THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMS v JOHN JOSEPH KEARNEY [2010] EWCA Civ 288

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

(CHANCERY DIVISION)

Lewison J

[2010] EWCA Civ 288

Case No Case No: A3/2009/0894

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Between

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE AND CUSTOMSRespondents

JOHN JOSEPH KEARNEYAppellant

Before

The Master of the Rolls

Lady Justice Arden

Lord Justice Sullivan

The Appellant represented himself

Mr Akash Nawbatt (instructed by HMRC Solicitors Office) for the Respondents

Hearing date : 3 March 2010

Lady Justice Arden:

This

[1]appeal concerns the circumstances in which the time for paying national insurance contributions ("NICs") can be extended. The respondents, whom I shall call the Revenue, refused the request of the appellant, Mr John Joseph Kearney, for an extension of time in which to make voluntary Class 3 contributions for the years 1948 to 1965. Mr Kearney appealed to the General Commissioners of Income Tax for the Division of West Sussex Northern ("the Commissioners"). They found in his favour, and, at the Revenue's request, stated a question for the opinion of the High Court, asking essentially whether on the facts as found by them and evidence before them, they were correct to hold that Mr Kearney had satisfied the burden of showing that his failure to make NICs between 1948 and 1965 was due to ignorance that was not "the result of any failure on his part to exercise due care and diligence", a condition he had to satisfy to obtain an extension of time. Lewison J (

[2008] STC 1506

) concluded that their decision was wrong in law and Mr Kearney now appeals. The question, therefore, on this appeal is whether the Commissioners' decision was correct in law. If it is upheld, then the decision of the Commissioners to the effect that, if the Class 3 NICs payable by Mr Kearney for the period 1 October 1948 to 5 September 1965 are paid, they should be treated as having been paid on their due dates, must stand. I shall have to consider the grounds on which an extension of time can be granted, and the circumstances in which the court can interfere with the conclusion of the Commissioners. Background

[2]As one of my conclusions is that cases in which an extension of time to pay NICs is sought must be considered on a case by case basis, it is important to note the facts of this case. Mr Kearney was born in Ireland in 1929 and grew up there. He spent a year in the Palestine police force from 1947 to 1948. He then returned to the United Kingdom and took a job as a hostel warden with London County Council ("LCC") for some two months, just after the introduction in July 1948 of the NIC Scheme ("the NIC scheme"). Later, in October 1948, he went to Kenya. He did not receive his formal discharge from the Palestine police force until after he had started work in Kenya. He spent many years in the Kenyan Police Force, both before and after independence in 1963. Those years included five years (1951 to 1956) during the Mau Mau insurgency, a period he describes as traumatic. In addition, after Kenya's independence, he commanded one of the most volatile provinces in Kenya, the Rift Valley. Mr Kearney considers that there are many former colonial servants who are in the same position as he is, but we are only dealing with the facts of his case.

[3]Additional facts are stated in the Case Stated issued on 15 October 2007:

"5. … (ii) … The Respondent entered the National Insurance Contributions Scheme (NICS) on 5 July 1948 when it commenced (this last fact was agreed). (iii) The commencement of the NICS was preceded by a publicity campaign. (iv) Between 5 July 1948 and 30 September 1948 (inclusive) the Respondent made 10 contributions to the NIC. (v) On 1 October 1948 the Respondent left the country... (vi) After 5 April 1949 the NICS authorities sent the Respondent at his last known address Form RF 85E (contributions record card). The form was apparently returned undelivered. (vii) The Respondent did not notify the NICS authorities that he had gone abroad until 1971. Had the Respondent so notified the NICS authorities he would have been sent leaflet NI 138 which contained information about liability and entitlement whilst abroad to pay National Insurance Contributions. (viii) Although Mr West told us that it was the practice of the Colonial Office to send their employees going abroad a copy of a circular telegram dated 15 August 1948 (containing information about liability and entitlement of those abroad to pay National Insurance Contributions) the Colonial Office in Kenya apparently failed to ensure that all of its employees were so notified."

