© 2024 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Procedure.Tax
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Opposing party must be given chance to object before Tribunal makes decision requested by other party
"'[1] Rule one for any judge dealing with a case is that, before you make an order requested by one party, you must give the other party a chance to object. Sometimes a decision needs to be made before it is practicable to do this. Then you must do the next best thing, which is - if you make the order sought - to give the other party an opportunity to argue that the order should be set aside or varied. What is always unfair is to make a final order, only capable of correction on appeal, after hearing only from the party who wants you to make the order without allowing the other party to say why the order should not be made.
[2] This fundamental principle of procedural fairness may seem so obvious and elementary that it goes without saying..." (Potanina v. Potanin [2024] UKSC 3)
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FTT judges subject to same requirement to act fairly as all judges​
"[42] Having said that, I am satisfied that any suggestion that judges of the FTT are not subject to precisely the same requirement to act fairly as any other judge is misconceived. A judge of the FTT takes the same judicial oath as all judges, namely to "do right to all manner of people after the laws and usages of this Realm without fear or favour, affection or ill will". Implicit in the judicial oath is the concept of acting fairly. The FTT in the field of asylum and immigration inevitably will deal with appeals of huge significance to the parties. That underlines the requirement for proceedings in the FTT to be fair and demonstrably so." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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- Fact that judge is irritated by bad point is not an excuse
"[54] For all of the reasons I have set out, I am satisfied that the appeal in this case was subject to substantial unfairness such that the outcome cannot stand. The UT judge's view was that the problems in the hearing stemmed from Mr Hussain's misguided approach to the appellant's case. She thought that the FTT judge by turns was surprised and infuriated. That assessment of the FTT judge's reaction may be correct. Any judge may be irritated by what the judge considers to be a bad point. The judge is entitled to draw the advocate's attention to the view being taken by the court or tribunal. That is what the FTT judge did at the outset of the hearing in this case. There is no proper criticism to be made of that. What the judge is not entitled to do is thereafter unfairly to criticise the advocate or to engage in wider procedural unfairness. It is not for me to comment on Mr Hussain's strategy. Whether it was appropriate is not the point. What was not appropriate was for the judge to act as he did." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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Assessing fairness of hearing is a cumulative exercise
"[53] The assessment of the fairness of a hearing is a cumulative exercise. Mr Jafferji argued that, once any aspect of the hearing has been identified as being unfair, the entire process is undermined. His argument was that it is not possible to rescue the outcome of a hearing where there has been unfairness by showing that some of the hearing was fair. I disagree with that proposition for which there is no authority. Mr Jafferji relied on a passage in Abdi relating to a submission made in that case that the unfairness had no material impact on the outcome. That is a different issue. As was made clear elsewhere in Abdi, what has to be considered is the overall fairness of the hearing." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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Consider inviting trial judge to comment if no transcript of hearing
"[45]...In relation to a hearing which has not been recorded and so cannot be made the subject of a transcript, such as a hearing before the Immigration and Asylum Chamber of the First-tier Tribunal, it may well be appropriate to invite the judge to comment in writing and perhaps to provide his or her own note of the hearing: Sarabjeet Singh v Secretary of State for the Home Department [2016] EWCA Civ 492, [2016] 4 WLR 183, para 53. But where, as in the present case, there is a full transcript of the relevant part of the proceedings, it is less likely to be appropriate to invite the judge to comment. On the one hand, as I know from personal experience, the anxiety of a trial judge may be profound if he considers that what he perceives to be the baselessness of criticisms of him in a forthcoming appeal is likely to go unexposed. On the other hand, unlike a disciplinary inquiry into his conduct, the focus of the appeal is not - directly - upon him. It is upon the alleged breach of the appellant’s right to a fair trial both at common law and under article 6 of the European Convention. Most appeals involve criticism of trial judges in one way or another and no doubt most judges would welcome an opportunity to respond to it. Where would the line be drawn and, if the appellant were to take issue with the judge’s responses, would resolution of the appeal be even more problematical? The observation of Black LJ in the G case therefore raises a difficult issue. All that need here be said is that, where a transcript exists, it is not the present practice of appellate courts to invite the judge to comment; but that the absence of his ability to comment places upon them a requirement to analyse the evidence punctiliously." (Serafin v. Malkiewicz [2020] UKSC 23)
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Result of finding of unfair trial: retrial
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"[49] What order should flow from a conclusion that a trial was unfair? In logic the order has to be for a complete retrial. As Denning LJ said in the Jones case, cited in para 40 above, at p 67,
“No cause is lost until the judge has found it so; and he cannot find it without a fair trial, nor can we affirm it.”
