Q Ltd v Revenue And Customs

An interim injunction preserving a trader’s position pending a full application for relief may be granted under the American Cyanamid principles where the applicant needs a short period to assemble the evidence required for the substantially more stringent test governing an injunction pending an appeal to the First-tier Tribunal.

The full application requires compelling, independently supported evidence that the appeal would otherwise be ineffective, detailed evidence addressing the prospects of success and the attempts made to obtain expedition before the Tribunal. Interim relief at the preparatory stage is therefore a short holding exercise, not an application of the full test by instalments.

Q Ltd was an authorised warehousekeeper permitted to warehouse duty-suspended goods. HMRC revoked its authorisation, extending the effective date to 2 January 2019.

The applicant sought anonymity and a short injunction preserving the status quo while it prepared a substantive application for an injunction pending an appeal to the First-tier Tribunal. An earlier application had been made in the Administrative Court, but the judge held that the appropriate procedure was a free-standing injunction application in the Queen’s Bench Division.

The central issue was which test governed the short interim period before the court could determine the substantive application.

1. The application for a short interim injunction was granted. The injunction was intended only to preserve the applicant’s position while it assembled evidence for a full inter partes hearing.

2. For the substantive application pending an appeal to the First-tier Tribunal, the applicable approach was the stringent test identified in ABC Ltd and another v HMRC [2017] EWCA Civ 956, rather than the ordinary balance-of-convenience approach. The court should expect compelling evidence that the appeal would otherwise be ineffective, supported by documentary financial evidence and an independent professional assessment. The applicant must also provide a proper basis for its prospects of success, a detailed explanation of why HMRC’s decision was unreasonable, and evidence of attempts to obtain expedition before the Tribunal.

3. At the preliminary stage, however, the court applied the American Cyanamid Co v Ethicon Ltd [1975] A.C. 396 test. There was a serious issue to be tried, damages could not confidently be treated as an adequate remedy, and there was a real risk of irrecoverable harm if the authorisation took effect before the substantive application.

4. The relief had to be strictly temporary. Although the evidence suggested that the applicant might struggle to satisfy the ABC Ltd and another v HMRC test, the injunction was continued only long enough to permit preparation of the necessary evidence. Evidence was ordered to be served by 14 January 2019, with a full hearing in the week commencing 21 January 2019. Costs were reserved.

The judgment states that an application was initially made in the Administrative Court and was heard by Lang J on 20 December 2018. The judge held that the appropriate procedure was a free-standing injunction application in the Queen’s Bench Division.