Commissioners for Her Majesty’s Revenue and Customs (Appellant) v London Clubs Management Ltd (Respondent) [2020] UKSC 49 On appeal from: [2018] EWCA Civ 2210

This case, which is of significant interest to the gaming and casino sector, centres on the treatment of “non-negotiable gaming chips” and “free bet vouchers” (collectively referred to as “Non-Negs” for the purposes of this appeal) when it comes to calculating an operator’s gaming duty.

From October 2008 until September 2012, London Clubs Management (“LCM”) included the face value of all the Non-Negs played by gamblers and retained by its casinos in the calculation of its banker’s profits for the purposes of computing its liability for gaming duty. It subsequently considered that this approach was incorrect and claimed that it had overpaid gaming duty by over £1.97 million.

HMRC rejected LCM’s claim for repayment of the alleged overpayment and LCM appealed that decision. The First-tier Tribunal dismissed LCM’s appeal. The Upper Tribunal allowed LCM’s appeal. The Court of Appeal then dismissed HMRC’s further appeal. HMRC appealed to the Supreme Court but this appeal has now been dismissed, although the members of the Supreme Court disagreed on the reasons for dismissal, with two members adopting a different analysis from that of the majority.

George Peretz QC represented HMRC. Read full judgment here.

Article 39 v Secretary of State for Education [2020] EWCA Civ 1577

In a landmark ruling for children’s rights, the Court of Appeal has today declared the Adoption and Children (Coronavirus) (Amendment) Regulations 2020, which suspended a large number of significant safeguarding duties owed to children in care, to be unlawful because of a failure to consult with the Children’s Commissioner and other organisations representing the interests of children. The appeal was brought by Article 39, a charity representing the interests of children in institutions.

The Regulations were introduced in April 2020 and suspended a number of key procedural safeguards, in the form of legal obligations, owed by local authorities to children in their care. The Secretary of State for Education had introduced the Regulations after consultation with (predominantly) local authorities and other children’s social care providers. The Secretary of State had failed to consult with either the Children’s Commissioner, whose statutory function it is to promote and protect children’s rights, or other organisations representing the views and interests of children in care.

Although the High Court had ruled against the Appellant, it had made two significant factual findings. The first was that the amendments were not “some minor burdens” (as had been described by the Secretary of State), but changes which significantly undermined the safeguards for children in care. The second was that, contrary to the Secretary of State’s submissions, there had been sufficient time to consult representatives of children in care.
The Court of Appeal held that such a ‘one-sided’ consultation was a breach of the Secretary of State’s statutory and common law consultation duties. Besides significantly strengthening the voices of children in care and those of their representatives, this important judgment is the first successful challenge to legislation made in response to the Covid-19 pandemic, and is one of the few consultation challenges to succeed on the common law ground of ‘conspicuous unfairness’.

Khatija Hafesji represented Article 39. The Judgment can be found here. A detailed case note by David Gregory is here

Press coverage of the judgment can be found on the BBC and Guardian.

The Court of Appeal has dismissed appeals by the Defendants in a series of competition damages claims arising from the European Commission’s 2016 infringement decision relating to trucks. The claims are currently before the Competition Appeal Tribunal which, in March 2020, ruled on a preliminary issue concerning the binding nature of the Commission’s decision. The Tribunal held that:

(1) a number of the Commission’s findings were binding as a matter of EU law; and
(2) in relation to the remainder, it would be an abuse of process for the Defendants to contest findings that the decision recorded them as having accepted in the settlement procedure, unless there was some justification for doing so.

The Tribunal’s conclusion on abuse of process reflected the fact that the Commission’s decision followed a settlement procedure in which the Defendants accepted the infringement.

The Defendants appealed the Tribunal’s decision on abuse of process to the Court of Appeal. The Court dismissed the appeals at the end of the hearing and has today issued its judgment, a copy of which is here. The judgment upholds the Tribunal’s conclusion on abuse of process and in doing so addresses the interaction between EU law and the domestic law of abuse of process. It also explains the Court’s decision not to make a preliminary reference to the EU Court of Justice.

