Total Network SL v. United Kingdom (Her Majesty's Revenue and Customs), (2008) 385 N.R. 310 (HL)

• Case Date: March 12, 2008
• Jurisdiction: Canada (Federal)
• Citations: (2008), 385 N.R. 310 (HL)

Total Network SL v. U.K. (2008), 385 N.R. 310 (HL)

MLB headnote and full text

Temp. Cite: [2009] N.R. TBEd. JA.052

Total Network SL (a company incorporated in Spain) (original respondents and cross-appellants) v. Her Majesty's Revenue and Customs (suing as Commissioners of Customs and Excise) (original appellants and cross-respondents)

([2008] UKHL 19)

Indexed As: Total Network SL v. United Kingdom (Her Majesty's Revenue and Customs)

House of Lords

London, England

Lord Hope of Craighead, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Lord Mance and Lord Neuberger of Abbotsbury

March 12, 2008.

Summary:

At issue on this appeal was: (1) whether the Commissioners of Customs and Excise (U.K.) were entitled to resort to a private law remedy, a civil action for damages for the tort of unlawful means conspiracy, in order to recoup value added tax (VAT), which would otherwise be irrecoverable, and (2) if so, whether it was an essential requirement of the tort of unlawful means conspiracy that the conduct which was said to amount to the unlawful means had to give rise to a separate action in tort against at least one of the conspirators.

The House of Lords, per Lord Scott of Foscote, Lord Walker of Gestingthorpe and Lord Mance, held that the Commissioners could maintain a civil action for damages for the tort of unlawful means conspiracy. Lord Hope of Craighead and Lord Neuberger of Abottsbury disagreed on this issue, holding that the comprehensive statutory scheme of the Value Added Tax Act barred a civil action. The House unanimously held that it was not an essential requirement of the tort of unlawful means conspiracy that the conduct which was said to amount to the unlawful means be separately actionable civilly. Rather criminal conduct at common law or by statute could constitute unlawful means in unlawful means conspiracy.

Torts - Topic 5088

Interference with economic relations - Conspiracy - Conspiracy to defraud (incl. unlawful means conspiracy) - Total Network, a Spanish company, had a bank account in the United Kingdom - The Commissioners of Customs and Excise (U.K.) claimed that Total was liable to them in damages at common law for conspiracy in sums equivalent to amounts of value added tax (VAT) which the Commissioners said they had lost as a result of thirteen "carousel" frauds (i.e., frauds involving a dishonest application of the VAT system) - A preliminary issue arose as to whether the Commissioners could maintain a civil cause of action in damages at common law based on the tort of unlawful means conspiracy as a means of recovering VAT from a person who was under no liability to pay that tax under the Value Added Tax Act - The House of Lords, per Lord Scott of Foscote, Lord Walker of Gestingthorpe and Lord Mance, held that there was nothing in the statutory scheme of the Value Added Tax Act (VATA) that precluded the Commissioners' pursuit of a common law claim for conspiracy against Total Network - See paragraphs 58 to 61, 105 to 110 and 126 to 139 - Lord Hope of Craighead and LordNeuberger of Abbotsbury opined that the claim was barred by the comprehensive statutory scheme in the VATA - See paragraphs 21 to 33 and 173 to 212.

Torts - Topic 5088

Interference with economic relations - Conspiracy - Conspiracy to defraud (incl. unlawful means conspiracy) - The Commissioners of Customs and Excise (U.K.) claimed that Total Network, a Spanish company, was liable to them in damages at common law for conspiracy in sums equivalent to amounts of value added tax (VAT) which the Commissioners said they had lost as a result of thirteen "carousel" frauds (i.e., frauds involving a circular and dishonest application of the VAT system to avoid creating tax liability) - A preliminary issue arose as to whether it was an essential requirement of the tort of unlawful means conspiracy that the conduct which was said to amount to the unlawful means had to give rise to a separate action in tort against at least one of the conspirators - The House of Lords held that it was not necessary that the unlawful act relied upon be actionable civilly, rather criminal conduct at common law or by statute could constitute unlawful means in unlawful means conspiracy whether or not that conduct would be actionable as some other tort - Total would therefore be liable if the conspiracies could be proved - See paragraphs 34 to 46, 56, 57, 62 to 104, 112 to 125 and 213 to 321.

Cases Noticed:

Gosling v. Veley (1850), 12 Q.B. 328, refd to. [para. 22].

Attorney General v. Wilts United Dairies Ltd. (1921), 37 T.L.R. 884 (C.A.), affd. (1992), 38 T.L.R. 781 (H.L.), refd to. [para. 22].

Inland Revenue Commissioners v. Hambrook, [1956] 2 Q.B. 641, refd to. [para. 27].

Lonrho Ltd. v. Shell Petroleum Co. (No. 2), [1982] A.C. 173 (H.L.), refd to. [paras. 28, 66, 116, 218].

