EUROPEAN UNION

Input tax - principle of effectiveness - repayments - retrospective legislation - time limits - transitional provisions - accrued right to deduct

Michael Fleming (t/a Bodycraft) v Revenue & Customs Commissioners: CA (Civ Div) (Lords Justice Ward, Lady Justice Arden, Lady Justice Hallett): 15 February 2006



The appellant taxpayer (F) appealed against the decision ([2005] EWHC 232 (Ch)) that a claim for repayment of input tax outside the statutory three-year time limit for such claims failed because, although the introduction of the time limit had not been accompanied by the transitional arrangements required by European Community law, F had delayed too long before making his claim.


In 1989 and 1990, F had purchased 13 motor cars for the purpose of his business. He duly reclaimed input tax on ten of the cars, but did not receive VAT invoices at the time of purchasing the remaining three cars and did not claim repayment until 2000. In the meantime, a three-year time limit for making repayment claims had been introduced by amendment by regulation 29(1A) in the Value Added Tax Regulations 1995, with effect from 1 May 1997.


The VAT and duties tribunal held that Customs could not rely on the time limit because F had an accrued right to deduct input tax under EC law that could not be taken away by legislation having retrospective effect. On appeal by Customs, the judge held that regulation 29(1A) had been introduced without the transitional provisions required by EC law but, if a person with an accrued right to deduct allowed too long a period to go by before making a claim, as F had done in this case, the national court might properly conclude that the principle of finality or legal certainty required it to refuse to disapply the limitation provisions. F submitted that a person could not know whether a transitional period was adequate until he first knew what that period was; therefore, if the national legislation did not contain any transitional arrangements, they could not be implied and the restriction on accrued rights could not be effective. Customs submitted that it could rely on the time limit to bar claims based on accrued rights if the claim was made after the lapse of a reasonable period from the introduction of the regulation, which was six months.


David Southern (instructed by Hepburns) for the appellant; Alison Foster QC, Adam Robb (instructed by the solicitor, Revenue & Customs) for the respondent; Jonathan Peacock QC (instructed by Deloitte & Touche) for Condé Nast Publications Ltd (intervening with permission of the court).


Held, (Lady Justice Arden dissenting on the issue whether the court had power to imply an adequate transitional period). Regulation 29(1A) did not include transitional arrangements allowing an adequate period after the enactment of the legislation for lodging claims for repayment and was therefore incompatible with the principle of effectiveness ((C-62/00) Marks & Spencer Plc v Customs and Excise Commissioners [2002] ECR I-6325 applied). Therefore, it had to be disapplied. The legislation could not reasonably be construed as incorporating a transitional period where none was provided or contemplated. It was simply not possible to do so, however broad or robust an approach the court adopted (Litster v Forth Dry Dock Engineering & Co Ltd (In receivership) [1990] AC 546 and Godin-Mendoza v Ghaidan [2004] UKHL 30, [2004] 2 AC 557considered, and (C-255/00) Grundig Italiana SpA v Ministero della Finanze [2002] ECR I-8003 distinguished).


Appeal allowed. For European Court of Justice proceedings see (C-62/00) Marks & Spencer Plc v Customs and Excise Commissioners [2002] ECR I-6325 and (C-255/00) Grundig Italiana SpA v Ministero della Finanze [2002] ECR I-8003.





LANDLORD AND TENANT


Possession claims - secure tenancies - tolerated trespass - extension to currency of suspended possession order

Michael Richmond v Kensington & Chelsea London Borough Council: CA (Civ Div) (Lords Justice Buxton, Gage, Lloyd): 15 February 2006


The appellant secure tenant (R) appealed against a preliminary ruling that his landlord, the respondent local authority, was entitled to possession of his flat.


The local authority had obtained an order for possession, suspended on condition that R complied with the terms of his tenancy agreement. The possession order was expressed to remain in existence until 17 December 2004. R had subsequently breached the terms of his tenancy and thereby broken the terms of the suspension. Suspecting that it might not have time to obtain and execute a warrant of possession by 17 December, the local authority had, in November, sought an extension of the currency of the original order.


A second order was made suspending the order for possession for six months, the intention of which was to enable the local authority to move its application for a warrant under the possession order at a future date, while ensuring that the objective was not frustrated by the time limit imposed in the original order. R submitted that under section 85(2)(b) of the Housing Act 1985 the effect of the extension was not merely an extension of the currency of the order, but also a postponing of the date of possession, thereby reviving the original tenancy, which would otherwise have terminated had the breach of the tenancy agreement been proved. Therefore, his prior breaches of the tenancy agreement were defunct, and the local authority could only rely on future breaches in a fresh set of proceedings if possession was to be enforced.


Zia Nabi (instructed by Miles & Partners) for the appellant; Ranjit Bhose (instructed by the local authority solicitor) for the respondent.


Held, it was impossible to view the extension of the possession order as an extension of the date on which possession must be given in the way that was envisaged by Burrows v London Borough of Brent [1996] 1 WLR 1448.


