Europcar UK Ltd & Ors v HM Revenue & Customs

This is my judgment on the trial of 19 claims brought by test claimants within the by now many times amended Group Litigation Order (“GLO”) relating to Advance Corporation Tax (“ACT”) (“the ACT GLO”) which was originally made by Chief Master Winegarten on 26 November 2001. The main purpose of these particular claims is to determine four out of five of a new sub-category of EU Issues, know as the “Class 1 Post Judgment Issues”, which were added to the ACT GLO by an order made by Rimer J (as he then was) on 20 July 2007. The questions raised by those four issues are, in summary:

The remaining Class I Post Judgment Issue raises the fundamental question whether the provisions of section 320 of the Finance Act 2004 are contrary to European Community (“EC”) law in so far as they restrict the application of section 32(1)(c) of the Limitation Act 1980 with retrospective effect in relation to claims amended on or after 20 November 2003. By virtue of paragraph 13 of Rimer J’s order of 20 July 2007, trial of that issue was directed to await developments in the Aegis test case for Issue P in the Franked Investment Income (“FII”) Group Litigation. It is now one of the questions due to be determined (as Issue Q) in a hearing fixed for July of this year in the FII GLO. It is therefore common ground that the issues with which I am now concerned fall to be determined on the assumption that section 320 is compatible with EC law.

The general background to the ACT GLO is by now well known and has been described in a number of authoritative judgments. It forms part of what Lord Hoffmann has aptly termed “the forensic fall-out” from the decision of the Court of Justice of the European Communities (“the ECJ”) in Joined Cases C-397 and 410/98 Metallgesellschaft Limited and others v IRC and Hoechst AG and another v IRC [2001] Ch 620 (“Hoechst”). For the purposes of this judgment, it will suffice if I quote from the introductory paragraphs of Lord Hoffmann’s speech in Deutsche Morgan Grenfell Group Plc v IRC [2006] UK HL 49, [2007] 1 AC 558 (“DMG”):

“1.

… On 8 March 2001, the [ECJ] decided that United Kingdom revenue law, which had since 1973 allowed companies whose parents were resident in the United Kingdom to elect to pay dividends free of [ACT], discriminated unlawfully against companies with parents resident in other member states: [Hoechst]. The exaction of the tax from such companies had been contrary to the EC Treaty and they were entitled to compensation.

2.

The forensic fall-out from this decision has been very considerable. Large numbers of subsidiaries of companies resident in other member states have lodged claims for compensation or restitution, some raising difficult ancillary points of law. The High Court has made a [GLO] to enable these points to be resolved in an orderly fashion. The main point in this appeal concerns the period of limitation applicable to such claims. But that in turn raises some fundamental questions about the cause of action upon which the claimants rely.

3.

Before coming to these questions, I must briefly enlarge upon the provisions relating to [ACT] which the [ECJ] held to be contrary to Community law. The tax, which was abolished in 1999, was in theory corporation tax payable in advance of the date on which it would otherwise have been payable. A company resident in the United Kingdom pays corporation tax on profits arising in a given accounting period and, generally speaking, the tax is payable nine months after the period ends. But the trigger for the payment of corporation tax was the payment of a dividend. A company which paid a dividend became liable to account to the Inland Revenue for ACT calculated as a proportion of the dividend. This could afterwards be set off against the corporation tax (“mainstream corporation tax” or “MCT”) which became chargeable on its profits. The revenue thereby obtained early payment of the tax and, in cases in which the company’s liability for MCT turned out to be less than it had paid as ACT, payment of tax which would not otherwise have fallen due.

4.

The rule that ACT was payable on dividends was however subject to an exception if the dividend was paid to a parent company in the same group. Under section 247 of the Income and Corporation Taxes Act 1988 the company and its parent could jointly make a group income election which gave them the right to be treated for the purposes of ACT as if they were the same company. No ACT would be payable on the distribution by the subsidiary. It would however be payable on any distribution by the parent. The Act confined the right of election to cases in which the parent was resident in the United Kingdom. Otherwise a subsidiary which had elected would not be liable to ACT and the parent, being non-resident, would not be liable either.

5.

In [Hoechst] the [ECJ] decided that these arrangements infringed the right of establishment guaranteed by article 52 (now 43) of the EC Treaty in that they discriminated against companies resident in other member states. It held that the companies which had been unlawfully required to pay ACT were entitled to restitution or compensation. The nature of the remedies, the procedures by which they could be enforced and matters like the appropriate limitation periods were said to be matters for domestic law. The only specific qualification imposed by the [ECJ] was that English courts could not apply the rule in The Pintada … [1985] AC 104 to deny any recovery of interest to a claimant whose ACT had been set off against MCT before the commencement of proceedings. The claimant was entitled to be compensated for loss of the use of the money between the date on which it was paid and the date when MCT became due.”

A fuller account of the legislative background and the decision of the ECJ in Hoechst may conveniently be found in the judgment of Rimer J in Pirelli Cable Holding NV v Revenue & Customs Commissioners (No.2) [2007] EWHC 583 (Ch), [2008] STC 144 (“Pirelli”), at paragraphs 7–15, 19–21 and 23–24.

Where a United Kingdom company has overpaid ACT in a situation where, had it been able to do so under UK domestic law, it would have made a group income election, there are in principle three different causes of action recognised by English law which may permit the company to recover compensation for its loss from the Revenue (an expression which I shall use to refer to HMRC and their predecessors the Commissioners of Inland Revenue). The first is an action for damages, in the nature of an action for breach of statutory duty (i.e. the infringement of article 43), in accordance with the well-known principles laid down by the ECJ in the Factortame litigation: see Brasserie du Pecheur SA v Federal Republic of Germany and R v Secretary of State for Transport, ex parteFactortame Limited (No. 4) (Joined Cases C-46/93 and C-48/93), [1996] QB 404. The second is a claim for restitution of tax unlawfully demanded under the principle established by the House of Lords in Woolwich Equitable Building Society v IRC [1993] AC 70 (“Woolwich”). The third, established by the decision of the House of Lords in DMG, is a restitutionary claim for tax wrongly paid under a mistake of law.

It is important to note at this early stage that, although the second and third of the above causes of action are both founded on the developing law of restitution, they are (at any rate as the law now stands) conceptually distinct and subject to differing requirements. As Lord Hoffmann pointed out in DMG at para 21, English law as yet “has no general principle that to retain money paid without any legal basis (such as debt, gift, compromise, etc) is unjust enrichment”. Accordingly, a claimant in England “has to prove that the circumstances in which the payment was made come within one of the categories which the law recognises as sufficient to make retention by the recipient unjust” (ibid). See too the valuable observations of Lord Walker of Gestingthorpe at paras 150–158 under the sub-heading “The foundations of unjust enrichment”. Although mistake is, self-evidently, a crucial ingredient of the third cause of action, it is not a necessary ingredient of the second (Woolwich) cause of action. Indeed, the claimant building society in Woolwich was clearly not labouring under a mistake in any normal sense of the word, because it paid the unlawfully exacted tax under protest: see for example the speech of Lord Goff of Chieveley at 171 G-172 A and 173 D, and Lord Slynn at 201 A – B. Under the law as it was generally understood before the landmark decision of the House of Lords in Kleinwort Benson Limited v Lincoln City Council [1999] 2 AC 249 (“Kleinwort Benson”), the claimant would have had no remedy in Woolwich if it had in fact paid the tax under a mistake of law. This may explain why the company chose to frame its claim on a different basis where the presence or absence of a mistake was irrelevant. In any event, as Lord Hoffmann said in DMG at para 13:

“The Woolwich principle is indifferent as to whether the taxpayer paid the tax because he was mistaken or, as in the Woolwich case, for some other reason.”

It is also important to note that it was a question of limitation which lay behind the dispute between the taxpayer company and the Revenue in DMG. The company started its action on 18 October 2000, claiming compensation for having had to pay ACT on three dividends which it had paid to its German parent company between 1993 and 1996. The first of the dividends had been paid in October 1993, more than six years before the commencement of the claim. There was also an issue whether the subsequent payments of dividends in February 1995 and January 1996 were covered by the wording of the claim as originally pleaded, or whether they were effectively introduced for the first time by an amendment made in August 2002, in which case the latter date would be taken as the commencement date of the action in respect of those dividends, and would again fall outside the usual limitation period of six years. The reason why the company wished to establish that it had a separate cause of action for tax paid under a mistake of law was in order to take advantage of section 32(1)(c) of the Limitation Act 1980, which provides that where the action is for “relief from the consequences of a mistake”, the period of limitation does not begin to run until the claimant has discovered the mistake “or could with reasonable diligence have discovered it”.

It was common ground in DMG that the usual limitation period of six years applied to any claim by the company to recover compensation for breach of statutory duty or under the Woolwich principle. Accordingly, as Lord Hoffmann explained in para 7 of his speech:

“DMG therefore argues that it has an additional cause of action for restitution on the ground that the money was paid by mistake … DMG says that it did not discover its mistake until the [ECJ] gave judgment (after the commencement of proceedings) and no amount of diligence could have enabled it to know in advance what the [ECJ] was going to say.”

The House of Lords held unanimously in DMG that a taxpayer who has wrongly paid tax under a mistake of law is entitled at common law to a restitutionary remedy against the Revenue. In so holding they upheld the decision of Park J at first instance, and reversed the Court of Appeal (Jonathan Parker, Rix and Buxton LJJ) who had taken the view, based largely on their reading of a passage in the speech of Lord Goff in Kleinwort Benson, that payments of tax under a mistake of law were recoverable only under the Woolwich principle or under the special statutory regime for relief from errors or mistakes in a return contained in section 33 of the Taxes Management Act 1970. The House also held that a taxpayer is not precluded from pursuing his claim on the basis of mistake of law, with its longer limitation period, merely because he might also have a concurrent cause of action under another common law principle (such as a Woolwich claim).

