Foulser v Revenue and Customs Commissioners
| Jurisdiction | UK Non-devolved |
| Judgment Date | 04 October 2011 |
| Neutral Citation | [2011] UKFTT 642 (TC) |
| Date | 04 October 2011 |
| Court | First Tier Tribunal (Tax Chamber) |
[2011] UKFTT 642 (TC)
Judge Roger Berner
Alun Jones QC, instructed by Keystone Law, for the Appellant
Fiona Dewar, instructed by the General Counsel and Solicitor to HM Revenue and Customs, for the Respondents
Procedure - jurisdiction - abuse of process - appellants' application that the tribunal should hear no submissions or evidence from HMRC - whether tribunal has inherent power to prevent its processes being abused - whether the power asserted by the appellants was to be implied - no - application dismissed
1.These are applications in the appeals of Mr and Mrs Foulser ("the Appellants") which give rise to important issues concerning the jurisdiction and powers of the Tribunal in case of an alleged abuse of process.
2.The application of the Appellants is that, on the basis of the conduct of HMRC, the Tribunal should hear no submissions or evidence from HMRC for the purpose of obtaining further monies as claimed by HMRC in these appeal proceedings. Essentially, and as accepted by Mr Jones for the Appellants, this application amounts to one that the Tribunal debar HMRC from taking further part in the proceedings, with the result that the appeal would fall to be allowed.
3.The facts on which the Appellants rest their application are largely undisputed. What are, however, disputed are the inferences which the Appellants draw from those facts as to the motives or purposes to be ascribed to HMRC. Each of the parties prepared statements of witnesses to provide the Tribunal with the opportunity of making findings in this respect. But the parties agreed that I should first make a determination on an application by HMRC that the Appellants' application should either be struck out or summarily dismissed, without proceeding to hear live evidence on the merits, on the basis that:
(2) this Tribunal has no jurisdiction to make the order sought by the Appellants; and/or
(3) the application is in any event bound to fail as the evidence in support fails to raise a prima facie case and the allegations (even if true) would not justify the sanction sought.
4.This case has a long history. As far back as November 1997 the Appellants, advised by their tax adviser, Mr Edward Gittins, made gifts of shares in a company, BG Foods Limited, on which they claimed holdover relief from capital gains tax. HMRC refused those claims, and the Appellants' appeals to the then special commissioners, and on appeal to both the High Court and Court of Appeal, were dismissed in principle. That left the amount of the CGT assessment to be determined, which depended on the open market value of the shares. That fell to be determined by this tribunal (as successor of the special commissioners), and a hearing before Judge Avery Jones commenced on 27 September 2010.
5.The first day of the hearing was a reading day. The Appellants' case commenced on 28 September 2010, during which certain evidence of fact was given. On the following day the events took place which have given rise to these applications. I set out the following brief description merely to provide context for the discussion of the issues raised on HMRC's application. In the absence of having heard the evidence, nothing in this description amounts to a finding of fact.
6.According to Mr Gittins' witness statement he left the house in Montpelier Street, London, where he had been staying since arriving on the previous Sunday, at around 7.30am. He was due to meet counsel for the Appellants in those proceedings at 8am. He was at that stage arrested on suspicion of cheating the Revenue and false accounting. He was told that HMRC had a warrant to search the premises.
7.Despite informing the HMRC officers that he was on his way to a conference and then to the tax tribunal for the hearing, Mr Gittins was escorted back into the house and when inside asked to hand over his briefcase. He was then taken to Notting Hill police station where he was processed, spent time in a cell, and was questioned before being released on bail that evening. The Montpelier Street premises and other premises at Cockspur Street were searched under the warrant.
8.In the meantime the tribunal, through the clerk assisting Judge Avery Jones on that day, had been informed of Mr Gittins' arrest. There is some dispute about the circumstances of the calls made, and the instructions given to the clerk with regard to information about the arrest being passed to the judge, but in any event, by agreement between counsel for the Appellants and counsel for HMRC, the judge was not informed of this. Instead, counsel met with the judge in chambers and a short adjournment was directed, without any of the detailed reasons having to be disclosed. The judge was subsequently given details of the arrest, and of the Appellants' consideration of making an application in respect of abuse of process, and he granted a further stay.
9.In support of their application the Appellants claim that the warrants to enter, search and make seizures from the Montpelier Street and Cockspur Street premises occupied by their adviser, Mr Gittins, Montpelier Tax Consultants (Isle of Man) Limited and associated companies, and the arrest and detention of Mr Gittins, were arranged by officers and agents of HMRC to take place on 29 September 2010 with the purposes, among other purposes, of:
(2) obtaining sight of legally privileged and confidential material held by Mr Gittins or associated companies relevant to the hearing of their tax appeal held in the week of 27 September 2010;
(3) alerting the tribunal hearing their tax appeal on that day to the arrest and detention;
(4) causing the postponement of the hearing;
(5) causing publicity to the arrest of Mr Gittins and thus embarrassing the Appellants in the preparation and conduct of their appeal;
(6) placing pressure oppressively on the Appellants to settle the subject matter of the appeal.
10.Although correspondence, and references in Mr Foulser's witness statement refer to the Appellants' complaint being that they cannot have a fair hearing before the Tribunal, in argument Mr Jones did not rely upon any submission that the proceedings could not be fairly conducted. Instead he submitted that HMRC had been guilty of such serious misbehaviour that they should not be allowed to benefit to the detriment of the Appellants, and accordingly should not be permitted to take further part in the proceedings.
11.The distinction between these two approaches can be seen from the case of R (on the application of Ebrahim) v Feltham Magistrates Court; Mouat v DPP [2001] 2 Cr App R 23 in the Divisional Court. There, in cases concerning applications to stay criminal proceedings against a defendant on the ground that videotape evidence had been obliterated, the court reviewed the principles underlying the jurisdiction to order a stay. It stated (at [18]) that the two categories of case in which the power to stay proceedings for abuse of process may be invoked in this area of the court's jurisdiction are (i) cases where the court concludes that the defendant cannot receive a fair trial, and (ii) cases where it concludes that it would be unfair to the defendant to be tried. In relation to this second category, the court said:
[19]We are not at present concerned with the second of these categories (which we will call "Category 2" cases), in which a court is not prepared to allow a prosecution to proceed because it is not being pursued in good faith, or because the prosecutors have been guilty of such serious misbehaviour that they should not be allowed to benefit from it to the defendant's detriment. In some of those cases it is this court, rather than any lower court, which possesses the requisite jurisdiction (see ex parte Watts, per Buxton LJ at p. 195B-D).
[20]In these cases the question is not so much whether the defendant can be fairly tried, but rather whether for some reason connected with the prosecutors' conduct it would be unfair to him if the court were to permit them to proceed at all. The court's enquiry is directed more to the prosecutors' behaviour than to the fairness of the eventual trial. Although it may well be possible for the defendant to have a fair trial eventually, the court may be satisfied that it is not fair that he should be...
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