Mobilix Ltd ((in Administration)) v HM Revenue and Customs; Blue Sphere Global Ltd v Same; Calltel Telecom Ltd and Another v Same

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Rimer,Lord Justice Moses,Sir John Chadwick,Lord Justice Carnwath
Judgment Date12 May 2010
Neutral Citation[2010] EWCA Civ 517,[2009] EWCA Civ 843
Docket NumberCase No: A3/2009/0400 A3/2009/1222 AND A3/2009/1345,Case No: A3/2009/1222(A)

[2009] EWCA Civ 843





Before: Lord Justice Rimer

Case No: A3/2009/1222(A)

Commissioners for HM Revenue & Customs
Blue Sphere Global Ltd

Ms M Hall QC & Mr J Hall (instructed by Messrs Howes Percival Llp) appeared on behalf of the Appellant.

Mr D Grant (instructed by Messrs Thomas Cooper) appeared on behalf of the Respondent.

(As approved)

Lord Justice Rimer

Lord Justice Rimer:


This is an application in a pending appeal. The litigation arises out of the refusal of the appellants, the Commissioners for Her Majesty's Revenue and Customs (“HMRC”), to repay to the respondent, Blue Sphere Global Limited (“BSG”), input tax amounting to something over £1.1 million claimed in its April 2006 VAT return in relation to the purchase for sale of mobile telephones.


On 25 April 2007 HMRC refused the claim on the basis that BSG's transactions were connected to a fraudulent evasion of VAT. On 18 May 2007 BSG appealed against that decision to the VAT and Duties Tribunal. By a decision dated 17 December 2008 the tribunal dismissed BSG's appeal. By a judgment on appeal to the High Court dated 22 May 2009, the Chancellor allowed BSG's appeal, ordered the payment of just over £1.1 million to BSG by 19 June 2009 plus interest and a repayment supplement of some £55,000, and awarded BSG its costs in the High Court and below. By an order dated 19 June 2009 I permitted HMRC to appeal against that decision and stayed execution of the payment orders until after judgment on the appeal or further order in the meantime. I gave liberty to BSG to apply to vary or discharge the stay I so ordered.


The appeal is a second appeal but I was satisfied by HMRC's skeleton argument in support of the application for permission that the appeal raises a point of principle of general importance. I granted the stay in the light of the evidence then before me from Mr Iain Dickinson, a chartered accountant and officer with HMRC. That evidence was directed to the question of whether, if HMRC paid the judgment debt and costs to BSG and were then to succeed on their appeal, they would be able to recover payment of the moneys so paid from BSG.


I need not, I think, for present purposes, detail the effect of that evidence beyond saying that it painted the gloomiest of pictures of BSG's solvency. BSG has filed no recent accounts, it has in fact now stopped trading and the only possible inference from Mr Dickinson's evidence was that such information as there is about the asset strength of BSG suggests that, if HMRC pay over the judgment debt and were then to succeed on the appeal, the likelihood of recovering from BSG what they had paid over would be remote. In those circumstances, I considered, according to what I regarded as familiar principles, that it was a proper exercise of discretion to order the stay that I did. I did, however, as is conventional, give BSG liberty to apply to vary or discharge the stay, and on 24 June BSG made such an application supported by witness statements from Mr Peters, the sole director and shareholder of BSG, and by Nicholas Green, a partner in Thomas Cooper, BSG's solicitors, who acted for BSG both in the appeal to the tribunal and in the appeal to the Chancellor.


Now again, I need not, I think, detail Mr Peters' evidence beyond saying that it paints a picture showing that he is going through extremely difficult personal financial circumstances. He is the subject of an individual voluntary arrangement. He has had to take his children out of private schools. He is in arrears with his mortgage and he has had to sell his car and borrow money from his mother in law to buy what I assume is a less valuable substitute car. He is in default of his commitments under the IVA and he has been warned by the supervisor of the IVA that, unless he meets them, he may be made bankrupt.


As I have said, BSG is not trading, and I have referred in general terms to its financial position. It is apparent that BSG is not in a position by recourse to its own resources, insofar as it has any, to finance the defence of HMRC's appeal to this court. In those circumstances, Mr Grant, for BSG, asks me to discharge the order, or at least to vary it so as to release to BSG sufficient money to enable it to defend the appeal and advance a cross-appeal; and Thomas Cooper have put before the court an estimate of the costs of that exercise which comes to something in excess of £195,000, which I have to say does appear to me to be, on the face of it, a very large figure for resisting an appeal to this court.


HMRC's opposition to the application recognises that someone in BSG's position should not find itself unable to defend an appeal such as this; and it is no part of HMRC's position that the appeal should go by default against BSG on the basis that BSG cannot afford to defend itself. What, however, HMRC submit is that BSG has to make out its case for a variation of the stay, the premise of HMRC's position being that I was justified in granting the stay in the first place. I fully accept that BSG has to make out its case for a variation; and what Ms Hall QC submitted—very forcefully, if I may say so—was that the evidence before the court does not demonstrate that BSG is in fact in a position where, as matters stand at present and if there is no variation of the stay, it will be prevented from defending the appeal and advancing a cross-appeal.


