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You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Serpes v Revenue & Customs [2008] UKVAT V20906 (22 December 2008) URL: http://www.bailii.org/uk/cases/UKVAT/2008/V20906.html Cite as: [2008] UKVAT V20906

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20906

COSTS—Litigant in person—Claim for costs in respect of Appellant's own time and work expended in pursuing the appeal—Whether litigant in person entitled to such costs—"Costs recoverable at common law"—Whether such costs are now recoverable at common law—Meaning of common law—VAT Trib Rules 1986, r 29

LONDON TRIBUNAL CENTRE

MELINA SERPES Appellant

- and -

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: ANGUS NICOL (Chairman)

Sitting in London on 18 and 19 September 2008

Mr Eamon McNicholas for the Appellant

Miss Judith Ayling for the Respondents

© CROWN COPYRIGHT 2008


 


DECISION

1. This is the continuation, and perhaps the last stage, of a costs application by the Appellant, she having succeeded in her appeal against a number of assessments to VAT raised and applications for security made by the Customs and Excise Commissioners, as they then were, now Commissioners of Revenue and Customs. This case, the serial number of which is LON/2000/1392, has been running for a very long time. Perhaps "running" is not an apt word, since it has in fact been in a state of stagnation since an initial hearing before me in 2002. On many occasions hearing dates were fixed, but no further hearing after that first one actually took place, because on each occasion the Appellant herself (whether in person or by a representative) was unable to attend, on almost all, if not all, occasions because of a matter concerning her health. From time to time the Appellant was represented, by Kingston Smith, accountants, and by Omnis, tax consultants, also by Marion Lonsdale of counsel, and most recently, and in this hearing, by Eamon McNicholas of counsel. There have also been hiati during which, it seems, the Appellant was not represented at all. It would need careful and time-consuming analysis of the files of this Tribunal and of Customs to establish exactly what was going on in the appeal during those periods of hiatus, and whether, at any given time, the Appellant was represented or ought to have been. That, however, is not a matter for this Tribunal: if it has to be done at all, it will be a matter for the taxing master. I mention it only because the fact, without analysis, is germane to the issues before me.
2. At this stage, I am not asked to determine the quantum of costs, if any, to which the Appellant is entitled. This decision is concerned only with the issue of whether the Appellant is entitled to claim costs in respect of time spent by herself, when not represented, in pursuing the appeal. This being an application for costs, the hearing would normally be held in private and the decision would not be published. However, this application raises matters of substantial importance, and, both parties having by their representatives consented, it is being held in public and the decision will be published.

Brief history

3. The history of this matter has been set out in a number of earlier decisions relating to costs in this appeal, and I do not, therefore, propose to set it out in detail. However, for ease of reference, I think it may be helpful if I summarise the most recent stages of the litigation, so far as may be relevant to this costs application, before coming on to deal with the issues.
4. After the appeal had been static for a number of years, for reasons mentioned in paragraph 1 above, a date for the hearing of the appeal was fixed for 23 January 2006. The Appellant, yet again, and at the last minute, made an application for the hearing to be stood out on health grounds. Customs cross-applied, for the appeal to be dismissed for want of prosecution. On this occasion the Appellant, herself absent, was represented, and the application and cross-application were heard by me on the date fixed for the hearing of the appeal, 23 January 2006. The Appellant was given one last chance to pursue her appeal. She instructed Omnis VAT Consultancy Ltd ("Omnis"), of Stockport, who instructed Marion Lonsdale of counsel. Miss Lonsdale clearly did a considerable amount of work on the matter, and the result was that, on 31 March 2006, an application was made to amend the Appellant's notice of appeal. This was granted. There followed a new notice of appeal, a very substantial document, from which it was clear that the appeal had in effect been completely recast. In that amended notice of appeal, the Appellant asked

(1) To amend her grounds of appeal and to provide voluntary further particulars of her existing grounds of appeal in the form annexed [to the notice of application];

(2) For anything which took place at the first day of the hearing in December 2002 to be disregarded and the appeal be heard afresh.

