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M29a: Strike out where no real prospect of success
Case, or part of it, has no reasonable prospect of success (limb (c))
“(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.” (FTT Rules r.8(3)).
“Case” not confined to positive case
“[30]...A party's case is not confined to its positive case, nor to a form of pleading. Although r 8(3)(c) is in different terms, the parties (rightly in our view) accepted that CPR 3.4, which applies to the formal statements of case which are served in civil proceedings, was a helpful source of guidance on the proper application of r 8(3)(c). CPR 3.4(2)(a) confers a power to strike out a statement of case, including a defence, even where the burden of proof is on the claimant; and it would be surprising if it were otherwise.” (HMRC v. Fairford Group plc [2014] UKUT 329 (TCC), Simon J and Judge Bishopp).
Realistic as opposed to fanciful prospect of success (cases not fit for a full hearing at all)
"[19]...First, to defeat an application for summary judgment, a defendant need do no more than show that his defence has a prospect of success which is real, as distinct from merely fanciful. 'Fanciful' connotes being devoid of substance or hopeless: see, eg, ED&F Man Liquid Products v. Patel [2003] EWCA Civ 472 at [5], [10], [53] per Potter LJ. As Lord Hobhouse held in Three Rivers District Council v. Bank of England (No 3) [2003] 2 AC 1 at [158], the "criterion which the judge has to apply under Part 24 is not one of probability; it is absence of reality"." (Athena Capital Fund Sicav- Fis S.C.A v. Crownmark Limited [2019] EWHC 1952 (Comm))
“[41]... 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], 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 Products Ltd v Patel [2003] EWCA Civ 472. 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.” (HMRC v. Fairford Group plc [2014] UKUT 329 (TCC), Simon J and Judge Bishopp).
"[32] In this regard, I am guided by the detailed statement of principles set out by Lewison J (as he then was) in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15], which was endorsed by the Tax and Chancery Chamber of the Upper Tribunal (Henry Carr J and Upper Tribunal Judge Sinfield) in The First De Sales Ltd Partnership and others v Revenue and Customs Commissioners [2018] UKUT 396 (TCC) at Para [33]:
"(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 91
(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 v Hillman
(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.”
[33] In essence, HMRC argues that these appeals cannot survive the strike-out application because the totality of the presently available evidence, looked at as a whole, shows that the Appellant does not enjoy any realistic prospect of successfully advancing these appeals." (Mediability Limited v. HMRC [2023] UKFTT 315 (TC), Judge McNall)
“Striking out under Rule 8(3)(c) is like summary judgment and (while not cited to me) cases on the test for summary judgment are relevant. In De Molestina v Ponton [2002] 1 Lloyds LR 280 Colman J said that where strike out was sought in an evidentially complex matter the judge would have to:
[3.4]….conduct a careful investigation of the evidence to ascertain whether, in spite of the intrinsic complexity, there is obviously no substance in the claim…..Where, in a complex case, as may often be the situation, the frontier between what is merely improbable and what is clearly fanciful is blurred, the case or issue should be left to trial.”
In Berezovsky v Abramovich [2010] EWHC 647 (Comm) Colman J said:
[146] …For the court to be satisfied that the claim has no real prospect of success it must entertain such a high degree of confidence that the claim will fail at trial as to amount to substantial certainty….That high degree of confidence is required in order to deal with each case justly and consistently with Art 6.1 of the European Convention on Human Rights…”
The test is in my view the same whether looking at the evidential or legal case, and whether or not the appellant puts forward a simple or legal case. The test is whether that case has no real prospect of success.” (Chung v. HMRC [2016] UKFTT 215 (TC), §§40…42).
- More than arguability required
“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]” (Easyair Ltd v. Opal Telecom Ltd [2009] EWHC 339 (Ch), approved in The First De Sales Ltd Partnership v. HMRC [2018] UKUT 396 (TCC), §33, Carr J and Judge Sinfield).