[4]It is convenient to refer here to the circular telegram dated 15 August 1948. It was from the Secretary of State for the Colonies to the colonial administration in Kenya. In the relevant part it enclosed a number of leaflets giving details of the NIC scheme. It pointed out that only persons working overseas for an employer with a place of business in the United Kingdom were required to pay contributions while working abroad. It also pointed out that, in certain circumstances, a person working abroad could if he wished contribute to the NICs scheme "and it may be of advantage for him to do so in order to build up or preserve the right to benefit". The circular telegram continued:

"9. You will no doubt have the contents of these pamphlets brought to the notice of officers serving under your administration who may enquire as to their position. Any who may appear to be eligible, and may wish to contribute under the Scheme should be advised to communicate direct with the Ministry of National Insurance (Contributions), Newcastle upon Tyne, stating full particulars of their individual cases."

[5]On the face of it, the telegram is not helpful to Mr Kearney as he made no enquiries as to his position. However, the statement of practice in paragraph 5(viii) of the Case Stated (set out above) by the Revenue indicated that the telegram was intended to be brought to his attention whether he made enquiries about his eligibility or not. The Case Stated continues:

"(ix) On 18th October 1971 the Respondent paid Class 3 Contributions in respect of the period from 6th September 1965 to 5th September 1971 (this fact was agreed). (x) The Respondent ceased working in Kenya on 30th October 1975 and returned to the UK. On 30th December 1975 the Respondent started work in South Africa. At the end of each of the tax years from 1976/77 to 1987/88 (inclusive), the Respondent paid Class 3 Contributions (these facts were agreed). (xi) In 2005 the Respondent approached the National Insurance Contributions Office (NICO) about deficiencies in his National Insurance record that he thought he had already made good. After investigation it was established that the Respondent had not been advised by a deficiency in the 1975/76 year and because of this he was allowed to pay Class 3 Contributions in respect of 1975/6 outside the statutory limit. (xii) The Respondent's failure to pay voluntary contributions during the period that he was abroad was due to his ignorance of the fact that he could have done so having not been made aware of the contents of the circular telegram dated 15th August 1948."

[6]The Commissioners' conclusion was as follows:

"9(a) We, the Commissioners, having seen and read the evidence and heard the arguments, allowed the appeal of the Respondent. (b) We were satisfied that the Respondent was not made aware of the need to notify the National Insurance Contributions Office of his posting abroad. Firstly by the National Insurance Office since his RF85E was returned and secondly because the Colonial Office in Kenya apparently failed to ensure that all of its employees were notified of the contents of the circular telegram dated 15 August 1948. (c) We found that the Respondent took immediate action to remedy the situation on being made aware of it and that he had continued his fight for the last 35 years. The Respondent's failure to pay National Insurance Contributions was due to ignorance. We did not consider this failure was due to a lack of care and due diligence on the part of the Respondent. We ordered that if the Respondent pay the Class 3 National Insurance Contributions for the period 1 October 1948 to 5 September 1965 they are to be treated as having been paid on the due dates."

[7]The question of law posed by the Case Stated was as follows:

"Whether on the facts found and evidence before us we were right to find that the Respondent exercised due care and diligence in accordance with Regulation 24 of the National Insurance (Contributions) Regulations 1969 and Regulation 6 of the Social Security (Crediting & Treatment of Contributions, and National Insurance Numbers) Regulations 2001."

Legislative scheme

[8]It is common ground that, contrary to the question posed by the Case Stated, the relevant regulation is regulation 32(1) of the National Insurance (Contributions) Regulations 1969 ("the 1969 regulations"). Regulation 32 (1) provides that:

"(1) Where a person was entitled to pay a contribution under any of the provisions of the regulations referred to in regulation 31(2) of these regulations (imprisonment or detention in legal custody, full-time education, unpaid apprenticeship and training, and periods abroad) but he failed to pay that contribution in the period provided for payment in the said provisions applicable and his failure is shown to the satisfaction of the Secretary of State to be attributable to ignorance or error on his part which was not due to any failure on his part to exercise due care and diligence, that contribution may be paid within such further period as the Secretary of State may direct."

[9]Regulation 24 confers any requisite power to allocate the payments to particular dates. There is, however, no material difference between regulation 32 and the regulations referred to in the Case Stated. There are thus two conditions to entitlement to make late payment of contributions. The first condition is that the failure to pay was attributable to ignorance or error. The second condition is that that ignorance was not due to his failure to exercise due care and diligence. It is accepted that the non-payment was due to ignorance. However, the Revenue's view is that that ignorance was due to a failure to exercise due care and diligence. The judgment of the Judge

[10]The Judge gave a clear and decisive answer to the question posed by the Case Stated. He held that there was no duty on the national insurance authorities (which I shall call "the NICO") to "chase up" any contributor who had ceased to pay. Nor was there any duty to explain to a contributor the consequences of his going abroad. The Judge accepted Mr Kearney's submission that the test of due diligence was a flexible test. He further held that:

"18. … The factors that would be relevant would include the degree of knowledge of the Scheme, the length of time during which a person was contributing to a Scheme, the point in the line of the Scheme [sic] at which the person began to contribute. I think that all these factors are potentially relevant. I would add to them whether the person concerned has claimed benefits under the Scheme, which would itself indicate a knowledge of it, and what information he received about his liabilities and entitlements under the Scheme and from what source."

