LADY BLACK: (with whom Lord
Reed, Lord Sumption and Lord Briggs agree)
1.
The Finance Act 2015 introduced a regulatory scheme requiring
wholesalers supplying duty-paid alcohol to be approved by Her Majesty’s Revenue
and Customs Commissioners (“HMRC” or “the Commissioners”) under section 88C of
the Alcoholic Liquor Duties Act 1979 (“ALDA”). Approval may only be given if
HMRC are satisfied that the person seeking to carry on the activity is a fit
and proper person to do so.
2.
OWD, Hollandwest and Budge Brands (“the wholesalers”) were already
involved in the wholesale supply of duty-paid alcohol when the scheme was
introduced. They needed HMRC approval to continue to trade. Approval was
refused because HMRC were not satisfied that they were fit and proper. Each
wholesaler appealed to the First-tier Tribunal (“FTT”) against the decision,
inviting HMRC to permit them to continue trading whilst the appeals were
pending. When HMRC refused to permit this, the wholesalers brought judicial
review proceedings in the High Court challenging that refusal, and seeking
orders that would permit them to carry on trading until after the determination
of the FTT appeal. Having failed in the High Court, they obtained a measure of
relief in the Court of Appeal, but on terms that they did not find
satisfactory. Both they and HMRC appeal to this court against aspects of the
Court of Appeal’s decision.
The principal questions for determination in this court
3.
Two principal questions arise for determination on the appeal. The
first, in broad outline, is this: when HMRC have refused a person’s application
for approval under section 88C of ALDA, what, if any, power do they have to
permit that person to carry on trading pending the determination of an appeal
to the FTT?
4.
HMRC’s case is that they have no power to grant temporary approval
pending the determination of a wholesaler’s appeal. The wholesalers argue that
section 88C of ALDA enables HMRC to grant such approval or, failing that, HMRC
can do so under section 9 of the Commissioners for Revenue and Customs Act 2005
(“the 2005 Act”). The Court of Appeal held that temporary approval can be
granted to a person under section 88C of ALDA, but not under section 9 of the
2005 Act. However, contrary to the wholesalers’ argument, it held that
considerations of hardship and the impact on the person’s appeal rights were
irrelevant to the decision whether to grant temporary approval to cover the
appeal period, and that HMRC’s focus must be purely on whether the person was
fit and proper for that limited purpose. The issues that require attention in
relation to this first question are, therefore, whether HMRC have any power at
all, and if so, on what basis it is to be exercised.
5.
The second question concerns the position if HMRC either do not have
power to permit trading pending the determination of an appeal to the FTT, or
have power but decline to exercise it. In those circumstances, what interim
relief, if any, can the High Court grant to ensure that the appeal to the FTT
is not thwarted by the wholesaler going out of business whilst awaiting its
determination?
6.
The Court of Appeal held that the High Court was able to grant
injunctive relief under section 37 of the Senior Courts Act 1981. Drawing on CC
& C Ltd v Revenue and Customs Comrs [2014] EWCA Civ 1653; [2015] 1 WLR 4043 (“CC & C Ltd”), it held that relief would only be granted in
rare circumstances, but that this could include where there was a clear and
properly evidenced claim that a failure to grant interim relief would render
the appeal to the FTT illusory. This accorded with the position of HMRC. The
wholesalers disagreed with the narrow limits imposed by the Court of Appeal on
the scope for relief, but were refused permission to appeal to this court on
that ground. Accordingly, the hearing before us began on the basis that the
High Court had power to grant injunctive relief, exercisable in exceptional
circumstances.
7.
As a result of questions which arose in the course of oral argument
about the High Court’s power, we received further written submissions on the
point, after the hearing. Although both parties continued to support the
existence of a power in the High Court, the issue needs attention in this
judgment.
The regulatory scheme: background
8.
The regulatory scheme introduced by the Finance Act 2015 was designed to
combat fraud in relation to tax due on alcohol. Alcoholic liquors are subject
to excise duty. Generally the charge to duty arises at the moment of
importation into the United Kingdom, or at the moment of production here. The
charge normally falls exclusively on the distiller/manufacturer/importer of
alcohol. The duty paid is then reflected in the price of the alcohol as it
passes down the supply chain. Alcohol was, however, entering the supply chain
without the requisite duty being paid, resulting in a significant loss of tax
revenue. There had long been a requirement for those dealing in duty-suspended
alcohol to be approved by HMRC, but there was no equivalent requirement for those
dealing in duty-paid alcohol. The introduction of the present scheme, known as
the Alcohol Wholesaler Registration Scheme (“AWRS”), closed that gap.
The statutory provisions
9.
Section 54 of the Finance Act 2015 inserted Part 6A and Schedule 2B into
ALDA. Much of the fine detail of the statutory provisions is not necessary for
present purposes and what follows is, at times, a broad summary only.
10.
A central concept is “controlled activity”. By virtue of section 88A(8),
“controlled activity” means selling controlled liquor wholesale, offering it
for sale wholesale, or arranging in the course of a trade or business for it to
be sold or offered for sale wholesale. By section 88A(2), a sale is of
“controlled liquor” if it is a sale of dutiable alcoholic liquor on which duty
is charged under the Act at a rate greater than nil, with the excise duty point
for the liquor falling at or before the time of the sale. By section 88A(3),
subject to some exceptions, the sale is “wholesale” if the seller makes the
sale, in the course of his trade or business, to a trade or business buyer, for
the buyer to sell or supply in the course of his trade or business. It must be
noted that one of the exceptions is, by section 88A(3)(d), “an excluded sale”.
Section 88A(7) defines a sale as an “excluded sale” if it is “of a description
prescribed by or under regulations made by the Commissioners”.
11.
Section 88B gives the Commissioners power to make provision, by
regulations, for certain matters, including as to the cases in which sales are,
or are not, to be treated for the purposes of Part 6A as (amongst other things)
wholesale sales, and sales of controlled liquor.
12.
Section 88C deals with approval to carry on controlled activity. It
provides:
“88C. Approval to
carry on controlled activity
(1) A UK person may not
carry on a controlled activity otherwise than in accordance with an approval
given by the Commissioners under this section.
(2) The Commissioners may
approve a person under this section to carry on a controlled activity only if
they are satisfied that the person is a fit and proper person to carry on the
activity.
(3) The Commissioners may
approve a person under this section to carry on a controlled activity for such
periods and subject to such conditions or restrictions as they may think
fit or as they may by or under regulations made by them prescribe.
(4) The conditions or
restrictions may include conditions or restrictions requiring the controlled
activity to be carried on only at or from premises specified or approved by the
Commissioners.
(5) The Commissioners may
at any time for reasonable cause revoke or vary the terms of an approval under
this section.
(6) In this Part ‘approved
person’ means a person approved under this section to carry on a controlled
activity.”
13.
