“Effect of the GLO (1) Where a judgment or order is given or made in a claim on the group register in relation to one or more GLO issues – (a) that judgment or order is binding on the parties to all other claims that are on the group register at the time the judgment is given or the order is made unless the court orders otherwise; and (b) the court may give directions as to the extent to which that judgment or order is binding on the parties to any claim which is subsequently entered on the group register. (2) Unless paragraph (3) applies, any party who is adversely affected by a judgment or order which is binding on them may seek permission to appeal the order. (3) A party to a claim which was entered on the group register after a judgment or order which is binding on them was given or made may not – (a) apply for the judgment or order to be set aside, varied or stayed; or (b) appeal the judgment or order, but may apply to the court for an order that the judgment or order is not binding on them. (4) Unless the court orders otherwise, disclosure of any document relating to the GLO issues by a party to a claim on the group register is disclosure of that document to all parties to claims – (a) on the group register; and (b) which are subsequently entered on the group register.” (a) that judgment or order is binding on the parties to all other claims that are on the group register at the time the judgment is given or the order is made unless the court orders otherwise; and (b) the court may give directions as to the extent to which that judgment or order is binding on the parties to any claim which is subsequently entered on the group register. (a) apply for the judgment or order to be set aside, varied or stayed; or (b) appeal the judgment or order, (a) on the group register; and (b) which are subsequently entered on the group register.”
“(A) How should compensation or relief be assessed?”
“In relation to the claims for utilised ACT, it is common ground (as I have said) that the position is governed by Sempra. Accordingly, compound interest is payable on the amount of the ACT prematurely paid, from the date of its payment until the date of setting-off against MCT, at conventional government rates.”
“The Revenue accept that compound interest is payable in respect of the utilised ACT claims, because that is what the House of Lords decided in Sempra.”
“i) such claims are to be characterised as San Giorgio claims under EU law; ii) the overpaid tax (or its time value in the case of utilised ACT) is in principle recoverable by either a Woolwich claim or a mistake-based restitutionary claim, subject to defences and limitation; iii) the tax was in fact paid under an operative mistake, the mistake being that it was lawfully due and payable; iv) unlawful ACT which was utilised against lawful MCT is recoverable, on the same basis as in Hoechst; …”
“Compound interest computed on the conventional government basis is payable is respect of all claims which are upheld, namely, overpaid corporation tax, unutilised ACT and ACT utilised against lawful MCT for the periods both before and after utilisation.”
“3. Subject to paragraphs 4, 5 and 6 below, the following claims are claims for restitution of the payment by mistake of taxes unlawfully exacted and are upheld: … d. Claims for the payment of ACT not due because the credit referred to in declarations 2(B) to (E) above [relating to the lack of an ACT credit on non-UK source dividends] was not available from the date of payment until: i. in the case of unlawfully levied ACT utilised against a lawfully levied MCT liability, the date of utilisation; ii. in the case of unutilised unlawfully levied ACT, judgment, namely the24th October 2013 ; or iii. in the case of unlawfully levied ACT utilised against unlawfully levied MCT liabilities, judgment, namely, the24th October 2013 ; … 4. The amounts of restitution are to be calculated on a compound interest basis computed on the conventional government rate for all periods including the period from payment to judgment or from payment to utilisation and therefrom to judgment.”
“… entitled to compound interest on their claims for unduly levied DV tax and/or ACT … (it being common ground that the restitution of the time value of unlawfully levied ACT repaid or utilised prior to the claim being brought should be measured by compound interest)?”
“Is [Prudential] entitled to compound interest in respect of tax which was levied in breach of EU law, on the basis that HMRC were unjustly enriched by the opportunity to use the money in question?”
“78. On a literal reading of section 35A, no such interest could have been awarded on the claims under category (a). That is because section 35A applies only where there are proceedings for the recovery of a debt (or damages), and therefore does not apply where the defendant has repaid the debt (or has set it off) before the creditor has commenced proceedings for its recovery. An award of interest is nevertheless required in such circumstances by EU law, if an effective restitutionary remedy is to be available under English law in respect of San Giorgio claims: that was the point decided in Metallgesellschaft. It is unnecessary to decide in this appeal how an award of interest should be made available in those circumstances (and the court has heard no argument on the point). But there are a number of potential solutions. 79. For the foregoing reasons, we therefore depart from the reasoning in Sempra Metals so far as it concerns the award of interest in the exercise of the court’s jurisdiction to reverse unjust enrichment... Since the award of compound interest to PAC by the courts below was based on the application of the reasoning in Sempra Metals which we have disapproved, it follows that HMRC succeed on Issue II, and PAC’s claims to compound interest under categories (b) and (c) must be rejected. PAC’s claim to compound interest under category (a) would also have been rejected, if it had not been accepted by HMRC.”
