UT (Tax & Chancery) UT/2022/000100 and UT/2022/000107 - [2024] UKUT 00156 (TCC)

If I had decided that the Tribunal had jurisdiction to consider the proposed amendments relating to the alternative allegation of negligence, I would have needed to consider whether, in exercise of my discretion, I should permit the Authority to amend its statements of case in that regard.

In exercising its power under rule 5(3)(c) of the Rules to permit a party to amend a document, the Tribunal should have regard to the overriding objective as set out in rule 2, asking whether it would be fair and just to permit the Authority to add the allegation. It should also have regard to the relevant factors set out by Judge Herrington in Bittar v Financial Conduct Authority, [2017] UKUT 82 (TCC) at [53] to [55], which are:

As far as the first factor referred to in Bittar is concerned, it has not been suggested by either Applicant that the pleading is bad in law or that the pleaded facts and circumstances could not support a finding of lack of due skill and care. However, as I indicated at [81], a lot of the language of the Decision Notices pleads a level of conscious wrongdoing which is hard to equate with a distinct allegation of lack of due skill and care. That notwithstanding and not without some reservations, I am satisfied that the Authority would have a more than fanciful prospect of success in establishing a lack of due skill and care based on its proposed amended statements of case if it failed to establish recklessness/lack of integrity.

As regards the timing of the amendment, if I had allowed the statements of case to be amended now (and ignoring the complicating feature of the Authority’s appeal in Bluecrest for the moment, but see more on this at [71]-[73] below), there would have been plenty of time (even with a substantive hearing scheduled for early 2025) for the Applicants to respond to an alternative analysis of the same facts and circumstances which have been pleaded for some time. The underlying facts and circumstances which the Authority says support the allegation made by the amendment are the same as those before the RDC and are already pleaded in the statements of case.

As to whether there was a good reason why the relevant allegations were not pleaded earlier, the reason given by the Authority is that the amendments are a response to the decision in Bluecrest, which has made them aware of the need to be open and specific about their allegations. As we have already noted, the Authority’s policy (Mr Temple tells us) before that decision would have been not to plead negligence as an alternative to recklessness on the same facts. I have noted the comment in Markou, which suggests that this is not a sound approach, but the assumption of the Tribunal in Carrimjee (that negligence would automatically be considered as an alternative to recklessness) might appear to lend some support the Authority’s practice. The Authority’s explanation of why this allegation was not previously raised is understandable, if not in line with best practice as articulated in the authorities.

I accept that the proposed amendment is set out with appropriate detail and clarity. In my view, there can be no suggestion that the Applicants are unable adequately to respond to the proposed case.

Looking at the factors in the round, I would have concluded that the Applicants would not have been prejudiced by the proposed amendments, to introduce the alternative allegation of negligence, and would have allowed the Authority to make them if I had concluded that the Tribunal had jurisdiction to do that.