There was a division of opinion between their Lordships on the questions whether the claimant had in fact paid ACT under a mistake of law, and (if so) when the mistake was discovered by the claimant. The majority (Lord Scott of Foscote dissenting) held that the claimant had paid the ACT under a mistake of law, but there was some disagreement between them about the nature of the mistake which had been made. Lord Hoffmann took the view that the mistake was about whether the company was liable for ACT (see para 31), whereas Lord Hope agreed with Park J in identifying the mistake as being about whether group income elections could be made (see para 62). Lord Walker substantially agreed with Lord Hoffmann, saying (para 143) that the company paid the ACT because it mistakenly thought that it had to, and the fact that there was a procedural requirement for a group income election did not alter the substance of the mistake, because any attempt to make such an election would undoubtedly have been rejected by the Revenue. For his part, Lord Brown of Eaton-under-Heywood saw the touchstone as being when a party comes to recognise that he has a worthwhile claim to recover the payment which he has made (see para 165), and considered that payments made after that date could no longer be regarded as made under a mistake of law. He identified that date as having occurred in July 1995 when the company first became aware of the Hoechst proceedings and “recognised that there was a serious legal challenge to the legality of the UK’s ACT regime under EC law” (para 162). Lord Scott, dissenting, considered that the company did not pay the ACT under a mistake at all, because “there was a legal obligation under a valid statutory provision for the money to be paid” (para 89), with the result that DMG’s remedy was, in his opinion, not a restitutionary one for the repayment of money under Woolwich, or for the repayment of money paid under a mistake, but was a claim for compensation to recover the loss caused by the breach of Community law.

As to the date when the mistake was (or could with reasonable diligence have been) discovered by the company, Lord Hoffmann, Lord Hope and Lord Walker all agreed in identifying it as the date when the ECJ gave its ruling in Hoechst on 8 March 2001. Again, however, they differed somewhat in the reasoning which led them to this conclusion. Lord Hoffmann founded his view largely on the retrospective nature of judicial decision-making, and the impossibility of saying before the ECJ gave its judgment what the law would, in the light of that judgment, turn out to have been: see in particular paras 23 and 31. Lord Hope held (para 71) that DMG’s mistaken belief that a group income election was not available was not shown to be wrong until the ECJ determined the issue. The issue, which was one of law, was not capable of being resolved except by litigation, and until the determination by the ECJ the mistake could not have been “discovered” within the meaning of section 32(1)(c). To similar effect, Lord Walker held in para 144 that it was the judgment of the ECJ that “first turned recognition of the possibility of a mistake into knowledge that there had indeed been a mistake”. He accepted that there may be cases where a party may be held to have discovered a mistake even in the absence of any authoritative pronouncement on the point by a court, but on the facts in DMG he considered it clear that the judgment of the ECJ “was the decisive moment”.

It is fortunately unnecessary for me to analyse in any greater detail the precise nature of the mistake which engaged the restitutionary remedy held to exist by the House of Lords in DMG, or the reasons for picking the date when time began to run for the purposes of section 32(1)(c) as the date when the ECJ gave its judgment in Hoechst. I say this because in each of the 19 cases with which I am now concerned the claimant has provided the Revenue with evidence in support of its claim that it paid ACT by mistake, and having considered that evidence the Revenue has accepted it. Accordingly, it is now conceded by the Revenue that the first of the Class 1 Post Judgment Issues (“Did the claimant pay the ACT under a mistake?”) should in each case be answered in the affirmative. Furthermore, the Revenue do not argue in any case for a date other than 8 March 2001 to be taken as the date when the limitation period began to run for the purposes of section 32(1)(c).

It follows that the key issues at the hearing before me have been the second, third and fourth of the Class 1 Post Judgment Issues, which I will now set out in the form in which they appear in paragraph 9(v) of the ACT GLO following its amendment by Rimer J’s order of 20 July 2007:

“(v)

Class 1 Post Judgment

Description of claims to which these Issues are relevant:

Where the claimant (other than a claimant in the [DMG and Sempra Metals] test cases for EU Limitation Issues (A) and (B) and Quantum Issues (A) and (B)) is a UK resident subsidiary of a parent company resident in another Member State of the EU/EEA which parent was not entitled to a tax credit under the terms of the relevant double tax convention with the UK upon the receipt of dividends from its UK subsidiary and it is enrolled in EU Limitation Issues (A) and (B) and the claimant’s claim concerns ACT paid in excess of 6 years before the issue or amendment of the claim form:

(A)

…

(B)

For limitation purposes, did the claimant make a valid claim in mistake prior to 8 September 2003?

(C)

If the claimant did not make such a claim, but brought an action before 8 September 2003 which was subsequently amended to add a claim in mistake after 20 November 2003, what is the effect of section 320 of the Finance Act 2004?

(D)

Would the answer to question (C) be any different and if so how if the claim issued before 8 September 2003 rather than being amended after 20 November 2003 was re-issued as a new claim after that date in respect of the same subject matter?

(E)

… ”

It will be seen from the introductory description of the claims to which the Class 1 Post Judgment Issues are relevant that one of the conditions which the claimant needs to satisfy is that it is enrolled in EU Limitation Issues (A) and (B). Those issues are to be found in paragraph 9(i) of the ACT GLO, and as amended by an order of Park J dated 21 November 2002 they read as follows:

“(i)

Limitation

(A)

Can a Claimant’s claim properly be brought as a claim for restitution for mistake of law or must such claim be brought only as:

(a)

a claim for damages; and/or

(b)

a claim for restitution in respect of payment made pursuant to an unlawful demand?

(B)

If the claim may be properly brought in restitution based on mistake of law, does the applicable limitation period for such a claim in restitution start to run from the date of the decision of the [ECJ] in [Hoechst] (8 March 2001) by reason of section 32(1)(c) Limitation Act 1980? If not, from what date does the applicable limitation period start to run?”

These were of course the issues which the House of Lords finally determined in DMG. The important point to note for present purposes is that every claimant which is enrolled in the Class 1 Post Judgment Issues was also enrolled in the two limitation issues determined by DMG, and must therefore have been interested in the question whether its claim could properly be brought on the basis of restitution for mistake of law, and in the question when the limitation period for such a claim would begin to run. I would also observe that the two limitation issues formed part of the ACT GLO from its inception on 26 November 2001, although prior to the amendment on 21 November 2002 the first issue did not differentiate between a Woolwich claim and a claim based on mistake of law and simply asked the question:

“(A)

Can a Claimant’s claim properly be brought in restitution based on mistake of law as well as by way of a claim for damages (as the Defendants accept)?”

Before I come on to consider the live issues, I need to say a little more about the claims before me and about the special features of the GLO procedure.

Of the 19 test claimants, 17 are represented by the designated lead solicitors for the Class 1 Post Judgment Issues, Messrs Dorsey & Whitney, and by Mr David Cavender of counsel. The 18^th test claimant, Iveco (UK) Ltd, is represented by a different firm of solicitors, Messrs Reynold Porter Chamberlain, but the same counsel, Mr Cavender. The 19^th test claimant, Amalgamated Metal Corporation Plc (“AMC”), is represented by Messrs Farrer & Co and by Mr Francis Fitzpatrick of counsel. The defendants (the Revenue and, in some cases, the Attorney General) appear by Mr Rupert Baldry of counsel.

The 18 claimants represented by Mr Cavender are all in essentially the same position, although there are some minor differences of detail. They are members of ten multi-national commercial groups, of which the first, Europcar, may be taken as typical. In each case the claimant issued a Part 8 claim form, on dates which range from July 1995 (the two Pirelli group claimants) to August 2002 (the Schott group claimant). In each case the claim form, as originally pleaded, gave a brief summary of the claim which did not expressly mention a claim for compensation or restitution based on payments made under a mistake of law. In each case relief was sought in respect of at least some payments of ACT which pre-dated the issue of the claim form by more than six years.

By way of example, the first claimant, Europcar UK Limited, issued its Part 8 claim form on 26 November 2001. Part 8 of the CPR is headed “Alternative procedure for claims”. It was intended to replace, in a simplified form, the former High Court procedure by way of originating summons. By virtue of CPR 8.1(2), a claimant may use the Part 8 procedure where “he seeks the court’s decision on a question which is unlikely to involve a substantial dispute of fact”. Rule 8.2 then provides that where the claimant uses the Part 8 procedure the claim form must state (among other things) that Part 8 applies, and

“(b)

(i) the question which the claimant wants the court to decide; or

(ii)

the remedy which the claimant is seeking and the legal basis for the claim to that remedy; … ”

In its claim form Europcar UK Ltd set out the details of its claim in five numbered paragraphs. The first paragraph said that it was a UK resident company and a wholly owned subsidiary of a French parent, to which it had paid dividends (together with ACT pursuant to sections 14, 208, 231 and 247 of, and schedule 13 to, ICTA 1988, defined as “the ACT Provisions”) on seven dates between 1983 and 1989 which were set out (together with details of the amounts of ACT paid) in a schedule. Paragraph 2 then said this:

“2.

Had the Parent been a UK resident company, the payment of ACT on dividends from the Claimant would not have been required as a group income election under Section 247 of ICTA could have been made. As a group income election could not be made regarding dividends paid to the Parent, ACT was required to be paid by the Claimant on funds paid by way of dividends to the Parent. Had the Parent been a UK resident, the Claimant would not have paid ACT upon the dividends.”

Paragraph 3 then set out the relief claimed, which included (after appropriate declarations):

“(d)

Damages for breach of and/or failure to comply with [the relevant EC Treaty provisions and the relevant article of the double taxation agreement between the United Kingdom and France].

(e)

Restitution of (and/or compensation or damages for) monies paid by the Claimant pursuant to demands by the Defendants and the ACT Provisions of ICTA, those provisions being contrary to the articles of the Treaty referred to above and/or the articles of the Double Tax Convention as referred to above.”

Paragraphs 4 and 5 were of a purely formal nature, certifying that the value of the claim exceeded £15,000 and that Part 8 of the CPR applied to the claim.

In each case the claim remained in essentially this form until 8 September 2003, that being the date when the provisions of section 320 of the Finance Act 2004 first came into effect. In each case a subsequent amendment introduced an express reference to mistake of law as an alternative ground for the relief claimed. In the case of Europcar, the amended claim form dated 27 February 2007 did no more than change paragraph 3(e) of the details of claim so that it read as follows (for ease of reference I have underlined the new wording):

“(e)

Restitution of (and/or compensation or damages for) monies paid by the Claimant pursuant to unlawful demands by the Defendant and the ACT Provisions of ICTA, those provisions being contrary to the articles of the Treaty referred to above and/or the articles of the Double Tax Convention as referred to above, and paid under a mistake of law.”

The addition of the word “unlawful” was evidently intended to make it clear that restitution was in the first place being claimed on the Woolwich basis, while the addition of the words “and paid under a mistake of law” made it clear that restitution was also being claimed on the basis of payments made under a mistake of law. It should be noted here that the House of Lords had given judgment in DMG some four months earlier, on 25 October 2006; and on the footing that the extended limitation period for a claim based on mistake had begun to run on 8 March 2001, the amendment was made nine days before the expiry of the period on 7 March 2007 (ignoring the effect, if any, of section 320).