“… is binding on the parties to all other claims that are on the group register at the time the judgment is given or the order is made unless the court orders otherwise…”
“60. The various principles which the claimants invoke are underpinned by the same legal policies, ‘that there should be finality in litigation and that a party should not be twice vexed in the same matter’: Johnson v Gore Wood & Co[2002] 2 AC 1 , 31, per Lord Bingham of Cornhill. Those policies are reinforced by the need for efficiency and economy in the conduct of litigation. In Virgin Atlantic Airways Ltd v Zodiac Seats UK Ltd (formerly Contour Aerospace Ltd)[2014] AC 160 , para 55 Lord Neuberger of Abbotsbury PSC stated: ‘The purpose of res judicata is not to punish a party for failing to take a point, or for failing to take a point properly, any more than to punish a party because the court which tried its case may have gone wrong. It is … to support the good administration of justice, in the public interest in general and the parties’ interest in particular.’…”
“Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. … Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to reopen that issue.”
“In my opinion your Lordships should affirm it to be the law that there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result…”
“The application of the principles of issue estoppel is subject to the overriding consideration that it must work justice and not injustice.”
“Except in special circumstances where this would cause injustice, issue estoppel bars the raising in subsequent proceedings of points which (i) were not raised in the earlier proceedings or (ii) were raised but unsuccessfully. If the relevant point was not raised, the bar will usually be absolute if it could with reasonable diligence and should in all the circumstances have been raised.”
“76. It is not disputed that the doctrine of abuse of process can apply to separate stages within one litigation as well as to separate legal proceedings. 77. But for the court to uphold a plea of abuse of process as a bar to a claim or a defence it must be satisfied that the party against whom the bar is asserted is abusing the process of the court by oppressing the other party by repeated challenges relating to the same subject matter. It is not sufficient to establish abuse of process for a party to show that a challenge could have been raised in a prior litigation or at an earlier stage in the same proceedings. The party must go further and show that it should have been raised at that earlier stage and that it is abusive to raise the matter at the later stage. 78. We are satisfied that there is no such abuse on this issue. The FII GLO litigation and the related GLO litigations proceeded against a background in which both domestic and EU law were in a state of significant development and interacted with each other in this GLO litigation. Henderson J in FII (HC) 2[2015] STC 1471 , para 468 correctly spoke of “a complex and evolving legal landscape”
“In its judgment in Prudential, this court held that there was no common law claim to compound interest on unlawfully levied ACT on the basis of restitution.”
“The public interest in seeing an end to litigation is of little weight in circumstances under which, failing agreement, there must in any event be arbitration at each successive review date.”
“Proper pleading of the material facts is essential for the orderly progress of the case and for its sound determination. The definition of the issues has an impact on such important matters as disclosure of relevant documents and the relevant oral evidence to be adduced at trial. In my view, the fact that the nature of the grievance may be obvious to the respondent or that the respondent can ask for further information to be supplied by the claimant are not normally valid excuses for a claimant’s failure to formulate and serve a properly pleaded case setting out the material facts in support of the cause of action.”
“No positive case about section 32(1)(b) has been put forward by the claimant. The claimant has not set out the facts it possessed and explained which essential facts it was missing. In a claim of this type, it is not just the facts that have to be considered but also what inferences may reasonably be drawn from them. The claimant has not explained why Mr Grumbridge, as a director of and indirect shareholder in BPI, was not made a party to the First Claim. It is not for the court to speculate why that decision was taken and whether there were objectively justifiable grounds for it. The absence of such a case makes it impossible to assess what essential facts the claimant did not possess that might trigger reliance on section 32(1)(b) of the 1980 Act. In my judgment, the absence of any positive case about limitation is fatal to the claimant because the real prospect of success test is being applied to an issue in relation to which the burden of proof rest[s] on the claimant. The burden is of course on the defendant to establish the grounds of the application, but where the claimant declines to explain its case on section 32(1)(b), the court is entitled to conclude that the usual limitation period applies. This suffices to determine the application in favour of Mr Grumbridge.”
“VIII. LIMITATION 1 To what extent is the claim statute barred by a 6 year limitation period? 2 To what extent is the claim for recovery under a mistake of law barred by section 320 FA 2004?”
