Frankice (GG) Ltd. v Customs & Excise

J U D G M E N T

1. LORD JUSTICE PETER GIBSON: This is the adjourned hearing (directed by Laws LJ) of an application by the applicant, a company called Frankice (GG) Ltd, for permission to appeal from the order made on 3rd November 2004 by Lindsay J. Thereby he refused the application of the applicant for an extension of time for lodging a notice of appeal from the decision made on 8th January 2004 of the VAT and Duties Tribunal (Mr Theodore Wallace sitting alone).

2. I must now set out briefly what Lindsay J rightly described as the very strange procedural background to this case. The respondents, the Commissioners of Customs and Excise ("Customs"), raised assessments on the applicant for gaming machine licence duty amounting to some £455,000. The applicant appealed on 12th April 2002. Despite repeated extensions, Customs had failed to serve a statement of case when on 14th February 2003 a Tribunal Chairman directed, with the consent of Customs, that unless Customs served its statement of case and list of documents by 4.00 pm on 14th March 2003, the appeal should stand allowed without further hearing.

3. On 18th March 2003 a letter from the Tribunal was sent to Customs in this form:

"The Tribunal has been notified by the Appellant that the requirements of the direction of the Tribunal released on 18th February 2003 have not been met. It follows that the direction has come fully into effect and the appeal now stands allowed."

It was signed by "BJ Cresswell, Proper Officer". Proper Officers are the name by which administrative officers and more senior officers in the Tribunal are known.

4. On 25th March 2003 Mr Van der Wal, a Principal Legal Officer of the Solicitors Office for Customs, wrote to the Tribunal that in fact the documents had been lodged by fax on 13th March. Customs later applied to reinstate the appeal. That application was supported by evidence from Mr Van der Wal. He said that the documents had been faxed from his home to the Tribunal on 13th March 2003 and he exhibited an itemised copy of part of his telephone bill, showing that he called or faxed to the Tribunal number on 13th March 2003 at 1726 at a cost of 38.7p (that is nine times the minimum rate).

5. The file was placed before the same Tribunal Chairman. He restored the appeal. On 1st September 2003 the Tribunal informed the applicant of the Chairman's decision.

6. The applicant on 19th September challenged the reinstatement. On 25th September, on the Chairman's instructions, the Tribunal wrote saying:

"Thinking that the statement of case had not been received we wrote to you on 18 March 2003 stating that the appeal had been allowed, which was wrong on the basis of the facts as we now know them. The restoration of the appeal is not a separate act on which the Appellant should have been heard, but something that follows automatically from the fact that the statement that the appeal had been allowed was, on the basis of the facts as we now know them, incorrect. The appeal was in reality never allowed in accordance with the unless order. It therefore still stands as it would have done if we had in fact received the fax on 13 March."

7. The applicant maintained that the reinstatement was invalid and so the matter came before Mr Wallace. He gave his decision on 18th January 2004, but his full reasons were not sent out until 27th February. He said that the letter of 18th March 2003 did not have the status of a decision or direction of the Tribunal, and was no more than a communication of the fact that, as a result of the failure to comply with the Chairman's direction, the appeal was allowed.

8. However, Mr Wallace said that if it was based on incorrect facts, then that communication was not correct. Whether it was incorrect, he said, could only be resolved by the Tribunal itself at a hearing. Mr Wallace accepted that when the letter of 18th March was written, the statement of case cannot have been on the Tribunal file for the appeal. He also accepted that when Mr Van der Wal wrote to the Tribunal on 25th March he believed that the documents had been faxed on 18th March, and Mr Wallace said that that was supported by the cover sheet for the fax transmission dated 13th March, carrying the reference number of the appeal.

9. Mr Wallace considered a number of possibilities which had been canvassed at the hearing before him by counsel, Mr Bhalla, who appears before us today and was counsel for the applicant on that occasion. Those possibilities included that the documents which were being faxed were put into the fax machine the wrong way up. Mr Wallace went on to say this in paragraph 44:

"However, having considered the material before me, I concluded on the balance of probabilities that the documents were sent and received on 13 March 2003. It is quite clear that something went wrong. I concluded that it is less likely that the mistake was by Mr Van der Wal who was aware of the need to comply with the direction and who believed that he had transmitted the documents. On that basis the Statement of Case was served within the time directed."

