Gurney (H.M.I.T.) v Petch

For a statutory appeal from Special Commissioners, the time limit in section 56(4) of the Taxes Management Act 1970 is mandatory where transmission of the Case Stated invokes the High Court’s jurisdiction. A court cannot extend or waive the limit without statutory power, and late transmission is not substantial compliance. The rule applies equally to taxpayer and Revenue. Timely transmission by the other party does not cure the default unless that party agrees to transmit on the appellant’s behalf. Absence of prejudice or delay in objecting cannot confer jurisdiction. A Case Stated is a statutory document, not a pleading, although the court retains an exceptional inherent power to strike one out for non-compliance or abuse.

The taxpayer appealed two orders made by Harman J on 5 November 1992. One order struck out his Case Stated because it had been transmitted to the High Court outside the 30-day period in section 56(4) of the Taxes Management Act 1970. The other refused his application to strike out the Inland Revenue’s Case Stated.

Both parties had challenged different parts of a Special Commissioner’s determination. The Commissioner prepared one composite Case Stated. The Revenue transmitted its copy in time, but the taxpayer transmitted his seven days late. The issues were whether the statutory time limit could be extended or relaxed, whether the Revenue’s transmission satisfied the taxpayer’s obligation, and whether the Revenue’s Case Stated could be struck out.

The Court of Appeal unanimously dismissed the taxpayer’s challenges and upheld both orders.

1. Mandatory and directory requirements. Whether statutory compliance is essential depends on legislative intention. The court considers the subject matter, the importance of the provision disregarded, and its relationship with the statute’s general object. The principles stated in Liverpool Borough Bank v Turner (1861) 30 LJ Ch 379 and Howard v Bodington (1877) 2 P.D. 203 were applied.
2. Section 56(4). Transmission of a Case Stated is the means by which the appellant invokes the High Court’s jurisdiction. The requirement to transmit it within 30 days of receipt is therefore mandatory. A time limit cannot be treated as merely directory where that would leave no effective time limit at all. Unless the statute gives a power to extend time, or another final limit can be derived from it, late transmission cannot be treated as compliance. Valleybright Ltd v Richardson (1987) 58 T.C. 290 and Brassington v Guthrie (1992) S.T.C. 47 were accepted as correctly decided, and the approach in Barker v Palmer (1881) 8 Q.B.D. 9 supported the conclusion.
3. Composite Case Stated. Each party requiring a Case Stated must transmit it, or obtain the other party’s agreement to transmit it on its behalf. The Revenue’s timely transmission of an identical composite document did not satisfy the taxpayer’s separate obligation.
4. Other grounds. The court could not extend jurisdiction because of lack of prejudice or delay in raising the objection. The principle in Pepper v Hart (1993) AC 593 was not appropriate where the absence of an extension power was plain. The taxpayer’s reliance on RSC Order 18 rule 19 was misconceived because a Case Stated is not a pleading. Although an exceptional inherent strike-out jurisdiction exists, it was not engaged by the Revenue’s Case Stated or its offer to withdraw the appeal.

The appeal was dismissed with costs.

• Court of Appeal (Civil Division) The taxpayer’s appeal against both orders was dismissed unanimously with costs: [1994] EWCA Civ 27.
• High Court Harman J struck out the taxpayer’s out-of-time Case Stated and refused to strike out the Inland Revenue’s Case Stated by orders dated 5 November 1992.