“ I have considered those submissions carefully. However, while I have concluded that they are arguable, I do not consider that they carry the measure of conviction necessary for me to conclude that they have a reasonable prospect of success.” (The First De Sales Ltd Partnership v. HMRC [2018] UKFTT 106 (TC), §45, Judge Jonathan Richards)
Burden on the person seeking strike out
"[19]...Second, a party resisting a claim for summary judgment or strike-out is not under a general burden of proof in an evidential sense: see eg, Green v. Hancocks (A Firm) [2001] PNLR 10 at [21] per Ferris J." (Athena Capital Fund Sicav- Fis S.C.A v. Crownmark Limited [2019] EWHC 1952 (Comm))
"[31] In short, HMRC bears the burden of establishing that the taxpayer's case in this regard enjoys prospects which are no more than false, fanciful or imaginary."(Crawford v. HMRC [2022] UKFTT 37 (TC), Judge McNall)
Tribunal must seek to understand party's case as a whole before striking out
"[46] ... On its face the letter appears to be contradictory. The Tribunal has not made any reference to the substance of the letter or the appellant’s strenuous assertions in the letter regarding its entitlement to reclaim its input tax. The First-tier Tribunal has erred by failing to engage with and analyse the basis on which the appellant asserts or maintains its case that it is entitled to reclaim input tax. It also failed to grapple with, when deciding what the letter asserted, the apparently wholly contradictory position of claiming entitlement to input tax recovery whilst arguing the supplies were not zero-rated in circumstances where, in the absence of the zero-rating of the supplies, no entitlement to input tax would appear to arise. The only clear basis to strike out the case in these circumstances would be if the First-tier Tribunal found that the appellant, in abandoning its case that the supplies were zero-rated, had no other basis on which it was entitled to recover input tax. There is no reasoning in the First-tier Tribunal’s decision that indicates the Tribunal thought about or considered if there was any other basis upon which the appellant could reclaim input tax in light of the strenuous and persistent claims throughout the letter that it was entitled to do so." (G B Fleet Hire Limited [2021] UKUT 225 (TCC), Judge Ramshaw and Judge Andrew Scott)
- Clear wording required to conclude party has withdrawn part of case previously advanced
"[50] We accept Mr Beal’s submission that in the context of this appeal the First-tier Tribunal’s construction of the letter required the clearest terms to be used particularly where even the respondent had described that construction as ‘incomprehensible’. The assertion in the letter to have never claimed zero-rating is simply (and as identified by the respondent) inexplicable. The Tribunal failed to properly engage with and consider if there were any reasonable prospects of an appeal succeeding on the basis of a continued and strenuously argued case that the appellant was entitled to input tax recovery. A more detailed analysis of the assertions in the letter and an adequate explanation was required in the face of such an ‘astonishing volte-face’ (to adopt the language used by the respondents)." (G B Fleet Hire Limited [2021] UKUT 225 (TCC), Judge Ramshaw and Judge Andrew Scott)
Needs to be possible for party to win if it proves all the facts it proposes to prove
"[35] It follows that I am not persuaded that, even if the appellant were to succeed in proving all the facts that the appellant offers to prove, the appellant will not succeed in this case. In my view, therefore, the appellant's case has a realistic prospect of success in the sense that the appellant's case is not merely fanciful and should be permitted to proceed to full hearing." (Newsand Limited v. HMRC [2024] UKFTT 221 (TC), Judge Greenbank)
Factual dispute: no mini trial, but not required to take all statements at face value
“iii) In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman
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]” (Easyair Ltd v. Opal Telecom Ltd [2009] EWHC 339 (Ch), approved in The First De Sales Ltd Partnership v. HMRC [2018] UKUT 396 (TCC), §33, Carr J and Judge Sinfield).
- Not appropriate to go into the evidence in detail
"[18]...(6) Likewise, in Three Rivers (at [96]), Lord Hope held that the court's power under r.24.2 is not intended to be exercised by a minute and protracted examination of documents and facts of the case in order to see whether the defendant does indeed have a defence. To do that is to usurp the position of the trial judge and to produce a trial on paper without disclosure and without oral evidence tested by cross examination in the ordinary way" (Athena Capital Fund Sicav- Fis S.C.A v. Crownmark Limited [2019] EWHC 1952 (Comm))
"[97] ... We agree with [HMRC] that it was not necessary or appropriate to go into the evidence in detail. Such a process was not appropriate to an application under Rule 8(3)(c) and, if such a process was required, that might have been a good reason for concluding that the case was unsuitable for summary judgment. This is however speculation on our part. The relevant point is that the required reasoning, whether it should have been short or long, is missing from the Decision." (HMRC v. Tasca Tankers Limited [2022] UKUT 88 (TCC), Edwin Johnson J and Judge Andrew Scott)
- Ambitious application with 1000s of pages of evidence
"[46]...Beyond this, and looking at the Application more generally, the Application may be said to be an ambitious one. The Application has required, even allowing for some interruptions to the hearing, the best part of two days to be heard. The documents for the Application are voluminous, running to some 1500 pages. The claims in respect of which I am asked to grant summary judgment involve serious allegations of dishonesty against various parties, and are not the kinds of claim which, at first sight, appear suitable for summary judgment. There is, at least at first sight, some merit in Mr. Becker's opening observation in his skeleton argument for this hearing, which was to the effect that with over 1100 pages of evidence brought to the Application, it is difficult to understand how the case lends itself to a summary judgment application in any event. All of this emphasizes the need for a cautious approach to the Application." (Umbrella Care Ltd v. Nisa [2022] EWHC 86 (Ch), Edwin Johnson J)
- No evidence in support of case provided
“The Tribunal finds that in the absence of appropriate and relevant documentation the second appeal has no realistic prospect of success and therefore that appeals should be struck out in accordance with Rule 8(3)(c) as requested by HMRC.” (O’Brien v. HMRC [2012] UKFTT 581 (TC) §42).
