Davies & Anor v Revenue and Customs

An appeal against an order adjourning proceedings in the exercise of judicial discretion will succeed only if the judge applied wrong legal principles or the decision was plainly wrong. When related judicial review and specialist tax proceedings may affect one another, the court should consider whether their sequencing could prejudice the judicial review. Where the proposed appeal raises a point of potential general application and assistance from both parties is required, a renewed permission application may be adjourned to a full court. If permission is granted, the full court may proceed immediately to the substantive appeal.

The applicants faced a claim by HM Revenue and Customs that they were ordinarily resident in the United Kingdom during the tax year ending 5 April 2002 and liable for capital gains tax. They appealed to the Special Commissioners against the residence determination and separately sought permission for judicial review, alleging that reliance on Revenue guidance IR20 would make the Revenue’s position an abuse of power or maladministration.

Stanley Burnton J ordered that the judicial review application be heard after the Special Commissioners’ appeal. On a renewed application for permission to appeal, the applicants argued that the proceedings should proceed in the opposite order or in parallel. They also argued that the tax appeal might prejudice the judicial review proceedings. The central issue was whether the judge had wrongly exercised his discretion in sequencing the proceedings.

1. Disposition. The renewed application for permission to appeal was not finally granted or refused. It was adjourned to the full court. If permission was refused, the matter would end; if permission was granted, the full court was directed to hear the substantive appeal immediately.
2. Threshold for challenging a discretionary order. The order adjourning the judicial review proceedings had been made in the exercise of the judge’s discretion. An appeal could succeed only if the judge had proceeded on wrong legal principles or the decision was plainly wrong. Mummery LJ had already refused permission on the papers because he was not satisfied that the proposed appeal had a real prospect of success.
3. Sequencing and possible prejudice. The judge had considered that the Special Commissioners were the appropriate body to determine residence, possessed the necessary expertise, and might resolve the dispute so that judicial review would become unnecessary. However, the applicants’ concern that an adverse determination by the Special Commissioners could prejudice, prevent, or require amendment of the judicial review proceedings had not apparently been considered. That issue required assistance from the Revenue and could be relevant to the proper exercise of the discretion.
4. Full-court consideration. Although Mummery LJ was not prepared to grant permission, he was not sufficiently confident that permission should simply be refused. The unusual potential general application of the issue, together with the need for both parties to address the possible prejudice, justified placing the renewed application before the full court.

• Court of Appeal (Civil Division): On 11 April 2008, the renewed application for permission to appeal was adjourned to the full court. Mummery LJ had refused permission on the papers on 30 January 2008, but directed that the full court determine permission and, if granted, hear the substantive appeal immediately.
• High Court, Queen’s Bench Division: Stanley Burnton J ordered on 27 November 2007 that the judicial review application be heard after the applicants’ appeal to the Special Commissioners.