R Veolia Es Landfill Ltd and Another (1st Respondent) v Viridor Waste Management Ltd and Others (2nd Respondent) FCC Environment UK Ltd and Another (3rd Respondent) Alpha Resource Management Ltd (4th Respondent) Sita UK Ltd and Others (5th Respondent) HM Commissioners for Revenue and Customs

JurisdictionEngland & Wales
JudgeLady Justice Arden,Lady Justice Black,Lord Justice Floyd
Judgment Date16 July 2015
Neutral Citation[2015] EWCA Civ 747
CourtCourt of Appeal (Civil Division)
Date16 July 2015
Docket NumberCase No: C1/2014/2009

[2015] EWCA Civ 747

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT

ADMIN COURT

Mrs Justice Thirlwall

CO/1486/2014

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lady Justice Arden

Lady Justice Black

and

Lord Justice Floyd

Case No: C1/2014/2009

Between:
The Queen on the application of Veolia ES Landfill Limited and Another
1st Respondent
Viridor Waste Management Limited and Others
2nd Respondent
FCC Environment UK Limited and Another
3rd Respondent
Alpha Resource Management Limited
4th Respondent
Sita UK Limited and Others
5th Respondent
and
Her Majesty's Commissioners for Revenue and Customs
Appellant

Ms Melanie Hall QC and Mr Brendan McGurk (instructed by HM Revenue and Customs) for the Appellant

Mr Sam Grodzinski QC (instructed by Simmons and Simmons Llp) for the First Respondent

Mr Francis Fitzpatrick QC (instructed by Ashfords Llp) for the Second Respondent

Ms Philippa Whipple QC (instructed by Pricewaterhouse Coopers Legal Llp) for the Third and Fifth Respondent

The Fourth Respondent did not appear and was not represented

Hearing dates: Thursday 4 June

Lady Justice Arden

ISSUE: WHETHER STAY SHOULD BE REFUSED WHERE PARTIES PURSUING TWO SEPARATE REMEDIES AND THERE MAY BE A RISK OF INCONSISTENT FINDINGS

1

The short point on this appeal is whether there should be a stay of judicial review proceedings ("JR proceedings"), designed to establish whether the respondents had a legitimate expectation of being entitled to a repayment of tax, while proceedings to determine whether they were ever liable for the tax in the first place are heard and determined. If both proceed at the same time, there may be different findings of fact. The JR proceedings may also be unnecessary if there is in fact no liability to tax and the respondents have a statutory right to repayment in those circumstances to all the tax wrongly paid. There are also considerations of cost and delay and the use of scarce court resources for what might turn out to be a valueless duplication of effort. However, there is guidance in R (o/a Davies) v IRC; R (o/a Gaines-Cooper) v IRC [2011] 1 WLR 2625, where an issue arose as to whether the taxpayer was entitled to rely on a guidance issued by HMRC, and there were again both judicial review proceedings and also an appeal against liability on foot. Lord Wilson held that this court had correctly determined that the appeal should be stayed to allow the judicial review proceedings to run their course first.

2

In this case, on 7 July 2014, Thirlwall J granted the respondent taxpayers permission to bring judicial review proceedings against the appellants ("HMRC") (which expression includes their predecessors, the Commissioners of Customs and Excise) for alleged abusive conduct in breach of the respondents' legitimate expectations arising out of negotiations for repayments of overpaid landfill tax, but she refused to stay those proceedings while the respondents' appeals against assessments for the same landfill tax were finally resolved. Her decision to refuse a stay is challenged by HMRC on this appeal. The parties are not complaining about the risk of additional costs: HMRC's main concern seems to be about the diversion of its resources away from the important task for it and the justice system of determining whether there was a liability to tax. That question arises in this and many other cases. The respondents' priority on the other hand is to have the JR proceedings tried first as they are likely to take a much shorter time to resolve than the tax appeals process, particularly if all avenues of appeal are pursued.

