The Queen (on the Application of Def Ltd) v The Commissioners for HM Revenue & Customs
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mostyn |
| Judgment Date | 14 March 2019 |
| Neutral Citation | [2019] EWHC 600 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/435/2019 |
| Date | 14 March 2019 |
[2019] EWHC 600 (Admin)
Mr Justice Mostyn
Case No: CO/435/2019
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
David Bedenham (instructed by Rainer Hughes) for the claimant
Ben Hayhurst (instructed by HMRC) for the defendant
Hearing date: 7 March 2019
Approved Judgment
This is my judgment on the claimant's application for what is known as an ABC injunction (see ABC Ltd v HMRC [2017] EWCA Civ 956). Such an order is sought where:
i) the defendant (HMRC) has withdrawn approval from the claimant's warehouse business to store duty-suspended alcohol;
ii) the business has exercised its right of appeal to the First-tier Tribunal (FTT);
iii) there will be a lengthy delay before that appeal is heard;
iv) the defendant has refused to reinstate the approval temporarily pending the hearing of the appeal;
v) the FTT has no power to reinstate the approval temporarily pending the hearing of the appeal; and
vi) it is said by the business that it will suffer fatal harm if it is not allowed to continue trading in the period up to the hearing of the appeal.
The details of the regulatory regime are fully described in ABC and do not need to be repeated here.
Although a substantial body of case law has been built up (and one aspect of the jurisprudence has even been considered by the Supreme Court, where judgment is awaited) there is, subject to one point, no dispute about law that I should apply.
In order to obtain the injunction, the claimant first has to show “to a high degree of probability” that if the order is not made its appeal would be rendered nugatory or illusory. This means that the business has to show to “a high degree of probability” that it faces collapse if it cannot trade in the period before the hearing of the appeal. I will explain below what the phrase I have quoted must be taken to mean.
The claimant then has to show that its appeal to the FTT is arguable and would not be susceptible to being struck out as disclosing no reasonable prospect of succeeding under rule 8(3)(c) of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI 2009 No. 273). This is the same as the test where there is a permission-to-appeal filter. In ABC at [85] Burnett LJ stated: “material would have to be deployed which provided a proper insight into the prospects of success in an appeal. There is no permission filter for an appeal to the FTT”. When assessing whether the appeal has reasonable prospects of success it is clear that the court should not conduct some kind of “mini-trial”: see, Swain v Hillman [1999] EWCA Civ 3053, [2001] 1 All ER 91 at [20], per Lord Woolf MR, but that is not to say that everything said by the claimant has to be taken at face value: see, ED&F Man Liquid Products Ltd. v Patel & Anor [2003] EWCA Civ 472 at [10] per Potter LJ.
Finally, the court must conduct a balancing exercise weighing the advantage to the claimant in being allowed to continue to trade against the disadvantage to the defendant (including detriment to the public interest) in that event. In this regard the defendant places great weight on the speech of Lord Goff of Chieveley in R v Secretary of State for Transport, Ex p Factortame Ltd (No 2) [1991] 1 AC 603 at 673 where he said:
“Turning then to the balance of convenience, it is necessary in cases in which a party is a public authority performing duties to the public that “one must look at the balance of convenience more widely, and take into account the interests of the public in general to whom these duties are owed:” see Smith v. Inner London Education Authority [1978] 1 All E.R. 411, 422, per Browne L.J., and see also Sierbien v. Westminster City Council (1987) 86 LGR. 431. Like Browne L.J., I incline to the opinion that this can be treated as one of the special factors referred to by Lord Diplock in the passage from his speech which I have quoted. In this context, particular stress should be placed upon the importance of upholding the law of the land, in the public interest, bearing in mind the need for stability in our society, and the duty placed upon certain authorities to enforce the law in the public interest. This is of itself an important factor to be weighed in the balance when assessing the balance of convenience. So if a public authority seeks to enforce what is on its face the law of the land, and the person against whom such action is taken challenges the validity of that law, matters of considerable weight have to be put into the balance to outweigh the desirability of enforcing, in the public interest, what is on its face the law, and so to justify the refusal of an interim injunction in favour of the authority, or to render it just or convenient to restrain the authority for the time being from enforcing the law.”