Mark Brealey QC, Tim Ward QC, Ben Lask and Anneliese Blackwood acted for a number of the Claimants before the Court of Appeal. Daniel Beard QC, Paul Harris QC, Ben Rayment, Michael Armitage, David Gregory and Alexandra Littlewood acted for a number of the Defendants.

The Supreme Court today confirmed the scope of the res iudicata principle in EU law, holding that findings of fact made in an EU General Court judgment in the course of a judgment annulling a finding of breach of Article 102 TFEU were not binding on a UK Court assessing the damages payable for a breach of Article 101 TFEU.

Servier, a French pharmaceutical company, was found by the European Commission to have infringed competition law in relation to the supply of Perindopril, a blood pressure drug. The Commission found that Servier had breached Article 101 TFEU by entering into ‘pay for delay’ agreements, under which generic companies agreed not to enter the market for supplying Perindopril. The Commission also found that Servier had breached Article 102 TFEU both by entering into those agreements, and by acquiring certain technology for the production of Perindopril. On appeal in Europe, the General Court upheld the Commission decision in relation to Article 101 TFEU, but annulled it in respect of Article 102 TFEU on the basis that the Commission had erred in defining the relevant market, and therefore in its assessment that Servier was in a dominant position. Both the Commission and Servier have appealed against the General Court judgment and those appeals remain pending before the CJEU.

In a damages action brought before the English High Court, in which the respective health authorities of England, Wales, Scotland and Northern Ireland are seeking to recover compensation for Servier’s anti-competitive behaviour, Servier have pleaded that the health authorities have failed to mitigate their loss, or have negligently contributed to their loss in that they failed to encourage prescribers to prescribe alternative substitutable blood pressure drugs instead of perindopril. In that context, Servier sought to rely on findings made by the General Court about how substitutable other drugs were with perindopril. Servier contended that those findings were binding as a matter of EU law and that it was an abuse of process for the health authorities to dispute them. The High Court rejected both arguments, but granted permission to appeal on the EU law point. The Court of Appeal likewise rejected the EU law argument, but Servier obtained permission from the Supreme Court to argue that a reference should be made to the CJEU.

Today the Supreme Court found as a matter of procedure that a reference could not be made while the General Court judgment remained subject to appeal. Further, as a matter of substance, the General Court’s findings were not binding in the context in which Servier sought to rely on them. The Supreme Court held that Servier was seeking to borrow findings of fact from an annulling judgment made in the context of abuse of dominance under Article 102 TFEU and to deploy them in the entirely different context of mitigation of loss, which had nothing to do with Article 102 or with the consequences of the annulling judgment. The EU law principle of res iudicata does not bite in those circumstances.

The full judgment is here. A detailed case note by Khatija Hafesji is here.

Jon Turner QC and Philip Woolfe acted for the English health authorities;
Daniel Beard QC, Julian Gregory and Alexandra Littlewood acted for the Scottish and Northern Irish health authorities;
Laura Elizabeth John acted for the Welsh health authorities.

In the proceedings below, Robert Palmer QC also acted for the English, Welsh, Scottish and Northern Ireland health authorities in the Court of Appeal, and Josh Holmes QC acted for the Welsh health authorities at first instance.

On 16 October 2020 the Information Commissioner’s Office announced that it had imposed on British Airways the biggest ever penalty in the UK for breach of data protection law.

The penalty is the culmination of a two-year investigation by the ICO into a cyber-attack on British Airways’ systems in 2018, which affected the personal data of over 400,000 of its customers. The ICO’s investigation identified a number of weaknesses in BA’s cyber-security measures, which were found to have allowed the attack to take place. The ICO also found that BA failed to detect the attack for several weeks, until it was alerted to the exfiltration of personal data from its systems by a third party. The ICO concluded that BA’s failures cumulatively amounted to a serious breach of the requirement to take appropriate measures against unauthorised or unlawful processing, contrary to Articles 5(1)(f) and 32 of the GDPR.

The final penalty, of £20m, was calculated from a starting point of £30m, with downward adjustments to take into account mitigating factors including BA’s prompt reporting of the breach and cooperation with the ICO, and a further discount of £4m having regard to the economic consequences of the Covid-19 pandemic.

