A recycling firm has failed to secure a decree declaring that the Scottish SPCA’s alleged termination of a long-standing waste services contract was invalid and constituted a repudiatory breach. The ruling was issued by Lord Lake in the Court of Session Outer House, referenced as [2026] CSOH 90.
Waste contract dispute
William Campbell Recycling Ltd signed an agreement with the Scottish Society for the Prevention of Cruelty to Animals in 2021 to manage waste services at various locations across Scotland. At certain sites, the recycling firm arranged agreements directly between the SSPCA and Veolia, while at others, third-party subcontractors were used. The contract allowed either party to end the arrangement with five years’ notice, though such notice could not take effect before 31 December 2038.
Tensions arose between the two parties over time. Starting in December 2023, the SSPCA requested documentation from William Campbell Recycling regarding risk assessments and health and safety procedures related to the services. On 14 February 2024, its legal representatives issued a letter marked “Waste Services Contracts: ULTIMATUM LETTER.” Invoking clause 6.3 of the agreement, the letter claimed the recycling firm had failed to meet a significant contractual duty and gave it 30 days to address the issue, warning that failure to comply would justify termination.
The correspondence demanded completed health and safety forms for each applicable site. It argued that William Campbell Recycling had violated an implied contractual provision requiring it to deliver services without causing the SSPCA to breach its own legal responsibilities. While the recycling firm challenged the existence of that term, it gathered the requested materials. Following an unsuccessful attempt to transmit the documents via email due to file size limitations, the information was sent via DX. The SSPCA confirmed receipt on 27 March. Five days prior, on 21 March, its lawyers had informed William Campbell Recycling that no timely response had been received and announced the termination of the contract.
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The recycling company contended that the SSPCA lacked grounds to terminate the agreement and that the termination notice itself represented a repudiatory breach, which it later accepted and pursued damages for.
Strict approach to notices
William Campbell Recycling applied for decree de plano based on its conclusions seeking a declarator affirming that the SSPCA’s notice did not lawfully dissolve the contract and that the notice itself amounted to repudiatory breach. It argued that any request under clause 6.3 required precise interpretation and had to specify both the facts involved and the specific contractual obligation alleged to have been violated.
According to the recycling firm, the only obligation cited in the ultimatum letter was an asserted implied term requiring it to perform services without exposing the SSPCA to legal violations. It denied the existence of such a term and argued that the SSPCA could not retroactively rely on other alleged obligations that were not mentioned in the notice.
The SSPCA countered that its stated case remained aligned with the claims outlined in the ultimatum letter and that the broader context made clear what was expected of William Campbell Recycling. Additionally, it argued that even if the notice was invalid under clause 6.3, its assertions that the recycling firm was in material breach of contract remained relevant to questions of enforcement and available remedies.
Lord Lake dismissed the argument that the SSPCA’s position regarding the implied obligation was inherently irrelevant, stating: “I doubt whether it could be said that such a condition arises in all contracts for services as the letter states, but, having regard to averments that of necessity the services are performed on the defender’s premises and require use of large vehicles, it is possible that there is an obligation that the services must be carried out in a way that would not result in the defender breaching the averred statutory duties.”
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He deemed this sufficient for the claim to be considered relevant. When evaluating the criteria for implying contractual terms, Lord Lake emphasized that commercial necessity did not demand “absolute necessity.” Instead, the focus could be on whether, without the proposed term, “the contract would lack commercial or practical coherence.” Based on the SSPCA’s assertions, he found that the standard could be satisfied if it could prove that delivering the services without the requested information would lead to unlawful activity.
‘Drastic’ consequences required strict approach
Lord Lake nonetheless supported a key aspect of the recycling firm’s argument regarding clause 6.3. He rejected the notion that a contractual default notice must always specify the exact obligation allegedly breached. Whether such identification was necessary depended on the specific terms of the agreement. In this instance, however, clause 6.3 mandated that a party submit a “request” to rectify a breach of a material obligation before termination could proceed.
He explained: “As the request must be to remedy the breach, it follows that the breach must be identified. That in turn requires that the obligation said to have been breached is identified.” This requirement, he noted, was not the introduction of an additional contractual term but rather part of interpreting the agreement’s actual stipulations.
The judge then evaluated whether the February ultimatum letter fulfilled these conditions. He determined that the letter should be interpreted in light of the parties’ prior communications and under standard commercial contract principles. Nonetheless, given the gravity of the notice, strict adherence to the requirements was essential.
Lord Lake observed: “The effect of the ultimatum letter was to create a situation in which, if remedial action was not taken, the defender would be entitled unilaterally to terminate a contract which otherwise would last until at least 2038.” He added: “I think that the effect of the letter can therefore properly be described as drastic and that a strict approach is required.”
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While the letter adequately referenced the implied obligation to avoid placing the SSPCA in violation of statutory duties, it failed to identify the separate duty to cooperate that was later cited in defenses. “Taking the required strict approach,” Lord Lake concluded, “the letter is therefore not effective in relation to the latter obligation.”
Further procedure required
However, this finding alone did not entitle William Campbell Recycling to decree. The SSPCA had also presented relevant claims that the recycling firm had itself been in material breach at the time the termination notice was issued. Lord Lake ruled that establishing whether the implied terms existed, whether they were material, and whether they had been violated required factual evidence.
If substantiated, these points could influence not only the extent of damages but also William Campbell Recycling’s own right to terminate the agreement in response to the SSPCA’s alleged repudiation. Lord Lake concluded that this provided a relevant defence to the declarators sought.
Accordingly, he denied the pursuer’s motion for decree de plano. “Clearly, further procedure will be required in this case,” he stated, ordering that the matter be submitted By Order to allow the parties to present their positions on implementation and future proceedings.