Shopkeeper wins legal challenge over deposit return scheme fees

A Scottish shopkeeper has won a judicial review case over the legality of fees which would have been paid to retailers when the deposit return scheme (DRS) began.  

Abdul Majid MBE filed a petition for review of reasonable handling fees (RHF) – the cost incurred during the collection and storage. 

Retailers were set to receive a fixed amount in RHF, set by scheme administrator Circularity Scotland, regardless of the true cost of the storage and handling of single-use drinks containers on their premises before them being taken away for recycling under the scheme. 

In the first year of implementation of DRS, retailers would be paid 2.69p per unit collected over the counter. Collection via so-called ‘reverse vending machines’ would have paid 3.55p for the first 8,000 containers collected, following that they would be paid 1.35p per unit. 

Majid argued that the RHFs did not take into account individual costs and that it put small businesses in an unfair position. 

Filing the petition, he claimed that his business would lose £1,000 per week operating as a collection point, creating unfair competition between businesses like his and larger retailers. 

The Court of Session judge Lord Young ruled in favour of Majid. 

The ruling follows a recently published FOI which detailed minutes of a meeting between First Minister Humza Yousaf, the minister in charge of the scheme Lorna Slater, and DRS stakeholders in early June. 

When asked by the first minister if they supported the most recent launch date for the scheme, which was 1 March 2024, many stakeholders noted that due to “recent events” it was impossible to roll out the scheme on that date.  

Yousaf also asked if they were seeking alignment with the rest of the UK on DRS. The majority of stakeholders agreed that under the circumstances alignment of the schemes across the UK was their preference. 

Speaking on the decision by judge Lord Young, Majid said: “I am absolutely delighted to have won my case, one which I feel in many ways was not just for myself but for the many other retailers who would have been negatively impacted if CSL had been able to proceed with their plans for the setting of the retail handling fee. 

“From the outset it was clear that there was an issue over the legality of the retailer handling fees but it is not as if this was not pointed out to them. 

“The Scottish Government and CSL were asked to address the concerns of retailers around this matter to avoid the concern, confusion, and uncertainty that it would generate, but to no avail despite all the best efforts which were made, in particular by Dr Pete Cheema and the Scottish Grocers’ Federation. 

“I hope the UK Government take note of this decision and use it to avoid a similar situation arising in any UK-wide scheme.” 

Scottish Grocers’ Federation chief executive Dr Pete Cheema OBE said: “The court of session has held that the way that the Scottish Government and Circularity Scotland had set up the Deposit Return Scheme was unlawful and did not comply with the regulations made by the Scottish Parliament. 

“CSL had no powers to set the fees that it sought to impose on retailers and even if it had, then they had still got it wrong by trying to impose a flat fee on all retailers, despite the difference in costs to the operators.” 

He added that the decision essentially stops the DRS progressing, but noted it was “hugely disappointing” that it reached the point of legal review. 

“This decision essentially stops the DRS progressing in its current form – it’s hugely disappointing however that it took a court action by an independent retailer when SGF had tried for some considerable time to make the Scottish Government listen to those directly affected – indeed, we had personally informed Lorna Slater that CSL was breaching their license but she refused to support us when it was obvious that we were right. 

“Also, we had warned the Scottish Government that it was never industry-led. Despite representing the largest number of Return Point Operators, our voice was consistently not listened to. 

“SGF is hopeful that the UK Government will make this legal position binding when they introduce the UK-wide DRS scheme in October 2025.”