DENTON APPLIED IN THE TAX & CHANCERY CHAMBER: LEEDS -v- COMMISSIONERS CONSIDERED

One of the places where Mitchell, and subsequently Denton, had a major impact was the specialist tribunals. As we have seen in this blog Mitchell principles were applied with some vigour and the “clarification” by Denton has also had an effect.  There have been a large number of cases that consider Denton. Here we look at the Denton principles considered in the Upper Tribunal of the Tax & Chancery Chamber.

THE CASE

In Leeds City Council -v- The Commissioners for Her Majesty’s Revenue and Customs [2014] UKUT 0350 (TCC)  the Council had lost an appeal in relation to the repayment of VAT.  The rules impose a time limit within which applications for costs should be made. The Commissioners made an application for costs 6 days, or four working days, late.   The Commissioners recognised this and made an application for an extension of time.

THE ARGUMENTS

The Council relied upon Mitchell, and subsequent cases, 

THE RELEVANCE OF THE CPR TO THE CHAMBER AND TAX CHAMBER

The Civil Procedure Rules do no apply in the Chambers, however they are taken to offer a “guide” rather than filling gaps.  However the Mitchell and Denton judgments were considered in some detail.

THE REASON FOR THE DELAY

The judge described the reason given for the delay as “weak”. A solicitor had moved from handling criminal cases into civil work. She was not familiar with civil procedure and was over-worked. She was not aware of the time limit for making the application.

the judge granted an extension DESPITE THE WEAK REASON

The judge considered the earlier practice of the Chamber and the Denton principles. He stated that:-

  • The aim of the rule is to require a party asserting a right to do so promptly and to afford the opponent an assurance that, after the limit has expired, no claim will be made.
  • The delay was short and included the Christmas and New Year holiday.
  • The reason was weak but could be understood.
  • The consequence would be to deprive HMRC from the costs direction they would normally have expected whilst Leeds would gain a windfall.
  • The application would have succeeded, probably without opposition, prior to the Mitchell decision.
  • The initial appeal was about significant sums of money. If Leeds had won it would have expected to recover its costs.
  • There would be no injustice if Leeds were required to pay the costs. There would be injustice if HMRC, representing a body of taxpayers, was deprived of a costs direction because of a minor error.

avoiding satellite litigation applies to tribunals as well

The judgment concludes

 “I should, finally, make it clear that I do not criticise Mr Bremner and those he

represents for opposing HMRC’s application, nor do I regard that opposition as

opportunistic. The decisions in Mitchell and McCarthy & Stone suggest that it was

the right thing to do. But I am satisfied, following Denton, that opposition to short

 extensions when a mistake has been made and there is no real prejudice beyond the

loss of a windfall gain is not within the spirit of the overriding objective of r 2 of the

Upper Tribunal rules, and should be the exception rather than the norm. Time limits

are there to be complied with, and for the reason I have given; but mistakes do occur 

and if they are not egregious—for example when there is a failure to comply without

good reason with an “unless” direction—or are not remedied promptly when

discovered, they should not, in my view, lead to satellite litigation which takes up the

resources of the parties and the tribunal. What was said in Denton at [42] on that topic

5 is of equal application to the tribunals.”

(I am grateful to Rachael Gregory from Walker Morris for drawing this case to my attention).