[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | ||
England and Wales High Court (Queen's Bench Division) Decisions |
||
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Donatas Labeikis & Ors v HM Revenue & Customs [2021] EWHC 3237 (QB) (19 November 2021) URL: http://www.bailii.org/ew/cases/EWHC/QB/2021/3237.html Cite as: [2021] EWHC 3237 (QB), [2021] BTC 33 |
[New search] [Context] [View without highlighting] [Printable PDF version] [Help]
QUEEN'S BENCH DIVISION
Strand London WC2A 2LL |
||
B e f o r e :
____________________
DONATAS LABEIKIS AND OTHERS | ||
-and- | ||
EDUARDO KANG KIM AND OTHERS | Claimants |
|
-and- | ||
THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS | Defendant |
____________________
One Cow Lane, Church Farm, South Harting, West Sussex, GU31 5QG Phone: 01730 825 039
____________________
Crown Copyright ©
(Friday, 19 November 2021)
THE MASTER:
Introduction
The Loan Charge
The Remedies Claimed
The HMRC Procedural Challenges
The Tax Exclusivity Principle and Autologic
"11. In resolving this question of jurisdiction the starting point is to note two basic principles. The first concerns the exclusive nature of the appeal commissioners' jurisdiction to decide certain types of disputes arising in the administration of this country's tax system. The present disputes concern claims for group relief. The way a taxpayer claims group relief depends on whether the claim relates to an accounting period before or after 1 July 1999. Before that date the corporation tax (pay and file) system was in force. This has now been replaced by the corporation tax (self-assessment) system. For present purposes this difference is immaterial. What matters is that, whichever system is applicable, an assessment which disallows a group relief claim cannot be altered except in accordance with the express provisions of the tax legislation. Statute so provides: see, in respect of the pay and file system, section 30A of the Taxes Management Act 1970 and, in respect of the self-assessment system, paragraphs 47(2) and 97 of Schedule 18 to the Finance Act 1998. Further, the statutory code makes its own provision for appeals. Under both the 'pay and file' system and the self-assessment system a taxpayer has a right of appeal to the appeal commissioners against assessments of tax, including amendments made by the revenue to a taxpayer's tax return. The appeal commissioners' findings of fact are final. In appropriate cases a further appeal lies to the High Court by way of case stated on a point of law. Where the appeal commissioners reduce the amount of an assessment, any overpaid tax must be repaid to the taxpayer, with a repayment supplement by way of interest as provided in section 825 of the ICTA.
12. Clearly the purpose intended to be achieved by this elaborate, long established statutory scheme would be defeated if it were open to a taxpayer to leave undisturbed an assessment with which he is dissatisfied and adopt the expedient of applying to the High Court for a declaration of how much tax he owes and, if he has already paid the tax, an order for repayment of the amount he claims was wrongly assessed. In substance, although not in form, that would be an appeal against an assessment. In such a case the effect of the relief sought in the High Court, if granted, would be to negative an assessment otherwise than in accordance with the statutory code. Thus in such a case the High Court proceedings will be struck out as an abuse of the court's process. The proceedings would be an abuse because the dispute presented to the court for decision would be a dispute Parliament has assigned for resolution exclusively to a specialist tribunal. The dissatisfied taxpayer should have recourse to the appeal procedure provided by Parliament. He should follow the statutory route.
13. I question whether in this straightforward type of case the court has any real discretion to exercise. Rather, the conclusion that the proceedings are an abuse follows automatically once the court is satisfied the taxpayer's court claim is an indirect way of seeking to achieve the same result as it would be open to the taxpayer to achieve directly by appealing to the appeal commissioners. The taxpayer must use the remedies provided by the tax legislation. This approach accords with the views expressed in authorities such as Argosam Finance Co Ltd v Oxby (Inspector of Taxes) [1965] Ch 390, In re Vandervell's Trusts [1971] AC 912 and, more widely, Barraclough v Brown [1897] AC 615.
14. In Vandervell's case [1971] AC 912, 939-940, Lord Wilberforce sought to clarify the limits of this 'exclusivity' principle. This principle, he said, is not to be taken to exclude the jurisdiction of the courts to decide a question of fact or law which is a basis for an income tax assessment where the taxpayer and the revenue so agree, provided the assessment to which the question relates has not become final and provided also the question, 'in form suitable for decision by the court', is not 'so close to the question of the assessment itself' that the court should decline to entertain it. But Lord Wilberforce was at pains to add that either the taxpayer or the revenue have the right to insist the statutory procedure should be followed.
15. Lord Wilberforce's formulation indicates that, apart from cases of straightforward abuse, there is an area where the court has a discretion. In Glaxo Group Ltd v Inland Revenue Commissioners [1995] STC 1075, 1083-1084, Robert Walker J put the matter this way:
'It is not easy to discern any clear dividing-line between High Court proceedings which are, and those which are not, objectionable as attempts to circumvent the exclusive jurisdiction principle. Possibly the correct view is that there is an absolute exclusion of the High Court's jurisdiction only when the proceedings seek relief which is more or less co-extensive with adjudicating on an existing open assessment: but that the more closely the High Court proceedings approximate to that in their substantial effect, the more ready the High Court will be, as a matter of discretion, to decline jurisdiction.'
I respectfully agree with this approach, subject to noting that, at least as a general principle, the taxpayer and the revenue are each entitled to insist that the statutory procedure for dealing with disputed assessments should be followed."
"The second basic principle concerns the interpretation and application of a provision of United Kingdom legislation which is inconsistent with a directly applicable provision of Community law. Where such an inconsistency exists the statutory provision is to be read and take effect as though the statute had enacted that the offending provision was to be without prejudice to the directly enforceable Community rights of persons having the benefit of such rights. That is the effect of section 2 of the European Communities Act 1972, as explained by your Lordships' House in R v Secretary of State for Transport, Ex p Factortame Ltd [1990] 2 AC 85, 140, and Imperial Chemical Industries Plc v Colmer (Inspector of Taxes) (No 2) [1999] 1 WLR 2035, 2041."
"20. In my view in the former of these two classes the category (1) claims in the High Court are misconceived. Where a claimant company can obtain through the statutory procedures the very tax relief of whose non-availability it is complaining, I see no justification for the company by-passing the statutory route and, instead, going to the High Court and claiming damages or a restitutionary remedy based on the proposition that the company has been wrongly refused the tax relief to which it is entitled under Community law.
21. Take a case where an inspector disallowed a claim for group relief and an appeal to the Special Commissioners is pending. If that appeal proceeds the Special Commissioners will give effect to all relevant directly applicable provisions of Community law. The Special Commissioners can refer any necessary questions to the European Court just as readily as the High Court. They can resolve any questions of fact which may arise on issues such as the amount of the losses claimed. They can enquire into the group structure to see if it meets the statutory requirements. Indeed, detailed questions of this character are more suited for determination by the Special Commissioners than the High Court, especially where large numbers of companies are involved. In short, in this example the claimant is still able to obtain the tax relief it seeks despite its claim having been refused by an inspector.
22. The Autologic group exemplifies this factual situation. The material facts are that one of the companies in the group submitted corporation tax returns for the years ending 31 December 1999 and 31 December 2000 making group relief claims in respect of losses surrendered by two French subsidiaries. Having conducted inquiries into these returns, the inspector refused the claims and amended the returns accordingly. The claimant company appealed to the Special Commissioners against the revenue amendments. Corporation tax was paid on the basis of the amended assessments. These appeals are still pending. An enquiry into the tax return for the year ended 31 December 2001 is still in progress. In the High Court Autologic claims that, in refusing to grant group relief in respect of the losses of the French subsidiaries, the revenue unlawfully failed to give effect to the E C Treaty. They claim as damages, and by way of restitution, the amounts of corporation tax overpaid. These are the category (1) claims.
23. In my view these claims in the High Court are prima facie a misuse of the court's process. These claims cover the same ground in all respects as the appeals pending before the appeal commissioners. The remedy sought is co-extensive with adjudicating upon existing, open assessments. The essence of the High Court claims is that these assessments were wrong, that the court should so hold, and that the court should itself calculate the amounts which ought to have been assessed and order repayment of the overpaid excess. There could hardly be a more obvious example of seeking to sidestep the statutory procedure.
24. The taxpayers say that recourse to the appeal commissioners is a poor alternative to the High Court proceedings. If their appeals succeed their position regarding interest and costs before the special commissioners will compare unfavourably with their position in the High Court. The appeal commissioners do not have power to award interest as such. The statutory repayment supplement is restricted to simple interest at a specified rate, usually about 1% below base rate, starting 12 months after the date the corporation tax was paid. The special commissioners' power to award costs is confined to cases where a party has acted wholly unreasonably in connection with the hearing: Special Commissioners (Jurisdiction and Procedure) Regulations 1994 S I 1994/1811, regulation 21. These limitations on the special commissioners' powers, it is said, offend the Community law principle which requires that relief for breach of Community rights must be effective.
25. I am not attracted by this submission. Appeals to the special commissioners when novel points of law arise are part of the ordinary statutory procedure. Usually the points of law concern United Kingdom tax legislation. But a dispute on the interpretation and application of Community law, and the need to refer questions to Luxembourg, do not make a case fundamentally different. Once the interpretation and application of Community law have been clarified by the European Court, the principal difficulty surrounding these appeals will be gone. Confining claimants to the statutory route, with the interest and costs consequences just mentioned, can hardly be regarded as rendering this route to reimbursement 'excessively onerous', to adopt the phrase of Advocate-General Colomer in D v Rijksbelanstingdienst (Case C-376/03, 26 October 2004).
