Singleton Birch Limited & Anor v The Commissioners for HMRC

calcium based reaction wastes from titanium dioxide production; …”

The explanatory notes to the QMO provide that, in making the QMO, the Treasury had regard to the criteria published by the Commissioners and to other factors that they considered relevant.

The parties have agreed certain facts in connection with the appeals and those facts are as follows:

The dispute between the parties has taken the following course:

It is fair to say that, in the period prior to filing their statement of case, the Respondents were not at all consistent in giving their reasons for objecting to the application of the lower rate of LFT to the FCC waste. Critically, no mention was made of what is now the main ground of engagement between the parties – namely, whether the FCC waste was “entirely” calcium based reaction waste from titanium dioxide production. Instead, the primary focus of the Respondents’ objection was that the FCC waste did not derive from titanium dioxide production because it arose as a result of a process carried out by a person other than Cristal at a location other than Cristal’s titanium dioxide production premises. On at least two occasions – once in an email of 12 January 2018 from Officer Ben Rob of the Respondents to Mr Mark Sacker of the First Appellant and then again in their review conclusion letter – the Respondents accepted that the FCC waste was calcium based reaction waste but said that it did not arise from titanium dioxide production. There was also a suggestion in the Respondents’ pre-assessment letter of 8 October 2018 that the FCC waste fell outside Note (9)(a) because the treatment of the FC that gave rise to the FCC waste did not take place on-site at Cristal’s premises.

Be that as it may, since the Respondents produced their statement of case on 12 August 2019, the Respondents have made it clear that their objection to the FCC waste’s qualifying for the lower rate of LFT is based on their view that the FCC waste was not entirely calcium based reaction waste from titanium dioxide production but was instead the product of bringing together two wastes - the FC arising out of titanium dioxide production and the APCRs – and that the FCC waste was therefore as much, if not more, a waste deriving from the treatment of APCRs with the FC as it was a calcium based reaction waste from the treatment of FC with the APCRs.

There is a considerable amount of common ground between the parties.

For instance, it is common ground that:

It is also common ground that Section 63(2) of the FA 1996 – which makes provision for the Commissioners to direct that material must be treated as qualifying material if in fact it would be such material but for a small quantity of non-qualifying material – is not in point in the present case.

For completeness, we should observe that the parties reached this conclusion for slightly different reasons.

Mr Nawbatt submitted that Section 63(2) of the FA 1996 applied on its terms only to so-called “mixed loads” – which is to say loads comprising both standard-rated materials and lower-rated materials. He then said that, since the FCC waste was simply a single material, it was not a “mixed load” and therefore the section was not in point. Mr Puzey agreed that the FCC waste was not a “mixed load”. He also agreed that the section was not in point in the present case. However, he said that that was not because the section was confined by its language to applying to cases involving “mixed loads”. Instead, he said, it was merely because the only direction which had been made pursuant to the section was the direction in paragraph 7.3 of Excise Notice LFT1 (“LFT1”) and that direction was confined in its application to “mixed loads”.

In any event, for present purposes, it is merely necessary for us to note that it is common ground that:

Finally, it is also common ground that:

Accordingly, the only issue for us to determine in this appeal is whether, like the Cristal waste, the FCC waste consisted entirely of a calcium based reaction waste from titanium dioxide production, within the meaning of Note (9)(a), and therefore consisted entirely of material which was “qualifying material” for the purposes of Section 42(2) of the FA 1996.

Inevitably, although both parties recognised that the status of the Cristal waste was technically not in issue before us, the nature of the process leading up to the production of that waste, the content of the slaked lime and the virgin calcium hydroxide slurry used in that process and the content of the waste resulting from that process loomed large in the course of the proceedings. The Appellants quite naturally sought to demonstrate the similarities between the Cristal waste and the FCC waste in those respects, whilst the Respondents equally naturally sought to emphasise the differences in each case. Moreover, the Respondents were (quite fairly) challenged by the Appellants to explain the implications of their submissions in relation to why the FCC waste did not qualify for the lower rate of LFT on the ability of the Cristal waste to be regarded as qualifying for that rate, given the Respondents’ acceptance that the Cristal waste did do that. We will return to this in due course.

For the purposes of the hearing, we were provided with a number of documents and the evidence of five witnesses. Two of the witnesses were Officers of the Respondents who provided witness statements outlining the history of the dispute between the parties. Their evidence was not material to the outcome of the question which we had to decide. They were not called to attend the hearing and their evidence was not challenged by the Appellants. The three other witnesses did attend the hearing. They were Mr Ian Martin, the general manager of FCC Knostrop, and two expert witnesses, Ms Leslie Heasman for the Appellants and Dr Andrew Godley for the Respondents.

