Skatteforvaltningen v Solo Capital Partners LLP (in special administration) and others
[2023] UKSC 40
Skatteforvaltningen v MCML Limited
2 February 2024
[2024] EWHC 148 (Comm)
High Court
A company (SKAT) sued another (ED&F Man) for wrongly getting tax refunds. The first lawsuit failed on a technicality. SKAT tried again, claiming fraud. ED&F Man tried to stop the new lawsuit. The judge said SKAT should have mentioned the fraud earlier, but it didn't hurt ED&F Man, so the new lawsuit can continue. It's important to investigate serious fraud, even if it means dealing with some procedural missteps.
Key Facts
- •SKAT (Danish Customs and Tax Administration) initially sued ED&F Man and others in 2018 for negligent misrepresentation related to tax refunds (Original Proceedings).
- •The Original Proceedings were consolidated and involved preliminary issues, including a 'Revenue Rule' trial which initially dismissed SKAT's claims.
- •The Court of Appeal overturned the dismissal, except for the claim against ED&F Man due to SKAT's failure to appeal the Revenue Rule decision on the negligence claim.
- •SKAT then issued fresh proceedings (2022 Proceedings) against ED&F Man alone, this time alleging deceit (fraud).
- •ED&F Man applied to strike out the 2022 Proceedings based on issue estoppel and Henderson v Henderson abuse of process.
- •The 2022 Proceedings concern over 400 Tax Vouchers and approximately £70 million in tax refunds.
Legal Principles
Issue estoppel prevents relitigating an issue already decided between the same parties, even if in a different cause of action, provided the issue is identical.
Thoday v Thoday [1964] P 181; Arnold v National Westminster Bank Plc (No.1) [1991] 2 AC 93; New Brunswick Railway Company v British and French Trust Corporation Ltd [1939] AC 1; Re Lehman Brothers Holdings Plc [2023] EWHC 3056 (Ch)
Henderson v Henderson abuse of process prevents a claim if it could and should have been raised in earlier proceedings. This is a merits-based assessment considering public and private interests, including efficiency and avoiding harassment.
Henderson v Henderson (1843) 3 Hare 100; Johnson v Gore-Wood [2002] 2 AC 1; Dexter Ltd v Vlieland-Boddy [2003] EWCA Civ 14; Aldi Stores Ltd v WSP Group plc [2007] EWCA Civ 1260; Orji v Nagra [2023] EWCA Civ 1289; Playboy Club v Banca Nazionale [2018] EWCA Civ 2025
Outcomes
ED&F Man's application to strike out the 2022 Proceedings was dismissed.
Issue estoppel failed because the causes of action (negligent misrepresentation vs. deceit) differed, despite the Revenue Rule issue being similar. While SKAT could have raised the fraud claim earlier (particularly at the Court of Appeal hearing or the May 2022 CMC), it did not cause ED&F Man actual prejudice and striking out the claim would be unjust given the serious nature of the allegations.
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