26. The Autologic group exemplifies cases where the statutory claims procedures have reached an advanced stage. In other cases the claims for group relief are less advanced. In some cases the claimant company is in time to make a group relief claim to the revenue but has not yet done so. The H J Heinz group is an instance of this. In other cases claims for group relief have been made and are still being considered by the revenue, as with the British Telecommunications group. In further cases claims have been made and refused and the claimants are in time to appeal to the appeal commissioners but have not yet done so. The Future Network group is an example of this.
27. In my view in each of these types of case the category (1) claims in the High Court are prima facie misconceived, for the reason set out above. The claimants are able to obtain the group relief to which they are entitled by following the statutorily-prescribed route. That is the route they should follow.
28. The taxpayers contend that to oblige all claimants to follow this route, especially those who have not yet made group relief claims to the revenue, would be inconsistent with the approach indicated by the European Court of Justice in the Hoechst case. As matters stand the revenue are bound to refuse claims for group relief where the surrendering company is not resident in this country. The European Court, it is said, has ruled that claimants should not be required to take futile steps of this nature when seeking to enforce their rights under Community law. In the Hoechst case [2001] Ch 620, 667, para 107, the European Court said:
'... it is contrary to Community law for a national court to refuse or reduce a claim brought before it by a resident subsidiary and its non-resident parent company for reimbursement or reparation of the financial loss which they have suffered as a consequence of the advance payment of corporation tax by the subsidiary, on the sole ground that they did not apply to the tax authorities in order to benefit for the taxation regime which would have exempted the subsidiary from making payments in advance and that they therefore did not make use of the legal remedies available to them to challenge the refusals of the tax authorities, by invoking the primacy and direct effect of the provisions of Community law, where upon any view national law denied resident subsidiaries and their non-resident parent companies the benefit of that taxation regime.'
The Court of Appeal regarded this ruling as determinative of these test cases.
29. I am unable to agree. The taxpayers' reliance on this ruling in the present cases is misplaced. The taxpayers are seeking to apply the European Court ruling out of context. In the Hoechst case this ruling was directed at rejecting a governmental defence based on the taxpayers' alleged lack of reasonable diligence in pursuing its claims. The Hoechst ruling was not directed at a situation where, as here, the claimants' claims have yet to be decided by the national court and there exists a statutorily prescribed route by which the claimants are able to obtain the tax relief they say is their entitlement under Community law. Which court or tribunal has jurisdiction to hear disputes involving rights derived from Community law is a matter for determination by each member state: see, for instance, Dorsch Consult Ingenieurgesellschaft mbH v Bundesbauesellschaft Berlin mbH (Case C-54/96) [1997] ECR I-4961, 4996, para 40."
"Of course, to be compliant with Community law the remedial route prescribed by the legal system of a member state must be such that the rules 'are not less favourable than those governing similar domestic actions (principle of equivalence)' and, additionally, the rules must not render 'practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness)': see the Hoechst case, para 85. The statutory route prescribed for group relief claims was not designed for claims in respect of non-resident companies. So, as United Kingdom law presently stands, at the initial step a taxpayers' group relief claim will inevitably be refused by the revenue. Further, as already noted, some statutory requirements will need adaptation to accommodate claims in respect of non-resident companies. But neither of these features should present any major problem. Neither of them renders the statutory route 'practically impossible or excessively difficult'. Adaptation of the formal requirements will be needed whichever route is followed, and the appropriate adaptation is a matter on which the Special Commissioners' practical expertise will be invaluable."
"39. Thus far I have been considering cases where the subject matter of the category (1) claims in the High Court is group relief claims which can still be allowed by the appeal commissioners if the claimants' Community law contention is correct. I now turn to the other class of cases, where this is not so. The most obvious example is where it is now too late, in respect of the relevant accounting periods, for a claimant to make a group relief claim to the revenue or to appeal to the appeal commissioners. The claimant is outside the prescribed time limits. The Paribas group is an instance of this, where the claim advanced in the High Court relates to group relief for an accounting period ending 31 December 1998. No group relief claim in respect of the losses in question has been made.
40. Time bars of this character are commonplace. I see no reason to suppose the statutory time bars applicable to group relief claims are in themselves inconsistent with Community law: cf. Steenhorst-Neerings v Bestuur van de Bedrijfvereiniging (Case C-338/91) [1993] ECR I - 5475 and Johnson v Chief Adjudication Officer (Case C-410/92) [1995] ICR 375. This means that, in respect of this class of cases, it is now too late for the taxpayers to obtain group relief by following the statutory route. A similar view has, rightly, been expressed by the Court of Appeal in respect of an employment tribunal's jurisdiction to entertain claims for unfair dismissal involving directly applicable Community rights outside the statutory time limits: see Biggs v Somerset County Council [1996] ICR 364.
41. In such cases the taxpayers' remedy necessarily lies elsewhere. In such cases the taxpayer's remedy is of a different character. The taxpayer's remedy lies in pursuing proceedings claiming restitutionary and other relief in respect of the United Kingdom's failure to give proper effect to Community law. The appeal commissioners have no jurisdiction to hear such claims. Such claims are outside the commissioners' statutory jurisdiction, and the commissioners have no inherent jurisdiction. Claims in this class should therefore proceed in the High Court. Difficult questions, both of domestic law and Community law, may arise about the time limits applicable to High Court claims of this character. Some of these questions were explored recently by the Court of Appeal in Commissioners of Inland Revenue v Deutsche Morgan Grenfell Group plc [2005] EWCA Civ 78. Those are not matters arising on these appeals.
42. I add one caveat. The revenue and the appeal commissioners have power to extend time limits for late amendments and late appeals. Before proceeding with their High Court claims claimant companies in this class of cases should therefore take the simple step of inviting the revenue or the appeal commissioners to extend the time limits appropriately. If this invitation is accepted, the claimants should proceed along the statutory route. If the invitation is declined, or if the revenue and the appeal commissioners have no power to grant the necessary extensions, the way will be clear for the High Court proceedings to continue.
43. I recognise there may be instances where a claimant company has claims in both the classes I have described. In respect of some accounting periods a company may have made a group relief claim or still be in a position to make such a claim, in respect of more distant accounting periods it may now be too late for the company to put forward such a claim. The need for one company to pursue proceedings before the appeal commissioners and separately and additionally in the High Court is unfortunate. But this possibility is inherent in the distinction between the two classes of case: the distinction between obtaining the tax relief to which the claimant is entitled and obtaining damages for unlawful failure to make such relief available. Unless the circumstances are exceptional, having claims in both classes is not a sufficient reason for a company declining to make a group relief claim in respect of accounting periods where this can still be done."
Further Authorities following Autologic
"It is well established that if Parliament has laid down a statutory appeal process against a decision of HMRC, a person aggrieved by the decision and wishing to challenge it must use the statutory process. It is an abuse of the court's process to seek to do so through proceedings in the High Court or the County Court. In Autologic Holdings plc v Inland Revenue Commissioners [2005] UKHL 54, [2006] 1 AC 118, Lord Nicholls of Birkenhead, giving the majority judgment, said:
'11. In resolving this question of jurisdiction the starting point is to note two basic principles. The first concerns the exclusive nature of the appeal commissioners' jurisdiction to decide certain types of disputes arising in the administration of this country's tax system. The present disputes concern claims for group relief. The way a taxpayer claims group relief depends on whether the claim relates to an accounting period before or after 1 July 1999. Before that date the corporation tax (pay and file) system was in force. This has now been replaced by the corporation tax (self-assessment) system. For present purposes this difference is immaterial. What matters is that, whichever system is applicable, an assessment which disallows a group relief claim cannot be altered except in accordance with the express provisions of the tax legislation. Statute so provides: see, in respect of the pay and file system, section 30A of the Taxes Management Act 1970 and, in respect of the self-assessment system, paragraphs 47(2) and 97 of Schedule 18 to the Finance Act 1998. Further, the statutory code makes its own provision for appeals. Under both the 'pay and file' system and the self-assessment system a taxpayer has a right of appeal to the appeal commissioners against assessments of tax, including amendments made by the revenue to a taxpayer's tax return. The appeal commissioners' findings of fact are final. In appropriate cases a further appeal lies to the High Court by way of case stated on a point of law. Where the appeal commissioners reduce the amount of an assessment, any overpaid tax must be repaid to the taxpayer, with a repayment supplement by way of interest as provided in section 825 of the ICTA.
12. Clearly the purpose intended to be achieved by this elaborate, long established statutory scheme would be defeated if it were open to a taxpayer to leave undisturbed an assessment with which he is dissatisfied and adopt the expedient of applying to the High Court for a declaration of how much tax he owes and, if he has already paid the tax, an order for repayment of the amount he claims was wrongly assessed. In substance, although not in form, that would be an appeal against an assessment. In such a case the effect of the relief sought in the High Court, if granted, would be to negative an assessment otherwise than in accordance with the statutory code. Thus in such a case the High Court proceedings will be struck out as an abuse of the court's process. The proceedings would be an abuse because the dispute presented to the court for decision would be a dispute Parliament has assigned for resolution exclusively to a specialist tribunal. The dissatisfied taxpayer should have recourse to the appeal procedure provided by Parliament. He should follow the statutory route.
13. I question whether in this straightforward type of case the court has any real discretion to exercise. Rather, the conclusion that the proceedings are an abuse follows automatically once the court is satisfied the taxpayer's court claim is an indirect way of seeking to achieve the same result as it would be open to the taxpayer to achieve directly by appealing to the appeal commissioners. The taxpayer must use the remedies provided by the tax legislation. This approach accords with the views expressed in authorities such as Argosam Finance Co Ltd v Oxby (Inspector of Taxes) [1965] Ch 390, In re Vandervell's Trusts [1971] AC 912 and, more widely, Barraclough v Brown [1897] AC 615.'
