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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Customs & Excise v Anchor Foods Ltd (No.3) [1999] EWHC 834 (Ch) (08 July 1999) URL: http://www.bailii.org/ew/cases/EWHC/Ch/1999/834.html Cite as: [1999] EWHC 834 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Ch. 1999 No.000651 Royal Courts of Justice
		8th July 1999

1. MR. JUSTICE NEUBERGER: On 26th February this year I made an order in connection with an application by the Commissioners of Customs and Excise ("the Commissioners") to restrain Anchor Foods Ltd. ("AFL") from transferring effectively the whole of its business to another company. The Commissioners' claim against AFL, the financial claim on which the injunction sought was based, arose out of certain PCDNs (whose nature is briefly explained in my earlier judgment). Although I had some doubt about the Commissioners' case, which was based on the contention that the transfer was at very substantial undervalue, I thought it right to grant the order but, rather unusually, I also decided to require the Commissioners to give a cross-undertaking in damages.
2. Because I had such doubts, I included a rather unusual provision enabling, in effect, AFL and its accountants to persuade the Commissioners and their accountants that the proposed transfer of the business was not at an undervalue. The order that I made included an order for costs in the cause. As a result of discussions which subsequently took place between the parties' respective accountants, the Commissioners have decided, as I understand it, that they can no longer maintain the contention that the proposed transfer is at an undervalue.
3. There is no suggestion, very fairly, on behalf of AFL that the advice that the Commissioners were given was not in good faith. Views developed in something of a hurry and without full information can change as a result of further consideration of new facts and discussions and deeper thought. It is right and proper for accountants, like all other professionals, particularly when advising or giving evidence in connection with litigation, to state their honest views and, far from criticising the accountants advising the Commissioners, I consider that they appear to have acted entirely properly.
4. In the event, therefore, I am now invited to discharge the undertaking which was offered on behalf of AFL, and I do so. I am also asked by AFL to stand over any claim it might have on the Commissioners' cross-undertaking in damages. Provided that, when this matter comes next before me, an appropriate timetable is agreed, so that the matter is not left hanging in the air, I also do that.
5. There are, however, two other issues which arise. The case is due to come before me in eight days time, because AFL contends that the proceedings should be stayed. It argues that the proper way in which its liability, if any, should be determined under the PCDNs is before the tribunal and that these proceedings before the court are inappropriate and misconceived. That turns on the construction of the Community Customs Code and, in particular, I think, art.242.
6. If that argument is right in principle, then, subject to any other argument, I anticipate that a stay will be granted. If it is wrong, then the Commissioners wish to argue that, however unfair it may be suggested to be, they would be entitled to judgment for the whole amount claimed in the PCDNs on the basis that the terms of the Code entitle the Commissioners to recover the whole of the amount claimed in the PCDNs when they are issued, and that the application to the tribunal by AFL will, if successful or to the extent that it is successful, result in AFL's being entitled to a repayment.
7. At the moment it seems to me that that is something which, if it is possible to decide in eight days time, should be decided then. It is a point which is said by Mr. McCombe for the Commissioners to turn upon construction of the Code. To a substantial extent it is said to be a mirror image of AFL's case in support of the stay. If that is so, I see no good reason why it cannot and should not be determined at the same time. It involves abridging time but only by one or two days, and there has been no suggestion of prejudice to AFL as a result of abridging the time, provided the issue is limited to one of construction.
8. Mr. Lewis on behalf of AFL suggests that the Commissioners' case may involve having to go into the various defences of fact raised by AFL. I make it clear now, and indeed Mr. McCombe has made it clear, that if that is right, then it would be inappropriate for the application of the Commissioners to proceed in eight days time.
9. Given that it may turn out on further analysis that the argument on the Commissioners' case will be more complicated or more wide-ranging than Mr. McCombe has suggested, I should not want it to be thought that I am saying that I will hear it on Friday come what may. If it is simply the mirror image of AFL's case, then I cannot see any reason for not hearing it. Equally if it involves going into detailed facts, then, as Mr. McCombe himself accepts, there can be no question of dealing with it. If it turns out to be somewhere in the middle, then to some extent one will have to use commonsense, but I have to say in fairness to
10. Mr. Lewis that, if it involves significantly more than a mirror image of the stay application of AFL, then I would not anticipate letting it proceed in eight days.
11. That brings me to the other matter. Mr. Lewis argues that I should award AFL the costs of and occasioned by the preparation for, and evidence and argument at, the hearing resulting in the order of 26th February and the costs of the discussions that took place thereafter. In principle and subject to one point, I have very considerable sympathy with that submission. I quite accept that the Commissioners have acted in good faith. I quite accept that the advice they took was on the face of it sensible advice (and if, as I said, I was sceptical about it at the time, that does not make it unsensible) and it was itself given in good faith.
