Ministers “negligently misrepresented” a now collapsed drinks container return scheme with a waste management company to persuade it to sign up, a court has heard.

Waste disposal company Biffa is suing the Scottish Government for around £160 million, following a decision to abandon the proposed Deposit Return Scheme (DRS).

The waste management company, which was selected as a “logistics partner” for the project, said it had invested “significant amounts” to prepare this project before it was abandoned.

The DRS, which was due to come into force on August 16, 2023, would have imposed a deposit on buyers when purchasing drinks in cans and bottles, which would be refunded to them when the empty containers were returned.

However, the Scottish Government changed its plans when UK ministers used the Internal Market Act (IMA) to ban the inclusion of glass bottles.

Roddy Dunlop KC, representing Biffa, told the Court of Session in Edinburgh on Friday that his client had received “negligently distorted” assurances from government ministers to persuade him to agree to provide the logistical element of the project.

He said ministers were keen to bring the company on board for political and practical reasons, telling the court the government was aware that without a logistics provider the project would have been “dead in the water”.

He told the court that a letter to the company from Lorna Slater, then minister for the circular economy, with assurances about the viability of the project had concealed “particular information” that it was still awaiting approval of the IMA and that there was a risk that this would not happen at present. all.

He said this led to his client entering into an “onerous contract” which committed him to “tens of millions of pounds” in expenses.

He added that if his client had known the “truth” of the situation, he would not have subscribed to it.

He told the court: “Biffa wanted and demanded assurances. The minister was not required to give them, but she voluntarily chose to do so because she wanted Biffa on board.

“She had to know – because why would they have asked otherwise – she had to know that Biffa would trust what she said.

“It’s that simple.

“The minister knew the position regarding the approval of the IMA. We say that the minister had special knowledge.

“We say that in the light of this particular knowledge, the minister persuaded, even urged (Biffa) to enter into a contract which committed him to substantial financial expenditure.”

He also described as “remarkable” the fact that ministers apparently made no effort to “cure or correct” the situation, on the grounds that it would have been “politically inexpedient” to do anything to prevent the company to “hemorrhage financially”.

Mr Dunlop also explained the scale of the legal challenge, saying: “No one is asking the court to presume to question the DRS, or the decision to insert it.

“But what the court can do is decide whether the minister was negligent in the way the policy was put in place.”

Gerry Moynihan KC, representing the Scottish Government, reiterated calls from the first day of the hearing on Tuesday for the case to be thrown out.

He said Biffa’s decision to start spending money on the project was a “business risk” that the company had “chosen to take”.

He added that any assumptions made by the company about the project, including that it would proceed “as proposed” on August 16, 2023 and that it would include glass, were made at its “own risk”.

Judge Lord Clark said a decision in the case would be made “as soon as reasonably possible”.

A UK-wide DRS is not expected to start until the end of 2027.

Following the hearing, a spokesperson for Biffa said: “Biffa was selected by Circularity Scotland Limited as its logistics partner for the delivery of the Scottish Deposit Return Scheme and has invested significant sums to support its rapid and successful implementation.

“This was done in good faith and after receiving assurances from the Scottish Government.

“Having carefully considered our position with our advisors, we believe it is appropriate to take this legal action to seek redress for the losses suffered by Biffa.

“As the action is ongoing, we are unable to comment further at this time.”

The Scottish Government said it could not comment on ongoing litigation.