Landmore Limited V. Shanks Dumfries And Galloway Limited
| Jurisdiction | Scotland |
| Judge | Lord Menzies |
| Neutral Citation | [2011] CSOH 100 |
| Court | Court of Session |
| Published date | 16 June 2011 |
| Year | 2011 |
| Docket Number | CA107/10 |
| Date | 16 June 2011 |
| OUTER HOUSE, COURT OF SESSION [2011] CSOH 100 | |
| CA107/10 | OPINION OF LORD MENZIES in the cause LANDMORE LIMITED Pursuers; against SHANKS DUMFRIES AND GALLOWAY LIMITED Defenders: ________________ |
Pursuers: MacColl; Tods Murray LLP
Defenders: Borland; Semple Fraser LLP
16 June 2011
Introduction
[1] The pursuers are the heritable proprietors of Galdenoch Landfill and Civil Amenity Site ("the premises"), near Stranraer. By lease dated 26 July and 25 November 2004 ("the lease") the pursuers let the premises to the defenders from 27 November 2004 until 26 November 2030. The premises were to be used as a landfill refuse site and civil amenity waste disposal site.
[2] Clause 2 of the lease provides that the defenders will pay an occupational rent (subject to review) together with a "Royalty Rent" to be calculated on the basis of the material being brought onto the premises by the defenders. Clause 2(3) provides that the tenant shall ....
"pay to the Landlord an additional royalty rent ("the Royalty Rent") comprising the following:-
(i) in respect of the first 40 metric tonnes of inert waste entering the Premises on any given day the sum of THIRTY PENCE (£0.30) sterling per metric tonne of inert waste entering the premises;
(ii) in respect of (a) each additional metric tonne of inert waste entering the Premises on any given day over and above the first 40 metric tonnes entering the Premises on the same day, and (b) each metric tonne of putrescible waste entering the Premises, the sum of ONE POUNDS (£1) sterling per metric tonne of inert waste or putrescible waste, as the case may be ("the Base Figure"), (in each case exclusive of value added tax);
subject to a minimum annual payment in respect of the Royalty Rent of FIFTEEN THOUSAND POUNDS (£15,000) sterling (exclusive of value added tax) ("the Minimum Royalty Rent"), which Royalty Rent shall be payable quarterly in arrears without any deduction or set off whatsoever on 28 February, 28 May, 28 August and 28 November throughout the duration of this Ground Lease, the first payment being due on the Scottish Quarter Day following the Date of Entry and so forth quarterly in arrears ....".
In addition, Clause 8.8 of the Lease provides inter alia as follows:
"The Tenant will supply to the Landlord upon written request (but not more than quarterly) certified documentation in respect of the tonnage of putrescible and inert waste entering the Premises ....".
[2] In order to operate the premises as a landfill site, the defenders bring material onto the premises which they use to form cells, which are then filled and thereafter capped and the area landscaped with other materials brought onto the premises by the defenders. The pursuers aver that the material brought onto the premises by the defenders for these purposes is material which is discarded and disposed of by the defenders within the premises, and is accordingly inert waste for the purposes of Clause 2(3) of the lease and falls to be taken into account in the calculation of Royalty Rent. They refer to the Waste Framework Directive (75/442/EEC) (as amended), and to SEPA guidance "Is It Waste". They aver that the definition of the Royalty Rent in Clause 2 of the lease included a discrete element for inert waste in order to provide for payment to the pursuers of a sum in respect of these materials. The materials having been discarded by a third party fall to be regarded as waste. The defenders deny that the materials used in the construction of the cell, its capping or its landscaping is, in any ordinary and natural sense of the word, "waste". The materials are not refuse matter, nor are they unserviceable materials or useless by-products. They are not damaged articles nor are they discarded.
[3] In the present action the pursuers seek several remedies. In their first conclusion they seek declarator (reading short) that all inert material brought by the defenders onto the premises during the currency of the lease for the purposes of (a) waste cell modelling, (b) waste cell capping, and (c) land restoration purposes is "inert waste" for the purposes of Clause 2(3) of the lease. For present purposes, I need not rehearse the other remedies sought by the pursuers, as they were not the subject of live discussion before me. Parties were agreed that a proof before answer should be held limited to the pursuers' first conclusion, and to parties' averments directed in support of and against that conclusion. I heard evidence and submissions in relation to this aspect of the dispute. In the course of closing submissions, both counsel agreed that the following question should be answered by the court:
"Does the soil (and any other inert material) forming the waste regulating layer and restoration materials layer of Areas 1, 2 and 3 and Cell 1 of the Galdenoch Landfill Site (as identified in paragraphs 5(ii) and (v) and (vii) of the parties' joint minute) fall to be classified as 'inert waste' for the purposes of Clause 2(3) of the parties' Lease (6/1 of process)?"
