IPS UMBRELLA LIMITED v Revenue & Customs (Procedure - Application by appellant to amend grounds of appeal) [2022] UKFTT 00081 (TC)

FTT-Tax
IPS UMBRELLA LIMITED v Revenue & Customs (Procedure - Application by appellant to amend grounds of appeal)
[2022] UKFTT 00081 (TC) · 2022-02-21
[36]“36. An application to amend will be refused if it is clear that the proposed amendment has no real prospect of success. The test to be applied is the same as that for summary judgment under CPR Part 24. Thus the applicant has to have a case which is better than merely arguable. The court may reject an amendment seeking to raise a version of the facts of the case which is inherently implausible, self-contradictory or is not supported by contemporaneous documentation.[37]Beyond that, the relevant principles applying to very late applications to amend are well known. I have been referred to a number of authorities: Swain-Mason v Mills & Reeve [2011] 1 WLR 2735 (at paras. 69 to 72, 85 and 106); Worldwide Corporation Ltd v GPT Ltd [CA Transcript No 1835] 2 December 1988; Hague Plant Limited v Hague [2014] EWCA Civ 1609 (at paras. 27 to 33); Dany Lions Ltd v Bristol Cars Ltd [2014] EWHC 928 (QB) (at paras. 4 to 7 and 29); Durley House Ltd v Firmdale Hotels plc [2014] EWHC 2608 (Ch) (at paras. 31 and 32); Mitchell v News Group Newspapers [2013] EWCA Civ 1537 . Drawing these authorities together, the relevant principles can be stated simply as follows : a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted; b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission; c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept; d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done; e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation; f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay; g) a much stricter view is taken nowadays of non-compliance with the Civil Procedure Rules and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so.” “… the law on pleadings is clear: the appellant must state what are its grounds of appeal. If it does not, it cannot rely on those grounds. And if it wants to rely on a new grounds of appeal, as it does here, it must apply for permission to amend. And Quah and Denley set out the principles the Tribunal will consider in determining such an application.”23. Clearly, as no hearing date has been lost, it is accepted that the present case cannot be described as “very late” in the sense described by Carr J. However, in my judgment, the delay, for which there is no adequate explanation, cannot be described as anything other than significant and serious.24. The Application was made on 9 June 2020, some eight months after IPS had been notified by Accountax that it no longer considered the appeal “to be viable”, ten months after receiving the statement of case and more than a year after IPS had further particularised its grounds of appeal. Although Mr Shand does say that ITS consulted its present advisers for a “second opinion” he does not say when it did so or explain why it took “several months of consultation” before the Application was made. As such, I find myself in a similar position to Judge Mosedale in Asiana , who said at [27], albeit that in Asiana there was an even greater delay than in the present case:
“… while raising a new ground of appeal now is not ‘very late’ in the sense of jeopardising a hearing date, it is extremely late in all other senses as the appeal has been running many years …” 25. Not only is the Application late but it is also contrary to the contemporaneous documentation, the Statement of Main Terms and Conditions of Employment (see paragraph 9, above) and a complete volte face from the case that IPS originally sought to advance. Although the interpretation and effect of that document is a matter for the Tribunal, as Carr J observed at [36] in Quah this might be enough in itself for the Application to be rejected. 26. In so far as IPS seeks to blame its previous advisers for not advancing the grounds of appeal on which it now seeks to rely, as Ward LJ observed, at 1675, in Hytec Information Systems v Coventry City Council [1997] 1 WLR 666 (which was not cited by either party), when considering the question of whether a litigant’s case should be struck out for breach of an “unless” order that was said to be the fault of counsel rather than the litigant itself: “ Ordinarily this court should not distinguish between the litigant himself and his advisers. There are good reasons why the court should not: firstly, if anyone is to suffer for the failure of the solicitor it is better that it be the client than another party to the litigation; secondly, the disgruntled client may in appropriate cases have his remedies in damages or in respect of the wasted costs; thirdly, it seems to me that it would become a charter for the incompetent (as Mr MacGregor eloquently put it) were this court to allow almost impossible investigations in apportioning blame between solicitor and counsel on the one hand, or between themselves and their client on the other.” 