18. In those cases where HMRC had opened an enquiry, the approach re-affirmed in Autologic requires the claimants to pursue appeals to the FTT and renders any attempt to litigate their liability to tax or their right to a repayment in Part 7 or 8 civil proceedings an abuse of the court's process.
19. Mr Ewart QC on behalf of the claimants submits that there exist special circumstances in this case that mean that such proceedings are not an abuse of process.
20. First, Mr Ewart points out that in some cases the claimants are now out of time to appeal the conclusions stated in or amendments made by closure notices issued by HMRC. We cannot see that this can justify a challenge by civil proceedings. Parliament has laid down an exclusive appeal process and time limits for invoking it. If those time limits have expired, and are not or cannot be extended, the clear legislative intention is that it is too late to make any challenge. There is no sensible basis for reading the statutory provisions as permitting an alternative route of challenge once the time limits for an appeal to the FTT have expired. In Autologic, the House of Lords were prepared to countenance the possibility of civil proceedings once a statutory appeal was no longer possible only because it was a means of vindicating the taxpayer's EU law rights. There is no parallel with the present case.
21. Second, Mr Ewart submitted that, if HMRC are not entitled to open an enquiry under sections 9A and 12AC, a closure notice is a nullity and its conclusions or amendments cannot be the subject of an appeal to the FTT. It seems to us that the FTT is competent on an appeal to decide whether HMRC had the statutory power to invoke the procedure which led to the closure notice under appeal. A lack of power to issue a closure notice is as much a ground of appeal against its conclusions or amendments as any other ground of challenge. Even if that were wrong, civil proceedings issued to determine this issue would remain an abuse, because for the same reasons as given below as regards a notice under section 28B, the appropriate mode of challenge would be by way of judicial review.
22. Third, Mr Ewart submitted that it was necessary for those claimants seeking repayments of tax to issue proceedings so as to prevent their claims becoming time-barred under the Limitation Acts. Mr Ewart was suggesting that if a claimant successfully appealed against the conclusions in or amendments made by a closure notice, HMRC might refuse to make any repayment on account of a potential limitation defence. We found startling the idea that, having lost on an appeal against the effects of a closure notice, HMRC would decline to give effect to the FTT's decision and refuse to repay the tax that HMRC had no right to retain. If, contrary to all principles of public administration, HMRC did seek to adopt this position, we do not consider that their stance would be well-founded in law. Paragraph 4 of schedule 1A to TMA requires HMRC to give effect to a claim "as soon as practicable after a claim…is made". Time for limitation purposes would not start to run until it became practicable to give effect to the claim. While an appeal to the FTT is pending, and the entitlement of the taxpayer to the claim has yet to be determined, it cannot be said to be "practicable" to give effect to the claim.
23. As earlier noted, many of the claimants participated in the tax schemes through partnerships. In those cases, HMRC have opened or intend to open enquiries into the partnership returns under section 12AC. Giving notice of enquiry is deemed to include the giving of notice of enquiry under section 9A to each partner who has made a return: section 12AC(6). Upon completion of the enquiry, HMRC issue a closure notice to the partnership and, if the partnership return is amended by the closure notice, HMRC must give each partner a notice amending the partner's return: section 28B(4). The partnership can appeal against the conclusions in or amendments made by the closure notice, but the individual partners have neither that right nor a right to appeal the notice given to them under section 28B(4).
24. Mr Ewart accepts that individual partners are entitled to seek to challenge the notices given to them by way of judicial review, but he submits that it is not an abuse of process for claimants to seek to do so in ordinary civil proceedings. There have been many cases since O'Reilly v Mackman [1983] 2 AC 237 in which the circumstances in which a claimant may raise public law issues in ordinary civil proceedings, rather than by way of judicial review, have been considered, although none of them has been in the context of tax. For the purposes of this appeal, we do not consider it necessary to review those authorities.
25. We are satisfied that, in the present case, the correct procedure for individual partners to challenge the amendments made to their returns was by judicial review, and not by ordinary civil proceedings. There are a number of reasons for this. First, there are no private law rights involved. This is not, for example, a case where a claimant is seeking to enforce a contractual right. Second, the time limits are a strong factor in favour of judicial review being the correct procedure. Both appeals to the FTT and applications for permission to pursue judicial review are subject to short time limits. It makes no sense at all that an individual taxpayer or a partnership has a period of 30 days in which to appeal to the FTT against a closure notice, but an individual partner should have six years in which to make what is, in effect, the same challenge to a notice given under section 28B(4). Third, the challenges in these cases affect a large number of people and raise no issues of fact that might be unsuitable for determination in judicial review proceedings. Fourth, the requirement for permission to pursue judicial review does not make it an unsuitable procedure in the circumstances of this case, any more than in the many other cases (tax and non-tax) to which it applies. It is no more than a filter to weed out groundless cases."
"47. In my judgment, at least in a case where HMRC have formed a "settled view" that tax is payable under the legislation, and that view cannot be seen to be irrational or formed for improper purposes, they do not have that power. I consider that this is in keeping with paragraph [90] of Heathrow Airport. I also consider that it is in keeping with the proper limits of the collection and management discretion in this area. That discretion is, as Lord Hoffmann put it in Wilkinson in the passage I have quoted, one which enables HMRC to formulate policy in the interstices of the tax legislation and to deal with minor or transitory anomalies. It is not one which allows them to "untax" matters which they consider are unequivocally taxed on the basis that another view of the legislation is arguable – a situation which, of course, might arise in relation to numerous taxation provisions.
48. It also appears to me that a recognition of this limitation on HMRC's collection and management powers is consonant with the statutory regime by which tax assessments may be challenged. If a taxpayer in cases such as the present disputes HMRC's view of the effect of the tax legislation, it is open to her to proceed with the proposed transaction, and to appeal to the tax tribunal against any assessment to tax which might be made. The tax tribunal is ordinarily the exclusive, and appropriate, forum for challenging HMRC's view of the law, as emphasised in Autologic Holdings Plc v IRC [2006] 1 AC 118. In any such appeal in the tax tribunal it is open to the taxpayer to argue, for example, that the relevant legislation should be accorded a purposive construction under which no tax is payable.
49. An acceptance of Mr Clamp's argument as to the subsistence and width of a managerial discretion on the part of HMRC not to seek to levy tax, even when they have formed the view that the legislation imposes a charge, would be likely to mean more challenges by way of judicial review to HMRC decisions refusing to agree proposals whereby no tax is to be levied, disrupting the ordinary process of appeals to the tax tribunal against assessments made. In this context what Sales LJ said in R (oao Glencore Energy UK Ltd) v Revenue and Customs Commissioners [2017] EWCA Civ 1716 at paragraph 57 (cited in the context of challenges to the Loan Charge in Finucane v Commissioners for HMRC [2021] CSOH 38) is significant:
' … The basic object of the tax regime is to ensure that tax is properly collected when it is due and the taxpayer is not otherwise obliged to pay sums to the state. The regime for appeals on the merits in tax cases is directed to securing that basic objective and is more effective than judicial review to do so: it ensures that a taxpayer is only ultimately liable to pay tax if the law says so, not because HMRC consider that it should. To allow judicial review to intrude alongside the appeal regime risks disrupting the smooth collection of tax and the efficient functioning of the appeal procedures in a way which is not warranted by the need to protect the fundamental interests of the taxpayer. Those interests are ordinarily sufficiently and appropriately protected by the appeal regime. Since the basic objective of the tax regime is the proper collection of tax which is due, which is directly served by application of the law to the facts on an appeal once the tax collection process has been initiated, the lawfulness of the approach adopted by HMRC when taking the decision to initiate the process is not of central concern. Moreover, by legislating for a full right of appeal on fact and law, Parliament contemplated that there will be cases where there might have been some error of law by HMRC at the initiation stage but also contemplates that the appropriate way to deal with that problem will be by way of appeal.'
50. I recognise, of course, that the possibility of judicial review is not of itself a reason for confining the managerial discretion of HMRC. It is, however, of importance, as emphasised in what Sales LJ said in Glencore, that the taxpayer's interests are ordinarily and appropriately protected by the regime of an appeal against an assessment to tax. There is no need, in order to provide proper protection to the taxpayer, to recognise a managerial discretion on the part of HMRC to agree not to seek to collect tax as subsisting even when they have formed the clear view that tax is or will be payable. Such proper protections are, instead, provided by way of the statutory appeal process.
51. In the present case, on the evidence and material before me I consider it to be clear that HMRC are of a settled view as to the construction of Part 7A ITEPA 2003, namely that tax would be payable on the reinstatement of Mr Clamp's loans. This is apparent from Mr Durnin's witness statement, to which I have referred and from which I have quoted above, and from the stance of HMRC throughout this application. Furthermore, no case has been made on this application that the view formed by HMRC is irrational or improperly motivated. Any such suggestion would, I consider, be very unlikely to succeed."
"[20] It was submitted on behalf of HMRC that the application should be refused as incompetent, because the petitioner had a statutory remedy that he had failed to exhaust. The petitioner had available to him the usual procedure for challenging an assessment to tax, namely an appeal to the specialist tax tribunals under s.31 of the Taxes Management Act 1970. It was accepted that no assessment in relation to the petitioner's liability to pay the loan charge had yet been made: that might simply be because the charge had only recently fallen due. If, however, an assessment was made, the petitioner could appeal against it and present all of the arguments made in this petition to the First-tier Tribunal and in any subsequent appeal from that tribunal's decision. Reference was made to Autologic Holdings Plc v Inland Revenue Commissioners and R (on the application of Glencore Energy UK Ltd) v Revenue and Customs Commissioners. It would additionally be open to the petitioner in such proceedings to present arguments based upon his personal circumstances which were not being presented in the application for judicial review.
