Case Number: TC09623
In public by remote video hearing
Appeal reference: TC/2024/03371
INCOME TAX – application to bar HMRC – fair trial issue raised in the application as a ground of appeal - application rejected – directions given
Judgment date: 28 August 2025
Before
TRIBUNAL JUDGE NIGEL POPPLEWELL
Between
SEAN MCMAHON
Appellant
and
THE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMS
Respondents
Representation:
For the Appellant: Tom Dyer of Ascot Tax
For the Respondents: Daniel Hopkins litigator of HM Revenue and Customs’ Solicitor’s Office
DECISION
Introduction
The appellant has been assessed to additional income tax for the tax years 2008/2009 (£4,198.40) and 2009/2010 (£2,462.20 subsequently increased on review to £8,764.80) by virtue of discovery assessments originally issued on 6 March 2013 and 28 January 2014 (respectively) (“the discovery assessments”).
It is HMRC’s position that the appellant participated in a contractor loan scheme, and that payments which originally had been made to him by way of loans should be re-categorised as employment income on which he is liable to income tax.
It is the appellant’s pleaded position that the discovery assessments, both in their original form and as subsequently amended by HMRC, are defective.
On 31 December 2024, the appellant made an application under Rule 8 (as defined below) that HMRC should be barred from taking further part in these proceedings (“the barring application”).
In the barring application the appellant raises a new ground of appeal, namely that HMRC’s delays in investigating his affairs following the issue of the discovery assessments make it impossible for him to receive a fair trial.
I have to determine whether HMRC’s case has a reasonable chance of success. I will deal with the detailed case law later but in simple terms, I need to decide whether HMRC have a realistic as opposed to a fanciful prospect of succeeding in making out their case.
I was greatly assisted by the written and oral representations made by Mr Dyer and Mr Hopkins. I have considered in detail those representations and all of the relevant evidence. However, I have not found it necessary to refer to each and every argument advanced or all of the authorities cited in reaching my conclusion.
That conclusion is that HMRC’s case does have a realistic prospect of success. And so I have rejected the barring application.
THE LAW
The law which is relevant to the barring application is set out in the Appendix. Words and phrases defined therein bear the same meanings in the body of this decision.
THE FACTUAL BACKGROUND
There was no dispute about the factual background which was set out in a bundle of documents. I set this out below:
In a letter dated 6 March 2013 to the appellant, Officer Stopp (“OS”) told the appellant that she had made a discovery assessment for additional income tax of £4,198.40 for the tax year 2008/2009 in order to protect HMRC’s position. The letter enclosed a discovery assessment for that tax year and went on to explain that the further sums which the assessment brought into charge were those “related to an employment arrangement you entered into with Merchant Group Limited a company sited outside the UK. Although described as loans, I believe that the sums relate to your professional work in the UK and are taxable income”.
The appellant appealed against this discovery assessment by way of a letter dated 11 March 2013. The grounds of appeal were, basically, that HMRC had offered no evidence for their suggestion that the loans were taxable income, and the relevant conditions for a discovery assessment had not been made out.
OS responded to this letter on 13 May 2013. In her response she noted the grounds of appeal, explained in a bit more detail the rules which enabled her to tax the loans as additional income, and justified the making of a discovery on the basis that new facts had come into her possession which demonstrated that there was an insufficiency of the tax returned by the appellant.
HMRC’s original discovery assessment for 2009/2010 was dated 28 January 2014 and was sent to the appellant by OS under cover of a letter dated 30 January 2014. The explanation for issuing that assessment is virtually identical to the explanation in her letter of 6 March 2013 in relation to the earlier period.
The appellant appealed against this assessment on 6 February 2014. The grounds of appeal were that there were no grounds for raising the discovery assessment, nor that the loan constituted taxable income.
In a letter to the appellant dated 7 February 2014, OS explained that the original assessment for 2009/2010 included incorrect figures and was therefore invalid. She enclosed a new assessment and amended the appellant’s self-assessment statement accordingly.
On 2 October 2018, Mr Dyer, on behalf of the appellant, sent a letter to HMRC referring to an HMRC letter of 26 July 2018 (which was not in the bundle) in which he said that having reviewed the appellant’s position, the appellant had no liability for tax under “your assertion of Contractor loans-the loan charge”. And went on to say: “Please advise me of any open tax enquiry so I can advise my client accordingly”.