- Must consider both sides
“[HMRC] submitted that the FTT offered no proper analysis of the evidence before concluding that Mr Munir had a reasonable prospect of establishing that he did not know what was in the van. We accept that submission. The FTT focussed on what the appellant was saying as to the circumstances, without considering in the light of all the material available to it what weight should be given to his assertions. In this regard, we were referred to the judgment of Spencer J in CXX v DXX [2012] EWHC 1535 (QB) which considers s11 CEA 1968 and the approach to an application for summary judgment where there is a relevant conviction in criminal proceedings. It is clear that the existence of a conviction will itself carry weight in such an application and the weight to be attached to it is a matter for the hearing judge. In the present case we cannot see that the FTT gave any weight to fact of Mr Munir’s conviction or indeed to the undisputed evidence as to the circumstances generally.”(HMRC v. Munir [2019] UKUT 280 (TCC), §35, Judge Cannan and Judge Greenbank)
- Hesitate before concluding issues of fact can be decided without trial
“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;”(Easyair Ltd v. Opal Telecom Ltd [2009] EWHC 339 (Ch), approved in The First De Sales Ltd Partnership v. HMRC [2018] UKUT 396 (TCC), §33, Carr J and Judge Sinfield)
- But must consider the point in the specific context of the case
"[72] It may be that the Judge concluded, from his decision that the question of knowledge or means of knowledge in an MTIC case requires a careful consideration of all the evidence and relevant circumstances of that case, that it necessarily followed that Issue (4) was unsuitable for summary determination in the present case. If however this was the Judge’s reasoning, and we accept that we are speculating, we do not think that it can be supported. As Mr. Carey pointed out, if this was the correct approach, it would never be possible to exercise the power of summary determination in Rule 8(3)(c) in an MTIC case. We agree with Mr. Carey that this cannot be correct. It may be, where Issue (4) is concerned, that the evidential inquiry which is required is not one which lends itself easily to summary determination; see Davis & Dann above. This must however be a case sensitive question, depending upon the facts of the particular case in which summary determination is sought." (HMRC v. Tasca Tankers Limited [2022] UKUT 88 (TCC), Edwin Johnson J and Judge Andrew Scott)
- Documents showed scheme was a construct of contracts not reflecting economic reality
"[53] Taken together, the documentary evidence set out above tends inevitably to the conclusion that the Wilmslow/Karacus/Mediability scheme was simply a "construct of contracts", and that the contracts did not in fact reflect the true economic reality.
[54] I have heard full argument on these documents, and, insofar as this is a case which turns on documents, there is, in my view, no realistic prospect of that assessment changing at a full hearing.
[55] Hence, I need to move on to consider whether there is any other evidence which might nonetheless change the position so as to justify allowing these appeals to go forward to a full hearing.
...
[85] I simply do not see any realistic route whereby Mr Ripley's characterisation as a re-supply can gainsay these documents. His explanation comes decades after the events, is contrary to the explanations given at the time, and (in any event) does not really make commercial sense.
[...]
[88] I do not accept that (to adopt the guidance in Easyair) "the evidence that can reasonably be expected to be available at trial" - namely, that of Mr Alan Grundy and Mr Darren Grundy - is even remotely likely to have any real weight set against the contemporary documents, including the record of the interviews. Submissions to the contrary are completely unpersuasive." (Mediability Limited v. HMRC [2023] UKFTT 315 (TC), Judge McNall)
- Result of similar case not sufficient where there may be factual differences
"[33] In an application such as this, it is not appropriate to conduct a mini-trial. A strike out application is designed to weed out cases that do not merit a full hearing. I have heard very little evidence of the facts. The summary that I have given above is taken largely from the parties' skeleton arguments. Although I did not understand there to be any material dispute about the facts that I have described, I am not satisfied that I have heard all the evidence that the appellant might wish to bring. I am not convinced that this case is such that the Tribunal has before it all the evidence that it may require to decide the case.
[34] On the questions of law, I accept that there are many similarities between the Ladson Preston case and this case. For example, the issue concerning whether it is appropriate to take into account works that are commenced on the day of completion, but after the time of completion strike me as equally applicable to the present circumstances. However, Ladson Preston is not on all fours with this case. There are arguable differences between a "process of construction" and a "process of adaptation" - not least because in a process of adaptation an existing building will always exist and so the requirement for there to be "a physical manifestation" of a building in the case of a process of construction (which is critical to the reasoning in Ladson Preston) do not arise.
...