Argument for the petitioner
[21] On behalf of the petitioner, it was submitted that there was no substance to HMRC's contention. As was recognised, there was no assessment or closure notice currently extant that the petitioner could challenge by appeal under the Taxes Management Act 1970, and therefore no alternative remedy for him to exhaust before coming to this court. More fundamentally, HMRC's argument failed to recognise that the present application was a constitutional law judicial review rather than an administrative law judicial review, raising questions of whether the enactment by the legislature of the loan charge legislation, and its operation by HMRC, was or was not compatible with EU law. These were clearly matters of and for constitutional judicial review: cf. R v Secretary of State for Transport Ex p Factortame Ltd (No.2) and R v Secretary of State for Transport Ex p Factortame Ltd (No.3). Constitutional judicial review fell within the experience and expertise of judges of this court acting as a constitutional court. They were not matters which fell within the experience or expertise of an administrative tribunal with no inherent jurisdiction, such as the Tax Chamber of the First-tier Tribunal. The issue was one of appropriateness, not competency. It would not be appropriate to delay resolution of the matters raised by requiring them to be argued again in a tax appeal which might not be heard until years from now.
Decision
[22] In my opinion, HMRC's argument is well founded. Although the nature of the petitioner's challenge could be described as constitutional, in so far as it seeks a declaration that certain provisions of UK tax legislation are unlawful because they breach principles of EU law, the critical fact that gives him standing is that he is resisting a charge to income tax that he expects to be made upon him. That, in my view, is a matter whose resolution has been allocated by Parliament to the specialist tax tribunals. The relationship in England and Wales between judicial review and the tax tribunals was recently considered by the Court of Appeal in the Glencore case (above), in which Sales LJ (with whom the other members of the court agreed) observed ([2017] 4 W.L.R., pp.12–13):
'[54] …The [alternative remedy] principle does not apply as the result of any statutory provision to oust the jurisdiction of the High Court on judicial review. In this case the High Court (and hence this court) has full jurisdiction to review the lawfulness of action by the designated officer and by HMRC. The question is whether the court should exercise its discretion to refuse to proceed to judicial review (as the judge did at the permission stage) or to grant relief under judicial review at a substantive hearing according to the established principle governing the exercise of its discretion where there is a suitable alternative remedy.
[55] In my view, the principle is based on the fact that judicial review in the High Court is ordinarily a remedy of last resort, to ensure that the rule of law is respected where no other procedure is suitable to achieve that objective. However, since it is a matter of discretion for the court, where it is clear that a public authority is acting in defiance of the rule of law the High Court will be prepared to exercise its jurisdiction then and there without waiting for some other remedial process to take its course. Also, in considering what should be taken to qualify as a suitable alternative remedy, the court should have regard to the provision which Parliament has made to cater for the usual sort of case in terms of the procedures and remedies which have been established to deal with it. If Parliament has made it clear by its legislation that a particular sort of procedure or remedy is in its view appropriate to deal with a standard case, the court should be slow to conclude in its discretion that the public interest is so pressing that it ought to intervene to exercise its judicial review function along with or instead of that statutory procedure. But of course it is possible that instances of unlawfulness will arise which are not of that standard description, in which case the availability of such a statutory procedure will be less significant as a factor.
[56] Treating judicial review in ordinary circumstances as a remedy of last resort fulfils a number of objectives. It ensures the courts give priority to statutory procedures as laid down by Parliament, respecting Parliament's judgment about what procedures are appropriate for particular contexts. It avoids expensive duplication of the effort which may be required if two sets of procedures are followed in relation to the same underlying subject matter. It minimises the potential for judicial review to be used to disrupt the smooth operation of statutory procedures which may be adequate to meet the justice of the case. It promotes proportionate allocation of judicial resources for dispute resolution and saves the High Court from undue pressure of work so that it remains available to provide speedy relief in other judicial review cases in fulfilment of its role as protector of the rule of law, where its intervention really is required.
[57] In my judgment the principle is applicable in the present tax context. The basic object of the tax regime is to ensure that tax is properly collected when it is due and the taxpayer is not otherwise obliged to pay sums to the state. The regime for appeals on the merits in tax cases is directed to securing that basic objective and is more effective than judicial review to do so: it ensures that a taxpayer is only ultimately liable to pay tax if the law says so, not because HMRC consider that it should. To allow judicial review to intrude alongside the appeal regime risks disrupting the smooth collection of tax and the efficient functioning of the appeal procedures in a way which is not warranted by the need to protect the fundamental interests of the taxpayer. Those interests are ordinarily sufficiently and appropriately protected by the appeal regime. Since the basic objective of the tax regime is the proper collection of tax which is due, which is directly served by application of the law to the facts on an appeal once the tax collection process has been initiated, the lawfulness of the approach adopted by HMRC when taking the decision to initiate the process is not of central concern. Moreover, by legislating for a full right of appeal on fact and law, Parliament contemplated that there will be cases where there might have been some error of law by HMRC at the initiation stage but also contemplates that the appropriate way to deal with that sort of problem will be by way of appeal.'
I have set out these observations at length because they appear to me to be equally applicable to the supervisory role of the Court of Session, and also to be particularly apposite to the facts of the present case. They acknowledge that the issue is not one of jurisdiction but of discretion, and explain the reasons why the court should, in exercise of its discretion, decline to exercise its supervisory function in relation to a matter that has clearly been directed by Parliament to be dealt with by a different statutory process.
[23] Sales LJ went on in Glencore to contrast the circumstances of that case with those of In re Preston. In that case a taxpayer sought judicial review of a decision of the Inland Revenue Commissioners to inquire into his tax affairs, on the ground that he had previously reached an agreement with an inspector of taxes that no further inquiries would be made, provided that he withdrew certain claims for relief. The House of Lords held that the issue was amenable for judicial review because it amounted to an allegation of abuse of power that would not have fallen within the jurisdiction of the tax appeal tribunal. I respectfully agree that the contrast is helpful in illustrating circumstances in which recourse is properly made to the supervisory jurisdiction: a similar contrast may be made between Preston and the present case.
[24] There was a suggestion in the petitioner's written note of argument, not pursued in oral argument, that consideration of the EU law issues raised in the petition would be beyond the jurisdiction of the First-tier Tribunal. It was also contended that these were matters beyond the experience and expertise of such a tribunal. I reject both of these contentions. As regards jurisdiction, it is beyond any doubt that the tax tribunals can, and indeed must, make findings in relation to EU law issues raised by parties (and could until the UK's departure from the European Union have made references to the Court of Justice for preliminary rulings). This was made clear by Lord Nicholls of Birkenhead, delivering one of the majority judgments in Autologic Holdings Plc v Inland Revenue Commissioners (above) at [2006] 1 AC 118[2021] ScotCS CSIH_38;[2021] SLT 665 [1994] EUECJ C-410/92;[1995] ICR 375 [2019] EWCA Civ 1719 , pp.126–127, paras 16 and 17:
'[16] The second basic principle concerns the interpretation and application of a provision of United Kingdom legislation which is inconsistent with a directly applicable provision of Community law. Where such an inconsistency exists the statutory provision is to be read and take effect as though the statute had enacted that the offending provision was to be without prejudice to the directly enforceable Community rights of persons having the benefit of such rights. That is the effect of section 2 of the European Communities Act 1972, as explained by your Lordships' House in R v Secretary of State for Transport, Ex p Factortame Ltd [1990] 2 AC 85, 140, and Imperial Chemical Industries plc v Colmer (No 2) [1999] 1 WLR 2035, 2041. [17] Thus, when deciding an appeal from a refusal by an inspector to allow group relief the appeal commissioners are obliged to give effect to all directly enforceable Community rights notwithstanding the terms of sections 402(3A) and (3B) and 413(5) of ICTA. In this regard the commissioners' position is analogous to that of the Pretore di Susa in Amministrazione delle Finanze dello Stato v Simmenthal SpA (Case 106/77) [1978] ECR 629. Accordingly, if an inconsistency with directly enforceable Community law exists, formal statutory requirements must where necessary be disapplied or moulded to the extent needed to enable those requirements to be applied in a manner consistent with Community law… .'
[25] As regards experience and expertise, it is not in my view for this court to decide, where Parliament has directed that appeals against tax assessments are to be heard by the specialist tax tribunals, that some of these are unsuitable for those tribunals because they raise questions of the supremacy of EU law. Even though the facility of reference for a preliminary ruling is no longer available, there is no basis whatever for treating a dispute as inappropriate for hearing by the First-tier Tribunal (with the usual rights of further appeal) simply because an issue characterised by the taxpayer as "constitutional" has been raised.
