Dontabella Ltd is in the ready-to-eat frozen meals business. It has seen a significant growth in its business because of the COVID-19 pandemic due to the convenience of their meals for people working from home. However, due to health and food safety handling regulations, it has had to increase the amount of the paper and plastic packaging for its products. The local council has sued Dontabella Ltd for breaching their paper and plastic waste quotas and is claiming that Dontabella will have to pay significant fines.

Dontabella's lawyers have advised them they will defend Dontabella's actions and claim that Dontabella was acting in the publics interests, and they expect to win the case.

Required:

Should Dontabella Ltd recognize a liability for this event? Justify your answer by reference to the definition and recognition criteria as per the Conceptual Framework.