5. The notice of application set out in considerable detail her grounds of appeal, pursuant to the first of the above headings. Summarised, the Appellant contended that the assessments were void and unlawful, and had been raised and issued in bad faith and vindictively, and had not been made to the best of the Commissioners' judgment. The Appellant contended that, therefore, all the assessments should be struck out. As for the requirements of security, she said that all of them had been made after she had ceased trading. (Originally, the Appellant had alleged that Customs had been guilty of specific acts of misconduct in relation to the assessments and their investigations. These have not been pursued since the first hearing date in December 2002, and I do not propose, therefore, to make any further mention of them.)
6. Shortly after the service of the amended notice of appeal, Customs withdrew all the decisions which had been the subjects of that appeal, without (so far as the Tribunal was informed) giving any reason. The Appellant was invited to withdraw her appeal, but did not do so, and the appeal was, therefore, dismissed.
7. By a notice dated 29 January 2007, served on the Appellant's behalf by Omnis, the Appellant sought an order for costs against Customs in the total sum of £17,885.11. That sum was made up of fees paid to Omnis of £4,778.73, fees to Marion Lonsdale of £8,512.88, and fees of Kingston Smith of £4,593.50. Customs served a schedule of points of objection, dated 26 February 2007, in a modified Scott Schedule form, giving space for the Appellant's own comments on the objections. The hearing of the costs application was fixed for 31 May 2007, notice of the hearing being sent to the parties on 6 March 2007. On 31 May the Appellant did not attend and was not represented. Customs were represented by Michael bacon, of A & M Bacon Ltd, costs consultants. It became clear that Mr Gibbon, of Omnis, was not going to attend, and Omnis said that it had not received the hearing notice. The court file contained a copy of that notice and record of its transmission, and it had been received by Mr Bacon. The hearing therefore proceeded, under rule 26(2) of the VAT Tribunals Rules 1986. That gave the Appellant the opportunity to apply to the Tribunal within 14 days of the date of release of the decision to have that decision set aside and the application reinstated.
8. The outcome of that hearing was that I determined the amount of costs to which the Appellant was reasonably entitled in the total sum of £8,464, together with an additional sum in respect of fees paid to Kingston Smith conditional upon the Appellant satisfying Customs (or, in default of agreement, this Tribunal) as to the fees paid to Kingston Smith. I also directed the Appellant to pay Customs' wasted costs of the hearing of 23 January 2007 in the sum of £1,095.27, and two-thirds of Customs' costs of the hearing of the Appellant's application for costs.
9. No satisfactory evidence of the costs referable to her representation by Kingston Smith was forthcoming from the Appellant. However, a further hearing took place on [date] when, partly from what was deposed to by the Appellant and partly from a search through the Tribunal's file, I was satgisfiedx that Kingston Smith had indeed been retained by the Appellant in connexion with her appeals and that Kingston Smith were entitled to charge fees. Customs opposed this award (on grounds set out in my decision) and I assessed the costs which the Appellant was entitled to recover in the sum of £00000.
10. The Appellant has now served a further noticed of application for costs, relating to periods when she was not represented and was, therefore, a litigant in person. Her claim is for costs totalling £247,637.84, which she has quantified (in summary; there is also a detailed schedule) as follows:

ITEM TIME (hours) TOTAL SUM

11. Travel expenses £1,495.00
12. Out of pocket expenses

Costs incurred in attendances 69 (x £202.26) £13,983.64

Preparation costs, statements

correspondence, telephone 1,041.40 £211,050.12

Court fees £900.00

Telephone calls, faxes,

photocopying, postage

paper £875.00

Desperately seeking professional

advice 22 £4,458.52

Preparation of this schedule 48 £9,727.68

Discussion/attendances with

various accountants 18 £3,647.88

13. Solicitors' costs (Elliotts) ` £1,500.00

Total £247,637.84

The figure of £202.66 which is the sum to which the multiplier is applied in the case of each timed item, is claimed by the Appellant as being two-thirds of the hourly rate, of £304.00, for a grade A solicitor in central London.

14. The Appellant also claims damages for the mental stress and health disorders alleged to have been suffered by her as a direct result of the vindictive manner in which the Respondents dealt with the Appellant. In addition, the Appellant says, that she spent three weeks trying to collect all the documents and prepare her statement of costs with assistance, which sums she seeks to recover. She added that some of the expenses for some years remained to be sent, since she was still trying to locate the files. I should say, at this point, that this Tribunal is not the proper forum for claiming damages, and has no power to award damages. Nor was any evidence adduced in support of such claims, except during the very first hearing of the appeals, in 2002. The appellant's claims for damages must therefore be dismissed. That does not prevent her pursuing a claim for such damages in another court if she should wish to do so and is still in time.
15. The schedule of costs which accompanies the claim runs to 17 pages and is divided into parts. Each part is a list of items, all of which are, or are related to, documents. The parts come under thye following headings:

A HM Customs and Revenue to M Serps [sic]

B From M Serps to H M Customs and Revenue

C Other documents

D Supreme Court – Correspondence from M Serpes and Supreme Court – Correspondence from Court and Application, Directions, Orders High Court

E Affidavit (x 2) of M Serpes

- Witness statement of M Serps

- Copies of VAT forms

- Correspondence from M Serpes to Moon Beaver

(I understand that Moon Beaver is a firm of solicitors which handles bankruptcy matters for Revenue and Customs.)

Some of those parts appear to concern proceedings in the High Court, and may or may not be within the ambit of this Tribunal. However, the present application is not concerned with the items of costs claimed, but only with the principal issue, whether or not the Appellant is entitled to recover the costs claimed at all.

The issue

16. The issue in this application is whether the Appellant is entitled to recover costs, as a litigant in person, for work done and time spent by herself on her own appeal when she was not represented.

The Appellant's case

17. Mr Eamon McNicholas, for the Appellant, referred first to rule 29(1)(a) of the VAT Tribunals Rules 1986 (as amended) which provides:

(1) A tribunal may direct that a party or applicant shall pay to the other party to the appeal or application—

(a) within such period as it may specify such sum as it may determine on account of the costs of such other party of and incidental to and consequent upon the appeal or application;"

He then set out to establish that a litigant in person's own time costs fell within that rule.