[26] In relation to arguments based on expediency, it would be unrealistic for me not to recognise that there are broader interests in these proceedings than the tax affairs of the present petitioner. As is noted in HMRC's answers, the petitioner appears to have the support of a group entitled "Loan Charge Judicial Review European Union". That group's website refers to one, and possibly two, "lead cases" in Scotland: it is reasonable to infer that this petition is one of them, and that there are therefore other taxpayers with potential liability to pay the loan charge to whom the outcome of the present challenge is of considerable interest. (Reference is also made on the website to judicial review proceedings raised in England.) The question is whether I should regard this wider interest as a reason to allow this application to proceed, thereby providing a decision now rather than requiring all concerned to await the outcome of an appeal (perhaps not yet even commenced) to the First-tier Tribunal. I am not persuaded that the fact that there are other taxpayers with similar interests affects the rationale set out in the observations of Sales LJ in Glencore for refusing to entertain an application. In my view the present application amounts to an attempt to preempt consideration of the issues raised by the tribunals appointed by Parliament to hear such issues. I see no reason in principle why a particular group of aggrieved taxpayers should be accorded favourable treatment in this way. It may be that those co-ordinating the challenge to the loan charge see advantage in obtaining a court declarator in general terms, as opposed to hoping for a favourable decision capable of general application in an appeal to a tribunal by a particular taxpayer. The difference may however be more apparent than real. Any declarator by this court would be pronounced against the factual circumstances of the petitioner, and it seems to me that the relevance of such a declarator to the affairs of other taxpayers would be no less uncertain than the relevance of the reasoning of an appeal tribunal.
[27] On behalf of the petitioner, reference was made to dicta pronounced in various cases including Ruddy v Chief Constable, Strathclyde Police, Taylor v Scottish Ministers, and Keatings v Advocate General for Scotland, to support an assertion that HMRC's alternative remedy argument was "vexatious" and "an abuse of process". It suffices to say that all of the dicta referred to were pronounced in very different contexts and afford no support for this assertion.
[28] For these reasons I hold that it is not appropriate for this court to entertain the petitioner's application for judicial review and that it falls to be dismissed. However, as I was fully addressed on the substantive issues, and in case the matter goes further, I will express my opinion on them."
Authorities (domestic law) cited by the Taxpayers
"In deciding whether to grant a declaration or not, the court should take into account justice to the parties, whether the declaration will serve a useful purpose and whether there are any other special reasons as to why a declaration should or should not be granted."
"In my judgment, this [that is the contentions of the defendant] does not affect the jurisdiction of the court to deal with the claim as matters presently stand."
"It would be a blot on our system of law and procedure if there was no way by which a decision on the true limit of the powers of inquisition vested in the Commissioners can be obtained by any member of the public aggrieved without putting himself in the invidious position of being sued for a penalty."
"I have not found this jurisdictional question an easy one but I am at the end of the day driven to the conclusion that, certainly in a case where a question is raised as to the propriety of a determination by the tribunal, which the tribunal may be concerned to answer, that this court is a proper forum for the resolution of the question."
"It is plainly convenient and economic that the court should decide the point at issue at this stage rather than leave the matter to be considered by the Special Commissioners after the amassing of information which at the end of the day may be shown to have been unnecessary."
"An issue as to information gathering powers arising in the context of an existing or anticipated assessment of tax is a good example of the sort of issue that can conveniently and usefully be heard by the High Court, possibly, but not necessarily, by way of judicial review, subject to the court's discretion to decline jurisdiction or decline to grant relief. Quite apart from the exclusive jurisdiction principle, the court may refuse relief because it will not grant declarations on hypothetical questions ..."
Robert Walker J cited Argosam as support for that latterproposition.
"From these authorities I conclude that the general principle which I have termed the exclusive jurisdiction principle is not open to doubt, subject perhaps to some erosion under the impact of judicial review. Moreover the exclusive jurisdiction principle cannot be circumvented simply by dressing up proceedings in the High Court as an application for a declaration, if the substantial effect of a declaration would be to determine a liability which ought to be determined by the commissioners. But the principle is not to be pushed too far so as to exclude any proceedings which might conveniently and usefully be heard in the High Court, 'just because those questions arise between taxpayer and Crown and form a basis, even a necessary basis, for an income tax assessment' (as Lord Wilberforce said in Vandervell Trustees v White [1971] AC 912 at 939, 46 TC 341 at 370). An issue as to information-gathering powers arising in the context of an existing or anticipated assessment to tax is a good example of the sort of issue that can conveniently and usefully be heard by the High Court, possibly but not necessarily by way of judicial review (RSC Ord 53, r 1(2)), subject to the court's discretion to decline jurisdiction or to decline to grant relief. Quite apart from the exclusive jurisdiction principle, the court may refuse relief because it will not grant declarations on hypothetical questions (see Re Barnato [1949] Ch 258 and Argosam Finance v Oxby).
It is not easy to discern any clear dividing-line between High Court proceedings which are, and those which are not, objectionable as attempts to circumvent the exclusive jurisdiction principle. Possibly the correct view is that there is an absolute exclusion of the High Court's jurisdiction only when the proceedings seek relief which is more or less co-extensive with adjudicating on an existing open assessment; but that the more closely the High Court proceedings approximate to that in their substantial effect, the more ready the High Court will be, as a matter of discretion, to decline jurisdiction."
Authorities (European law) cited by the Taxpayers
"43. By its first question, the Haparanda tingsrätt asks the Court, in essence, whether a national judicial practice is compatible with European Union law if it makes the obligation for a national court to disapply any provision contrary to a fundamental right guaranteed by the ECHR and by the Charter conditional upon that infringement being clear from the instruments concerned or the case-law relating to them.
44. As regards, first, the conclusions to be drawn by a national court from a conflict between national law and the ECHR, it is to be remembered that whilst, as Article 6(3) TEU confirms, fundamental rights recognised by the ECHR constitute general principles of the European Union's law and whilst Article 52(3) of the Charter requires rights contained in the Charter which correspond to rights guaranteed by the ECHR to be given the same meaning and scope as those laid down by the ECHR, the latter does not constitute, as long as the European Union has not acceded to it, a legal instrument which has been formally incorporated into European Union law. Consequently, European Union law does not govern the relations between the ECHR and the legal systems of the Member States, nor does it determine the conclusions to be drawn by a national court in the event of conflict between the rights guaranteed by that convention and a rule of national law (see, to this effect, Case C-571/10 Kamberaj [[2012] EUECJ C-571/1, paragraph 62).
45. As regards, next, the conclusions to be drawn by a national court from a conflict between provisions of domestic law and rights guaranteed by the Charter, it is settled case-law that a national court which is called upon, within the exercise of its jurisdiction, to apply provisions of European Union law is under a duty to give full effect to those provisions, if necessary refusing of its own motion to apply any conflicting provision of national legislation, even if adopted subsequently, and it is not necessary for the court to request or await the prior setting aside of such a provision by legislative or other constitutional means (Case 106/77 Simmenthal [1978] ECR 629, paragraphs 21 and 24; Case C-314/08 Filipiak [2009] ECR I-11049, paragraph 81; and Joined Cases C-188/10 and C-189/10 Melki and Abdeli [2010] ECR I-5667, paragraph 43).
46. Any provision of a national legal system and any legislative, administrative or judicial practice which might impair the effectiveness of European Union law by withholding from the national court having jurisdiction to apply such law the power to do everything necessary at the moment of its application to set aside national legislative provisions which might prevent European Union rules from having full force and effect are incompatible with those requirements, which are the very essence of European Union law (Melki and Abdeli, paragraph 44 and the case-law cited).
47. Furthermore, in accordance with Article 267 TFEU, a national court hearing a case concerning European Union law the meaning or scope of which is not clear to it may or, in certain circumstances, must refer to the Court questions on the interpretation of the provision of European Union law at issue (see, to this effect, Case 283/81 Cilfit and Others [1982] ECR 3415).
48. It follows that European Union law precludes a judicial practice which makes the obligation for a national court to disapply any provision contrary to a fundamental right guaranteed by the Charter conditional upon that infringement being clear from the text of the Charter or the case-law relating to it, since it withholds from the national court the power to assess fully, with, as the case may be, the cooperation of the Court of Justice, whether that provision is compatible with the Charter.
49. In the light of the foregoing considerations, the answer to the first question is:
- European Union law does not govern the relations between the ECHR and the legal systems of the Member States, nor does it determine the conclusions to be drawn by a national court in the event of conflict between the rights guaranteed by that convention and a rule of national law;
- European Union law precludes a judicial practice which makes the obligation for a national court to disapply any provision contrary to a fundamental right guaranteed by the Charter conditional upon that infringement being clear from the text of the Charter or the case-law relating to it, since it withholds from the national court the power to assess fully, with, as the case may be, the cooperation of the Court of Justice, whether that provision is compatible with the Charter."
"... by withholding from the national court having jurisdiction to apply such law the power to do everything necessary at the moment of its application to set aside national legislative provisions which might prevent European rules from having full force and effect, are incompatible with those requirements which are the very essence of European law."
"36. By its first question, the Högsta domstolen asks, in essence, whether the principle of effective judicial protection of an individual's rights under Community law must be interpreted as requiring it to be possible in the legal order of a Member State to bring a free-standing action for an examination as to whether national provisions are compatible with Article 49 EC if other legal remedies permit the question of compatibility to be determined as a preliminary issue.
37. It is to be noted at the outset that, according to settled case-law, the principle of effective judicial protection is a general principle of Community law stemming from the constitutional traditions common to the Member States, which has been enshrined in Articles 6 and 13 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (Case 222/84 Johnston [1986] ECR 1651, paragraphs 18 and 19; Case 222/86 Heylens and Others [1987] ECR 4097, paragraph 14; Case C-424/99 Commission v Austria [2001] ECR I-9285, paragraph 45; Case C-50/00 P Unión de Pequeños Agricultores v Council [2002] ECR I-6677, paragraph 39; and Case C-467/01 Eribrand [2003] ECR I-6471, paragraph 61) and which has also been reaffirmed by Article 47 of the Charter of fundamental rights of the European Union, proclaimed on 7 December 2000 in Nice (OJ 2000 C 364, p. 1).