[11]However,

the Judge concluded:

"19… The General Commissioners relied on Mr Kearney's immediate action to remedy the situation on being made aware of it. Mr Nawbatt said that this was irrelevant, because the action relied upon was outside the critical period during which the contribution should have been paid. I think he is right. There is, in my view, another reason why this finding by the General Commissioners is not relevant, although it may go to show that Mr Kearney's failure to pay was due to ignorance or error, it does nothing to explain why the error was made. In the present case on the basis of the General Commissioners' findings, the core reason why Mr Kearney did not make the payment was that he simply assumed that as a Government servant he would be looked after. He made no inquiries of the National Insurance authorities. He made no inquiries of his employer. There was nothing that positively led him to believe that he would be entitled to a full State pension. It was simply an assumption on his part. Nor did he inquire of his employer whether deductions were actually being made from his salary to fund contributions. He assumed that as a Government servant all that would be handled for him. 20. In my judgment, to rely on an assumption, which has not been shown to have been positively induced, and without making any further enquiries cannot amount to the exercise of due care and diligence…."

DISCUSSION AND CONCLUSIONS Powers of the Court on an appeal by way of Case Stated

[12]An appeal lies from the general commissioners only on a point of law. However, a perverse decision by the general commissioners on the facts may involve an error of law. The court will intervene "if the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. … It has no option but to assume that there has been an error in point of law." (per Lord Radcliffe in Edwards v Bairstow

[1956] AC 14

). Accordingly, in relation to questions of fact, the court can only review the findings of fact by the Commissioners to see whether they are unreasonable in the sense given above, and not from the point of view of correctness.

[13]There are two reasons for the court to exercise restraint when dealing with appeals from general commissioners. The first is this. The Commissioners are the tribunal selected by Parliament to deal with appeals from decisions of the Revenue in national insurance matters. While they are often lay persons, they may have some experience of cases in this field of law. Although the position is not on all fours, the court should bear in mind generally what Hale LJ (as she then was) said with respect to social security commissioners in Cooke v Social Security Commissioners

[2002] 3 All ER 279

: ".. the ordinary courts should approach such cases with an appropriate degree of caution. It is quite probable that on a technical issue of understanding and applying the complex legislation the social security commissioner will have got it right. The commissioners will know how that particular issue fits into the broader picture of social security principles as a whole. They will be less likely to introduce distortion into those principles. They may be better placed, where it is appropriate, to apply those principles in a purposive construction of the legislation in question. They will also know the realities of tribunal life. All of this should be taken into account by an appellate court when considering whether an appeal will have a real prospect of success." ([16])

[14]Secondly, as will be further explained below, the ultimate issue for the Commissioners in this case involved considering what would be "due" care and diligence. That particular question involves the exercise by the Commissioners of judgment, or an evaluation. There is room within limits for a legitimate difference of judicial opinion as to what is due care or diligence in given circumstances. This factor underscores the need to respect the decision of Commissioners on this issue. An appellate court must exercise restraint from interfering with their decision unless the court is satisfied that the decision was motivated by improper considerations or wrong principle, or that it was perverse.

[15]Accordingly, a court hearing an appeal by way of case stated on a point of law is not entitled to set aside a conclusion of the Commissioners on a question of fact or a question of an evaluation of facts unless it is satisfied that no reasonable Commissioners, acting judicially and properly instructed, could have come to that conclusion.

[16]Furthermore, it follows from Edwards v Bairstow that it is not open to the court on an appeal by way of case stated to find a particular fact not found in the Case Stated unless it is satisfied that no tribunal, acting judicially and properly instructed as to the law, could refrain from making that finding ( Hitch v Stone

[2001] EWCA Civ 63

[17]The procedure on appeals from general commissioners has altered since the date of the Case Stated. An appeal against a decision of the Revenue now goes to the First-tier Tribunal, and an applicant may appeal on a point of law arising from their decision to the Upper Tribunal with the permission of either Tribunal. A further appeal to the Court of Appeal is possible only on obtaining permission in accordance with CPR 52.