The 19^th test claimant, AMC, is in a somewhat different position from the other test claimants. For example, it began its action with a Part 7, not a Part 8, claim on 15 January 2002, and expressly stated from the outset that its claim was also founded upon the common or related issues of law to be determined in the ACT GLO, including the limitation issues in sub-paragraphs (i)(A) and (B). Because of these differences, it was agreed at the start of the hearing that I would hear the other claims first and would then hear AMC’s claim immediately after. I propose to follow the same course in this judgment, and will postpone my consideration of AMC’s claim until I have dealt with the claims of the other claimants represented by Mr Cavender.

Much of the argument on the first issue (i.e. the question whether the claimant made a valid claim in mistake for limitation purposes before 8 September 2003) revolved around the special procedural features of GLOs in general, and the ACT GLO in particular. It is therefore convenient to deal with this aspect of the matter first.

The rules relating to GLOs are contained in section III of CPR Part 19 (Rules 19.10 to 19.15) and an associated Practice Direction. These provisions were added to the CPR by the Civil Procedure (Amendment) Rules 2000 (SI 2000 No 221), rule 9, and came into force on 2 May 2000. They were intended to achieve the objectives stated in Lord Woolf’s Final Access to Justice Report of July 1996, Chapter 17 of which recommended that new procedures dedicated to multi-party claims should be introduced with the following objectives:

CPR rule 19.10 defines a GLO as an order made under rule 19.11 to provide for the case management of claims which give rise to common or related issues of fact or law (the “GLO issues”). Rule 19.11(1) provides that the court may make a GLO where there are, or are likely to be, a number of claims giving rise to the GLO issues. By virtue of rule 19.11(2) a GLO must contain directions about the establishment of a register (the “group register”) on which the claims managed under the GLO will be entered, must specify the GLO issues, and must specify the management court which will manage the claims on the group register. Rule 19.11(3) provides that a GLO may, in relation to claims which raise one or more of the GLO issues, direct their transfer to the management court, order their stay until further order, and direct their entry on the group register.

Rule 19.12 contains important provisions about the effect of the GLO, the general effect of which is that where a judgment or order is given or made in a claim on the group register in relation to one or more GLO issues, that judgment or order is binding on the parties to all other claims that are on the group register at the time the judgment is given or the order is made, unless the court orders otherwise, and such a judgment or order will also be binding on any parties who subsequently join the group register unless they apply to the court for an order that the judgment or order is not to bind them. By virtue of rule 19.12(2) any party who is adversely affected by a judgment or order which is binding on him may seek permission to appeal the order. Rule 19.12(4) provides that unless the court orders otherwise disclosure of any documents relating to the GLO issues by a party to the GLO is to be treated as disclosure to all the parties then or subsequently on the group register.

Rule 19.13 sets out various directions which may be given by the management court, including directions which provide for one or more claims on the group register to proceed as test claims and for the appointment of the lead solicitor. Rule 19.14 deals with removal of a party from the register, and rule 19.15 enables a fresh test claimant to be substituted if the claim of an original test claimant is settled.

The associated Practice Direction contains a number of ancillary provisions, including the following:

The ACT GLO was the first GLO to be made in the Chancery Division, and was made at the request of the Revenue, not the taxpayers. Its purpose was to deal with the common or related issues of law arising from claims brought against the Revenue and/or the Attorney General on the basis that the provisions relating to ACT in UK tax legislation were contrary to the EC Treaty and/or contrary to double taxation conventions entered into between the UK and other states: see paragraph 1 of the Order of 26 November 2001. The common or related issues of law were set out in paragraph 9 of the order, which has now been amended no fewer than 9 times. I have already quoted the relevant issues for the purposes of the present proceedings, which are the EU Issues contained in sub-paragraphs 9(i)(Limitation) and 9(v)(Class 1 Post Judgment).

By virtue of paragraph 11 of the ACT GLO, all the claims listed in Schedule 1 (which sets out details of the participating claimants), except for those identified to proceed as test claims pursuant to paragraph 10, are stayed until further order, but with permission to apply for the stay to be lifted on giving 14 days’ written notice to the other parties.

At this point it will be helpful to cite some important observations made by Lord Woolf in Boake Allen Limited v Revenue and Customs Commissioners [2007] UKHL 25, [2007] 1 WLR 1386 (“Boake Allen”). I will need to say more about this case later on, and the relatively strict approach which the Court of Appeal adopted to amendments made by the taxpayer companies to add new claims based on unlawful demands and on a mistake of law in the context of another group of claims arising under the ACT GLO. In the event it was unnecessary for the House of Lords to deal with these pleading issues, because they decided the case on a basis which made them irrelevant. However, Lord Woolf was evidently concerned about the approach taken by the Court of Appeal, and their failure (as he saw it) to make proper allowance for the objectives of the GLO regime. I will pick up his speech at paragraph 30, [2007] 1 WLR 1386 at 1394E:

“30.

In view of the outcome of this appeal in accordance with the opinion of Lord Hoffmann, the decision of the Court of Appeal as to the amendment is of no practical significance to the parties. However, my concern is as to its possible effect on future practice in relation to GLOs. GLOs can involve hundreds or thousands of different parties. In such a situation any step which each of the many parties has to take can cumulatively so effect the total costs, as to make them disproportionate both to the means of the parties to the action and the issues at stake. For this reason it is important that such steps generate the least possible costs.

31.

This may not appear to be such a problem in this case, as the actions are being brought against a government department over very substantial sums of money. However, where this is avoidable, having one rule for one set of litigants who have ample means and a different rule for litigants of lesser means, cannot be justified. All litigants are entitled to be protected from incurring unnecessary costs. This is the objective of the GLO regime. Primarily, it seeks to achieve its objective, so far as this is possible, by reducing the number of steps litigants, who have a common interest, have to take individually to establish their rights and instead enables them to be taken collectively as part of a GLO Group. This means that irrespective of the number of individuals in the group each procedural step in the actions need only be taken once. This is of benefit not only to members of the group, but also those against whom proceedings are brought. In a system such as ours based on cost shifting this is of benefit to all parties to the proceedings.

32.

Before a GLO can be made it is necessary for each individual potential member who wishes to join the GLO to make an individual claim under CPR Part 7 or Part 8. This in conjunction with the application to register enables the court to determine whether the respective litigants qualify to be a member of the GLO. It also prevents time continuing to run for purposes of limitation of actions. Nonetheless the claim once made will usually almost immediately be of only limited historic interest because what matters is the application to register and the register of the GLO on which all proceedings subject to the GLO are registered. The purpose of a GLO is then “to provide for the case management of claims which give rise to common or related issues of fact or law…” [Lord Woolf then cites further provisions in CPR rules 19.13 and 19.12].

33.

In considering the leave to amend issue the Court of Appeal do not appear to have had submissions addressed to them as to the significance of the proceedings being the subject of a GLO. No doubt it was as a result of this, that they failed to consider the question of whether an amendment was necessary and if so whether permission could be given in the context of the GLO. In the context of a GLO, a claim form need be no more than the simplest of documents. It needs to be read together with the application to register and the register bearing in mind its place in the GLO process and the need to limit pre-registration costs so far as this is possible. In this case the suggested deficiency in the claim forms are that they did not sufficiently identify the basis for the Revenue being under an obligation to repay the tax paid assuming this should not have been claimed by the Revenue. This is an area of the law the parameters of which are still evolving. In my judgment it would be wholly inconsistent with the objective of the GLO to require the nature of the remedy claimed to be spelled out in detail in the claim forms of the taxpayers. The Revenue knew perfectly well the basis of the claims once the issues had been defined for the purpose of the GLO. For each of the parties to have to spell out details of the manner in which they would advance their claim at the outset would have caused substantial extra costs to be incurred in researching the law. Cumulatively this would have been grossly wasteful. The decision of the Court [of] Appeal should not be treated as requiring a claim to set out more than an outline of the claim. Furthermore for limitation purposes in the case of a GLO the individual claims should be construed in conjunction with the applications for the claims to be registered and, from the time of registration, the register.”

None of the other members of the House in Boake Allen (Lord Hoffmann, Lord Walker, Lord Mance and Lord Neuberger of Abbotsbury) said anything about the pleading issues, nor did they state whether they agreed, or disagreed, with the observations of Lord Woolf which I have quoted. Nevertheless, it seems to me that those observations, coming as they do from the architect of the CPR and the author of the Final Report which identified the problems which the GLO regime was introduced to remedy, are entitled to the greatest respect. Furthermore, I have no doubt that Lord Woolf was right when he said in paragraph 33 that in the context of a GLO a claim form “need be no more than the simplest of documents”, and that for limitation purposes “the individual claims should be construed in conjunction with the applications for the claims to be registered and, from the time of registration, the register”.

If the Part 8 claim form of Europcar UK Limited is read in isolation, I would see much force in the submission of counsel for the Revenue that it does not contain a sufficiently pleaded claim for restitution on the ground of mistake of law. The word “mistake” nowhere appears, either in the body of the claim or in the prayer for relief. It is true that restitution is expressly claimed, but (leaving aside the claim based on alleged breach of the non-discrimination article of the UK/French double taxation agreement) the claim is only explicitly based on the alleged illegality of the ACT Provisions. In other words, it appears at first blush to be a claim based on the Woolwich principle and nothing more. The ACT Provisions, and the payment of the ACT pursuant to them, are pleaded in paragraph 1; paragraph 3(a) seeks a declaration that the ACT Provisions as they apply to the claimant and its French parent are contrary to the EC Treaty and therefore illegal; and paragraph 3(e) claims restitution of monies paid by the claimant pursuant to demands by the Revenue and the ACT Provisions, “those provisions being contrary to the articles of the Treaty”.

As I have already pointed out, the making of a mistake is, obviously, an essential ingredient of a claim for restitution based on mistake of law, whereas it is not a necessary ingredient of a Woolwich claim. Accordingly, a claim which pleads the necessary ingredients of a Woolwich claim, but does not allege that a mistake was made, cannot without more be read as a mistake-based claim, even making every allowance for the relatively summary pleading requirements of the Part 8 procedure. CPR 8.2(b)(ii) requires the claim form to state “the remedy which the claimant is seeking and the legal basis for the claim to that remedy” (my emphasis). In my judgment it cannot be said that a claim form which fails to refer either expressly or inferentially to a mistake has sufficiently pleaded the legal basis for a claim to mistake-based restitution.

