Test Claimants In Class 8 of the CFC & Dividend Group Litigation v Revenue And Customs

Permission to appeal may be granted where the proposed appeal has a real prospect of success or there is some other good reason for it to be heard. A court deciding permission should determine the application on the law and facts presently available, rather than defer it because a higher court may later decide a related issue. Decisions in group litigation generally bind the group, but that does not prevent a party raising an argument where the earlier decision did not determine the point and materially different facts may produce a different outcome. Permission may be granted on the narrower basis of preserving an arguable issue for consideration by a higher court.

The judgment concerned HMRC’s application for permission to appeal the decision on Issue 4, concerning the date of constructive discovery for limitation purposes. The claimants already had permission to appeal that issue. HMRC sought to argue that the relevant House of Lords decision, DMG, was wrongly decided and that limitation should instead run when each claimant had good reason to believe that a mistake had been made.

The issue was whether HMRC was entitled to raise that argument despite the earlier Portfolio Dividends litigation and the parties’ conduct of the Class 8 group litigation.

1. Permission test. The applicable test was whether the proposed appeal had a real prospect of success or whether there was some other good reason for an appeal to be heard.
2. Effect of group litigation. The purpose of the group litigation order under Civil Procedure Rules 1998, rule 19.12, was that decisions in the test litigation would bind the claimants, subject to materially different facts in particular Class 8 cases. That principle did not establish that every limitation argument had already been determined.
3. Earlier Portfolio Dividends decisions. The limitation issue in the Portfolio Dividends litigation had been decided on a different basis. The decisions established that Prudential’s claims were not barred by limitation and that HMRC could not raise new points on appeal without having pleaded them. They did not decide the distinct argument that DMG was wrongly decided.
4. Approach to the pending higher-court issue. It was undesirable to adjourn the application merely because the Supreme Court might later grant permission in an appeal concerning FII CA 2. The application had to be decided on the facts and law as they stood.
5. Disposition. HMRC was granted permission to appeal Issue 4 on the basis that there was some other good reason for an appeal to be heard. The permission was limited to the argument that DMG was wrongly decided and that limitation began when the relevant claimant had good reason to believe that a mistake had been made. Permission was not granted on the basis that HMRC had demonstrated a real prospect of success.

The judgment concerned an application for permission to appeal this court’s decision on Issue 4. The claimants already had permission to appeal that issue. HMRC’s application was granted on the limited basis that there was some other good reason for an appeal to be heard.