[18]A failure by the Commissioners to give reasons may also constitute an error of law, and that indeed is the primary basis on which the Judge intervened in this case. Referring to the Case Stated, he held: "Paragraph 9(b) goes to the first of the two questions, namely whether Mr Kearney's failure to pay was attributable to ignorance or error. Those findings do not, in my judgment, go to the second question at all. The second question is whether the ignorance or error was or was not attributable to the lack of due care and diligence. The conclusion in para 9(c) of the case stated devotes a single sentence to the second question, but without explanation save for the bold conclusion." ([15])

[19]However, the question posed for the opinion of the High Court (and set out above) made it clear that the Commissioners had reached their conclusion "on the facts found and the evidence before us". The evidence referred to consisted of a number of documents, some of which I have referred to above, such as the circular telegram, a sample form RF85E and the leaflet NI 38. The Judge correctly pointed out that the Commissioners did not in paragraph 9(b) of their conclusions identify any finding of fact on which they relied in relation to the second condition. However, the court could not conclude from that that there were no sufficient reasons for the Commissioners' conclusion. To determine whether the Commissioners' conclusion satisfied the test in Edwards v Bairstow the court must look at the totality of the findings of fact and evidence before the Commissioners. I return to this task below. The Judge also examined the facts but for a different purpose, namely reaching his own conclusion having directed himself as to the principles from the authorities that were relevant to the granting of an extension of time. But he did not ask whether the conclusion of the Commissioners met the Edwards v Bairstow test, namely whether it was a decision to which the Commissioners, acting judicially and properly instructed as to the law, could have come. In my judgment, that was the correct test for the reasons given above. The framing of the question in the Case Stated made no reference to an error of law, but this cannot make any difference to the role of the court on an appeal to it.

[20]However, that said, it was regrettable that the Commissioners did not identify the factors which had caused them to decide the appeal to them in Mr Kearney's favour. I would draw to the attention of the Commissioners what was said by Lord Phillips of Worth Matravers MR giving the judgment of this court in English v Emery Reimbold Strick

[2002] 1 WLR 2409

: "A judge cannot be said to have done his duty if it is only after permission to appeal has been given and the appeal has run its course that the court is able to conclude that the reasons for the decision are sufficiently apparent to enable the appeal court to uphold the judgment. An appeal is an expensive step in the judicial process and one that makes an exacting claim on judicial resources. For these reasons permission to appeal is now a nearly universal prerequisite to bringing an appeal. Permission to appeal will not normally be given unless the applicant can make out an arguable case that the judge was wrong. If the judgment does not make it clear why the judge has reached his decision, it may well be impossible within the summary procedure of an application for permission to appeal to form any view as to whether the judge was right or wrong. In that event permission to appeal may be given simply because justice requires that the decision be subjected to the full scrutiny of an appeal." ([18])

[21]That passage applies to the decisions of Commissioners as it does to other judges. It does not impose an onerous duty. Reasons need not be lengthy. It will often be sufficient for them to be briefly stated. Features of the NIC scheme

[22]The NIC scheme has certain features which are now generally well known. In particular, it is a contributory scheme. As the Judge pointed out, it relies on the timely payment of contributions to fund the payment of benefits and pensions. The amount which Mr Kearney wishes to contribute is extremely small -- less than £200 -- but the cost to the scheme of providing him with the benefit of a full state pension would be many times in excess of this. As Mr Akash Nawbatt, for the Revenue submits, time limits are necessary because without them there would be nothing to prevent contributors in general from exercising options against the National Insurance fund by delaying the payment of contributions until the event against which cover is sought has already occurred.

[23]There has been a certain amount of discussion in this case about the practice of the NICO when it comes to chasing up contributors. Every person going abroad to work in the Colonial Service should have received NI 38. This told contributors that if they went abroad after 4 July 1948 they could pay either Class 3 or Class 2 contributions. Furthermore, the evidence shows that in 1949 Mr Kearney was sent form RF 85E, which was a statement of his contribution record for the period ended 4 September 1949. This would have told him the yearly average of contributions required for a full pension was 50. However, it was returned to the NICO on the grounds that he had gone abroad.