18. Mr McNicholas referred first to Nader (trading as Try Us) v Customs and Excise Commissioners [1993] STC 806 CA. In that case the Court of Appeal construed rule 29 as giving the Tribunal power to award costs which were confined to such sums as would be recoverable at common law, and also that to succeed a litigant in person had to shew that the law on costs in the Tribunal falls into a different category from that of the conventional position. It was the Appellant's case that she should succeed on both limbs: the common law, by its very nature, has not remained static and has moved on and been developed. The result is, that the common law position today is that a litigant in person is entitled to his own time costs. Mr McNicholas referred by analogy to the the reference to costs under the Civil Practice Rules in the Competition Appeal Tribunal Rules 2003, at rule 55(1). That defines costs as "costs and expenses recoverable before the Supreme Court of England and Wales, the Court of Session or the Supreme Court of Northern Ireland". The VAT Tribunal also uses the CPR as a guideline on costs: Mr McNicholas gave the examples of Capital One Bank v Revenue and Customs Commissioners [2006] Customs Commissioners [2006] UKVAT V 19525 at paragraphs 14 to 17, in which the Tribunal considered the effect on rule 29 of CPR 44.3(2)(a) and parts 47 and 44.4 respectively. It followed, Mr McNicholas submitted, that the common law referred to in Nader must be taken to be the common law now, having moved on since 1993, and that litigants in person are now entitled to their time costs.
19. As to the second limb of Nader, that also was satisfied, because the Tribunal has to take account of the European basis of VAT law and apply that. In Albert Ruckdeschel & Co v Hauptzollamt Hamburg-St Anne [1977] ECR 1753 the European Court of Justice, in paragraph 7 on page 1769, stated the general principle of equality in European law, which "requires that similar situations shall not be treated differently unless differentiation is objectively justified. The Appellant also sought support from Léa Jorion née Jeunehomme et EGI v Belgium (Joined Case 123 and 330/87) in which the Court held that a Member State may not make the exercise of a right derived from European law impossible by reason of technical rules. And in Brasserie du Pêcheur SA v Germany and The Queen v Secretary of State for Transport ex parte Factortame and ors (joined cases C-46/93 and C-48/93) [1996] ECR 1029 at paragraph 68, the Advocate General's opinion was that within equal situations everyone has the right to the effective judicial protection.
20. There was, Mr McNicholas contended, a fundamental flaw in Customs' interpre4tation of rule 29, that anyone might be awarded their time costs except a litigant in person, which is unjust and illegal. Any appellant who can afford representation may recover his costs, but an appellant who cannot effectively defend his position [counsel's emphasis] because he cannot afford to appeal or to be represented is barred from obtaining costs. Such an appellant may be spending time on research, but it is time which should be sopent in his business. That is fundamentally unfair in European law.
21. There is also an inbuilt element of unfairness in Customs' approach, so that an appellant such as Miss Serpes cannot obtain a fair hearing. The use by a court of costs to control a party's conduct is one of the Tribunal's most effective means of keeping a party's behaviour reasonable: e.g., the issue of indemnity costs in Funding Corporation. But as against a litigant in person Customs would be immune from any costs consequences of their conduct, and there is thus no effective judicial sanction for any misbehaviour. Customs, on the other hand, can invoke the sanction of a costs order against a litigant in person.
22. In Revenue and Customs Commissioners v IDT Card Services Ireland Ltd [2006] STC 1252 CA it was held that English legislation must be consistent so as to be compatible with European Law. Therefore, Mr McNicholas submitted, rule 29 must be applied even-handedly: if one party can get its time costs, then the other should also be able to. A small trader would otherwise have to think very carefully whether to fight a wrongful claim if he could not get his costs relating to his time spent on the case.
23. Nader made the poijnt that rule 29 enables the VAT Tribunal to award costs which would be allowed atg common law: but at common law a litigant in person would not be awarded costs relating to his own time spent on the case. Therefore, Mr McNicholas contended, at the date of Nader no costs could be awarded in respect of a litigant in person's time unless there was something else which could be prayed in aid. It was the Appellant's case that now a litigant in person's time costs can be awarded. The Appellant was not relying on the Litigants in Person (Costs and Expenses) Act 1975, which has not been extended to the VAT Tribunal. But the common law has moved on since the date of Nader. The Tribunals, Courts and Enforcement Act 2007 will bring all tax tribunals into the Tax Chamber. From April 2009 that will be the law. That fact gives a very heavy indication as to what the common law is now in 2008.
24. The United Kingdom Statute Law Database, to which Mr McNicholas referred, shews the amendments to the law. Paragraph 6 of Schedule 8 to the Tribunals, Courts and Enforcement Act gives the amendments to the L I P Act: in section 1(1) and (2) of the L I P Act, expenses and losses of a litigant in person will be recoverable, and the VAT Tribunals Rules are imported into the First Tier Tribunal or Upper Tribunal.
25. The Database also records that in August 2008

"The Tribunal Procedure Committee has commenced consultation on rules for the First Tier Tax Chamber…. The procedural rules support and enable unification of existing tax tribunal processes for the new Tax Chamber of the First Tier Tribunal…."

Under the heading "The Intention of the Tax Chamber Rules", the Database records that new rules will

"support and enable unification of existing tax tribunal processes and deal with issues such as a single costs regime and how the wide spectrum, of tax appeals (from the very simple to the complex) might best be managed."

26. Mr. McNicholas referred to the draft First Tier Tribunal (Tax Chamber) Rules 2009, rule 10 of which deal with orders for costs. Mr McNicholas contended that the draft rule 10 does not in so many words provide that a litigant in person will be able to recover his own time costs; but the fair and just position mujst be that a litigant in person should be able to recover such costs.. Nor does the draft rule 10 say what is meant by "costs". But, he contended, it looks as if, from April 2009, a litigant in person will be enabled to recover such costs.
27. The modern approach, Mr McNicholas contended, is to be found in the Competitive Appeal Tribunal Rules 2003, of which rule 55 provides:

"For the purposes of these rules, 'costs' means costs and expenses recoverable before the supreme Court of England and Wales, the Court of Session or the supreme Court of Northern Ireland."