Section 88D obliges HMRC to maintain a register of approved persons. It
is to contain “such information relating to approved persons as the
Commissioners consider appropriate” (section 88D(2)). HMRC may make publicly
available “such information contained in the register as they consider
necessary to enable those who deal with a person who carries on a controlled
activity to determine whether the person in question is an approved person in
relation to that activity” (section 88D(3)). This publicly available
information is important as section 88F provides that “[a] person may not buy
controlled liquor wholesale from a UK person unless the UK person is an
approved person in relation to the sale.”
14.
Section 88G supports the statutory scheme by establishing various
criminal offences. For example, section 88G(1) makes it an offence to
contravene section 88C(1) by selling liquor wholesale knowing, or having
reasonable grounds to suspect, that the buyer is carrying on a trade or
business and the liquor is for sale or supply in the course of that trade or
business. Buying controlled liquor from an unapproved person, contrary to
section 88F, is also an offence, if the person knows or has reasonable grounds
to suspect the unapproved status of the supplier.
The Wholesaling of Controlled Liquor Regulations 2015
15.
The Wholesaling of Controlled Liquor Regulations 2015 (SI 2015/1516) (“the
2015 Regulations”) were made under Part 6A of ALDA. They provide for the manner
in which an application for approval is to be made and processed.
16.
In the present context, the following provisions of the Regulations are
of note:
i)
The application must be on a prescribed form, regulation 3(1).
ii)
If HMRC refuse an application, they must notify the applicant of that
and give reasons, regulation 4(4).
iii)
In addition to any conditions or restrictions imposed by HMRC under
section 88C(3) of ALDA, “the approval of a person is subject to such conditions
and restrictions as the Commissioners may prescribe”, regulation 7.
iv)
HMRC may prescribe descriptions of sales that are excluded sales for the
purposes of Part 6A of ALDA, regulation 10.
v)
Part 6 of the Regulations provides for dutiable alcoholic liquor to be
subject to forfeiture where a person contravenes section 88C or section 88F or
any condition or restriction imposed under Part 6A of ALDA or under the
Regulations.
vi)
By regulation 2, “prescribed” means “prescribed by the Commissioners in
a published notice”.
Excise Notice 2002: Alcohol Wholesaler Registration Scheme
17.
Excise Notice 2002: Alcohol Wholesaler Registration Scheme (“EN2002”)
was made under ALDA and the 2015 Regulations. It explains what the AWRS is
about and addresses various particular aspects of it. It has been amended many
times since its first publication in November 2015. The version which is
relevant to the decisions of HMRC in this case is that in force between 21 June
2016 and 26 March 2017; unless otherwise specified, references are to that
version.
18.
Existing wholesalers who sought approval after the introduction of the
scheme were informed, by the relevant version of EN2002, that they could
continue to trade as normal until receipt of HMRC’s decision (para 6.5).
19.
Para 6.10 set out how HMRC would assess whether an applicant was fit and
proper to carry on a controlled activity. It contains a list of relevant
points, and a general statement that:
“HMRC must be satisfied the
business is genuine and that all persons with an important role or interest in
it are law abiding, responsible, and don’t pose any significant threat in terms
of potential revenue non-compliance or fraud.”
20.
Para 10 dealt with conditions and restrictions. It said that HMRC may
decide to apply specific conditions or restrictions where they consider that a
wholesaler “is fit and proper to be approved but some additional controls are
still needed”, which would be used to address specific concerns HMRC had about
the business. In contrast, if HMRC considered a wholesaler was not fit and
proper to be approved, approval would be refused or revoked rather than
allowing the wholesaler to trade subject to added conditions.
21.
In para 15(4), which dealt with revocation by HMRC of an existing
approval, circumstances were identified in which approval was likely to be
revoked, and it was pointed out that the controlled activity could not be
carried on after revocation. However, the paragraph ended with a passage to
which it will be necessary to return:
“Where HMRC think the
circumstances merit, they may allow a reasonable period of time to wind down
the business, for example, to dispose of any legitimate stock.”
22.
Doubts have been expressed about HMRC’s power to allow a period of grace
in this way. The version of EN2002 published on 27 March 2017 put the position
in relation to disposal of stock on winding down on a rather firmer footing by
providing, under regulation 10 of the 2015 Regulations, for such sales to be
excluded sales.
Challenging a refusal of approval
23.
A wholesaler can challenge HMRC’s refusal of approval by seeking a
review of it by HMRC and/or appealing to the FTT. Sections 13A-16 of the
Finance Act 1994 (“FA 1994”) (as amended by article 1(2) of and Schedule 1 to
the Transfer of Tribunal Functions and Revenue and Customs Appeals Order 2009
(SI 2009/56) govern the review and appeal process.
24.
Reviews are covered by section 15A-F.
By section 15F, the nature and extent of the review are such as appear
appropriate to HMRC in the circumstances, but account must be taken of
representations made. The review may conclude that the decision is to be
upheld, varied, or cancelled.
25.
An appeal to the FTT can be brought
either as an alternative to seeking a review or, where there has been a review,
against the review decision. The provisions as to appeals are set out in
section 16. A central concept is that of a “relevant decision”. This is defined
in section 13A which, in subsection (2)(a)-(j), lists the decisions which are
relevant decisions. A decision for the purposes of Part 6A of ALDA as to
whether or not a person is to be approved and registered, or as to the
conditions or restrictions on approval and registration, features in subsection
(2)(j). By section 16(8) of FA 1994, such a decision is classed as an
“ancillary matter”. Section 16(4) sets out the FTT’s powers on an appeal in
relation to any decision as to an ancillary matter, or any decision on the
review of such a decision. It provides that the tribunal’s powers
“… shall
be confined to a power, where the tribunal are satisfied that the Commissioners
or other person making that decision could not reasonably have arrived at it,
to do one or more of the following, that is to say -
(a) to
direct that the decision, so far as it remains in force, is to cease to have
effect from such time as the tribunal may direct;
(b) to
require the Commissioners to conduct, in accordance with the directions of the
tribunal, a review or further review as appropriate of the original decision;
and
(c) in
the case of a decision which has already been acted on or taken effect and
cannot be remedied by a review or further review as appropriate, to declare the
decision to have been unreasonable and to give directions to the Commissioners
as to the steps to be taken for securing that repetitions of the
unreasonableness do not occur when comparable circumstances arise in future.”
26.
These limited powers contrast with the
wider powers available to the FTT, under section 16(5), when dealing with other
relevant decisions which are not classed as decisions as to “ancillary
matters”. In those appeals, the FTT can also vary the decision or quash it and
substitute its own decision.
27.