In a letter to the appellant dated 28 May 2021, HMRC’s Avoidance Arrangements Support Team explained that the disguised remuneration loan charge applied to the loans made to the appellant under the contractor loan scheme in which he had participated and went on to explain changes to that loan charge and what they meant to the appellant. It recorded the progress of the Hoey case from the initial appeal in July 2019 through to the Upper Tribunal decision in April 2021. It recorded the issues considered by the tribunals and how they might affect the appellant, including reference to the Supreme Court ruling in the Rangers case. It referred to settlement terms which the appellant might wish to consider and what he should do if he decided to settle.
A further letter to the appellant dated 14 November 2022 recorded HMRC’s view that the appellant had been involved in a disguised remuneration scheme and, given that it was not appropriate for the end user to account for income tax under PAYE, it was up to the appellant to settle the income tax liability in connection with the contractor loan scheme.
HMRC provided their view of the matter and offered a review in a letter to the appellant dated 18 January 2024. It provided schedules which recorded their then current view of the matter. Those schedules recorded, in considerable detail, the technical basis on which HMRC considered that the loans were redirected earnings, together with two alternative arguments. They also contained a detailed explanation of why, in HMRC’s view, there had been a valid discovery pursuant to which there had been valid in time discovery assessments.
Mr Dyer responded by asking for an independent review of the conclusions which were set out in HMRC’s letter of 13 May 2024 to the appellant. It set out the background, HMRC’s understanding of the contractor loan arrangements, the application of the Rangers case to those arrangements, and the validity of the discovery assessments. It upheld the discovery assessment for the tax year 2008/2009 but varied the discovery assessment for 2009/2010 by increasing it to £8,764.85.
On 10 June 2024, the appellant appealed to the tribunal. The grounds of appeal were that the discovery assessments were wrong in law and are invalid since they did not comply with section 29 of the Taxes Management Act 1970.
On 11 September 2024, HMRC made an application for the tenant to provide further and better particulars in support of his grounds of appeal.
On 29 November 2024, the appellant provided those further and better particulars (“the further and better particulars”). These set out the background to the discovery assessments; identified the relevant points at issue as being the validity of those assessments, their quantum, whether sums received under the contractor loan arrangements had actually been received by the appellant; and if they had been so received, whether they were taxable as income. They set out the relevant legislation in considerable detail; the relevant facts and case law; and details of the relevant challenge.
His challenge is that; he received no notice to file a return under section 8 TMA; he did not submit or approve any tax return for the relevant tax years; he did not appoint or authorise to HMRC, an agent to submit returns on his behalf. In the appellant’s view since there was no valid return filed, there could be no valid discovery assessment. Furthermore, no detailed calculations have been provided of the appellant’s additional income, nor whether it was actually received by the appellant, nor why the loans were taxable as additional employment income.
Mr Hopkins provided me with a timeline of the case law which he submitted was relevant to HMRC’s consideration of the appellant’s contractor loan scheme arrangements.
The Upper Tribunal decision in the Rangers case (originally Murray Holdings but now colloquially known as “Rangers”) was released in July 2014. It was appealed to the Court of Appeal which released its decision on 4 November 2015. This was then appealed to the Supreme Court which released its decision on 5 July 2017 (RFC 2012 Plc (in liquidation) vAG for Scotland [2017] UKSC 45).
The Upper Tribunal decision in Hoey v HMRC [2021] UKUT 0082 (“Hoey”) was released on 12 April 2021, and the Court of Appeal decision was released on 13 May 2022. Hoey had originally been heard by the FTT in July 2019.
DISCUSSION
The barring application
The barring application requests that the proceedings should be struck out pursuant to Rules 8(2)(a) and 8(3)(c).
The appellant asks the tribunal to use its power to allow the appeal based on delay which is an abuse of process.
The grounds for the application are that the appellant has been prejudiced by HMRC’s inordinate and inexcusable delay and as a result the appellant cannot obtain third party evidence to corroborate his grounds of appeal, nor will he receive a prompt and fair trial under Article 6 of the European Convention of Human Rights (“Article 6”).
The barring application then goes on to deal with:
Jurisdiction. In the appellant’s view the tribunal has jurisdiction to consider whether an appeal should be allowed on the basis of delay;
Prejudice. The timeline shows that between February 2014 and May 2021, HMRC had no contact with the appellant notwithstanding there was an open appeal. This has caused prejudice.