The documents to which our attention was drawn at the hearing included the following:

Mr Martin testified that:

Mr Martin accepted that:

Finally, as regards the Cristal waste, Mr Martin said that:

The two expert witnesses provided their evidence concurrently. This was helpful to us as we were able to see each of them respond to points made by the other on an interactive basis.

There was a considerable degree of common ground between the two experts. For instance, in relation to the APCRs, both of them were agreed on the following:

Similarly, both experts were agreed that, in relation to the process giving rise to the Cristal waste:

However, there was a difference between the experts in relation to the following issues:

In relation to the first issue, Ms Heasman accepted that the ratio of APCRs to FC (in producing the FCC waste) was always going to be greater than the ratio of slaked lime to FC (in producing the Cristal waste) but she suspected that the ratio was likely to be between 2 to 3 tonnes of APCRs to 1 tonne of FC (and closer to 2 tonnes than 3 tonnes, at that) whereas Dr Godley said that ratio was much higher than that.

Dr Godley explained that he had carried out two calculations in relation to the amount of APCRs required to neutralise 1 tonne of FC. The first calculation was based on the figures for the FC received and the treated FCC waste landfilled in each of 2016 and 2017. That gave rise to a figure of 2.37 tonnes of APCRs for 1 tonne of FC in 2016 and 3.2 tonnes of APCRs for 1 tonne of FC in 2017, an average for the two years in question of 2.9 tonnes for 1 tonne of FC. The second calculation was based on the figures which appeared in the ash plant log. That gave rise to a figure of 3.9 tonnes of APCRs for 1 tonne of FC. Both figures were more than 10 times the amount of slaked lime which was required to treat the FC at Stallingborough.

Ms Heasman said that both of Dr Godley’s calculations were flawed.

The first calculation did not take into account, inter alia, the fact that:

The second calculation was flawed in that it was simply based on three samples, all of which were processed on the same day, and it was common ground that the amount of variables in APCRs meant that there was a considerable fluctuation in the constituent elements of APCRs from time to time.

Ms Heasman accepted that the ratio of APCRs to FC (in producing the FCC waste) was always going to be greater than the ratio of slaked lime to FC (in producing the Cristal waste) but she suspected that the true figure was somewhere in the middle of the figures produced by Dr Godley’s two calculations, a figure closer to 2 tonnes of APCRs to 1 tonne of FC than 3 tonnes.

Ms Heasman said that, although the Cristal waste contained only a small contribution from the slaked lime and the APCRs made a somewhat larger contribution to the FCC waste, the table described at paragraph 27(5) above demonstrated that the chemical composition of each of the FCC waste and the Cristal waste was similar. However, she accepted that, since that table showed that over 40% of each category of waste was composed of unidentified elements, they might well be more chemically diverse than the breakdown in that table suggested.

In relation to the second issue, Ms Heasman accepted that a significant portion of the APCRs was not reactive but said that her view (in common with that of Mr Martin) was that the usual range of reactive alkaline compounds within APCRs was between 10% and 30% whereas Dr Godley expressed the view that that figure was only between 3% to 4%.

Dr Godley reached his figures by comparing the amount of APCRs which was required to neutralise the FC in the course of producing the FCC waste to the amount of slaked lime which was required to neutralise the FC in the course of producing the Cristal waste. He said that, on the assumption that:

Ms Heasman said that she based her figures on the measurements of total alkalinity within each batch of APCRs which the Second Appellant had made before carrying out the process in each case and the evidence of Mr Martin to that effect.

In relation to the third issue, Ms Heasman was of the view that the reactive alkaline compounds were predominantly calcium-based and that only a negligible proportion of the reactive compounds was non-calcium based whereas Dr Godley, whilst accepting that the majority of the reactive alkaline compounds was calcium based, was of the view that that was only a slight majority and that a meaningful proportion of the reactive alkaline compounds was non-calcium based.

In support of his conclusion, Dr Godley pointed out that:

In contrast, Ms Heasman was of the view that:

In relation to the fourth issue, Dr Godley said that, on the basis of a stoichiometric calculation, it required only 119.3 kilograms of calcium hydroxide to neutralise 1 tonne of FC whereas Ms Heasman said that there were a number of issues with Dr Godley’s calculation. Those were as follows:

For the above reasons, Ms Heasman was of the view that Dr Godley had understated the amount of calcium hydroxide which was needed to produce the Cristal waste. She declined to provide a precise figure herself but said that, based on an earlier calculation made by Dr Godley (by reference to the level of calcium contained in the Cristal waste) of between 187 kilograms and 260 kilograms of calcium hydroxide per 1 tonne of FC, and recognising that that earlier calculation also did not take into account the calcium which had been lost in the effluent, she would expect the amount of calcium hydroxide required to neutralise 1 tonne of FC in the course of producing the Cristal waste to be more than 260 kilograms.