However, I have so far not referred to paragraph 2 of the claim form, which (see paragraph 19 above) pleads that a group income election could have been made had the claimant and its parent both been UK-resident, and goes on to say:

“Had the Parent been a UK resident, the Claimant would not have paid ACT upon the dividends.”

This amounts to a clear averment that a group income election would have been made, and ACT would not have been paid on the dividends, if the parent company had been UK resident. If one then goes on to ask why an election was not in fact made, it is reasonable to infer, in the context of the pleading as a whole, that it was because the two companies mistakenly thought it was not open to them to make one, or perhaps because they mistakenly thought that ACT was payable in the absence of such an election, even if the parent was resident in an EC member state. Either way, it seems natural to infer that a mistake was made by the two companies about their legal rights, and that this explains why the draftsman of the claim form thought it necessary or advisable to include this paragraph. However, another possible view, again looking at the claim form in isolation, is that the reason for the inclusion of paragraph 2 is nothing to do with mistake, but rather to do with causation. In order to recover substantial damages or compensation in respect of the ACT that had been paid, it would plainly be necessary for the claimant to establish, as a matter of fact, that a group income election would have been made if the opportunity to make one had in any realistic sense been available. Obviously, if the election would not have been made, even if it was available, the claimant would have nothing to complain about.

If the claim form stood alone, it would in my view be a nicely balanced question whether the possibility of inferring a plea of mistake of law from the terms of paragraph 2, read in the context of the pleading as a whole, would be sufficient to ground a claim of mistake-based restitution. In my judgment, however, I do not need to answer that question because, in the context of the ACT GLO, the claim form both can and should be read in conjunction with the order establishing the GLO and the register recording which of the common issues of law each claimant wished to have determined. As I have already explained, all of the claimants with which I am now concerned subscribed to determination of the GLO limitation issues, including the questions whether their claim could properly be brought in restitution based on mistake of law, and (if so) when the limitation period for such a claim began to run. In my judgment this fact is crucial, because it resolves any ambiguity about the ambit of paragraph 2 of the claim form and makes it clear that the claimant wished to rely on the absence of a group income election both to ground a claim in mistake and for causation purposes. The suggestion that the claimants might have signed up to determination of an issue that was of no concern to them and they did not wish to pursue would clearly be absurd, not least because of the exposure to costs which would ensue if the issue were determined in the Revenue’s favour. Accordingly, my provisional view is that if the claim form is read together with the GLO order and the register, as common sense and the guidance given by Lord Woolf in Boake Allen alike suggest, there can be no real doubt about the answer to the question raised by the first issue: a valid claim in mistake was indeed made before 8 September 2003, and it was understood between the Revenue and the claimants concerned that it would be determined within the ACT GLO by the test case to be brought on the limitation issues, i.e. DMG.

I must now consider whether there is anything in the judgments of the Court of Appeal in Boake Allen which requires me to modify my provisional conclusion. The case is reported in the Court of Appeal under the name NEC Semi-Conductors Limited v IRC [2006] EWCA Civ 25, [2006] STC 606 (“NEC Semi-Conductors”). The appeal was heard in July 2005, and judgment was given on 31 January 2006. The case had been heard at first instance by Park J in October and November 2003: see [2003] EWHC 2813 (Ch), [2004] STC 489. Like the present case, and like DMG and Pirelli, it was a test case brought under the ACT GLO. The particular issues for determination were at least some of the Double Tax Convention Issues set out in the GLO as amended. The claims did not involve groups of companies where the UK subsidiary which paid the ACT was owned by a parent resident in an EC member state, but rather groups where the parent was based in a non-member state such as Japan or the USA. The two main questions for determination, in broad terms, were (a) whether the inability of the non-resident parent to join in a group income election was in breach of provisions of a double taxation agreement incorporated into UK law, and (b) whether that inability was also a breach of EU law, under article 56 EC: see paragraph 6 of the judgment of Lloyd LJ.

The taxpayer companies lost at all three stages, but for different reasons. Park J held that the ACT regime did indeed discriminate against companies in the claimants’ position contrary to the non-discrimination provisions contained in the relevant double taxation agreements, but that those provisions as incorporated into UK domestic law by section 788 of ICTA 1988 did not entitle the claimants to relief from ACT, which was not “corporation tax in respect of income or chargeable gains” within the meaning of section 788(1)(b) and (3)(a). He also held that the legislation did not breach article 56, because it fell within the saving in article 57(1) for the application to third countries of restrictions on the movement of capital which existed on 31 December 1993. It was therefore unnecessary for Park J to deal with the remedies to which the claimants would have been entitled had their claim succeeded. He did, however, deal briefly with a limitation issue which arose out of amendments to the original pleadings which he had allowed to be made pursuant to a consent order on 11 July 2003. The terms on which the amendments had been made were subject to an express saving for the question whether the proposed amendments had the effect of adding new claims within the meaning of section 35 of the Limitation Act 1980. Park J held (see paragraph 71 of his judgment) that the amendments did not add new claims, but arose out of the same or substantially the same facts as the original claims. In particular, he said in paragraph 71(iii):

“A related point is that the amended pleadings allege that the claimants and their parent companies did not know that they were entitled to make group income elections, and it was by reason of a mistake on their part that they did not know that. This too seems to me to arise out of the same or substantially the same facts as those originally pleaded: it is inherently obvious, and in my view it would be pedantic obscurantism to insist that it be separately pleaded.”

In the Court of Appeal, the taxpayer companies appealed against Park J’s decision on the substantive issues and the Revenue cross-appealed against his decision on the pleading point. The Court (Mummery, Sedley and Lloyd LJJ) dismissed the taxpayers’ appeal, for substantially the same reasons as those given by Park J in relation to the construction and effect of the double taxation agreements and the effect of section 788 of ICTA 1988; in relation to articles 56 and 57 EC, however, they considered that the position was potentially more complex than Park J had allowed, but nevertheless declined to make a reference to the ECJ until the House of Lords had ruled on the relevant issues of UK law. These conclusions made it strictly unnecessary for the Court to deal with the Revenue’s cross-appeal. However, Mummery LJ dealt with it at some length, in a passage of his judgment to which I will shortly return, and held that the cross-appeal should be allowed. Sedley and Lloyd LJJ agreed with him, for the reasons which he gave: see paragraphs 84 and 89.

In the House of Lords, the leading speech was given by Lord Hoffmann. He held, in short, that there was no breach of the non-discrimination provisions in the relevant double taxation agreements, because a group income election under section 247 of ICTA 1988 was a joint decision by two entities paying and receiving dividends that one rather than the other would be liable for ACT, and as such could not apply when one of the entities was not liable for ACT by reason of residence abroad. As Lord Hoffmann said in paragraph 17:

“An election is a joint decision by two entities paying and receiving dividends that one rather than the other will be liable for ACT. This is not a concept which can meaningfully be applied when one of the entities is not liable for ACT at all.”

Lord Hoffmann went on to explain that the claim under article 56 EC had been overtaken by recent decisions of the ECJ: see paragraphs 24 and 25. Finally, in paragraph 26 he said that it was unnecessary to express any view on the remedies to which the appellants would have been entitled if they had succeeded.

The other four members of the appellate committee agreed with Lord Hoffmann. Lord Mance and Lord Neuberger would also have dismissed the appeal for the main reason given in the courts below, namely that even if there was a breach of the non-discrimination articles of the double taxation agreements, effect was not given to those provisions in UK domestic law by section 788 of ICTA 1988. Lord Woolf, for his part, added the observations on the pleading and limitation issues to which I have already referred: see paragraphs 30 – 31 above.

Against this background, I can now turn to the judgment of Mummery LJ on the pleading issue.

He began in paragraph 107 by emphasising that “the pleadings matter”. They “are the starting point for defining the issues and identifying the causes of action, which can affect the nature of the domestic remedies available to a claimant complaining of overpaid or prematurely paid ACT”. Accordingly, although it was strictly unnecessary for the court to do so in order to dispose of the appeal, he considered that the court should deal with all the points argued by the parties. In paragraph 110 he said that the litigation was exceptional in his experience, and the arguments had given the court “an overview of the ACT group litigation”. He referred to the vast scale and complexity of the litigation arising from the decision of the ECJ in Hoechst, and in paragraph 111 he referred to the important ruling of the House of Lords on procedural issues in Autologic Holdings Plc v IRC [2005] UKHL 54, [2006] 1 AC 118, which had been handed down soon after the conclusion of argument on the appeal. In paragraph 112 he said that the time had come for the court “to take stock of the overall situation”, and that the pleading points needed to be addressed in detail now.

Mummery LJ then commented on the original pleadings, which he described in paragraph 114 as “uninformative” considering the size of the sums at stake and the novelty of the questions raised. He summarised the position in paragraphs 116 and 117:

“116.

The original claim forms did not expressly identify any cause of action or plead any relief by way of restitution or compensation based on allegations that payments of ACT by the appellants/claimants were made either pursuant to an unlawful demand by the respondent or under a mistake of law on the part of the appellants. No allegation that the appellants were unaware that they did not have to make the payments of ACT, or that they were unaware that they could have made a group income election or that, if they had been aware that they could make a group income election, they would have done so, featured in the original pleadings.

117.

Indeed, the original pleadings were totally silent on all of the following matters which are, in my view, reasonably relevant to the claims now advanced: the whole question of group income elections as a means of not having to account to the respondent for ACT on dividends paid; the alleged effects of breaches of the non-discrimination articles in the relevant Double Taxation Conventions on the right of a UK resident subsidiary with a parent resident in the relevant State to make a group income election; and the differential treatment amounting to a breach of art 56 EC in restricting the parent’s freedom to move capital.”

In paragraph 119 he said that “neither the causes of action potentially available nor the material facts necessary to support them were pleaded”.

Mummery LJ then said that the need to reform the pleadings had been recognised in the amendments made pursuant to the consent order of Park J on 11 July 2003. The amendments had taken the form of “Group Particulars of Claim”, which amplified the original pleaded case by alleging that, if the foreign parent had been resident in the UK, elections would have been made as a result of which no ACT would have been payable. The amendments to the prayer for relief claimed restitution of (and/or compensation or damages for) the ACT payments made, either pursuant to a mistake of law or pursuant to unlawful demands.

After referring to the rival submissions on the pleading issue, and setting out the reasoning of Park J in paragraph 71 of his judgment, Mummery LJ then stated his conclusions in a passage beginning at paragraph 129 which I will cite in full:

“129.

In order to deal with the respondent’s submissions on the amendments to the claims it was necessary for Park J to compare the claims and the factual allegations in the original pleadings with the claims and factual allegations in the amended pleadings. The questions for decision were whether new claims were added by the amendments and, if so, whether they arose out of the same facts or substantially the same facts. [He then cited authority for these propositions].