Although Parliament has not changed rule 29 of the VAT Tribunals Rules, the common law has moved on, and the general position is that at common law a litigant in person can recover time costs. Both Capital One Bank and Funding Corporation are instances of the CPR being used as guidelines in the Tribunal. Customs' case is that they are armour-plated against a litigant in person, and so this basis of costs, indemnity costs, cannot be recovered. But it cannot be fair or right that one party has a one-way bet on costs.

28. The Appellant passes the Nader test, it was contended. But in that case the court of appeal did not look at the European dimension. The principle is that the VAT Tribunal is set up to protect rights which are ultimately set up under European law, which therefore runs through the English law. In paragraph 7 of the judgment in Ruckdeschel, the Court held that the principle stated in Article 40(3) of the Treaty, "that the common organization of agricultural markets 'shall exclude any discrimination between produces or consumers within the Community'", required that "similar situations shall not be treated differently unless differentiation is objectively justified". If that paragraph is read properly, contrary to Customs' contention, a litigant in person can recover time costs. In Léa Jorion.the Court said, at paragraph 17,

"However, the requirement on the invoice of particulars other than those set out in Art. 22(3)(b) of the Sixth Directive, as a condition for the exercise of the right to deduction, must be limited to what is necessary to ensure the correct levying of value added tax and permit supervision by the tax authorities. Moreover, such particulars must not, by reason of their number or technical nature, render the exercise of a right to deduct practically impossible or excessively difficult."

That, Mr McNicholas contended, is exactly what Customs interpretation of rule 29 does: it renders obtaining of costs impossible because of a technical difficulty. A litigant in person has to forego rights because it is too costly to afford to resist a claim.

29. The Advocate General's statement in paragraph 68 of his opinion in Brasserie du Pêcheur is taken as a fundamental point of European law. He said,

"In a Community governed by the rule of law, in which it is the aim that the acts and conduct of all participants in the system should be amenable to judicial review without privileges for anyone, the requirement for effective protection of the rights claimed by individuals under Community law may not vary – given equal situations – depending on whether a Member State of the Community caused the loss or damage."

There is an impediment to a litigant in person to contest: he cannot get repaid for wasted time. In the present case, Customs are in a uniquely privileged position: they can recover their costs but a litigant in person cannot. There is no justification for such treatment just because an appellant may be a small trader.

30. During his submissions, Mr McNicholas submitted a witness statement made by the Appellant and called her to give evidence based upon it. She did so, and was somewhat emotionally affected by the recollection of her dealings with and treatment at the hands of Customs. The witness statement includes little of no detail, and it is difficult to get a comprehensive picture of the Appellant's situation from the very general terms in which she described the effect upon herself and her companies, a nd her finances, of Customs' actions. I remember that on the occasion of the first hearing, in 2002, the Appellant made some very serious allegations as to the conduct of the Customs officers: those are not repeated in this witness statement, nor were they in her oral evidence. But she gave an account of the ruinous effect of Customs' actions on both her business and her health. She stated that the mental strain and trauma made her ill so that she could not continue trading in her own name as a sole trader. She received a number of assessments to and requirements of security which, she said, were not made until after she had ceased trading. She also received, notwithstanding the fact that she had appealed against all the assessments, a number of statutory demands for the amount of tax alleged to be owed by her, followed up promptly by bankruptcy petitions. In such circumstances, it would be no wonder if her health was adversely affected by the stress. The Appellant said that everyone to whom she had turned for assistance demanded large sums of money as she was a director of a company at the time. She said that she had challenged the first bankruptcy petition successfully "but had to pay several thousands of pounds to the solicitors for their attendance costs". She said that she had also been served with disqualification proceedings, in which Customs were involved. Her health, she said, deteriorated to the extent that she could not walk and was bedridden for a few months. An order for disqualification was apparently made by default, because she was unable to obtain help. She said that then she tried to set the order aside by lodging the appeal but was unable to complete it and the cost was extremely high. I have condensed this account, and I hope that I have done justice to the Appellant's complaints against Customs. Although no details of dates were given by the Appellant in her witness statement nor in her oral evidence, Little of what was included in that evidence was put before the Tribunal on those occasions when the Appellant sought, sometimes at the last minute, adjournments of hearing dates. Nor were medical reports containing any detail put before the Tribunal until very recently. I also recall evidence given at an earlier hearing by Mr Quesnel in which he produced documents shewing that during these years when the Appellant was unable to appear before the Tribunal, she was able to represent a "client" in this very Tribunal and was claiming costs on behalf of that client. I mention that only in passing: the fact remains that Customs did pursue this Appellant for a long time, only to abandon all their claims in the end. For that reason the Appellant should certainly receive all costs to which she is entitled.
31. The Appellant's statement also included a number of requests to the Tribunal for declarations against Customs as to their conduct, and to award damages. I have to say that this Tribunal has no jurisdiction to do either of those things. Even if the Tribunal had such powers, those claims do not come within the ambit of an application for costs, nor has this Tribunal before it the evidence which would be necessary to establish a claim for either relief. If the Appellant should wish to seek to recover damages against Customs, she will have to take proceedings in another court, if she has not already begun such proceedings. The appellant also raises a number of points in her witness statement which are relevant to he present application for costs, and asks the Tribunal to declare whether her contentions are right. These have all been covered by her counsel in his contentions on her behalf, and I will deal with them in that context.
32. Mr McNicholas referred to the CPR. He began with the overriding object, set out in1.1(1) in Part 1:

"(1) These Rules are a new procedural code with the overriding object of enabling the court to deal with cases justly.

. . .