At the hearing, Mr Nawbatt sought to advance the Appellants’ case in the first instance by advancing three propositions in relation to the manner in which Section 42(2) of the FA 1996 and the QMO should be construed. Those were as follows:

In support of his first proposition, Mr Nawbatt referred us to the judgment of Aldous J in Customs and Excise Commissioners v Parkwood Landfill Limited [2002] EWCA Civ 1707 at paragraphs [9], [10], [20] and [28]. In paragraphs [9] and [10], Aldous LJ described LFT as a creature of a domestic statute which was not itself required by any provision of EU law but was a separate domestic initiative aimed at protecting the environment and enabling the UK to meet its obligations under the EU legislation dealing with environmental protection.

In paragraph [20], Aldous LJ noted that the FA 1996 needed to “be construed against the background of its purpose” and that there was no dispute that “one of the purposes of the Act was to promote recycling and to reduce the amount of waste going to landfill”. It followed that there would need to be a clear indication in the language of a particular provision of the Act before one could conclude that that provision produced a result that was contrary to that purpose.

Mr Nawbatt said that a similar point was made by the Upper Tribunal for Scotland in Barr Environmental Limited v Revenue Scotland [2022] UT 11 (“Barr”). In that case, the Upper Tribunal for Scotland had pointed out that the purpose of the LFT was to change behaviour and not just raise revenue so that there was nothing wrong with a landfill operator’s seeking to reduce its LFT liability by recycling waste (see Barr at paragraphs [43] and [45]).

Mr Nawbatt then took us in some detail through various documents which revealed that the principles and aims of the environmental legislation included the fact that:

Mr Nawbatt said that the documents which demonstrated this included:

In relation to Mr Nawbatt’s first proposition, Mr Puzey did not deny that the general environmental principles and aims could be helpful in construing the LFT legislation but merely noted that that approach had its limits. He drew our attention to the judgement of Lady Rose JSC in Devon Waste Management Limited and others v The Commissioners for Her Majesty’s Revenue and Customs; Biffa Waste Services Limited v The Commissioners for Her Majesty’s Revenue and Customs [2021] 4 WLR 89 at paragraph [68] in which Lady Rose JSC observed that “such broad brush policy goals are not usually helpful in determining where more precisely the line was intended to be drawn by Parliament between what is a taxable disposal and what is not.” Whilst he accepted that Lady Rose JSC was addressing a different generic question in that case – namely the question of whether there had been a taxable disposal at all, as opposed to the question of what rate to be applied to a disposal – he said that the same caveat was pertinent in relation to whether or not the lower rate of LFT applied.

Similarly, the decision in Barr was of limited relevance in the present case. Not only was it a decision of the Scottish courts in relation to Scottish landfill tax – and therefore not binding in the present proceedings. It was also that the case related to the use of recycled materials for infrastructure at landfill sites, as opposed to the disposal of material as waste at landfill sites. For all its qualities as non-hazardous waste, the FCC waste was still waste.

In this case, whether or not it was good environmental practice to extend the lower rate of LFT to a product combining FC and APCRs was irrelevant in light of the fact that the statute required material to be entirely qualifying material in order to fall within the ambit of the lower rate.

Mr Puzey added that, in any event, the Appellants had failed to demonstrate that the use of waste in this way did meet the environmental objectives of the LFT. The LFT was a landfilling tax and the result of combining the two wastes was to increase the amount going to landfill. Moreover, the Appellants had produced no analysis to make good their proposition that the FCC waste was better for the environment than the Cristal waste. It was not sufficient to say that because a waste product was being used instead of a virgin product to neutralise the FC, that made it more environmentally friendly. That did not take into account the amount of APCRs which were being used to produce the FCC waste or the environmental costs of doing so and of transporting the APCRs, the FC and the FCC waste.

Mr Nawbatt pointed out that the unchallenged evidence of Ms Heasman had been that the use of APCRs to neutralise the FC was environmental BAT.

In support of his second proposition, Mr Nawbatt referred us to the recent Supreme Court Decision in R (Project for the Registration of Children as British Citizens) v Secretary of State for the Home Department; R (O) v Secretary of State for the Home Department [2022] UKSC 3 (“R(O)”) at paragraphs [29] to [31] and [58] to [63]. He said that the judgments in that case made it clear that, in construing a statute, it was necessary to consider the context in which the legislation was enacted. That included primarily other provisions in the same section, group of sections or statute but also included, as secondary aids to interpretation, external material such as explanatory notes and consultation documents preceding the enactment of the legislation in question. Those materials disclosed the context in which the legislation had been enacted. Thus, whilst the external aids could not displace the meanings conveyed by the words of the statute which, after consideration of that context, were clear and unambiguous and did not produce absurdity, they were relevant in assisting the court to establish the meaning of the legislation, whether or not there was ambiguity or uncertainty in the wording. Indeed, that context might well reveal ambiguity and uncertainty which would otherwise not be perceived.