[37] I can understand HMRC's desire to bring matters to a conclusion as swiftly as possible, but this case is not so clear cut as to justify depriving the appellant of the opportunity to present all its evidence and have the case determined following a full hearing." (Newsand Limited v. HMRC [2024] UKFTT 221 (TC), Judge Greenbank)
Take account of evidence that can reasonably be expected to be available at trial
"[18]... Third, whether a party has a real prospect of success depends on an assessment of two distinct matters: (1) whether the party has a real prospect of success on the basis of the facts known at the time; and (2) whether there is a real prospect that some additional support for the party's case would emerge if the case followed the normal procedural route: see, eg, Zuckerman on Civil Procedure (3rd ed, 2013), §9.55. As May LJ held in S v. Gloucestershire County Council [2001] Fam 313, 342 (CA) for a summary judgment application to succeed where a strike out application would fail,[2] the court will need to be satisfied that:
(a) It had before it all substantial facts that were reasonably capable of being before it;
(b) These facts are undisputed or that there is no real prospect of successfully disputing them; and
(c) There is no real prospect of oral evidence affecting the court's assessment of the facts." (Athena Capital Fund Sicav- Fis S.C.A v. Crownmark Limited [2019] EWHC 1952 (Comm))
“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;” (Easyair Ltd v. Opal Telecom Ltd [2009] EWHC 339 (Ch), approved in The First De Sales Ltd Partnership v. HMRC [2018] UKUT 396 (TCC), §33, Carr J and Judge Sinfield).
- Premature to apply before evidence
"[21] At a substantive hearing, the Appellant will bear the onus of proof. Therefore, if the Appellant fails to produce any documents and also fails to call any witnesses to give oral evidence, then the Appellant would have a lower likelihood of success as it would be relying entirely on its argument about the appropriate method of calculating estimated turnover. But, at this early stage of proceedings, the Tribunal (and the Respondents) simply cannot know what evidence the Appellant will present. In the circumstances I am not persuaded that the Appellant’s lack of evidence, at a stage prior to any evidence being required, demonstrates that the Appellant does not have a realistic prospect of being successful in this appeal. I am not persuaded that this is an appeal that is not fit for a full hearing." (Phu Hung Limited v. HMRC [2023] UKFTT 224 (TC), Judge Bailey)
“The parties have not yet exchanged full lists of documents or witness statements. I can quite accept that the appellants will have something of an uphill struggle in making out the argument that HMRC’s conduct in processing Mr Deville’s repayment gave rise to a legitimate expectation that the payment would not be recovered. However, it would be premature, before having seen the appellants’ evidence to conclude that this argument has no reasonable prospect of success.” (Executors of Alan Deville v. HMRC [2018] UKFTT 184 (TC), §55, Judge Jonathan Richards).
- If further evidence intended, explain what that evidence will be and its relevance
"[61] Equally, if Tasca wished to adduce further evidence at the trial of the Second Appeal it was incumbent upon Tasca to explain what that evidence would be, and how it would affect the position, in terms of the evidence and the arguments in the Second Appeal. In fact, Tasca did make such an application, in the course of the FTT Hearing, which was refused by the Judge; see [FTT85-89]." (HMRC v. Tasca Tankers Limited [2022] UKUT 88 (TCC), Edwin Johnson J and Judge Andrew Scott)
Witness evidence
Where witness evidence is tendered in opposition, must be bound to be disbelieved
"[14] At the summary judgment stage it was, as it seems to me, simply not possible to say that Mr Woodstock and these men were bound to be disbelieved, or that the Director was otherwise bound to succeed on some other basis. I accept, contrary to one of Mr De Mello's written submissions, that it may well be possible to say in some cases that a story which is advanced by a defendant is so obviously untrue that it is fanciful to suggest that it might be accepted. In such a case, summary judgment will be justified. I do not, however, consider that this is such a case. This was a story which, however flimsy it might in some senses appear, needed to be tested at trial. There was very little in the way of direct evidence that the source of this money was unlawful, that is to say criminal, conduct. It depended in effect upon showing that Mr Woodstock and his three or five witnesses, whichever it turned out to be, were lying. That needed more than the fog of suspicion which was all that was cast over it at the stage of the hearing before the judge. It needed trial. In those circumstances, it is unnecessary to consider whether there was also a triable issue as to the source of the money used to service the mortgage, though I incline to the view that there was." (Director of the Assets Recovery Agency v. Woodstock [2006] EWCA Civ 741, Hughes LJ)
"[18]...Fourth, the injunction against the Court conducting a 'mini-trial' simply means that, if at the hearing of a summary judgment application, the court concludes that issues should be disposed of by a trial process, then it should not continue the hearing of the application as if it were a trial process: see, eg, Zuckerman, §9.60. The following guidance assists:
(a) The Court of Appeal has held that, where witness evidence on disputed issues of fact is tendered in opposition to an application for summary judgment, the court cannot grant the application unless it is satisfied that those witnesses are "bound to be disbelieved" or that their evidence is "so obviously untrue that it is fanciful to suggest that it might be accepted": see Director of the Assets Recovery Agency v. Woodstock [2006] EWCA Civ 741 at [14] per Hughes LJ.
