EE Ltd v Ofcom [2017] EWCA Civ 1873

The Court of Appeal has upheld an appeal by EE Ltd. in the context of the Annual Licence Fees (ALFs) it and other mobile operators pay for the use of mobile spectrum. The High Court had found last year, dismissing EE’s application for judicial review, that Ofcom had been correct to conclude that it had no discretion but to set ALFs at the market value of the relevant spectrum. The High Court had agreed that Ofcom was obliged to do so in light of a direction by the Secretary of State to set fees at a level reflecting full market value. The Court of Appeal disagreed, finding instead that the power of the Secretary of State to direct Ofcom to exercise its functions in a specific manner did not absolve Ofcom from having regard to its statutory duties and objectives under the Communications Act and the EU Common Regulatory Framework. These duties were non-delegable, and the direction by the Secretary of State did not on the face of it preclude Ofcom from having regard to its wider objectives as it was required to.

Ofcom’s 2015 decision and its implementing Regulations which brought in a significant increase in ALFs have been quashed. Ofcom has been granted permission to appeal the matter to the Supreme Court.

Philip Woolfe and Stefan Kuppen acted for EE (led by Lord Pannick QC).

The judgment can be found here.

The High Court (Phillips J) has dismissed Sainsbury’s claim against Visa in the on-going Interchange Fee litigation. In a judgment which departed from important aspects of the reasoning adopted in earlier cases (in particular, the High Court’s Judgment in Asda Stores Ltd v MasterCard Inc and the CAT’s determination in Sainsbury’s v MasterCard), Phillips J concluded that the UK Multilateral Interchange Fees imposed by Visa did not constitute a restriction on competition by effect within the meaning of Article 101 (1) of the Treaty on the Functioning of the European Union. The Court accepted, however, that if the fees had constituted a restriction on competition within the ambit of Article 101 (1) it would not have been objectively justified for purposes of that article. This finding departs from the approach adopted by Popplewell J in the High Court’s earlier ASDA judgment.

Mark Brealey QC acted for Sainsbury’s Supermarkets Ltd in the claim.

To read the judgment please click here.

On 4 October 2017, Mrs Justice Rose dismissed claims by Emerald Supplies Limited and other claimants seeking damages alleged to have been caused in relation to alleged overcharges for flights between the EU and third countries prior to 1 May 2004, and alleged overcharges for flights between the EEA and third countries prior to 19 May 2005. For the Judgment see here. The principal issues concerned whether Article 101 of the Treaty on the Functioning of the European Union applied in the international air transport sector before those dates and/or whether Regulation 1/2003 changed the position as to the powers of a national court retrospectively in relation to those periods. At a hearing on 1 December 2017 Mrs Justice Rose granted Emerald Supplies and other Claimants permission to appeal to the Court of Appeal.

The following Monckton barristers are instructed in the case:

Philip Moser QC, Ben Rayment, Anneliese Blackwood and Conor McCarthy are instructed by the Claimants.

Jon Turner QC, Michael Armitage and Stefan Kuppen for British Airways PLC

Daniel Beard QC and Thomas Sebastian for airlines facing Part 20 Contribution Claims.

United Biscuits (Pension Trustees) Ltd and another v HMRC [2017] EWHC 2895 (Ch)

The High Court (Warren J) has dismissed a claim by United Biscuits (Pension Trustees) Ltd (“UB”) against HMRC for refunds of (allegedly) overpaid VAT.

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”).

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 13B(a) of the Sixth Directive (388/77/EEC) or Article 135(1)(a) of the Principal VAT Directive (2006/112/EC) 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 (a process which would require the Court to create a common law cause of action in unjust enrichment and to disapply the statutory bar on such causes of action in section 80(7) of the Value Added Tax Act 1994, notwithstanding ITC SC): it was not “impossible or excessively difficult” for UB to vindicate any EU law rights it may have via the route dictated by UK statute, namely a claim against the Non-Insurer.

If he were wrong on Issues 1 and 2, Warren J considered that any direct claim against HMRC would be a claim in unjust enrichment; and that the bar in section 80(7) would have to be disapplied only to the extent necessary to allow UB a claim for the 4-year period prior to the issue of the claim form, having regard to the 4 year “cap” on claims by Non-Insurers against HMRC under section 80(4) VATA 1994.

Andrew Macnab appeared for HMRC.

To read the judgment please click here.