Jersey Choice Limited v Her Majesty's Treasury

Abuse of process is determined by a broad, merits-based assessment of all the circumstances. The fact that an issue could have been raised in earlier proceedings does not automatically bar later proceedings, particularly where the claimant has not previously litigated and lost the issue and seeks to vindicate private rights.

A charge imposed on importation is not necessarily a customs charge having equivalent effect. Its substance, legislative source, purpose and relationship with a general system of internal taxation must be examined. VAT measures made under the EU VAT legislation fall within the fiscal regime. EU general principles, including equal treatment, fiscal neutrality and proportionality, do not protect direct imports into a Member State from territories outside the EU VAT regime.

Jersey Choice Limited claimed damages from Her Majesty's Treasury for the alleged breach of EU law by the removal of low value consignment relief from mail-order goods imported from the Channel Islands under section 199(3) of the Finance Act 2012.

The High Court struck out the claim as having no reasonable prospect of success and as an abuse of process: [2020] EWHC 3258 (Ch). The appeal concerned whether the claim was abusive, whether the charge was governed by the EU customs or tax regime, and whether EU principles of equality, fiscal neutrality and proportionality could be invoked in relation to direct imports from Jersey.

1. Abuse of process. The Court of Appeal set aside the finding of abuse. Applying the broad, merits-based approach in Johnson v Gore Wood & Co [2002] 2 AC 1, the court had to consider all the public and private interests and the circumstances as a whole. The constitutional importance of access to a court was material. It was rare to bar a person who had not previously litigated and lost the issue. The Jersey judicial review was public, inter-governmental litigation, whereas the present claim was a private damages claim brought by a non-party within the ordinary limitation period. The alleged breach was continuing and had continuing financial consequences. JCL's witness evidence in the earlier proceedings did not make it a party or give it control of those proceedings. The claim was therefore not abusive.
2. Customs or tax regime. The classification of a charge depends on substance, including its purpose, legislative source and whether it forms part of a general system of internal taxation. The fact that a charge is imposed on importation or because goods cross a frontier is not decisive. Gaston Schul Douane Expediteur BV [1982] ECR 1409 and Weigel [2004] ECR I-5005 supported that distinction. Article 23 of the Directive 2009/13/EC was a tax provision. LVCR was removed to address tax abuse, and the resulting charge was VAT. The fiscal regime therefore applied, rather than the absolute prohibitions on customs duties and equivalent charges in Articles 28 and 30 TFEU.
3. General principles. Equal treatment, fiscal neutrality and proportionality can in principle support justiciable rights and Francovich damages. However, those principles do not govern direct imports from third countries or territories outside the EU VAT regime. The Channel Islands were third territories under Article 6(1) of the Directive 2006/112/EC. The authorities concerning intra-EU trade did not require equal treatment between Jersey and other such territories. The same geographical limitation defeated the proportionality challenge.
4. Disposition. Although the abuse finding was rejected, the substantive claim could not succeed. The appeal was dismissed.

1. Court of Appeal (Civil Division). The court rejected the abuse of process finding but dismissed the appeal because the customs and general-principles arguments could not succeed: [2021] EWCA Civ 1941 .
2. High Court. The claim was struck out as disclosing no reasonable grounds and as an abuse of process: [2020] EWHC 3258 (Ch) .