38. Under the principle of cooperation laid down in Article 10 EC, it is for the Member States to ensure judicial protection of an individual's rights under Community law (see, to that effect, Case 33/76 Rewe, [1976] ECR 1989, paragraph 5; Case 45/76 Comet [1976] ECR 2043, paragraph 12; Case 106/77 Simmenthal [1978] ECR 629, paragraphs 21 and 22; Case C-213/89 Factortame and Others [1990] ECR I-2433, paragraph 19; and Case C-312/93 Peterbroeck [1995] ECR I-4599, paragraph 12).
39. It is also to be noted that, in the absence of Community rules governing the matter, it is for the domestic legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive from Community law (see, inter alia, Rewe, paragraph 5; Comet, paragraph 13; Peterbroeck, paragraph 12; Case C-453/99 Courage and Crehan [2001] ECR I-6297, paragraph 29; and Case C-13/01 Safalero [2003] ECR I-8679, paragraph 49).
40. Although the EC Treaty has made it possible in a number of instances for private persons to bring a direct action, where appropriate, before the Community Court, it was not intended to create new remedies in the national courts to ensure the observance of Community law other than those already laid down by national law (Case 158/80 Rewe [1981] ECR 1805, paragraph 44).
41. It would be otherwise only if it were apparent from the overall scheme of the national legal system in question that no legal remedy existed which made it possible to ensure, even indirectly, respect for an individual's rights under Community law (see, to that effect, Case 33/76 Rewe, paragraph 5; Comet, paragraph 16; and Factortame, paragraphs 19 to 23)."
"42. Thus, while it is, in principle, for national law to determine an individual's standing and legal interest in bringing proceedings, Community law nevertheless requires that the national legislation does not undermine the right to effective judicial protection (see, inter alia, Joined Cases C-87/90 to C-89/90 Verholen and Others [1991] ECR I-3757, paragraph 24, and Safalero, paragraph 50). It is for the Member States to establish a system of legal remedies and procedures which ensure respect for that right (Unión de Pequeños Agricultores v Council, paragraph 41).
43. In that regard, the detailed procedural rules governing actions for safeguarding an individual's rights under Community law must be no less favourable than those governing similar domestic actions (principle of equivalence) and must not render practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness) (see, inter alia, Case 33/76 Rewe, paragraph 5; Comet, paragraphs 13 to 16; Peterbroeck, paragraph 12; Courage and Crehan, paragraph 29; Eribrand, paragraph 62; and Safalero, paragraph 49).
44. Moreover, it is for the national courts to interpret the procedural rules governing actions brought before them, such as the requirement for there to be a specific legal relationship between the applicant and the State, in such a way as to enable those rules, wherever possible, to be implemented in such a manner as to contribute to the attainment of the objective, referred to at paragraph 37 above, of ensuring effective judicial protection of an individual's rights under Community law."
"45. It is in the light of those considerations that the answer must be given to the first question referred by the Högsta domstolen.
46. According to that court, Swedish law does not provide for a self-standing action which seeks primarily to dispute the compatibility of a national provision with higher-ranking legal rules.
47. In that regard, it is to be noted, as is apparent from the case-law referred to at paragraph 40 above and has been argued by all the governments which have submitted observations to the Court and by the Commission of the European Communities, that the principle of effective judicial protection does not require it to be possible, as such, to bring a free-standing action which seeks primarily to dispute the compatibility of national provisions with Community law, provided that the principles of equivalence and effectiveness are observed in the domestic system of judicial remedies.
48. Firstly, it is apparent from the order for reference that Swedish law does not provide for such a free-standing action, regardless of whether the higher-ranking legal rule to be complied with is a national rule or a Community rule.
49. However, with regard to those two categories of legal rules, Swedish law permits individuals to obtain an examination of that question of compatibility in proceedings before the ordinary courts or before the administrative courts by way of a preliminary issue.
50. It is also apparent from the order for reference that the court which is to determine that question is required to disapply the contested provision if it considers that it conflicts with a higher-ranking legal rule, regardless of whether it is a national or a Community rule.
51. In that examination, it is only where a provision adopted by the Swedish Parliament or Government is manifestly in conflict with a higher-ranking legal rule that such a provision is to be disapplied. As is apparent from paragraph 3 above, that condition does not apply, on the other hand, where the higher-ranking rule in question is a rule of Community law.
52. Therefore, as was observed by all the governments which submitted observations and by the Commission, it is clear that the detailed procedural rules governing actions brought under Swedish law for safeguarding an individual's rights under Community law are no less favourable than the rules governing actions for safeguarding an individual's rights under national provisions.
53. It is necessary, secondly, to establish whether the effect of the indirect legal remedies provided for by Swedish law for disputing the compatibility of a national provision with Community law is to render practically impossible or excessively difficult the exercise of rights conferred by Community law.
54. In that regard, each case which raises the question whether a national procedural provision renders the application of Community law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its progress and its special features, viewed as a whole, before the various national instances (Peterbroeck, paragraph 14).
55. It is apparent from the order for reference that Swedish law does not prevent a person, such as Unibet, from disputing the compatibility of national legislation, such as the Law on Lotteries, with Community law but that, on the contrary, there exist various indirect legal remedies for that purpose.
56. Thus, firstly, the Högsta domstolen states that Unibet may obtain an examination of whether the Law on Lotteries is compatible with Community law in the context of a claim for damages before the ordinary courts.
57. It is also clear from the order for reference that Unibet brought such a claim and that the Högsta domstolen found it to be admissible.
58. Consequently, where an examination of the compatibility of the Law on Lotteries with Community law takes place in the context of the determination of a claim for damages, that action constitutes a remedy which enables Unibet to ensure effective protection of the rights conferred on it by Community law.
59. It is for the Högsta domstolen to ensure that the examination of the compatibility of that law with Community law takes place irrespective of the assessment of the merits of the case with regard to the requirements for damage and a causal link in the claim for damages.
60. Secondly, the Högsta domstolen adds that, if Unibet applied to the Swedish Government for an exception to the prohibition on the promotion of its services in Sweden, any decision rejecting that application could be the subject of judicial review proceedings before the Regeringsrätten, in which Unibet would be able to argue that the provisions of the Law on Lotteries are incompatible with Community law. Where appropriate, the competent court would be required to disapply the provisions of that law that were considered to be in conflict with Community law.
61. It is to be noted that such judicial review proceedings, which would enable Unibet to obtain a judicial decision that those provisions are incompatible with Community law, constitute a legal remedy securing effective judicial protection of its rights under Community law (see, to that effect, Heylens, paragraph 14, and Case C-340/89 Vlassopoulou [1991] ECR I-2357, paragraph 22).
62. Moreover, the Högsta domstolen states that if Unibet disregarded the provisions of the Law on Lotteries and administrative action or criminal proceedings were brought against it by the competent national authorities, it would have the opportunity, in proceedings brought before the administrative court or an ordinary court, to dispute the compatibility of those provisions with Community law. Where appropriate, the competent court would be required to disapply the provisions of that law that were considered to be in conflict with Community law.
63. In addition to the remedies referred to at paragraphs 56 and 60 above, it would therefore be possible for Unibet to claim in court proceedings against the administration or in criminal proceedings that measures taken or required to be taken against it were incompatible with Community law on account of the fact that it had not been permitted by the competent national authorities to promote its services in Sweden.
64. In any event, it is clear from paragraphs 56 to 61 above that Unibet must be regarded as having available to it legal remedies which ensure effective judicial protection of its rights under Community law. If, on the contrary, as mentioned at paragraph 62 above, it was forced to be subject to administrative or criminal proceedings and to any penalties that may result as the sole form of legal remedy for disputing the compatibility of the national provision at issue with Community law, that would not be sufficient to secure for it such effective judicial protection.
65. Accordingly, the answer to the first question must be that the principle of effective judicial protection of an individual's rights under Community law must be interpreted as meaning that it does not require the national legal order of a Member State to provide for a free-standing action for an examination of whether national provisions are compatible with Article 49 EC, provided that other effective legal remedies, which are no less favourable than those governing similar domestic actions, make it possible for such a question of compatibility to be determined as a preliminary issue, which is a matter for the national court to establish."
"If, on the contrary, as mentioned at paragraph 62 above, it was forced to be subject to administrative or criminal proceedings and to any penalties that might result as the sole form of legal remedy for disputing compatibility of the national provision, that would not be sufficient to secure for it such an effective judicial protection."
"It is, therefore, not necessary for a domestic law to provide for a freestanding action to challenge compatibility ..."
(that is to say declaration of proceedings of the sort brought by the taxpayer here):
" ... provided that other effective legal remedies which are no less favourable than those governing similar domestic actions make it possible for such a question of compatibility to be determined."
"106. The exercise of rights conferred on private persons by directly applicable provisions in Community law would, however, be rendered impossible or excessively difficult if their claims for restitution or compensation based on Community law were rejected or reduced solely because the persons concerned had not applied for a tax advantage which national law denied them with a view to challenging the refusal of the tax authorities by means of the legal remedies provided for that purpose, invoking the primacy and direct effect of Community law.
107. "The answer to the fifth question must therefore be that it is contrary to Community law for a national court to refuse or reduce a claim brought before it by a resident subsidiary and its non-resident parent company for reimbursement or reparation of the financial loss which they have suffered as a consequence of the advance payment of corporation tax by the subsidiary, on the sole ground that they did not apply to the tax authorities in order to benefit from the taxation regime which would have exempted the subsidiary from making payments in advance and that they therefore did not make use of the legal remedies available to them to challenge the refusals of the tax authorities, by invoking the primacy and direct effect of the provisions of Community law, where upon any view national law denied resident subsidiaries and their non-resident parent companies the benefit of that taxation regime."
a. that is the route laid down by Parliament,
b. that it is an effective procedure satisfying European Union law,
c. it avoids dealing with hypothetical questions which may never arise, and,
d. with regards to damages, even though the FTT cannot award them, (a) no damages claims are actually made, and (b) even if they were, that could be left to a second stage, as in Autologic.
