmio Della Repubblica Di San Marino Spa v Barclays Bank Ltd [2011] EWHC 484 (Comm), [2011] 1 CLC 701
  Used to ground the objective interpretation of alleged representations in their context. The court’s construction exercise was central: it concluded that the letter was a political/commitment reassurance and CSL-status clarification, not a representation that “no legislative obstacle remains”.

4) Causation debate in misrepresentation (acknowledged but not decisive)

• Raiffeisen Zentralbank Österreich AG v Royal Bank of Scotland Plc [2010] EWHC 1392 (Comm), [2011] 1 Lloyd's Rep 123, [2011] Bus LR D65
  Raised in submissions as to the correct “counterfactual” in misrepresentation causation (what if nothing had been said vs what if truth had been told). Lord Sandison expressly found it unnecessary/desirable to decide the “more controversial elements” of Raiffeisen because, having found no misrepresentation, reliance/causation did not arise in a way requiring resolution. Nonetheless, he endorsed a conventional “but for” understanding of causation in principle.
• JEB Fasteners Ltd v Marks Bloom & Co [1983] 1 All E.R. 583 and BP Exploration Operating Co Ltd v Chevron Shipping Co [2001] UKHL 50, 2002 SC (HL) 19, 2001 SLT 1394
  Cited for “real and substantial part” inducement, not sole cause.
• Downs v Chappell [1997] 1 WLR 426 and Smith New Court Securities Ltd v Citibank [1997] AC 254
  Appeared in submissions around causation in deceit vs negligence; the court did not need to enter that terrain in deciding the case.

5) Public law analogies (rejected as determinative)

• Re Finucane's Application for Judicial Review [2019] UKSC 7, [2019] 3 All ER 191 and R v Secretary of State for the Home Department, ex parte Fire Brigades Union [1995] 2 AC 513
  Invoked by the defenders to stress the nature of political judgment and legitimate expectation thresholds. Lord Sandison rejected the defenders’ attempt to import legitimate expectation as a limiting comparator for private-law negligence; the delictual question is separate.

Legal Reasoning

A. The negligent misrepresentation claim failed at the first hurdle: no misleading impression

The letter was central. Biffa’s theory required the court to hold that, although literally true, the letter created a false impression—specifically that there was no unresolved legislative obstacle such as the IMA exclusion issue. Lord Sandison’s reasoning proceeded in three steps:

1. Identify the alleged “impression”: Biffa’s CEO eventually framed it as “no legislative obstacle remained; the scheme was sound in law.”
2. Test whether Biffa actually formed that impression: the court found the evidence “intrinsically” unlikely and unsupported by contemporaneous material. The more probable understanding was that the letter offered high-level reassurance on political commitment and CSL’s status—not legislative certainty.
3. Apply objective construction in context: even taking the commercial background (pressure to sign; concern about delay/cancellation), a reasonable recipient could not read the letter as a guarantee of legislative deliverability or as assuring that all regulatory approvals were secured.

Because the letter did not bear the meaning required, Biffa could not establish either misleadingness or reasonable reliance on that supposed meaning. The “half-truth” doctrine did not assist: omission only matters if it renders what was said misleading in the relevant sense.

B. Assumption of responsibility existed only in a narrow sense—and did not create a duty to volunteer IMA-exclusion status

Lord Sandison accepted that by voluntarily issuing the letter, the Ministers assumed responsibility to take reasonable care as to what they chose to communicate. But he drew a sharp line between:

• Responsibility for the accuracy/care of stated information (possible); and
• A general responsibility to supply all material information needed for Biffa’s contracting decision (not objectively assumed).

Two features were decisive:

1. The letter’s scope and closing invitation: the last sentence offered to provide further information if Biffa required it. That indicated the Ministers were not undertaking a comprehensive “risk briefing”; they were responding on limited points and leaving the initiative with Biffa to ask.
2. Objective limits of the “nexus” created by speaking: the proximity created by the letter did not extend beyond its terms. Assumption of responsibility is not a policy lever to impose whatever wider disclosure duty seems desirable; its scope must be grounded in what the defender objectively undertook.

C. The post-contract “failure to warn”/mitigation narrative did not prove causation

Even if the Ministers had later said something (e.g., September 2022 meeting), the contract was already signed and Biffa’s evidence went only so far as: “we would have taken legal advice and wanted to pause expenditure.” The court noted:

• No evidence of what advice would have been given;
• No demonstration that Biffa could lawfully or contractually suspend performance merely because a third party (the Ministers) had not disclosed risk; and
• No proof that loss would probably have been avoided in consequence.

On the restricted proof, Biffa had not established that any alleged omission after signing caused it any loss at all.

Impact

The judgment is significant for commercial counterparties engaging with government-backed projects and for public bodies issuing reassurance communications:

• Comfort letters are construed narrowly. Even emphatic language (“unwavering commitment”) will not readily be treated as a representation that all legal/regulatory preconditions have been satisfied.
• Assumption of responsibility is not a general disclosure obligation. A public authority may assume responsibility for the care/accuracy of what it says, but that does not automatically morph into a duty to volunteer other risks—even risks uniquely within governmental knowledge—unless the objective undertaking extends that far (e.g., by answering specific questions or providing a comprehensive advisory assurance).
• Proof of causation matters acutely once a contract is signed. A claimant must show (with evidence, not assertion) what alternative course was available, lawful, and likely to reduce loss.
• Separation of political responsibility from private-law liability is reinforced. The court was explicit that it was not adjudicating political blame for the DRS failure, but orthodox delictual duties and causation.

Complex Concepts Simplified

Negligent misrepresentation (Hedley Byrne liability)

A claim for economic loss based on careless statements, requiring (i) a duty of care (often via “assumption of responsibility”), (ii) a misleading statement (including, sometimes, a misleading half-truth), (iii) reasonable reliance, and (iv) causation of loss.

“Half-truth”

A statement that is literally true but misleading because it omits a qualification or related fact that makes the overall impression false. The omission must make what was actually said misleading in context.

Assumption of responsibility

An objective legal mechanism by which a duty of care can arise where someone undertakes (expressly or implicitly) to use reasonable care for another’s benefit—commonly by providing advice/information in circumstances where reliance is foreseeable and reasonable. The scope is limited to what is objectively undertaken.

Internal Market Act 2020 (IMA) exclusion (section 10)

A mechanism allowing certain measures to be excluded from UK internal market “market access principles” so regulatory divergence can operate. In this case, the political/administrative process around exclusion (and conditions such as glass being excluded) was part of the factual background to why the DRS was postponed.

Conclusion

Lord Sandison’s decision establishes a clear, practically important boundary: when government provides a reassurance letter to facilitate private contracting, any private-law duty is confined to taking reasonable care that what is actually said is accurate and not misleading in its proper context. Without more—such as answering specific inquiries or undertaking an advisory role—there is no assumed responsibility to volunteer additional legal or regulatory risks, even if government uniquely knows their status. For claimants, the case is also a cautionary illustration that post-contract loss mitigation theories require concrete evidence of what could have been done and how loss would probably have been avoided.