Mr Nawbatt then took us in some detail through the consultation which preceded the enactment of the QMO. He said that that consultation demonstrated that:

Mr Nawbatt said that the documents which demonstrated this included:

In relation to Mr Nawbatt’s second proposition, Mr Puzey noted that R(O) had made it plain that, where the words of the legislation were unambiguous and clear, and did not produce absurdity, there was no need to resort to secondary material such as consultation documents. In this case, he said, the word “entirely” was unambiguous and clear and did not give rise to any absurdity. The was therefore no need to resort to the terms of the documents which were part of the consultation process in order to construe the legislation.

In response, Mr Nawbatt said that Mr Puzey had not taken into account the fact that Lady Rose JSC had said that looking at the secondary materials might well reveal an ambiguity or uncertainty which was not apparent simply by looking at the words of the legislation themselves. As such, secondary materials should always be considered when construing legislation even though he accepted that, if, having done so, the words of the legislation were unambiguous and clear and did not give rise to absurdity, they could not be displaced by anything contained in the secondary materials.

In relation to his third proposition, Mr Nawbatt sought to rely on the decision of the First-tier Tribunal in Augean North Limited and Augean South Limited v The Commissioners for Her Majestys’ Revenue and Customs [2021] UKFTT 0230 (TC) (“Augean”). In that case, the First-tier Tribunal had rejected the Respondents’ submission to the effect that the LFT “tertiary legislation” in LFT1 should be construed in the light of the Treasury criteria. Mr Nawbatt said that, in the course of doing so, the First-tier Tribunal had, in paragraph [57] of its decision, reiterated the importance of applying the Treasury criteria in construing the secondary legislation in the QMO.

Mr Nawbatt also placed reliance on the fact that the terms of the QMO itself made reference to the criteria and the role which the criteria had played in determining the materials which qualified for the lower rate. He explained that the Treasury criteria had been published on 21 December 2010 as a result of the consultation process and they were that waste:

Mr Nawbatt said that the link between the criteria and the terms of the QMO could be seen both in the language of the QMO itself and in the document of 21 December 2010 in which the criteria were published. The reason why Group 6 included low activity inorganic compounds such as calcium based reaction waste from titanium dioxide production was that those compounds met all three of the criteria. It followed that the provisions of Note (9)(a) must necessarily be construed in the light of the criteria.

Mr Nawbatt stopped short of saying that waste which clearly fell outside the language in the Schedule to the QMO could nevertheless be treated as falling within that language simply because it met the Treasury criteria. However, he said that the criteria should be used as an aid to construing the language and should be a factor which was taken into account in considering whether a particular category of waste fell within the scope of the Schedule.

In relation to Mr Nawbatt’s third proposition, Mr Puzey agreed that the Treasury criteria had a role to play in construing the language used in the Schedule but said that that was not the same as saying that simply satisfying the criteria should be sufficient to bring material within the scope of the Schedule. There were items within the Schedule which did not satisfy the criteria – such as bottom ash and fly ash in Note (7) to the Schedule - and similarly there would be items satisfying the criteria which did not fall within the language of the Schedule. That was because, in drafting the QMO, the Treasury were required to take into account not only the criteria but also “other factors they consider relevant”.

As for the application of the legislation, when construed as described above, in the light of the evidence, it was common ground that:

However, there was a disagreement between the parties in relation to the extent to which waste needed to be the product of a reaction between calcium compounds and the FC in order to satisfy the statutory language.

Mr Nawbatt said that, since:

In response, Mr Puzey submitted that the FCC waste was as much, if not more, a product of neutralising the APCRs with the FC as it was the other way around. The mere fact that the reactions giving rise to the creation of the FCC waste were primarily between calcium compounds within the APCRs and the FC arising from titanium dioxide production did not mean that the resulting waste was entirely calcium based reaction waste from titanium dioxide production given the presence of substantial non-reactive material within the APCRs and the amount of APCRs that was required to be used in the course of the process giving rise to the FCC waste.

In terms of the detailed submissions, Mr Nawbatt said that the evidence of Mr Martin and Ms Heasman was that approximately 10% to 30% of the APCRs was composed of alkaline compounds which reacted with the FC and that those reactive compounds were predominantly calcium based compounds. The reactive calcium compounds included not only calcium hydroxide but also other calcium compounds such as calcium carbonate, calcium oxide and calcium chloride hydroxide. In addition, the Bogush paper revealed that an average of 26% of the APCRs samples analysed was composed of calcium and that, on average, calcium was the predominant element in those samples.

