C-369/04: Hutchison 3G & C-284/04: T-Mobile Austria

A ruling by the ECJ on 26th June means that Revenue and Customs will not have to pay a VAT claim for over £3 billion brought by the winners of the third generation mobile phone spectrum auction in 2000.

The mobile phone companies had claimed that the £27 billion paid by them for spectrum licences included £3 billion VAT, which they were entitled to reclaim.  However, the ECJ today ruled that the UK’s allocation of spectrum was not “economic activity” and hence was not subject to VAT.

The judgment will come as a relief not just to the UK but also to many other Member States, including Germany, the Netherlands, Ireland and Spain, where similar auctions were conducted and similar VAT claims made by the winners; a case from Austria on the same point was the subject of a parallel ECJ judgment today.

Barristers from Monckton Chambers acted on each side in this case: the mobile phone companies were represented by Paul Lasok QC, and Revenue and Customs by Christopher Vajda QC and George Peretz.

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Paul Lasok QC
George Peretz

The High Court gave judgment in the case of Chester City Council v. Arriva plc.  Arriva was accused of predatory pricing and flooding the market for local bus services in central Chester, in breach of Chapter II of the Competition Act.

Arriva defeated Chester City Council on every point, including by demonstrating that Arriva was not dominant on the relevant market.  The Court held that the relevant geographic market was to be measured using bus drive time isochrones and that the correct metric for assessing market share was bus capacity.  Permission to appeal was denied.

Paul Harris appeared on behalf of Arriva as Junior Counsel.

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Paul Harris QC

 

 

The High Court has held that the United Kingdom’s arrangements for compensating the victims of untraced drivers do not comply with European Community law in requiring compensation claims made on behalf of minors to be brought within three years of injury.  The Court also found that the breach of EC law was sufficiently serious to expose the Secretary of State to a claim in damages.

The judgment arose out of a claim brought on behalf of Ben Byrne, who was injured by an untraced driver when he was three years old.  Later, his parents learnt of the possibility of claiming compensation, and made a claim to the Motor Insurers Bureau,which provides compensation to the victims of untraced drivers under the terms of an agreement with the Department of Transport.  But the MIB refused to process Ben’s application because of a rule in the agreement requiring all claims to be brought within three years of the injury.  This rule was harsher than the provisions of the Limitation Act governing claims against traced drivers; under the Limitation Act, the three year time limit only starts to run when a minor reaches 18.

In legal proceedings brought on Ben’s behalf against the MIB and the Secretary of State for Transport, the High Court found that this was contrary to the EC Directive governing claims by victims of untraced drivers because it did not protect claims by minors against the MIB as effectively as the Limitation Act rules applicable to actions in court by minors who are the victims of traced drivers.

The High Court rejected Ben’s claim against the MIB, holding that the MIB was not an emanation of the State and that the Directive was therefore not directly effective against it; and that the agreement between the MIB and the Secretary of State could not be construed so as to comply with the Directive.

However, the High Court held that the United Kingdom was in sufficiently serious breach of the Directive to expose it to a claim for damages under the principle laid down in the Francovich line of case-law.  Ben can therefore proceed with his claim against the Secretary of State for Transport, seeking damages for the loss he has suffered in being deprived of the possibility of obtaining compensation from the MIB.

Nicholas Paines QC and Josh Holmes represented Ben Byrne.

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Josh Holmes

The Administrative Court has rejected a claim by Abbey Mine to quash a decision of the Coal Authority to grant a licence to Corus, the steel maker, to mine coal in the Margam area of South Wales.  The Court had to consider how to apply the public law principle of fairness in the context of a comparative evaluation of competing bids.  Among the arguments it rejected was that fairness dictated that the decision maker should disclose a number of documents to Abbey Mine.  A competition law attack was also made on the Coal Authority.  This also failed.  Of particular interest was the Court’s rejection of an argument that, because of the royalty payments received from its licensing functions, the Coal Authority was an undertaking for the purposes of competition law.

Christopher Vajda QC and Josh Holmes, instructed by Nabarro, acted for the Coal Authority.

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Josh Holmes

We are delighted that Monckton Chambers has been nominated as ‘Chambers of the Year’ and Peter Roth QC has been shortlisted as ‘Barrister of the Year’ as part of The Lawyer Awards 2007.  It is great to have been chosen among hundreds of entries.  The winners will be announced on 26th June 2007 at an award ceremony at The Grosvenor House Hotel.

Paul Lasok QC, Head of Chambers says: “We are very pleased with this news, especially as this year saw a tough panel of judges including some of the biggest names in the City.”

We would like to take this opportunity to thank our clients for their continuous support.

First published by De Voil Indirect Tax Intelligence, Issue 131, April 2007

Just Fabulous (UK) Ltd v HM Revenue and Customs was one of three cases which were not consolidated but were effectively heard together by the Administrative Court (Burton J), each relating to the powers of HM Revenue and Customs (“HMRC”) in relation to so-called “contra-trading” fraud, a variation of MTIC or carousel fraud.

On 23 March 2007 Mr Justice Rimer gave judgment in Pirelli Cable Holding NV and others v. Commissioners for HM Revenue and Customs [2007] EWHC 583 (Ch.), the latest chapter in the long-running Advance Corporation Tax (‘ACT’) group litigation.