(2) Dealing with a case justly includes, so far as is practicable—

(a) ensuring that the parties are on an equal footing;

. . ."

It follows, Mr McNicholas contended, that a litigant in person should be on an equal footing with the other party, but they start on an unequal footing. The Appellant's interpretation of rule 29 would put them on an equal footing. Rule 44.3 made this principle clear, in providing that the court has a two-way discretion as to the award of costs. Rule 44.3(2)(a) sets out the general rule, that the unsuccessful party will be ordered to pay the costs of the successful party. However, Customs contend to the contrary in the case of a litigant in person. But if that is right and there is only a one-way discretion, there is potential misconduct because Customs can proceed against a litigant in person knowing that they will not have to pay costs.

33. While the VAT Tribunals Rules do not directly implement anything laid down in the Sixth Directive, they must be interpreted in accordance with European law: see IDT at paragraph [68]. In that case the Court of Appeal held (see paragraphs [86], [88], [90]) that the domestic courts are prepared also to interpret legislation so that it is compatible with human rights, and that it was not necessary to find any ambiguity in the statutory language before interpreting legislation so that it is compatible with Convention rights. Arden LJ (paragraph [92]) said that there was no reason why "robust techniques" employed in Ghaidan v Godin-Mendoza [2004] 2 AC 557 should not apply to make domestic legislation comply with European law. It followed that the court should interpret rule 29 so as to ensure that a party is treated fairly: "costs" is the same in all respects as "costs to any party". Mr McNicholas drew particular attention to paragraph [142] of Pill LJ's judgment, where he said,

"The 'scheme of the legislation' in the present context includes the fundamental duty arising from EU directives to impose VAT on the supply of

services."

Pill LJ was there referring to and relying upon the speech of Lord Rodger of Earlsferry in Ghaidan, at paragraph [121], in which he held that it was

"possible for the courts to supply by implication words that are appropriate to ensure that legislation is read in a way which is compatible with [human rights] Convention rights."

His Lordship went on to explain that such implication of words does not amount to amendment of the legislation. Mr McNicholas contended that IDT was as good authority for the taxpayer as for Customs, and enabled the court to put both on an equal footing.

34. The Human Rights act 1998, Mr McNicholas said, though much misunderstood by the media, is part of the constitution of England. It was the Appellant's case that she had been treated in a way that contravened the Convention, and had been put in a position in which she could not afford representation, and had thus been the victim of discrimination. Customs actions had affected n ot only the Appellant's business but also her personal and family life. It was Customs who had picked the fights with the Appellant, and the Appellant who was proved right. The appeals represented some years of the Appellant's life. It is no answer to sway that she can sue, when she is embroiled in this present struggle. As her witness statement shews, the Customs' actions blighted her life. The assessments were wrong, as were the consequent actions of Customs, and the Appellant is entitled to some kind of equity of equality. I pause at this point, to point out, again, that this Tribunal has no jurisdiction to offer redress for acts by Customs of which the Appellant complains, a fortiori in a costs application. Even if it had such jurisdiction, it would not be proper to give such redress, as this submission seems to be asking, without hearing detailed evidence subject to cross-examination and without giving Customs and possibly the individual officers concerned, the right to answer the complaints. The Appellant had the opportunity of appealing, and did appeal, and has in the end succeeded. What happened before the appeal has nothing to do with this application.
35. Mr McNicholas contended that there was a fundamental unfairness in rule 29. Nader has not been superseded, but the Human Rights Act has come in and European law is now much more to the fore. Nader, while binding upon the Tribunal, can now be applied differently because the common law has moved on. What the Court of Appeal did not do in Nader was consider that one now has to apply the whole body of European law. Customs were wrong: it is unfair that the Appellant should not be paid in respect of what she has lost as a result. Of her working life, 1,200 hours were wasted. She had not brought this upon herself.

Customs' contentions

36. For Customs, Miss Judith Ayling began with four basic propositions. First, while the Appellant had won her appeal, she had had her order for costs. Secondly, the Tribunal is bound by the decision of the Court of Appeal in Nader, and there was no way round that. Thirdly, the common law has not changed; any new provisions in the L I P Act are not in force, and rules thereunder are still under discussion: they cannot, therefore, affect the decision in Nader, nor that of this Tribunal. Fourthly, although the Appellant contends that rule 29 should be read in a way that is free from the decision in Nader, that cannot be done.
37. Rule 29(2) has now been modified, Miss Ayling pointed out, and the reference to RSC O 62 (and therefore to the whole pre-CPR costs provisions) has been replaced by a narrow provision of CPR 47; and both before and after the advent of the CPR rule 29(2) applied only to the taxation of costs, and not to the award of costs.
38. The Appellant contends that the definition of "costs" in rule 29 includes a litigant in person's time costs. But, Miss Ayling said, the case law, going back to 1884, shews that that is not so. In Buckland v Watts [1970] 1 QB 27, it was held that a litigant in person could not recover time costs unless he was a solicitor, but could only recover out-of-pocket expenses. The court in that case followed and applied a principle first enunciated in London Scottish Benefit Society v Chorley (1884) 13 QBD 872. In that case, Bowen LJ said,

"Costs are the creation of statute. Only legal costs which the court can measure are to be allowed…. Professional skill and labour are recognised and can be measured by the law; private expenditure and troubke by a layman cannot be measured…. Professional skill, when it is bestowed, is accordingly allowed for in a bill of costs…."