Submissions
In his written and oral submissions at the hearing, Mr Dyer supplemented these issues with the following submissions (which I have summarised):
The tribunal has an obligation to provide a fair and public hearing. The delay by HMRC of over 11 years makes that impossible. Any trial cannot be on the basis of the best available evidence.
The appellant cannot cross examine the officers who were involved in the investigation nor who made the discovery as they have retired. Nor can he obtain evidence from the appellant’s employer (it no longer exists) nor the promoter (it no longer exists either) nor any tax agent. Documents which might be relevant to the appellant’s case have been destroyed by HMRC. HMRC rely on a calculation error which is now going to be difficult to disprove.
If the appellant had realised that there was going to be this delay, then Mr Dyer would have contacted the relevant HMRC officers and asked them to explain the basis of the assessment and would have contacted the employer and the tax advisers to obtain an explanation as to the technical basis on which the returns had been made.
HMRC are relying on third party evidence. But, given the delay, the appellant will not be able to obtain third party evidence which might assist his case.
If the discovery had been made by HMRC, and it has become stale. In any event, in the appellant’s view there has been no discovery
At the time of submitting the tax returns, the appellant had no authorised agent and therefore any such returns had not been approved by the appellant. The appellant had never received a notice to file returns for the years in question.
Under Article 6 the appellant has a right to a fair and public hearing and the right to be informed of the charges against him within a reasonable time. HMRC have not fulfilled these obligations.
Imposition of the tax via the discovery assessments are in fact penalties and thus criminal in nature. This means that the appellant has the right to cross examine HMRC’s witnesses.
HMRC are in breach of their obligations under the taxpayer’s charter on which the appellant is entitled to rely.
A reasonable taxpayer would assume there is a time limit for HMRC to pursue matters as these are normal business transactions.
The best approach to evidence is to rely on documents, but these are no no longer obtainable.
HMRC have major technical difficulties with the discovery assessments. They have no evidence of the employment arrangements between the appellant, his employer, and the end users. There was no discovery. The fact that there were no valid tax returns makes it more difficult for HMRC to establish an insufficiency given the time that has elapsed.
HMRC had the opportunity following Mr Dyer’s letter of 2 October 2018 to provide information to the appellant which they failed to do. Many of the problems stem from this failure.
In summary, Mr Hopkins submitted as follows:
The case law timeline demonstrates that HMRC were not doing nothing between the issue discovery assessments and the letter to the appellant in October 2021 and their subsequent view of the matter letter in 2022.
That correspondence, together with the review conclusion letter, clearly demonstrates the basis on which HMRC are challenging the appellant’s position both as regards the validity of the discovery assessment and the technical grounds for justifying their view that the payments to the appellant made by way of a loan were in fact redirected income and thus subject to income tax.
There were significant changes to the tax landscape in this area, given Rangers and Hoey, and the issues around the imposition of the loan charge. These needed to be clarified before these appeals could be meaningfully progressed.
The onus is on the appellant to justify why HMRC should be barred. There is no assertion that the tribunal has no jurisdiction to hear the appeal. It seems to be that the appeal cannot be heard fairly and justly because of the delay.
There has been no delay since the submission of the appeal to the tribunal.
It has always been open, since 2013 and 2014 when the appellant appealed to HMRC against the discovery assessments, for the appellant to notify those appeals to the tribunal.
There is no evidence that HMRC have failed to cooperate with the tribunal in furtherance of the overriding objective.
The discovery assessments and the letters which were sent with them gives a considerable amount of information to the appellant to enable him to understand the basis of HMRC’s challenge.
HMRC have the burden of establishing that the discovery assessments were valid in time assessments. To do this they will need to show that an officer made a subjective and objective discovery and a valid assessment pursuant to that discovery. It is up to them to decide how to establish this. They must be allowed to do this at a trial. If they bring witnesses who gave oral evidence, the appellant can cross examine those witnesses. Without a substantive hearing it will not be possible to decide whether or not a valid discovery has been made.
Staleness is not relevant in this context. This is not a situation where an assessing officer has sat on discovery before issuing the assessment. Furthermore, given the decision in HMRC v Tooth [2021] UKSC 17, staleness in the context of a discovery assessment is irrelevant.
No evidence has been supplied to support Mr Dyer’s assertion of what he would have done had he known there was going to be a delay. In any event, given that he knew there was an HMRC challenge to the appellant’s position, he could, and should, have contacted those people at the time to obtain their views on HMRC’s position.
