DEF Ltd, R (On the Application Of) v Revenue & Customs

On an application for an ABC injunction, the claimant must show a high degree of probability that refusal of relief will render its appeal nugatory or illusory, that the appeal is arguable and has reasonable prospects of success, and that the balance of convenience favours relief. The high-degree requirement concerns predicted future harm. It does not impose a more-likely-than-not threshold where the consequence is grave business failure. The court should not conduct a mini-trial on the underlying appeal. Public interest in enforcing the law must be balanced against the claimant’s right to an effective remedy. The absence of interim-relief powers in the First-tier Tribunal does not prevent the High Court granting relief in aid of the appeal.

The claimant operated a warehouse business approved to store duty-suspended alcohol. HMRC withdrew that approval. The claimant appealed to the First-tier Tribunal, but the appeal was unlikely to be heard before the withdrawal caused serious commercial harm. The Tribunal could not grant interim relief, and HMRC refused temporary reinstatement.

The claimant sought an injunction suspending HMRC’s decision pending determination of the appeal. The issues were whether the claimant faced a sufficiently probable risk of collapse, whether its factual and European-law grounds were arguable with reasonable prospects of success, and where the balance of convenience lay.

1. Relief granted. The claim succeeded under the ABC principles. HMRC’s decision withdrawing approval was suspended until the First-tier Tribunal decided the claimant’s appeal. The order recorded the claimant’s undertaking to comply with the first interim condition imposed by HMRC.
2. The court applied the three-stage ABC approach. The claimant had to establish, first, a high degree of probability that refusal of relief would render the appeal nugatory or illusory by causing business collapse; secondly, an arguable appeal with reasonable prospects of success and no susceptibility to strike-out under rule 8(3)(c); and thirdly, a balance of convenience favouring relief.
3. The first stage required an assessment of the likelihood of a future event. It did not require proof that collapse was more likely than not. Applying Re S-B Children [2009] UKSC 17, the gravity of the predicted harm could justify preventive action at a probability materially below 50 per cent. The evidence established a significant risk, amounting to the required high degree of probability, that the claimant would become insolvent and collapse.
4. At the second stage, the court was not to conduct a mini-trial. The claimant’s factual challenges were plainly arguable, and its European-law grounds were also arguable with reasonable prospects of success. The test was materially similar to, and in any event more stringent than, the ordinary American Cyanamid v Ethicon [1975] AC 396 approach.
5. The public interest in enforcement of the law was relevant, but it was not decisive. It had to be balanced against the claimant’s right to an effective remedy against an allegedly unreasonable public-authority decision. The absence of interim-relief jurisdiction in the Tribunal did not establish that Parliament intended businesses to face collapse through appellate delay.
6. The judge followed the approach of Slade J in Q v HMRC, although the approved transcript was unavailable, because no powerful reason existed to depart from a decision of a judge of coordinate jurisdiction. The same conclusion was reached under the ordinary American Cyanamid principles. If judicial review had been the only route, interim relief would likewise have been granted and the substantive hearing expedited.

First-instance judicial review proceedings in the Administrative Court. The judgment records no earlier decision in the same litigation.