Applying that principle stated in London Scottish, Danckwerts LJ, in Buckland v Watts, at page 37, held that a layman could not charge for his time. Sir Gordon Willmer (also at page 37) held that costs were intended to cover remuneration for the exercise of professional skill, and that no-one other than a solicitor had ever been held entitled to make any charge in respect of the exercise of professional legal skill (page 38). That, Miss Ayling said, was the starting-point.

39. Buckland v Watts, Miss Ayling said, shewed the position in 1970. Since then the L I P Act 1975 had changed the position very substantially. Section 1 provides that where a party is ordered to pay the costs of a litigant in person there may be allowed on taxation of those costs "sums in respect of any work done and any expenses and losses incurred by the litigants in or in connexion with the proceedings to which the order relates". Section 1(1)(a) – (c) specifies the proceedings to which the subsection applies, and in (c) includes any other court or tribunal specified in an order made under that subsection. A number of such orders had been made, which extended the section to the Employment Appeal Tribunal and to magistrates' courts. There was no order which extended it to the VAT Tribunal. Before the introduction of the CPR, the L I P Act was given effect by RSC O 62, r 18, which provided the mechanism once the L I P Act had been triggered: r 18 had no freestanding application.
40. Miss Ayling referred to Customs and Excise Commissioners v Ross [1990] 2 All E R 65 QB, in which Simon Brown J considered the effect of rule 29, an d held that the Tribunal had fallen into error in allowing a litigant in person's own time costs, and that the power to award costs to a litigant in person was confined to such sums as were recoverable at common law (following Buckland v Watts). The Court of Appeal considered and approved that judgment in Nader. Order 62 r 18 was not enough to make a litigant in person's costs allowable because it had not been triggered by the L I P Act, and therefore the RSC and rule 29(2) could not assist Dr Nader. That was the pre-CPR position; the Appellant must therefore shew that the common law has moved on in such a way that those authorities do not apply. It is also the case that the L I P Act still does not apply to the VAT Tribunal.
41. Miss Ayling then referred to the relevant parts of the CPR, which had been made under the provisions of the Civil Procedure Act 1997. These rules apply, by CPR 2, to all proceedings in county courts, the High Court, and the civil division of the Court of Appeal. CPR 43.2(1) defines "costs" as the word is used in CPR 44 to 48, and includes "… fees, charges, disbursements, expenses, remuneration, reimburse-ments allowed to a litigant in person under rule 48.6…." CPR 43.2 (2) includes in the definition the costs of proceedings before a tribunal. CPR 48.6 now governs the position of a litigant in person. But there has been no statutory change such that a litigant in person is en titled to time costs under the L I P Act. CPR 48.6 governs the position of a litigant in person in the courts to which both the CPR and the L I P Act apply; it therefore does not apply to the VAT Tribunal. The amendment ot rule 29 is a narrow one and applies only CPR 47, not 48. Nothing in the CPR nor the Civil Procedure Act extends the application of the rules to the VAT Tribunal: they apply only to costs specified therein. CPR 48.6 therefore does not apply; as in the case of RSC O 62, r 18, it is no more than the method of implementing the L I P Act where, and only where, it applies. No trigger has made the L I P Act applicable, and the mechanism of r 48.6 has no force in the VAT Tribunal.
42. Rules 43 to 46 of the CPR do not apply to the VAT Tribunal, Miss Ayling pointed out, only rule 47, by the amendment to rule 29 of the VAT Tribunals Rules. CPR 48.6(3), which refers to costs which would be allowed if the litigant in person had been represented by a legal representative cannot apply because there is no reference in rule 29 except to rule 47. Dr Nader's "loophole" has been closed, though the Court of appeal held that he could not get through it in any event. A litigant in person is in effect weaker now than had been the case under the combination of rule 29 and O 62.
43. The Appellant sought to apply the CPR by analogy, Miss Ayling said. But even if this could be done it would not mean that those CPR rules actually applied in the VAT Tribunal. In Capital One Bank the Tribunal merely drew upon the provisions of CPR 44.3 and case law relevant to it, by analogy; the Tribunal is in no sense bound by that. Again, in The Funding Corporation, the provisions iof CPR 44.4, dealing with the basis of assessment of costs, were applied, the Tribunal saying expressly that it was by analogy. But if the Tribunal has no jurisdiction to award costs to a litigant in person it cannot assume such jurisdiction from such an analogy. The Tribunal case of Broomco (1984) Ltd v Customs and Excise Commissioners (2000) (Decision No C 123) was decided before the amendment to rule 29 to refer only to CPR 47. It also applied by the CPR analogy, and was far from deciding that the CPR apply generally in the VAT Tribunal. The Tribunal decided that rule 29(2) applied O 62 "and thus by implication the CPR Parts 44 to 48"; but that position has been changed by the later amendment to rule 29(2): see also Dave v Customs and Excise Commissioners (2001) (Decision No E 182).
44. That is the common law position after the CPR came into force, Miss Ayling said. It is clear, she continued, that there has been no change since Nader. The common law relating to costs of litigants in person has remained extremely tight. The Appellant prayed in aid the Competition Appeal Tribunal Rules, rule 55(1), as to costs. That rule defined "costs" as "costs and expenses recoverable before the supreme Court of England and Wales, the Court of session, or the Supreme Court of Northern Ireland". There is no such provision in the VAT Tribunals Rules. Miss Ayling contended that if the Competition Appeal Tribunal Rules made a specific provision for costs and the VAT Tribunals Rules did not, that made Customs' case all the stronger. Short of shewing that Nader is not good law since the introduction of the CPR, which she cannot do, or unless Nader were to be overruled, the Appellant cannot recover her own time costs. On the contrary, recent case law shews that a litigant in person cannot recover such costs except where Parliament has given an express right to do so.