There has been no Article 6 breach to the appellant’s right to a fair and timely hearing. HMRC have remained procedurally active during the period since the discovery assessments were raised. There has been no unreasonable delay since the appeal was notified to the tribunal (i.e. since the litigation process started). Article 6 does not in any event cover general tax liability.
My view
I start by considering the Rules.
The barring application requests that the proceedings should be struck out pursuant to Rules 8(2)(a) and 8(3)(c).
Under Rule 8(2)(a), I must bar HMRC from taking any further part in these proceedings if the tribunal has no jurisdiction in relation to them. The parties agree that I do have such jurisdiction. And even if they did not so agree, it is clear that I have such jurisdiction. This is a straightforward case in which HMRC have issued discovery assessments which are being challenged by the appellant. There is no jurisdictional point in issue.
The barring application is therefore made pursuant to Rule 8(3)(c).
I therefore have to consider whether HMRC have a reasonable prospect of success.
The barring application stated that the appellant has no prospect of receiving a fair trial. In the appellant’s view the tribunal cannot deal with proceedings fairly and justly. This is the language of Rule 8(3)(b). But whilst this gives me discretion to bar HMRC, it only applies if HMRC have failed to cooperate with the tribunal. There is no evidence that they have failed to cooperate, and indeed the appellant’s submissions include no such assertion. He asserts that the “non-cooperation” is by HMRC.
Nor, in my view, does the overriding objective to deal with cases fairly and justly, set out in Rule 2 provide a route for the appellant to persuade me that because in his view he will not receive a fair trial, I can strike out HMRC’s case at this stage. Strike out (or barring HMRC) is a draconian remedy and to my mind therefore can only be exercised in accordance with the specific provisions of Rule 8. Rule 2 does not provide a roving power outside Rule 8 to strike out an appellant or bar HMRC. What it does do is provide that if I am considering either, I must also consider the overriding objective in Rule 2, when exercising that power under Rule 8.
So, I need to consider whether there is no reasonable prospect of HMRC’s case succeeding. I must consider whether HMRC have a realistic, as opposed to a fanciful, prospect of success. This is likely to be the case where I consider that there is relevant evidence which will be available to the trial judge. I can consider evidence that was before me at the hearing and also evidence which can reasonably be expected to be available at the trial. I should allow the appeal to proceed to trial if I believe that a full investigation into the facts would add to the evidence available to the trial judge and thus affect the outcome of the case. But if HMRC’s case is bad in law, I should grasp the nettle and deal with it now.
The barring application essentially asserts two grounds. The first is that the discovery assessments are defective. The second is that due to the delay by HMRC, the appellant cannot get a fair trial.
I shall refer to these as the “discovery assessment issue” and the “fair trial issue”.
Dealing first with the discovery assessment issue. This was clearly pleaded by the appellant in his original appeals to HMRC in 2013 and 2014, in his notice of appeal to the tribunal on 10 June 2024, and in the further and better particulars which were provided on 29 November 2024. He asserts that no valid discovery was made, no one had authority on his behalf to submit a tax return, HMRC have not provided details of the amounts assessed, and there is no technical justification for recategorising the loan as redirected employment income.
He further asserts, via the barring application, that he cannot get a fair trial as he will not be able to cross examine the assessing officers.
However, as set out in Mr Hopkins’ skeleton argument and as I explained to Mr Dyer at the hearing, the law is very clear regarding who has to prove what in relation to a discovery assessment. It is for HMRC to show that an officer has made a subjectively and objectively reasonable discovery and on the basis of that discovery went on to make a valid in time discovery assessment which was properly served on the appellant.
This requires HMRC to do all the running. If they cannot establish the validity of the assessment, then the appellant must succeed. The second stage of the process (namely if HMRC have established that there is a valid discovery assessment, the burden is on the appellant to demonstrate that it overcharges him) does not apply unless the discovery assessment is valid in the first place.
To do this HMRC will need to provide sufficient evidence to persuade a judge. They may have a difficulty given that the assessing officer or officers may not be available to give first-hand evidence of the process pursuant to which the discovery was made and the assessments generated. But that is their problem. If those officers are available and give oral evidence, then the appellant’s objection that he cannot cross-examine them falls away. He can cross-examine them at the hearing at which they give evidence. The same is true if oral evidence is given by officers other than the original assessing officers. They will be available for cross-examination by the appellant.