In response, Mr Puzey said that, even if we were to accept the evidence of Mr Martin and Ms Heasman to the effect that only 10% to 30% of the APCRs was reactive, that still meant that between 70% and 90% of the APCRs was non-reactive. He added that:

Mr Puzey said that, in addition to the high proportion of the APCRs which was non-reactive, the process required a significant amount of APCRs to be used to neutralise the FC at FCC Knostrop in comparison to the amount of slaked lime which was used to neutralise the FC at Stallingborough. The evidence of both Mr Martin and Dr Godley was that it typically required around 3.9 tonnes of APCRs to neutralise 1 tonne of FC at FCC Knostrop whereas the evidence of Dr Godley was that it required only 119.3 kilograms of slaked lime to neutralise 1 tonne of FC at Stallingborough.

Mr Nawbatt accepted that the amount of APCRs which were used to treat the FC at FCC Knostrop was greater than the amount of the slaked lime which was used to treat the FC at Stallingborough. However:

Mr Puzey said that he was not relying solely on the evidence of Dr Godley in relation to establishing the proportion of APCRs to FC. The ratio of 3.9 tonnes to 1 tonne was the ratio revealed by the ash plant log and Mr Martin, in giving his evidence, had said that that ratio was typical. It was true that Dr Godley had also come to the same ratio but, in any event, Mr Martin was the most reliable witness in this context because he was responsible for actually carrying out the process.

Mr Puzey went on to say that, taking the proportion of the APCRs which were non-reactive along with the ratio of APCRs to FC, it could be seen that, necessarily, a significant proportion of the FCC waste – somewhere between 57% (assuming that 70% of the APCRs was non-reactive) to 72% (assuming that 90% of the APCRs was non-reactive) - of the FCC waste did not result from a reaction between the alkaline compounds within the APCRs and the acidic FC. Moreover, that was before taking into account the fact that not all of the reactive compounds in the APCRs were calcium-based (as noted in paragraph 76(2) above).

Mr Nawbatt submitted that the experts had agreed that the virgin calcium hydroxide slurry which was used by Cristal to neutralise the FC contained elements which were not calcium compounds and that some of those elements were alkaline and therefore reacted with the FC when the slurry and the FC were mixed. Those elements were attributable to certain impurities in the quarries from which the calcium carbonate which gave rise to the slaked lime derived and to the water in which the slaked lime was diluted to create the slurry which was then mixed with the FC. It followed that there was no meaningful difference between the FCC waste and the Cristal waste in this respect. Both wastes were the product of applying an alkaline solution which included calcium hydroxide to the FC arising from titanium dioxide production in circumstances where elements other than calcium were present in that alkaline solution and where some of those elements were themselves reactive with the FC.

Moreover:

In response, Mr Puzey said that it was incorrect to liken the impurities in the APCRs to the impurities in the virgin calcium hydroxide slurry which was used to treat the FC at Stallingborough. That was because:

He added that the experts were agreed that it would be impossible for an industrial reaction to proceed on the basis of a single reaction with no side reactions taking place. It would therefore be unreasonable and impracticable for the waste classification in Note (9)(a) to be limited to a waste that was wholly or solely referable to a single element. Since Note (9)(a) had been introduced specifically to cover the Cristal waste, it necessarily followed that the presence of minute quantities of contaminants in the virgin calcium hydroxide slurry should not prevent the resultant waste from being regarded as entirely qualifying waste. To adopt any other approach would be absurd given the origins of the drafting. However, the FCC waste was not the Cristal waste. The level of the non-calcium based compounds in the APCRs was significant.

Mr Nawbatt said that:

Mr Puzey said that the process whereby the FCC waste was created could just as easily (if not more accurately) be described as the treatment of the APCRs with FC as it could the treatment of the FC with APCRs. The purpose of the process at FCC Knostrop was very different from the purpose of the process at Stallingborough. In that regard:

In response, Mr Nawbatt said that the fact that the process was most appropriately described as the neutralisation of the FC, instead of the neutralisation of the APCRs, could be seen in the fact that not all of the APCRs received by the Second Appellant were used to treat the FC from Cristal. APCRs were tested, both by third parties before being brought to FCC Knostrop and on-site by the Second Appellant itself, to ensure that they were appropriate for neutralising the FC. The above features demonstrated that the process whereby the FCC waste was created should properly be regarded as involving a calcium based reaction and therefore that the entirety of the FCC waste should properly be regarded as a calcium based reaction waste from titanium dioxide production within the meaning of Note (9)(a).

In conclusion, Mr Nawbatt noted that:

Mr Puzey said that none of the above-mentioned aids to construction could override the fact that, on the plain meaning of the language in the legislation, the FCC waste did not consist entirely of calcium based reaction waste from titanium dioxide production and therefore the FCC waste did not fall within the ambit of Note (9)(a). The FCC waste was simply a combination of two wastes, some parts of which reflected a calcium based reaction. Moreover, a majority of the FCC waste consisted of elements which had not reacted. Even if one assumed that 30% of the APCRs was reactive, which was the top of the range provided by Mr Martin and Ms Heasman, that still meant that more than half of the FCC waste did not consist of a reaction waste deriving from titanium dioxide production.

