Appeal by Waheeda Akram against Assessor for Lothian Valuation Joint Board (Court of Session)

Factual and Procedural Background

The Plaintiff, a waste management company, contracted with Company A (the scheme administrator) to act as logistics provider for a deposit-return programme established by the Defendant under powers in the Climate Change (Scotland) Act 2009 and the Deposit and Return Scheme for The State Regulations 2020. Company A appointed the Plaintiff as logistics provider on 18 July 2022. The contract anticipated mobilisation ahead of an operational date in August 2023 and included mitigation measures (insurance, producer pre-pay arrangements and a contractual longstop).

Between 2021 and 2023 political and inter-governmental issues arose under the Internal Market Act 2020 (IMA). The Defendant sought an IMA exclusion for the scheme; a broad exclusion sought in 2021 was not granted in March 2022, and a scheme- specific application was not transmitted in final form until March 2023. On 26 May 2023 the Central Government indicated it would approve a conditional, partial exclusion that excluded glass; the Defendant thereafter announced a substantial postponement of the scheme (June 2023). Company A went into administration and refused to perform the Plaintiff's contract, which the Plaintiff contends caused loss of £51.4m.

Procedurally, the Plaintiff sued the Defendant claiming negligent misrepresentation (a comfort letter dated 17 May 2022 from the Minister) and an independent duty of care by way of assumed responsibility to warn of IMA-related risk. The court held a diet of proof on liability limited to (a) whether a duty of care existed and (b) whether any breach caused loss (quantum left over if necessary). Judge Sandison heard oral and documentary evidence from witnesses for both sides and reserved other issues.

Legal Issues Presented

1. Whether the Defendant owed the Plaintiff a duty of care in relation to statements made in a letter dated 17 May 2022 (negligent misrepresentation) and/or a duty positively to disclose the status and materiality of any IMA exclusion process (assumption of responsibility / failure to warn).
2. If such a duty existed, whether it was breached by the Defendant (by omission or misleading reassurance) and whether any breach caused the Plaintiff's losses.

Arguments of the Parties

Plaintiff's Arguments

• The 17 May 2022 ministerial letter constituted a negligent misrepresentation (a half-truth) because it reassured the Plaintiff as to the deliverability and legislative footing of the scheme while omitting the material fact that an IMA exclusion was required, had not been sought and might not be granted; reliance induced the Plaintiff to enter the contract and incur mobilisation expenditure.
• Alternatively, the Defendant assumed a special responsibility towards the Plaintiff (the only party able to apply for an IMA exclusion and uniquely informed of its status) and thus owed a duty to warn; the Defendant breached that duty by failing to alert the Plaintiff to the IMA position and to the absence of an active, advanced exclusion request.
• Reliance was reasonable because the Plaintiff was the unique prospective logistics provider, had expressed its capital exposure, and the ministerial reassurance was a decisive factor for senior management recommending signature.

Defendant's Arguments

• The 17 May 2022 letter was a true political and administrative reassurance about commitment to the programme and Company A's approved status; it did not assert matters of law that were untrue and did not represent an undertaking to provide legal advice about the IMA.
• The Plaintiff was an experienced commercial operator with internal and external legal and financial advisers; it was unreasonable to rely on a ministerial comfort letter instead of conducting legal inquiry about the public-law landscape and the IMA.
• No wider duty to warn existed as a matter of private law in the context of decisions to implement public policy; the Defendant followed the common- framework process for an IMA exclusion and cannot be held liable for political or ministerial decisions by the Central Government.
• If any duty were recognised, causation and mitigation issues remained unresolved and the Plaintiff had contractual and insurance mitigations available which undermined reliance and causation.

Table of Precedents Cited

Court's Reasoning and Analysis

The court framed the dispute narrowly: whether (a) the 17 May 2022 ministerial letter was a negligent misrepresentation (or created an assumed responsibility to the Plaintiff) and (b) whether any duty to warn existed and was breached causing loss. The court proceeded by (i) construing the letter objectively in its factual context; (ii) assessing whether a reasonable recipient in the Plaintiff's position could have taken from it the material false impression alleged; (iii) determining whether reliance by the Plaintiff upon any such impression was reasonable; and (iv) analysing whether the Defendant, by voluntarily issuing the letter, had assumed a responsibility extending to disclosure of IMA-exclusion status.

On construction and reliance the court accepted that the Defendant had relevant specialist knowledge and that the letter plainly sought to reassure parties about political commitment and Company A's approved status. The court rejected the Plaintiff's contention that the letter should reasonably have been read as a guarantee that no further legislative obstacle (the lack of an IMA exclusion) remained. The judge found (a) the Plaintiff's CEO's later account that he understood the letter to convey legislative sufficiency was not supported by contemporaneous evidence and was improbable; (b) an objectively reasonable reader would not have inferred the broader legal assurance asserted by the Plaintiff; and (c) reliance on that strained construction would not have been reasonable.

On the assumption-of-responsibility / duty-to-warn limb, the court held the Defendant did assume responsibility to state matters of its private knowledge in the letter with reasonable care (eg commitment and Company A's approval). That assumption did not, however, extend to a free-standing promise to disclose all material matters (including public-domain or inter-governmental matters) the Defendant had not volunteered. The letter expressly invited further questions; no further enquiries were made. The court observed that, had the Defendant assumed a wider responsibility, disclosure would be limited to information uniquely within its private knowledge, not matters in the public domain or for which industry observers and the Plaintiff's advisers might reasonably be expected to investigate.

On causation the court noted that the Plaintiff asserted it would not have contracted had it been told the true IMA position. The judge accepted that evidence in the abstract but concluded there was no established misrepresentation because no reasonable reader would have taken the letter to mean what the Plaintiff later said it did. Consequently, the misrepresentation claim failed. Similarly, because the objective scope of any assumption of responsibility did not extend to the undisclosed IMA matters the Plaintiff relied upon, the duty-to-warn claim failed. The court therefore found no actionable breach by the Defendant.

Holding and Implications

DECREE OF ABSOLVITOR GRANTED

Holding: The court dismissed the Plaintiff's claims. It held that (1) the 17 May 2022 letter did not, on objective construction, amount to a negligent misrepresentation as alleged; and (2) while the Defendant assumed responsibility to state accurately matters of its private knowledge in issuing the letter, it did not assume a broader duty to disclose the state of inter-governmental processes concerning the IMA that the Plaintiff asserted it should have been told.

Implications: The direct consequence is that the Plaintiff's liability claim against the Defendant fails and no proof on quantum is fixed. The decision applies established principles on negligent misstatement and assumption of responsibility to a public-authority context and does not create a novel expansion of duties on government to provide comprehensive legal updates to private commercial counterparties; no new precedent enlarging public-law disclosure duties was established.