The Commissioners for HM Revenue and Customs v IGE USA Investments Ltd (Formerly IGE USA Investments) (personally and in its capacity as a partner in GE Commercial & Consumer Finance Holdings Ltd Partnership)
| Jurisdiction | England & Wales |
| Judge | James Pickering |
| Judgment Date | 31 December 2020 |
| Neutral Citation | [2020] EWHC 1716 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. RL-2018-000005 |
[2020] EWHC 1716 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
REVENUE LIST (ChD)
BETWEEN:
James Pickering QC (sitting as a Deputy High Court Judge)
Claim No. RL-2018-000005
Appeal ref: CH-2020-000147
Thomas Bell (instructed by PricewaterhouseCoopers LLP) for the Defendants/Appellants
Gareth Tilley (instructed by HM Revenue & Customs) for the Claimants/Respondents
Hearing date: 29 June 2020
APPROVED JUDGMENT
James Pickering QC (sitting as a Deputy High Court Judge):
PART I: INTRODUCTION
PART I: INTRODUCTION
The matter before me
The matter before me is an appeal which concerns the extent of the court's jurisdiction under the Disclosure Pilot Scheme (CPR PD51U) (“ the Pilot Scheme”). The issue, as it was described to me, is:
“Does the court have the power to order specific disclosure when there is no agreed or approved List of Issues for Disclosure?”
The issue is in fact more nuanced than that but, in broad terms, the above is a useful summary of the jurisdictional question which I have to decide.
More specifically, on 2 June 2020 Deputy Master Nurse gave judgment dismissing an application for disclosure of specific documents pursuant to paragraph 18.1 of the Pilot Scheme holding, amongst other things, that in the absence of a List of Issues for Disclosure, the court had no jurisdiction to order such disclosure.
The present appeal is against that finding in relation to jurisdiction. If I agree with the Deputy Master that the court has no jurisdiction, it follows that I should dismiss the appeal and that, of course, would be the end of the matter. If, however, I disagree with the Deputy Master and allow the appeal, rather than remit the matter to a Master for reconsideration, I am invited to exercise the jurisdiction myself and decide whether or not an order for disclosure ought to be made.
PART II: THE BACKGROUND
The underlying background is complex. For present purposes, however, it is necessary for me to set out the history of the matter only in the broadest terms.
The parties
The Appellants are a number of companies within the GE group (“ GE”).
The Respondents are HM Revenue & Customs (“ HMRC”). They, of course, are the authority responsible for the collection of tax within the United Kingdom.
The Settlement Agreements
On about 21 December 2005, GE and HMRC entered into a series of settlement agreements (“ the Settlement Agreements”) in relation to GE's tax liability.
On 16 October 2018, however, HMRC sent a letter to GE rescinding (or purporting to rescind) the Settlement Agreements on the basis of misrepresentation and/or material non-disclosure.
The claim
A few days later, on 23 October 2018, HMRC issued the present claim against GE seeking to confirm the above rescission. The amount sought to be recovered was in the region of £650 million 1. Statements of case were then filed and served by both parties in the usual way.
The Amendment Application
Almost a year later, on 22 October 2019, HMRC issued an application for permission to amend their Particulars of Claim (“ the Amendment Application”). Amongst other things, rather than relying simply on innocent misrepresentation, HMRC now wished to allege fraud. Unsurprisingly, GE denied the allegation of fraud and, moreover, resisted the proposed amendment.
The CMC
On the following day, 23 October 2019, a case management conference took place. At that CMC, Master Kaye made various directions. In the light of the recently made Amendment Application, these included a timetable for evidence and the setting down of that matter for a hearing.
In addition, the Master made a direction for disclosure as follows:
“13. There shall be extended disclosure under paragraph 6 of the Practice Direction 51U in the form of Model D without narrative documents unless otherwise agreed between the parties or further ordered. The parties shall give disclosure by exchange of lists of documents accompanied by electronic copies in such format as may be agreed [or] ordered by 4.00 pm on 16 October 2020.”
Following the above, the parties liaised with a view to agreeing a draft List of Issues for Disclosure (as discussed further below). It is uncontroversial, however, that not all of the proposed issues were agreed between the parties.