It is to be noted that, in ALDA appeals
such as the present ones, FA 1994 gives the FTT no power to suspend the effect
of a challenged decision pending an appeal, nor is any such power contained in
the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (SI
2009/273). This contrasts with the position in appeals relating to relevant
decisions which come within section 13A(2)(a)-(h) of FA 1994, which include a
variety of decisions as to payment of duties, levies, assessments, security and
penalties. Normally, by section 16(3) of FA 1994, an appeal in such a case will
not be entertained unless the amount of duty which HMRC have determined, by the
challenged decision, is payable has been paid or deposited with them. However,
the appeal can proceed without full payment if HMRC issue a certificate stating
that they have accepted such security as appears to them to be adequate, or
that, on the grounds of the hardship that would otherwise be suffered by the
appellant, they do not require security or have accepted such lesser security
as they consider appropriate. If no certificate is issued, the appellant will
be able to bring the appeal nonetheless, if the FTT decides that the
certificate should not have been refused, and are satisfied that HMRC have been
given such security (if any) as it would have been reasonable for them to
accept. The Court of Appeal in the present case said (para 29) that this
amounts to the FTT having “a circumscribed power to provide interim relief”.
The Commissioners of Revenue and Customs Act 2005, section
9
28.
Section 9(1) of the 2005 Act confers “ancillary powers” on HMRC in the
following terms:
“The Commissioners may do anything
which they think -
(a) necessary or expedient
in connection with the exercise of their functions, or
(b) incidental or conducive
to the exercise of their functions.”
29.
Section 51(2) of the 2005 Act provides the following assistance in
interpreting the meaning of “functions”:
“(2) In this Act -
(a) ‘function’ means
any power or duty (including a power or duty that is ancillary to another power
or duty), and
(b) a reference to the
functions of the Commissioners or of officers of Revenue and Customs is a
reference to the functions conferred -
(i) by or by virtue of
this Act, or
(ii) by or by virtue of any
enactment passed or made after the commencement of this Act.”
Issue 1A: what powers do HMRC have under section 88C ALDA
to permit trading pending the determination of an appeal to the FTT?
30.
When HMRC refuse approval under section 88C, do they nevertheless have
power under that section to grant temporary approval pending a wholesaler’s
appeal to the FTT? To recap, HMRC deny that they have any such power under
section 88C, whereas the wholesalers support the conclusion of the Court of Appeal
that there is power, but challenge the Court of Appeal’s conclusion that
hardship and the impact on a wholesaler’s appeal rights are irrelevant to the
exercise of the power.
31.
The Court of Appeal’s reasoning for its conclusion about section 88C is
to be found in paras 52 to 54 of the judgment of Burnett LJ, with whom the
other members of the court agreed. Para 52 deals with HMRC’s submissions. As
Burnett LJ explained, it had been “readily accepted” on behalf of HMRC through
their counsel (then, as now, Sir James Eadie QC) that “subsections (2) and (3)
[of section 88C] ‘hang together’”. It was not a question simply of whether, in
the abstract, a person was fit and proper, HMRC accepting that it was “feasible
for persons to fail to satisfy HMRC that they are fit and proper to conduct a
wholesale alcohol business without conditions, but to satisfy them that they
are fit and proper subject to conditions”. Nevertheless, HMRC submitted that “a
temporary approval lasting a finite period could not be a proper basis to use
the combined operation of the two subsections”. It is important to identify the
precise reason for this submission, which is reflected in HMRC’s submissions to
this court as well. It was, as summarised in the concluding lines of para 52:
“because there would have been no
relevant change of circumstance relating to fitness since the general decision
was made. Mr Eadie QC accepted that the statute envisaged an approval being
given for a limited time but only, as he put it, if HMRC were satisfied on day
one that the person concerned was fit and proper.”
32.
Para 53 set out the following examples of situations in which approval
might properly be limited in some way:
“53. … It is possible to
envisage that HMRC might have well founded concerns about the operation of a
business at one of is locations, but not others. A condition limiting trading
to specified sites might follow. They might consider the involvement of a
particular proprietor, director or senior employee as critical to the grant of
approval. By contrast, they might consider the involvement of a particular
person to be inimical to the grant of approval. They might limit the period of
approval to coincide with the known plans for retirement of an individual of
significance in the business. They might limit the period to enable systems to
be improved about which there is some concern. They might insist on the
production of regular information to meet underlying concerns about record
keeping and the like.”
33.
In the following two paragraphs, Burnett LJ set out his conclusion in
these terms:
“54. A conclusion that a
person is not fit and proper for unconditional approval does not preclude
conditional approval of that person. In my view HMRC
have power under section 88C(3) to grant a temporary approval pending appeal if
they conclude that a person is fit and proper for that limited period,
perhaps with additional conditions. That is a possible conclusion that might be
reached even if a general approval is being denied. In substance, if not in
form, that is what HMRC were doing before 27 March when they purported to grant
30 days or more grace. The focus of a decision would remain whether the person
was fit and proper but for the more limited purpose. Hardship and the impact on
appeal rights would be extraneous considerations. Section
88C does not confer upon HMRC a broad discretionary power of approval but
it is possible that they could conclude that a person is fit and proper for a
limited time to continue trading. To the extent that HMRC apprehended that they
had no power to do what was asked of them by the claimant, in my view they
erred.
55. … there is nothing in
the statutory scheme relied upon by HMRC which excludes the possibility of what
amounts to an ancillary application for temporary approval in the face of a
refusal of the general application.”
34.
In the light of these conclusions, Burnett LJ determined (para 87) that
HMRC’s decisions that they had no power to grant temporary approval to the
wholesalers to trade pending appeal should be quashed, and the question
returned to them for reconsideration.
35.
HMRC submit that the Court of Appeal was wrong to conclude that they had
power to grant temporary approval to the wholesalers under section 88C. However,
if it is found that section 88C does confer such power then, in HMRC’s
submission, the Court of Appeal was correct as to the criteria for the exercise
of the power.
36.
It is necessary to appreciate exactly how HMRC put their criticism of
the Court of Appeal. The following passage from their written case goes to the
heart of the argument:
“It is therefore submitted that
HMRC could not properly conclude someone was not fit and proper ‘to carry on
the controlled activity’ (even on conditions which include the power to
approve for a limited time only); yet then separately conclude in
response to a request that the same business and leadership might be fit and
proper to carry on the controlled activity pending appeal to the FTT against
the first finding …” (Emphasis in the original)
From this, it is clear that HMRC’s argument is addressed
to a situation in which they have already concluded that someone is not fit and
proper even for a limited period, and whatever conditions might be imposed. In
their submission, the introduction of an extraneous factor which has nothing to
do with fitness and propriety (ie the fact that an appeal is pending) cannot
alter this assessment of fitness.
37.
The wholesalers appear to interpret HMRC’s argument rather differently.
They have taken HMRC to be contending that whether a person is fit and proper
is an absolute question, that must be determined without considering whether
the imposition of a time limit or other conditions might make it possible to
approve someone as fit and proper. For example, they refer, in their written
case, to
“HMRC’s thesis that unless it is
satisfied that a person is fit and proper to carry on a controlled activity (ie
without consideration of whether that person might be fit and proper for a
period, with conditions, with restrictions or any combination of these) it
cannot approve a person under section 88C …”
38.