In Burrows, the doctrine of revival of the tenancy through an extension of the date for possession was not actually applied, which meant that the case gave authoritative general statements rather than principles, the limits and extent of which have been demonstrated by application to a range of factual circumstances. The 'date for possession' in a possession order was part of a sanction imposed by the court following a sufficiently serious breach of the tenancy agreement. Relief from that sanction by an extension to the date for possession under the Burrows jurisprudence, was to be taken as a waiver of the breach, and that explained how the old tenancy could still subsist but clear of the original breach (Burrows explained).


In this case, the judge had not been relieving the tenant from the consequences of his breaches; he had simply kept in place the application to enforce the sanction imposed for the original breaches of the tenancy. The judge had been right to find that the extension to the currency of the possession order had merely been an exercise of case-management powers and had not resulted from addressing the substantive rights of the parties. All that the extension did was to extend the period during which an obligation to give possession might arise, which was already provided for in the first order. To accept R's contentions would be to apply the jurisprudence in Burrows in a way that was plainly not intended, and would lead to wasteful duplication of litigation.


Appeal dismissed.





HUMAN RIGHTS


Compensation - mandatory life imprisonment - release on licence - retrospective effect

R (on the application of Ernest Leslie Wright) v Secretary of State for the Home Department: CA (Civ Div) (Lord Justice Ward, Lady Justice Arden, Lady Justice Hallett): 15 February 2006


The appellant (W) appealed against a decision that he was not entitled to compensation from the respondent secretary of state in respect of a period of unlawful detention. W had been serving a mandatory life sentence following his conviction for murder in 1973. In 1993, the parole board recommended his release from prison as he was no longer considered a risk following the expiry of the punitive element of his sentence. However, the secretary of state rejected that recommendation on the basis that W had absconded from prison during previous attempts to facilitate his release.


W was eventually released in 1999 and claimed compensation under article 5 of the European Convention on Human Rights, on the basis that the secretary of state had failed to agree to his release notwithstanding recommendations from the parole board in 1988, 1993 and 1994. The judge upheld the decision not to award W compensation on the basis that the alleged wrongful detention had pre-dated the coming into force of the Human Rights Act 1998.


The issues for determination were whether there was a free-standing autonomous right to compensation conferred by article 5(5) and, if so, whether the secretary of state was in breach of it by failing, after the 1998 Act came into force, to implement a scheme to compensate victims of detention in contravention of article 5(1) and article 5(4); the decision of the European Court of Human Rights in Stafford v United Kingdom (46295/99) [2002] 35 EHRR 32 operated retrospectively or only prospectively.


Stephen Cragg (instructed by Lester Morrill) for the appellant; Pushpinder Saini (instructed by the Treasury Solicitor) for the respondent.


Held, the source of the right conferred by article 5(5) was the 1998 Act and the meaning of the provision was therefore a matter for the Court of Appeal and not the European Court of Human Rights (McKerr, Re [2004] UKHL 12, [2004] 1 WLR 807 applied).


As a matter of construction of article 5(5), treating it as a domestic right, a person could only be 'the victim of... detention in contravention of the provisions of this article' if there was a breach of article 5(1) or article 5(4), which was recognised by domestic law. The Act did not apply retrospectively and there could be no breach for violations of the convention that occurred before the Act came into force. In this case, any breach of W's right to liberty and security occurred pre-Act between 1993 and 1997.


Consequently, W had no 'enforceable right to compensation' that could be recognised by the domestic courts. Furthermore, Parliament could not have intended that the Act should give a different meaning for article 5(5) purposes to a 'contravention of the provisions of this article' from the meaning it gave for the purpose of section 6 of the Act where it was unlawful to act in a way that was 'incompatible with a convention right'. Logic and consistency demanded that all obligations under the Act should arise alike following the implementation of the Act. The trigger for the 'enforceable right to compensation' was the unlawful detention and that trigger did not fire the remedy if it was pulled before the Act came into force.


The secretary of state was therefore not in contravention of article 5(1) and article 5(4) by failing to compensate W. (Obiter: the proper place to test the application of the decision in Stafford was before the European Court of Human Rights and not in the course of this appeal &150; Stafford considered.)


Appeal dismissed. For related proceedings, see Stafford v United Kingdom (46295/99) [2002] 35 EHRR 32.





SOCIAL SECURITY


Habitual residence - income support - advance award - claim by person from abroad

Secretary of State for Work & Pensions v Pushpaben Bhakta: CA (Civ Div) (Lords Justice Auld, Longmore, Lady Justice Hallett): 15 February 2006


The appellant secretary of state appealed against a decision of the social security commissioner to make an advance award of income support to the respondent (B) under regulation 13 of the Social Security (Claims and Payments) Regulations 1987. B, who had been living in the US but had previously resided in the UK for substantial periods, had returned to the UK with a view to settling permanently.


B's claim for income support had been disallowed on the ground that she did not satisfy the requirement of habitual residence in the UK as set out in regulation 21(3) of the Income Support (General) Regulations 1987 because, although she had a settled intention to stay, she had not been resident for an appreciable amount of time.