(b) The Supreme Court has held that the documentary evidence must be "effectively unanswerable", in order to justify summary judgment on a disputed issue of fact. In Gohil v. Gohil [2015] UKSC 61, [2015] 3 WLR 1085 Lord Neuberger MR held that:
"49 The issue whether there has been non-disclosure is a question of fact which involves an evaluative assessment of the available admissible evidence. Such a question is, of course, common in civil and family litigation, and under our common law system the rule is that it can only be answered by a judge after hearing from live witnesses as well as looking at the documents. The most common exceptions to this rule are (i) cases where the evidence is so clear that there is no need for oral testimony and (ii) cases where neither party wishes, or alternatively is unable, to call any witnesses. Ignoring cases in the second category (which has no application here), attempts to seek summary judgment in relation to such disputed issues often fail even when the evidence appears very strong, because experience shows that a full investigation at a trial with witnesses occasionally undermines what appears pretty clearly to be the truth when relying on the documents alone: see eg per Sir Terence Etherton C in Allied Fort Insurance Services Ltd v Creation Consumer Finance Ltd [2015] EWCA Civ 841 at [81], [89], [90] and the cases which he cites. Accordingly, in practice it is only when the documentary evidence is effectively unanswerable that summary judgment can be justified.
50 There is also a principled reason behind this rule, namely that, at least where there is a bona fide dispute of fact on which oral testimony is available, a party is normally entitled to a trial where he and his witnesses can give evidence, and he can test the reliability of the other party and/or her witnesses by cross-examination. (I say "normally", because, in exceptional cases, there may be reasons, such as a sanction in the form of a debarring order, for not following the rule)." (Athena Capital Fund Sicav- Fis S.C.A v. Crownmark Limited [2019] EWHC 1952 (Comm))
Factual assertions must be contradicted by all the documents
"[23] If Mr Reza was hoping to find in those words [ED&F Man Liquid Products v. Patel, §10] some qualification of Lord Hope's approach, he will be disappointed. The Three Rivers case was specifically cited by Potter LJ. He was in my view intending no more than a summary of the same principles. Lord Hope had spoken of a statement contradicted by "all the documents or other material on which it is based" (emphasis added). It was only in such a clear case that he was envisaging the possibility of rejecting factual assertions in the witness statements. It is in my view important not to equate what may be very powerful cross-examination ammunition, with the kind of "knock-out blow" which Lord Hope seems to have had in mind." (Mentmore International Ltd v. Abbey Healthcare (Festival) Ltd [2010] EWCA Civ 761)
"[18]...(5) In Three Rivers (at [95]), Lord Hope referred to summary judgment being available where: "It may be clear beyond question that the statement of facts is contradicted by all the documents or other material on which it is based." In Mentmore International Ltd v. Abbey Healthcare (Festival) Ltd [2010] EWCA Civ 761 at [23], Carnwath LJ[3] held that it was only where factual assertions in a witness statement were contradicted by all the documents or other material that Lord Hope envisaged the possibility of rejecting such factual assertions. As Carnwath LJ held, it is therefore: "important not to equate what may be very powerful cross-examination ammunition, with the kind of "knock-out blow" which Lord Hope seems to have had in mind". (Athena Capital Fund Sicav- Fis S.C.A v. Crownmark Limited [2019] EWHC 1952 (Comm))
- Very cautious about striking out defence in cases of fraud/dishonesty
"[45] Second, where the court is dealing with claims in fraud or dishonesty the court should be very cautious in granting summary judgment. As Cockerill J. explained in King v Stiefel [[2021] EWHC 1045 (Comm)] at [23] and [24], albeit in the context of an application to strike out a claim in conspiracy:
“23. I should deal specifically with the law on summary judgment and claims in fraud, not least because it was at least implicit in the submissions for the Kings that such serious allegations were not suitable for summary determination.
24. The reality is that while the court will be very cautious about granting summary judgment in fraud cases, it will do so in suitable circumstances, and there are numerous cases of the court doing so. This is particularly the case where there is a point of law; but summary judgment may be granted in a fraud case even on the facts. I have done so in a case heard very close in time to this application: Foglia v The Family Officer and others [2021] EWHC 650 (Comm), where at [14] I gave some examples of other cases in which this course was also followed. In other cases, such as AAI Consulting Ltd v FCA [2016] EWHC 2812 (Comm) and Cunningham v Ellis [2018] EWHC 3188 (Comm) fraud claims were struck out on the basis that the particulars of claim were inadequate in themselves to support the claims being made.”