As an aside, both parties agreed that the question of whether the description of the FCC waste in the WTN - as “sludge consisting of calcium based residues from the treatment of acid from titanium oxide” – complied with Articles 6 and 7 of the QMO was ultimately redundant in terms of resolving the appeals. Mr Nawbatt maintained that the description was accurate whilst Mr Puzey maintained that it was not. However, since each party’s position on this question accorded with its position in relation to whether or not the FCC waste fell within the ambit of Note (9)(a), it was recognised that the answer to the question would have no bearing on the outcome of the appeals. If Mr Nawbatt was right to say that the FCC waste fell within the ambit of the language in Note (9)(a), then, by definition, the language used by the Second Appellant in the WTN would be correct. Conversely, if Mr Puzey was right to say that the FCC waste fell outside the ambit of the language in Note (9)(a), then, by definition, the language used by the Second Appellant in the WTN would be incorrect. It followed that, in either case, the answer to the WTN question would not be determinative of the appeals.

We have set out in paragraphs 32 and 33 above a number of points on which both of the expert witnesses were agreed. We find each of those statements to be a fact for the purposes of the appeal.

However, there are various other findings of fact to be made in the light of the evidence, particularly because, as noted in paragraphs 34 to 49 above, there were a number of points on which the expert witnesses did not agree.

Before setting out our conclusions in relation to the issues on which the experts did not agree, we will make some general observations about the witnesses.

We considered Mr Martin to be an open and frank witness. Moreover, although he was not an expert witness, his qualifications included a degree in Environmental Science and Occupational Hygiene, an MSC in Public Health Engineering, Certificates of Technical Competence in Hazardous Waste Treatment and Transfer and various relevant professional memberships. Most importantly, as the general manager of FCC Knostrop throughout the relevant period, he had had first-hand experience of the workings of the site and the process involved in converting the FC and APCRs into the FCC waste and he had also been provided with information about the content of the Cristal waste by SLR, the consultants to Cristal. We have therefore placed considerable weight on his evidence in reaching our conclusions of fact.

Both of the expert witnesses were eminently well qualified to address the matters at hand. However, that is not to say that we did not find certain aspects of their evidence troubling.

In our view, Dr Godley was a little more enthusiastic about advancing his client’s case than we would have liked, given that his role was to assist us in providing independent and objective factual information about the nature of the chemical processes which gave rise to the FCC waste and the contents of the materials which were used in those processes and not to provide us with his view on why the FCC waste was not entirely calcium based reaction waste from titanium dioxide production. For instance, in giving his evidence:

Ms Heasman appeared to us to be more independent and objective and less partisan in the evidence she provided and we have therefore preferred to accept her evidence over that of Dr Godley where the two were in conflict and there was no other evidence available. However, we were perplexed by Ms Heasman’s failure to ask the Appellants (and, through the Appellants, Cristal) for information in relation to the amounts of APCRs and FC required to produce the FCC waste or the amounts of slaked lime and FC required to produce the Cristal waste and, on the basis of that information, to come up with her own calculations in relation to those matters.

That information was readily available. In giving his evidence, Mr Martin said that the Second Appellant had maintained batch-by-batch records of the amounts of APCRs and FC which had been used in the course of giving rise to the FCC waste - as exemplified by the ash plant log - and that he had access to information in relation to the composition of the Cristal waste from Cristal’s consultants, SLR, who were also consultants to the First Appellant.

Ms Heasman could therefore reasonably have asked Mr Martin to provide batch-by-batch records of the amounts of APCRs and FC which were used on each occasion that the process leading to the production of the FCC waste was carried out and to obtain information from SLR in relation to the amounts of slaked lime and FC which were used by Cristal on each occasion that the process leading to the production of the Cristal waste was carried out.

In relation to the former information, although it is possible that the batch-by-batch records for the period to which the appeals relate were no longer available, neither Ms Heasman nor Mr Martin appears to have checked whether or not that was the case and, in any event, the batch-by-batch records in relation to more recent periods would have given considerable insight into the answer to the question. Thus, Ms Heasman had ready access to information which would have enabled her to make an informed calculation of the amounts of APCRs and FC which were used in the course of creating the FCC waste and she had the opportunity to ask Mr Martin to ascertain from SLR information in relation to the amounts of slaked lime and FC which were used by Cristal on each occasion that the process leading to the production of the Cristal waste was carried out.

Ms Heasman did not ask for any of that information. Instead, she confined herself to commenting on the deficiencies in the methodologies used by Dr Godley in attempting to answer the questions despite the fact that Dr Godley did not have access to the same level of information as she did. This meant that Ms Heasman was not as helpful to us as she could have been.