Lord Reed observed during the hearing that a judgment which results from an unfair trial is written in water. An appellate court cannot seize even on parts of it and erect legal conclusions upon them." (Serafin v. Malkiewicz [2020] UKSC 23)
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"[57] I consider that the appeal should be allowed. The proper course now would be for the decisions of the FTT and the UT to be set aside. The matter should be remitted to the FTT to be reheard by a different FTT judge." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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Tribunal relying on point it identified without giving parties opportunity to address it​
See further N8: Tribunal role (facts)
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"[10] We should say at this stage that we were told that neither party before the FTT submitted that section 75A FA 2003 was engaged and the point was not raised by the FTT at the hearing. The parties only became aware that the FTT considered that section 75A was engaged when the Decision was released. Mr Ridgway was acting in person before the FTT and HMRC were represented by their own litigator. Before us, both parties have been represented by counsel. We are sure that the FTT was intending to be fair to the parties in raising section 75A as a point of law. However, in circumstances where a significant issue has not previously been canvassed, fairness and justice demands that the FTT should indicate to the parties that it considers the issue to be relevant. A letter to the parties raising the issue and inviting written submissions would suffice." (HMRC v. Ridgway [2024] UKUT 36 (TCC), Judges Cannan and Tilakapala)
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"[129] [HMRC] argued that the FTT’s decision on Issue 2 was actually a decision on HMRC’s “fairly represents” argument, and that the applicability of the conditions in section 307(3) was “undoubtedly a live issue” which Shinelock had an opportunity to address in submissions and evidence. We do not agree. The “fairly represents” argument was in issue, but the FTT decided it did not have to determine that argument, because it had identified “a more fundamental problem” resulting from the opening lines of section 307(3). That more fundamental problem was a new argument, conceived by the FTT itself, and it was procedurally unfair for the FTT to have denied Shinelock the opportunity to respond to it. As the FTT’s discussion of the new argument demonstrates, whether or not the Payment was “in respect of” Shinelock’s loan relationships was largely a question of fact, so it is possible that Shinelock would have produced evidence to rebut the argument if it had been given an adequate opportunity to do so.
[130] If we had not decided that the Payment was prevented from giving rise to a NTLRD because it was a distribution, we would have allowed Shinelock’s appeal in relation to Issue 2 and set aside the FTT’s decision on that issue as being vitiated by procedural unfairness. Given that Issue 2 turns largely on the facts, if it had been material to the outcome of Shinelock’s appeal given our decisions on the other issues in the appeal, we would have remitted Issue 2 for reconsideration by the FTT. We do not need to decide whether the FTT was correct in law in relation to the distinct issue which it considered arose from the use of the words “in respect of” in section 307(3), and we consider it appropriate to leave that question to a case where the point is dispositive." (Shinelock Limited v. HMRC [2023] UKUT 107 (TCC), Judge Thomas Scott and Judge Greenbank)
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- Argument on which party bore the burden of proof and produced evidence which HMRC were entitled to dispute
​"[133] However, we have concluded that, unlike Issue 2, Issue 1 [that the payment was not recognised in the relevant accounts] was sufficiently in play in the hearing before the FTT, and its consideration by the FTT should not have amounted to an ambush from Shinelock’s perspective. We reach that conclusion for two reasons.
[134] First, it was clear from Shinelock’s appeal and its skeleton argument that the Payment was claimed to give rise to a debit under the loan relationship provisions. The skeleton asserted that the Payment gave rise to such a debit, and in a section headed “The Loan Relationship Code” recorded that as a result there must be relevant loan relationships of Shinelock and the Payment must come within section 307(3) and be a loss or expense. Shinelock chose in framing its case to focus on those two requirements. However, while section 307(3) does operate to define further the debits and credits to be brought into account, section 307(2) sets out what is described in that subsection as “the general rule”, namely that the debits and credits to be brought into account are “those that are recognised in determining the company's profit or loss for the period in accordance with generally accepted accounting practice”. The recognition in Shinelock’s accounts for 2015, in accordance with GAAP, was therefore what Mr Ripley described as an “inherent element” of Shinelock’s argument. The burden of proof (to the normal civil standard) was on Shinelock in its appeal to establish that a NTLRD arose for the period. Shinelock should not, therefore, have been ambushed when the FTT probed the treatment in the 2015 accounts and tested whether the Payment satisfied the general rule in section 307(2).