[46] These last two points are particularly relevant in the present case because one of the causes of action, in respect of which I am asked to grant summary judgment, is dishonest assistance. This requires, among other things, a finding of dishonesty against Mr. Raja on a summary basis, without the benefit of oral evidence...
...
[185] In the present case the claim in dishonest assistance is another route by which the Company can establish an entitlement to the relief to which it is also entitled by virtue of my decision on the claim in knowing receipt. In my view it is neither necessary nor appropriate, on this summary judgment hearing, to embark on the question of whether Mr. Raja was dishonest by reference to the test in FM Capital Partners. I am doubtful that I am equipped with all the evidence which I would require to make a decision, by reference to the criteria in FM Capital Partners, that Mr. Raja was dishonest in the required respect. I think that this is a question better left to a trial, if the Company regards it as necessary to pursue the claim in dishonest assistance to a trial." (Umbrella Care Ltd v. Nisa [2022] EWHC 86 (Ch), Edwin Johnson J)
Short points of law upon which case depends are suitable for summary determination
"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 11 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.”(Easyair Ltd v. Opal Telecom Ltd [2009] EWHC 339 (Ch), approved in The First De Sales Ltd Partnership v. HMRC [2018] UKUT 396 (TCC), §33, Carr J and Judge Sinfield).
No disproportionate hearing in simple cases
“I indicated at the hearing that I was not happy with the HMRC’s application. That is an understatement. Not only do I consider that it was inappropriate for HMRC to apply to strike out Mr Adewade’s appeal, but the list of authorities given by HMRC was woefully inadequate.” (Adewale v. HMRC [2017] UKFTT 103 (TC), §85, after citing Garland, below. Costs awarded against HMRC).
“These remarks [in Garland] apply to this case just as they did to Garland. It came as no surprise to Miss Young that I quoted from Garland to her, as she was the HMRC presenting officer in that case. She told me that HMRC did not agree with Judge Staker’s views. Well I do, and I imagine so do many other Tribunal judges.” (Hill v. HMRC [2017] UKFTT 18 (TC), §132, Judge Thomas – minded to award costs against HMRC).
“Default paper cases and simple basic cases in particular may involve an unrepresented appellant who wishes to exercise the right of appeal to the Tribunal against a decision that the appellant considers to be harsh and unfair, even though the appellant has no knowledge of the law and is incapable of articulating a legally arguable ground of appeal. It is possible for the Tribunal in such a case to hear the appellant’s account of the facts and to consider this together with all of the evidence presented by the parties, and for the Tribunal to satisfy itself as to the facts, and to determine for itself whether the HMRC decision is in accordance with the facts and the law. In such a case, even if it should turn out that the appeal was hopeless, the unrepresented appellant at least has the satisfaction of knowing that his or her case has been considered by an independent judicial body. Furthermore, the appeal may not turn out to be hopeless, and it may ultimately be allowed in whole or in part. In the case of an unrepresented appellant, failure of a notice of appeal to state an arguable ground of appeal should therefore not in every case necessarily lead automatically to a strike out application being granted…That is not to say that the Tribunal should allow every case to proceed, no matter how hopeless it appears, merely because the appellant is unrepresented. Apart from anything else, the Tribunal will always have to have regard to the overriding objective in rule 2 of the Tribunal’s Rules. In a case of any complexity, hearing and determining a strike out application may involve less time and fewer resources than the hearing of the substantive appeal. In such a case, if no viable grounds of appeal are set out in the notice of appeal, it may therefore be proportionate and efficient initially to determine at a strike out hearing whether there is any justification for the appeal to proceed to a substantive hearing, and for a strike out application to be granted if no ground of appeal with a reasonable prospect of succeeding has been identified at the strike out hearing. On the other hand, in a default paper case or a simple basic case, the time and resources required for a strike out application may be the same or nearly the same as the time and resources required to hear the substantive appeal. In such a case, the making of a strike out application may be disproportionate, unmeritorious though the appeal may appear to be. Given that there is always the possibility that the strike out application may not be granted, the most efficient way of disposing of the case may be simply to proceed to hear the substantive appeal, giving the appellant his or her day in court.” (Garland v. HMRC [2016] UKFTT 573 (TC), §§16 – 17, Judge Staker).
Respondent must advance all relevant points
"[60] ...If, at the FTT Hearing, Tasca had particular arguments which it wished to raise on any of the Issues, then it was incumbent upon Tasca to raise those arguments at the FTT Hearing. We cannot see that it was permissible for Tasca to sit on its hands in this respect, in response to the Strike Out Application, simply because it had not been required to produce a written document provided for by Direction 8 [to state whether connect to tax loss etc. was accepted].