But at this stage however, I cannot possibly say that the prospect of HMRC establishing a valid discovery are fanciful. The validity of the discovery assessments, which lies at the heart of this appeal, can only be ascertained on the basis of full evidence given by HMRC at a hearing at which any oral evidence can be challenged by the appellant. I cannot say at this stage (when no witness statements have been prepared or exchanged, and indeed there has been no statement of case as yet) whether HMRC have a realistic prospect of establishing the validity of the discovery assessments.
What I am able to say is that it is highly likely that HMRC will produce evidence to justify the validity of the discovery assessments at a full hearing. Whether that evidence comes up to proof is another matter. But to deny them the opportunity, at this stage, to present that evidence, would not to my mind satisfy the overriding objective of dealing with this case fairly and justly.
I consider that there is a reasonable prospect of HMRC being able to establish that the discovery assessments are valid and consequently I am not prepared to bar them from taking any further part in these proceedings on that basis.
I now turn to the fair trial issue. This presents a difficulty for the appellant. He has never pleaded this as a ground of appeal. Whilst that would have been impossible of course when he originally appeal against the discovery assessments in 2013 and 2014, it would have been perfectly possible for him to have done so in his appeal to the tribunal and, more importantly, as part of his further and better particulars which were submitted as recently as 29 November 2024.
It seems strange to me that at that time he was focusing on the discovery assessment issue, but only a month later, on 31 December 2024, via the barring application, his focus changed completely. It is now on whether he can obtain a fair trial due to HMRC’s delay.
HMRC have never addressed this argument before. They have never needed to. The view of the matter letter and review conclusion letter simply dwell on the justification for their technical view that the loan comprises employment income, and that there were valid in time discovery assessments. This is unsurprising given that, as a basis for his appeal, the suggestion that he might not get a fair trial was only raised in December 2024.
Mr Hopkins, however, very fairly dealt with the appellant’s assertions. He could have said that given that the fair trial issue has not been pleaded by the appellant, there is nothing in HMRC’s case which could form the basis of an application that their case does not have a reasonable prospect of success because the appellant would not get a fair trial.
In light of this, I have considered the fair trial issue in the context of the barring application. I have considered the appellant’s assertions and HMRC’s response. Given that I am allowing this appeal to proceed to a trial, anything I say regarding the fair trial issue should not be construed as giving a definitive opinion, nor a finding of fact, which might have an impact on the trial.
But there is authority that the tribunal can consider whether inexcusable and inordinate delay on behalf of HMRC might prejudice an appeal by an appellant to such an extent that they cannot get a fair trial and thus there has been an abuse of process which might allow a tribunal to allow an appeal.
However, these are deep waters and (subject to what I say below regarding the appellant’s pleadings) can only be considered in light of an extensive review of the facts tested against the relevant case law. That is not the purpose of the barring application which is to consider whether HMRC have a reasonable prospect of success. Whilst the appellant has put forward a number of arguments to justify his assertion that he will not get a fair trial, HMRC have equally put forward a number of arguments to explain why, to the extent that it is relevant to the proceedings, he will receive a fair trial. These competing positions need to be considered at length, and that is not the purpose of the proceedings before me.
And I certainly do not consider HMRC’s position on the fair trial issue to be fanciful. They have put forward cogent arguments as to why, for example, Article 6 does not apply to tax cases. They have explained that the taxpayer’s charter has no statutory basis. They have explained why, in their view, the appellant will not be prejudiced by not being able to cross examine HMRC’s witnesses, since they will of course be able to cross-examine them should such witnesses give oral evidence. They have challenged the appellant’s assertion regarding evidence that he could have obtained had he known about the delay, and the relevance of that evidence to the issues in this case (in light of the fact that it is HMRC’s obligation to establish the validity of the discovery assessments).
So, I am not prepared to bar HMRC from these proceedings on the basis that they have no realistic prospect of establishing a “defence” to the fair trial issue.
Pleading the fair trial issue
I have decided therefore that this appeal should proceed to a full hearing. That hearing will deal with the issues which have been pleaded. The problem for the appellant is that he has not pleaded the fair trial issue. As such, they will not be before the trial judge at the hearing.
It is not satisfactory for the appellant to allege that he has pleaded them by dint of raising them in the barring application. The purpose of pleadings is to enable the parties to understand each other’s case and case law clearly shows that an appellant’s grounds of appeal should set out their legal and factual case in sufficient detail for HMRC to understand it, and to be able to submit a statement of case in response to it.
At present, HMRC’s statement of case cannot deal with the fair trial issue since it has not been formally pleaded by the appellant.