HMRC relies on the case law cited by Ms Choudhury, especially Autologic and Knibbs, as well as also Finucane.
a. firstly, that they should not have to wait for the Revenue to take steps, should it ever get round to doing so, but that the matter should be determined now. They say that is the only way to vindicate their European law rights and that they have no other avenue by which to do so.
b. secondly, that the FTT procedure is not an effective procedure in European law: firstly, because of the delay; secondly, because it would not be able to deal with damages; and, thirdly, because prejudice us being suffered now in terms of the individuals not knowing what they ought to or ought not to do and potentially exposing themselves to penalties and substantial cost.
They say that the matter should proceed to, effectively, a trial determination, at which the court can decide if a declaration is appropriate.
a. In Autologic, where there was a European law challenge and so the principle of effectiveness applied, certain of the claims could not be brought before the tribunal and that resulted in the split approach (i.e. where a claim could not be brought before the tribunal it could be brought to the court as a civil claim) which the House of Lords decided upon.
b. In Knibbs, the challenge was not a European law challenge. However, I do note that in Knibbs, at paragraph 20, the Court of Appeal were considering the question of whether the taxpayer should have to go to the tribunal or could use civil proceedings, and one argument put forward by the taxpayer was that the taxpayer was out of time for going to the tribunal. It was held ultimately that that class of taxpayer could not go to the tribunal at all irrespective of timing (and with the result that domestic tax tribunal exclusivity was disapplied) but, when considering the argument, the Court of Appeal stated that, in Autologic, the House of Lords had proceeded on the basis that the short time period for going to the tribunal, or the fact that that time period had expired, did not matter in Knibbs because, in Autologic, (i) what was sought to be done was to vindicate European Union law rights (which was not the case in Knibbs), and (ii) for there to be a short time limit which had expired to have the consequence of barring the ability for the individual to have their European law rights vindicated would infringe the principle of effectiveness (which did not apply in Knibbs as it was not a European law challenge case). This was picked up to a degree in paragraph 25 in terms of the Court of Appeal's reasoning as to why the taxpayer's challenge should proceed by judicial review rather than by ordinary civil action; their second reason being that the time limits were a strong factor in favour of judicial review being the correct procedure because both appeals to the FTT and applications for permission to pursue judicial review are subject to short time limits, and so that it would make no sense at all that an individual taxpayer or a partnership had a period of 30 days in which to appeal to the FTT against a closure notice but that individual partners should have six years, being an ordinary limitation period, in which to make what is, in effect, the same challenge to a statutory notice. It seems to me that that reasoning is somewhat indicative of saying that the different procedural time limits are relevant in terms of whether or not to exercise a discretion to go down the declaration route; but also, and more importantly at this stage, it supports a contention that their expiry and also their short length is material, or potentially material, when considering whether the European law principle of effectiveness is satisfied as the court asks itself the question "Does having to go down the FTT route enable the individual to have their European rights effectively vindicated?"
c. In MCX, also, the availability of the process was crucial to whether or not there was tax tribunal exclusivity.
a. Firstly, the thrust and policy of decisions such as Fransson is that the individual should be able to have the point determined, and determined now.
b. Secondly, it is an important part of the certainty of European law that individuals should be able to have determined the question of whether national law infringes European law, and effectively be able to do so as a matter of right. There is substantial force in Mr Kamal's submissions, firstly, that it is part of the principle of legality of European law that the national courts should be able to declare what the law is in terms of possible domestic law incompatibility; and, secondly, that it is unfair to individuals not to have that certainty where they are having to take decisions and that they should be able to take decisions on a basis of knowing what the law is in terms of compatibility.
c. Thirdly, that, although Unibet says that it is sufficient to be able to challenge national law on grounds of incompatibility with European law by indirect means, including by the taxpayer taking particular steps, there are two important qualifications to this:
i. Firstly, that the steps need to be able to be taken without cooperation from the other side, or in circumstances where the other side (in this case HMRC) has no choice but to cooperate in a way which will enable a dispute to exist such as can be determined by a judicial or other court or tribunal process. In Unibet, that was actually the situation and Unibet could have asked for an exemption, which the relevant authority would have been bound either to grant or to refuse, thus enabling a case to be taken to a court or tribunal. However, that is not the situation here. Here, the taxpayer cannot force HMRC to do anything. In those circumstances, it seems to me that the taxpayer is not in a situation of having an effective remedy
ii. Secondly, although I place little weight on this because, for reasons I have already given, it seems to me to be premature, for there to be an effective remedy, the taxpayer should not be subject or potentially subject to any penalty or significant disadvantage in the meantime. It seems to me that there is some ground for saying that the taxpayer is exposed to this, albeit for the reasons I have already given I place little weight on that.
d. Fourthly, I do not see this conclusion as in any way being contrary to England and Wales case law. Autologic and Knibbs are not dealing with the situation where a taxpayer is able to go to the tribunal but only in the future when HMRC decides to take steps which enable that to occur. It does in fact seem to me that the situation here is more like Autologic type 2 cases and Knibbs, where the position is that the taxpayer simply cannot go to the tribunal at this point in time and, therefore, ought to be allowed to go to the court. Although the court refused something like this in the Clamp decision, that Clamp decision is distinguishable because: (i) it had no European law aspect, and it is the European law principle of effectiveness which is key here, and (ii) the Clamp actual situation was all a purely hypothetical situation, where it seems to me that the judge was very much proceeding on the basis that it is not for the courts to deal with hypothetical situations rather than actual situations, into which latter category I conclude that this one falls.
a. firstly, it is a Scots' decision and not binding on me;
b. secondly, it does not seem to have had the European cases cited;
c. thirdly, I am unclear to the extent, or at all, as to which Knibbs was cited in it, and it does not seem to me to deal with all the relevant parts of Autologic;
d. fourthly, it seems to me that the reasoning in that case does not seem to be really to be directed to this point that the taxpayer simply cannot go to the tribunal unless and until HMRC allows it to do so, notwithstanding that the taxpayer's contention to that effect was actually recorded within the judgment.
The Judicial Review Exclusivity Principle
"In this section, (a) a claim for judicial review means a claim to review the lawfulness of, (i) an enactment ..."
which is exactly what it seems to me the claimants are seeking to do here.
a. Firstly, that the claim did not involve private law rights but tax law matters, which it seems to me at first sight applies here;
b. Secondly, that time limits are important, including the short time limits of going to the tribunal and the similar, albeit somewhat longer, short time limit of filing a claim form for judicial review. In European law, the time limit, at least for claiming damages, is a six year one. It seems to me at first sight that this case is very different from the Knibbs one, where, as I said earlier, European law did not feature, and which itself regarded Autologic as a different case because the challenges there (as in this case) were based on European law.
c. Thirdly, was the fact that the claim would effect large numbers of people, with no particular issues of fact, thus not rendering it unsuitable for judicial review, which at first sight seems also to apply here. That may be different in relation to a damages claim where the loss might be unique to the individual taxpayer, but damages claims can always be dealt with at a second stage.
d. Fourthly, Knibbs emphasized the importance of the requirement for permission to proceed as a filter to remove claims which are not sufficiently arguable or otherwise inappropriate for judicial review, and it seems to me that that is an important and key element of the judicial review procedure. There are parallel procedures in ordinary civil claims of applications to strike out and for reverse summary judgments, but they have their own particular provisions and procedures and do not necessarily result in the initial matter being dealt with at the initial stage, as in the judicial review procedure. It seems to me that this initial filter is a specific important part of the usual procedure for reviewing statutory provisions.
"20. The main issue in the present case turns on the effect of the so-called exclusivity" principle, established in O'Reilly v Mackman [1983] 2 AC 237: that is, that in general it is an abuse of process to challenge the validity of public law actions or decisions other than by judicial review. Among the factors leading to this conclusion was the streamlined procedure by then available for judicial review, the requirement for leave, and the short time-limit (normally three months) for commencing proceedings. Lord Diplock said:
' The public interest in administration requires that public authorities and third parties should not be kept in suspense as to the legal validity of a decision the authority has reached in purported exercise of decision-making powers for any longer period than is absolutely necessary in fairness to the person affected by the decision.' (p 281A, see also p 284E)
21. Subsequent experience has shown that a clear division between public and private law is often difficult to maintain, and the rigidity of the rule has had to be relaxed accordingly. Wade and Forsyth Administrative Law 10th Ed p 570-81 gives a valuable description of this evolutionary process, leading to the emergence of "signs of liberality", and to some abatement of the "rigours of exclusivity" under the new Civil Procedure Rules. A particular area of difficulty was in relation to private law disputes involving public authorities, for example employment and contractual relations (ibid p572). In Roy v Kensington and Chelsea FPC [1992] 1 AC 624, the scope for relaxation of the rule was acknowledged by the House of Lords, when they accepted that private law rights could be enforced by civil action, even though they might involve a challenge to a public law decision or action (ibid p578).
22. De Smith's Judicial Review 6th Ed para 3-097 contains a similar account, suggesting that a "new approach" is required following the replacement in 2002 of Order 53 by the new CPR 54:
' What matters under the CPR regime is not the mode of commencement of proceedings but whether the choice of procedure may have a material effect on the outcome.'
Cases such as Clark v University of Lincolnshire [2000] 1 WLR 1988 (a case involving an alleged breach of contractual relationship with a public authority) are cited to support the proposition that the courts should avoid "sterile and expensive procedural disputes which may be of no practical significance to the outcome of the case" (para 3-103). There is a discussion to similar effect in the White Book (para 54.3.2: "Distinction between public and private law").