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[65] It was for Tasca to identify whether Issues (1) and (2) were in issue and, if so, the basis upon which they were in issue. If Tasca had not done that, the Judge was not thereby prevented from dealing with Issues (1) and (2) in the context of the Strike Out Application. Rather, the Judge would be considering Issues (1) and (2), in the context of the Strike Out Application, without Tasca having declared its hand. Whether that situation favoured HMRC or Tasca would be a matter for the Judge to consider." (HMRC v. Tasca Tankers Limited [2022] UKUT 88 (TCC), Edwin Johnson J and Judge Andrew Scott)
Less likely to strike out in cases where HMRC bear a burden of proof
“…the primary reason why I do not strike out these appeals on the basis of Rule 8(3)(c) is because, as HMRC acknowledge in their Note of Argument, the onus of proof in regard to the discovery assessments and utilisation of the extended time limit to do so in terms of sections 29 and 36 TMA lies with HMRC. That is the case whether or not the appellants raise a challenge. If HMRC do not discharge that burden then the appellants’ appeals succeed. In these circumstances it is not appropriate to strike out these proceedings in terms of Rule 8(3)(c).” (Decker v. HMRC [2016] UKFTT 805 (TC), §81, Judge Anne Scott).
Discretion even if defence appears to lack a real prospect of success
"(7) Finally, the power to grant summary judgment is discretionary. If the court concludes that a defence appears to lack a real prospect of success, it is then necessary to consider whether to enter summary judgment. In this regard:
(a) Where there is overlap between the issues raised in the summary judgment part and the remaining issues, the fact that there will be a trial in any event may be a compelling reason to have all those issues decided at the same time: see, eg, Radiocomms Systems Limited v. Radio Communications Systems Ltd [2010] EWHC 149 (Ch) at [5] per Floyd J.
(b) It may be appropriate to exercise the discretion where a strike out or summary judgment would not result in the saving of court time or relieve the winning party of the need to fund and participate in the trial. If, notwithstanding a strike out or summary judgment, there is still likely to be a trial in which, in substance, the same parties will be involved and substantially the same issues will need to be tried, then the court may exercise its discretion to refuse summary relief. This is so "even when a party has a very weak claim or defence" since it puts no significant additional burden on his opponent, nor adds significantly to the time to be taken up by the court in determining the dispute, imposes no significant hardship on the opponent and does not significantly inconvenience other parties waiting for an opportunity to come before the court: see, eg, Barrett v. Universal-Island Records Ltd [2003] EWHC 625 (Ch) at [47] per Laddie J." (Athena Capital Fund Sicav- Fis S.C.A v. Crownmark Limited [2019] EWHC 1952 (Comm))
Relevant factors and examples
- Case is vague, evasive or incoherent
“The court's powers may be exercised if a defence is vague, evasive, incoherent or obviously ill-founded, although in such cases the objectionable nature of the party's case can often be cured by amendment or further particulars.” (HMRC v. Fairford Group plc [2014] UKUT 329 (TCC) §30, Simon J and Judge Bishopp)
- Case is factually the same as a case that has been rejected by the Tribunals in another case
“In the Notice of Appeal Mr Sutton seeks to argue, yet again, that the settlement with AXA/PPP was by way of a surrender value. He submits that taxable interest should arise only in respect of the period from the date of the acceptance of the initial offer to the dates of settlement. These arguments were rehearsed at length in his own appeal which was unsuccessful. I therefore strike out Mrs Sutton’s appeal under Rule 8 sub-paragraph (3) (c) as there is no reasonable prospect of Mrs Sutton’s case, or part of it, succeeding. I would also point out to Mr Sutton that he should bear in mind Rule 10 (b) as to costs.” (Sutton v. HMRC [2014] UKFTT 44 (TC), §10, Judge Porter)
- Realistic prospect of success where there is an apparently binding authority but facts may be materially different
“Accordingly it is not apparent that the material factual findings on the appeal from the assessments will be the same as those on which the Court of Appeal made its decision, and in those circumstances it cannot be said, at present, that the point at issue in the appeal is stare decisis. I emphasise “at present”. If it turns out that there is no material difference between the facts established or averred on the appeal and the facts on which the Court of Appeal based its decision, then the doctrine could come into play. But that is not apparent at the moment. Because of the procedural stage at which the application to strike out was launched it is not possible to say that the facts are not materially different.” (Shiner v. HMRC [2015] UKUT 596 (TCC), §50, Mann J)
- No relevant contradiction where party takes different positions in different proceedings
“It does not seem to me that the fact that the liquidator’s a claim against the Directors is based on a claim that VAT is in fact due, means that there is no reasonable prospect of the arguments succeeding that the VAT is not due. This is not a case of the liquidator facing different ways at the same time, but of facing different ways in relation to different proceedings.” (Space Maker Storage 2 Ltd v. HMRC [2014] UKFTT 296 (TC), §20, Judge Hellier)
- HMRC have accepted that closure notice should be amended
"[22] [The taxpayer] contends that, as there is no time limit in s 50(6) TMA, rule 5 gives the Tribunal the power to reduce an assessment whenever it decides that an appellant has been overcharged.
