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Cite as: [2004] UKVAT V18935

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RP Ltd & Ors v Customs and Excise [2004] UKVAT V18935 (11 August 2004)

18935

PRACTICE – Joint hearing – Application for appeals by separate appellants to be heard together – Carousels alleged – Separate facts – Powers of Tribunal under Rule 19(3) – Whether "necessary or expedient to ensure the speedy and just determination of the appeal" – Held, not necessary for "just determination" nor to ensure speed – Application by Customs dismissed – Trib. Rules 1986 r.19(3)

LONDON TRIBUNAL CENTRE

RP LTD LON/2004/744 Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

FCC LTD LON/2004/745 Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

UKTC LTD LON/2004/749 Appellant

and –

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: THEODORE WALLACE (Chairman)

Sitting in private in London on 5 August 2004

Hugh McKay, counsel, instructed by the Solicitor for the Customs and Excise

Donald Mavin, of WJB Chiltern plc, for RP Ltd

Michael Hitchen, of WJB Chiltern plc, for FCC Ltd

Jolyon Maugham, Counsel, instructed by Michael Welch & Co, Solicitors, for UKTC Ltd

© CROWN COPYRIGHT 2004

DECISION ON APPLICATION

This hearing concerned an application by Customs dated 3 June 2004 for the appeals by the above three Appellants, which I refer to as RP Ltd, FCC Ltd and UKT Ltd, all of which involve disallowance of input tax on alleged circular transactions, to be consolidated. Mr McKay accepted that consolidation is not appropriate with different parties and varied his application to one that the appeals be heard together.

Although the application was heard in private it raises important matters of principle and the parties agreed to this decision being published in an anonymised form.

Mr McKay referred to a number of other companies, relying on the power to disclose information for the purposes of legal proceedings under section 182(6)(e) of the Finance Act 1989. I have anonymised references to companies those also.

Notice of this application hearing had not in fact been given to UKT Ltd. However their advisers were aware of the application and attended, waiving the lack of notification.

On 27 July Customs amended their application to include RC Ltd and NUKC Ltd and they also wish to include SI Ltd. None of those three companies were notified of this hearing.

I indicated at the outset that I could not properly direct consolidation of the appeals of companies who had not been notified but that I would consider how the matter should be handled procedurally with a view to a further application hearing properly notified to all parties.

Mr Maugham said that the application had no prospect of success and should be dismissed without a further hearing. I agreed to hear his submissions.

Mr McKay for Customs produced Statements of Case for all six appeals with diagrams attached showing the alleged carousels. These showed 38 or 39 carousels, 20 or 21 of which involved SI Ltd; the most extensive involved 15 companies. RC Ltd was common to each carousel, however Customs do not submit that RC Ltd was fraudulent. A Dutch company was in each case the recipient of the mobile phones on which the input tax had been disallowed. Either EIT Ltd or LI Ltd also appeared in each transaction. One officer would give evidence of Customs' practice. Case officers would give evidence producing the invoices in respect of each carousel which were self-explanatory. One case officer was involved for RC Ltd, one for SI Ltd and two for the other four appeals. The evidence for Customs would cover the source of documents but would not contain any evidence of visits or interviews since Customs relied merely on the objective characteristics and did not contend that there was a ringmaster. Officers would speak to each transaction chain and much of the evidence would be repetitious. The sales in question were by description specifying the model of telephone and not sales of specific telephones.

Mr McKay said that if each appeal was heard on its own each might last three days making 18 days in all. He estimated that if all appeals were heard together 9 or 10 days might suffice. He said that the Tribunal could give directions for statements from all witnesses to stand as evidence in chief and could set a timetable for the preliminary stages to be closely monitored by the Tribunal.

He said that the costs to the Tribunal and to Customs are relevant factors as are the time of Customs officers as witnesses.

Mr Maugham said that some of the Appellants are in serious financial difficulties because of the disputed input tax. WUKC Ltd was not represented at the hearing because of shortage of funds and would be asking for its appeal to be stood over pending the decision of the Court of Justice on the reference by the High Court in Bond House Systems Ltd in October 2003.

He said that there is no common issue of fact in the six appeals. In each case the Tribunal will have to decide whether there was circularity in fact. None are identical and each will have to be considered separately. Some appeals involve several alleged carousels. No dishonesty had been alleged.

Mr Maugham said that if the appeals are heard together his clients would have to be present for nine days assuming that the total hearing time was halved, which he did not necessarily accept, instead of only three days. He would have to be present three times as long with the attendant costs.

He said that a joint hearing would involve major logistical difficulties. Each Appellant would be entitled to be heard involving questions as to the order of speeches which do not normally arise in the Tribunal.