23. The problems described in those passages arose principally from cases in which private and public law principles overlapped (see De Smith para 3-102). I do not read them as seeking to undermine the principles that purely public acts should be challenged by judicial review, and that it is in the public interest that the legality of the formal acts of a public authority should be established without delay. The latter is confirmed by the retention in CPR 54 of the requirement that an application to bring judicial review proceedings must be made promptly, and in any event within three months. This principle is not undermined by the fact that it is subject to the general power to extend time-limits (CPR3.1(2)(a)), the exercise of which is itself governed by well-established principles (see 2010 White Book para 3.1.2, 54.5.1).
24. Nor do I find in the textbooks support for the suggestion that the existence of factual disputes is a reason for an exception to the exclusivity principle. The need to resolve such disputes does not often arise, because of the nature of most judicial review proceedings. But, when it does arise, it does not create any particular conceptual or procedural problems. The permission stage gives the court full control of the proceedings. It may give any necessary directions for the attendance of witnesses and cross-examination (CPR8.6(2)-(3), not disapplied by CPR54.16: see White Book para 54.16.1-2, R (G) v Ealing LBC(No 2) [2002] EWHC 250 (Admin) para 20).
25. It is true that in Dilieto Sullivan J referred to the possible shortcomings of judicial review proceedings to resolve factual disputes. However, that was in a different context, in which he was comparing that procedure with the alternative of the magistrate's court. If, which I doubt, he was intending to imply that judicial review cannot effectively cater for such disputes where they arise, I would respectfully disagree.
26. The exclusivity principle is in my view directly applicable in the present case. The service of a breach of condition notice is a purely public law act. There is strong public interest in its validity, if in issue, being established promptly, both because of its significance to the planning of the area, and because it turns what was merely unlawful into criminal conduct. It is an archetypal example of the public action which Lord Diplock would have had in mind. It does not come within any other categories identified in Wade and Forsyth or De Smith as requiring a more flexible approach.
27. Mr Findlay QC sought help in the Pyx Granite v MHLG [1960] AC 260, in which one can find observations as to the impact of universal planning control under the 1947 Act (then relatively new) on the enjoyment of private property rights. That case of course remains important for the clear statement by Lord Simmonds of the "constitutional right" of access to the court. However, access to the courts is not here in issue; the question is which court, by what procedure, and when. Since that case was decided more than 20 years before O'Reilly v Mackman, it is not surprising that it offers no help on the issue of procedural exclusivity, or on the modern division between public and private law. Public action does not lose its "public" character merely because it involves, as most public action does, interference with private rights and freedoms. It is only where there is an overlap with private law principles (such as contract or tort), that procedural exclusivity may become difficult to maintain.
28. One well established exception to the exclusivity principle arose shortly after O'Reilly v Mackman. In Wandsworth LBC v Winder [1985] AC 461, it was held that public law issues could be raised by way of defence to legal proceedings initiated by the public authority itself. Again, the working out of this exception, and its application in more recent House of Lords decisions, is well described by Wade and Forsyth (see p 237-9). There is an apparent tension, at least in theory, between this exception and the exclusivity principle, with its leave requirement and strict time-limits. Someone who has failed to challenge a public law act within the normal time allowed for judicial review, or who has even been refused permission to bring such a challenge, may yet be able to raise it by way of defence outside the time-limit if the authority decides to initiate proceedings.
29. Dilieto is an illustration of the exception, as applied in the context of a prosecution for a breach of condition notice. That does not in my view assist Mr Findlay's argument on the facts of this case. It is true that, if the authority decide to prosecute, the defendant may be able to raise an issue as to the validity of the notice. In such proceedings, the authority will be able to rely on the breach of condition notice as providing an adequate foundation for the prosecution. The burden will then be on the defendant to raise any invalidity defence, and to establish the facts necessary to make it good.
30. On the other hand, the authority are under no duty to bring a prosecution. They may decide to rest on the effect of the breach of condition notice. They may properly take the view that the "blight" so created for the owner is sufficient sanction without the need for a criminal penalty. They may reasonably prefer to avoid the uncertainty of the factual disputes which may arise if the notice is challenged by way of defence to criminal proceedings. There is no obligation on the authority to give the owner a platform on which to challenge the validity of their action. They may rather see it as in the interests of the planning of their area for him to be encouraged towards the route of a section 73 application, which will bring the planning merits into play."
"64. In case I am wrong about that, I have, in any event, gone on to consider the question whether the claim should be struck out as an abuse of process under either of the alternative bases on which the application is put.
65. First, the defendant argues that the claim amounts to an abuse of process because the claimant is using the incorrect procedure. In this regard, the defendant argues that the claimant is seeking to pursue what is, in substance, a judicial review claim without utilising the specified procedure for such claims under CPR Part 54. The claimant has, instead, utilised the Part 8 procedure, which (the defendant objects) has the practical effect, for instance, that the claimant avoids the requirement to provide a detailed statement of his grounds and a statement of the facts relied on. More specifically, the defendant observes that CPR Part 54.2 provides that the judicial review procedure must be used in a claim for judicial review where the claimant is seeking, inter alia, a mandatory order. The claimant contends that the case law provides a more flexible approach and argues that he is seeking to pursue his claim as a private individual, asserting his rights under the HRA. He says that the defendant is taking an overly-technical objection that is inconsistent with the development of the civil law in this regard.
66. I acknowledge that the court should avoid adopting an overly-technical approach and agree that the case law has developed, to provide for what might be described as a more nuanced approach to the exclusivity principle arising from the speech of Lord Diplock in O'Reilly v Mackman [1983] 2 AC 237 (HL). That said, it is plain that the present claim comprises a claim for judicial review as defined in CPR Part 54.1(2)(a). That is because it involves both a claim to review the lawfulness of an enactment (that is, both section 18(1) of the SCA and the provisions of LASPO) and a claim to review the lawfulness of what is said to be a failure to act in relation to the exercise of a public function (the failure to take measures to implement the Directive). In O'Reilly v Mackman Lord Diplock stated (see page 285) that this would be:
'… contrary to public policy, and as such an abuse of the process of the court, to permit a person seeking to establish that a decision of a public authority infringed rights to which he was entitled to protection under public law to proceed by way of an ordinary action and by that means to evade the provisions of [CPR Part 34].'
67. Although the claimant might ultimately derive a private benefit from the declarations he seeks, that does not establish that this is a claim where his private law rights are necessarily in issue. A private right arising from a point of construction does not preclude the question of the meaning and effect of a public decision - here what is said to be failure to transpose the Directive into domestic law - retaining its public law status: see, by analogy, the decision in T&P Real Estate Limited v Mayor and Burgesses of the London Borough of Sutton [2020] EWHC 879 (Ch) at paragraphs [37] to [40].
68. In the present case, the claimant has not identified any sufficient private law interest that would justify the use of the Part 8 procedure by way of exception from the general rule in O'Reilly v Mackman (i.e. that public law claims should be pursued by way of public law (that is judicial review) proceedings). Moreover, the claim form makes clear that the relief sought by the claimant includes a mandatory order that the defendant pays the claimant his entitlement for legal aid and reimbursement of expenses under the Directive. It is impermissible to use the Part 8 procedure for the purposes of seeking such mandatory relief. That would have to be a claim pursued under CPR Part 54.
69. For those reasons, I agree with the defendant that the pursuit of this claim by way of CPR Part 8 amounts to an abuse of process. That, however, would not be the end of the matter: the next stage would be for me to consider whether some relief should be granted to allow the claim to be pursued by the appropriate alternative means. In this case, however, I am satisfied that that is not a step that should be taken, or indeed could properly be taken. First, because of the view I have already formed on the application to strike out/for summary judgment. Second, because of the view that I have reached as to the second basis for the defendant's complaint of abuse of process; that is, that this is an attempt to re-litigate decided issues. I turn to that point next."
"That said, it is plain that the present claim comprises a claim for judicial review as defined by CPR Part 54.1(ii)(a). That is because it involves both the claim for reviewing the law and thus an enactment and on the lawfulness of the decision of a public authority."
"The mere fact that the claimant may derive a private benefit does not mean that it is not a public law case."
a. Firstly, it is a challenge to the lawfulness of an enactment. It is, therefore, judicial review within CPR 54.1(ii)(a)(i) and the Menjou decision.
b. Secondly, it is judicial review as it is seeking a declaration whether or not damages are sought. In fact, I think, there is no damages claim and that damages are therefore an irrelevance, at this stage for the same reasons which I have given earlier in relation to the tax exclusivity principle. However, and in any event, a damages claim can be included within a claim for a declaration within the judicial review procedure. Whether or not it is then determined within the ordinary judicial review mechanisms is another matter, but that is second stage and for the Administrative Court to decide.
c. Thirdly, this is not a private rights case; it affects very many individuals and it is all public law. And it may be a tax matter but, as stated in Knibbs, that does not render it private law.
d. Fourthly, the initial permission stage is a crucial part of the judicial review procedure. Although there are some equivalents, as I have said, in Part 7 and Part 8 claims, judicial review has its own rules and the filter is a crucial part of that. That is a matter which was stressed in Knibbs. Having a permission filter does not in any way, it seems to me, to contravene the principle of effectiveness in European law. It is simply a domestic law procedure designed to test whether or not there is sufficient in the claim to start with. It is, at first sight, a legitimate national law procedural mechanism.
Conclusion (and the Part 7 or Part 8 Claim point)
APPROVED 30/11/2021