Van Der Merwe v Goldman & Anor

This judgment deals with a number of matters which were raised by the parties in written submissions following the hand down of judgment in this case on 11 April 2016. The neutral citation of that judgment is [2016] EWHC 790 (Ch).

The matters which now need to be dealt with are:

I have been provided with a draft order to give effect to my judgment. The different orders which I might possibly make were referred to in paragraph [48] of that judgment. The particular form of relief which is sought in the draft order is the setting aside of the transfer of 24 March 2006 and the settlement and transfer of 27 March 2006. I will make that order.

I will consider HMRC’s application for permission to appeal to the Court of Appeal before I address HMRC’s application for a certificate under section 12 of the Administration of Justice Act 1969 (although HMRC made its applications in the reverse order). HMRC made three submissions in support of their application for permission to appeal to the Court of Appeal.

HMRC’s first submission is that I ought to have found that there was a prior contract between the Claimant and the First Defendant to create the settlement. In my judgment I analysed the transactions in this case and addressed the arguments put forward by the parties as to whether the arrangements between the Claimant and the First Defendant resulted in a contract or a resulting trust or a gift. One of the reasons for doing so was out of deference to the detailed arguments of the parties. However, the central reasons for my holding that the equitable rules in Pitt v Holt [2013] 2 AC 108 applied were stated in [37] of my judgment. I held that an application by A and B to set aside a settlement made by A and B in favour of A, B and C should be treated in the same way as an application by X to set aside a settlement made by X in favour of X and Y. If, in the second case, Y did not give consideration for the settlement, then the settlement was a unilateral transaction where the beneficiaries were volunteers who did not give consideration for the settlement. I held that the position in relation to a settlement by A and B in favour of A, B and C would be dealt with in the same way if C did not give consideration. In a case where A and B are joint settlors and both apply to set aside the settlement, it would make no difference if there were a prior agreement between the joint settlors to the effect that they both wanted to make the settlement and they would both take the necessary steps to do so. Accordingly, I do not think that even if I had accepted HMRC’s first submission, it would have affected the result.

HMRC’s second submission was that my reasoning in paragraph [44] of the judgment gave rise to an independent ground of appeal. I do not think that such an appeal would have a realistic prospect of success.

HMRC’s third submission was that my judgment was the first which considered where the boundary lay between “a contract” and “a gift” when determining which legal principles applied in the case of a mistake in relation to a transaction. That may be so. Again, I dealt with the matter in a little detail out of deference to the arguments of counsel. However, in my view, the present case is a clear one which is on the gift side of the boundary.

Accordingly, I will refuse permission to appeal to the Court of Appeal on the above three grounds because I am not satisfied that an appeal on a point which would affect the result would have a realistic prospect of success.

I will next consider HMRC’s application for a certificate under section 12 of the Administration of Justice Act 1969, as amended. Section 12 permits me to grant a certificate which would allow HMRC to apply to the Supreme Court (under section 13 of the 1969 Act) for leave for an appeal to be made directly to the Supreme Court (a “leapfrog appeal”). HMRC wish to explore in the Supreme Court the scope of the principle tentatively put forward in paragraph [135] of Lord Walker’s judgment in Pitt v Holt. I have set out the relevant part of that paragraph in my earlier judgment. This ground of appeal can be referred to as the public policy ground. I can well understand why HMRC wish to have clarification of the types of case in which this possible approach might operate. However, I doubt if the present case is a suitable case in which to explore that matter. I did not hear oral argument on the public policy ground at the trial but I was provided with detailed and thoughtful written submissions on the point and I was able to form a provisional view that on the facts of this case, as found in the judgment, it would be very unlikely that the possible principle referred to by Lord Walker, if it existed, could be of such an ambit as to extend to the facts of this case.

HMRC submit that this case comes within section 12(3)(b), alternatively section 12(3A) of the 1969 Act. I am not persuaded that that is so. As to section 12(3)(b), the particular point which HMRC would wish to raise has not been fully considered by the Court of Appeal or the Supreme Court. Paragraph [135] in Lord Walker’s judgment is a suggestion of a possibility and I have not been shown any case in which that suggestion has thereafter been fully considered by the Court of Appeal or the Supreme Court. What has been considered by those courts are more general questions as to the law’s approach to different types of illegality or unlawful behaviour. As to section 12(3A), the criteria there raise matters of degree and I am not satisfied that this case meets those criteria to the required extent.

It follows that I will not grant a certificate under section 12 of the 1969 Act. If I had been minded to take a different view as to the application of section 12(3)(b) or section 12(3A) in this case, then I would have had to consider whether it was truly desirable for there to be a direct appeal to the Supreme Court on the public policy ground at the same time as there exists a possibility that HMRC might wish to appeal on other grounds. HMRC argue that the right thing to do is for me to grant a certificate under section 12 of the 1969 Act on the public policy ground and then HMRC would seek to persuade the Supreme Court to grant leave to appeal not only in relation to the public policy ground but also in relation to all other challenges to my judgment. If the door had been open to me to grant a certificate under section 12, I would still have hesitated to do so because of the existence of the other possible grounds of appeal in addition to the point which is said to justify a leapfrog appeal.

For the sake of completeness, I will deal with one further point. Counsel for HMRC submitted to me that there was a time of limit of 14 days within which the court had power to grant a certificate under section 12 of the 1969 Act. That is not correct. The 14 day time limit under section 12(4) is for the making of the application for a certificate, not for the court’s determination of that application.

The final matter with which I need to deal concerns the parties’ costs of the action. The Claimant seeks an order that HMRC pay his costs. The First Defendant also seeks an order that HMRC pay her costs. HMRC submit that the Claimant should not recover his costs (or, at least, not all of his costs) from them. HMRC further submit that they should not have to pay two sets of costs so that the First Defendant should not recover her costs.

I need to refer to some of the procedural history before coming to my conclusion in relation to costs. The Claimant issued his claim form on 9 February 2015. At that stage, his wife was the sole Defendant. On 25 March 2015, she served an acknowledgement of service, stating that she did not wish to contest the claim. On 27 August 2015, Master Bowles ordered that HMRC be added as a Second Defendant. The Master’s order recites that HMRC were added on the application of the Claimant. It appears that the trial of the action was then fixed for a date in early October 2015. On 25 September 2015, HMRC applied for various orders including an order permitting it to take part in the trial and for an adjournment of the trial. On 6 October 2015, Judge Walden-Smith, sitting as a Judge of the High Court, adjourned the trial. She made an order that HMRC should serve Points of Dispute and that the Claimant should serve Points of Reply. She ordered HMRC to pay the Claimant’s costs of their application and the Claimant’s costs thrown away by reason of the adjournment and, indeed, other costs which were thrown away. She gave the First Defendant liberty to apply in relation to the First Defendant’s costs thrown away by reason of the adjournment and other matters.

HMRC duly served detailed Points of Dispute disputing the claim on a number of grounds, including the public policy ground. The Claimant duly served detailed Points of Reply and then answered a detailed Request for Further Information in relation to the Points of Reply.

The trial began at 2.00 pm on 16 March 2016. The evidence was completed by the end of that day. On 17 March 2016, I heard legal argument and reserved my decision.

I consider that my conclusions as to the costs of this action should take account of the following matters:

Taking all the above matters into account, I conclude that the right order to make as to costs is that HMRC should pay to the Claimant:

As to the First Defendant, there will be no order as to costs including the costs in relation to which she was given permission to apply in the order of 6 October 2015.