UT (Tax & Chancery) UT/000097/2023 - [2025] UKUT 00034 (TCC)

In my view the Equality Issue is a “succinct, knock out point”. Both parties accept that it could be dealt with in a half day hearing and if the Authority is successful then it would dispose of that part of the Applicant’s case based on discrimination. The Applicant has said in correspondence that he will withdraw his case on discrimination if the Tribunal determines that the Authority is not a qualifications body.

There is no reason why a preliminary issue hearing could not be heard without delay. Neither party suggests that any evidence is required to determine the preliminary issue. It is a pure question of law. The parties will need to agree a bundle of documents and exchange skeleton arguments, but other than that no further directions would be required for the preliminary issue hearing.

The preliminary issue is a discrete issue and any finding on the issue would not have implications for other aspects of the reference.

I should take into account any risk that determination of the preliminary issue may prove to be irrelevant. The Authority contends that at the final hearing the Tribunal may find it unnecessary to determine whether the Authority is a qualifications body. If the Tribunal were to find that the Authority did not as a matter of fact discriminate against the Applicant, then no further finding would be necessary.

It appears to me, at this stage, that the panel hearing the reference would be unlikely to take such an approach. There would be no reason for the Tribunal to effectively side-step a relatively short legal point on which it had heard full argument.

It will still be necessary to have a substantive hearing of the reference, whatever the outcome of the preliminary issue. The parties have differing views as to how long the substantive hearing of the reference might take. At this stage, no evidence has been served in relation to the reference. It is difficult to estimate therefore how long the substantive hearing will take. The range of views is that the substantive reference will take between 5 and 7 days if there is no preliminary issue. This includes evidence and submissions on the Equality Issue. If the preliminary issue is determined in favour of the Applicant then it would still be necessary to have evidence and submissions on the Equality Issue. The time estimate would not change significantly. If the preliminary issue is determined in favour of the Authority, then evidence and submissions on the Equality Issue would not be required.

The evidence relevant to the Equality Issue could be wide ranging. The Authority does not admit that the two comparators identified by the Applicant were in materially the same position as the Applicant. It would therefore be necessary to hear evidence as to the situation of the comparators and the circumstances in which the Authority decided not to pursue enforcement action against the comparators. Mr Teraiya has said that he will seek to adduce evidence from the comparators and that he himself will give evidence on the Equality Issue. It would also be necessary to hear evidence from the Authority on the issue. The parties would make submissions on that evidence and on the significance of the evidence in terms of the enforcement action taken by the Authority.

The Authority says that the Equality Issue could be dealt with in the space of a day at the final hearing. The Applicant says that it would require at least 3 days. It seems to me that a day is very optimistic and 3 days is unduly pessimistic. I shall assume that a substantive hearing including the Equality Issue would take 6 days. A substantive hearing which did not need to determine the Equality Issue would take 4 days. There is therefore a potential saving of 2 days at the final hearing and a saving in terms of pre-trial preparation, in particular the preparation and service of witness statements and documentary evidence relevant to the Equality Issue.

I am satisfied on the material before me that if the preliminary issue is determined in favour of the Authority, the substantive hearing would be significantly shorter. Further, it would not be necessary for the parties to incur the expense of obtaining and serving evidence in relation to the Equality Issue. There would be a significant reduction in the costs of both parties in terms of pre-hearing preparation for the substantive hearing and of the reference itself. I do not accept the Authority’s submission that a preliminary issue would increase the parties’ costs. Whilst the overall costs might be increased if the preliminary issue is determined in favour of the Applicant, it does not appear to me that the increase would be significant or indeed disproportionate to the potential benefit of determining the preliminary issue.

I take into account that there is the potential for delay if I direct a preliminary issue. The losing party may seek to appeal the decision to the Court of Appeal. If that is the case, then steps could be taken to mitigate any delay. I have in mind that if the preliminary issue did go to an appeal, then the parties could be required to continue their preparation of all other issues in the reference. In particular, the service of witness statements on those issues. Such evidence will be necessary in any event. The reference would then be ready for a substantive hearing, subject only to the parties serving evidence on the Equality Issue if the preliminary issue were eventually determined in favour of the Applicant.

The Authority is rightly concerned about delay in proceedings. There has already been some delay in the progress of this reference. The pleadings were complete in March 2024, but since then the parties appear to have been in discussions about case management directions. No case management directions have been agreed and the question of a preliminary issue then arose.

Taking all these factors into account, including the overriding objective of dealing with cases fairly and justly, and adopting a cautious approach, I am satisfied that it is appropriate to direct the hearing of whether the Authority is a qualifications body as a preliminary issue.