130.

Mr Cavender, who argued this part of the case for the appellants, submitted that the basic facts were pleaded in the original pleadings, which should be viewed in the context that this whole matter is at the cutting edge of a whole range of different issues. The court should, he said, take “a commercial view” of the pleadings. He cited Lloyds Bank Plc v Rogers (1997) Times, 24 March in support. On that approach he contended that the basic factual elements of the claim were pleaded from the start. It was inherent in the matters pleaded that the appellants were mistaken in making the payments of ACT and in not making a group election. The amendments only added further information about pleaded claims, which the respondent could have asked the claimants to supply on the original pleaded case.

131.

While it is good sense not to be pernickety about pleadings, the basic requirement that material facts should be pleaded is there for a good reason – so that the other side can respond to the pleaded case by way of admission or denial of facts, thereby defining the issues for decision for the benefit of the parties and the court. Proper pleading of the material facts is essential for the orderly progress of the case and for its sound determination. The definition of the issues has an impact on such important matters as disclosure of relevant documents and the relevant oral evidence to be adduced at trial. In my view, the fact that the nature of the grievance may be obvious to the respondent or that the respondent can ask for further information to be supplied by the claimant are not normally valid excuses for a claimant’s failure to formulate and serve a properly pleaded case setting out the material facts in support of the cause of action. If the pleading has to be amended, it is reasonable that the party, who has not complied with well-known pleading requirements, should suffer the consequences with regard to such matters as limitation.

132.

On the correct approach to the construction and application of the terms of the group order the judge would, in my view, have been bound to conclude that the amendments added new claims, not just details about pleaded causes of action, and that the new claims did not arise out of the same, or substantially the same facts as a claim in respect of which the relevant claimants had already sought a remedy.

133.

Material facts relating to the overpayment or premature payment of ACT pursuant to an alleged unlawful demand or under a mistake were pleaded for the first time in the proposed amendments. On the appellants’ own case as to the relevant law, the fact of an unlawful demand or the fact of a payment under a mistake are material facts in the claims for restitution based on unjust enrichment. The amendments introduced the new facts of demand and mistake necessary to establish a claim for restitution based on unjust enrichment. The new facts alleged would be relied on as the reasons why there was “unjust” enrichment of the respondent and why the appellants were entitled to restitution of the benefits conferred on the respondent in consequence of payments of ACT unlawfully demanded or mistakenly made.

134.

Before the amendments were made the claims were for compensation for non-compliance with the relevant discrimination provision of the Double Taxation Conventions, the loss being the payment of ACT when it was not payable. The amendments were not just new instances of those particular claims already raised or for a new remedy arising out of the pleaded facts or substantially the same facts. If the claims were based on unlawful demands for payment and upon mistaken payments of ACT, the respondent should have been notified in the pleading that there was an alleged unlawful demand and what it was and that there was an alleged mistake and what it was.

135.

It follows that, on the proper construction of the consent order, the appellants’ claims are to be treated as having been made when the amendments were made and that they are not deemed to have been made at the time of the original claim forms commencing the proceedings. I would set aside the relevant declarations made by Park J in relation to the amendment of the pleadings and make contrary declarations in their place.”

A preliminary question which arises is whether the reasoning of the Court of Appeal on the pleading issue is technically binding on me, or whether it can be regarded as obiter on the basis that it was unnecessary for the Court to deal with the Revenue’s cross-appeal. Counsel for the claimants argued that the reasoning was obiter, for that reason, but I disagree. It seems to me that, once the Court had decided to entertain the cross-appeal, the reasoning which led to its conclusion that the cross-appeal should be allowed must be treated as the ratio decidendi of the cross-appeal and, as such, is binding on me sitting at first instance. In any event, even if that view is incorrect, I would in practice regard myself as bound to follow the unanimous views of the Court of Appeal on the pleading issue, especially as they went out of their way to deal with the question. However, as with any judgment, the reasoning needs to be understood and evaluated in the particular context in which it arose. On the one hand, the reasoning is of particular value because it is concerned with the self-same ACT GLO as the present case. On the other hand, the particular pleadings considered by the Court were different from those in the present case, and were directed to the determination of different GLO issues.

In my judgment NEC Semi-Conductors is authority for the proposition that, even where multiple proceedings are managed through a GLO, the individual claim forms must still satisfy the basic pleading requirement of setting out the material facts relied upon and the causes of action to which they relate. The necessary information may be pleaded in a concise and summary form, particularly if the Part 8 procedure is adopted and the facts are unlikely to be disputed; but in the absence of this basic minimum the claim form will not fulfil its primary purpose of defining the issues and enabling the defendant to know what case it has to meet. In my judgment these principles are salutary and in accordance with long-established authority. I therefore agree with the general approach of the Court of Appeal, whether or not their reasoning is strictly binding on me. However, the Court of Appeal did not expressly direct their minds to the point made by Lord Woolf in Boake Allen that, in the context of a GLO, a claim form need be no more than the simplest of documents, and it should be construed in conjunction with the application to register and, from the time of registration, the register itself. In my view there is nothing in the reasoning of the Court of Appeal which should deter me from having regard to the register, and the particular GLO issues to which the claimants had subscribed, in considering whether a plea of mistake of law is implicit in paragraph 2 of the claim forms in the Europcar format, and in answering that question affirmatively. If the documents are read together in this way, the pleading (taken in conjunction with the register and the relevant GLO issues) will have fulfilled its purpose of letting the Revenue know that mistake-based restitution is one of the causes of action advanced, and that the alleged mistake lay in the failure to make the group income election which would have been made if the parent company had been UK resident. In my judgment this was all that the pleading needed to do, for the purpose of asserting the cause of action and stopping time from running for limitation purposes. From then onwards, the Revenue can have been in no doubt that all these companies wished to advance a claim of restitution based on mistake. It was then a matter for case management within the GLO how, and by what stages, these claims were to be determined. In practice, it was obviously sensible to leave further investigation of the underlying factual issues (e.g. what mistake precisely was made, and when, and was it causative of the failure to make an election?) until after the questions of legal principle had been decided in DMG. At that stage, as I have already noted, directions were given by Rimer J in July 2007 for the claimants to provide the Revenue with the evidence they relied upon on the factual issues, and the Revenue then considered that evidence and conceded the point.

I am encouraged in reaching this conclusion by the fact that the Revenue were clearly not unduly hampered by the form of the pleadings in considering the factual aspects of the issue of mistake and in deciding not to contest them any further. It is true that the original pleadings had been amended in the meantime, but only by the addition of a few words to the claim for relief which in my view made explicit that which was already implicit in the original claim form read in conjunction with the register and the relevant GLO issues: see paragraph 20 above. The history of the matter to date therefore demonstrates that there has been no procedural unfairness to the Revenue, and no uncertainty on their part about the case which they had to meet, despite the compressed and relatively uninformative nature of the original claim forms.

A distinction may also be drawn between the claim forms in the present case and the original claim forms considered by the Court of Appeal in NEC Semi-Conductors, which did not expressly identify any cause of action or plead any relief by way of restitution, and also did not allege that a group income election would have been made had the foreign parent been resident in the UK. This crucial allegation was only introduced in the Group Particulars of Claim pursuant to the amendments made in July 2003, whereas in the present case it formed part of the claim from the beginning. Similarly, in the present case restitution on the Woolwich basis was pleaded from the beginning, and it was only the plea of mistake-based restitution which was not expressly advanced. The claim forms were therefore considerably more informative than those in NEC Semi-Conductors, and a cause of action in restitution was pleaded from the outset.

I bear in mind the warning by Mummery LJ in paragraph 131 of his judgment that “the fact that the nature of the grievance may be obvious to the respondent or that the respondent can ask for further information to be supplied by the claimant are not normally valid excuses for a claimant’s failure to formulate and serve a properly pleaded case setting out the material facts in support of the causes of action”. While this is undoubtedly true as a general proposition, Mummery LJ’s use of the word “normally” shows that there may be exceptions to it. In the context of a GLO, I think that I may legitimately regard as one of the exceptions the principle stated by Lord Woolf in Boake Allen to which I have already referred more than once. I do not say that the register, or the formulation of the common issues to which the claimant has subscribed, can introduce a cause of action which is wholly absent from the claim form, or obviate the need to plead at least the main facts relied upon. I do consider, however, that such material may be used to resolve any uncertainties or ambiguities in the pleading, and particularly where the real nature of the claim is obvious to the Revenue. It is also material to note in this context that the ACT GLO was not in any sense forced upon the Revenue, but was in fact made at the Revenue’s instigation in order to avoid the procedural chaos that would otherwise have ensued while the implications of Hoechst were being worked out.

For all these reasons, I conclude that there is nothing in NEC Semi-Conductors which should cause me to change my provisional view, and I therefore hold on the first issue that all the claimants whose claim form was in the same, or substantially the same, form as that of Europcar UK Limited did make a valid claim in mistake before 8 September 2003.

It remains to consider one claim form which is in a different format, namely that of the fifth claimant, Heidelberg Graphic Equipment Ltd (“Heidelberg”). This claim form, both in its original form as issued on 9 January 2001 and as amended in minor (and for present purposes immaterial) respects on 5 March 2001, 11 September 2002 and 29 November 2002, is a remarkably obscure and uninformative document. It merely pleads (in paragraphs 1 and 2) that the first claimant is a UK-resident wholly-owned subsidiary of the German-resident second claimant; that dividends were paid by the first claimant to its parent on the dates and in the amounts set out in the schedule; and that if the parent had been a UK-resident company “the payment of the said dividends would have carried a tax credit” pursuant to the ACT provisions of ICTA 1988. The relief claimed in paragraph 3 is a declaration that the ACT provisions are contrary to various articles of the EC Treaty, damages for breach of and/or failure to comply with those articles, and interest, together with “further or other relief” and costs. There is no claim for restitution, on the Woolwich or any other basis; there is no reference to the machinery of group income elections; and there is no allegation that the claimants would have made such an election if the parent had been UK-resident. The only complaint appears to be the non-availability to the parent of a UK tax credit, not the fact that ACT was paid in the first place; and the only substantive relief expressly claimed, apart from the declaration, is a Factortame claim for damages.