In that famous case the applicants sought an interim injunction to disapply generally until final trial the operation of Part II of the Merchant Shipping Act 1988 and the Merchant Shipping (Registration of Fishing Vessels) Regulations 1988. It was in that context that Lord Goff gave his opinion. That is a far cry from what the claimant seeks here. It is not in its injunction application seeking to disapply the law of the land (although its appeal to the FTT does have grounds which could have that effect). It merely seeks to be allowed to continue trading pending that appeal. When assessing the public interest in this case the duty of a public authority to enforce the law of the land is certainly relevant, but so too is the right of an aggrieved citizen to have an effective remedy against a measure meted out to him by a public authority which he avers is unreasonable.
Of course, it is a blot on our legal system that this kind of case needs to happen at all. In an efficient, well-resourced tribunal service arrangements would surely be in place to ensure that in a case such as this, where the FTT has no power to award interim relief, the appeal would be heard extremely quickly. In this case the decision to withdraw approval was made on 11 January 2019 to take effect on 11 April 2019, although conditions were imposed which seriously hampered the ability to trade with effect from 25 January 2019. The appeal to the FTT was filed on 30 January 2019. Directions were given on 1 February 2019 which provide that the appeal will be heard between 14 June 2019 and 14 January 2020 – that is possibly as much as a year after it was filed. This is frankly unacceptable. The system should provide in a case such as this that the appeal should be heard within a matter of weeks and certainly before the date on which the withdrawal of approval takes effect. Were that the norm then satellite litigation of the type on which I have spent two days (including reading and judgment writing), at some considerable expense to the parties, would be avoided, thus freeing up the court's most precious resource, namely judicial time.
I have to say that I find it disturbing that in this case one arm of the government fails to provide a sufficiently resourced appeal service to enable a challenge to a withdrawal of approval to be heard without harmful delay, while at the same time another arm of the government, namely HMRC, argues that it is reasonable for the claimant to be exposed to the risk of insolvency caused by that very delay.
The authorities say that the reason a stringent test is applied on the determination of the application is because in sec 16(4) of the Finance Act 1994 Parliament chose not to vest the FTT with the power to award interim relief. Therefore, it is said, the court should be cautious before it starts liberally wielding a power which Parliament, by design, did not include in the statutory scheme. I have to say, respectfully, that I doubt the logic of this argument. I have not been provided with any pre-legislative consultative material or extracts from Hansard to show that the framers of the legislation positively intended an appellant to be exposed to the risk of business failure simply by reason of the delay that would arise in the hearing of its appeal. I would be very surprised if such material existed. A far more likely legislative intention, I would have thought, would have been that the framers were well aware that the High Court had power to award interim relief in aid of an inferior tribunal, and that it was therefore unnecessary for that power to be additionally vested in the FTT. It is classic law that an injunction may only be granted in support of a legal or equitable right ( North London Railway Co v Great Northern Railway Co (1883) 11 QBD 30, CA per Cotton LJ), but the definition of such a right has been vastly expanded since that decision and now extends to a right claimed in proceedings in a foreign court, arbitral body or inferior tribunal (see, for example, Fourie v Le Roux and others [2007] UKHL 1, [2007] 1 WLR 320 per Lord Scott).
Equally, the framers of the legislation would surely have thought that the appeal to the FTT would be heard very quickly. They would have been surprised not only by the delay in determining the appeal but by the practice which has arisen of the FTT, if and when it allows an appeal under sec 16(4), not to determine the issue conclusively but rather merely to remit the matter back to the defendant for it to reconsider its decision on the correct basis. Needless to say, this practice gives rise to further delay and can generate a yet further appeal. Lord Neuberger once memorably said that we only have one iron law in this country, and that is the law of unintended consequences. I cannot conceive that the framers of the legislation intended the situation here.
Sec 16(4)...
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