Allen v HM Treasury & Anor

A claim seeking damages alone for breach of public-law or EU-law obligations is not required to be brought by judicial review where CPR 54.3(2) excludes such a claim from judicial-review proceedings. For a Francovich damages claim, the relevant inquiry is whether the particular provisions relied on were intended to entail the grant of rights to individuals. A directive may confer individual rights in some respects but not others. General provisions aimed at harmonisation, preventing abuse and avoiding distortion of competition do not, without sufficiently clear wording and purpose, confer a private right not to suffer market distortion. Where that first condition is not met, the remaining conditions need not be decided.

The claimant sought damages from HM Treasury and HMRC, alleging that the United Kingdom had failed to remove or restrict low value consignment relief for Channel Islands imports. He claimed that the resulting competition from VAT-free goods damaged his business.

The defendants argued that the claim should have been brought by judicial review and was out of time. They also disputed that the relevant VAT directives conferred an individual right capable of supporting a Francovich damages claim. The court determined the procedural issue and whether the first two Francovich conditions were satisfied.

1. Procedure. The claim was, in form and substance, for damages alone. Under CPR 54.3(2), judicial review may include a claim for damages but may not seek that remedy alone. The claim therefore did not have to be brought by judicial review. The defendants’ delay in raising the procedural objection would in any event have caused concern, but no further abuse issue required determination.
2. Applicable test. Francovich requires, in substance, that the rule infringed be intended to confer rights on individuals, that the content of those rights be identifiable, and that there be a causal link to the loss. The second formulation referred to in [1996] QB 404 also required a sufficiently serious breach. Only the first condition, with some overlap into the second, was decided.
3. Construction of the directives. The relevant provisions of the 1983 Directive were directed principally to harmonising VAT arrangements between Member States, while preventing evasion, avoidance, abuse and distortion of competition. Their general wording did not show an intention to confer on individuals a right not to be harmed by market distortion caused by the application of low value consignment relief. The relevant recital was not an operative provision, and Article 1 operated as a general qualification on the regime rather than as a sufficiently clear source of individual rights.
4. The conclusion was confined to the particular right asserted and the provisions relied on. It remained possible that other parts of the VAT legislation might confer enforceable individual rights in a different context. The first Francovich condition was not satisfied, and the second was also not satisfied. The action was dismissed.