If HMRC were advancing the “thesis” there set out, it would be an
untenable one, in my view. But as I have said, they are not doing so. They are
not insisting that absolute fitness and propriety is required in all cases, but
addressing the situation where, as here, they have concluded that no conditions
or limitations will enable them to be satisfied that the person is fit and
proper. The power to incorporate such conditions/limitations is always present,
and the relevant technical guidance given to HMRC officers making AWRS
decisions specifically drew attention to the option of approval with
conditions, including an example of imposing a time limit on the approval. On
the facts of these appeals, HMRC had nevertheless concluded that the
wholesalers were not fit and proper. I would accept their argument that in
those circumstances there is no power to grant temporary approval pending
appeal. If the person is not fit and proper for even a limited period of time,
that holds good whatever purpose the time limited approval would be designed to
achieve. If considerations of hardship and the impact that maintaining the
decision would have on the efficacy of the appeal were relevant to HMRC’s
decision, it might be different. But I am satisfied that the Court of Appeal
was right to conclude that such considerations are not to the point. Section
88C operates through the medium of HMRC being “satisfied that the person is a
fit and proper person to carry on the activity”, and the impact upon the
person, or his business, of a refusal of approval is not material to that
evaluation.
39.
The wholesalers invite attention to HMRC’s practice, prior to the 27
March 2017 version of EN2002, of allowing a winding down period to a business
whose approval was revoked, where they thought the circumstances merited it
(see para 21 above). They submit that such temporary approval was granted under
section 88C, noting that the Court of Appeal saw it that way (para 54), and
submitting that it demonstrates the existence of the power that HMRC now deny.
HMRC respond that the provision of a winding down period is different in
character from temporary approval pending appeal, being closed-ended, and
presuming the rationality of the refusal.
40.
In my view, the practice (now, of course, ceased) of continuing approval
during a winding down period cannot prove the existence of the power for which
the wholesalers contend. It may serve to provoke a closer look at the scope of
section 88C, but if, after that exacting inspection, the conclusion is reached
that it does not encompass the power to grant temporary approval pending
appeal, the fact that HMRC may have proceeded, in the past, on the basis of a
looser construction of the section, does not alter that conclusion. It may not
be irrelevant that HMRC took the opportunity in the 27 March 2017 EN2002 to
regularise the position through the route of excluded sales (see para 22
above).
41.
Notwithstanding the earlier practice relating to a winding down period,
I remain of the view that section 88C does not permit the temporary approval
for which the wholesalers argue.
Issue 1B: can HMRC give temporary approval pending appeal
under section 9 of the 2005 Act?
42.
The wholesalers’ primary argument in the Court of Appeal, renewed as
part of their case before this court, was that HMRC have power to grant
approval pending appeal under section 9 of the 2005 Act. Section 9, which is
set out in full at para 28 above, permits the Commissioners to do anything
which they think necessary or expedient in connection with, or incidental or
conducive to, the exercise of their functions. The Court of Appeal was not
prepared to accept that this permitted the temporary approval sought. Burnett
LJ gave this summary of his reasons for rejecting that construction:
“35. In my judgment section 9
of the 2005 Act does not provide HMRC with power to approve persons as fit and
proper to trade in wholesale alcohol pending appeal to the FTT, when they have
concluded they are not fit and proper persons. Such an action could not be
either necessary or expedient in connection with the exercise of their
functions; nor would it be incidental or conducive to the exercise of their
functions. It would be inconsistent with the statutory scheme.”
43.
The wholesalers argue that there is nothing inconsistent with the
statutory scheme in section 9 being interpreted as enabling HMRC to approve
them to trade pending appeal. HMRC say, first, that the only route by which permission
can be granted is the section 88C route, and secondly that to use section 9 for
temporary approvals would run counter to the statutory scheme as a whole. Their
first point is shortly stated: section 88C(1) provides that a person “may not
carry on a controlled activity otherwise than in accordance with an approval
given by the Commissioners under this section” (my italics). The
wholesalers reply that there is nothing in section 88C(1) that prohibits HMRC
from granting permission by a different route, and complain that if the
provision were to be interpreted in this way, there would be no scope for the
use of the powers set out in section 9. It is put this way in their written
case:
“Allowing a decision-maker to do
something that that decision-maker could otherwise not do in the performance of
a function is precisely what ancillary and incidental powers do. If an
ancillary power never enables the decision-maker to do something that the
decision-maker otherwise lacks the power to do, then the ancillary power is
left with nothing to do.”
44.
I have no doubt that there are situations in which the sort of
considerations identified by the wholesalers in this passage would lead the
court to accept that the Commissioners have indeed got ancillary powers of one
sort or another. But it all depends upon the general attributes, and detailed
provisions, of the particular statutory scheme in relation to which the
question arises, and the nature of the ancillary powers being considered. There
are, in the authorities, plentiful statements to this effect, made in various
contexts, see for example the following, from Hazell v Hammersmith and
Fulham London Borough Council [1992] 2 AC 1 at p 31D-E:
“The authorities deal with widely
different statutory functions but establish the general proposition that when a
power is claimed to be incidental, the provisions of the statute which confer
and limit functions must be considered and construed.”
45.
Section 9 concerns ancillary powers which are necessary or expedient in
connection with the Commissioners’ exercise of their functions, or incidental
or conducive to that exercise, not ancillary powers which undermine or
contradict those functions. I do not accept that recourse can be had to it to
provide an alternative route to time limited approval, supplementing section
88C in the way that the wholesalers suggest. I say that not only because of the
terms of section 88C itself, which permit authorisation only under that section
(“approval given by the Commissioners under this section”), but also because of
the attributes of the whole scheme of which section 88C forms part. Rather than
assisting the Commissioners’ exercise of their functions under the scheme, such
a use would, in my view, undermine the scheme.
46.
To start with section 88C itself, it is important to take sections
88C(1) and (2) together. By subsection (1), a person may not carry on a
controlled activity otherwise than in accordance with an approval given by the
Commissioners under section 88C. By subsection (2), the Commissioners may only
give the required approval if they are satisfied that the person is a fit and
proper person to carry on the activity. So where, as here, they are not
so satisfied, they may not give approval under section 88C, and without
approval under section 88C, the person may not carry on the controlled
activity. Amongst the consequences that follow if he does act without approval,
the person will be guilty of an offence (section 88G). It can hardly be said to
be necessary or expedient to the exercise of the functions under that tightly
drafted scheme, which has at its heart that the Commissioners will only approve
people to sell controlled liquor wholesale if satisfied that they are fit and
proper to do so, for the Commissioners to be able to draw upon the ancillary
powers in section 9 to grant approval to someone in relation to whom they are
not satisfied, nor yet can that be said to be incidental or conducive to the
exercise of their functions under the scheme. Furthermore, approval granted
under section 9 would not be of any practical assistance to the wholesaler
unless he were also put on the register of approved persons under section 88D.