The Disclosure Application
In any event, in due course evidence was filed by both parties in relation to the Amendment Application. Importantly, however, within their evidence, HMRC referred to the fact that the case team dealing with the GE matter had on two occasions (in November 2016 and December 2017) referred the case to HMRC's Fraud Investigation Service (“ FIS”), the specialist body within HMRC responsible for investigating suspected taxpayer fraud, which on both occasions had declined to investigate.
Following the above, GE's solicitors wrote to HMRC asking for copies of the documents relating to the above referral to FIS (the “ FIS Documents”). The basis for the request was that, in broad terms, the test which would be applied on the Amendment Application was whether the proposed new claim of fraud had a real prospect of success and that the FIS Documents would be relevant to that determination.
HMRC declined to produce the above documents. As a result, on 2 March 2020 GE issued an application (the “ Disclosure Application”) for:
“An Order pursuant to paragraph 18.1 of Practice Direction 51U requiring [HMRC] within 7 days of the order arising from this application to provide specific disclosure of [the FIS Documents]”.
On 26 May 2020, the Disclosure Application came before Deputy Master Nurse who, on 2 June 2020 handed down his reserved judgment. As indicated above, the Deputy Master dismissed the application on the basis that, in broad terms, he did not have jurisdiction to make the order sought. Recognising, however, that this was an important point in the context of a relatively new procedural code, the Deputy Master went on to grant permission to appeal to a High Court Judge stating:
“…although as a matter of construction, it seems to me that the meaning and effect of the Disclosure Pilot is clear, and that paragraph 18 is not applicable in the circumstances of the present case, there is little if any reported authority on the application of paragraph 18. I am very doubtful whether the threshold of ‘reasonable prospect of success’ has been reached, but it seems to me that the combination of lack of reported authority on the point and the nature of the claim is a sufficiently compelling reason for me to be able to grant permission to GE to attempt to reverse my decision.”
The Appeal
Pursuant to the above permission to appeal, on 15 June 2020, GE issued its appellant's notice. As part of that appellant's notice, GE sought expedition of the appeal on the basis that the Amendment Application was due to be heard on 7 July 2020 and that accordingly the appeal needed to be heard in good time before then. On 19 June 2020, the matter came before Trower J who granted expedition, following which the appeal was set down for 29 June 2020. It is that appeal which is of course before me now.
PART III: “SPECIFIC DISCLOSURE” UNDER CPR 31 AND THE PILOT SCHEME
As mentioned at the start of this judgment, the application was described to me as an application for “specific disclosure”. It is worth at this stage, therefore, a brief consideration of the relevant provisions relating to the disclosure of specific documents under both CPR 31 and the Pilot Scheme.
Specific disclosure under CPR 31
It should not be forgotten that CPR 31 remains in force. The Pilot Scheme applies to most (but not all) cases in the Business and Property Courts. It does not, however, apply to other jurisdictions within the High Court and nor of course to the County Court. Further, as a pilot, it is currently in force only for a limited period of time; it was originally due to expire on 31 December 2020 and has since been extended to 31 December 2021 and may of course be further extended. The short point, however, is that while it has currently been replaced for (most) Business and Property Court cases, CPR 31 nevertheless remains very much alive.
Under CPR 31, “specific disclosure” undoubtedly exists as a concept. Indeed, CPR 31.12 provides:
“ Specific disclosure…
31.12
(1) The court may make an order for specific disclosure…
(2) An order for specific disclosure is an order that a party must do one or more of the following things –
(a) disclose documents or classes of documents specified in the order;
(b) carry out a search to the extent stated in the order;
(c) disclose any documents located as a result of that search.”
That rule is then supplemented with CPR Practice Direction 31A which provides (with underling added):
“ Specific disclosure
5.1 If a party believes that the disclosure of documents given by a disclosing party is inadequate he may make an application for an order for specific disclosure (see rule 31.12)…
5.4 In deciding whether or not to make an order for specific disclosure the court will take into account all the circumstances of the case and, in particular, the overriding...
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