It is to this matter that this Opinion is confined.
The evidence
[4] Parties lodged a joint minute (No.34 of process) recording certain agreements relating to productions, the witness statements of two witnesses and certain other matters. I do not rehearse here the full terms of the joint minute, but the following paragraphs are necessary for an understanding of the evidence:
"The partial capping and restoration of Areas 1, 2 and 3
5. The steps, and materials, involved in the partial capping and restoration of areas 1, 2 and 3 were as follows.
(i) First, the waste deposited in these areas was reshaped into an appropriate formation.
(ii) Secondly, a so-called 'waste regulating layer' was placed on top of the waste. This layer comprised soil.
(iii) Thirdly, a low linear density polyethylene ('LLDPE') membrane was placed over the waste regulating layer. This membrane is a manufactured product made of plastic.
(iv) Fourthly, a 'protection layer' was then placed on top of the LLDPE membrane. This protection layer is a manufactured product made of polypropylene or polyester fibres. This is a non-woven geotextile, similar to a felt carpet-tile (typically 3-10mm thick).
(v) Fifthly, there was then placed on top of the protection layer some 1 metre of 'restoration materials'. This 1 metre layer was made up of two sub-layers, one of a depth of approximately 300mm and the other of a depth of approximately 700mm. The initial sub-layer of approximately 300mm was placed immediately on top of the protection layer. This initial sub-layer comprised soil. The second sub-layer of approximately 700mm was made up of a mixture of soil and peat.
The capping and restoration of Cell 1
7. The steps, and materials, involved in the capping and restoration of cell 1 were the same as those described in paragraph 5(i)-(v) above, with the exception that in relation to step (v) only soil was used for the 'restoration materials' (ie, no peat was used).
Miscellaneous
9. The soil used in the capping and restoration process referred to at paras. 5 and 7 above was sourced from a construction site, or sites, operated by a third party.
10. The soil referred to in the preceding paragraph did not require to be paid for by the defender."
[5] I heard evidence from six witnesses, each of whom had provided a witness statement (or report). In addition I had witness statements from Mr Alan Davidson and Mr Colin Dempster (Nos. 21 and 33 of process), and it was agreed in the joint minute that the contents of their statements should be treated as their evidence subject to the defenders reserving their position as to the relevancy and admissibility of that evidence. Because these witness statements are in process, I shall give only a brief summary of the salient points of each witness' evidence. It should be noted that before any evidence was led, counsel for the defenders reiterated an objection which had been made at an earlier hearing to the admissibility of certain parts of the evidence of Mr Thomson and Mr Walker; I shall return to this objection at a later stage in this Opinion.
[6] Robert Elvin Thomson was born in 1938 and lived at an address in County Tyrone, Northern Ireland. He was a director of the pursuers and negotiated the lease on their behalf. He adopted his statement (No.22 of process). He had experience of the commercial letting of land, being a farmer and a director of a company involved in sand and gravel extraction and concrete production in Northern Ireland. In 1998 the company sought planning permission to use a disused gravel pit for a landfill refuse site; this application was unsuccessful, but because of his involvement in preparing it Mr Thomson gained a detailed understanding of the EU and Domestic Regulatory Framework for landfill operations, and he knew "a fair bit" about the waste landfill industry. Under reference to No.6/9 of process he confirmed that when the parties were discussing a possible lease of the premises they were thinking of the statutory background that would apply at the time.
[7] On the basis of his commercial experience it was his view, as a businessman involved in the commercial letting of commercial landfill sites, that the use of the word "waste" in the context of a lease of a commercial landfill site would be informed and construed against the general background of law (and in particular EC Regulations) relating to waste. He understood (both at the proof and at the date of the lease) that waste related to materials that were discarded by third parties and would include materials generated as bi-products of construction work (such as the soil that required to be excavated and disposed of when houses or other buildings are built).
[8] Mr Thomson believed that much of the material used for the partial capping and restoration of Areas 1, 2 and 3 and Cell 1 was properly regarded as inert waste, and that the defenders were obliged to pay a Royalty...
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