27. In Asiana Judge Mosedale said: “30. The appellant’s case that it was not to be blamed for its representative’s errors rested on the CPR and the Upper Tribunal decision in O’Flaherty [2013] UKUT 161 (TCC) where the Upper Tribunal cited Sayers v Clarke Walker [2002] I WLR 3095 which pointed out that the CPR required the court to consider whether the failure to comply was caused by the party or its legal representative and that therefore it was a ‘relevant factor that the failure to comply was caused by the party’s legal representative and not by the party himself.’ 31. I am of course bound by what the Upper Tribunal said. Nevertheless, I would point out that where the fault lay with the representative it was only said to be a ‘relevant’ factor and not that it was necessarily an exonerating factor. It is difficult to see how it could be an exonerating factor save in exceptional circumstances: a party is responsible for how it conducts litigation; that includes responsibility for the actions of its representative whom it has chosen to appoint. Moreover, while the non-compliant party may well feel aggrieved if it is let down by its representative, it by no means follows that the errors of one party’s representative should be visited upon the other party who had no choice over who its opponent appointed as representative and certainly has no rights to sue his opponent’s representative in contract or negligence. The Tribunal is called upon to do justice between the parties and I struggle to see how it can be just to visit the errors of one party’s representative on the other party, which is in practice may be the result if a party is forgiven its non-compliance arising from its own representative’s failures.”
Adopting Judge Mosedale’s comments to the present case, it would clearly be unfair if any alleged errors of IPS’s former representative were to be visited on HMRC. HMRC would also be prejudiced if the Application was allowed as this would effectively lead to the re-commencement of the appeal with all that it would entail including the need for the provision of a new statement of case. 28. I accept that, given the sums involved (£761,253 plus interest), IPS would suffer hardship if it lost the appeal for procedural reasons as may be the case if the Application is dismissed. But, as the Upper Tribunal (Mann J and Judge Jonathan Richards) recognised in HMRC v Katib [2019] STC 2106 at [60] in allowing HMRC’s appeal against the conclusion of the First-tier Tribunal (“FTT”) to allow Mr Katib to appeal out of time as the financial consequences of him not being able to appeal were very serious as his means were limited such that he would lose his home, saying, at [60]: “We have considered this factor anxiously for ourselves. However, again, when properly analysed, we do not think that this factor is as weighty as the FTT said it was. The core point is that (on the evidence available to the FTT) Mr Katib would suffer hardship if he (in effect) lost the appeal for procedural reasons. However, that again is a common feature which could be propounded by large numbers of appellants, and in the circumstances we do not give it sufficient weight to overcome the difficulties posed by the fact that the delays were very significant, and there was no good reason for them.” 29. Therefore, for the reasons above I have come to the conclusion that the Application cannot succeed and have directed accordingly. I have also directed that the s 72 Appeal be joined to the present appeal to enable both to proceed and be heard together. Directions 30. It is therefore directed that: (1) The Application is dismissed (2) Appeals under references TC/2018/06372 (the s 72 Appeal) and TC/2021/04976 be joined to proceed and be heard together by the same Tribunal. (3) Not later than 60 days from the date hereof the respondents shall provide a statement of case for TC/2021/04976 to the Tribunal and the appellant in accordance with rule 25 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. (4) Appeal under reference TC/2018/06372 be stayed until the statement of case in appeal TC/2021/04976 is provided to Tribunal and appellant (5) Liberty to apply 31. The Tribunal will make further directions for the progress of the appeals following the provision of the statement of case by HMRC in accordance with the direction in paragraph 30(5), above. Right to apply for permission to appeal 32. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. JOHN BROOKS TRIBUNAL JUDGE Release date: 25 FEBRUARY 2022

Cited in 1 later judgment