Mobile Export 365 Ltd & Anor v Revenue and Customs

A tribunal should make a final decision on the admission or exclusion of evidence, ordinarily admitting relevant evidence unless there is a compelling reason to exclude it. Entering judgment as a sanction for procedural misconduct is a draconian last resort, justified only where the misconduct is serious and the resulting prejudice cannot otherwise be remedied. A tribunal may receive evidence de bene esse while determining admissibility, but should not postpone that determination longer than necessary. Procedural tactics involving unexpected applications or evidence are inconsistent with the CPR 1.1 overriding objective and the parties’ duty to assist the court.

Mobile Export 365 Ltd and Shelford IT Ltd appealed against an interlocutory decision of the VAT and Duties Tribunal refusing their application for judgment under Rules 19(4) and 19(5) of the Tribunal Rules. The application arose during proceedings concerning the denial of substantial VAT repayments and credits alleged to be connected with missing trader intra-community fraud.

The appellants complained principally about late disclosure and late service of evidence by HMRC. The Tribunal refused judgment and proposed directions concerning the admission of further evidence, consolidation and the conduct of the substantive appeals. The central issue was whether the Tribunal had erred in refusing the draconian sanction sought by the appellants.

1. Appeal dismissed. The Tribunal’s refusal to enter judgment for the appellants was plainly correct. Entering judgment in this way is a draconian order and a last resort. It requires serious misconduct and prejudice to the applicant which cannot otherwise be remedied. Those conditions were not satisfied.
2. The Tribunal had properly considered the procedural history and the parties’ respective defaults. Any delay was not attributable solely to HMRC. The appellants’ insistence on pursuing the appeal caused further delay and resulted in the loss of the available hearing slot.
3. The Tribunal should decide which appeals should be consolidated or heard together. Subject to countervailing considerations, related appeals should be heard together where practicable for reasons of expedition and economy.
4. Relevant evidence should ordinarily be admitted unless there is a compelling reason to exclude it. The Tribunal should make a final decision on admission or exclusion. It should not admit evidence provisionally on the basis that it may later reverse that decision. It may, where necessary, permit evidence to be read and referred to de bene esse pending a final ruling on admissibility.
5. The evidence of Mr Nicolas’s convictions for MTIC fraud had substantial potential significance. His role in the companies and transactions, and his failure to give evidence, could justify adverse inferences. The evidence should not be excluded as irrelevant at that stage.
6. Unexpected applications and procedural surprises are unacceptable in civil proceedings. They are repugnant to the overriding objective in CPR 1.1, where applicable, and to the parties’ duty to assist the court in furthering that objective.

• High Court (Chancery Division): The appeal against the VAT and Duties Tribunal’s interlocutory decision was dismissed.
• VAT and Duties Tribunal: The Tribunal’s decision, issued in draft on 20 June 2007 and finally on 26 June 2007, refused the appellants’ application to enter judgment and addressed proposed directions for evidence, disclosure and consolidation.