The matters to which we have referred above have made it very difficult for us to reach conclusions of fact beyond those which are set out in paragraphs 32 and 33 above. All that can be said with any certainty, because all three witnesses agreed on this, is that:

We accordingly find the matters set out in paragraph 102 above to be additional facts for the purposes of this decision, although they are subject to our more detailed findings of fact on those questions in paragraphs 107 to 111 below.

The findings of fact set out in paragraphs 32, 33 and 102 above are, in our view, sufficient to dispose of this appeal, for reasons which will become apparent in the section of the decision which follows. Nevertheless, in case the appeal should go further, we set out below our conclusions in relation to the matters which were in dispute between the experts and our reasons for those findings.

As regards the first issue, we consider that, Dr Godley’s second calculation of 3.9 tonnes of APCRs for 1 tonne of FC is likely to be more accurate than either Dr Godley’s first calculation or Ms Heasman’s calculation. We say that because:

Therefore, to the extent that it is relevant, we find as a fact that the amount of APCRs which would have been required to neutralise 1 tonne of FC in the course of producing the FCC waste was 3.9 tonnes.

As regards the second issue, we again consider the evidence of Mr Martin to be determinative.

Mr Martin said that each batch of APCRs was tested for alkalinity with clean acid before it was used in the neutralisation process and that, on the basis of that testing, the usual range of reactive compounds within the APCRs was 10% to 30%. We have already said that we considered Mr Martin to be a reliable and credible witness and that, as the person with responsibility for the process, his evidence is compelling. On that basis, we prefer his estimation of the degree of reactivity of the APCRs over the more theoretical estimation of Dr Godley.

It follows that, to the extent that it is relevant, we find as a fact that the usual range of reactivity of the APCRs was 10% to 30% and our finding of fact in paragraph 102(1) above is modified to that effect.

As regards the third issue, we again rely on the view of Mr Martin in concluding that the reactive alkaline compounds within the APCRs were predominantly calcium based. That view is supported by the breakdowns of the elements within the APCRs with which we were provided. Whilst we accept that those breakdowns are not determinative, because of the presence of significant unidentified elements within the APCRs (described as ‘Other” in the breakdowns) and because the calcium content in the APCRs included non-reactive calcium as well as reactive calcium, the significance of the calcium content relative to the other identified elements suggests to us that a significant part of the reactive compounds within the APCRs were calcium based.

Therefore, to the extent that it is relevant, we find as a fact that a significant majority, and not merely a slight majority, of the reactive compounds within the APCRs were calcium based and our finding of fact in paragraph 102(2) above is modified to that effect.

As regards the fourth issue, the critical point, on which both experts were agreed, is that the amount of APCRs required to neutralise the FC in the course of producing the FCC waste was considerably in excess of the amount of slaked lime which is required to neutralise the FC in the course of producing the Cristal waste. Even on Ms Heasman’s view on both questions, the amount of APCRs required for the former purpose was almost 10 times the amount of slaked lime required for the latter purpose.

Having said that, we think that Dr Godley’s conclusion - based on his stoichiometric calculation – that it requires 119.3 kilograms of calcium hydroxide to neutralise 1 tonne of FC in producing the Cristal waste is flawed, for the reasons given by Ms Heasman and set out in paragraph 48 above. In particular, Dr Godley’s analysis did not take into account either the amount of calcium which was left in the Cristal waste following the process or the fact that a considerable amount of calcium would have been discharged in the effluent before the Cristal waste was formed. However, in the absence of any definitive suggestion by either of Ms Heasman or Mr Martin, we can say no more than that we are inclined to accept that the relevant figure is somewhere in excess of 260 kilograms of slaked lime to 1 tonne of FC.

It follows that, to the extent that it is relevant, we find as a fact that the amount of slaked lime which is required to neutralise 1 tonne of FC in the course of producing the Cristal waste is somewhere in excess of 260 kilograms.

It may be seen that, with the exception of our conclusion that the amount of APCRs which was required to neutralise 1 tonne of FC in the course of producing the FCC waste was 3.9 tonnes, our findings of fact are entirely consistent with the submissions of Ms Heasman and that the one conclusion which is not consistent with those submissions reflects the view of Mr Martin as well as that of Dr Godley. Thus, to all intents and purposes, our findings of fact in this case are consistent with the position adopted by the Appellants.

Even though that is the case, we have reached the conclusion that the FCC waste does not consist entirely of calcium based reaction waste from titanium dioxide production. Indeed, we think that that conclusion is self-evident, essentially for the reasons given by Mr Puzey and summarised in paragraphs 71 to 89 above.

Starting first with the issues relating to statutory construction, we did not detect a meaningful difference between the parties in relation to Mr Nawbatt’s three propositions, as set out in paragraph 50 above.