[24]As to the practice of the Revenue, the Judge was, in my judgment, correct in his observation that there was no duty to chase contributors for contributions, or to explain to them the consequences of going abroad unless asked to do so. The limit of their practice was to inform contributors of the consequences in terms of the NIC scheme of their going abroad: see paragraph 5(vii) of the Case Stated as set out above. That is the foundation of the Revenue's submission that Mr Kearney should have informed the NICO of his intention to go abroad. I come to that below. The statutory question

[25]As already stated, this appeal is only concerned with the question whether Mr Kearney's ignorance was "not due to any failure on his part to exercise due care and diligence". The burden of proof on this issue is clearly on the contributor. By the "statutory question", I mean the question that has to be asked in order to determine whether or not the second condition is satisfied.

[26]To identify the nature of the statutory question, it is necessary to analyse the second condition. The subject of the enquiry under the second condition is ignorance of the need or right to make NICs. The statutory question is not, however, directed at determining what the cause of the ignorance was in the abstract. It is a much more focused question. The applicant has to satisfy the Revenue that that ignorance was not caused by his own lack of due care or diligence. So the statutory question is thus whether lack of due care and diligence by him can be eliminated as a cause. It is perhaps paradoxical that Parliament should exclude from benefits those who have been careless; it might be thought that those were the persons who most needed help from the welfare state. But that is not what Parliament has decided. Parliament has decided on the two conditions which I have already summarised.

[27]The next question is what care and diligence mean in this context. They are not the same concept. As Mr Nawbatt submits, lack of care means lack of concern, whereas diligence means a failure to apply oneself to the issue. I agree with the Judge and with Owen J in Walsh v Secretary of State for Social Security , 28 March 1994, unreported, who made a similar observation, that it is not possible to define all the circumstances that will meet the second condition. In part what is due care and diligence in any set of circumstances will depend on the obligations of the person being considered.

[28]Mr Kearney submits that a failure to exercise due care and diligence should be found only where the failure is gross enough to become a matter of concern. I do not accept this submission. Mr Kearney's test lacks that degree of certainty which is required for a legal test. It does not tell us how a gross failure is recognised. Moreover, it is a basic principle of justice that like cases must be decided in a like manner and so we have to identify the correct approach to determining the presence or absence of due care and diligence.

[29]In my judgment, the statutory question assumes that there is at least in general a duty to make some enquiries and in appropriate circumstances to follow them up. I agree with the Judge that those enquiries need not necessarily be made of the NICO. The enquiries might be sufficiently made if they were made of the employer or trade union.

[30]In many situations a contributor has a legal duty, backed up by a criminal sanction, to make contributions. That is not so in Mr Kearney's case as he was working abroad. When it comes to performing one's duty, the general principle of English law is that ignorance of the law is no defence. What regulation 32 achieves in a case where a contributor is under a duty to make contributions is a way of performing the duty out of time and it provides a set of conditions in which the contributor is excused from the consequences of his ignorance of his legal duty. This is an exceptional course, and the onus will be on him to bring himself within the conditions.

[31]It is to be noted that, in answering the statutory question, the period to be examined is not the entire period from the time when the duty or right arose, but simply the period in which the payments were required to be paid, or (in cases where there was an option to pay) the period in which the option might be exercised.

[32]The argument on this appeal has revolved round two distinctly different approaches to determining the presence or absence of due care and diligence. Mr Kearney naturally stresses the special facts of his own case. The Revenue, for its part, has argued for relatively "bright line" or hard-edged rules. In particular, Mr Nawbatt submits that if a contributor has knowledge of the scheme, he comes under an obligation to make enquiries about the consequences of going abroad if he goes abroad or alternatively to notify the NICO of his whereabouts. That links in with the Commissioners' finding of fact in the Case Stated that if Mr Kearney had taken this alternative course, he would have been advised as to his option to make Class 3 contributions. In other words, on Mr Nawbatt's submission, the contributor has to do something and doing nothing is not the exercise of due care and diligence.

[33]In the course of argument, Mr Nawbatt modified his submission to accept an approach along the lines of the passages in the Revenue's published Guidance Manual dealing with the extension of time limits for paying NICs. It is there made clear in the context of Class 2 NICs that the second condition is determined by taking into account(i) the steps the contributor made to maintain their contribution record,

(ii) any previous warnings about the consequences of late payment, and

(iii) their ability to understand their obligation to pay NICs giving consideration to their age, health and intelligence. The last matter touches on knowledge of the NIC scheme, but otherwise knowledge of the NIC scheme is not expressly mentioned.