On appeal, the commissioner held that future establishment of habitual residence as a condition of entitlement for income support could constitute satisfaction of the requirements for entitlement to benefit in respect of which an advance award could be made under regulation 13 of the Social Security (Claims and Payments) Regulations 1987. Therefore, the commissioner made an advance award on the basis that B would satisfy the requirement of habitual residence within the relevant three-month period.


The secretary of state submitted that the commissioner's application of regulation 13 of the 1987 regulations was inconsistent with sections 8(2) and 12(8) of the Social Security Act 1998, which confined the secretary of state and appeal tribunal to determination of the matter on the basis of the circumstances obtaining at the time when the decision appealed against was made, and that satisfaction of the requirement of habitual residence was not capable of determination in advance, because that would entail impermissible prediction or speculation.


Marie Demetriou (instructed by the solicitor, Department for Work and Pensions) for the appellant; Desmond Rutledge (instructed by Park Woodfine) for the respondent.


Held, a claimant had to adduce evidence that residence had become and was likely to continue to be habitual, but if the quality of the claimant's residence tended towards being habitual, but had not yet extended for a sufficient period to become habitual, there was no reason why the secretary of state or appeal tribunal should not, in an appropriate case, utilise regulation 13 and decide that unless there was a change of circumstances the residence would have become habitual as from a particular date which would become the relevant day, Nessa v Chief Adjudication Officer [1999] 1 WLR 1937 considered.


When the secretary of state considered whether to make an advance award, he considered the matter as at the date of his decision. He was not saying that the claimant was entitled to benefit on the basis of circumstances not obtaining at that time, which would be, in any event, difficult. He was saying that, at the time of his decision, he was of the opinion that the claimant would satisfy the requirement of habitual residence on some future date, unless there was a change of circumstances. He was not basing his decision on circumstances not obtaining at that time but on circumstances obtaining at that time which he had no reason to think would change. The commissioner therefore made no error of law and his decision was not inconsistent with sections 8(2) 12(8) of the 1998 Act.


Appeal dismissed.





LICENSING


Hospitality and leisure - licences - premises - removal - dead issue - jurisdiction to hear appeal

R (on the application of Ron Bushell & Others) v Newcastle upon Tyne Licensing Justices & Another: HL (Lords Hoffmann, Scott of Foscote, Rodger of Earlsferry, Walker of Gestingthorpe, Brown of Eaton-Under-Heywood): 15 February 2006


The appellant hotel owner (H) appealed against a decision of the Court of Appeal to uphold a decision to quash a justices' licence granted by way of special removal. The respondents (R) raised a preliminary objection to the hearing of the appeal on the basis that the Licensing Act 1964 had been repealed and therefore H could no longer take advantage of the disputed licence to trade.


Newcastle City Council had acquired a public house, which was subject to an unconfirmed compulsory purchase order, from its owners, H. H had also acquired an hotel in another part of the same licensing district. H had applied at the transfer session for the licensing district for an order authorising the special removal of an on-licence from the pub to the hotel under section 15 of the Act. The application was granted at an adjourned hearing. R sought judicial review of that decision.


The judge quashed the decision, finding that the justices were wrong to hold that the case came within the provisions concerning special removal in section 15 because the pub was not occupied or about to be occupied for a public purpose. R had provided a cross-undertaking in return for an undertaking by H not to commence trading until the judicial review application had been heard.


H subsequently commenced proceedings to enforce the cross-undertaking. R submitted that the appeal had become moot in view of the fact that the subject matter of the appeal, namely the removed on-licence and the question of the construction of section 15, had disappeared because the whole of the Act had been repealed by the Licensing Act 2003 and therefore the appeal should be dismissed without a hearing; the section 15 grounds should be narrowly construed because the right to a special removal could be abused.


Susanna FitzGerald QC, Simon Colton (instructed by Mincoffs) for the appellants; John Steel QC, Gerald Gouriet, James Rankin (instructed by Sintons) for the respondents.


Held, The appeal was not moot because its outcome did have practical consequences for the parties for two reasons: H had incurred considerable costs, and H's proceedings to enforce R's cross-undertaking would be doomed to failure if this court decided that the justices had no jurisdiction under section 15 of the 1964 Act and had dismissed the appeal. An appellant was permitted to pursue an appeal even though it no longer turned on a question of general public importance but had become a one-off case for which this court would not ordinarily have given leave to appeal (Sirius International Insurance Co v FAI General Insurance Ltd [2003] EWCA Civ 470, [2003] 1 WLR 2214 applied).


Without a successful appeal, the Court of Appeal judgment would stand and would defeat H's considerable claim for damages. That was sufficient justification for deciding the point at issue, notwithstanding that no one's entitlement to an on-licence could depend on the proper construction of the words 'occupied for any other public purpose' in section 15(1)(a) of the 1964 Act.


The grounds for special removal had remained unchanged since the Licensing Act 1828. The restriction on the grounds of refusal was first introduced by the Licensing Act 1904, but that would not have changed the meaning of occupation for a public purpose. The kind of strict construction adopted by the Court of Appeal would be a haphazard way of dealing with such cases. It followed that the conditions for a special removal were satisfied and the justices had jurisdiction to grant it.


Appeal allowed.