[135] Second, we agree with Mr Ripley that Mr Ahmed’s evidence further operated to put the accounting issue in play. He discussed the actual and potential accounting entries which were or might have been made in relation to the transactions. The FTT set out in some detail at [81] what was explained by Mr Ahmed in his written and oral evidence in this regard. HMRC were entitled to take issue with that evidence, leaving the FTT in the position of having to consider the competing views. As the FTT recorded at [129]:
…Mr Vallis was clear that HMRC was not challenging whether or not the accounts of Shinelock were GAAP-compliant, this did not mean that HMRC accepted that there was a debit of £305,000 within s307(2) or, if there was such a debit, that such amount fairly represented Shinelock’s losses or expenses within s307(3). Indeed, Mr Vallis relied on the £305,000 not being shown in the accounts of Shinelock and challenged Mr Ahmed’s evidence as to the alternative accounting treatments (submitting that I should treat the evidence of Mr Ahmed on accounting with extreme care as he was not an independent expert witness).
[136] We therefore reject Shinelock’s argument that the FTT’s decision on Issue 2 was vitiated by procedural unfairness.
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[138] Stepping back, the FTT correctly directed itself in law as to the issues raised by Issue 1. In considering whether the statutory requirements were met on the facts found by the FTT, the FTT was in our view taking an approach to Shinelock’s case which was generous, in attempting to make the necessary findings by inference in the absence of the relevant accounts. Bearing in mind that the burden was on Shinelock to establish that a NTLRD was due, the FTT might have simply concluded that Shinelock had failed to discharge that burden. We do not think it can now be said to have erred in law by taking that more generous approach. What matters is the FTT’s finding, at [132], that this was a case where it was concluded in preparing the accounts that no entry needed to be made, so nothing was recorded as required by section 308(2). In those circumstances, the FTT reached the right decision on Issue 1." (Shinelock Limited v. HMRC [2023] UKUT 107 (TCC), Judge Thomas Scott and Judge Greenbank)
- No unfairness in relation to issues on which the parties might reasonably expect the FTT to reach a view
"[51] Whether a failure to alert an appellant to an issue upon which the FTT proposes to rely in making its decision amounts to procedural unfairness will depend on the circumstances of the particular case. Where a party might reasonably expect the FTT to reach a view on a particular point, there generally will be no unfairness in the FTT not drawing attention to that issue. Thus, where inconsistencies are used to support a decision, it will not normally be necessary for the FTT to draw the attention of the parties to those inconsistencies: SSHD v Maheshwaran [2002] EWCA Civ 173. In this case, I am satisfied that there was no reason for Mr Hussain to suspect that the FTT judge would come to a conclusion about the genuineness of the previous marriage which was contrary to that which had been reached in 2017. Fairness required that Mr Hussain be warned of the position so that he could address it. When the judge cross-examined the appellant he did not put it to him that the previous marriage was a sham. Nor did the judge alert Mr Hussain to his thinking so that Mr Hussain could consider re-examining the appellant on the circumstances of the break-up of his previous marriage. In my view the UT judge was wrong to find that there was no criticism to be made of the FTT judge in relation to this issue. Rather, the approach taken by the FTT judge was unfair." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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Authority not cited: court should give parties opportunity to make submissions if likely to be decisive
"[32] Unfortunately Russell v Northern Bank Development Corpn Ltd was not cited or referred to in the course of argument. It is a decision which has attracted a good deal of discussion as to its extent: see for instance [1992] CLJ 437 (Sealey), [1994] CLJ 343 (Ferran), (1993) 109 LQR 210 (Shapira), 553 (Davenport). If it were likely to be decisive of this appeal, it would not be satisfactory for the Court to decide the case without inviting further written submissions as to its significance." (Grays Timber Products Limited v. HMRC [2010] UKSC 4, Lord Walker)
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FTT cross-examining witness unfair
"[44] The UT judge said that the most problematic part of the hearing was when the FTT judge asked many questions of the appellant. She said that the questioning was unnecessary. In fact, it was wholly inappropriate. Mr Hussain was right when he described the exercise as cross-examination. The appeal was an adversarial process. The SSHD bore the onus of satisfying the FTT that the appellant's marriage was one of convenience. After the appellant had given his evidence in chief, he was cross-examined by Ms Mepstead. She asked a total of nine questions. She began with the issue of visits to Ms Ruse's home. That line of cross-examination ended when Mr Hussain produced the document on his mobile telephone. She then cross-examined on three points: whether the appellant had entered the UK illegally in 2017; why the name of a person who was said to live with the appellant and Ms Ruse was not on the tenancy agreement; why the appellant had not produced supporting evidence to show that the marriage was genuine. Although the FTT judge later described his questions as "clarificatory", there was nothing in the matters raised by Ms Mepstead that required clarification.