He said that a combined hearing would be much more difficult to list so as to accommodate all parties. He said that the Appellants would be seeking particulars of Customs' allegations and also the documents which had not yet been produced.

Mr Maugham said that in principle Rule 19(3) is wide enough to provide for a joint hearing provided that the requirements of the Rule are satisfied. He said that the parties cannot confer a jurisdiction on the Tribunal which it does not have.

He cited the decision of the Court of Appeal in Davis v Daily Sketch and Daily Graphic Ltd [1960] 1 WLR 126 where Willmer LJ applied the test whether there was "a common question of law or fact bearing sufficient importance in proportion to the rest of the action to render it desirable that the whole of the matters should be disposed of at the same time." He said that the test is not satisfied in the present case.

Mr Maugham said that a joint hearing is neither "necessary" nor "expedient to ensure the speedy and just determination of the appeal" within Rule 19(3). Far from expediting the appeals, it would slow them down. He said that there is no need for the same Tribunal to hear each appeal. There would be no real saving of time because each carousel would require separate consideration. He said that even if the Tribunal concludes that the requirements of Rule 19(3) are otherwise satisfied, the substantial additional costs for each Appellant are a good reason why a joint hearing should not be ordered. The benefit to Customs would be less than the aggregate costs to the Appellants which are already in financial difficulty.

Mr Mavin, whose firm represents SI Ltd as well as RP Ltd, opposed the appeals being heard together and adopted Mr Maugham's submissions.

Mr Hitchen also opposed a joint hearing. He said that there is a real risk that a multiplicity of appeals would make a "just determination" more difficult.

Mr McKay said that the risk of delay was more imagined than real. He said that the matter could be heard early in the New Year. Clear and specific directions could be given. He said that the Tribunal should view all six appeals together when considering consolidation.

He accepted that a joint hearing is not necessary for a "just determination" of the appeals but said that it would ensure "speedy" determination. He said that if the appeals are heard separately there will inevitably be stragglers. He invited the Tribunal to be innovative in line with the approach of the Courts.

Conclusions

The material words of Rule 19(3) of the Tribunals Rules are as follows,

"… a tribunal may … make any direction as to the conduct of or as to any matter or thing in connection with the appeal … which it may think necessary or expedient to ensure the speedy and just determination of the appeal including the joining of other persons as parties to the appeal."

The crucial words are "necessary or expedient to ensure the speedy and just determination of the appeal."

There clearly are cases where there are sufficient common facts in separate appeals to make joint hearing desirable to ensure a just determination of the appeals, if only to avoid inconsistent decisions. If disputed evidence is heard twice it may well differ between the two appeals, if only because a witness is prepared for cross-examination in the second case.

In the present cases however it does not appear that there is likely to be any disputed evidence which is common to different appeals. As Mr Maugham stressed the facts in each appeal will have to be considered separately. There is no allegation by Customs that there was a common ringmaster.

Mr McKay accepted that the "just determination" will not be affected by whether or not the appeals are consolidated. Although this aspect should not be exaggerated, I accept Mr Hitchen's submission that a multiplicity of appeals would make a just determination more difficult.

Mr Maugham said that he did not wish to rely on a strict or narrow interpretation of Rule 19(3) but that he disputed Mr McKay's submissions as to saving of time.

In my judgment the question of whether the appeals be heard together has to be considered separately in relation to each Appellant. They are at this point separate appeals. I do not see how it would be possible to conclude in respect of any one appeal that a joint hearing which would require (say) nine days could be heard and determined more speedily than a single appeal needing three days. In fact I have reservations as to whether a joint hearing would save as much time as Mr McKay suggested. There is the further problem that apparently WUKC Ltd would wish the appeals to be stood over for Bond House Systems, whereas the other Appellants wish to proceed.

It seems to me that while there may be cases where the objective of a just determination will outweigh delay, it is impossible to say that individual appeals will be expedited by a joint hearing unless added to a hearing the date for which has already fixed. That is not the case here.

Furthermore in the present case a joint hearing would clearly have serious adverse costs implications for the Appellants not one of which has been accused of any impropriety in the pleadings. Factors such as Tribunal's costs and the time of witnesses can only be relevant if the direction sought is potentially within Rule 19(3) as expedient for the speedy and just determination of the appeals. It does not seem to me that a joint hearing will lead to a speedy and just determination.

I therefore accept Mr Maugham's submission that the application for a joint hearing should be dismissed without the need for any further hearing and I direct accordingly.

THEODORE WALLACE

CHAIRMAN

RELEASED: 11 August 2004