By sections 88F and 88G, a person may commit a criminal offence by buying from
a person who is not approved, and would need to have recourse to the register
to confirm the status of the wholesaler before buying. By using section 9
powers to enter the wholesaler on the register, HMRC would appear to be holding
out as fit and proper a person in relation to whom they have formed the
opposite view. It is unreal to suggest, as the wholesalers do, that this could
be satisfactorily addressed by HMRC including information about the wholesaler
under section 88D(2), to the effect that the approval is only temporary pending
the outcome of the wholesaler’s appeal to the FTT and that actually HMRC do not
consider the person fit and proper.
47.
But, says Mr Coppel QC for the wholesalers, it is necessary to look at
HMRC’s functions as a whole, not just their functions under section 88C, or
under Part 6A of ALDA. I readily accept that as a general proposition, but I do
not think that it justifies HMRC using section 9 to grant temporary approval.
Mr Coppel relies on the fact that HMRC’s section 88C decisions are attended by
a review and appeal process, in which HMRC have a role, including a duty to
give effect to whatever decision the FTT reaches. He argues that, as part and
parcel of their functions in the appeal process, HMRC must be able to take
steps to ensure the effectiveness of the wholesaler’s right to have his appeal
heard, especially bearing in mind that, even if it ultimately turns out that
approval was wrongly refused, the wholesaler will receive no compensation for
the damage suffered whilst awaiting the appeal, including potentially the final
closure of the business. So, where implementation of the challenged decision
pending appeal is likely to result in the wholesaler suffering substantial, and
irreversible, harm, he submits that HMRC must take as their starting point that
temporary approval should be granted so as to keep the appeal right alive,
although he would concede that the starting point could be displaced if the
likelihood and scale of harm to the revenue would be greater, if temporary
approval were to be granted, than the likelihood and scale of the harm to the
wholesaler from a refusal.
48.
I am not persuaded by this argument. I do not accept that the fact that
HMRC’s decision is subject to an appeal, to which they are a party, is a proper
foundation upon which to conclude that it is necessary or expedient, incidental
or conducive, to the exercise of their functions to assume a power to grant
temporary approval so as to preserve the wholesaler’s position pending that
appeal. With certain other types of relevant decision, HMRC do have a role in
facilitating an appeal to the FTT, by relaxing the normal requirement for duty
to be paid prior to an appeal. As can be seen from para 27 above, they can
effectively waive the standard security required under section 16(3) of FA 1994
on the grounds of hardship, and, if they are not prepared to do so, the FTT can
intervene to allow the appeal to proceed nevertheless, if it decides that HMRC
should not have refused to provide the required certificate. It cannot be said,
therefore, that the review and appeal provisions were drafted without heed to
the possibility that HMRC/the FTT might need powers to allow relief pending
appeal, but when it comes to ancillary decisions such as the decisions in
question here, there is nothing in sections 13A-16 of
FA 1994 (see above at para 23 et seq), or in the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, conferring
any power on either HMRC or the FTT to suspend, or circumvent, the
consequences of the decision that is being challenged pending determination of
the appeal.
49.
R (Wilkinson) v Inland Revenue Comrs [2005] 1 WLR 1718 offers
some insight as to how this absence of express power might bear upon the
operation of a general provision such as section 9 of the 2005 Act. It
concerned bereavement allowance, which at that time was payable only to widows
and not to widowers. The House of Lords rejected the argument that section 1 of
the Taxes Management Act 1970, which said that income tax “shall be under the
care and management of the Commissioners of Inland Revenue”, could be construed
as giving the revenue a discretionary power to grant an extra-statutory
concession allowing a widower to claim the equivalent to a widow’s bereavement
allowance. Lord Hoffmann observed at para 21, with the agreement of the rest of
the House, that the power could not be construed “so widely as to enable the
commissioners to concede, by extra-statutory concession, an allowance which
Parliament could have granted but did not grant”. Although the context was not
the same as in the present case, section 1 of the Taxes Management Act 1970 not
being concerned with ancillary powers in quite the same way as section 9 of the
2005 Act, it can similarly be said here that section 9 should not be construed
as conferring on HMRC a power to grant temporary approval pending appeal which
Parliament could have conferred through Part 6A or the FA 1994, but did not.
That temporary approval pending appeal is not part of the scheme is perhaps
underlined also by the fact that express provision was made in section 54(12)
of the Finance Act 2015 for the time from which the prohibition on trading in
section 88C was to apply, namely when the wholesaler’s application to HMRC was
“disposed of” (ie by section 54(13), has been determined by HMRC, withdrawn,
abandoned, or otherwise ceases to have effect), rather than from the conclusion
of any appeal against the decision on the application.
Issue 2: High Court powers
(1) The approach of the
Court of Appeal in CC & C Ltd and in the present case
50.
In the Court of Appeal, it was common ground that the High Court has
power to grant injunctive relief to assist a wholesaler pending his appeal to
the FTT, but there was a dispute between the parties as to the basis on which
relief could be granted. In determining this issue, the Court of Appeal drew
heavily upon its earlier decision in CC & C Ltd and it will be
necessary to look, therefore, at that decision.
51.
There are considerable similarities between CC & C Ltd and
the present case, although CC & C Ltd concerned wholesale trade in
duty-suspended goods, not duty-paid goods. Those trading wholesale in
duty-suspended goods were required to be approved and registered by HMRC. The
claimant company had been approved and registered for some years, when HMRC
revoked the registration on the basis that it was no longer fit and proper.
Like HMRC’s decisions in the present case, the decision in CC & C Ltd was
classed, for the purposes of sections 13A-16 of the FA 1994, as a decision
relating to an ancillary matter. The company appealed to the FTT against the
decision and also commenced proceedings in the Administrative Court to obtain
interim relief pending the determination of the appeal, claiming that there was
a risk that it would be irreparably damaged meanwhile.
52.
Underhill LJ, with whom the other members of the court agreed, had “no
doubt that the court has jurisdiction, in the formal sense, under section 37(1)
of the [Senior Courts Act 1981] to make an order of the kind sought” (para 38,
and see also Lewison LJ’s short judgment commencing at para 48). The court was
concerned with the approach that should be taken to the exercise of that
jurisdiction. At para 39, Underhill LJ said that it was trite law that where
Parliament has enacted a self-contained scheme for challenging decisions, it
would normally be wrong for the High Court to permit such decisions to be
challenged by way of judicial review. He cited a passage from a judgment of the
Privy Council, in Harley Development Inc v Comr of Inland Revenue [1996] 1 WLR 727, 735-736, culminating in the following:
“Their Lordships consider that,
where a statute lays down a comprehensive system of appeals procedure against
administrative decisions, it will only be in exceptional circumstances,
typically an abuse of power, that the courts will entertain an application for
judicial review of a decision which has not been appealed.”