45. In Mike Kiernan's Beer Tent Co Ltd (trading as Fish & Duck) v Customs and Excise Commissioners [2003] UKVAT V 18310, decided after the introduction of the CPR, the Tribunal held that the L I P Act had no application and that the Tribunal was bound by the decision of the Court of Appeal in Nader. Sisu and ors v Tucker and ors [2005] EWHC 2321, Warren J held that a litigant in person, even if a professional (and he was not a solicitor) could not recover costs in respect of his time other than on matters within his own professional expertise and which required the attendance of an expert. He held that there was no reason to apply a different approach post-CPR, and did not extend the London Scottish principle to professionals other than solicitors. Likewise in Malkinson v Trim [2003] 1 WLR 463 CA, there was nothing which derogated from the London Scottish principle. In Agassi v Robinson (Inspector of Taxes) (No 2) [2005] EWCA Civ 1507 and [2006] 1 WLR 2126 CA, it was held that the taxpayer could not recover the cost of fees paid by him to specialist tax advisers, who instructed counsel direct, on the ground that the taxpayer was a litigant in person because the tax advisers had no right under the Courts and Legal Services Act 1990 to conduct litigation on behalf of a client, and were not a disbursement, but were fees for services for which only a solicitor could charge. He could recover fees paid to the tax advisers only in so far as they were fees paid to experts. That case, Miss Ayling said, underlined the strictness with which the London Scottish principle is applied. It is not open to the Tribunal to adopt the broader construction contended for by the Appellant.
46. Contrary to the Appellant's contention, Miss Ayling submitted, European law did not change the position so as to allow the Appellant to recover time costs where neither the L I P Act nor the CPR did. The Appellant pointed to no specific provision of European law which got her home, nor to any faulty implementation of European law. In any event, that would only assist her in an action for damages. Her complaints under the Convention on Human Rights would also assist the Appellant only in a claim for damages or a claim based on the Human Rights Act. Such matters had no place in the VAT Tribunals Rules. Those rules do not deny a taxpayer a right to representation. While the Tribunal was obliged to take account of European law, no arguments based thereon were advanced in Sisu or Agassi. The Appellant did not seek to shew that she had been unfairly treated in comparison with some appropriate comparator: anyone appearing in the Employment Appeals Tribunal, or any other tribunal where no order had been made under section 1 of the L I P Act would be in exactly the same position. The passages cited in Albert Ruckdeschel applied to the cause of action, whereas the matter of costs was procedural, and was a long way removed from the passages or principles in Albert Ruckdeschel.
47. The decision of the ECJ in Léa Jorion did not assist the Appellant, because she had not been denied the exercise of any right, in particular not of a right arising under European law. Not only that, but she succeeded in her appeal. The cases on Article 6 of the European Convention on Human Rights made it clear that financial restrictions on the right ot legal advice or representation will not be taken to have denied the effective access to the court, except in extreme cases: see McVicar v United Kingdom (2002) 35 EHRR 22. The Appellant does not allege that any right under European law had been violated. Léa Jorion was of no assistance in construing "costs" in the face of the common law and in spite of statutory provisions. The Appellant might, for instance, have entered into a conditional fee agreement.
48. Miss Ayling contended that Brasserie du Pêcheur could not assist the Appellant, since it had no bearing upon the present matter; it dealt with a failure to implement a EC Directive, whereas the present case was a procedural matter in which the Member State regulates its own affairs. The costs claim arose after the Appellant had already succeeded in the substantial issue, and had achieved the result which she sought. There was no impediment or obstruction of the Appellant's right to effective judicial protection.
49. IDT was a case concerning compatibility of an EC directive and domestic law. But, Miss Ayling contended, the Appellant had not raised any incompatibility issue. IDT does not have the effect for which the Appellant contended, but was a decision that in interpreting United Kingdom legislation which was designed to give effect to Community legislation the English courts should construe the English legislation as far as possible so as to make it compatible with the purpose of the Community legislation. No Community legislation was involved in the present case. In IDT also it was held that the court might have to depart from an unambiguous statutory provision provided that the meaning adopted by the court did not conflict with a fundamental feature of the legislation. But only interpretation is permitted, not the rewriting of the legislation which goes beyond interpretation. It was therefore not possible for the Tribunal to read into rule 29 what the Appellant contended should be read in, in view of the fundamental features of the L I P Act and the fact that no order had been made under the Act including the VAT Tribunal among the tribunals which could award a litigant in person's time costs. It was not right to complain that Customs were immune from the costs consequences of its actions. They were liable in costs to this successful Appellant, and have paid the costs which were recoverable at common law. The reason why she can recover no more, as the Respondent contends, is that the legislature has not included a rule in the VAT Tribunal Rules which would allow this, or has not made an order to that effect under the L I P Act.