[34]In my judgment, this guidance reflects the correct approach, which is to treat all relevant circumstances as factors which have to be balanced together to reach an assessment or evaluation on a case-by-case basis as to whether due care and diligence was exercised and, if not, whether the failure was the cause of the contributor's ignorance of his obligation to pay contributions when he was bound or entitled to pay them. This more nuanced approach can also be seen from the Explanatory Statement dated February 2008 by the Revenue made to a meeting of the Working Party of the Overseas Pensioners' Association, where it was said that earlier decisions had to be treated as providing guidance on what should be considered necessary for the exercise of due care and diligence. Those decisions could provide "a framework" within which the Revenue could consider individual cases.

[35]Like the Judge, I do not think it is possible to produce a definitive list of relevant factors. However, they would include the contributor's age and any relevant physical disability or incapacitation. Thus Mr Nawbatt accepted that a 19-year-old student might be in a stronger position to show that he had exercised due care and diligence when he took no action to pay contributions than an older person already in employment. Moreover, a person may have known about the NIC scheme and gone abroad, leaving, like the Good Samaritan with the innkeeper, a sum of money with another person, whom he thought reliable. He may have instructed that person to make payments of NICs. If that person fails to pay NICs on time, the contributor may be able to show that his ignorance of the failure to pay was not due to lack of due care or diligence. In some circumstances, therefore, doing nothing in terms of contacting the NICO may (as the Judge accepted) not be fatal. However, as I see it, a person need not be induced to take no action by a positive misrepresentation. To take an obvious example, a person may be incapacitated by illness during the relevant period. A person may also have language difficulties which may require to be taken into account.

[36]Knowledge of the NIC scheme is also likely to be a very important factor, but it may have to be established what the source of his knowledge was and generally the degree of knowledge. Moreover, there cannot logically be an absolute rule that, if the contributor has knowledge of the existence of some aspect of the NIC scheme, he can never show that he exercised due care and diligence unless he made further enquiries about his rights or obligations. It must, as the Judge recognised, all depend on the circumstances. Nonetheless, it will be an unusual case in which a person is able to show that, while he made no contributions even after learning the basic features of the NIC scheme, he nonetheless exercised due care and diligence

[37]The decision-maker also has to look at the circumstances as they stood at the time. People can now be expected in many parts of the world to have access to the internet or to mobile phones, but that would not have been the position in the 1960s. The Commissioners' conclusion

[38]The first question is whether the Commissioners asked the right question. The relevant paragraph of the Case Stated on this point is paragraph 9(c) (set out above). That appears to ask a slightly different question, namely whether "the failure to pay [NICs] was due to a lack of care and due diligence on the part of the Respondent." However, the question was sufficiently stated in the question for the opinion of the High Court, and accordingly we are entitled to treat the question as if correctly set out in paragraph 9(c).

[39]In paragraph 9(c) the Commissioners referred to the fact that Mr Kearney took "immediate action to remedy the situation on being made aware of it". This is clearly a factor which goes to the question of ignorance, but ignorance was not in issue. Its weight in relation to the second condition is marginal. It may be that the Commissioners in giving this reason mistakenly thought that they were concerned with failure beyond the period allowed for payment without an extension. But their mistake in this regard is not the end of the case because it is to the totality of the findings made by the Commissioners and evidence before them that we must look in order to determine whether their conclusion disclosed any error of law, that is, whether the conclusion to which the Commissioners came was a conclusion which no tribunal, acting judicially and properly instructed as to them all, could have arrived at. I now turn to the parties' submissions on this point.

[40]Mr Kearney submits that the decision of the Commissioners should be reinstated. He submits in his skeleton argument that:

"Ignorance on my part may be a fault. Unlike other recent claimants, many of whom have been successful, my claim dates back to N.I. infancy of July 1948 and my return from the bloodiest period of the time in Palestine. A callow youth of 19 years traumatised with no counselling and having to fend for oneself in the harsh difficult conditions of the post World War II. My relentless efforts to rectify a 1948 mistake, my career progress since then and inconsistency in HMRC's handling of my claim should negate any assertion of lack of due care and diligence on my part..."

