COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE JONATHAN PARKER
MR. JUSTICE LADDIE
| COMMISSIONERS OF CUSTOMS AND EXCISE
|- and -
Mr. Paul Shadarevian (instructed by Messrs Courts & Co of London W1) for the Appellant
Hearing dates : Friday 16 July 2004
Crown Copyright ©
Lord Justice Peter Gibson:
"40 Charge to tax
(1) Tax shall be charged on a taxable disposal.
(2) A disposal is a taxable disposal if-
(a) it is a disposal of material as waste,
(b) it is made by way of landfill,
(c) it is made at a landfill site, and
(d) it is made on or after 1st October 1996.
(3) For this purpose a disposal is made at a landfill site if the land on or under which it is made constitutes or falls within land which is a landfill site at the time of the disposal.
41 Liability to tax
(1) The person liable to pay tax charged on a taxable disposal is the landfill site operator.
2) The reference here to the landfill site operator is to the person who is at the time of the disposal the operator of the landfill site which constitutes or contains the land on or under which the disposal is made."
"(1) A disposal of material is a disposal of it as waste if the person making the disposal does so with the intention of discarding the material.
(2) The fact that the person making the disposal or any other person could benefit from or make use of the material is irrelevant."
"(1) There is a disposal of material by way of landfill if -
(a) it is deposited on the surface of land or on a structure set into the surface, or
(b) it is deposited under the surface of land.
(3) Subsection (1)(b) above applies whether the material -
(a) is covered with earth after it is deposited, or
(b) is deposited in a cavity (such as a cavern or mine)."
"Land is a landfill site at a given time if at that time –
(a) a licence which is a site licence for the purposes of Part II of the Environmental Protection Act 1990 (waste on land) is in force in relation to the land and authorises disposals in or on the land."
"The operator of a landfill site at a given time is -
(a) the person who is at the time concerned the holder of the licence, where section 66 (a) above applies…."
(1) A disposal is not a taxable disposal for the purposes of this Part if -
(a) the disposal is of material all of which is treated for the purposes of section 42 above as qualifying material,
(b) before the disposal the operator of the landfill site notifies the Commissioners in writing that he is commencing the restoration of all or a part of the site and provides such other written information as the Commissioners may require generally or in the particular case, and
(c) the material is deposited on and used in the restoration of the site or part specified in the notification under paragraph (b) above.
(2) In this section "restoration" means work, other than capping waste, which is required by a relevant instrument to be carried out to restore a landfill site to use on completion of waste disposal operations.
(3) The following are relevant instruments -
(a) a planning consent;
(b) a waste management licence;
(c) resolution authorising the disposal of waste on or in land."
(1) A disposal is not a taxable disposal for the purposes of this Part if it is -
(a) of material all of which is treated for the purposes of section 42 above as qualifying material,
(b) made at a qualifying landfill site, and
(c) made, or treated as made, on or after 1st October 1999.
(2) A landfill site is a qualifying landfill site for the purposes of this section if at the time of the disposal -
(a) the landfill site is or was a quarry,
(b) subject to subsection (3) below, it is a requirement of planning consent in respect of the land in which the quarry or former quarry is situated that it be wholly or partially refilled, and
(c) subject to subsection (4) below, the licence or, as the case may require, resolution authorising disposals on or in the land comprising the site permits only the disposal of material which comprises qualifying material."
"The regulations may only provide that a disposal is to be treated as not being a taxable disposal if or to the extent that –
(a) the material comprised in the disposal is held temporarily pending one or more of the following –
(iii) the use of the material, if it is qualifying material within the meaning of section 42(3) above, for the restoration to use of the site at which the disposal takes place, or any part of that site, upon completion of waste disposal operations at the site, or as the case may be, that part of the site, or
(iv) …. and
(b) the material in question is held temporarily in an area designated for the purpose by an authorised person."
"The single most commonly raised issue was that of the tax treatment of inert wastes used for constructing, operating and restoring landfill sites. We accept that the tax has contributed to a shortfall in the availability of suitable material, and that this has caused a problem in particular for the restoration of landfill sites, including the filling of mineral workings with inert waste.
We therefore recommend that inert wastes used to restore sites and to fill old and existing mineral workings should be exempted from landfill tax."
"We prefer to consider an exemption based on the use to which material is put rather than the nature of the material. The extent to which material qualifies would be determined by reference to the site licence requirements. Disposals beyond this limit would not be encouraged, thus the exemption should not be a disincentive to the recycling of inert waste. This option could reduce the impact of the tax on, amongst others, sites at the restoration stage, sites with heavy restoration requirements, and inert only sites. The extent to which the impact on inert only sites is affected would depend on the scope of the exemption. Only if the definition includes all inert disposals at a former quarry would the impact on quarry operators be significantly reduced."
"18.104.22.168.6 The proposals provide for the satisfactory restoration and landscaping of the area over a four to five year period by recontouring the site on a phased basis with Class A waste material which would be capped with a 1 metre thick clay sealing layer and then covered with a soil restoration layer. The total quantity of materials required to complete the development will be about 1.25 million [cubic metres]. The proposed phased development is shown in Appendix 3. Measures would be taken to prevent landfill gas migration off site by the construction of a venting trench around the perimeter of the site. A comprehensive monitoring scheme requiring the installation of permanent monitoring boreholes has also been proposed. The land would be progressively landscaped following restoration on a phased basis as will be described by Liz Lake, landscape Architect."
22.214.171.124.7 The proposals provide for approximately 520,000 cu m of Class A waste materials to be deposited at the site which is the minimum necessary to finance the engineered clay capping layer, soil restoration layer, landscaping, aftercare scheme and environmental monitoring programme."
The Tribunal's decision
The appeal to the judge
"The Site was filled before 1970, but was then only restored to a poor standard. The work which has been and is continuing to be undertaken by Ebbcliff is not disposal for the sake of disposal, but merely continued restoration of the Site to modern standards. All that work is required by the 1995 Consent and the Licence. Accordingly all the work, including the deposit of qualifying material underneath the capping layer, is "restoration" within s.43C(1)(c) and (2)."
"56. In my judgment, the Tribunal's analysis is not compatible with the proper meaning and effect of FA 1996 s. 43C(2). Indeed, this was conceded by Mr. Shadarevian in the course of the appeal. Ebbcliff's case, however, is that, had the Tribunal applied s.43C(2) correctly, the Tribunal would have come to the same conclusion, and so the appeal should be dismissed.
57. The Tribunal was wrong, and Mr. Shadarevian so concedes, in associating, for the purposes of s. 43C, the "restoration" of the Site with "the completion of waste disposal operations" before 1970, including the filling of the Site.
58. A landfill site within s.43C must be a licensed landfill site, that is to say a site in respect of which there is in force at the relevant time a permit or one of the licences or resolutions specified in FA 1996 s. 66.
59. In my judgment, giving the words in s.43C(2) their natural and ordinary meaning, the sub-section is directed at work to land, which, prior to the commencement of that work, has received disposals of waste as an operational licensed landfill site, and has not changed its use since then, and which work is carried out to restore the land to use for a purpose other than for the disposal of waste by way of landfill."
"63. …. It constitutes that final part of waste disposal operations which is required by a relevant instrument to be carried out to restore the site to a use other than disposal of waste by way of landfill.
64. This straightforward approach to the proper meaning of s.43C(2) is consistent with the evidence before the Tribunal that the conventional practice is for the disposal of putrescible waste at a landfill site to proceed, broadly speaking, in three phases: the filling of the site, the construction of the cap, and, finally, the work of restoration."
The appeal to this court
"The restoration process starts when the site has reached its capacity and is unable to accept any more waste. This is determined by the planning permission issued to the site operator, which gives details for the sites final contours and afteruse of the site once restoration is complete.
The capping system varies between sites but generally consists of an engineered capping layer and restoration layers. The purpose of a capping layer is to cover the emplaced waste material and is the foundation for the restoration material. The capping layer may vary from a suitable soil cover to an engineered system depending on the nature of the waste and the intended afteruse.
Restoration material is considered to be the material that is placed above the capping material. This usually consists of a protective layer above the capping material then a surface layer. The type and quantity of restoration material will depend on the site and the intended afteruse. Waste Management Paper 26B states that the "objective of restoration layers is to enable the planned afteruse of the site to be implemented and therefore to provide a suitable growing and rooting medium for plants as appropriate".
Please note that the above is general information only and is not site specific."
"The capping system is the final component in the construction of the landform. It comprises the engineering and restoration layers."
"We agree that the supporting planning application statement, the Chief Executive's report, the Inspector's report, the working plan and the waste management licence are all written in language which is consistent with the normal arrangements for a modern conventionally designed landfill site where there are three separate operations, namely the filling of the site by the deposit of waste (usually active waste), the capping layer and the final layer of soils for the purposes of restoration."
"Obviously this involves the deposit of waste to achieve the desired contours but is not disposal for the sake of disposal.
Therefore the operation of restoration will cease when the agreed contours for the site are achieved."
However, Mr. Spinks also went on to refer to the installation of the capping layer and the deposit of topsoil and said:
"As detailed in [the Licence] …. the final restoration will begin once the final contours of waste infill are reached."
I do not see this letter as seriously detracting from the general recognition that the restoration stage commences with the cessation of infilling the Site and the capping.
"What the section presupposes is a landfill site on which there have been disposals of waste on the completion of which deposits of what would otherwise be taxable disposals of waste are required to bring the site back to its original condition by the terms of the planning consent or a waste management or disposal licence. Here the site was at the beginning agricultural land. Even if one were to take as one's starting point that land after it had been stripped of its topsoil, in our judgment it just does not make sense of the statutory words to say that all of the tipped material from outside sources is waste deposited, as required, to restore the landfill site (which by definition is the consequence of those operations) to its original use."
The other is Dispit Ltd. v Commissioners of Customs and Excise, 25 February 2004, in which the Tribunal (Mr. Colin Bishopp) drew a distinction between the deposit of material to fill a landfill site to its useful capacity and the deposit of material thereafter for the purpose of restoration, as required by the planning consent in that case. The Tribunal referred to the present case and said that Etherton J.'s construction of "restoration" in the narrow sense coincided with the Tribunal's own conclusions.
Lord Justice Jonathan Parker:
Mr. Justice Laddie: