Matalan Retail Ltd v Revenue and Customs [2009] EWHC 2046 (Ch)

“In reference to our recent discussions relating to the swimwear reclaim which you gave 3 months from the date of the Customs decision to submit. This worked out at 3rd June. You also agreed that the reclaim would be accepted going back three years from the date of the original BTI decision from Customs (September 2004). As I explained in our last conversation, we received a letter on 4 March which stated: “ Based on all of the information above we now consider that the swimsuit classified on BTI GB113485192 is classified to commodity code 6112411000”

“ As discussed, further to my e-mail of 8 March 05 and your appeal against the BTI decision, I can confirm that the time limit for submitting the final claim (i.e. by duty value) will be extended to one month from the date of receipt of the Customs appeal decision Due to the volume of supporting documentation it is not necessary to supply this to Customs when the full claim is submitted but it must be retained so that the claim can be verified by Customs before repayment is authorised. As suggested, I would appreciate if you can let me know when the Customs appeal decision is received.”

“Thread wholly of localised rubber, of which any cross-sectional dimension exceeds 5mm, is to be classified as strip, rods or profile shapes, of heading 40. 08.” and on the HSEN to heading 40.07 which provides that the heading includes: “ thread wholly of vulcanised rubber (single strand) provided that no cross-sectional dimension exceeds 5mm.”

“ The Commissioners hereby withdraw the disputed decision. The Appellant is hereby invited to withdraw its appeal and is reminded in that regard that such withdrawal would not prevent its making application to the Tribunal in respect of costs (rule 16 of the Tribunal Rules).”

“ regardless of the position with any other claim, Matalan’s claim can be processed now, given that the local officer has verified the claim?”

“ I can confirm that all duty re-payment claims for swimwear including Matalan are being treated as protected claims but will not be processed until after the next meeting of the Textile Sector of the Nomenclature Committee in October. The classification of these items is complex therefore until further clarification is received from Brussels we are unable to progress any application for repayment.”

“ that all protected reclaims held and accepted by Customs prior to [20 April 2006] should be covered by the decision. If they were not covered by the appeal, the reclaims should have been rejected by Customs at the point of submission. Given this, I have recommended that Matalan do not submit further samples to Customs, as requested by your letter dated 21 August 2006. We believe the protected reclaims already launched should instead be settled….”

“ I was thinking along the lines of what the issue is, what happened about the withdrawal from Tribunal, what claims are in the offing, what to look out for at other traders, and the extent to which claims must be on all fours with ……/Matalan to be paid.”

“ In view of the fact that we have withdrawn our decision on Matalan, I think we are on a losing wicket if we try to block claims for what seem to be essentially the same goods (in classification terms) from other traders.. Idris and I agreed to hang fire until Aileeen got back from Brussels; if they decide that the garment in question is, in fact, subject to a far higher rate after all, we will reject our claims (although where this leaves Matalan I don't know) ..”

“I have spoken to two LBS [Local Business Service] managers… and they have informed me that although HMRC withdrew from the tribunal, T&SO still don't agree with the change of commodity code for these goods and have referred the case to Brussels, who next meet either in July or October.”

“ I understand that the Matalan ruling was withdrawn on solicitor’s advice because they felt that the General Interpretation Rules used as a basis for the disputed ruling had not been correctly applied and that this would weaken our case at tribunal and lead to further litigation. PWC are presumably using this for all of their other claimants in that they will argue that the assumptions behind the 6112419000 classification are flawed and the goods should be classified as 6112411000.”

“As one of our large companies has challenged this opinion it is imperative that discussion takes place between all Member States (MS) at our next Textile Sector meeting. If all MS are in agreement with the UK we believe clarification should be established by a Regulation. If you are in agreement I will prepare a draft Regulation in advance of the meeting which can be amended if necessary.”

“The [Matalan] case was withdrawn because Counsel considered that our case was weak. However, the classification of swimwear and the definition of rubber ‘thread’ has consequently been submitted, by yourself, for consideration to the NC [Nomenclature Committee] (Textiles). In my opinion, the NDRC can accept protected (i.e. provisional) repayment claims, because of future discussions. However, I do not consider that any refunds can be made for these goods, until the NC has fully considered the issue and maybe approved a classification regulation, especially if it transpires that the UK's line is accepted.”

“ ... The swimwear claim has still not been repaid. Everything is finalised between us, Stewart Rayton and yourself and the claim forwarded to Dover for processing, this was at the end of June. I had heard nothing by the end of July so phoned Dover requesting an update to why there was a delay in repaying. They advised they had lost the claim. Stewart Rayton’s colleague then re-sent everything to them. Two weeks later I still haven't heard anything so decided to phone them. I have just been told that they are waiting for confirmation off Stewart or yourself that they are allowed to repay us in light of this issue being taken to the commission. I did try and explain that we are different to anyone else because Customs conceded just before we were due to go to Tribunal and that Stewart had already asked this question of you and agreed it was to be paid but they want confirmation. The ladies [sic] name at Dover is Jan Hunt ….There appears to be a severe lack of communication between the repayment unit and local officers. Do they not have some sort of activity boundaries statement in place?.”

“Aileen Andrews does not want repayment.”

“The company has been visited & my staff have verified the claim in detail. In view of the information above [which was as to the percentage weight of rubber in the relevant garments], it is still our recommendation that the claim is repaid. I accept the wider implications involved but would highlight the delays from the trader’s perspective.”

“Article 1 The goods described in column 1 of the table set out in the Annex shall be classified within the Combined Nomenclature under the CN-code indicated in column 2 of that table.”

“Since the rubber is added to the garment but not contained in the fabric this garment cannot be classified in subheading 6112 41 10.”

“In my view it is necessary to approach the case on the footing that there was, or is deemed to have been, a valid BTI in heading 6112 41 10 from 22nd September 2004, when the original, rescinded, BTI was issued, to 3 July 2007, when the regulation came into force.”

“the correspondence to which article 12 (3) of [the Code] alludes is … to be limited to details of the description which might have a bearing on classification.”

“the further argument that the regulation, which equally describes only one garment , is nevertheless to be applied to all garments which, as far as the tariff is concerned, are indistinguishable from it.”

“85Settling appeals by agreement (1) Subject to the provisions of this section, where a person gives notice of appeal under section 83 and, before the appeal is determined by a tribunal, the Commissioners and the appellant come to an agreement (whether in writing or otherwise) under the terms of which the decision under appeal is to be treated— (a) as upheld without variation, or (b) as varied in a particular manner, or (c) as discharged or cancelled, the like consequences shall ensue for all purposes as would have ensued if, at the time when the agreement was come to, a tribunal had determined the appeal in accordance with the terms of the agreement (including any terms as to costs). … (4) Where— (a) a person who has given a notice of appeal notifies the Commissioners, whether orally or in writing, that he desires not to proceed with the appeal; and (b) 30 days have elapsed since the giving of the notification without the Commissioners giving to the appellant notice in writing indicating that they are unwilling that the appeal should be treated as withdrawn, the preceding provisions of this section shall have effect as if, at the date of the appellant's notification, the appellant and the Commissioners had come to an agreement, orally or in writing, as the case may be, that the decision under appeal should be upheld without variation.”

“22 As Aldous LJ said during the hearing, the authorities taken as a whole tends to encourage elaborate technical submissions which many percipient non-lawyers would scarcely understand. Cause of action estoppel and issue estoppel are not readily understandable phrases to a non-lawyer. It should not be necessary to have to pick for hours over the precise text of a dozen or so Law Reports to find out what in the end is reasonably straightforward and understandable law capable of being simply expressed. I would try to express it simply as follows. 23. If a claim has been explicitly determined in previous concluded proceedings between the same parties, that claim cannot be raised again, other than on an appeal, unless there is a fraud or collusion. If a necessary element of a claim has been explicitly determined in previous concluded proceedings between the same parties, that issue cannot be raised again, if, as is likely but not inevitable, it would be an abuse to raise that issue again. This may also extend to an implicitly necessary element of the previous determination. The previous determination may include a settlement. If a claim or issue has not been determined in previous concluded proceedings between the same parties, there may nevertheless be circumstances in which, as a matter of public and private interest on a broad merits-based procedural judgment, it would be an abuse for a party to raise that claim or issue. Such circumstances may, depending on the facts, exist where the litigant could and should have raised the matter in question in earlier concluded proceedings. There may in particular cases be other elements of abuse, including oppression of another party; but abuse of process is a concept which defies precise definition in the abstract. The court will only stop a claim as an abuse after most careful consideration.”

“It may very well be, as has been convincingly argued ... that what is now taken to be the rule in Henderson v Henderson has diverged from the ruling which Wigram V-C made which was addressed to res judicata. But Henderson v Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be fired, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present later proceedings will be much more obviously abusive, and there will rarely be a finding of an abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because the matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgement which takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.”

“Furthermore the common understanding of the parties that the BTI as originally issued covered not only the items specifically described in it but all others of a like kind meant that, on its revocation, the replacement BTI similarly covered all the garments of a like kind. The Commissioners were accordingly precluded from arguing that they were obliged to meet Matalan’s repayment claim only so far as it related to the specific item: they were required to meet it all.”

“ Decisions on income tax, land tax and rating assessments constitute an established exception to the general as to res judicata. Decisions on one year's tax or rate, or one rating valuation or assessment list, do not create estoppels in respect of another year's tax or rate, or a later valuation or assessment list. Such decisions often involve changing facts, and where this is the case it is impossible in any event to hold the parties estopped from one year to another. “This assessment seems inherently to be of a passing nature”

“ high and frequent authority for the proposition that it is not in the nature of a decision on one rate or tax that it should settle anything more than the bare issue of that one liability, and that, consequently, it cannot constitute an estoppel when a new issue of liability to a succeeding year’ s rate or tax comes up for adjudication. The question of this liability is a “new question.”

“The valuation officer has a public duty to perform by making periodically every five years a valuation list of all hereditaments, with certain exceptions, in his rating area. He must necessarily reconsider and revise the previous valuation list. He has no personal interest in any appeals taken against his valuations, and has a duty to hold the scales as fairly as he can among the ratepayers affected, the occupiers of the various hereditaments. The general body of ratepayers is constantly changing. With each quinquennium the revaluation will affect a new body of ratepayers. I doubt if the valuation officer owing such a duty to an ever-changing body of ratepayers can be regarded as always the same party in the sense in which that expression is used for the application of the rule of res judicata. What if the appellant society changes its habitat, and moves into another rating area with a different valuation officer? I emphasise these aspects of the functions of a valuation officer under the statute, for they lead to what I regard as the true answer to the submission for the appellants, which is that a public officer in the position of the respondent cannot be estopped from carrying out his duties under the statute.”

“The critical thing is that the dispute which alone can be determined by any decision given in the course of these proceedings is limited to one subject only, the amount of the assessable income for the year in which the assessment is challenged. It is only the amount of that assessable income that is concluded by an agreement or by a decision on an appeal against it (see section 75). Although, of course, the process of arriving at the necessary decision is likely to involve consideration of questions of law, turning upon the construction of the Ordinance or of other statutes or upon the general law, and the tribunal will have to form its view on those questions, all these questions have to be treated as collateral or incidental to what is the only issue that is truly submitted to determination (cf Reg v Hutchings).”

“… the commissioners [by which he meant the judicial body of commissioners and not HMRC] are bound to treat as res judicata any decision of a competent court to which the revenue were parties on any issue which may come before them.”

“But it would do no more. The taxpayer would still have to satisfy the special commissioners that the assessment was wrong and, so far as it is depended upon facts, to do so by lawful evidence of them. The judgment of the court would not be lawful evidence of the facts find therein. Those facts would have to be approved afresh by the taxpayer if the grounds on which he sought reduction of the assessment depended on those facts.”

“ … circumstances justify limiting the finality of the conclusion in Customs controversies to the identical importation. The business of importing is carried on by large houses between whom and the Government there are innumerable transactions ... and there are constant differences as to proper classification or similar importations. The evidence which may be presented in one case may be much varied in the next. The importance of a classification and its far-reaching effect may not have been clearly understood ... when the first litigation was carried through. One large importing house may secure a judgement in its favour ... If that house can rely upon a conclusion in early litigation as one which is to remain final as to it ... while a similar importations made by another ... may be tried and heard and a different conclusion reached, a most embarrassing situation is presented. The importing house which has ... obtained the favourable position permanently binding on the Government will be able to import the goods at a much better rate than that enjoyed by ... its competitors. Such a result would lead to inequality in the administration of the customs law, to discrimination and to great injustice and confusion. In the same way if the first decision were against a large importing house, and its competitors ... succeeded in securing a different conclusion, the first litigant, bound by the judgement against it ... must permanently do business ... at great and inequitable disadvantage with its competitors.”