“a claimant’s claim”
“Against this background, two questions were briefly argued before me. The first question was the extent to which the corporation tax claims of the second claimant (“PHL”) are confined to a six year limitation period. The second was whether the ACT claims of both claimants (which were first introduced by amendment in October 2009) arise out of the same or substantially the same facts as their corporation tax claims. Neither question was argued in detail or at any length, from which I infer that the answers are not perceived on either side as having much practical significance.”
“255. If, however, the section is invalid, the question arises whether it is open to PHL to pursue any claims in respect of payments of tax made by it before14 July 1998 . In principle, it seems to me that the answer to this question is Yes, because there would then be nothing to prevent PHL from relying on the extended limitation period for mistake-based claims insection 32(1)(c) of the Limitation Act 1980 . I do not understand the Revenue to argue that PHL could with reasonable diligence have discovered its mistake before14 July 1998 . In practice, therefore, I can see no obstacle to PHL pursuing its mistake-based claims for periods before July 1998, always assuming that section 320 is invalid. 256. The claimants also suggested that it would in any event be possible for the claims of PHL to be related back to the date of issue of the original claim form by Prudential. I have no hesitation in rejecting that submission. The claim by PHL cannot be regarded as a claim made by Prudential. It is a claim made by a different company, relating to different dividends paid at different times. Even if the claim could be said to arise out of substantially the same facts as Prudential’s claim, that would not avail PHL, because it is a different party. 257. The second question, assuming section 320 to be invalid, is whether the ACT claims can be related back to the dates of the respective claim forms. The question is probably academic, since it seems to me that the claimants would probably be able to rely on section 32(1)(c) on the ground that they could not have been aware of the invalidity of the ACT provisions before, at the earliest, the decision in FII (ECJ) I in December 2006: compare FII (High Court) at paragraph [267]. In case it matters, however, I will briefly state my views on the question.”
“11. Issues VIII. 1-2 are answered in light of [FII CJEU3] as follows: The claims in mistake-based restitution (that is those successful claims listed in paragraph 8.A above) are not subject to the limitation period insection 320 of the Finance Act 2004 and are in time.”
“158. The judge therefore had to decide (on the assumption that section 320 was valid) whether the amended claims relating to ACT arose out of the same or substantially the same facts as the claims already pleaded. He decided that they did. However, he said that his decision on that point was of little practical consequence because if section 320 was invalid, as was likely, Prudential would be entitled to rely on an extension of the limitation period undersection 32(1)(c) of the Limitation Act 1980 which extends the limitation period in cases of relief from the consequences of a mistake. It was clear from the transcript that this was common ground. HMRC wished to appeal on the question whether the judge was right in what he decided; and also wished to argue that Prudential could with reasonable diligence have discovered the mistake earlier than it did. This was not an allegation that had been pleaded or raised before. Since the question of extending the limitation period under section 32(1)(c) was common ground before the judge, we refused to permit HMRC to argue the latter point. In the light of that an appeal against the judge’s decision on the question whether the amended claims arose out of the same or substantially the same facts as the pleaded claims could have had no practical effect on the judge’s order; so we excluded that issue from the appeal as well.”
“…the construction of a judicial order, like that of any other legal instrument, is a single coherent process. It depends on what the language of the order would convey, in the circumstances in which the Court made it, so far as these circumstances were before the Court and patent to the parties. The reasons for making the order which are given by the Court in its judgment are an overt and authoritative statement of the circumstances which it regarded as relevant. They are therefore always admissible to construe the order. In particular, the interpretation of an order may be critically affected by knowing what the Court considered to be the issue which its order was supposed to resolve.”
“11. Issues VIII. 1-2 are answered … as follows: The claims in mistake-based restitution (that is those successful claims listed in paragraph 8.A above) are …in time.”
“157. In the main proceedings, it is apparent from para 10(6) of the KStG [ie the Austrian tax legislation] that, under the imputation system concerned, dividends distributed by non-resident companies are included in the tax base of the company receiving them, thereby reducing, when a loss is recorded for the tax year in question, the amount of that loss by the amount of the dividends received. The amount of the loss that can be carried forward to subsequent tax years is thus reduced to the same extent. By contrast, dividends from resident companies, which are exempt, do not affect the tax base of the company receiving the dividends or, therefore, any losses that it may be able to carry forward. 158. It follows that, even if dividends distributed by a non-resident company and received by a resident company do not have corporation tax charged on them in the member state where the latter company is established in respect of the tax year in which those dividends have been received, the reduction of the losses of the company receiving the dividends is liable to result for that company, if the credit for the tax paid by the company making the distribution is not carried forward, in economic double taxation on the dividends in subsequent tax years when its results are positive (see, to this effect, Belgium v NV Cobelfret (Case C-138/07 )[2009] STC 1127 ,[2009] ECR I-731 , paras 39 and 40, and the order in Belgium v KBC Bank NV (Joined Cases C-439/07 and C-499/07)[2009] ECR I-4409 , paras 39 and 40). By contrast, there is no risk of economic double taxation for nationally sourced dividends, because the exemption method is applied to them. 159. Where national legislation, such as that at issue in the main proceedings, does not provide for the credit for the corporation tax paid in the state where the company distributing the dividends is established to be carried forward, foreign-sourced dividends suffer, in a system such as that at issue in the main proceedings, higher taxation than that resulting from application of the exemption method for nationally sourced dividends. 160. In light of what is stated in para 156 of the present judgment, art 63 TFEU must be considered to preclude such legislation.”
“131. … As a result of the inability to carry forward unused credits, tax was liable to be paid in a subsequent year which would not have been payable if the unused credits had been carried forward. The consequence was indirect economic double taxation.”
“138. In other words, the later tax liability arising from the failure of the Austrian tax system to enable the unused DTR credits to be carried forward amounted to indirect taxation of the earlier dividend income. It had not been directly taxed, but full relief had not been given for the foreign tax paid (or for the FNR [ie foreign nominal rate]). The result was unlawful economic double taxation, equivalent in effect to the postponement of an unlawful tax charge on the dividend income until a later year.”
“145. … the problem can be resolved by disapplying the domestic rule that the DTR credit given in respect of particular income can only be allowed against tax computed by reference to the same income, to the extent that it prevents unused DTR credits from being carried forward and applied against tax liabilities arising in subsequent years, and giving effect instead to the EU rule that unused DTR credits (calculated on a FNR basis) can be carried forward for use against tax liabilities arising in subsequent years…. Looking to the future, therefore, any unused DTR credits (calculated on a FNR basis) must in principle be regarded as remaining available to be applied against other income in subsequent years, notwithstanding any statutory provisions or other domestic rules of law to the contrary effect.”
“146. What, however, of the situation where tax has already been paid as a result of the inability under domestic law to carry forward unused DTR? In that situation, the continued availability of the unused DTR credits cannot be considered to meet the EU requirement of “effective legal protection”, since the state has received a payment of unlawfully levied tax at some point in the past and has had the use of the money since then, while the claimants have been out of pocket. Such circumstances fall within the San Giorgio principle, and call under EU law for the restitution of the tax, together with an award of interest: see, for example, the CJEU’s judgment in Littlewoods[2012] STC 1714 , paras 25-26.”
“155. … it is clear that a San Giorgio claim lies for the recovery of tax which was paid as a result of the impossibility of carrying forward unused DTR credits. The levying of the tax in question was unlawful under EU law, because it involved the less favourable treatment of foreign-sourced dividends than domestic-sourced dividends. It was for that very reason – because it would result in taxation which was incompatible with EU law – that the inability to carry forward the DTR credits was held in Salinen to be contrary to article 63 TFEU.”
“158. Accordingly, we conclude that, in so far as tax was paid as a result of the inability to carry forward unused DTR credits, calculated at the higher of the FNR rate and the tax paid, a claim lies in restitution to recover that tax, together with interest, subject to the law of limitation.”
“1. Claims for declarations that sections 208 and 18Schedule D Case V of the Income and Corporation Taxes Act 1988 in so far as they concern the payment of dividends and distributions from a company resident in another Member State of the European Union or the European Economic Area to a company resident in the United Kingdom and the Defendant’s application of those sections to the Claimant are contrary to the articles of the European Economic Community Treaty referred to in the Particulars of Claim; 2. Claims for restitution of (and/or compensation for) monies paid or liable to be paid, loss, expense and damage suffered by the Claimant pursuant to a mistake of law and/or demands by the Defendant under the provisions referred to, those demands being contrary to the articles of the Treaty referred to above.”
“The receipt of the Dividend Income gave rise to an immediate tax charge on the Claimant receiving it as it amounted to taxable income within the terms ofs.18 Schedule D Case V of the Income and Corporation Taxes Act 1988 (“ICTA”). Had the Portfolio Companies been UK resident companies, the Claimants would not have been chargeable to corporation tax upon the Dividend Income by reason ofsection 208 of ICTA . The approximate liability to corporation tax for each Claimant is also set out in the Schedule.”