3

In my judgment, there is no doubt that, although the respondents seek effectively the same relief in the two sets of proceedings, they have two separate claims: (1) their appeals to the FTT and (2) their judicial review claims. There is no question of preventing them from pursuing either or both remedies though there may come a time when they are bound to elect between remedies. They can choose which set of proceedings will be their priority. In my judgment, there have to be strong reasons for restricting their right to pursue both claims. In this particular case, it would be a strong reason to restrict their right if there were likely to be a significant duplication of fact in the proceedings which might lead to inconsistent findings. On that basis the crucial question on this appeal is whether the judge's order will lead to the Administrative Court having to make findings of fact on matters which will have to be determined in the tax appeals if the judge's order stands. In general, the same issues of fact ought not to be decided by different tribunals in disputes between the same parties not only because it wastes time and costs but because it is contrary to the interests of justice: it undermines the parties' confidence in the justice system's ability to produce a fair result and may lead to a continuation rather than a resolution of their disputes. There are cases (I am thinking particularly of disputes which have to be litigated in different national jurisdictions) where the risk cannot be avoided but the present case does not fall into that category.

SUMMARY OF OVERALL CONCLUSION

4

In my judgment, for the reasons given below and having considered the helpful submissions of all parties, due to developments in HMRC's case in related tax appeals leading to last minute but incomplete changes in HMRC's case on this appeal, this court is not in a position to determine that the judge's refusal to stay the JR proceedings was wrong because it would lead to a significant risk of inconsistent findings in the JR proceedings and tax appeals. Accordingly the appeal must be dismissed.

HOW THE ALLEGED LEGITIMATE EXPECTATION AROSE

5

The respondents are landfill site operators. Under section 40 of the Finance Act 1996, they are bound to pay landfill tax on waste material used in filling landfill sites, but that tax is payable only if the waste material is "discarded". In Waste Recycling Group v HMRC [2009] STC 200 ("WRG"), this court (Sir Andrew Moritt, Arden and Smith LJJ) held that the word "discard" should be given its normal meaning so that (in summary) it did not include material either not disposed of or not disposed of with the intention of discarding the material. On that basis it did not include the retention and use of waste material brought to the landfill site, which the landfill site operator reused, in that case, as a daily cover of the tip to protect it against vermin and the escape of odours, and as hardcore for roads on the landfill site. HMRC decided not to seek permission to appeal from this decision. Instead it chose to issue guidance for landfill site operators, Revenue & Customs Brief 58/08 ("Brief 58/08"). This stated that HMRC would, applying WRG, grant relief from landfill tax in specified circumstances. The material passages from Brief 58/08 read as follows:-

2. On 22 July 2008 the Court ruled in favour of Waste Recycling Group Limited in their action relating to landfill tax liability. The Court found that where material received on a landfill site is put to a use on the site (for example, for the daily coverage of sites required under environmental regulation, and construction of on-site haul roads), it is not taxable, as there is not, at the relevant time, a disposal with the intention of discarding the material.

3. We accepted the Court's decision and did not seek leave to appeal to the House of Lords.

Description of use of material

4. Notwithstanding any possible future changes to landfill tax legislation that the Government might decide to introduce, the judgment means that materials put to use on a landfill site are not taxable. Illustrative non-taxable uses of material include:

Cell engineering

• Mineral material (including clay) used as part of an artificially established (geological) barrier on the bottom, sides or top (cap) of a landfill. Materials used to protect from damage any geosynthetic product used for landfill containment on the base, sides or top of the landfill.

• Drainage material at the base and up the sides of the site used to collect leachate and allow its transport to a low point for collection/ extraction.

• Material used beneath the landfill cap and up the sides of the site to allow landfill gas to accumulate for extraction. Material used as a preferential drainage layer above the cap to encourage surface water run off.

• Mineral material (including clay) used to protect the cap and provide a restoration layer for planting.

6

As regards the present disputes with HMRC, I take the facts concerning the first respondent ("Veolia") only. Veolia made a claim for repayment of landfill tax which it considered it had overpaid by letter dated 26 February 2010. This was acknowledged by Richard Hart, a higher officer employed by HMRC on 9 March 2010. Veolia sent a reminder on 29 June 2010. On 22 September 2010, Mr Hart wrote with a long list of various issues which he wished to discuss at a meeting. Substantial correspondence ensued. Ultimately, on 1 February 2013, HMRC accepted that Veolia had overpaid landfill tax in periods up to October 2009 as it had incorrectly declared landfill tax on material placed against the base and sidewall drainage layer or liner of the disposal area to prevent damage to that layer or liner. HMRC stated that it was in a position to agree the quantum of the claim. It then went on to discuss the applicable time periods, unjust enrichment and interest.

7

The respondents say that HMRC investigated the matter very thoroughly. There is, however, a dispute as to whether HMRC were...

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