Mr Nawbatt did not go so far as saying that the clear words which were used in the legislation could be overridden by any of:

In our view, the correct approach lies between the two extremes referred to in paragraph 118 above, which is also where we believe that both Mr Nawbatt and Mr Puzey were.

The context in which the LFT legislation in general, and the QMO in particular, were enacted is plainly relevant in construing the language in Note (9)(a). We have therefore taken into account in answering the question at issue in this appeal the fact that:

However, none of the above matters can override the clear language which is used in Section 42(2) of the FA 1996 and the QMO. They can provide some context but they are not a substitute for examining the language actually used and, when one turns to considering whether the FCC waste can be said to “consist entirely of…calcium based reaction waste from titanium dioxide production”, we think that it is self-evident that it does not. As Mr Puzey succinctly pointed out, more than half of the FCC waste was neither reaction waste nor derived from titanium dioxide production. It is therefore clear that the FCC waste does not consist entirely of calcium-based reaction waste from titanium dioxide production.

We agree with Mr Puzey that:

We also agree with Mr Puzey that the process which took place at FCC Knostrop is more accurately described as the neutralisation of the APCRs using FC than the neutralisation of the FC using APCRs. The Second Appellant recognised this in:

We should make it clear that we do not base our conclusion on the mere fact that the process at FCC Knostrop happened to involve the neutralisation of the APCRs at the same time as the FC was neutralised. We recognise that that is no different from the fact that the process at Stallingborough involves the neutralisation of the virgin calcium hydroxide slurry at the same time as the FC is neutralised. Instead, our conclusion is based on:

For the reasons set out above, notwithstanding the principles of statutory construction which we were urged by Mr Nawbatt to apply, we cannot see how the FCC waste can properly be said to satisfy the statutory language. Quite simply, the FCC waste did not consist entirely of calcium based reaction waste from titanium dioxide production and the fact that the use of APCRs instead of slaked lime to neutralise the FC may fit better with the UK environmental legislation, may be consistent with the process of consultation leading to the enactment of the QMO and may be consistent with the Treasury criteria is not sufficient to make it so.

Mr Nawbatt sought to make much of the fact that the word “entirely” in this context could not mean what it purported to say given that the Cristal waste also contains some impurities and there is no dispute that Note (9)(a) was inserted precisely in order to include the Cristal waste within its ambit.

One possible answer to that submission is that this appeal does not relate to the Cristal waste. Were it to transpire that, contrary to the parties’ common understanding, the Cristal waste also fell outside the language in Section 42(2) of the FA 1996 and the Schedule to the QMO, that would simply mean that the Parliamentary draftsman had failed to achieve his or her objective in drafting the relevant legislation. It would be irrelevant to the matter which we are required to address in this decision.

However, we think that that is not the correct answer to the submission. Instead, we think that, for the reasons which follow, in contrast to the FCC waste, the Cristal waste can properly be described as consisting entirely of calcium based reaction waste from titanium dioxide production.

In our view, the starting point in determining whether or not a particular waste product consists entirely of calcium based reaction waste from titanium dioxide production is not to ask whether all of that waste product is the result of a reaction between alkaline calcium compounds and the acid arising from titanium dioxide production. Instead, one should instead consider whether the essence of the process by which the relevant waste product has been produced involves a reaction between alkaline calcium compounds and the acid arising from titanium dioxide production. As long as the latter is the case, then the waste product resulting from the process in question consists entirely of calcium based reaction waste from titanium dioxide production. Moreover, that is the case regardless of whether:

Applying that test in the present case, it is plain that the essence of the process which takes place at Stallingborough is exactly as described in paragraph 129 above. In other words, the only purpose of the process is to neutralise the FC that has arisen from titanium dioxide production. That remains the case despite the fact that:

The Cristal waste displays both of the features described in paragraphs 130(1) and 130(2) above because:

However, the crucial point is that those impurities are simply unavoidable features of the calcium based reaction which is the essence of the process giving rise to the Cristal waste or, to put it another way, unavoidable features of the alkaline which is required to be applied in order to achieve the end objective of neutralising the FC with calcium hydroxide. They do not change that end objective and thus they do not change the essence of the process which is occurring at the site. Instead, that essence remains the neutralisation of the FC arising from titanium dioxide production by way of a reaction between a reactive alkaline which is calcium-based and that FC.

We say that because:

So, when one asks whether the Cristal waste can accurately be described as consisting entirely of a calcium based reaction waste from titanium dioxide production, the answer is demonstrably that it is.

The same cannot be said of the FCC waste. On the contrary, as we have said in paragraph 123 above, the essence of the process giving rise to the FCC waste was the neutralisation of the APCRs using the FC.  In addition:

It may be seen from the above that we emphatically reject the proposition that, because:

It follows from the above that, in our view:

The appeals are therefore dismissed.

This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of The Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.