[23] Although initially attracted by this argument, having given the matter some further careful thought and consideration, I have come to the conclusion that [HMRC are] correct and that, on a proper construction, the words “on appeal” (which refers to an appeal “notified to the Tribunal”), and “the tribunal decides” in s 50(6) TMA must be read together with the result that the Tribunal must make a single, final decision at the hearing in which the appeal is finally determined or decided and not on an application, such as at this case management hearing, which does not dispose of the proceedings. Further support for such a construction can be found in the concluding words of s 50(6) TMA, “otherwise the assessment or statement shall stand good”. In my judgement, this also indicates that the Tribunal should make a single, final decision following a substantive hearing rather than interim one at an earlier stage of proceedings and that this accords with the intention of Parliament.
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[27] ... Although [HMRC] contends that such a direction is not appropriate as it is clear that the issue is not in dispute and there is no evidence to support it, I agree with [the taxpayer] that, as it is common ground the closure notice should be amended to remove the balancing charge, there is no reasonable prospect of HMRC being able to defend it. I have therefore directed that HMRC be barred from doing so." (Redevco Properties UK 1 Ltd v. HMRC [2022] UKFTT 102 (TC), Judge Brooks)
- T's evidence deficient, but burden on HMRC and questions to be explored
"[64] Mr Brown submitted that the evidence of Tasca’s witnesses must be tested to establish what exactly they knew at the time the transactions took place and in the light of that knowledge whether there was any other reasonable explanation for the transactions. I disagree. The onus is on Tasca’s witnesses to set out in their witness statements the evidence they intend to give. If witnesses do not take the opportunity to answer HMRC’s case in their witness statements, they cannot simply rely on adducing evidence either by way of supplementary oral evidence given in chief or in the course of cross-examination. It is not for HMRC to draw out Tasca’s case in cross-examination. The purpose of cross-examination is to challenge Tasca’s case on the evidence given in chief.
[65] It seems to me that there are considerable deficiencies with Tasca’s evidence which I have noted above. In addition, Ms Wood clearly regarded the transactions as unusual. However, Tasca’s evidence does not say whether Ms Wood took her concerns to Mr Harte or the directors. If Ms Wood had concerns, there is no reason why Mr Harte should not have had concerns. Mr Harte does not say that Ms Wood’s concerns were misplaced or suggest any reason why he did not share her concerns.
[66] Tasca has at least put forward what it says is a reasonable explanation for the transactions which might not involve a connection with fraud. Namely, the agreement with Mr McNulty. There remain significant questions as to the nature of that agreement and whether it does, in all the circumstances offer a reasonable explanation for the transactions. In my view, that is a matter which must be tested in cross-examination.
[67] On balance I do not consider that HMRC have met the threshold for me to dismiss this appeal on a summary basis. There remain questions which must be explored with Tasca’s witnesses as to why Tasca entered into the transactions in the circumstances it did. There is a realistic prospect of Tasca rebutting HMRC’s case that it should have known of the connection with fraud. In short, it would not be fair or just to determine what Tasca should have known without a fuller investigation of the facts." (Tasca Tankers Ltd v. HMRC [2023] UKFTT 372 (TC), Judge Cannan)
- Misguided attempt to elevate the standard of proof on HMRC in MTIC case to certainty
"[23] In my view the Appellant's position is entirely unsustainable. In essence it elevates the burden on HMRC to one of beyond reasonable doubt or worse certainty. As directed in Frist De Sales all I must be satisfied of is that there is a reasonable argument. It is possible that there is another explanation for CMUS and GCorp's failure to pay any VAT at all over a substantial period of trading and to have rendered returns including a declaration as to accuracy showing no trading when there is plain evidence that they were trading and adding VAT to their invoices. But whether that possibility is more or less likely than HMRC's posited view that CMUS and GCorp fraudulently evaded VAT is one of the matters which will be tested in evidence at a full trial alongside the evidence as to the Appellant's knowledge. It is certainly not a possibility so likely that it would render HMRC's position so improbable that it was fanciful or not reasonably arguable. It would be entirely contrary to the direction in Frist De Sales for me to evaluate without evidence the likelihood of possible alternatives in order to dismiss HMRC's case as fanciful, without conviction and merely arguable." (4Site Services London Limited v. HMRC [2024] UKFTT 143 (TC), Judge Brown KC)