Fenix International Ltd v RCC [2020] UKFTT 499 (TC) (First-tier Tribunal, Tax Chamber, 15 December 2020)

Fenix International Ltd is the operator of the well-known Only Fans website/online social media platform, which allows “Creators” to post content for “Fans” in return for payment. Fenix’s case is that it acts as agent in respect of transactions between Creators and Fans. Fenix charges Creators a 20% commission on all sums paid by Fans and accounted for VAT in respect of that intermediary service for the accounting periods at issue. Thus, if a Fan pays 100 and Fenix charges the Creator commission of 20, Fenix accounted for VAT on the 20, rather than the 100.

HMRC have assessed Fenix for VAT on the basis that Article 9a of Council Implementing Regulation (EU) No. 282/2011, which was directly applicable in the UK prior to IP Completion Day (23:00 GMT on 31 December 2020) and which remains applicable in the UK, deems Fenix to be liable for VAT on 100. Fenix has appealed against those assessments to the First-tier Tribunal (Tax Chamber) (“FTT”), arguing that the deeming provisions go beyond the power to “implement” the Principal VAT Directive, in this case Article 28 PVD, conferred on the Council by Article 397 PVD. Prior to IP Completion Day, any challenge to the validity of an EU Regulation could only be entertained by the CJEU; and challenge before a national court had to be referred for a preliminary ruling under Article 267 of the Treaty on the Functioning of the European Union (“TFEU”).

On 15 December 2020, the FTT referred a question to the CJEU concerning the validity of Article 9a under Article 267 TFEU. On 22 December 2020, the FTT’s order for reference was registered at the CJEU Registry (as Case C-695/20). On IP Completion Day, the ability of UK courts and tribunals to make Article 267 references (relevantly) ended. The combined effect of the Withdrawal Agreement (Articles 86 and 89) and section 7A of the European Union (Withdrawal) Act 2018 is that the CJEU has jurisdiction to entertain the FTT’s reference and that the FTT and UK will be bound by the CJEU’s answer.

Valentina Sloane QC, leading Max Schofield of 3PB, acted for Fenix.

Andrew Macnab acted for HMRC.

Read the FTT’s decision to refer here.

Just Digital Marketplace Ltd [2021] EWHC 15 (QB), 8 January 2021, Master McCloud

The High Court (Master McCloud), in a Part 8 claim brought by one of the leading players in High Court enforcement, has held and declared that an enforcement agent may enter into a controlled goods agreement (“CGA”) within the meaning of para 13 of Schedule 12 to the Tribunals, Courts and Enforcement Act 200 with a judgment debtor whether or not the enforcement agent has physically entered the premises on which the goods are located. Accordingly, an enforcement agent and judgment debtor can enter into a valid CGA via a video call made over Zoom or other video platform (a “non-entry CGA”).

Master McCloud further held, however, that many of the provisions of Schedule 12 concerning subsequent enforcement of a CGA (involving entry or re-entry on the premises) did not apply to a non-entry CGA; and that it would be a matter for the Government and the legislature to consider the implications of the judgment and whether, and if so what, rules and procedures were required for entry into and enforcement of non-entry CGAs..

Andrew Macnab, instructed by the Government Legal Department, represented the Ministry of Justice, the third interested party.

Read the full decision here.

Information Commissioner v Driver and Thanet District Council [2020] UKUT 333 (AAC)

In a judgment published on 29 December 2020, the Upper Tribunal allowed the Information Commissioner’s appeal against a First-tier Tribunal decision concerning the application of section 41(1) of the Freedom of Information Act 2000.

Section 41(1) provides an exemption from a public authority’s duty to disclose information where the information has been obtained from another person, and disclosure of the information would amount to an actionable breach of confidence.

In 2014, the High Court found that Thanet District Council had acted unlawfully in imposing a ban on live animal exports from the port of Ramsgate, and was liable to pay Francovich damages to the affected traders. Following that judgment, the Council entered into confidential settlement agreements with a number of the affected traders.

The Respondent in the present case asked the Council for disclosure of the names of the parties with whom it entered into settlement agreements. The Council refused to disclose the names of the parties. The Commissioner upheld the Council’s refusal to disclose on the basis that the information was exempt from disclosure under section 41(1).