10. Mr Wallace then went on to consider whether the list of documents had been sent. He criticised Customs for sending an uninformative list in which Customs promised that an amended list of documents would be filed, and Mr Wallace pointed out that no amended list had been filed. But he said in paragraph 47:

"I found as a fact that the Commissioners did comply with the Direction of 18 February 2003 although the compliance was far from satisfactory as regards the List of Documents. On that finding the appeal goes ahead."

11. The applicant had 56 days from the date of the decision or determination in which to appeal (see the Part 52 Practice Direction, paragraph 23.8(2)(b)). That period expired on 5th March 2004. On 28th April 2004 the applicant wrote indicating a possible intention to appeal. The notice of appeal was, however, not served until 10th June 2004. The notice seeking an extension of time was dated 7th June. Reliance was placed on a witness statement from Mr Panchal, the General Manager of the applicant, in which he purported to explain the delay in appealing to the High Court. He said in paragraph 4:

"Any delay is as a result of much consideration by the company of a variety of advice and the necessity of consulting as a consequence the proper officers of [the applicant]."

12. Mr Panchal went on to say that within the statutory time limit it was simply not possible to obtain specialist advice, understand its ramifications, have it explained to the Board, and instruct in consequence the draft grounds of appeal to be (as he put it) "constructed".

13. The application came before Lindsay J. He found the reasons given for the delay "really very inadequate" and "feeble". The judge rejected an argument that the findings of fact made by Mr Wallace were so unreasonable as to amount to an error of law. The judge commented that it was the only conclusion to which a Tribunal could properly have come.

14. The judge rejected a second argument that either no reason or inadequate reasons had been given by Mr Wallace, the judge pointing to the reason that Mr Wallace thought it less likely that a mistake had been made by Mr Van der Wal than that something had gone wrong on the Tribunal's side.

15. The judge also rejected the submission that the letter of 18th March represented an irrevocable allowing of the appeal. He said that the letter was based on a misunderstanding of the underlying facts and as such was not irrevocable. The judge therefore refused to extend time.

16. On this adjourned hearing Mr Bhalla sought permission to adduce further evidence in the form of a second witness statement from Mr Panchal and a witness statement from the applicant's present solicitor further to explain the delay. It is not suggested that that evidence could not have been adduced before Lindsay J with reasonable diligence. Indeed, it is obvious that such evidence could have been produced to the judge.

17. It follows that the first of the tests in Ladd v Marshall [1954] 1 WLR 1489, which are still pertinent since the coming into force of the Civil Procedure Rules, is not satisfied. Although Mr Bhalla sought to suggest that, as he put it, it was a matter of delicacy that prevented Mr Panchal from giving the evidence in his first witness statement which he has now put into the second witness statement, I cannot see how that makes any difference. This court should not admit fresh evidence which could have been adduced below when it is considering whether or not the court below has erred in law in reaching its conclusion.

18. On this matter it seems to me plain that Lindsay J was fully entitled to take an adverse view of the evidence before him purporting to explain the gross delay in this case. I should add that while Lindsay J had referred to the delay as being some 50 days in fact, as I estimate it, it is a delay of no less than 14 weeks. Whilst part of that delay is perhaps excusable because of the lapse of time before Mr Wallace sent out his full reasons, nevertheless in truth no excuse was proffered by the applicant for the gross delay.

19. Mr Bhalla then addressed us on the footing that the application to adduce further evidence was refused by this court. He first submitted that Laws LJ had already decided in the applicant's favour that the appeal had merit. Mr Bhalla therefore was intending to proceed on the footing that all he had to deal with was the delay.

20. Laws LJ could by his order have decided the question of the merits of the appeal apart from delay, and adjourned the single question of delay to be heard at the further hearing. It is plain from his order that the Lord Justice did no such thing. He simply adjourned the application for permission to a court of two Lord Justices. That being so, the views of Laws LJ (which, I accept from Mr Bhalla, were that the appeal would have merit) were obiter views which cannot be treated as binding this court, though of course this court will take note of that fact when reaching its own conclusion and it is its own conclusion which it must reach on the matters put before us.

21. Mr Bhalla advanced three arguments to us on the merits of the appeal. The first was that Mr Wallace was perverse to reach the conclusion which he did. It was submitted to us that having regard to the relevant rules, the Value Added Tax Tribunals Rules 1986 (as amended) and in particular Rule 31(1), what is important is that a fax should be received at the appropriate tribunal centre by the facsimile transmission process. That receipt was necessary for there to have been service of a notice of appeal within the time specified in the unless order of the Chairman. Mr Bhalla submitted that in view of findings which Mr Wallace had made in favour of the applicant, it was perverse for Mr Wallace in paragraph 44 to reach the conclusion which he did.