So I Direct that within 28 days from the date of release of this decision, the appellant shall, if it wishes the fair trial issue to be considered at the full hearing, make a formal application to the tribunal (copied to HMRC) to amend its grounds of appeal to include the fair trial issue.
I would observe that any such application might be challenged by HMRC in which case the tribunal will consider the most appropriate way to resolve that challenge.
I therefore further Direct that the deadline for HMRC to submit their statement of case shall be 60 days from the date on which any application by the appellant to amend his grounds of appeal has been finally determined.
DECISION
I reject the barring application. This appeal shall proceed to a full hearing.
PERMISSION TO APPEAL
This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.
Release date: 28th AUGUST 2025
APPENDIX
STRIKE OUT
The F-tT Rules
1. The relevant Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009 (the “Rules”) are Rules 2 and 8:
Rule 2(3) requires me to give effect to the over-riding objective when exercising any power under the Rules. The over-riding objective, as set out in Rule 2(1), is as follows:
“The overriding objective of these Rules is to enable the Tribunal to deal with cases fairly and justly”.
Rule 8 deals with strike out:
8. Striking out a party’s case
(1) …
(2) The Tribunal must strike out the whole or a part of the proceedings if the Tribunal-
(a) does not have jurisdiction in relation to the proceedings all that part of them; …
(3) The Tribunal may strike out the whole or a part of the proceedings if—
(a) the appellant has failed to comply with a direction which stated that failure by the appellant to comply with the direction could lead to the striking out of the proceedings or part of them;
(b) the appellant has failed to co-operate with the Tribunal to such an extent that the Tribunal cannot deal with the proceedings fairly and justly; or
(c) the Tribunal considers there is no reasonable prospect of the appellant’s case, or part of it, succeeding.
(4) The Tribunal may not strike out the whole or a part of the proceedings under paragraphs (2) or (3)(b) or (c) without first giving the appellant an opportunity to make representations in relation to the proposed striking out…
(5) …
(6) …
(7) This rule applies to a respondent as it applies to an appellant except that –
(a) A reference to the striking out of the proceedings must be read as a reference to the barring of the respondent from taking further part in the proceedings…
Case law
2. The legal principles which I must consider have been neatly set out in the Upper Tribunal in The First De Sales Limited Partnership and others v HMRC [2018] UKUT 396:
Approach to applications to strike out - legal principles
31 At [30] of the decision, the judge applied the summary of principles set out by the Upper Tribunal in HMRC v Fairford Group plc [2014] UKUT 329; [2015] STC 156 (‘Fairford Group plc’). The Upper Tribunal held (at [41]) that:
“In our judgment an application to strike out in the FTT under r 8(3)(c) should be considered in a similar way to an application under CPR 3.4 in civil proceedings (whilst recognising that there is no equivalent jurisdiction in the FTT Rules to summary judgment under Pt 24). The tribunal must consider whether there is a realistic, as opposed to a fanciful (in the sense of it being entirely without substance), prospect of succeeding on the issue at a full hearing, see Swain v Hillman [2001] 1 All ER 91 and Three Rivers [2000] 3 All ER 1 at [95], [2003] 2 AC 1 per Lord Hope of Craighead. A ‘realistic’ prospect of success is one that carries some degree of conviction and not one that is merely arguable, see ED & F Man Liquid ProductsLtd v Patel [2003] EWCA Civ 472, [2003] 24 LS Gaz R 37. The tribunal must avoid conducting a ‘mini-trial’. As Lord Hope observed in Three Rivers, the strike-out procedure is to deal with cases that are not fit for a full hearing at all”.
32. It was common ground that the application should be considered in a similar way to an application under CPR 3.4 in civil proceedings (whilst recognising that there is no equivalent jurisdiction in the FTT Rules to summary judgment under Part 24).
33. Although the summary in Fairford Group Plc is very helpful, we prefer to apply the more detailed statement of principles in respect of application for summary judgment set out by Lewison J, as he then was, in Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]. This was subsequently approved by the Court of Appeal in AC Ward & Sons v Caitlin Five Limited [2009] EWCA Civ 1098. The parties to this appeal did not suggest that any of these principles were inapplicable to strike out applications.
i) The court must consider whether the claimant has a ‘realistic’ as opposed to a fanciful prospect of success: Swain v Hillman [2001] 1 All ER 9;
ii) A realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
iii) In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain vHillman;
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.