In my judgment application of the principles which I have derived from NEC Semi-Conductors must lead to the conclusion that this pleading was inadequate to raise a case of mistake-based restitution, and I so hold. It would only be possible to reach the contrary conclusion if the mere fact that the claimants had joined the ACT GLO and subscribed to determination of the limitation issues could be taken to import the making of a claim for mistake-based restitution for ACT wrongly paid. I do not believe that the principles stated by Lord Woolf in Boake Allen, even on the most liberal interpretation, go nearly that far; and in any event they are clearly obiter and not binding on me, unlike the considered views of all three members of the Court of Appeal on the pleading issue in NEC Semi-Conductors. The claim form is in fact generically similar to, but if anything even less informative than, that considered by the Court of Appeal in NEC Semi-Conductors: see the description of it by Mummery LJ in paragraphs 114 and 115.

My adverse decision on the Heidelberg claim form makes it necessary for me to go on to consider two alternative arguments advanced by counsel for the claimants in support of their case on the first issue. I will do so fairly briefly, because I am satisfied that neither argument can assist the claimants, at any rate at High Court level.

The first argument is that there was an estoppel by convention binding the claimants and the Revenue, because (put shortly) both parties proceeded on the basis that each of the claimants had advanced a claim based on mistake which related to payments of ACT for a period going back more than six years, and agreed that this claim should be resolved through the GLO machinery. Accordingly, it would now be unconscionable for the Revenue to go back on this agreement or common understanding.

The evidence in support of this contention is set out in the second witness statement of Simon Whitehead, who is a partner of Dorsey & Whitney, dated 25 March 2008, and in the witness statement of Fiona Walkinshaw, who is a partner of Reynolds Porter Chamberlain LLP, dated 27 March 2008. Neither of these witnesses was cross-examined by the Revenue. Mr Whitehead has been closely involved with the ACT GLO since its inception, and he gives a valuable and detailed account of its history. He states, among other things, that a standard form of claim was settled by counsel at an early date, and that the nature of the claims was “undeveloped” (paragraph 32) when the first claims were pleaded in January 2001. He cites the Heidelberg claim as an example of this earliest stage in the evolution of the claims, and confirms its similarity to the claim of NEC Semi-Conductors. He refers to correspondence between the claimants and the Revenue dealing with the management of the GLO and the selection of test claims, and points out that a number of claims relating to ACT paid within six years of the date of issue of the claim form were settled on terms which expressly preserved claims relating to ACT paid before that date. He says that the Revenue never raised any objection to the enrolment of the claims within the GLO limitation issues, or to the adequacy of the pleadings.

I do not propose to review this evidence in any detail, because in my judgment it falls well short of establishing that the Revenue ever communicated to the claimants, by words or conduct, an acceptance that their individual claim forms included a valid plea of mistake. The test is an objective one (see for example Seechurn v ACE Insurance [2002] EWCA Civ 67, [2002] 2 LLR 390, at paragraph 26 per Ward LJ), so Mr Whitehead’s personal perception of the matter is irrelevant. It would, indeed, be inherently surprising if the Revenue had estopped themselves, whether by convention or representation, from taking pleading or limitation points against the claimants, given the very large number of claims which emerged in the wake of Hoechst, the huge amounts at stake, and the legal uncertainties which surrounded the claims. The most that can be said, in my view, is that the parties agreed on a convenient procedural method for dealing with the multifarious claims which were brought and the common issues of law raised by them. On an objective appraisal, this agreement did not bind the Revenue to accept that each claimant had in fact properly pleaded a cause of action which raised every issue in which it was enrolled, nor did it absolve each claimant from satisfying the minimum pleading requirements referred to in NEC Semi-Conductors.

The second argument seeks to attack the orthodox view that the running of time for limitation purposes under section 32(1)(c) of the Limitation Act 1980 can only be postponed where mistake is an essential ingredient of the cause of action. As I understand it, the argument runs in outline as follows:

In my judgment it would be inappropriate for me, sitting at first instance, to embark on a review of the long-standing orthodoxy about the scope of section 32(1)(c), particularly as the House of Lords has itself recently declined to do so in DMG in circumstances where it was unnecessary to the decision. As Lord Walker said at paragraphs 146-7, under the heading “The “scope of section 32(1)(c)” issue”:

“146.

This issue arises only if DMG fails on the first (cause of action) issue. In my opinion it does not arise on this appeal. The rule that in order to come within section 32(1) a mistake must be an essential ingredient of the claimant’s cause of action rests on a surprisingly uncertain basis, that is a view expressed by Pearson J in Phillips-Higgins v Harper [1954] 1 QB 411, 419. Nevertheless it has been generally accepted (with some dissentient academic voices raised against it) for over 50 years.

147.

The Law Commission has now completed and published its review of the Law of Limitation of Actions (2001) (Law Com No. 270) and the Government has accepted its general recommendations with a view to legislation as soon as time permits. In those circumstances your Lordships need not, in my opinion, reconsider the now nearly traditional view of the scope of section 32(1)(c), although there are persuasive arguments for its reinterpretation …”

In the present case, the point is likewise unnecessary to my decision, because I have held in relation to all of the claimants apart from Heidelberg that their original claim forms included a claim for mistake-based restitution, with the result that those claimants do not need to rely on this argument, while in the case of Heidelberg the claim form did not include any claim in restitution at all, so step (e) in the outline argument set out above is not satisfied. In any event, the question is obviously one of great potential importance, with wide-ranging implications for the law of limitation generally. It should therefore be ruled on, if at all, by a higher court which has heard full argument and considered all the implications.

I would, however, venture to add two brief comments.

First, the orthodox view does in my opinion fit better with the wording of section 32(1)(c) itself, viz “the action is for relief from the consequences of a mistake”. Where there has been a causative mistake, but the claimant’s cause of action does not itself depend on the existence of a mistake, it seems to me difficult, and an unnatural use of language, to say that the claimant’s action is for relief from the consequences of his mistake. The mistake may explain why the action was not begun earlier, but it cannot turn the action into one which seeks relief from the consequences of the mistake. Indeed, in almost every case where a limitation defence is pleaded there is likely to have been some kind of mistake or misunderstanding on the part of the claimant or his advisers which delayed the issue of the claim.

Secondly, as counsel for the Revenue pointed out, the orthodox view does not depend only on the judgment of Pearson J in Phillips-Higgins v Harper, loc.cit., but finds further support in the judgment of the Court of Appeal in an unreported case, Malkin and another v Birmingham City Council, CCRTF 98/1628/2, 12 January 2000, where Aldous LJ (with whom Laws LJ agreed) said this at paragraph 23:

“This is an action for breach of statutory duty. No doubt the failure to take proceedings in time was a result of the mistake by Mr & Mrs Malkin or someone acting on their behalf. That happens in nearly every case where there is a failure to take proceedings in the statutory period laid down in the Limitation Act. Section 32 of the Act is concerned with cases where the plaintiff can establish that the mistake was part of or an element of the cause of action. That does not arise in this case. The action is in my view not for relief for the consequences of a mistake. It is for damages for breach of a statutory duty.”

If I may respectfully say so, the good sense of that view seems to me to have much to commend it, even though it was not the product of any detailed analysis or argument (the point was a subsidiary one, which leading counsel for the appellants had all but abandoned).

The second issue only needs to be decided if the claimants did not make a valid claim in mistake before 8 September 2003. It therefore does not strictly arise in the case of all the claimants apart from Heidelberg, if my decision on the first issue is correct. I will, however, go on to consider it in relation to all the claimants, and not Heidelberg alone, in case my decision on the first issue is wrong. The discussion which follows is therefore premised on the assumption that no valid claim in mistake was made by any of the claimants before 8 September 2003.

I have already set out in paragraph 20 above a typical example of the amendments which I now have to consider. They were minimalist in form, but sufficient to make it clear that a claim was being advanced for restitution based on a mistake of law as well as on the Woolwich basis. As in NEC Semi-Conductors, the amendments were made pursuant to a special procedure set out in a consent order (in the present case made by Park J on 9 March 2004) which provided in paragraph 1(c) that:

“if a claim form or Particulars of Claim are amended in accordance with this procedure then any claims added by those amendments shall be deemed to have been commenced on the date the amended claim form is sealed by the Court or the amended Particulars of Claim are filed with the Court and served upon the Revenue (whichever is the latter (sic)) unless the Court subsequently finds that:

(i)

the amendments do not have the effect of adding new claims within the meaning of section 35 of the Limitation Act 1980; or

(ii)

the new claims added by the amendments arise out of the same or substantially the same facts as a claim in respect of which the Claimant has already claimed a remedy;

in which case the claims added by the amendment shall be deemed to have been commenced on the same date as the original claim.”

The effect of section 35 of the Limitation Act 1980, read with CPR 17.4 (which is headed “Amendments to statements of case after the end of a relevant limitation period”), is that where a party applies to amend his statement of case in one of the ways mentioned in CPR rule 17.4, and a relevant period of limitation has expired, the court by virtue of rule 17.4(2):

“may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”

If this test is satisfied, section 35(1) provides that the new claim shall be deemed to be a separate action, and to have been commenced on the same date as the original action. Section 35(2) defines a “new claim” as, relevantly, “any claim involving … the addition or substitution of a new cause of action”.

It can thus be seen that the effect of the procedure in the consent order is not to purport to change in any way the underlying principles by reference to which the court may allow a statement of case to be amended after the expiry of a limitation period, but simply to defer the stage at which the court rules on the question from the date when permission is sought for the amendment to a date when the court is subsequently asked to deal with the question.

In Hoechst UK Limited v IRC [2003] EWHC 1002 (Ch), [2004] STC 1486, Park J provided a helpful summary of the effect of the relevant statutory provisions in section 35 and CPR rule 17:

“22.

… I believe that their effect can be summarised as follows: where an amendment to a claimant’s pleading is proposed outside the limitation period, the first question is whether the amendment would involve the addition or substitution of a new cause of action to or for the cause or causes of action already pleaded. If it would not, the court has a discretion to allow the amendment. If the amendment would add or substitute a new cause of action, another question has to be asked: would the new cause of action arise out of the same facts or substantially the same facts as those out of which a cause of action which has already been pleaded arises? If it would, the court has a discretion to allow the amendment. If it would not, the court may not allow the amendment.

23.

It may be helpful to express the effect in the negative. An amendment for which permission may not be given is one of which the following three propositions are true:

(i)

The amendment is sought to be made outside the limitation period.

(ii)

The amendment involves the addition or substitution of a new cause of action.

(iii)

The new cause of action does not arise out of the same facts or substantially the same facts as a cause of action already pleaded.”