53.
Underhill LJ set out in paras 41 and 42 why, where Parliament could have
made provision for suspensory orders to be made pending appeal to the FTT but
had not done so, the court was not entitled to intervene to grant a trader
interim relief simply on the basis that there is a pending appeal with a
realistic chance of success. But, he said, it did not follow that there were no
circumstances in which the court may grant such relief, and he noted that HMRC
did not so contend. He went on, in paras 43 and 44, to set out when relief may
be granted. He said that:
“where the challenge to the
decision is not simply that it is unreasonable but that it is unlawful on some
other ground, then the case falls outside the statutory regime and there is
nothing objectionable in the court entertaining a claim for judicial review or,
where appropriate, granting interim relief in connection with that claim. A
precise definition of that additional element may be elusive and is unnecessary
for present purposes. The authorities cited in the Harley Development case
refer to ‘abuse of power’, ‘impropriety’ and ‘unfairness’. [Counsel for HMRC]
referred to cases where HMRC had behaved ‘capriciously’ or ‘outrageously’ or in
bad faith. Those terms sufficiently indicate the territory that we are in, but
I would sound a note of caution about ‘capricious’ and ‘unfair’. A decision is
sometimes referred to rhetorically as ‘capricious’ where all that is meant is
that it is one which could not reasonably have been reached; but in this
context that is not enough, since a challenge on that basis falls within the
statutory regime. As for ‘unfair’, I am not convinced that any allegation of
procedural unfairness, however closely connected with the substantive
unreasonableness alleged, will always be sufficient to justify the intervention
of the court: [counsel for HMRC] submitted that cases of unfairness would fall
within the statutory regime to the extent that the unfairness impugned the
reasonableness of the decision. As I have noted above, the types of unfairness
contemplated in [R v Inland Revenue Comrs, Ex p Preston [1985] AC 835]
-which is the source of the use of the term in the Harley Development
case - were of a fairly fundamental character. But since procedural unfairness
is not relied on in this case I need not consider the point further.”
54.
Summarising his conclusion at para 44, he said that the court may
entertain a claim “where it is arguable that the decision was not simply
unreasonable but was unlawful on one of the more fundamental bases identified
above”. He said that such cases “will, of their nature, be exceptional”. The CC
& C case was not one of them, and relief was not available.
55.
In the present case, Burnett LJ analysed the ratio of CC & C
as having the following components:
“61. … (i)
The High Court has jurisdiction to grant an injunction maintaining registration
pending appeal to the FTT, which has been revoked by HMRC, when a parallel challenge
to that decision is made in judicial review proceedings.
(ii) The jurisdiction
should not be exercised simply on the basis that the person concerned has a
pending appeal with a realistic chance of success.
(iii) If the decision is challenged only on the basis that HMRC could not
reasonably have come to it, the case falls within section 16 of the Finance Act
1994 and the court should not intervene.
(iv) If the challenge to the
decision is on some other ground outside the statutory regime the court may
entertain judicial review or grant interim relief.
(v) A
definition of the additional element needed is elusive but would include ‘abuse
of power’, ‘impropriety’ and ‘unfairness’ as envisaged in Harley
Development Inc v Comr of Inland Revenue [1996] 1 WLR 727.”
56.
Having lost their argument that CC & C Ltd had been decided
per incuriam or should be distinguished, the wholesalers accepted that their
cases did not fall within any of what Burnett LJ described (para 73) as the
“exceptions identified as examples” in CC & C Ltd but submitted that
interim relief should be granted because otherwise there was a risk that their
rights under article 6 and article 1 protocol 1 (“A1P1”) of the European
Convention on Human Rights (“ECHR”) would be violated. The argument, both in
relation to article 6 and A1P1, was put on the basis that by the time the
appeal is heard, the wholesalers would have ceased to be viable and their
appeals to the FTT would be ineffective. The Court of Appeal found it
sufficient to deal with the argument by focussing on article 6 alone, finding
it unnecessary to explore “the altogether more complicated route of A1P1”, para
82, and in due course I will take the same approach.
57.
Burnett LJ’s conclusion was as follows:
“81. In my opinion, a
statutory appeal against a refusal of approval which is unable to provide a
remedy before an appellant has been forced out of business, rendering the
appeal entirely academic (or theoretical or illusory in the language of the
Strasbourg Court) is capable of giving rise to a violation of article 6 which
the High Court would be entitled to prevent by the grant of appropriate
injunctive relief under section 37 of the 1981 Act. To that extent, the
exceptions enumerated by Underhill LJ in the CC
& C Ltd case [2015] 1 WLR 4043 can be expanded to include cases in which a claimant can
demonstrate, to a high degree of probability, that the absence of interim
relief would violate its ECHR rights. Moreover, such an injunction need not be
ancillary to a claim for judicial review of any decision of HMRC, although it
might be.”
58.
Burnett LJ’s reasoning for his conclusion (see paras 77 to 81) involved
the following steps:
i)
The dispute concerns “civil rights and obligations” for the purposes of
article 6, see Tre Traktörer AB v Sweden (1989) 13 EHRR 309, in which
the Strasbourg court concluded that there was a violation of article 6 where a
company had its licence to sell alcohol revoked by two administrative bodies,
neither of which was a court or tribunal.
ii)
Unlike in Tre Traktörer AB, the wholesalers have appeals to the
FTT which satisfy the requirement for a hearing by a tribunal.
iii)
However, the ECHR is intended to guarantee rights that are “practical
and effective”, not “theoretical or illusory”, see Airey v Ireland
(1980) 2 EHRR 305 and other authorities set out at para 80 of Burnett LJ’s
judgment.
iv)
If an appellant is forced out of business before the statutory appeal
concludes, the appeal is rendered theoretical or illusory.
59.
It is important to recognise the lack of debate that there was in the
Court of Appeal about this element of the case. At para 76, Burnett LJ recorded
that Sir James Eadie accepted on behalf of HMRC that the High Court may grant
an interim injunction to vindicate the Convention rights of the wholesalers,
though emphasising (1) that (as Burnett LJ himself expressly accepted) the
first port of call must be the FTT itself, which could be expected to expedite
the appeal to avoid the problem, and (2) that proper evidential support would
be required for an argument based on the ECHR. It was not argued on behalf of
the wholesalers that interim relief should issue automatically, without it
being demonstrated that the wholesaler could not survive until the appeal was
heard. As Burnett LJ set out at para 83, Mr Coppel recognised that factors such
as the strength of the appeal and the nature of the concern that led to the
refusal to approve would be factors to be weighed when considering whether to
grant an injunction, reflecting the fact that the scheme exists to protect the
public purse and legitimate traders. Burnett LJ set out the sort of compelling
evidence that would be required before relief would be granted:
“85. A claimant seeking an
injunction would need compelling evidence that the appeal would be ineffective.
