Davies & Anor vRevenue and Customs

A specialist fact-finding appeal will not automatically precede judicial review. Although the usual practice is to establish relevant facts first, judicial review should proceed first where the earlier proceedings could effectively pre-empt or significantly obstruct it. A finding that tax is due may create such an obstacle where legitimate expectation arguments depend on whether the Revenue can lawfully refrain from collecting that tax. The court deciding the sequence should not determine the merits of the judicial review or undertake factual findings inappropriate to that procedure.

The appellants disputed their United Kingdom residence for the 2001/2002 tax year. They had appealed the Revenue’s residence determination to the Special Commissioners and separately sought judicial review, relying on legitimate expectation arising from the Revenue’s guidance document IR20.

Stanley Burnton J adjourned the judicial review proceedings pending the Special Commissioners’ decision, without deciding whether permission should be granted. The appellants appealed against that sequencing decision. The central issue was whether the Special Commissioners’ determination might pre-empt or materially obstruct the judicial review claim.

1. Disposition. Hughes LJ granted permission to appeal and allowed the appeal. The order adjourning the judicial review application was set aside, and the application for permission to seek judicial review was restored for hearing in the Administrative Court. Lloyd LJ and Keene LJ agreed. The decision was unanimous.
2. The ordinary practice is to postpone judicial review until relevant facts have been found by an available fact-finding tribunal. That practice is not decisive where allowing the other proceedings to go first would effectively pre-empt or significantly obstruct the judicial review claim.
3. The legitimate expectation claim raised a serious sequencing difficulty. Authorities including R v Inland Revenue Commissioners ex parte MFK Underwriting Agents Ltd [1990] 1 WLR 1545 and R v Inland Revenue Commissioners ex parte Preston [1985] 1 AC 835 showed that the Revenue has discretionary management powers, which may include forgoing particular tax in the interests of collecting the generality efficiently. That did not make it possible to conclude confidently that the Revenue could lawfully decline to collect tax which the Special Commissioners had effectively ruled was due. A determination of residence could therefore render the legitimate expectation claim illegitimate or create substantial obstacles to it.
4. The existence of disputed primary facts did not justify postponement by itself. Findings about when full-time employment began might assist the judicial review, but a finding on whether the appellants had left the United Kingdom could pre-empt the central issue of residence. The Administrative Court was not to determine facts or hear oral evidence in the proposed proceedings, and the order gave no indication on the merits or on whether permission should be granted.
5. Keene LJ agreed that the issue was not straightforward and that there was a real risk that the Special Commissioners’ decision would be treated as ruling out subsequent judicial review based on legitimate expectation.

• Court of Appeal (Civil Division) [2008] EWCA Civ 933: permission to appeal granted and appeal allowed; the adjournment order was set aside and the judicial review permission application restored.
• High Court of Justice, Queen’s Bench Division: Stanley Burnton J adjourned the judicial review application pending the appellants’ appeal to the Special Commissioners, without deciding whether permission should be granted.
• Special Commissioners: the appellants had lodged an appeal concerning their United Kingdom residence; no determination by the Special Commissioners was stated.