Autologic Holdings plc et al. v. United Kingdom (Commissioners of Inland Revenue), [2005] N.R. Uned. 117; [2006] 1 A.C. 118; [2005] UKHL 54, refd to. [paras. 30, 130, 206].

Powell v. Boladz, [1998] Lloyd's Rep. Med. 116 (C.A.), refd to. [paras. 34, 56, 65, 217].

Marrinan v. Vibart, [1963] 1 Q.B. 234, refd to. [paras. 35, 103].

Hargreaves v. Bretherton, [1959] 1 Q.B. 45, refd to. [para. 35].

Lonrho plc v. Fayed et al., [1992] 1 A.C. 448; 127 N.R. 295 (H.L.), refd to. [paras. 35, 81, 116, 218].

Lonrho Ltd. v. Shell Petroleum Co. (No. 2), [1981] Com. L.R. 74; The Times, 7 March 1981 (C.A.), refd to. [para. 36].

Crofter Hand Woven Harris Tweed Co. v. Veitch, [1942] A.C. 435 (H.L.), refd to. [paras. 41, 56, 66, 116, 229].

Crofter Hand Woven Harris Tweed Co. v. Veitch, [1940] S.C. 141 (Ct. Sess.), refd to. [para. 41].

Allen v. Flood, [1898] A.C. 1 (H.L.), refd to. [paras. 41, 71].

Sorrell v. Smith, [1925] A.C. 700 (H.L.), refd to. [paras. 41, 69].

Douglas v. Hello! Ltd. - see OBG Ltd. et al. v. Allan et al.

Mainstream Properties Ltd. v. Young - see OBG Ltd. et al. v. Allan et al.

OBG Ltd. et al. v. Allan et al., [2007] 2 W.L.R. 920; 369 N.R. 66; [2007] UKHL 21, refd to. [paras. 43, 67, 119, 220].

Quinn v. Leathem, [1901] A.C. 495 (H.L.), refd to. [paras. 43, 72].

Snook v. London and West Riding Investments Ltd., [1967] 2 Q.B. 786, refd to. [para. 50].

Optigen Ltd. v. Customs and Excise Commissioners, [2006] Ch. 218 (Eur. C.J.), refd to. [paras. 55, 163].

Mogul Steamship Co. v. McGregor, Gow & Co. (1888), 21 Q.B.D. 544, refd to. [para. 66].

Mogul Steamship Co. v. McGregor, Gow & Co. (1889), 23 Q.B.D. 598 (C.A.), refd to. [para. 67].

Mogul Steamship Co. v. McGregor, Gow & Co., [1892] A.C. 25 (H.L.), refd to. [para. 68].

R. v. Parnell (1881), 14 Cox C.C. 508, refd to. [para. 78].

Metall und Rohstoff AG v. Donaldson Lufkin & Jenrette Inc., [1990] 1 Q.B. 391 (C.A.), refd to. [paras. 81, 118].

Mbasogo v. Logo Ltd., [2005] E.W.H.C. 2034 (Q.B.), refd to. [paras. 86, 218].

Mbasogo v. Logo Ltd., [2006] E.W.C.A. Civ. 1370; [2007] 2 W.L.R. 1062 (C.A.), refd to. [para. 86].

Associated British Ports v. Transport & General Workers' Union, [1989] 1 W.L.R. 939 (H.L.), refd to. [para. 87].

Credit Lyonnais Bank Nederland NV v. Export Credit Guarantee Department, [1998] 1 Lloyd's Rep. 19 (C.A.), refd to. [para. 87].

Yukong Line Ltd. of Korea v. Rendsburg Investments Corp. of Liberia, [1998] 1 W.L.R. 294, refd to. [para. 87].

Michaels v. Taylor Woodrow Developments Ltd., [2001] Ch. 493, refd to. [para. 87].

Surzur Overseas Ltd. v. Koros, [1999] 2 Lloyd's Rep. 611 (C.A.), refd to. [para. 88].

R. v. Clarence (1888), 22 Q.B.D. 23, refd to. [para. 91].

Island Records Ltd., Ex parte, [1978] Ch. 122, refd to. [para. 92].

Rookes v. Barnard, [1964] A.C. 1129 (H.L.), refd to. [paras. 93, 123].

Daily Mirror Newspapers Ltd. v. Gardner, [1968] 2 Q.B. 762, refd to. [para. 93].

Daily Mirror Newspapers Ltd. v. Gardner (1968), 84 L.Q.R. 310, refd to. [para. 93].

Kuwait Oil Tanker Co. SAK v. Al Bader, [2000] 2 All E.R. (Comm.) 271, refd to. [para. 94].

Cutler v. Wandsworth Stadium Ltd., [1949] A.C. 398, refd to. [para. 96].

RCA Corp. v. Pollard, [1983] Ch. 135, refd to. [para. 99].

Isaac Oren v. Red Box Toy Factory, [1999] F.S.R. 785, refd to. [para. 99].