[41]Mr Kearney makes essentially four further points. Firstly, he relies on his slight acquaintance with the NIC scheme. He says that he was in the United Kingdom in 1948 only through a very short period between his service in Palestine and the start of his work with the Kenyan Police Force. His family home was actually in Ireland. He personally does not recall ever receiving a national insurance card or a P45 or being briefed about the scheme while he was with the LCC. He submits that the Commissioners made no finding as to his having received a card or as to his knowledge of NIC scheme, and that the Judge was wrong to make any inference as to either matter. When he went to Kenya he expected that the Crown would look after him. He was only nineteen years old. At that age he was not particularly concerned about his pension. He submits that it is wholly unrealistic to expect a nineteen-year-old to appreciate from the ten NICs made in July 1948 that he had to continue to make payments.

[42]Mr Kearney's next submission is that the four reported cases put before us by the Revenue, namely HMRC v Thompson

[2007] STC 240

, Adojutelegan v Clark [2001] STC (SCD) 524, Walsh v Secretary of State and Rose v IRC [2007] STC (SCD) 129 concern contributors who were living in this country, or were self-employed and who had been paying NICs for many years. One would naturally expect them to be familiar with the NIC scheme. Simply looking at the reported authorities, there is force in this point. Moreover, Mr Kearney's case concerns only voluntary payments. Those voluntary payments were not backed up by criminal sanctions.

[43]Thirdly, Mr Kearney also relies on the failure of the British and colonial governments to advise him of the option of making voluntary payments while overseas. He relies on the circular telegram of 15 August 1948. Fourthly he submits that there were deductions from his salary for pension so he was justified in making no further inquiry.

[44]Mr Nawbatt submits that every insured person had to apply for an insurance card and it was the duty of the insured person to produce his card to his employer. Only the insured person could obtain a card. Accordingly Mr Nawbatt submits that for the ten NICs to have been made in 1948 Mr Kearney must have obtained a national insurance card and given that card to his employer. He would, therefore, have been aware of the NIC scheme at the time that he left the United Kingdom. Notwithstanding this knowledge there was no evidence to show that he made any enquiries about the position prior to or when he left the United Kingdom. Had he made the enquiries he would, as the Commissioners found, have been given information about liability and entitlement to pay NICs while abroad. Mr Kearney could either have made enquiries by post from Kenya or he could have contacted his local national insurance office before leaving for Kenya.

[45]Accordingly, the Revenue's case on this appeal is that it can be inferred from the fact that NICs were paid in 1948 that Mr Kearney must have had a national insurance card. In Rose v IRC , Special Commissioner Dr David Williams helpfully set out in an appendix to his decision the evidence in that case as to the practice about the issue of national insurance cards when the scheme was started in 1948. Although there was no similar evidence in this case, Mr Kearney did not object to Mr Nawbatt relying on this passage, which in relevant part is as follows:

"Registration into the scheme usually took place because a person starting work needed a National Insurance card to give to his employer so that contributions could be paid. To do so a person under age 18 visited a local Youth Employment Office or if 18 or over, a local National Insurance office. At the time a card was issued a record sheet was also set-up for the person. A unique National Insurance number was pre-printed on each RF1. The RF1 was passed to Records Branch where it was filed on a Ledger Section according to the last two digits of the National Insurance number. A Ledger Section existed for each combination of the last two digits thus there were 100 sections from 00 to 99. Each Ledger Section was responsible for the maintenance of approximately 38,000 records. Over the whole of Records Branch there were approximately 38 million record sheets in regular use."

[46]Mr Nawbatt submits that, if the court is in any doubt as to whether this finding can be inferred, the right course is for this court to remit the case back to the Commissioners to make a finding as to whether Mr Kearney had an insurance card in 1948.

[47]My conclusions on this part of the case are as follows. The Commissioners made no finding as to Mr Kearney's knowledge of the NIC scheme in 1948 or any subsequent date within the period in which NICs could have been paid for 1948 to 1965. In agreement with the Judge, I consider that the question of Mr Kearney's knowledge of the NIC scheme, and his degree of that knowledge, were relevant factors for the purpose of determining whether his ignorance was the result of a lack of due care and diligence. The Judge clearly took the view that Mr Kearney had sufficient knowledge and, while he does not state the reason for that view, it probably stemmed from his holding at paragraph [3] of his judgment that, while working for the LCC, Mr Kearney made ten contributions to the NIC scheme and in addition that:

"His contributions would have been recorded by stamps on a card which would have been issued to him when he registered for the scheme."

[48]The exercise undertaken by the Judge was accordingly to infer knowledge on Mr Kearney's part from the findings of the Commissioners. Mr Kearney would not, of course, have needed to know the full details of the NIC scheme but he did need to know enough to cause him to make further enquiries about his position notwithstanding that he was working abroad.