12. However, it seems to me that if a party, be it the Commissioners or anyone else, applies for a freezing order or any other order interfering with the commercial freedom of another organisation, then in the absence of very special circumstances it does so at its own risk. An award of costs is intended to be compensatory and is not normally punitive in its aim. If I were free to do so, I would grant AFL its costs of and occasioned by the interlocutory hearing and indeed the reasonable costs incurred in connection with the negotiations afterwards. It seems to me that those negotiations resulted from - and solely resulted from - the Commissioners' application. There would be no reason, particularly bearing in mind that AFL could not recover more than what was reasonable by way of costs, to exclude them. After all, what the Commissioners have avoided was a longer period of the injunction running, with the risk of a larger possible claim for damages, and a further hearing which would itself have involved considerable expenditure. Indeed that was the whole purpose of the rather unusual provision in the order.
13. The point taken by Mr. McCombe is that I ordered costs in cause and I cannot go behind that. Two arguments are put the other way by Mr. Lewis.
14. The first is that I have a wide discretion on costs, in particular in light of CPR rule 44.3, and that I can, as it were, revisit my order on costs which is pre-eminently a matter of discretion. Attractive though that argument is, I must reject it. It seems to me that when the court makes an order, only in the most exceptional circumstances such as those involving fraud or the slip rule, could the court revisit the order even where it is for costs. The court cannot act as an appellate court in respect of its own orders. It is not even as if the circumstances in which I am asked to revisit the order were not contemplated at the time when the order for costs was made. The order for costs was included in an order which reflected the possibility of the parties talking with a view to the undertaking (in lieu of the injunction I would have granted) being discharged. That is precisely what has happened.
15. The other course suggested by Mr. Lewis is that I revisit the question of costs in the sense of ordering the costs of these proceedings up to a certain date to be AFL's in any event thereby sweeping up the costs in cause. I am tempted by that, and I suggest that his application be renewed on Friday week. The reason I do not think that it is right to deal with it today is that I simply have insufficient information to satisfy myself that I can fairly make such an order for costs today.
16. If the stay is granted on Friday week, I anticipate (although, of course, it will be subject to argument) that AFL would have a powerful case for all its costs, including the costs in cause. If I grant summary judgment in favour of the Commissioners or refuse any relief to either party Friday week, then it may still well be possible for AFL to persuade me then to make an order for costs up to a certain date. However, in order to make a proper and fair order for costs it will be necessary for me to know, for instance, if I made an order for costs in favour of AFL, what costs to exclude. It may, for instance, be right to exclude merely the costs of the writ and statement of claim, if any. Or there may be other costs which Mr. McCombe can fairly say should be excluded from any order for costs in favour of AFL.
17. Accordingly, if Mr. Lewis still wishes me to make an application for costs, I would be sympathetic in principle to considering it on Friday week. If the parties wish to suggest that certain costs are excluded or included in any order
18. I make, then they should come with brief but clear evidence or argument, given to the other side in advance, as to what they say should be done. But I think it would be unfair and might be unjust on the Commissioners if I were to accede to that course today without their having had proper notice of it.
19. I do not think that there would be the same risk of injustice, as at present advised, if I were to reconsider that application on Friday week.
20. MR. LEWIS: I am obliged to your Lordship for that. As I understand it, then the order would be that the undertakings should be discharged and that costs be reserved?
21. MR. JUSTICE NEUBERGER: Well, the costs of today be reserved and your application for costs----
22. MR. LEWIS: Be adjourned to Friday?
23. MR. JUSTICE NEUBERGER: Yes. I mean, really - yes. Or you can make a fresh application as to how the costs up to and including next Friday are dealt with on Friday. If you win your stay, then you might be pushing at an open door for all your costs to date.
24. MR. LEWIS: Indeed.
25. MR. JUSTICE NEUBERGER: I say "may", because I do not know what Mr. McCombe will say.
26. MR. LEWIS: Indeed. I am obliged to your Lordship for that indication. Only one other matter arises and that is that your Lordship effectively indicated that the summary judgment should only be proceeded with on Friday week if my learned friend was right as to what the summary judgment involved.
27. MR. JUSTICE NEUBERGER: They would fit the summary judgment.
28. MR. LEWIS: The further basis of the summary judgment. In other words, that it is a point of law alone - a point of construction alone and not of fact. I would be anxious that my client should not be under an obligation to serve evidence in response to whatever evidence my learned friend's clients have served, when that evidence is not going to advance matters one way or the other.
29. MR. JUSTICE NEUBERGER: I do not know what his evidence consists of, but if I understand his case correctly, it would simply involve saying, "These are the PCDNs we served. We are entitled to money on them". But it may be a lot more. Even if it is a lot more, it may just be for convenience that it is a witness statement. But I see your point.
30. MR. LEWIS: It clearly would not be right for us to have to set out what we say our defences are to an O.14 application if it extends beyond the question of the law.
