Blada Ltd (In Liquidation) v Revenue & Customs Commissioners (2013)
The Upper Tribunal (Tax and Chancery Chamber) had the power to make a direction for security for costs in an appeal from the First-tier Tribunal (Tax Chamber).
The applicant commissioners sought security for their costs in an appeal brought by the respondent (B), a company in liquidation, against an assessment to VAT.
B had unsuccessfully appealed against the assessment in the First-tier Tribunal and had been ordered to pay costs. It then went on to lodge an appeal in the Upper Tribunal. The commissioners sought a direction that B should pay into the Upper Tribunal the costs ordered below, and that it should provide security for the costs of its second appeal. The commissioners estimated their costs before the First-tier Tribunal at about £250,000 and sought security for £25,000 in relation to the costs of the appeal to the Upper Tribunal. The Upper Tribunal had therefore to decide (i) whether it had jurisdiction to order security for costs; (ii) if so, whether making the order would stifle the appeal because B could not pay more than a nominal sum.
(1) The Upper Tribunal (Tax and Chancery Chamber) had the power to make a direction for security for costs in an appeal from the First-tier Tribunal (Tax Chamber). Under the Tribunals, Courts and Enforcement Act 2007 s.25(2)(c), the Upper Tribunal had the same powers as the High Court in relation to matters incidental to the tribunal’s functions, which had to include the making of an order for security, unless the Tribunal Procedure (Upper Tribunal) Rules 2008 expressly provided otherwise, which they did not. Moreover, the High Court had had the power to make a direction for security in an appeal from the Tax Chamber's predecessor, the VAT and Duties Tribunal, Calltel Telecom Ltd v Revenue and Customs Commissioners  EWHC 2107 (Ch),  Bus. L.R. 513 considered (see paras 3, 7-8 of judgment). (2) Where impecuniosity was shown, the court or tribunal should be slow to adopt a course which could shut out from justice a litigant with an arguable case. However, B had not discharged the burden of showing that the appeal would be stifled if it had to provide security: although it had no resources of its own and its owner was impecunious, there was no information at all about the resources of the other backers. If backers wished to secure the benefit of successful litigation it was incumbent on them to accept the risk of an adverse costs order if the litigation was unsuccessful, or to demonstrate that it would be unjust to make an order which might have that effect. Under CPR 25.12(2)(c), an order for security for costs could be made if there was reason to believe that a party would be unable to pay the other party's costs if ordered to do so. Since it was plain that, absent such an order, the commissioners would have no prospect of recovering their costs of both the first and second appeals if they succeeded, it was just to make an order. Therefore, B should pay in £150,000 in respect of the First-tier Tribunal appeal and £25,000 in respect of the Upper Tribunal appeal (paras 25, 37-40).
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28 Aug 2013
Upper Tribunal (Tax)
Judge Colin Bishopp
Mark Cunningham QC