Getting Justice in the Tribunal

This note is principally about two Supreme Court cases, R (on the application of UNISON) v Lord Chancellor [2017] UKSC 51 ("the fees case") and BPP Holdings Limited v HMRC ("BPP") [2017] UKSC 55.

The Fees Case

The following is a quotation from the unanimous judgment of the Supreme Court in the fees case:

"66. The constitutional right of access to the courts is inherent in the rule of law. The importance of the rule of law is not always understood. Indications of a lack of understanding include the assumption that the administration of justice is merely a public service like any other, that courts and tribunals are providers of services to the 'users' who appear before them, and that the provision of those services is of value only to the users themselves and to those who are remunerated for their participation in the proceedings…

68. At the heart of the concept of the rule of law is the idea that society is governed by law. Parliament exists primarily in order to make laws for society in this country. Democratic procedures exist primarily in order to ensure that the Parliament which makes those laws includes Members of Parliament who are chosen by the people of this country and are accountable to them. Courts exist in order to ensure that the laws made by Parliament, and the common law created by the courts themselves, are applied and enforced. That role includes ensuring that the executive branch of government carries out its functions in accordance with the law. In order for the courts to perform that role, people must in principle have unimpeded access to them. Without such access, laws are liable to become a dead letter, the work done by Parliament may be rendered nugatory, and the democratic election of Members of Parliament may become a meaningless charade. That is why the courts do not merely provide a public service like any other."

Judgment was delivered in the fees case and BPP on the same day, 26 July.  The judgment in the fees case is remarkable for its lucid explanation and re-affirmation of some very basic principles of constitutional law.  The dispute in the fees case related to a purported increase in the fees charged to litigants by the State in employment tribunal proceedings.  The level of these fees is fixed by the Lord Chancellor, by delegated legislation.  The Supreme Court's decision was that the Lord Chancellor had not lawfully exercised his power to fix fees by fixing them as he had, and a number of reasons were given.  The most fundamental reason, and the one with the widest application in fields other than employment law, is based on the common law right, enjoyed by all citizens of access to justice, which right had, the court concluded, been infringed by the order that the Lord Chancellor had made.  The court made an historical review of the citizen's right of access to justice from Magna Carta (1215) to the present day and concluded that the right could only be excluded by a provision in primary legislation and could only be restricted to the extent that the "intrusion" is reasonably necessary to fulfil the objective of the provision in question.  After a very careful review of the statistical and other empirical evidence about the effect of the fee structure prior to the order challenged, the Supreme Court was of the clear opinion that this criterion was not satisfied, because the fees proposed were in practice in some cases unaffordable  and were so high in other cases that they prevented even people who can afford them from pursuing claims for small amounts and non-monetary claims.

BPP

BPP also relates to access to justice, but in a different way.  BPP was a case arising out of a VAT appeal in the First-tier Tribunal ("F-tT").  The appellant taxpayers had encountered difficulties in obtaining from HMRC, the respondents, particulars of HMRC's case.  After a hearing, Judge Hellier directed on 9 January 2014 that HMRC were  to provide further information, as requested by the taxpayers in a number of specific questions, by 31 January 2014, and that if HMRC did not do so, they might be barred from taking further part in the proceedings.  HMRC purported to respond to the taxpayer's request on 31 January 2014, but Judge Mosedale later concluded (on 1 July 2014) that the response was inadequate.  Meanwhile, the taxpayers had applied to the F-t T for an order barring HMRC from taking further part in the proceedings and the F-t T made such an order ("the barring order") after a hearing on 1 July 2014.  HMRC appealed against the barring order to the Upper Tribunal, the Court of Appeal and finally the Supreme Court, ultimately unsuccessfully

It is abundantly clear that court proceedings will provide justice only if each party to the proceedings knows the case against him/her, and is given a proper opportunity to present his/her own case.  It has been recognised for centuries that a litigant who does not know the case against him is trying to hit an invisible and possibly moving target and is not being justly treated.  BPP Holdings Ltd did not consider that the details of the case against it had been properly explained until HMRC complied with the tribunal's direction and Judge Mosedale agreed.  There seems to have been no doubt that if the respondent in BPP had not been HMRC, but a private litigant which had behaved in the same way as HMRC, a barring order under the Civil Procedure Rules would have been made.  The key question was whether it made a difference that the Government (in the shape of HMRC) was the respondent.  HMRC advanced various possible reasons why they should be treated more favourably than other litigants.  These included:

• a scarcity of resources available to HMRC at a time of austerity.  However, despite the current resource constraints on public authorities, the Court will not construct special rules in their favour with regard to breaches of procedural rules and directions (per Lord Justice Moore-Bick in R (Hysaj) v Secretary of State for the Home Department,¹ approved by the Supreme Court in BPP).  A possible rationale is that the courts are of the view that HMRC's litigation (and settlement) policy should be determined so as to contain litigation of HMRC cases within available resources HMRC settling the rest, not expose taxpayers to difficulties because HMRC embarks on litigation which it does not have the resources to sustain.
• HMRC's statutory obligation to collect all tax lawfully due.

These points failed to sway the Supreme Court, though it acknowledged that Judge Mosedale's decision was a tough one (indeed a barring order amounts to confiscation without compensation) and that other F-t T judges could properly have decided differently.  The Supreme Court therefore upheld Judge Mosedale's decision.  The constitutional implications of the decision are considerable – it emphasises that organs of the State are to be treated no more favourably than other litigants – and public bodies (including HMRC) are to be encouraged to "live up to the standards expected of individuals and private bodies in the conduct of litigation".  It seemed to the court indeed that "there is at least as strong an argument for saying that the courts should expect higher standards from public bodies than from private bodies or individuals".   A similar point was made by the Supreme Court, in the tort context, in the Ingenious Media confidentiality case,² where HMRC was the unsuccessful defendant.  A very recent decision on costs of Mr Justice Charles³ indicates that HMRC may, as a winning party,  be deprived of their litigation costs where they have failed to follow the principles of good administration and other behavioural precepts laid down by the courts.

¹ [2015] 1WLR 2472 at [42].
² R (on the application of Ingenious Media Holdings plc) v HMRC [2016] UKSC 54.
³ R v HMRC, Dickinson & Ors [2017] EWHC 1943 (Admin).