[49]Was the Judge entitled to make the inference? At the end of the day, the Commissioners came to a conclusion in Mr Kearney's favour. In those circumstances, and reading the decision as a whole, I do not consider that, on its true interpretation, the decision implied any positive finding as to any significant degree of knowledge. It would have been inconsistent with their conclusion to do so, especially given their finding in paragraph 5(vii) of the Case Stated. Moreover, for the reasons already discussed, this court cannot make a finding which the Commissioners did not themselves make unless it is satisfied that no tribunal, acting judicially and properly instructed as to the law, could have failed to make that finding. In my judgment, it was not an inevitable finding by the Commissioners that he had any relevant degree of knowledge. There is no inevitability in fact about his having an insurance card at all. We know that the record card showing his contributions which was sent to him in 1949 was not received. There is also some doubt about the position concerning his original card in 1948. The then current regulations, The National Insurance and Industrial Injuries (Collection of Contributions) Regulations 1948 permitted national insurance cards to be issued to the employer. Thus, one possibility is that Mr Kearney signed the appropriate application form but never saw the card. The Judge was thus not entitled to proceed on the basis that a card would have been issued to him when he registered for the scheme.

[50]Mr Kearney's knowledge of the NIC scheme so far as it can be safely assumed from the facts found by the Commissioners was thus limited to the knowledge he gained by making an application for a card. We do not know what information would have been given to him or whether the requisite form was simply provided to him by his employer. Nor do we know what information he gained from the publicity attendant on the introduction of the NIC scheme. So far as I can see from the Commissioner's decision, that aspect of the case was not explored.

[51]Should this court remit the case back to the Commissioners? The Revenue accepts that it received the Case Stated in draft, and made some observations on it. We understand that the Revenue was understandably reluctant to make suggestions about the Case Stated but there is no doubt but that the Revenue had the opportunity to ask the Commissioners at that stage to consider whether to make a finding as to whether Mr Kearney had ever had a national insurance card in 1948. Moreover, I bear in mind that this case has gone on for a very long time and that Mr Kearney is no longer young. In all the circumstances, I take the view that this is not a case where it would be appropriate to exercise our discretion to remit the matter to the Commissioners.

[52]Having reached the conclusion that Mr Kearney was found only to have a slight degree of knowledge of the NIC scheme, I consider that there were sufficient facts and evidence on which the Commissioners could properly reach a conclusion that his ignorance of his right to make voluntary contributions was not due to a failure to exercise due care and diligence. When he was in the United Kingdom in 1948, Mr Kearney was only nineteen years old. His stay in United Kingdom was very short. Thereafter he worked continuously abroad. While overseas in both Palestine and Kenya, he was occupied with serious insurrection: in those circumstances his knowledge of the NIC scheme before he left for Kenya might, due to no culpable error on his part, have completely gone out of his mind. The telegram of 15 August 1948 is some indication of the contemporary view in official circles that overseas service people should be specifically informed about the NIC scheme, and their right to make voluntary contributions. He did not have the benefit of that document. In addition, in 1948 the NIC scheme was a novel and unfamiliar concept. For the reasons given, the Commissioners had to assess the circumstances in 1948 to 1965 by the then contemporary standards. When seen in the context of the factors referred to in this paragraph, the assumption which Mr Kearney made that the government would look after him, and on which the Judge relied, is reasonably capable of being diminished in its importance to the level of comparative insignificance. In sum, the conclusion to which the Commissioners came is in my judgment one to which they could properly come.

[53]In my judgment, while in many respects the Judge approached this case in the right way, he failed at the last to apply the test in Edwards v Bairstow with the result that he substituted his own judgment and reached the wrong conclusion. Disposal of appeal

[54]For the reasons given above, I would allow this appeal and reinstate the decision of the Commissioners. I would observe that the result in this case should not be thought to reduce the importance of the duties imposed on those who are liable to pay NICs or who have the option to do so. Ignorance is not an excuse save in limited circumstances. It is a person's own responsibility to pay NICs, and, if he or she fails to do so at the right time, he or she may lose the chance to pay them later on the basis of ignorance at the appropriate time of the need to pay. The facts of this case are unusual, and, while of course this judgment deals only with this appeal, I would observe that facts like these may not often occur. Sullivan LJ:

[55]I agree. Lord Neuberger MR:

[56]I also agree.

Cited in 14 later judgments

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