The Revenue do not, of course, object to the amendments in the present case taking effect from the date on which they were made (or, if later, served on the Revenue), because in that case section 320 of the 2004 Act would apply to them. In order to escape from that consequence, the claimants have to establish either that the amendments do not have the effect of adding new claims, or (if they do add new claims) that the new claims arise out of the same or substantially the same facts as a claim in respect of which they have already claimed a remedy. It is only in those circumstances that the commencement date of the amendments will relate back to the date of the original claim.

The meaning of a “new claim” was considered by the Court of Appeal in Lloyds Bank Plc v Rogers [1999] 38 EG 187, where Auld LJ said at 85F:

“It is important to note that what makes “a new claim” as defined in section 35(2) is not the newness of the claim according to the type or quantum of remedy sought, but the newness of the cause of action that it involves … Diplock LJ’s widely accepted definition of a cause of action in Letang v Cooper [1965] 1 QB 232, CA, at pp 242-3, as “simply a factual situation the existence of which entitles one party to obtain from the court a remedy against another person”, as distinct from “a form of action … used as a convenient and succinct description of a particular category of factual situation”, is of importance. It makes plain that a claim and a cause of action are not the same thing. It follows … that an originally pleaded “factual situation” may disclose more than one cause of action, although one of them may not be individually categorised as such or the subject of a claim for a separate remedy. However … it does not follow that a claim so categorising it and/or seeking a remedy for it made for the first time by amendment is the addition of a new cause of action so as to render it a new claim.”

This reasoning was adopted by the Court of Appeal in the subsequent unreported case of Aldi Stores Ltd v Holmes Buildings Plc [2003] EWCA Civ 1882: see the judgment of Dyson LJ at paragraph 21.

Application of this test to the present case can in my judgment only lead to the conclusion that the amendments did have the effect of adding a new claim. Mistake is a crucial factual ingredient of any claim for restitution for mistake of law, and even though the pleader of the amended claim forms chose not to spell out the precise nature of the mistake relied upon, that cannot disguise the fact that a cause of action of which mistake was a crucial ingredient had been introduced for the first time. Accordingly, it cannot be said that the amendments merely sought a new remedy arising out of facts which had already been sufficiently pleaded.

For similar reasons, it seems equally clear to me that the amendments cannot be regarded as arising out of the same or substantially the same facts as the original claim, always assuming that the original claim did not sufficiently plead a cause of action based on mistake. As counsel for the Revenue aptly says in his skeleton argument, an amendment which seeks to add the very fact of mistake on which the new cause of action is based will not satisfy that condition and therefore cannot be allowed. Furthermore, this conclusion seems to me to follow from the reasoning of the Court of Appeal in NEC Semi-Conductors: see in particular paragraphs 131-135. It is true that the situation in that case was more extreme than that of the current claimants, apart from Heidelberg, because there was no existing restitutionary claim of any description. However, as the law now stands Woolwich-based restitution and mistake-based restitution are separate causes of action, and while mistake is not a necessary ingredient of the former it is an essential ingredient of the latter. A claim based upon a mistake cannot in my view be said to arise out of the same or substantially the same facts as a claim based on an unlawful demand.

I now turn to section 320 of the Finance Act 2004, the relevant provisions of which are as follows:

“320.

Exclusion of extended limitation period in England, Wales and Northern Ireland

(1)

Section 32(1)(c) of the Limitation Act 1980 … (extended period for bringing an action in case of mistake) does not apply in relation to a mistake of law relating to a taxation matter under the care and management of the Commissioners of Inland Revenue.

This subsection has effect in relation to actions brought on or after 8 September 2003.

(2)

For the purposes of –

(a)

section 35(5)(a) of the Limitation Act 1980 … (circumstances in which time-barred claim may be brought in course of existing action), and

(b)

rules of court … having effect for the purposes of those provisions,

as they apply to claims in respect of mistakes of the kind mentioned in subsection (1), a new claim shall not be regarded as arising out of the same facts, or substantially the same facts, if it is brought in respect of a different payment, transaction, period or other matter.

This subsection has effect in relation to claims made on or after 20 November 2003.

…

(6)

The provisions of this section apply to any action or claim for relief from the consequences of a mistake of law, whether expressed to be brought on the ground of mistake or on some other ground (such as unlawful demand or ultra vires act).

(7)

This section shall be construed as one with the Limitation Act 1980 …”

The different commencement dates in subsections (1) and (2) reflect the fact that their provisions were foreshadowed by Inland Revenue announcements made on those respective dates. The announcement of 8 September 2003, which was accompanied by draft clauses published on the same day, referred to the recent decision of the High Court in DMG and said that the purpose of the proposed legislation was to ensure that the usual limitation period of six years should apply to actions for restitution in respect of payments of tax made under a mistake of law. The proposals did not at that stage deal with the effect of amendments to existing proceedings. To deal with this possible deficiency, amended draft clauses were published together with the announcement of 20 November 2003. The announcement included this paragraph:

“The amended draft legislation announced today is designed to further protect tax revenue by preventing claimants who had commenced proceedings for relief from the consequences of a mistake of law from amending their claims to include payments for years beyond the normal time limits.”

For present purposes, the important provision is section 320(2). It provides, in imperative terms, that for the purposes of section 35(5)(a) and associated rules of court (i.e. in the present context CPR 17.4(2)), as they apply to claims in respect of a mistake of law relating to a taxation matter under the care and management of the Revenue, a new claim is not to be regarded as arising out of the same facts, or substantially the same facts, “if it is brought in respect of a different payment, transaction, period or other matter”. The subsection therefore envisages a situation where the Court is considering after 20 November 2003 whether to allow a new mistake-based claim to be added by way of amendment to an existing claim brought before 8 September 2003. If the new claim were brought by way of a separate action, it would be time-barred in respect of payments of tax made more than six years previously, because section 32(1)(c) of the Limitation Act 1980 is now disapplied by section 320(1). Accordingly, section 35(3) of the Limitation Act applies, and the amendment may only be allowed if rules of court so permit and the conditions in section 35(5)(a) are satisfied. That, it seems to me, is the nature of the situation to which section 320(2) is directed. What, then, is the effect of the subsection?

The first point to make is that the subsection is not in my judgment engaged at all if application of section 35 and CPR rule 17 would in any event lead to the conclusion that an amendment with retrospective effect is impermissible. In view of the conclusions which I have already reached, that is the position in the present case. The amendments are ruled out, regardless of section 320(2), because the new mistake-based claim does not arise out of the same or substantially the same facts as the original claim.

Suppose, however, that the new claim could properly be regarded as arising out of the same or substantially the same facts: what then? Counsel for the Revenue submitted that section 320(2) would then conclusively deem the new claim not to arise out of the same or substantially the same facts, because the new claim would be “brought in respect of a different … matter”, namely mistake. I was at first attracted by this submission, but on reflection I am unable to accept it. The difficulty is that section 320(2) only applies in the first place to claims in respect of mistakes of law of the kind mentioned in subsection (1). If the draftsman had wanted to say that any amendment introducing such a claim was automatically to be ruled out, he could have said so very simply. Instead, however, he has focused on claims “brought in respect of a different payment, transaction, period or other matter”. If the words “other matter” include mistake, the rest of the provision would be unnecessary, because all the claims to which section 320(2) applies would automatically be eliminated. This suggests to me that the purpose of the subsection is different, and that its intention is to rule out any amendments which in any way seek to expand the factual scope, and thus the benefit to the taxpayer, of a mistake which has already been pleaded in the unamended claim. So, for example, if a mistake-based claim has been pleaded in respect of a particular payment made in a particular year, the claim cannot be expanded by amendment to include other payments, whether in the same or different years, even if the underlying facts which gave rise to the payments are in other respects exactly the same, or substantially the same. So construed, the subsection still has an important role to play. It confines mistake-based relief in existing proceedings strictly to that which has already been pleaded, and avoids argument about the ambit of the test of “arising out of the same or substantially the same facts”, which has been said in a number of authorities to be largely a matter of impression (see for example Welsh Development Agency v Redpath Dorman Long Limited [1994] 1 WLR 1409 (CA) at 1418D-E per Glidewell LJ giving the judgment of the court, but see too the more analytical approach of Millett LJ in Paragon Finance Plc v D B Thakerar & Co [1999] 1 All ER 400 at 418 g-h).

To conclude, therefore, my view is that pursuant to the consent order of 9 March 2004 the mistake-based claims added by the amendments do not relate back to the dates of the original claims. They must therefore be treated as new actions to which section 320(1) of the 2004 Act applies.

Before leaving this part of the case, I should deal briefly with the position of the 19^th claimant, Iveco (UK) Limited (“Iveco”), which differs in some points of detail from that of the majority of the other claimants. Iveco first issued its Part 8 claim form on 2 August 2001, in a form materially identical to the claim forms of the other claimants apart from Heidelberg. Until very recently, however, it has not sought to amend that claim. Instead, on 16 March 2004 Iveco issued a fresh claim form, in Part 7 form, which included a claim for mistake-based restitution. This claim, having been started after 8 September 2003, is plainly subject to section 320(1) of the 2004 Act, and counsel for the claimants did not seek to contend otherwise. Very recently, Iveco has also amended its original Part 8 claim form following the procedure set out in the consent order of 9 March 2004. The effect of this amendment is to add a claim for mistake-based restitution to the claim for relief. As such, it stands on the same footing as the other amendments which I have considered in this section of my judgment. There is, however, one further point which by itself would be fatal to any claim based upon the amendment. The date of the amendment is 2 April 2008, which is more than 6 years after the date of the judgment of the ECJ in Hoechst. Accordingly, unless the amendment could relate back to the date of the original claim form, it would in any event fall outside the extended limitation period available under section 32(1)(c) of the Limitation Act 1980, quite apart from the effect of section 320(1) of the 2004 Act.

I can deal with this issue very briefly, because counsel for the claimants accepted, rightly in my view, that any such claim would be caught by the clear wording of section 320(1), with the consequence that it would not be open to the claimant to rely on section 32(1)(c) of the Limitation Act 1980. I would only add that the question is not entirely hypothetical, because there is at least one claim, namely the action begun by Iveco on 16 March 2004, which falls into this category.

I now turn to consider AMC’s claim, which as I have already said (see paragraph 21 above) differs in some material respects from the claims of the other test claimants.

AMC issued its claim form in Part 7 form on 15 January 2002, with Particulars of Claim to follow. The brief details of claim set out on the claim form were as follows:

“This claim is for damages arising from breach(es) of EC Law governing Group Income Election. The claim is also founded upon common or related issues of law to be determined in the ACT Group Litigation against (1) Inland Revenue Commissioners and (2) HM Attorney General which is the subject of the Group Litigation Order dated 26 November 2001 made by The Chief Chancery Master Winegarten.