[45] The FTT judge's cross-examination occupied more time than any other part of the appellant's evidence. The initial questions related to the appellant's previous marriage. It had not been suggested by the SSHD that this marriage was questionable. That is hardly surprising since the FTT in 2017 found as a fact that the marriage was genuine. The appellant's witness statement did not deal with the previous marriage. Mr Hussain did not ask any questions about it in the hearing. Nor did Ms Mepstead. This was the context in which the FTT judge cross-examined on the topic. His questions could not be described as clarification. Having established that the appellant had not lived with his previous wife after his return to the UK, the judge left the point. He gave no indication as to his purpose in raising the issue. He did not ask whether it meant that the previous marriage was a sham.
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[47] Ms Anderson submitted that, in the jurisdiction of the FTT dealing with immigration cases, different approaches are taken. This court should not be concerned to establish an exercise in perfection. I accept that it would be unrealistic to expect perfection from any tribunal. But the cross-examination of the appellant was not a minor departure from ideal practice. In the context of this hearing, it demonstrated that the judge had entered the arena to an impermissible extent." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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- Challenging explanations for absence of witness
"[46] The questions put by the FTT judge in relation to witnesses whom the appellant could have called to give evidence were not neutral inquiries. They were not clarifying what the appellant had said. Rather, the judge asked in relation to more than one person why they had not been called to give evidence. When the appellant gave an explanation, the explanation was challenged. When Mr Hussain properly objected to the cross-examination, the judge was dismissive of Mr Hussain's representation of the appellant. The UT judge was correct to categorise this as "the most problematic part of the hearing". Had this been a minor episode in a lengthy hearing, the cross-examination, whilst wholly inappropriate, might not have been of critical significance. In fact, the hearing was relatively brief. The only live evidence came from the appellant. A substantial part of his evidence was taken up by cross-examination of him by the FTT judge." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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Criticising a representative
"[48] Moreover, when Mr Hussain quite properly drew the judge's attention to the fact that it was not appropriate for him to cross-examine the appellant, the judge roundly criticised Mr Hussain. He did so in a way which would have led the appellant to conclude that his case was not being given a fair crack of the whip. Unfairness in the treatment of a party's representative will impact on the fairness of the hearing. By way of example in R v Dean Cole [2008] EWCA Crim 3234 the Court of Appeal Criminal Division overturned a conviction where the judge had criticised counsel repeatedly. That was despite the evidence against the appellant being strong and in the context of a case where the judge was not the tribunal of fact. In this case Mr Hussain was unfairly criticised on more than one occasion during the relatively short hearing." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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Inconsistent treatment of representatives
"[49] The further instances of unfair treatment of Mr Hussain were in relation to the production of the document arising from the January 2021 visit and his submissions about the failure of the SSHD to disclose material relating to either visit. When Ms Mepstead sought leave to introduce the FTT decision of 2017, the judge said nothing by way of criticism even though it was material of some significance. In contrast, Mr Hussain was upbraided for failing to provide in advance a document which ought to have been in the hands of and disclosed by the SSHD. This was combined with an observation that the hearing had been delayed for Mr Hussain to look at a document (the previous FTT decision) which supposedly he should have seen before the hearing. There was no reason for Mr Hussain to have been in possession of a decision dating back to 2017. Later in the hearing Mr Hussain made proper submissions about the failure of the SSHD to disclose material. The UT judge considered that the submissions could have been made in a more neutral tone. She found that the FTT judge clearly found Mr Hussain's approach to be unhelpful. I consider that the substance of the submissions is not open to criticism. What can be criticised is the reaction of the FTT judge. When he accused Mr Hussain of making an allegation against Ms Mepstead personally, Mr Hussain's denial of the allegation was put politely. The judge's treatment of that was unsympathetic. His question about whether Mr Hussain as a legal professional had approached the case in an appropriate way was rhetorical. It can only have been seen by the appellant as expressing animus towards his case. The judge dealt with the matter unfairly." (Hima v. Secretary of State for the Home Department [2024] EWCA Civ 680)
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