The First-tier Tribunal, however, considered that the information was not exempt under section 41(1), as the names of the parties did not amount to information “obtained” from another person. The Commissioner, who was not represented at the First-Tier Tribunal hearing, appealed to the Upper Tribunal.

The Upper Tribunal accepted the Commissioner’s arguments that the First-tier Tribunal had been wrong to find that the names of the exporters did not amount to information “obtained” from third parties. In particular, the Court of Appeal’s decision in Browning v Information Commissioner [2014] EWCA Civ 1050 was high authority for the proposition that parties’ names are not mutually agreed terms, but rather factual information obtained by the public authority from an applicant. In addition, the First-tier Tribunal had been wrong to focus on the question of whether the parties’ names are distinguishable from the other, mutually agreed contractual terms.

The case has been remitted to the First-tier Tribunal to consider the outstanding grounds of appeal against the Commissioner’s decision notice.

Alexandra Littlewood acted for the Information Commissioner.

A copy of the judgment is available here.

While Monckton Chambers has always been proud to be one of the leading sets of EU law chambers, on December 8th two of its members set a new record for being last. Ian Rogers QC and Raymond Hill were the final British advocates to appear before the Court of Justice in Luxembourg during the UK transition period.

Ian and Raymond represented the UK in Case C-213/19 Commission v. United Kingdom, which is an infraction proceeding brought by the Commission claiming that the UK is responsible for losses of customs duties and VAT own resources caused by the fraudulent undervaluation of imports of Chinese textiles and footwear into the EU via UK ports. The Commission is seeking an order for approximately 2.7 billion euro, plus interest.

Although this case is likely to be one of the last UK cases to be heard by the CJEU, both Ian and Raymond remain eligible to appear before the CJEU as Irish qualified barristers. And Monckton Chambers is heavily involved in the legal effects of the new relationship between the UK-EU set out in the Withdrawal and Trade and Cooperation Agreements.  See EU Relations Law Blog.

The CAT has handed down a significant judgment which considers many aspects of the fining regime under the Competition Act 1998.  In doing so, the CAT has dismissed FP McCann’s appeal against the £25million penalty imposed by the CMA for FP McCann’s participation in the pre-cast concrete drainage products cartel.

FP McCann made a wide ranging challenge to the fine imposed by the CMA.  Its challenge included the contention that the CMA’s Penalty Guidance is ultra vires, because (FPM argued) fines should be assessed on a range from zero to the statutory maximum of 10% of global turnover, rather than using the CMA’s established penalty methodology.  The CAT rejected that argument and upheld the CMA’s interpretation of the statutory scheme – namely that the cap must be respected in the final analysis when imposing a penalty, but need not be treated as the top end of a range.

The CAT also considered:

• the extent to which the CMA must take into account evidence that the infringement had no effects when imposing a penalty for an object infringement;
• whether the CMA should have based its penalty on average turnover over the infringement period and not the turnover in the final year, given variability in FPM’s turnover over time;
• the application of discounts for co-operation and compliance activities
• the approach to the proportionality under the CMA’s guidance, including how far penalties should be reduced where the infringer’s business has grown through acquisitions since the infringement took place; and
• the relevance of delay to the investigation in assessing a Competition Act penalty – and in particular, whether a penalty may be reduced where the turnover on which the fine is based has increased as a result of delay to the investigation.  In this regard, the CAT departed from the EU jurisprudence, but rejected the contention that there had been unreasonable delay on the facts of the present case.

It remains for the CAT to determine whether the first statutory condition for disqualifying the directors of FP McCann is satisfied, which issue was transferred to the CAT by the High Court of Northern Ireland.

Rob Williams QC acted for the CMA.

The Judgment can be found here.

The Grand Chamber of the European Court of Human Rights has decided in Slovenia v. Croatia, no. 54155/16 that it does not have jurisdiction hear an inter-State application concerning the alleged violation of the rights of legal entity that is not a “non-governmental organisation”.

The case concerned unpaid and overdue debts owed to Ljubljana Bank by various Croatian companies on the basis of loans granted at the time of the former Yugoslavia.

The Court pointed out that, although the only reasons for which an inter-State application could be rejected at the admissibility stage on the basis of Article 35 (admissibility conditions) were the non-exhaustion of domestic remedies and the failure to comply with the six-month time-limit, it was entitled to reject an inter-State application without declaring it admissible if it was clear from the outset that it was wholly unsubstantiated, or otherwise lacking the requirements of a genuine allegation within the meaning of Article 33 of the Convention. Furthermore, emphasising the specific nature of the Convention as an instrument for the effective protection of human rights, the Court observed that, even in an inter-State case, it was always the individual who was directly or indirectly harmed and primarily “injured” by a violation of the Convention. In other words, only individuals, groups of individuals and legal entities which qualified as “non-governmental organisations” could be bearers of Convention rights and not a Contracting State or any legal entity which had to be regarded as a governmental organisation. The Court thus concluded that Article 33 of the Convention did not allow it to examine an inter-State application seeking to protect the rights of a legal entity which did not qualify as a “non-governmental organisation” and therefore would not be entitled to lodge an individual application under Article 34. In the present case, the Court saw no reason to depart from its findings in Ljubljanska Banka D.D. v. Croatia (dec.), no. 29003/07, 12 May 2015 to the effect that Ljubljana Bank did not enjoy sufficient institutional and operational independence from the State and could not therefore be regarded as a “non-governmental organisation” within the meaning of Article 34. Accordingly, Article 33 did not empower the Court to examine an inter-State application alleging a violation of any Convention right in respect of this legal entity.

To view the judgment, please click here.

Croatia was represented before the Grand Chamber by Jeremy McBride.

Colley v Shuker & ors, Freedman J [2020] EWHC 3433 (QB)

This is the latest judgment against the Motor Insurance Bureau (MIB) in a case where it refused compensation to a passenger victim of a road traffic accident not covered by insurance. The case follows the establishment of the principle that there should be no gaps in the duty under the EU Motor Insurance Directives to compensate the victim (see Delaney v Secretary of State for Transport [2015] 1 WLR 5177; news item here) and that the MIB is the responsible emanation of the state for that purpose in the UK (see Lewis v Tindale & ors [2019] 1 WLR 6298; news item here).

The MIB nonetheless denied that it was such an emanation for the purposes of a claim in the circumstances of this case and that the correct claim was for Francovich damages against the Secretary of State.

The Claimant was a passenger in a car crash. The vehicle was covered by a policy of insurance at the time of the accident, but the driver was not insured to drive it, a fact which the Claimant knew. The insurer later invalidated the insurance under section 152(2) of the Road Traffic Act 1988 (now repealed) and successfully resisted liability towards the Claimant. The Claimant turned to the MIB as insurer of last resort.

The MIB had argued, first, that its duty under Article 10 of Directive 2009/103/EC to pay compensation where the general insurance obligation in Article 3 of that Directive “has not been satisfied” was limited to cases where there is an unidentified vehicle or an uninsured vehicle, which the MIB contended did not extend to the present facts. It argued (relying on the CJEU case of C-287/16 Fidelidade) that the insurance obligation had been satisfied by the taking out of a policy. The Court held that the phrase that the insurance requirement “has not been satisfied” embraced more than just unidentified or uninsured vehicles and was apt to include the present case where the vehicle was insured but a vagary of the national legislation of the Member State gave rise to the insurance obligation not being satisfied.

The MIB argued, secondly, that the case fell within the exception in Article 10(2) of the 2009 Directive where “the Claimant voluntarily entered the vehicle which caused [him] the… injury when … [he] knew the vehicle was uninsured.” The Court held that this was a matter of Community law, as decided by the CJEU in Case C-442/10 Churchill and Fidelidade and meant knowledge that the vehicle was uninsured rather than the driver not being insured.

Judgment for the Claimant. Reference to the CJEU refused, the Court finding that the expiry of the Transitional Period on 31 December 2020 did not alter the test to be applied in deciding whether or not to make a reference.

Philip Moser QC acted for the successful Claimant, instructed by Irwin Mitchell.

A copy of the Judgement is here.

 

In a historic judgment delivered today, the Supreme Court has comprehensively upheld the decision of the Court of Appeal and in doing so has definitively set aside the original judgment of the Competition Appeal Tribunal (CAT). It has dismissed all of Mastercard’s efforts to stop the collective action proceeding. The Supreme Court has ruled that the CAT’s judgment contained errors of law and that the CAT mis-directed itself in how it applied the new legislative regime. Not only has the Supreme Court today conclusively set aside the refusal to permit the collective action, the judgment contains numerous finding in favour of Mr Merricks. Significantly, the Supreme Court has determined that the CAT should never have found that Mr Merricks would be unable at trial to have a reasonable prospect of showing that the class had suffered significant loss. The Supreme Court also ruled that whilst it may be difficult to work out how much damage Mastercard has caused to UK consumers, that is not a reason for a court to deny a trial to a class that has a reasonable prospect of showing that it has suffered loss. UK consumers can now look forward to finally receiving compensation for the losses created by Mastercard’s illegal actions.

This is the first mass consumer claim brought under the new collective action regime introduced by Parliament in the Consumer Rights Act 2015. The legislation was designed to enable collective actions to be brought by a class that has suffered loss as a result of competition law breaches.

Paul Harris QC, said: “This judgment represents a major step forward in the development of consumer protection law, just as Parliament intended. Acting on behalf of 46 million consumers in the UK’s biggest ever damages action, has, without doubt, been the biggest challenge of my career to date.”

Paul Harris QC leads on behalf of the claimants in Walter Hugh Merricks CBE v Mastercard Inc. instructed by Quinn Emanuel, lead partner, Boris Bronfentrinker.

Read full client press release here.

Read judgment here and Supreme Court press release here.

You can also read here the detailed case note by Michael Armitage.

An Independent Disciplinary Panel appointed by the Rugby Football Union (RFU) has given judgment in a high-profile case concerning breaches of COVID-19 protocols by 13 professional rugby players which led to the recent cancellation of the Quilter cup match between Barbarian FC and England.

The 13 players were charged with various breaches of RFU rule 5.12, on the basis that their conduct was prejudicial to the interests of the Union / the game.

In recognition of the very substantial mitigation that was advanced by the players, the Panel significantly reduced the sanctions that it imposed. The Panel’s judgment addresses a number of points of principle that will be of wider significance to practitioners in the field of sports disciplinary matters, not to mention players and clubs.

Paul Harris QC and Michael Armitage, of Monckton Chambers, acted for the 8 Saracens players who faced charges, as well as former England international Richard Wigglesworth.

Links to the Panel’s judgment can be found here.

You can also read the detailed case note here.

Judgment has been handed down in R (MP) v Secretary of State for Health and Social Care [2020] EWCA Civ 1634, an important case in which the Court of Appeal has provided significant guidance on: (i) the scope of a common law duty of consultation based on fairness, (ii) the legal test for establishing a legally enforceable procedural legitimate expectation, and (iii) the law on procedural rights of consultation based on a public body’s past practice.

The Court of Appeal’s judgment upholds certain changes to system of charging ‘overseas visitors’ (those not ordinarily resident in the UK) for use of NHS services brought about by the National Health Service (Charges to Overseas Visitors) Amendment Regulations 2017 (“the 2017 Regulations”).

The appeal related to provisions of the 2017 Regulations, which had the effect of: (i) mandating upfront charging of overseas visitors for treatment that is not “urgent or immediately necessary”; and (ii) requiring NHS trusts to flag on their record whether an overseas visitors is chargeable.

The Appellant challenged the relevant provisions of the 2017 Regulations on the grounds that the Secretary of State had breached a legal obligation to consult before introducing the provisions.
The Court of Appeal did not accept that the Secretary of State was obliged to consult on either the ‘upfront charging requirement’ or the ‘status recording requirement’. While the Secretary of State had chosen to consult on other changes to the charging regime (e.g. the extension of charging to additional services), the two changes forming the subject matter of the challenge were properly to be analysed as “discrete, self-contained issues”, in respect of which no legal duty of consultation arose. The fact that those proposals were published in the same consultation response document as other reforms upon which the Secretary of State had consulted did not change this analysis.

The Court of Appeal also held that following an analysis of the Secretary of State’s practice in respect of changes to the charging regime for overseas visitors since 1982 that past practice was not sufficient to generate a legally enforceable procedural legitimate expectation of consultation.

The judgment is available here.

Robert Palmer QC appeared for the Secretary of State for Health and Social Care, instructed by the Government Legal Department.