.png)
.png)
Key points
- The First-tier Tribunal has stayed proceedings until 30 June 2020.
- Factors when determining whether a delay is reasonable.
- There is a fundamental entitlement to justice within a reasonable period.
- What can advisers do for clients involved in proceedings?
A recent freedom of information request by the law firm, Pinsent Masons, showed that the backlog of tax disputes before the First-tier Tribunal had reached 27,280 in the past quarter. This was before the ‘general stay’ of proceedings was issued on 24 March 2020 to comply with government measures related to Covid-19. This is an astonishing number of cases with a substantial amount of tax in dispute. It can only be added to by the further stay of directions on 21 April ( tinyurl.com/y7vvsgnl) and the cancellation of existing hearings into (if not beyond) the summer.
While there can be no doubt that Covid-19 is a critical situation, we risk sleep-walking into a serious constitutional situation whereby the state is failing to meet its obligations to the people. As discussed by him in The Sunday Times (5 April 2020) the erosion of civil liberties has been a common theme of Lord Jonathan Sumption (former Supreme Court judge) in the context of Covid-19 measures. One aspect, which has gone largely unnoticed, is the risk to proper access to justice.
The First-tier Tribunal approach
To recap, on 24 March 2020 the First-tier Tribunal issued a general stay for 28 days (until 21 April 2020), subject to a general permission to apply for further directions. Thus, there remained the possibility of a particular case being treated differently on application.
The general stay was extended on 21 April 2020 so that all proceedings received by the tribunal before 24 March 2020 and assigned to the standard or complex category before 21 April 2020 were further stayed to 30 June 2020, with all time limits in such proceedings extended by a further 70 days. The stays do not apply to directions issued after 24 March 2020.
Thus for most cases before the First-tier Tribunal, timetables have been ‘frozen’ for 98 days, or more than three months.
Access to justice and delay of proceedings
Delay and access to justice arise in three separate legal contexts.
First, they arise as an aspect of English law. Scarman LJ stated in R v Secretary of State for the Home Department, ex parte Phansopkar [1976] QB 606: ‘Justice delayed is justice denied’ (“We will not deny or defer to any man either justice or right”, Magna Carta, chapter 29)’ before going on to describe the concept as a ‘hallowed principle of our law’.
Second, under the European Convention on Human Rights (ECHR), Art 6, as incorporated into domestic law by the Human Rights Act 1998, which (with my emphasis) provides that ‘in the determination of his civil rights and obligations or any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time...’. In a tax context, only penalties classed as criminal for human rights purposes (see Han and others v CCE [2001] STC 1188) attract the protection of Art 6.
Finally, the EU Charter of Fundamental Rights (the EU Charter), Art 47 provides broadly the same things as the ECHR, Art 6, saying: ‘Everyone whose rights and freedoms guaranteed by the law of the Union are violated has the right to an effective remedy before a tribunal.’ This includes entitlement to ‘a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law’.
Thus, the EU charter will only be applicable if there is an allegation of a breach of EU law.
What causes the right to be breached?
There is significant domestic and European case law on this point. The ECHR case law (which at present only applies in the context of a ‘criminal’ penalty) emphasises the following factors in determining whether or not the delay is reasonable: complexity of the case; behaviour of the applicant; behaviour of the domestic authority; and the importance of the right at stake.
The EU law on the point considers similar factors – at least in relation to the delay of the EU courts; it is yet to determine the matter in relation to domestic courts.
There are two recent domestic cases that are helpful in the current context. The first of these is Collinson (TC470) in which the applicant applied for a closure notice. In this (rather different) context the First-tier Tribunal said: ‘We also remind ourselves of the often quoted saying “Justice delayed, is justice denied”. This is reflected in Rule 2(1)(e) [the overriding objective] … It could be some time then before the case is heard and a decision reached. The longer the period from the time the actual transactions took place the harder it is to find documents and reliable evidence. Witnesses cease to be available and memories fade. This makes it harder for there to be a fair trial in a reasonable time.’
It is clear that the avoidance of delay is an important principle to be upheld by the First-tier Tribunal and that the root of this is in the fundamental entitlement to justice within a reasonable period – whether guaranteed by underlying English law, the European charter or, for ‘criminal’ penalties, the ECHR.
In Municipio De Mariana and others v BHP Group plc [2020] EWHC 928 (TCC) the High Court was required to consider whether to vacate and relist a hearing (in the largest class action ever brought in the UK) because of the difficulties caused by Covid-19. The applicant party wished to have the hearing relisted – at least to July but preferably to the autumn to avoid a remote hearing. The respondent was content to extend deadlines, but did not want the June hearing vacated.
The judge considered the unreported decision in National Bank of Kazakhstan v Bank of New York Mellon. There, Teare J declined to adjourn a trial fixed for the following week which could not be held face to face (because of Covid-19). He granted a short adjournment to facilitate a remote trial. Teare J took the approach that remote hearings would become the default position and this was necessary to ensure the continued provision of access to justice. He said that ‘the courts exist to resolve disputes’ and they should strive to continue to do so.
In Municipio De Mariana the judge set out the following criteria for considering whether a Covid-19 delay would be acceptable or whether there should be a remote hearing.
- Justice delayed is justice denied even when the delay results from a response to the currently prevailing circumstances.
- The extent to which disputes can be resolved fairly by way of remote hearings.
- The aim should be to achieve a remote hearing consistent with justice, rather than simply accepting that a just determination cannot be achieved in such a hearing.
- Whether a remote hearing can achieve a fair resolution will be case specific.
In considering these factors, the judge decided to delay the hearing to 20 July 2020 – a delay of merely 42 days (less than half the delay in all First-tier Tribunal cases).
In similar situations, judgments seem to negate delay. In Re Blackfriars Ltd [2020] EWHC 845 (Ch) the judge refused the adjournment saying there was ‘a clear and consistent message which emerges from the material I have referred to. The message is that as many hearings as possible should continue and they should do so remotely as long as that can be done safely.’
Where to next?
So, is the general stay in the First-tier Tribunal of 98 days commensurate with the proper administration of justice? First, the High Court is tending towards even complex trials being determined remotely. Second, the Health Protection (Coronavirus, Restrictions) (England) Regulations SI 2020/350, reg 6(2)(h) expressly includes attending legal proceedings as a reasonable excuse to leave home. If proceedings cannot be conducted remotely they could be conducted in person. The regulations clearly contemplate the need to maintain access to justice, and if clients are not content with a delay the right to access to justice should be put to the First-tier Tribunal which is likely to do everything it can to provide directions overriding the general stay and continue to progress such appeals.
Of course, initially, preparation such as the production of witness statements and bundles is likely to be more difficult without access to the usual places of work (although this too remains possible). But the High Court has indicated that this should not lead to excessive delays, and whether such an approach should be adopted should be considered both by those representing taxpayers and the First-tier Tribunal.
What can advisers do for clients involved in proceedings? The first step is to apply to the First-tier Tribunal for further directions in their case. The avoidance of delay, pursuant to the overriding objective – and where appropriate the EU charter, Art 47 and the ECHR, Art 6 – can be cited as a reason for directions being restarted. Ultimately, under EU and ECHR law, remedies may be available. Hopefully, it is unlikely that such an issue would ever need to be resolved before the ECHR or CJEU.
Any application should explain why delay is in contravention of the overriding objectives and other relevant rights. That should be all that is needed to ensure that proceedings continue despite these trying times. This really is essential to maintaining the sort of society in which we would want to live; no one should live under the additional stress of an unresolved dispute with the state.
Equally, if the state is entitled to tax, that should be paid without undue delay.
