Following a recent decision made by the High Court,
hotels, restaurants, cafes, pubs, clubs, bars and similar
operations selling bottled and canned drinks may be surprised to
learn that they are obliged to register with the Environment
Agency, the Scottish Environment Protection Agency or a compliance
scheme and to ensure, amongst other things, that empty bottles and
cans are recycled. This could give rise to additional costs for
such sellers. For those affected, the regulators are likely to be
making contact in the near future to ensure compliance
Bottles and cans fall within the definition of
'packaging' under the Producer Responsibility (Packaging Waste)
Regulations 1997 ('the Regulations'). 'Producers' of packaging who
exceed certain thresholds are subject to various obligations under
these complex Regulations including the obligation to recover and
to recycle specified proportions of the packaging they handle when
it becomes waste.
Responding to successful industry lobbying, the
draftsmen of the Regulations allocated the recovery/recycling
obligations between different categories of producer. As a result,
each category of producer bears a different percentage of the
overall recovery/recycling targets. Current overall targets require
at least 59% of packaging handled to be recovered from the
packaging waste stream. At least 50% of that must be recycled. At
least 19% of all glass, aluminium, steel and plastic packaging
handled must also be recovered and recycled.
One class of producer is the 'seller' who, either
himself or through an agent, in the course of business, supplies
packaging to a user or a consumer of that packaging. The seller is
responsible for achieving 48% of the overall recovery/recycling
targets for that packaging waste stream.
In the case of drinks sold to consumers by shops,
the shop is clearly a seller for the purpose of the Regulations.
However, in the case of drinks sold in hotels, restaurants, cafes,
pubs, clubs, bars and the like, it was arguable whether just the
drink or the drink and its packaging (i.e. bottle or can) are sold.
This issue has just been considered by the courts.
R (on the application of Valpak Ltd) v
Valpak (a compliance scheme registered under the
Regulations) argued that the 'seller' obligations under the
Regulations fell on the landlords of pubs, clubs and bars selling
drinks. The Environment Agency argued that where the bottle was
opened by the landlord, these obligations fell instead on the
brewery or other drinks supplier. The case turned, therefore, on
whether not only the contents also the bottle is sold to the
customer even when (for instance) the landlord pours the drink and
keeps the bottle.
The court ruled that, under the Sale of Goods Act
1979, when a landlord sells a bottle of beer, property in the
bottle passed to the buyer. The fact that the landlord might keep
the bottle did not affect the legal nature of the sale. Even if the
buyer wanted his drink served in a glass, both drink and bottle
were sold. The drink contained in the bottles was clearly intended
to be sold by the bottle, so the bottle did not cease to be a sales
unit just because it was opened by the publican. Accordingly, in
the case of bottled and canned drinks sold in, for example,
licensed premises, the landlord supplied this 'packaging'as a
'seller' for the purpose of the Regulations.
It is not yet known whether the Environment Agency
will appeal this decision. In some respects the decision makes the
Environment Agency's work both easier and harder. On the one hand
the Environment Agency will not now be required to consider narrow
factual distinctions between on- and off-licensed premises and
whether or not the bottle had been opened before it was sold. On
the other hand its workload is increased significantly as the
number of operations that it will potentially have to regulate has
been increased significantly.
Producer responsibility obligations
The implications of this decision for companies
operating in the hospitality sector are, unfortunately, far from
As a result of the decision, those operating
hotels, restaurants, cafes, pubs, clubs, bars and the like, selling
bottled and canned drinks will be 'producers'. They will be in the
'seller' category of 'producer', for the purpose of the
Regulations. If their annual turnover exceeds £2 million and they
handle over 50 tonnes of packaging (all relevant packaging, not
just bottles and cans) they will be subject to the 'seller'
obligations under the Regulations. Calculation of volumes of
packaging handled and appropriate recovery/recycling targets for
general packaging and for glass, aluminium, steel and plastic are
time consuming and far from simple. Relevant sellers must register
with, and demonstrate compliance to the Environment Agency or the
Scottish Environment Protection Agency, either directly or via a
registered compliance scheme.
Failure to register is a criminal offence and one
which the regulators have been enforcing with increasing
aggression. Failure to meet the percentage recovery/recycling
obligations is also a criminal offence, although this has been
pursued less vigorously to date, due to the complexity of
demonstrating compliance or non-compliance with the
Following this judgment, brewers and other drinks
suppliers will continue to be subject to their other producer
obligations but this judgment will mean that they are no longer
obliged to pick up the cost of the 'seller' obligation. To that
extent brewers and other drinks suppliers could effect a
considerable cost saving with a corresponding cost increase for the
operators of the pubs, cafes, bars and restaurants etc.
Other commercial/legal implications
In addition to considering whether the Regulations
apply to a particular publican, hotelier or café operator, etc,
other commercial and legal implications to take into account
- Contractual arrangements between brewers and other drinks
suppliers on the one hand and those running hotels, restaurants,
cafes, pubs, clubs and bars on the other. These should be reviewed
to determine whether the contract provides expressly or implicitly
which party is to bear the costs of the 'sellers' packaging
- Brewers and other drinks suppliers who directly arrange to take
back empties. If they are not already doing so, they will have to
treat the empties as 'waste' for the purpose of waste laws -
potentially this will require their registration as waste carriers,
registration of their vehicles used to collect the empties and
waste management licensing issues in relation to the sites used for
the collection and storage of the empties.
- Anyone broking the collection of empties as part of a drinks
supply contract. They are likely to be 'brokers' of waste and may
have to register as such with the regulators.
- All parties will have to comply with the statutory duty of care
as respects waste in respect of the empties.
For further information on any of the issues raised
please contact Paul Sheridan at firstname.lastname@example.org or on
+44 (0)20 7367 2186 or Tom Bainbridge at
email@example.com or at +44 (0)20 7367 3174