The Claimant joins with the Group Claimants in respect of the following issues set out in the Group Litigation Order of 26 November 2001: -

Paragraph 9 EU Issues – subparagraphs (i)(A) and (B), (ii)(A), (B) and (C).”

Thus the claim form expressly stated that, apart from the claim for damages, the claim was also founded upon common or related issues of law to be determined in the ACT GLO, including in particular the EU Limitation Issues in subparagraphs 9(i)(A) and (B). In those circumstances the Revenue cannot have been under any possible doubt that AMC wished to claim a restitutionary remedy founded on mistake of law, and to take advantage of the extended limitation period in section 32(1)(c) of the Limitation Act 1980.

Once AMC’s claim had been issued, it was stayed in accordance with paragraphs 3 and 11 of the ACT GLO with the result that AMC was not permitted to serve its Particulars of Claim at the normal time. The stay was eventually lifted by a consent order on 17 October 2007, and the Particulars of Claim were treated as having been served on 15 October 2007. In the Particulars of Claim AMC claimed (i) damages in tort for breach of statutory duty, (ii) restitution for monies paid pursuant to an unlawful demand and (iii) restitution for monies paid under a mistake of law. The mistake of law was said in paragraph 10 to have been a mistake “as to the validity of the Statutory Provisions”, and in paragraph 12 it was pleaded that if AMC had realised it was mistaken about the validity of the Statutory Provisions it would not have paid the sums of ACT which it paid in respect of the relevant dividends. Particulars of the dividends in question were set out in a schedule to the Particulars of Claim. They ranged in date from October 1975 to July 1995, a period of nearly 20 years.

Against this background, I have no doubt that AMC should be treated as having made a valid claim for restitution in respect of monies paid under a mistake of law in its original claim form. By virtue of CPR 16.2(1), as it stood in January 2002 when the claim form was issued, a claim form in Part 7 proceedings has to do no more than “contain a concise statement of the nature of the claim” and “specify the remedy which the claimant seeks”. Furthermore, rule 16.2(5) provides that the court may grant any remedy to which the claimant is entitled even if that remedy is not specified in the claim form. The requirement that the claim form must “contain a concise statement of the nature of the claim” is derived from the description of an endorsement on a writ under the pre-CPR rules in RSC Order 6 Rule 2, and it has accordingly been held that it is permissible to refer to authority relating to RSC Order 6 Rule 2 in construing CPR 16.2.1(a): see Nomura International Plc v Grenada Group Ltd [2007] EWHC 642 (Comm), [2008] Bus LR 1 at paragraph 39, per Cooke J. After referring to Court of Appeal authority on RSC Order 6 Rule 2, Cooke J said at the end of paragraph 39:

“It is necessary to at least give some idea or indication of the duty which it is alleged the defendant has failed to perform”,

and he then went on to say in paragraph 40:

“Although defectively endorsed writs could be cured by subsequent statements of claim in the ordinary way, such cure depended upon the plaintiff having a known genuine cause of action at the time of the issue of the writ and the irregularity merely being the failure properly to set it out. As appears from the decisions discussed earlier, that principle is of no application where the plaintiff had no known basis for making the claim at the time when the writ was issued.”

With these principles in mind, and the observation of Lord Woolf in Boake Allen that, in the context of a GLO, a claim form need be no more than the simplest of documents, I consider that AMC’s claim form gave a sufficient indication to the Revenue that AMC sought to advance a claim for mistake-based restitution in respect of ACT which it had paid. No useful purpose would have been served by requiring AMC to spell out its case in any more detail until the limitation issues, to which it had expressly subscribed, had been finally determined in DMG. That was duly done in the Particulars of Claim served in October 2007, to which the Revenue have raised no objection.

There remains one technical issue which I need to resolve in relation to the quantification of AMC’s claim. The question arises because at all material times AMC has had minority shareholders, as well as its Dutch (and more recently German) parent company. AMC has never disputed that it was liable to pay ACT in the usual way in respect of dividends paid to its minority shareholders. AMC’s claim against the Revenue therefore relates only to the ACT which it had to pay on dividends to its parent (“relevant ACT”), and not to the undisputed ACT which it paid on the other dividends to its minority shareholders (“non-relevant ACT”).

Before the abolition of ACT in 1999, the general rule was that ACT paid by a company in an accounting period had to be set against its liability to mainstream corporation tax (“MCT”) on any profits charged to corporation tax for that period, and would discharge a corresponding amount of that liability: see ICTA 1988 section 239(1). If the company had insufficient profits in the accounting period to absorb the ACT which it had paid, it had the option, exercisable within two years of the end of the period, to carry back the whole or any part of the ACT for up to six years: section 239(3). If that option was exercised, section 239(3) expressly provided that the amount carried back was to be set, so far as possible, against the company’s liability for a more recent accounting period before a more remote one, or in other words that the company’s liability to corporation tax was to be relieved by beginning with the most recent period and then working backwards. If and in so far as surplus ACT was not carried back, it was automatically carried forward and treated as if it were ACT paid in respect of distributions made by the company in the next accounting period: section 239(4). There was no time limit on how long surplus ACT could be carried forward, and experience has shown that very large amounts of unrelieved ACT could be built up in this way.

There was, however, one further possibility open to a company which had paid ACT, and that was to surrender it to a subsidiary: section 240(1). The surrender took effect on the making of a claim by the subsidiary. By virtue of section 240(2), the effect of the surrender was that the subsidiary was then treated as having itself paid ACT in respect of the same dividends, and on the same dates, as the parent company. Unlike the surrendering parent, the subsidiary was not permitted to carry back surrendered ACT (see section 240(4)); but any surrendered ACT which was not set off against its own MCT for the accounting period or periods in which it was deemed to have been paid was automatically carried forward, together with any other surplus ACT of the subsidiary, in a single undifferentiated pool.

The problem which arises in the present case may be stated in abstract terms as follows. Where a company (company A) has a claim for restitution in respect of amounts of ACT paid under a mistake of law in different accounting periods, and

The reason why the point matters is that company A (AMC in the present case) is seeking restitution for the time-value of the relevant ACT which it wrongly had to pay, and which is subsequently set off against the MCT of its subsidiary, company B. The longer the relevant ACT is treated as remaining unrelieved, the greater company A’s claim for loss of the use of the amount of the relevant ACT will be. Accordingly AMC favours the approach which treats the subsidiary as setting off all of its carried forward non-relevant ACT before it sets off any of its carried forward relevant ACT.

In order to decide the point in principle, the precise figures do not matter and I will not set them out. The details may be found in the second witness statement of Michael Hoffman dated 25 February 2008. In summary, the ACT surrendered by AMC to the subsidiary in question related to accounting periods between 1978 and 1986; the subsidiary paid no ACT of its own; the subsidiary also lacked capacity to set off ACT against its own MCT until 1994; and to date the subsidiary has still not generated enough MCT to absorb all of the surrendered ACT, although if it is treated as setting off the non-relevant ACT first, all of the non-relevant ACT had been utilised by 2000.

It is common ground that the statutory scheme is, not surprisingly, silent about the problem. The main argument advanced in support of AMC’s approach is that it is only the non-relevant ACT which was lawfully paid in the first place, so it should be treated as set off first. Otherwise, the subsidiary will be treated as setting off ACT which should never have been paid (i.e. the relevant ACT) while it still has unrelieved ACT which was properly due (the non-relevant ACT). It is submitted that this would be unfair and unreasonable, and that where the legislation is silent it is open to the claimant to choose the order of set off which approximates most nearly to what should have happened, namely that AMC would never have paid the relevant ACT in the first place and would only have paid the non-relevant ACT.

This submission was attractively advanced by counsel for AMC, but I am unable to accept it. In my judgment it confuses a question which goes to liability (was the payment of the relevant ACT unlawful?) with a question which goes to the calculation of the claimant’s loss (how should AMC be appropriately compensated, on a restitutionary basis, for the ACT which it actually paid, or more precisely for the loss of the use of the relevant ACT which it actually paid until the dates when that ACT is relieved by being set off against MCT?). The latter enquiry takes as its starting point the ACT that was wrongly paid, and then looks at the actual arrangements that were made within the group to deal with it. I cannot see any proper basis for continuing to distinguish between the relevant and the non-relevant ACT once it had been surrendered and carried forward as surplus ACT by the subsidiary in a single undifferentiated pool. In that situation, it seems natural and logical, in the absence of any express statutory direction of the kind found in section 239(3), to treat the ACT from an earlier accounting period as being set off against MCT in priority to ACT from a later accounting period, or in other words to apply a FIFO approach. The principle of taxpayer choice is in my judgment inapplicable. It is simply a question of finding the solution which best reflects what actually happened to the surrendered ACT, and deciding, on an objective basis, when the Revenue ceased to be unjustly enriched at AMC’s expense.

For these reasons I prefer the Revenue’s approach, and I will make a suitable declaration to the effect that the surrendered ACT is to be treated as set off against the subsidiary’s MCT on a FIFO basis.

I hope that I have now dealt with all of the questions on which my decision is needed at this stage. There were a number of other computational issues between the parties, but as I understand it they have all now been resolved by agreement, including a point relating to interest which was still unresolved at the date of the hearing before me and in respect of which I gave directions for written submissions to be lodged within 21 days if the parties were unable to reach agreement. I was subsequently notified that the parties had indeed been able to agree on this point too.

My principal conclusion, for the reasons which I have given, is that the claims of all of the test claimants apart from Heidelberg succeed in full, on the basis that a valid claim in mistake was made before 8 September 2003.

In the case of Heidelberg, I consider that no valid claim in mistake was made before 8 September 2003, and that the amendments to the claim form made on 27 February 2007 pursuant to the consent order of 9 March 2004 do not relate back to the date of the original claim, because they raise a new claim in mistake which does not arise out of the same or substantially the same facts as the claim in its original form. It follows that Heidelberg’s claim succeeds only in relation to amounts of ACT which it paid within six years before the date of issue of its original claim form on 9 January 2001.

For similar reasons, if I am wrong in my conclusion that the test claimants apart from Heidelberg made a valid claim in mistake before 8 September 2003, the subsequent amendments to make a mistake-based claim in my judgment take effect only from the dates on which they were made, and by virtue of section 320(1) of the Finance Act 2004 cannot take advantage of the extended limitation period in section 32(1)(c) of the Limitation Act 1980. This conclusion is, however, subject to the question whether the operation of section 320 in these circumstances is compatible with EC law, which has yet to be determined.