Skatteforvaltningen v MCML Limited

Issue estoppel requires the later issue to be precisely identical to an issue expressly decided, or necessarily and fundamentally determined, in the earlier proceedings. Similarity, parity of reasoning, inference or deduction is insufficient.

Henderson v Henderson abuse of process requires a broad, merits-based assessment. The applicant must establish that the claimant could and should have raised the matter earlier, and ordinarily must show unjust harassment, oppression, unfairness or comparable prejudice. Breach of case-management guidance may be highly relevant, but does not automatically justify striking out a genuine claim. Striking out remains a last resort.

SKAT had brought earlier proceedings concerning Danish withholding-tax refunds. Its claim against ED&F Man was pleaded in negligent misrepresentation and was struck out by Andrew Baker J under the foreign revenue rule. The Court of Appeal reversed the revenue-rule decision generally, but ED&F Man remained bound by the unappealed conclusion because SKAT had not pursued the relevant ground against it.

SKAT later issued fresh proceedings alleging that ED&F Man had acted fraudulently and claiming damages for deceit. ED&F Man applied to strike out the new claim, relying on issue estoppel and Henderson v Henderson abuse of process. The central questions were whether the revenue-rule issue had already been decided between the parties and whether SKAT should have advanced its fraud case in the earlier proceedings.

1. Issue estoppel. The application failed on this ground. The earlier issue was whether SKAT’s claims against ED&F Man, as alleged, were within the revenue rule. Those claims were founded on negligent misrepresentation. The new proceedings were founded on deceit. Although the issues were similar, the causes of action and pleaded facts were not identical. It was possible to infer how the earlier courts might have decided the fraud claim, but issue estoppel cannot be enlarged by inference, deduction or argument.

2. Henderson v Henderson. The claimant could not have pleaded fraud by the Revenue Rule trial in March 2021 because it had not yet practically analysed the relevant disclosure. It could and should, however, have raised its intention to plead fraud with the Court of Appeal in January 2022 and, more importantly, with Andrew Baker J at the May 2022 case-management conference. This breached the guidance in Aldi Stores Ltd v WSP Group plc.

3. The breach did not itself establish abuse. The court had to undertake the broad, iterative and merits-based assessment required by Johnson v Gore-Wood. The applicant bore the burden throughout. The relevant considerations included whether the matter could and should have been raised earlier, whether the later proceedings caused unjust harassment, oppression, unfairness or prejudice, the interests of finality, and the efficient use of court resources.

4. ED&F Man suffered no material prejudice. The revenue-rule issues would not require relitigation, and the fresh claim would probably take no greater time or cost than it would have taken had it been brought within the original case-managed proceedings. The delay adversely affected SKAT and court efficiency, but did not make the new proceedings abusive.

5. It would be unjust to deprive SKAT of a trial of a substantial and potentially sound fraud claim. The claim was therefore not struck out. SKAT’s failure to comply with the case-management guidance would nevertheless be highly significant on costs.

The judgment was a first-instance decision on ED&F Man’s application to strike out the fresh deceit claim.