It would call for more than a narrative statement from a director of the
business speaking of the dire consequences of delay. The statements should be
supported by documentary financial evidence and a statement from an independent
professional doing more than reformulating his client’s stated opinion.
Otherwise, a judge may be cautious about taking prognostications of disaster at
face value. It should not be forgotten that a trader who sees ultimate failure
in the appeal would have every incentive to talk up the prospects of imminent
demise of the business, in an attempt to keep going pending appeal. Equally,
material would have to be deployed which provided a proper insight into the
prospects of success in an appeal. There is no permission filter for an appeal
to the FTT. The High Court would not intervene in the absence of a detailed
explanation of why the decision of HMRC was unreasonable. It must not be
overlooked that the FTT is not exercising its usual appellate jurisdiction in
these types of case where it makes its own decision. Finally, there would have
to be detailed evidence of the attempts made to secure expedition in the FTT
and the reasons why those attempts failed.”
60.
Burnett LJ anticipated that the circumstances in which it was
appropriate for injunctive relief of this kind to issue would be rare, as
practical relief would be achievable by obtaining temporary approval from HMRC
under section 88C (not a route that I consider available for the reasons set
out earlier) or, failing that, by seeking expedition from the FTT.
61.
The evidence in support of injunctive relief in the present cases had
not been sufficient to satisfy either of the two judges who entertained the
proceedings at first instance that the appeals would be rendered nugatory
without interim relief, as Burnett LJ set out:
“86. In the
ABC Ltd case William Davies J considered himself bound by the CC
& C Ltd case to refuse injunctive relief even if the claimants
could show that the appeal would be rendered ‘nugatory’. However, at para 48 he
concluded that the evidence did not suggest that was inevitable. The evidence
demonstrated that there was a prospect that the appeal would be rendered
nugatory, no more. In the X Ltd and Y Ltd case, Andrew Baker J dealt
with the strength of the evidence relating to the business prospects of the
claimants in paras 39 and 40. He was unpersuaded by the assertions that they
would not survive the appeal process. In those circumstances, even if either
judge had considered a free-standing injunction by reference to rights
guaranteed by article 6 of the ECHR, it would have been refused.”
(2) The limited scope of Issue 2
62.
This court’s engagement in the issue as to the High Court’s powers is
narrowly confined for procedural reasons. Only the wholesalers sought to appeal
against the Court of Appeal’s determination on this aspect of the case. Their
notice of appeal sought permission to appeal on three grounds. The first ground
challenged the Court of Appeal’s decision that section 9 of the 2005 Act did
not give HMRC any power to permit temporary trading pending the outcome of an
appeal to the FTT. Permission was given for this ground to be pursued and I
have addressed it above. Ground 2 was that the Court of Appeal were wrong to
conclude that it was only in exceptional circumstances that the High Court
could grant interim relief pending an appeal to the FTT. Ground 3 was that the
Court of Appeal were wrong to conclude that even where implementation of HMRC’s
decision prior to the outcome of an appeal to the FTT would violate a
wholesaler’s ECHR rights, the High Court should not grant interim relief as the
first port of call must be to the FTT to expedite the appeal. Permission to
appeal was not granted in relation to either of these grounds.
63.
In these circumstances, both parties understandably approached the
appeal to this court on the basis that the High Court has power to grant
injunctive relief where the wholesaler’s article 6 rights would otherwise be
infringed by the business ceasing to be viable before the FTT could consider
the matter, rendering the appeal provided by statute entirely academic, and
that the circumstances in which that power would be exercised were as set out
in CC & C Ltd, as interpreted by the Court of Appeal in the present
case. This court’s refusal of permission to appeal in relation to the High
Court’s injunctive powers immunises that position from challenge in the present
proceedings. Furthermore, it has not been the role of this court to review the
established finding that the evidence produced by the wholesalers in support of
their application for injunctive relief on an article 6 basis failed to meet
the required standard (see para 86 of Burnett LJ’s judgment, set out above).
64.
The question that arose during the course of the hearing before us was
the discrete question of what form the High Court’s order could legitimately
take, where a case for injunctive relief was made out. If minded to make
an order, what, if anything, could the High Court order HMRC to do to protect
the position of a wholesaler pending appeal? Supplementary written submissions
were provided following the hearing directed to this point.
(3) The parties’ supplementary submissions
65.
In their supplementary submissions, both sides adhere to the position
that the Court of Appeal was correct to conclude that the power in section 37
of the Senior Courts Act 1981 could be exercised in the AWRS context, in
exceptional cases.
66.
HMRC emphasise the breadth of the High Court’s power under section 37,
being a power to make orders and grant interim relief whenever it considers it
just and convenient to do so, including when necessary to protect effective
rights of access to court, whether derived from article 6 of the ECHR or the
common law. This enables it, they say, to make an order which will have the
effect of holding the ring pending the appeal, unconstrained by the limitations
and conditions imposed upon HMRC by the legislation and public law principles.
They also submit that Parliament can be taken to have enacted the AWRS on the
basis that the High Court’s powers to grant interim relief remain intact.
67.
In their submission, an order can be made requiring them to give the
wholesaler provisional approval, under section 88C, to sell controlled liquor,
and also to add the wholesaler to the section 88D register. They support this
on the basis that, although they could not act in this way of their own
initiative, they could do so pursuant to a court order because the court’s role
is part of the statutory scheme. In the alternative, HMRC propose that an order
could be made requiring them to exercise their power, under regulation 10 of
the 2015 Regulations (see para 16 above), to exclude certain descriptions of
sales from ALDA. As with temporary approval, HMRC would not, they stress,
independently use this power to exclude sales in circumstances like the
present, but they would do so if ordered by the court to do that. If this route
were to be taken, the wholesaler would be outside the ALDA regime whilst the
appeal to the FTT was pending. It would be necessary, therefore, for the court
to impose conditions that would need to be met by the wholesaler for the
exclusion to continue, for example as to record keeping and due diligence.
68.
HMRC seek to explain why their own exclusion of sales to allow a winding
down period (see above) should not be taken to indicate that they have power,
without court intervention, to grant a wholesaler relief pending an appeal.
They draw a distinction between their limited exercise of power, which is
consistent with the statutory scheme, and an open-ended exclusion pending
appeal. The latter would, in their view, be a stretch too far for them, but not
for the High Court when intervening on the basis that the case was exceptional
and that there was a need to protect effective access to justice.
69.
Like HMRC, the wholesalers also submit that the High Court can order
HMRC to approve and register a wholesaler temporarily under section 88C and
section 88D. They say this on the basis that unless HMRC has decided that the
wholesaler is not fit and proper to carry on any controlled activity for any
period of time, regardless of all conditions and restrictions HMRC might
impose, there is a residual power in the High Court to order HMRC to act under
section 88C and D. Failing that, they propose that the order could focus upon
section 9 of the 2005 Act. If neither of those routes is available, they rely
upon section 8(1) of the Human Rights Act 1998, which they say gives the court
power to act to ensure the efficacy of the appeal to the FTT, as required by
article 6 ECHR (and, they say, A1P1).