Kearney v. Lloyd (1889), 26 L.R. Ir. 268, refd to. [para. 102].

Inland Revenue Commissioners v. Goldblatt, [1972] Ch. 498, refd to. [paras. 107, 129, 183].

Ramsay (W.T.) Ltd. v. Inland Revenue Commissioners, [1982] A.C. 300, refd to. [paras. 108, 207].

R. v. Mavji, [1987] 2 All E.R. 758, refd to. [para. 113].

R. v. Bainbridge (1783), 22 St. Tr. 1, refd to. [para. 121].

R. v. Hudson, [1956] 2 Q.B. 252, refd to. [para. 121].

Lumley v. Gye (1853), 2 E. & B. 216 (Q.B.), refd to. [para. 123].

Grupo Torras SA v. Al-Sabah, [1999] C.L.C. 1,469, refd to. [para. 123].

Henderson et al. v. Merrett Syndicates Ltd. et al. - see Arbuthnott et al. v. Fagan and Feltrim Underwriting Agencies Ltd. et al.

Arbuthnott et al. v. Fagan and Feltrim Underwriting Agencies Ltd. et al., [1995] 2 A.C. 145; 173 N.R. 173 (H.L.), refd to. [para. 123].

Deutsche Morgan Grenfell Group plc v. United Kingdom (Commissioners of Inland Revenue) et al., [2006] N.R. Uned. 190; [2007] 1 A.C. 558; [2006] UKHL 49, refd to. [paras. 130, 174].

Marcic v. Thames Water Utilities Ltd., [2003] N.R. Uned. 263; [2004] 2 A.C. 42; [2003] UKHL 66, refd to. [para. 130].

Woolwich Building Society v. Commissioners of Inland Revenue, [1993] A.C. 70; 145 N.R. 163 (H.L.), refd to. [para. 130].

Johnson v. Unisys Ltd., [2003] 1 A.C. 518; 268 N.R. 273 (H.L.), refd to. [paras. 130, 208].

Commissioners of Customs and Excise v. Federation of Technological Industries, [2006] 3 C.M.L.R. 11 (C.J.), refd to. [para. 132].

Halifax plc v. Customs and Excise Commissioners, [2006] Ch. 387 (Eur. C.J.), refd to. [para. 164].

Shiloh Spinners Ltd. v. Harding, [1973] A.C. 691, refd to. [para. 174].

Maddison v. Alderson (1883), 8 App. Cas. 467, refd to. [para. 203].

MacNiven v. Westmoreland Investments Ltd., [2003] 1 A.C. 311, refd to. [para. 207].

Authors and Works Noticed:

Carty, Hazel, An Analysis of the Economic Torts (2001), pp. 3 [para. 26]; 271 [para. 124]; 274 [para. 43]; 278 [para. 124].

Clerk, John F., and Lindsell, The Law of Torts (17th Ed. 1995), para. 23-80 [para. 35].

Clerk, John F., and Lindsell, The Law of Torts (19th Ed. 2006), pp. 1615 to 1620 [para. 35]; paras. 1-39 [paras. 179, 184]; 25-001 [para. 224].

Eekelaar, John, The Conspiracy Tangle (1990), 106 L.Q.R. 223, generally [para. 102].

Heuston, R.F.V., Legal Prosopography (1986), 102 L.Q.R. 90, generally [para. 71].

McGregor, Harvey, Damages (17th Ed. 2003), para. 1-021 [para. 180].

Sales, Philip, and Stilitz, Daniel, Intentional Infliction of Harm by Unlawful Means (1999), 115 L.Q.R. 411, pp. 420 to 425 [para. 121]; 435 [para. 102].

Stevens, Robert, Torts and Rights (2007), pp. 249 [para. 225]; 297 [para. 224].

Weir, Tony, A Casebook on Tort (10th Ed. 2004), p. 17 [para. 26].

Thomson, Joe, An island legacy - The delict of conspiracy, Comparative and Historical Essays in Scots Law (1992), p. 148 [para. 44].

Counsel:

John Martin, Q.C., and Philip Coppel (Instructed by Solicitor Her Majesty's Revenue and Customs), for the appellants;

Charles Flint, Q.C., and Tom Weisselberg (Instructed by Byrne and Partners), for the respondents.

Agents:

[Not disclosed.]

This appeal was heard on November 26-27, 2007, by Lord Hope of Craighead, Lord Scott of Foscote, Lord Walker of Gestingthorpe, Lord Mance and Lord Neuberger of Abbotsbury, of the House of Lords. The decision of the House was delivered on March 12, 2008, when the following opinions were filed:

Lord Hope of Craighead - see paragraphs 1 to 46;

Lord Scott of Foscote - see paragraphs 47 to 61;

Lord Walker of Gestingthorpe - see paragraphs 62 to 110;

Lord Mance - see paragraphs 111 to 139;

Lord Neuberger of Abbotsbury - see paragraphs 140 to 231.