The five test cases in the ACT group litigation (of which Pirelli is one) result from the 2001 decision of the ECJ in Metallgesellschaft v. IRC and Hoechst v. IRC [2001] Ch. 620. They are aimed at resolving the issues arising out of a large number of claims for compensation by foreign companies and their UK subsidiaries in respect of payments of ACT made between 1973 and 1999, which the ECJ held in Metallgesellschaft/Hoechst to be contrary to the right of establishment under Article 43 EC.

Two of the five test cases have progressed through the domestic courts and were decided by the House of Lords in 2006 (Pirelli and Deutsche Morgan Grenfell); two are currently being heard by the House of Lords (Sempra Metals and Boake Allen / NEC Semiconductors); while the last case, “Test Claimants in Class IV” was referred back to the ECJ, which delivered judgment on 12 December 2006.

The central issue in Pirelli was whether the payment of a tax credit to a parent company resident in another EU Member State should have any bearing on the compensation now payable to its UK subsidiary in respect of unlawful ACT payments. Having lost the argument in the House of Lords, Pirelli sought to argue before Rimer J. (to whom the matter was remitted) that the Claimants were nevertheless entitled under EC law to a separate tax credit that they had not yet received and which now had to be brought into account in assessing the compensation due in line with the ECJ’s judgment in Metallgesellschaft.

Rimer J. rejected the argument, finding that neither domestic law nor Community law provided Pirelli with a right to any such tax credit. The Judge held that the Claimants should have raised the point before the House of Lords but that, on balance, it was not an abuse of process for them to do so now.

It is now expected that there will be a further hearing to deal with factual issues and the method of assessing the relevant amount of compensation in line with the decision of the House of Lords.

Meanwhile, the House of Lords has set down a further day in May 2007 for argument in Sempra Metals, another of the ACT test cases, to deal with issues relating to the restitutionary claims by the ACT Claimants and the issue of whether compensation should be calculated using compound interest.

The original High Court actions in Metallgesellschaft and Hoechst were commenced in 1995 before Neuberger J., sufficiently long ago that the same Judge is now sitting in the House of Lords in one of the test cases (Boake Allen / NEC Semiconductors). Increasingly, it looks like what Lord Hoffman has referred to as ‘the forensic fall-out’ from Metallgesellschaft will see out another decade.

Gerry Facenna is instructed as junior counsel to HM Revenue & Customs in two of the five ACT group litigation test cases, Sempra Metals and Pirelli.

 

 

 

The Administrative Court gave judgment in a further test case involving ‘penalty charge notices’, more commonly known as ‘parking tickets’, which affects millions of people every year: R(Transport for London) v The Parking Adjudicator.

The general rule is that a parking attendant must serve a parking ticket on the spot by fixing it to the vehicle or by giving it to the person appearing to be in charge of the vehicle.  In London, there are two statutory exceptions permitting service by post.  One is concerned with contraventions observed by camera.  The other is where “a parking attendant attempts to issue a penalty charge notice in accordance with section 66(1) of the [Road Traffic Act 1991] but is prevented from doing so by any person” (s5 London Local Authorities Act 2000).

TfL brought judicial review proceedings against the Parking Adjudicator claiming that the adjudicator had adopted an unlawfully narrow interpretation of their power to serve by post under the second exception.  The issues were the meaning of “attempts to issue” and “prevented”.  Tfl argued that where an attendant had merely begun to note the vehicle details in a handheld device or notebook, that constituted an ‘attempt to issue’ a ticket.  Further, that merely by driving away, the driver ‘prevented’ the ticket being issued and Tfl were entitled to serve a ticket by post in such circumstances.

The Administrative Court upheld the decision and reasoning of the Parking Adjudicator on all points and dismissed Tfl’s application.  Merely preparatory acts, such as jotting down notes, do not amount to an attempt, applying the common law and common usage.  Given that the meaning of ‘issue’, in its statutory context, must refer to the act of ‘fixing’ or ‘giving’, it cannot be an ‘attempt to issue’ if the attendant is inputting details into a computer device or making notes. To make an ‘attempt to issue’, the attendant must be in the course of physically affixing the ticket or giving it to the person appearing to be in charge.  It follows that a ticket cannot be served by post if the ticket has not been completed by the time the vehicle is driven away.

The Judge also upheld the Parking Adjudicators’ interpretation of ‘prevention’ as involving violence or the threat of violence, in this context.  The judgment confirms the narrow scope of the power to serve parking tickets by
post, and minimises the risk of local authorities using the provision to issue tickets when an attendant has not had sufficient time to ascertain that a contravention has in fact occurred.

Ian Rogers appeared for the Parking Adjudicator.

 

 

 

The Court of First Instance (CFI) heard an important state aid case, T-475/04, which raises the question of in what circumstances the grant of 3G mobile licences can involve state aid. Bouygues, the number 3 operator in France has challenged a decision of the European Commission that the grant of 3G licences to SFR and France Telecom involved no aid.

Christopher Vajda QC who was instructed by the Paris office of Denton Wilde Sapte, acted on behalf of SFR, the number two mobile operator in France and addressed the CFI in French. Judgment is expected in the summer.