(4) Discussion
70.
It will be apparent, from what I have set out of their submissions, that
the parties do not share the court’s anxieties as to what, if any, form of
order the High Court could make to safeguard the position of a wholesaler,
without requiring HMRC to trespass impermissibly outside the statutory
provisions relevant to the AWRS. As a result of this, the court has not had the
benefit of any testing analysis, in the written or oral argument, of the
parties’ essentially agreed position. This is not intended as a criticism (the
parties were entitled to make the legal submissions they considered
appropriate) but the result is that the process has not entirely dispelled the
court’s unease about the form that the High Court’s order might legitimately
take. To illustrate the point, let me take the suggestion that the High Court
could order HMRC to grant temporary approval under section 88C to a wholesaler
whose application they have rejected, but who has appealed to the FTT and has
established an article 6 case for relief pending the appeal. Section 88C
approval, whether indefinite or limited in time, depends on HMRC being
satisfied that the wholesaler is fit and proper to carry on the controlled
activity; that is an essential condition for approval under the section. For
matters to have reached this point, however, HMRC must necessarily have concluded
that they are not satisfied that the wholesaler is fit and
proper, even for a limited period of trading. If the High Court orders HMRC to
grant temporary approval to the wholesaler in these circumstances, it is
necessarily requiring HMRC to be satisfied when they are not satisfied, and I
question how that can properly be done.
71.
That example points to a more fundamental concern. Generally the High
Court’s power to order a person to do something by mandatory injunction is
exercisable for the purpose of making that person do something that he has it
within his powers to do and should have done, but has failed to do. Here, the
court has concluded, and HMRC agree, that there is in fact nothing which HMRC
can properly do in the exercise of their statutory functions. They may fairly
be said to have no relevant power which they could legitimately exercise in
this context without straying outside the purpose for which the power was
given. In such circumstances, a conclusion that the High Court could
nonetheless solve the problem by granting an injunction looks worryingly like
endorsing the exercise of some sort of inherent authority to override an Act of
Parliament, on the basis that the end justifies the means. It would take a lot
of persuading for me to conclude that this would be a proper exercise of the
High Court’s undoubtedly wide power to grant injunctive relief, but the
parties’ agreement that it is permissible has closed off adversarial
submissions on the point.
72.
The absence of debate between the parties makes it undesirable to make
any definitive pronouncement as to whether an appropriate form of order might
be found as a vehicle for the exercise, by the High Court, of its power to
grant relief to a wholesaler pending an appeal to the FTT. Since the case for relief
was not, in fact, made out on the evidence in the present case (see para 86 of
the Court of Appeal judgment, set out at para 61 above), it is unnecessary to
do so, and I will say no more on the subject.
73.
It should be noted that Mr Coppel invites the court to broaden its
interpretation of section 88C of ALDA and section 9 of the 2005 Act by viewing
them with ECHR considerations in mind, and/or bearing in mind article 47 of the
Charter of Fundamental Rights and Freedoms of the European Union. Just as I am
uneasy about accepting that the statutory scheme can be interpreted in such a
way as to enable the High Court to come to the assistance of a wholesaler whose
ECHR rights are in issue, so I do not readily see how section 88C and section 9
could be more broadly interpreted to the same end. I need not say more on the
subject, however, as Mr Coppel’s argument would not, in any event, assist the
wholesalers in this case, given that their evidence did not establish that
their ECHR rights are endangered.
Conclusions
74.
I would allow HMRC’s appeal against the Court of Appeal’s order
remitting to HMRC the question of whether the wholesalers should be given
temporary approval under section 88C. HMRC do not, in my view, have power, in
circumstances such as the present ones, to grant such temporary approval under
that section.
75.
I would dismiss the wholesalers’ appeal against the Court of Appeal’s
determination that HMRC do not have power to grant temporary approval under
section 9 because, in my view, the Court of Appeal were right.
LORD HUGHES: (with whom
Lord Sumption agrees)
76.
For the reasons so clearly set out by Lady Black, I agree that:
(i) HMRC has no power
under section 88C of the Alcoholic Liquor Duties Act 1979 (“ALDA”) to approve
temporarily an existing trader whom it has determined not to be a fit and
proper person even for a short period and even subject to conditions; and
(ii) nor has HMRC any
power to do this under section 9 of the Commissioners for Revenue and Customs
Act 2005; moreover
(iii) although this is not
for decision in the present case, it is also difficult to see, where a trader
has been refused registration, on the grounds that HMRC is not satisfied that
it is a fit and proper person, even for a limited period or on conditions, that
a power to preserve its ability to trade pending appeal to the FTT can be found
in the High Court.
77.
As to (iii), it is highly significant that HMRC, which sponsored the
legislation in question, thought it right to contend in these proceedings that
the High Court does have the third-mentioned kind of power pending appeal,
albeit only in cases where it is clearly established that otherwise good
grounds of appeal would be rendered nugatory if the power did not exist. The
principle underlying that approach is correct, and responsible. Neither in
English law nor under the ECHR is there any general right to an appeal against
an adverse decision, such as the one here under consideration, viz a
determination that a trader is not a fit and proper person to be approved under
ALDA. But in this instance a right of appeal has been conferred by section 16
of the Finance Act 1994, albeit the grounds upon which it can succeed are
limited: see para 25 of Lady Black’s judgment. Where such a right exists in law
it would potentially be a breach of article 6 ECHR (right to a fair trial),
read with article 13 (right to an effective remedy) if it were rendered
illusory or nugatory by the absence of any power to suspend or stay the adverse
decision of HMRC until the appeal can be determined. In the particular case of
a trader who had an existing business at the time when the registration scheme
introduced by section 88C of ALDA, his right of appeal to the FTT might
be rendered illusory or nugatory if he would be forced out of business before a
good case on appeal could be determined. There may be few who are genuinely in
this position, and with the passage of time those thus affected must be a
reducing number. But some are enough to result in potential incompatibility of
the legislation with the ECHR.
78.
It is not possible for courts to invent a remedial legislative provision
where, as seems here to be the case, the language of the self-executing scheme
adopted by ALDA and of the appellate structure adopted by the Finance Act 1994
do not admit of a construction which allows for a power to stay a decision of
HMRC pending appeal. Nor, if the court’s reading of the legislation is correct,
can there be a remedy under section 8 of the Human Rights Act, since there is
no unlawfulness if no other course is possible - see section 6(2). But if
potential incompatibility is to be avoided, those responsible for legislation
in this field may wish urgently to address amendment, for example to give
either the FTT or the High Court a limited power to impose a stay pending
appeal in defined circumstances.