The ICO was acting as “lead supervisory authority” on behalf of other EU regulators, meaning that the decision had to be submitted for approval by all other EU data protection authorities, in accordance with Article 60 GDPR.

The ICO’s decision has been widely reported on, including by the BBC, Financial Times, The Times, The Telegraph and The Guardian, as well as the Register and other specialist tech and data publications. A copy of the penalty notice and decision is available here.

Gerry Facenna QC, Julianne Kerr Morrison and Khatija Hafesji advised the Information Commissioner’s Office throughout the investigation, Article 60 process, and the final penalty decision.

In a decision released today in a test case concerning the provision of sports and leisure facilities by all local authorities in Northern Ireland, the First-tier Tax Tribunal has ruled in Mid Ulster District Council (formerly Magherafelt District Council) v Comrs. for Her Majesty’s Revenue and Customs TC/2011/687& TC/2012/9253 that the provision of those facilities is not subject to VAT. The case was the designated lead case for Northern Ireland. Chelmsford City Council v HMRC TC/2011/7844 was the lead case for England & Wales and Midlothian Council v HMRC TC/2011/7816 for Scotland.

The decision for Northern Ireland will potentially have far-reaching implications for all UK local authorities providing services pursuant to any statutory duties and powers which can be classified as a special legal regime. The Tribunal found on the evidence that local authorities in Northern Ireland were not in competition with private providers of sports and leisure services. The appeal was therefore allowed.  The question whether the same is true for the rest of the UK will be determined on the evidence at a further hearing if the parties so request.

Melanie Hall QC and Harry Gillow acted for Mid Ulster (formerly Magherafelt) District Council, the successful Appellant. Raymond Hill acted for HMRC. The decision can be read here. The decisions for England, Wales and Scotland can be read here and here.

The case has been covered in the media: The Irish News and Newtownabbey Times

The Court of Appeal has dismissed appeals by the Defendants in a series of competition damages claims arising from the European Commission’s 2016 infringement decision relating to trucks. The claims are currently before the Competition Appeal Tribunal which, in March 2020, ruled on a preliminary issue concerning the binding nature of the Commission’s decision. The Tribunal held that:

(1) a number of the Commission’s findings were binding as a matter of EU law; and
(2) in relation to the remainder, it would be an abuse of process for the Defendants to contest findings that the decision recorded them as having accepted in the settlement procedure, unless there was some justification for doing so.

The Tribunal’s conclusion on abuse of process reflected the fact that the Commission’s decision followed a settlement procedure in which the Defendants accepted the infringement.

The Defendants appealed the Tribunal’s decision on abuse of process to the Court of Appeal and on 7 October 2020, following a remote two-day hearing, the Court dismissed the appeals with reasons to follow.

Mark Brealey QC, Tim Ward QC, Ben Lask and Anneliese Blackwood acted for a number of the Claimants before the Court of Appeal. Daniel Beard QC, Paul Harris QC, Ben Rayment, Michael Armitage, David Gregory and Alexandra Littlewood acted for a number of the Defendants.

Case C-235/19 United Biscuits (Pension Trustees) Limited and United Biscuits Pension Investments Limited v HM Revenue and Customs, CJEU, 8 October 2020, ECLI:EU:C:2020:801.

The Court of Justice of the European Union has ruled in favour of HMRC in a reference from the Court of Appeal concerning whether pension fund management services supplied to the trustees of a defined benefit occupational pension fund are “insurance transactions” within the meaning of the insurance exemption in Article 135(1)(a) of the VAT Directive (2006/112/EC).

The Appellant (“UB”) is the trustee of a defined benefits pension fund. It claimed restitution of sums paid by way of VAT on supplies of pension fund management services provided by undertakings that were not authorised insurance companies (“Non-Insurers”). Supplies of such services by Non-Insurers have always been treated as standard rated under UK law. The two main issues were (1) whether the supplies by Non-Insurers were to be treated as exempt supplies of “insurance”, because (allegedly similar) supplies of pension fund management services by authorised insurance companies (“Insurers”) had were treated as exempt; and (2) if Non-Insurers’ supplies should have been exempt, whether EU law required UB to be given a direct claim against HMRC to recover sums they had overpaid by way of VAT to the Non-Insurers (notwithstanding the Supreme Court’s recent decision in Investment Trust Companies (In Liquidation) v RCC [2017] UKSC 29; [2017] 2 WLR 1200; [2017] STC 985, “ITC SC”).

At first instance, Warren J decided both issues in favour of HMRC and dismissed UB’s claim. On Issue (1), Warren J held that the services were not “insurance transactions” within the meaning of Article 135(1)(a) and were thus properly standard rated. Further, the principle of fiscal neutrality did not require them to be treated as if they were “insurance transactions” (and thus exempt) or to be given the same (incorrect) VAT treatment as supplies of pension fund management services by Insurers. On Issue (2), Warren J held that EU law did not require UB to be given direct claim against HMRC: it was not “impossible or excessively difficult” for UB to vindicate any putative EU law rights it had via the route dictated by UK statute, namely a claim against the Non-Insurer. See United Biscuits (Pension Trustees) Ltd & Anor v Revenue And Customs [2017] EWHC 2895 (Ch) (30 November 2017).

On UB’s appeal, the Court of Appeal (Patten, Henderson and Rose LJJ) referred a question to the CJEU on Issue (1). In answer, the CJEU has ruled that “investment fund management services supplied for an occupational pension scheme, which do not provide any indemnity from risk, cannot be classified as ‘insurance transactions’, within the meaning of [Article 135(1)(a), and thus do not fall within the value added tax (VAT) exemption laid down in that provision in favour of such transactions”. The CJEU confirmed that, as generally understood and according to settled case-law, the essentials of “insurance transactions” referred to in Article 135(1)(a) are that the insurer undertakes, in return for prior payment of a premium, to provide the insured, in the event of materialisation of the risk covered, with the service agreed when the contract was concluded. Since the services supplied to UB did not have those essential features, they were not “insurance transactions”. The CJEU also rejected UB’s arguments, based on statements in the judgments in CPP (C‑349/96, EU:C:1999:93) and Skandia (C‑240/99, EU:C:2001:140), to the effect that the meaning of “insurance transactions” in the VAT Directive was dictated by the EU Directives concerning the regulation of insurance companies; and also held that pension fund management was not “insurance” within the meaning of the insurance directives, but was instead an “operation” relating to insurance.

Tim Ward QC and Andrew Macnab represented the UK in the CJEU and HMRC in the Court of Appeal. Andrew Macnab represented HMRC in the High Court. Read the full decision of the CJEU here (on Bailii), here (on EUR-Lex) or here (on Curia).

Uber London Ltd (“ULL”) has successfully appealed against the refusal of Transport for London (“TfL”) to grant it a new licence. TfL had refused to renew ULL’s private hire vehicle operator licence for London pursuant to the Private Hire Vehicles (London) Act 1998 on the grounds that it considered that ULL was not a “fit and proper person” to hold such a licence. On ULL’s appeal, Deputy Senior District Judge Ikram concluded that ULL was a fit and proper person. The Judge noted that whilst ULL did not have a “perfect record… I am satisfied they are doing what a reasonable business in their sector could be expected to do, perhaps even more.” The Court ruled that ULL should be granted a licence for 18 months, subject to certain conditions.

Tim Ward QC acted for ULL.

The case has been covered in the media: BBC, The Guardian, The Times and The Telegraph.

Representing up to 5 million children in England & Wales aged under 13 and their parents, privacy expert Duncan McCann has launched a claim against Google, the owner of YouTube. The claim alleges that YouTube’s methods of targeting underage audiences are in breach of data protection law, including because YouTube does not have parental consent to collect and process children’s personal data, which YouTube uses for targeted advertising.

The claim has been covered, amongst others, by the BBC, the Mail on Sunday, Business Wire, TechCrunch, and Lawyer Monthly.

Gerry Facenna QC and Nikolaus Grubeck are acting for the representative claimants, instructed by Hausfeld.