“(b) A declaration that the Claimants are not chargeable to corporation tax in respect of the dividends referred to in paragraph 2 above and restitution of (and/or compensation for) monies paid or liable to be paid, losses, expense or damage suffered by the Claimants in the circumstances referred to in paragraph 3 above pursuant to a mistake of law and/or demands by the Defendant, those demands being contrary to the Articles of the Treaty.”
“3. Claims for restitution of (and/or compensation for) monies paid or liable to be paid, reliefs used, loss, expense and damage suffered by the Claimants pursuant to a mistake of law and/or demands by the Defendant under the provisions referred to, those demands being contrary to the articles of the Treaty referred to above.”
“(b) A declaration that the Claimants are not chargeable to corporation tax in respect of the dividends referred to in paragraph 2 above and restitution of (and/or compensation or damages for) monies paid or liable to be paid, reliefs used, losses, expense or damage suffered by the Claimants in the circumstances referred to above pursuant to a mistake of law and/or demands by the Defendants, those demands being contrary to the Articles of the Treaty.”
“(e) Restitution of (and/or compensation or damages for) monies paid or liable to be paid, reliefs used, losses, expense or damage suffered by the Claimants in the circumstances referred to in these Particulars pursuant to a mistake of law and/or demands by the Defendants, those demands being contrary to the Articles of the Treaty.”
“16.4 (1) Particulars of claim must include– (a) a concise statement of the facts on which the claimant relies.” (a) a concise statement of the facts on which the claimant relies.”
“A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person.”
“121. I also consider that the pleadings summarised in paragraphs 116 and 117 above [ie the 2003 brief details of claim and Particulars of Claim] comply, albeit in a brief way, with Lord Burrows’ guidance set out in paragraph 119.iii) above [ie in Samsoondar]. It is asserted that HMRC were enriched at the expense of the Claimants because the Claimants made actual payments of tax to HMRC. It is said that the enrichment was “unjust” because the payments were made as a consequence of a mistake of law, namely that the UK’s corporation tax system complied with EU law, when it did not. 122. HMRC’s argument that the Claimants’ pleadings did not comply withCPR 16.4 is based on the proposition that they failed to identify the precise payments that “enriched”
“126. That, I consider, also deals with HMRC’s objection to the effect that the tax that is the subject of the Pleading Issue might have been paid only in accounting periods subsequent to that in which AXAIUK made its corporation tax claims. The parties were agreed that a claim in restitution can succeed only if an actual payment has been made which unjustly enriches the recipient. Therefore, if at the time AXAIUK made its corporation tax claims, HMRC had asked for full particulars of the payments said to have resulted in unjust enrichment, AXAIUK would not have been able to substantiate its claim by reference to payments which had not yet been made. To that extent, therefore, its claim might have failed. However, in my judgment for the reasons I have given it had still pleaded a claim based in unjust enrichment.”
“125. The flaw in [Mr Ewart’s] submission is that, as has been made clear in both Salinen and FII SC3, a claim for restitution of tax overpaid in the example set out in paragraph 108 is in effect a claim for restitution of tax overpaid on the overseas dividends themselves, rather than a claim for restitution of “other tax” as Mr Ewart submitted.”
“51(1) This paragraph applies where— (a) a person has paid an amount by way of tax but believes that the tax was not due, or (b) a person has been assessed as liable to pay an amount by way of tax, or there has been a determination or direction to that effect, but the person believes that the tax is not due. (2) The person may make a claim to the Commissioners for Her Majesty’s Revenue and Customs for repayment or discharge of the amount. … (6) The Commissioners for Her Majesty’s Revenue and Customs are not liable to give relief in respect of a case described in sub-paragraph (1)(a) or (b) except as provided— (a) by this Schedule and Schedule 1A to theTaxes Management Act 1970 (following a claim under this paragraph), or (b) by or under another provision of the Corporation Tax Acts.” (a) a person has paid an amount by way of tax but believes that the tax was not due, or (b) a person has been assessed as liable to pay an amount by way of tax, or there has been a determination or direction to that effect, but the person believes that the tax is not due. (a) by this Schedule and Schedule 1A to theTaxes Management Act 1970 (following a claim under this paragraph), or (b) by or under another provision of the Corporation Tax Acts.”