In Cider of Sweden Ltd v HMRC (Ernst & Young LLP (Third Party))  UKFTT 76 (TC), the First-tier Tribunal (“FTT”) has issued a significant, but narrow decision regarding third-party access to pleadings filed in proceedings before the FTT. (In this note, “pleadings” refers to notices of appeal; grounds of appeal; statements of case; and any further and better particulars in respect of any such documents.)
Consistently with the approach of the Courts and Tribunals when considering similar questions in the past, the FTT approached this as an application of the principle of open justice. Previously, the Tax Tribunals have held that open justice will usually permit third parties to access:
- pleadings (and skeleton arguments, which are not “records of the court” and in respect of which different considerations apply) filed in the FTT after the FTT has held a hearing and issued a decision: Hastings Insurance Services Ltd v HMRC (KPMG LLP (Third Party))  UKFTT 478 (TC) (“Hastings“); and
- pleadings filed in the Upper Tribunal (“UT”) before the UT has held a hearing: Aria Technology Ltd v HMRC (Situation Publishing Ltd (Third Party))  UKUT 111 (TCC) (“Aria“).
However, the question of third-party access to pleadings in the FTT before a hearing had not been addressed until now.
The main proceedings between Cider of Sweden (“COS”) and HMRC were not material to the FTT’s judgment in the application, but in broad terms, COS complained that the UK’s “Post Duty Point Dilution” regime gave rise to unlawful discrimination against it as an EU drinks manufacturer and therefore sought damages in the High Court and a refund of excise duty in the FTT.
Ernst & Young (“EY”) acted for a number of clients who were affected by the same regime and therefore interested in the outcome of the actions brought by COS. EY obtained copies of the statements of case in COS’s High Court action (pursuant to CPR Rule 5.4C(1)) which referred to the FTT appeal. EY therefore applied to the FTT to request copies of both parties’ pleadings. The FTT was originally minded to grant EY’s request, but afforded the parties the opportunity to object. Both parties did object and so the application went to an oral hearing.
EY argued that the Tribunals in Hastings and Aria had held that the Tribunal’s practice in respect of third-party access should be aligned with that of the High Court. This followed from their statements that CPR 5.4C(1) (which applies in the High Court but not the Tribunals) is itself simply an expression of the principle of open justice. The FTT should therefore apply the principle of open justice by following CPR 5.4(1), which entitles third-parties to access pleadings on request and puts the onus on the parties to apply for the third-party to be denied access.
COS’s and HMRC’s arguments
COS and HMRC argued that: (a) the main proceedings were at too early a stage for the open justice principle to apply; (b) even if the open justice principle could apply, EY had not shown how it would be advanced by allowing EY to access the documents; and (c) EY had not demonstrated that they had a legitimate interest in obtaining the pleadings.
The FTT’s decision
The FTT dismissed EY’s application on the grounds that it considered that providing access at the early stage that the main proceedings were at would not further any identified purpose of the open justice principle.
The FTT considered the decisions in Hastings and Aria and drew from them the principles that:
- the FTT had an inherent jurisdiction to provide access to documents
- the question for the FTT was whether, in accordance with the principle of open justice, that jurisdiction should be exercised; and
- CPR 5.4C did not apply to the FTT even by analogy, and it could at most provide “helpful guidance” as to the approach they should take.
As to the usefulness of CPR 5.4C in this case, the FTT expressly rejected EY’s argument that CPR 5.4C established that open justice always requires the provision of pleadings (subject to the specific safeguards contained in CPR 5.4C). The FTT held that the crucial point was that the FTT is different from the courts in that it is “a tribunal of first instance in which tax disputes between the citizen and the state are resolved“. The FTT considered that this required it to apply a higher level of confidentiality to FTT proceedings in order to protect the privacy of the citizen’s tax affairs, and to apply the principle of open justice in that context.
The FTT distinguished the decision in Hastings on the basis that it concerned access to documents after a hearing had been held and a decision issued. The decision in Aria was distinguished as relating to appeals to the Upper Tribunal, which almost invariably will have been the subject of a published decision in the FTT; issues of confidentiality therefore do not arise in the UT in the same way as in the FTT.
Given these conclusions, the FTT proceeded to consider the wider principle of open justice and its application to this case. The FTT’s starting point was the Supreme Court’s decision in Cape Intermediate Holdings Ltd v Dring  UKSC 38 (“Dring“). The FTT drew a number of general principles from Dring, the most material of may be summarised as:
- A court or tribunal must consider how to exercise its inherent jurisdiction to grant access to documents in the light of the open justice principle.
- What open justice requires in any individual case is to be judged by reference to whether granting such access would advance the purposes of the principle.
- The overall purpose of open justice is “to enable the public to understand and scrutinise the justice system of which the courts [and tribunals] are the administrators“.
- There are two main facets to this overall purpose:
- “to enable public scrutiny of the way in which courts (and tribunals) decide cases – to hold the judges to account for the decisions they make and to enable the public to have confidence that they are doing their job properly“; and
- “to enable the public to understand how the justice system works and why decisions are taken. For this they have to be in a position to understand the issues and the evidence adduced in support of the parties’ cases”.
- It is for the person seeking access to explain why he seeks it and how granting it will advance the principle of open justice.
- The person seeking access must show a “legitimate interest” in obtaining access.
- The open justice considerations in each case must be balanced against any risk of harm that disclosure may cause to the judicial process or to the legitimate interests of others.
- The court or tribunal should also consider the practicalities and proportionality of granting the request.
Application of the general principles
The FTT reached its decision to dismiss EY’s application by considering the overall purpose of the principle of open justice drawn from Dring, by reference to the two specific facets of the purpose given there. The FTT concluded that providing the pleadings to EY at such an early stage of the proceedings would not further EY’s ability to understand or scrutinise the justice system administered by the Tribunal (as opposed to enabling them to understand the legal arguments being deployed by the parties). Specifically, the FTT held that, at a stage where there had neither been any hearing or judicial decision regarding the issues dealt with in the pleadings, nor were they imminent:
- the purpose of enabling public scrutiny of the Tribunal’s decision making process could not be advanced by granting access to the Pleadings, as there is no place for such scrutiny; and
- the purposes of enabling public understanding of how the justice system works and why decisions are taken were equally inapplicable – before any substantive judicial involvement or effective hearing, all EY could gain was an understanding of the legal basis upon which the claim was being advanced and defended, but not anything that would enable them to monitor how the system of justice in the Tribunal worked.
The FTT emphasised that, if an application were made at a later stage when the substantive hearing had happened or (possibly) was about to happen, the same principles might well lead to the opposite conclusion.
Although it was not necessary for it to do so, the FTT went on to consider whether EY had a legitimate interest in accessing the pleadings. The FTT held (consistently with previous authorities) that a wish to understand the legal arguments being advanced was a legitimate interest. However, it considered that this would be outweighed by the interests of taxpayer confidentiality and the parties’ wishes to preserve the confidentiality of the detailed lines of their legal arguments in the appeal.
The FTT’s approach in Cider of Sweden is disappointingly narrow and, arguably, inconsistent with previous authorities.
- First, the FTT’s limitation of its consideration to the two facets of open justice identified in Dring appears to ignore the Supreme Court’s statement there that there may well be other relevant considerations. Such a consideration may be found in R (Corner House Research) v BAE Systems  EWHC 246 (Admin) in which Collins J stated that a purpose of the rules in CPR 5.4C was “to ensure that the public could look at and see why claims have been brought”. This was cited by EY but the FTT rejected its relevance. However, with respect, the FTT’s grounds for doing so appear open to challenge.
- Second, the FTT’s distinction between proceedings in the FTT and the courts is somewhat unpersuasive. Although the FTT is indeed a forum of first instance for disputes between citizen and state, the High Court is equally so in the case of judicial reviews. Indeed, Corner House was a claim for judicial review and the High Court concluded there that it was even more important that there be public access to such claims which are more likely to relate to matters of genuine public concern than litigation between individuals. Judicial review claims are also equally likely to involve matters that are as confidential to the citizen as their tax affairs.
- Third, the FTT’s view that the “justice system” which must be understood and open to scrutiny comprises solely the courts and tribunals whilst hearing cases and making decisions appears to be very narrow. The FTT did not explain why the courts’ and tribunals’ administrative functions fall outside of this system, and why cases should not be considered to have entered the justice system as soon as they are brought. Third-parties may very well have an interest in cases that have entered the system but not yet been seen by a judge, and in understanding how the parts of the justice system that handle cases at the early stages work, in ways that directly relate to the administration of justice.
Following this decision by the FTT, the position appears to be that a third-party may usually obtain access to pleadings in an FTT appeal once there has been a hearing and, possibly, when a hearing is imminent, but not before that.
However, it should be noted that this application only required consideration at an oral hearing due to the parties to the main proceedings objecting to such access being given. It is therefore entirely possible for a third-party to obtain access to pleadings at any stage by approaching the parties directly (without any recourse to the Tribunal) or if the parties do not object to a Tribunal application. In our experience, the former route can be successful where there is an existing relationship between the third party and the appellant, or where the third party’s interest in obtaining access is consistent the appellant’s and/or HMRC’s own interests.