31. MR. McCOMBE: My Lord, we entirely agree with that. What our witness statement - I am sorry. I hoped my learned friend would have seen it before he came in, but it did not quite work. The summary judgment application does not go to the full extent of the PCDNs included in the writ.
32. MR. JUSTICE NEUBERGER: I see.
33. MR. McCOMBE: There are other administrative matters that need to be taken into account, and the reduced claim is for, I think, £125 million. What we have done in the witness statement is to illustrate why we have confined the claim as far as we have.
34. MR. JUSTICE NEUBERGER: But really all you are----
35. MR. McCOMBE: There is nothing to say, "Well, this is butter and therefore it is dutiable at this rate".
36. MR. JUSTICE NEUBERGER: Basically your claim is, "Here are the PCDNs. Here are the regulations. End of story"?
37. MR. McCOMBE: Yes. That is it. But, my Lord, illustrating why we have confined it in the way we have.
38. MR. JUSTICE NEUBERGER: So the evidence really explains why you are asking for so little rather than so much?
39. MR. McCOMBE: Well, yes.
40. MR. JUSTICE NEUBERGER: I am sure that that is not the way Mr. Lewis sees it!
41. MR. McCOMBE: I do not want to steal my learned friend's thunder again when he sees the evidence. There may be other things that he wants to say about procedures. As we see it, all we have done is said, "Here are the PCDNs, and this is why we are not asking for the full amount of them summarily but only a more modified claim".
42. MR. JUSTICE NEUBERGER: What I am minded to say, Mr. Lewis, is if the evidence goes further than that, you do not have to answer it. And no adverse inferences will be made from it.
43. MR. LEWIS: I am obliged.
44. MR. JUSTICE NEUBERGER: The Commissioners' case, as I understand it, is simply, "We have put in evidence to explain why we are claiming less than on our case we might be seeking to claim". It may be that you will say, "Look, even on your case, you should be claiming less", and it may be that on Friday week all I should do, if I am in the Commissioners' favour is to give a judgment in principle and leave the parties to discuss the quantum or something like that.
45. MR. LEWIS: Indeed.
46. MR. JUSTICE NEUBERGER: But I think it is right that you should not be under pressure to put in evidence.
47. MR. LEWIS: I am obliged for that indication.
48. MR. JUSTICE NEUBERGER: Good. Or it may be that you cay say, "We will accept £100 million but even on the Commissioners' case we have got a defence for the balance" or something.
49. MR. LEWIS: Indeed.
50. MR. JUSTICE NEUBERGER: I think it unlikely - I know that you are sceptical about the whole of the Commissioners' case, but what I am saying is that if they are right, you may say, "Well, we would accept £100 million", and if contrary to your expectations I am with the Commissioners it may be right for me to say, "They are right in principle" and I will give them an interim order for that or something like that.
51. MR. LEWIS: Indeed.
52. MR. JUSTICE NEUBERGER: But by the sound of it you do not have to worry much about the evidence.
53. MR. LEWIS: I am obliged both to my learned friend and to your Lordship for those indications.
54. MR. JUSTICE NEUBERGER: I have not gone too far in what I have said from your point of view?
55. MR. McCOMBE: No, my Lord, I do not believe so.
56. MR. JUSTICE NEUBERGER: Thank you. How long do you estimate it will take on Friday?
57. MR. McCOMBE: My Lord, I have put in for this application a skeleton of some five pages. The skeleton that I anticipate drafting for the stay will be also considerably longer than my learned friend's might be in the light of the fact that he has not served any skeleton at all in relation to today. The basis on which my learned friend makes the case means that it is a short one, but the analysis that we put on it means that it cannot be dealt with shortly. In other words, if my learned friend were right, then the matter would be dealt with very quickly, no doubt. On the basis of the arguments that we put it takes more time to deal with the various different authorities and the various different points of law. So our estimate is that it will exceed half a day, and it will go into the second half of the day, but we will deal with it in one day.
58. MR. JUSTICE NEUBERGER: Right. If I want to start at 9.30, because I may have something to put in right at the end of the day - (after a brief discussion with the Associate): I thought I had another matter which was down - I have another matter which is down possibly for what is called "a good hour". I suspect that means a very bad hour. If I try to put that in at ten and give you a not before eleven marking?
59. MR. McCOMBE: We would be happy to start at 9.30 or to do as your Lordship wishes.
60. MR. JUSTICE NEUBERGER: If you have a choice, would you rather start early or finish late?
61. MR. McCOMBE: Start early in my case. I do not know what my learned friend would----
62. MR. LEWIS: It sounds like a good idea at this range.
63. MR. JUSTICE NEUBERGER: Let me see what can be arranged through the usual channels, but I will dispose of it on Friday. Would you agree with three to four hours? Does that sound unreal?
64. MR. LEWIS: No, it does not, my Lord.
65. MR. JUSTICE NEUBERGER: I look forward to seeing you.