22. The second argument which he advanced was that in any event the unless order was not satisfied because he said that Mr Wallace found as a fact that Customs did not comply with the unless order as regards the list of documents.

23. The third argument advanced was that the letter of 18th March, which was sent out by the Tribunal and received by the applicant, could be relied on as a decision of the Tribunal. He said that the taxpayer was entitled to regard that as such a decision, particularly as the applicant had not been notified until six months after the letter of 18th March that Customs were challenging what had been said in that letter.

24. These submissions all appeared to proceed on the footing that we in this court were considering the matter wholly afresh. That is a misapprehension. This court is considering whether or not Lindsay J arguably came to an erroneous conclusion in deciding in the exercise of his discretion that there should be no extension of time.

25. In the judgment of the judge he pointed out that in the case of Sayers v Clarke Walker [2002] 1 WLR 3095, Brooke LJ had considered whether the merits of a case should be taken into account by an appellate court faced with an application to extend time. In the Sayers case this court had said that the appellate court would have regard to the checklist in CPR 3.9, and Brooke LJ in paragraph 34 went on to say this:

"In cases where the arguments for granting or refusing an extension of time were otherwise evenly balanced, a court will have to evaluate the merits of the proposed appeal in order to form a judgment on what the defendants will be losing if time is not extended."

26. Lindsay J said that that was therefore a factor which came in where matters were otherwise evenly balanced, but he said that he did not regard that to be the case. He took the view that it was open to Mr Wallace to reach the conclusion of fact which he did, and that that conclusion could not be described as unreasonable. He accordingly refused to extend time.

27. I will deal briefly with the three arguments which Mr Bhalla advanced.

28. The first argument raises the question of perversity. To succeed on an appeal based on perversity requires the overcoming of a very high threshold. It has to be shown that no reasonable tribunal in the position which Mr Wallace was in could have reached the conclusion which he did reach. There was plainly some evidence before him, in the form of Mr Van der Wal's evidence, to support his conclusions, and it was open to Mr Wallace to conclude that, notwithstanding the points which Mr Bhalla had taken, on the balance of probabilities, something had gone wrong and that it was less likely that the mistake was by Mr Van der Wal than that the Tribunal had made a mistake. I cannot see any real prospect of an appeal on that ground succeeding in this court. Questions of the weight to be given to evidence are for the tribunal of fact, and it has not been shown that Mr Wallace was even arguably perverse on this point.

29. The second argument was a new argument which it is not open to the applicant to raise in this court for the first time. This point was not taken before Lindsay J when it could have been. I add that in any event the conclusion reached in paragraph 47 of Mr Wallace's decision seems to me not capable of serious challenge.

30. The third argument related to the letter of 18th March. I can well understand the applicant's annoyance and frustration at what has happened in this case. It was most unfortunate that Customs did not inform the applicant of what Customs were doing to have the appeal reinstated. However, it would be necessary to show that there was some ground in law which entitled the applicant to rely on the letter of 18th March as being in effect irrevocable, notwithstanding the findings of fact which were made by Mr Wallace as to what had actually happened and which falsified the factual basis on which the letter of 18th March was written.

31. I can see no such basis in law. The letter was not a Tribunal decision. True it came from the Tribunal, but the fact that a Proper Officer (who could be someone of junior rank) wrote a letter stating the result of the expiry of time when the Tribunal, as he thought, had not received the documents required to be lodged by the unless order, does not make that letter a decision of the Tribunal. When the factual basis of that letter was challenged by Customs, the dispute had to be determined by the Tribunal through a Chairman. That is what happened in front of Mr Wallace. It follows, in my judgment, that it is hopeless to seek to rely on that letter, premised as it was on a factual error.

32. Mr Bhalla submitted that Customs should have appealed that letter. That would be quite wrong. Customs could appeal decisions of the Tribunal. The question which arose in this case was whether or not documents had been lodged as required by the unless order, and it was entirely appropriate that the Tribunal itself should resolve that factual matter rather than that there should be an appeal on a question of law, as Mr Bhalla suggested.

33. Accordingly, I reach the clear conclusion that an appeal on each of the suggested grounds of appeal would have no real prospect of success. This court would not interfere with the judge's refusal to extend time. Nor can I see that any other compelling reason has been shown why this appeal should go ahead.

34. It follows that I would dismiss this application.

35. SIR MARTIN NOURSE: I agree, and cannot usefully add anything of my own.

ORDER: Application for permission to appeal refused.

(Order not part of approved judgment)

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