In support of that, Ms Hall referred to various passages in Mr Green's evidence and in the skeleton argument in support of BSG's application, which I will not refer to in detail because it is unnecessary. But the substance of these references—and there were about six of them—is to the effect that Thomas Cooper had not yet made a decision that they will not enter into a conditional fee arrangement in relation to the pending appeal in the like way they did in relation to the proceedings below. They were, so the evidence clearly conveyed, still considering the position; and Ms Hall makes the entirely valid point that, as they were doing so, there was no need to make any variation of the stay at this stage, The court should wait until it was known whether Thomas Cooper had come to a firm decision not to enter into such an agreement.


On hearing those submissions from Ms Hall, Mr Grant rose to his feet saying that he had at that moment been given instructions of a discussion between, I think, Mr Whelan of Thomas Cooper and Mr Green, to the effect that Thomas Cooper have now decided not to enter into a conditional fee agreement. That was, if I may say so, a remarkable turn of events. The evidence in support of this application clearly showed that that was still being considered. It was only when Ms Hall highlighted the points to which I have just referred that that decision appears to have been made, and it is, as Ms Hall submitted, an extremely unsatisfactory position that the whole nature of the application is by a sudden statement of counsel suddenly changed. Ms Hall's submission, in the light of that change, is that it is by itself still no answer to this application. The issues in the appeal are issues relating to MTIC fraud. There is a great deal of litigation going on in relation to frauds of that sort. There are many firms of solicitors devoting their professional skills to such litigation; and if Thomas Cooper are not prepared to enter into a conditional fee agreement, it by no means follows that there are no other firms who may be prepared to do so.


Ms Hall's position is therefore that it would be wrong for this court to deal with the present application on the assumption that there are no firms who would be prepared to consider entering into a CFA with BSG. Mr Grant, in response, submits that the prospect of that is extremely slight. Whether that is well-founded I am in no position to judge, and it is not something of which I am in any position to take judicial notice. But it does appear to me that Ms Hall is entitled to say that this application has been brought before the court on thoroughly unsatisfactory evidence; and the turn of events which occurred during the course of the hearing has presented what appears to me to be a practical difficulty in dealing with this application in the way that BSG invites, namely to release very substantial sums of money to BSG in order to meet costs. I may say that it was also part of Mr Grant's application that I should not only vary the order at least to that extent but that I should also release additional money to BSG so that it could promptly release it to Mr Peters for his own private purposes. That seemed to me to be an extraordinary application to make, as I indicated to Mr Grant.


What, then, should I do? I am not prepared to deal with this application today on the footing that there is no question of any firm of solicitors being prepared to enter into a CFA with BSG. The somewhat opportunistic stance adopted by Thomas Cooper, apparently adopted in the course of submissions by Ms Hall, is unsatisfactory. I have come to the conclusion that the right course in relation to this application is to make no order on the application today but to make it clear that BSG is at liberty to renew an application to vary or discharge the stay at any time hereafter when it has explored the possibility of entering into a CFA with an alternative firm of solicitors. If the evidence is to the effect that that is simply impossible, the court will consider that evidence on...

To continue reading

Request your trial
316 cases
  • HM Revenue and Customs v Greener Solutions Ltd
    • United Kingdom
    • Upper Tribunal (Tax and Chancery Chamber)
    • 18 January 2012
    ...VAT[2000] BVC 365 Meridian Global Funds Management Asia v Securities Commission ELR[1995] 2 AC 500 Mobilx Ltd v R & C Commrs VAT[2010] BVC 638 Moore v I Bresler Ltd UNK[1944] 2 All ER 515 Optigen Ltd v C & E Commrs ECASECASECASVAT(Joined Cases C-354/03, C-355/03 and C-484/03) [2006]......
  • NG International Ltd v R & C Commissioners
    • United Kingdom
    • Upper Tribunal (Tax and Chancery Chamber)
    • 24 July 2012
    ...ECR I-6161 Megtian Ltd (in administration) v R & C CommrsVAT [2010] BVC 314 Mobilx Ltd (in administration) v R & C CommrsVATVAT [2010] BVC 638 (CA); [2009] BVC 205 Netto Supermarkt GmbH & Co OHG v Finanzamt MalchinECASVAT (Case C-271/06) [2009] BVC 157; [2008] ECR I-771 POWA (Je......
  • Euro Stock shop Ltd v HM Revenue and Customs
    • United Kingdom
    • Upper Tribunal (Tax and Chancery Chamber)
    • 23 July 2010
    ...559; [2006] ECR I-6161 Mobilx Ltd v R & C CommrsUNKVAT [2009] EWHC 133 (Ch); [2009] BVC 205 Mobilx Ltd v R & C CommrsUNKVAT [2010] EWCA Civ 517; [2010] BVC 638 Value added tax - Input tax - Disallowance of input tax - Missing trader intra-Community (MTIC) fraud - Whether fraudulent ......
  • Red 12 Trading Ltd v HM Revenue and Customs
    • United Kingdom
    • Chancery Division
    • 20 October 2009
  • Request a trial to view additional results
1 firm's commentaries
  • Weekly Tax Update - 21 March 2016
    • United Kingdom
    • Mondaq UK
    • 30 March 2016
    ...VAT. This resistance has led to complications in litigation. The Court of Appeal's judgement in the case of Mobilx and others ([2010] EWCA Civ 517), the most senior decision to date, makes it clear that the requirement to plead and prove fraud is unchanged merely because the case involves a......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT