Yesterday (20 March 2023), Josh Holmes KC and Jack Williams appeared for Symphony Environmental Technologies PLC and Symphony Environmental Ltd (the Applicants) in the General Court (Luxembourg) in relation a damages action under Article 340 TFEU against the EU Institutions.

The Applicants allege that the EU institutions are non-contractually liable under Article 340(2) TFEU and Article 41(3) of the Charter of Fundamental Rights in respect of the adoption of Article 5 and Recital 15 (insofar as they apply to oxo-biodegradable plastic) of Directive (EU) 2019/904 of the European Parliament and of the Council of 5 June 2019 on the reduction of the impact of certain plastic products on the environment (OJ L 155, 12.6.2019, p. 1–19) (“the Directive”).

Article 5 of the Directive directs that Member States “shall prohibit the placing on the market of the single-use plastic products listed in Part B of the Annex and of products made from oxo-degradable plastic”.

The Applicants argue that insofar as the restriction imposed by Article 5 of the Directive encompasses, by means of the definition of “oxo-degradable plastic” in Article 3(1) and (3), a total prohibition of the placing of oxo-biodegradable plastics on the market (“the Article 5 Prohibition”), it is unlawful. This is on the basis that the adoption of the Article 5 Prohibition is vitiated by procedural errors, breaches the principle of proportionality, is based on manifest errors of assessment and matters disconnected with the aim of the Directive, fails to take into account relevant considerations, is discriminatory and breaches the Applicants’ fundamental rights. Accordingly, they seek damages.

Josh and Jack are representing the Applicants in accordance with their continued rights of privilege and audience before the EU Courts under the arrangements in the Withdrawal Agreement for cases started before the end of the transition period. Both also retain rights of privilege to advise confidentially on any new matters of EU law and represent clients before the EU Courts on account of their being called to the Irish Bar (in addition to the Bar of England and Wales).

Nikolaus Grubeck and Alex Littlewood acted for an Afghan national (‘AZ’) who worked as a patrol interpreter alongside British forces in Helmand province, in successfully challenging the Home Office’s refusal to allow him and his family to relocate to the UK.

AZ applied to relocate to the UK under the Government’s designated Scheme, on the basis that he had served on frontline duties in Helmand. The Scheme (like the Afghan Relocations and Assistance Policy which has now replaced it) aims to recognise the service provided to the British by locally employed staff in Afghanistan, and to provide them with appropriate support in light of the danger they face from the Taliban.

AZ was deemed eligible for relocation, but his and his family’s applications for visas were subsequently refused by the Home Office under the Immigration Rules, on alleged national security grounds. AZ challenged the Home Office’s decisions by way of judicial review in 2021, leading to those decisions being withdrawn. Fresh refusal decisions were issued, and following a further successful judicial review challenge were again withdrawn. The Home Office has now decided to issue visas to AZ and his family, allowing them to escape the dangerous situation they faced in Taliban-controlled Afghanistan.

Nikolaus and Alex were instructed by Erin Alcock of Leigh Day.

In the first judgment on an appeal against an infringement and penalty decision by the Guernsey Competition and Regulatory Authority (“GCRA”) under the Competition (Guernsey) Ordinance 2012, the Royal Court has set the decision aside, finding that it was unreasonable and based on material errors as to the facts. The Royal Court also set out the approach that it will take to appeals against GCRA decisions under the 2012 Ordinance.

The 2012 Ordinance is modelled on UK and EU competition law. The GCRA’s decision concerned the Medical Specialist Group (“MSG”), the partnership of specialist medical practitioners operating in Guernsey as part of its public health system. Doctors practising as associates or partners of the MSG agreed restrictions on their ability to practise privately in Guernsey after leaving the MSG (2 years for partners, 18 months for associates). . The GCRA considered that those restrictions were contrary to section 5(1) of the 2012 Ordinance (equivalent to the UK Chapter I prohibition or Article 101(1) TFEU), directed the MSG to remove those restrictions from its agreements with doctors and, in a separate decision, imposed a penalty of over £1.5m on the MSG.

In its appeal, the MSG argued that the restrictions were justified on the basis that the ability to practise privately and without immediate competition from former MSG doctors was critical to attracting specialist medical practitioners to Guernsey, and identified what it said were a number of errors in the GCRA’s analysis.

In his judgment, the Bailiff, the senior judge in Guernsey, held that the Royal Court was able to review GCRA decisions on a basis wider than traditional judicial review, so that the Court could consider any complaint made about the decision-making process or the decision reached. He found that the reasoning employed by the GCRA to support its rejection of the MSG’s justification for the restrictions was flawed in various respects and that the GCRA had failed to give evidence from GP practices sufficient weight. He set the infringement decision and penalty decision aside and remitted the matter to the GCRA for reconsideration in the light of his judgment.

The judgment establishes that the GCRA’s decisions are subject to detailed scrutiny by the Royal Court going well beyond traditional judicial review. It will also be of interest to anyone dealing with the application of the competition rules to post-termination restrictions on professional or specialist practice.

George Peretz KC assisted a Carey Olsen team led by Advocate Elaine Gray, of the Guernsey Bar, on behalf of MSG.

The Administrative Court today handed down judgment in R (Fire Brigades Union) v HM Treasury & SSHD (CO/4288/2021) and R (The British Medical Association) v HM Treasury & SS Health and Social Care (CO/4351/2021).

The two unions, the FBU and the BMA, brought judicial review challenges, which were heard together, to the decision of HM Treasury to make statutory directions contained in the Public Service Pensions (Valuation and Employer Costs Cap) (Amendment) Directions 2021. The challenges concerned the ‘Costs Cap Mechanism’ or ‘CCM’, which is a mechanism intended to control costs and changes in costs of public pension schemes and operates by modifying members’ benefits (and/or contributions to such schemes) should the measured cost of pension provision deviate from a set target. The CCM was modified by the 2021 Directions to reflect within the CCM the costs of what has been called ‘the McCloud Remedy’, which follows the decision in Lord Chancellor v McCloud & Ors. The costs of the McCloud Remedy are estimated to be £19 billion across the public service.

The Claimants brought a total of 8 grounds of challenge, namely: (1) Article 6 ECHR, (2) legitimate expectation, (3) Padfield, (4) indirect age, race and sex discrimination, (5) error of statutory interpretation, (6) failure to consult, (7) breach of PSED and (8) Tameside.

Mr Justice Choudhury dismissed the application for judicial review on all grounds. The unions are seeking permission to appeal.

Imogen Proud acted for HM Treasury, the Secretary of State for the Home Department and the Secretary of State for Health and Social Care, as part of a multi-chambers counsel team.

The judgment is available here.

The Supreme Court today handed down judgment in R (VIP Communications Ltd) v Secretary of State for the Home Department, allowing the Secretary of State’s appeal and dismissing VIP’s application for judicial review.

The appeal concerned the Secretary of State’s powers to protect national security as well as public safety and other important interests in the telecoms context. The telecoms kit at issue in the case were Commercial Multi-User Gateways (or ‘COMUGS’) which allow callers to route landline calls onto a mobile network. COMUGs pose national security risks because, when a call is routed through COMUG, communications data about the call and the caller is masked.

The Supreme Court concluded that the Secretary of State had the power to prevent Ofcom from exempting COMUGs form any prior licensing requirement. The Court of Appeal and High Court had said that the Secretary of State lacked the power to give a direction to Ofcom on national security or public safety grounds preventing exemption from licensing requirements.

In reaching this conclusion, the Supreme Court dismissed the Court of Appeal’s reliance on the ‘clear words’ principle of statutory construction – that statutory duties can only be overridden or qualified using clear words – and concluded that, outside fundamental rights or rule of law cases, no such general principle exists.

Daniel Beard KC, Michael Armitage, Imogen Proud and Will Perry acted for the Secretary of State.

On 2nd March 2023, Mr Justice Miles handed down judgment by which he gave a direction for the administrators of Sova Capital Limited to complete the sale of £274m worth of Russian securities to a creditor, Dominanta, which was represented by William Buck. The application arose in unusual circumstances, caused by the invasion of Ukraine, which had severely limited the administrators ability to sell the securities due to both western sanctions and restrictions within Russia as to such sales. The proposed transaction with Dominanta involved it waiving its claim as a creditor in exchange for the securities, in what was called a ‘credit bid’. This was opposed by another creditor, who wished to pursue his own proposed transaction and who made various allegations, including that the administrators had no power to enter into the transaction and that it amounted to a distribution which was contrary to the pari passu rule.

In his judgment, Mr Justice Miles addressed the “novel issues which have not previously been decided by the courts”, holding that a creditor could purchase assets from a company in administration by usings its creditor claim as consideration, and that such a transaction was not properly characterised as a distribution of assets, as the creditor was acting qua purchaser and not qua creditor. This is an important judgment in that it identifies a potential route by which administrators can realise value to the benefit of the body of creditors where a cash sale to third parties is problematic or offers poor value.

William Buck, leading Nicholas Wright, acted for Dominanta, instructed by Michael Barnett and Laurence Crees of Quillon Law.

On 28 February 2023 the Court of Appeal provided its second judgment in LA Micro Group (UK) v LA Micro Group, Inc. [2023] EWCA Civ 214, a dispute which has generated numerous complex legal arguments over its life.

On this occasion the Court of Appeal addressed whether a constructive trust came into existence when the legal owner of property (the property being shares in LA Micro Group (UK)), and who held that property on express trust, had entered into a specifically enforceable obligation with the beneficiary of the express trust to transfer back their beneficial interest to the legal owner – such that the legal owner held both the legal interest (as a trustee of the express trust) and the beneficial interest (as a beneficiary of the constructive trust, albeit under a ‘sub-trust’). The relevance of this point was the need for there to be a constructive trust, parasitic on the entering into of the specifically enforceable obligation, so as to avoid the formality requirements of s.52(1)(c) of the LPA 1925 and where, on the facts, those requirements had not been complied with.

In determining that a constructive trust did come into existence, the Court of Appeal held that the sub-trust was created and then died “at the same moment”, the effect being to vest absolute title in the original express trustee, and that it was not fatal to that trust analysis that the legal and beneficial interest were held, for that moment, by the same entity.

Separately, the Court of Appeal also held that there existed irreconcilable internal inconsistencies with the judgment under appeal in respect of a proprietary estoppel claim (upon which the Respondents which had been successful at first instance), where the representee’s actual state of mind was entirely contrary to the alleged estoppel.

William Buck, leading William Hooper, acted for the Appellants, instructed by Tom Bolam and Cecilia Ricks at Fladgate LLP.

Case C-695/20 Fenix International Ltd v HMRC, Court of Justice of the European Union (Grand Chamber), EU:C:2023:127, Judgment of 28 February 2023

Fenix International Ltd operates the well-known www.OnlyFans.com 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 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 the 100. Fenix paid the assessments and has accounted to HMRC for VAT on that basis since HMRC’s decision. However, it appealed the 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 a 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. On 22 December 2020, the order for reference was registered at the CJEU Registry. 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 and the European Union (Withdrawal) Act 2018 is that the CJEU had jurisdiction to entertain the reference and that the FTT and UK are be bound by the CJEU’s answer. See “The Long Goodbye”, news item, 13 January 2021, if only for its prescient headline.

On 15 September 2022, Advocate General Ramos delivered an Opinion rejecting Fenix’s challenge (EU:C:2022:685).

On 28 February 2023, in its last judgment in an Article 267 reference from a UK tax tribunal (and possibly any other UK court), the CJEU (Grand Chamber) gave judgment. The CJEU followed the Advocate General’s Opinion and upheld the validity of Article 9a(1). The Court held-

• the provisions of Article 9a(1) comply with the essential general aims of the PVD and, in particular, those of Article 28;
• Article 9a(1) is appropriate, and even necessary, for the uniform implementation of Article 28;
• the presumption in Article 9a(1) does not alter the nature of the presumption laid down in Article 28, but gives concrete expression to it in the specific context of the supply of electronically supplied services through a telecommunications network, an interface or a portal such as a marketplace for applications;
• where a taxable person who takes part in the supply of a service by electronic means, by operating, e.g., an online social network platform, has the power to authorise the supply of that service, or to charge for it, or to lay down the general terms and conditions of that supply, that taxable person may unilaterally define essential elements relating to the supply, namely the provision of that service and the time at which it will take place, or the conditions under which the consideration will be payable, or the rules forming the general framework of that service; in those circumstances, having regard to the economic and commercial reality reflected by them, the taxable person must be regarded as being the supplier of services pursuant to Article 28; and the irrebuttable presumption that applies in the circumstances set out in Article 9a(1) gives effect to that economic and commercial reality;
• accordingly, Article 9a(1) does not supplement or amend Article 28; it does not therefore disregard or exceed the limits of the Council’s implementing power; and is thus valid.

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

Andrew Macnab acted for HMRC.

Read the CJEU’s judgment here.

Read the Advocate General’s Opinion here.

Read the FTT’s decision to refer here.

The Competition Appeal Tribunal has today handed down judgment in Royal Mail and BT v DAF Trucks Limited and ors [2023] CAT 6, the first UK judgment in a follow-on claim based on the European Commission’s 2016 Trucks settlement decision. By its judgment, the Tribunal upheld Royal Mail and British Telecom’s damages claims against DAF Trucks for loss arising from the infringement of competition law found by the Commission.

A summary of the judgment has been made available on the Tribunal’s website.

All parties to the proceedings were represented by leading and junior counsel from Monckton Chambers.

Tim Ward KC, Ben Lask and Clíodhna Kelleher appeared for Royal Mail and British Telecom.

Daniel Beard KC, Daisy Mackersie and James Bourke appeared for DAF.

The Upper Tribunal has allowed the taxpayer’s appeal against the decision of the First-tier Tribunal (Tax) in WM Morrison Supermarkets PLC v HMRC.

The First-tier Tribunal had held that Nakd and Organix bars were “confectionery” and therefore outside the scope of zero-rating provisions for VAT.

Valentina Sloane KC was instructed by Deloitte to act for Morrison Supermarkets PLC in its appeal to the Upper Tribunal.

The Upper Tribunal accepted the arguments that the First-tier Tribunal had made errors of law and that they were material. It remitted the case for a fresh hearing by a newly constituted panel.

The judgment, which can be viewed here contains a detailed analysis of the test on appeal where the challenge is that the court failed to take into account relevant considerations.

The case has been reported in the Telegraph.