Skatteforvaltningen v MCML Ltd

An issue estoppel may arise from a determination of law, fact, or mixed law and fact, provided that the determination was fundamental to the earlier decision. The relevant issue need not concern identical documents where the earlier determination, reached after full argument, applies to the same defined factual situation.

A later claim cannot evade such an estoppel merely by pleading a different cause of action or alleging fraud rather than negligence. The Henderson v Henderson doctrine remains a broad, merits-based assessment. A failure to comply with case-management guidance does not itself make later proceedings abusive where the defendant has suffered no material prejudice and justice favours adjudication.

SKAT brought fresh proceedings against MCML, formerly ED&F Man Capital Markets Ltd, alleging deceit in connection with withholding-tax refund applications supported by tax vouchers. Earlier proceedings between the parties, which alleged negligent misrepresentation, had been dismissed under the foreign revenue rule. SKAT did not pursue the relevant appeal ground against MCML.

Bright J dismissed MCML’s application to strike out the fresh claim for issue estoppel or Henderson v Henderson abuse: [2024] EWHC 148 (Comm). MCML appealed. The central questions were whether the previous foreign-revenue-rule determination barred the fraud claim, including claims based on five additional vouchers, and whether SKAT’s failure to raise fraud earlier made the new proceedings abusive.

1. Appeal allowed. By the majority of Newey and Popplewell LJJ, the current proceedings were barred in their entirety by issue estoppel and were to be struck out. Nugee LJ would have limited the estoppel to claims based on vouchers pleaded in the earlier proceedings.
2. A determination can found an issue estoppel only if it was fundamental to the earlier outcome, but it may concern law, fact, or mixed law and fact. The previous determination, after full argument, that private-law claims to recover withholding-tax refunds paid on misleading applications fell within the foreign revenue rule was fundamental to the earlier dismissal. It was not a merely abstract proposition of law.
3. That determination governed all the fresh claims. The five additional vouchers did not create a legally distinct issue. The claim remained one for recovery of refunds paid on applications conveying misinformation. The distinction between deceit and negligent misrepresentation did not avoid the estoppel. There were no special circumstances that made it unjust to apply it. The position differed from New Brunswick, which concerned a default judgment and separate contractual instruments.
4. Abuse of process. The appeal on this ground was dismissed. Applying the broad, merits-based approach in Johnson v Gore-Wood, Bright J was entitled to find that SKAT could first plead fraud only in January 2022 and that its later failure to inform the courts clearly of its intention to do so caused no material prejudice or oppression to MCML. Although SKAT had breached the guidance in Aldi, that did not require a strike-out. The balance included the efficient use of court resources, the substantial fraud allegation and the absence of practical prejudice.

1. Court of Appeal (Civil Division): Allowed MCML’s appeal on issue estoppel and struck out the proceedings in their entirety. Dismissed the appeal on Henderson v Henderson abuse: [2025] EWCA Civ 371.
2. Commercial Court: Bright J dismissed MCML’s strike-out application, holding that there was neither issue estoppel nor abuse of process: [2024] EWHC 148 (Comm).