The Appellant's reply

50. Mr McNicholas sought and obtained leave to introduce a further authority: Marks & Spencer plc v Revenue and Customs Commissioners [2008] STC 1408 ECJ, in which judgment was delivered on 10 April 2008. Before referring to it, Mr McNicholas replied to customs' submissions.
51. Rule 29(2), upon which the Appellant did not rely, but which was considered by Customs, is a practical functional rule which allows the Tribunal to refer the matter of costs to the Supreme Court Costs Office: it does not in any way transmogrify the appeal or the application for costs. The Appellant wished to reserve her position on this point; she asked specifically that if this application were successful the taxation or assessment of costs should be carried out by this Tribunal and not sent to the SCCO, which would put her through a further ordeal.
52. Order 62, r 18 was perfectly clear on its face, Mr McNicholas said, and the court would have to find a reason for going outside it, a point which Customs had not addressed. The Appellant did not seek to distinguish Nader, but to comply with that decision. The problem with Nader was that the European law position was not before the Court of Appeal, which is fundamental to that decision. The Appellant embraces the decision in Nader, but the common law has moved on. The Appellant does not rely on the L I P Act, which would not get her home, nor does she pray CPR 42.2 in aid. Her case starts and finishes with rule 29. The points taken by Customs from Ross, London Scottish and Buckland v Watts do not enter into the matter: they are all about litigants in person claiming costs in the High Court. If a solicitor, as a litigant in person, claims his time costs, broadly he is entitled to his normal hourly rate. For a litigant in person who is not a solicitor, the rate would be £9.25 per hour plus business losses (substantiated by evidence) up to a maximum of ? of the appropriate rate for an appropriate fee-earner: CPR 48.6. That line of cases looks at a particular class of people who, as litigants in person can claim their time costs, not what the Tribunal has to consider here. The reference to the L I P Act is of no assistance. It provides the trigger, but the trigger is not here activated, and therefore of no help. The Appellant has no need to rely upon the draft rules, since the L I P Act has already been amended, nor is her argument concerned with the pre- or post-CPR situation. The Appellant relies on Nader. Since the Tribunal now regularly uses the CPR as its guidelines on costs (see Capital One and The Funding Corporation), it follows that the common law to which Nader refers is now that litigants in person are entitled to their time costs: the common law has progressed to a position of greater equality, and modern best practice is that a litigant in person should get his time costs.
53. The proper approach, Mr McNicholas contended, is to interpret rule 29 in the way Parliament meant, as Nader meant, and as rule 29 means now, bearing in mind that the European element was absent from the Court of Appeal's thinking in Nader. The general common law approach now is that a litigant in person should get his time costs. The common law before the court of Appeal in Nader was only the English common law. Such discrimination against a litigant in person is anathema to European laws: that which was conspicuously absent in Nader is now part of the common law. Sisu and Agassi were not concerned with European law, and therefore the argument was naturally not advanced. In fact the Appellant did make a comparison with a suitable comparator, more than once, comparing her situation with that of a litigant in person who could afford to litigate, and with Customs themselves. The Appellant has indeed won her caser, and now cannot get the fruits of victory. McVicar is of no assistance here, as this case does not concern legal aid. What Beldam LJ said in Nader at page 814c about the intentions of Customs in making then rules, and of parliament in approving them, is no more than a footnote.
54. Mr McNicholas then referred to Marks & Spencer. The Advocate General's opinion, at paragraph 54, sets out the principle of equivalence. Customs fail on that, as there is in rule 29 no equal treatment and no effectiveness. Mr McNicholas referred to the judgment of the Court on page 1433, under the heading "The second question: the existence of a right, deriving from the general principles of Community law, to a refund of VAT paid in error". He then prayed in aid paragraph 36 of the judgment, in which it was held that the general principles of Community law, including that of fiscal neutrality, apply so as to give a trader the right to recover sums mistakenly paid as VAT. Mr McNicholas contended that although the VAT Tribunals Rules are not directly derived from European law, it is the Appellant's case that that decision of the Court can none the less be applied in this case. First, the VAT Tribunals Rules are part of the domestic legislation to give judicial redress arising out of tax legislation. Secondly, rule 29 is part of that judicial redress, so therefore European law does apply. If a Member State is in error, European law principles can be invoked. The answer to Customs' contention, that they are not immune from costs consequences of its actions, having already paid to the Appellant such costs as she can recover in law, is that the interpretation of rule 29 is a matter for this Tribunal, not a matter for judicial review. Rule 29(2) as amended brings in the CPR (perhaps the draftsman was very busy and did not amend it at once).
55. The Appellant must succeed on the second limb of Nader too: namely that (page 809f) in order to succeed a litigant in person has to shew that the law on costs in the Tribunal falls into a different category. She succeeds because in the Tribunal one has to take account of the European basis of VAT law, which is what the Tribunal applies. Mr McNicholas reiterated the principles of equality under European law for which he had contended by reference to Albert Ruckdeschel, Léa Jorion and Brasserie du Pêcheur. The alternative would be to say that a litigant in person cannot get his time costs, therefore Customs should not be able to recover costs against a litigant in person. There would have to be a cogent reason to justify Customs' approach, that everyone except a litigant in person is entitled to costs, which is unjust and illegal. Such a rule renders the effective exercise of a person's rights under European law meaningless; ifhe cannot afford to appeal a wrong decision by Customs he has no effective recourse to law. An appellant in Miss Serpes's position cannot, to a gbreat degree, obtain a fair hearing, because without the court's or the Tribunal's power to control proceedings, by means of costs, there is no effective judicial sanction to control Customs' misbehaviour when dealing with a litigant in person, though Customs can, and will, invoke such a power against a litigant in person.
56. Describing it as a "third limb", in case the Appellant should fail on the first two, Mr McNicholas contended that Arden LJ's judgment in IDT enabled the Tribunal to interpret rule 29 in such a way that it would be compatible with European law, and to read the rule as encompassing the power to award a litigant in person his own time costs.

The Respondent's reply on Marks & Spencer

57. Miss Ayling, replying to submissions on the decision in Marks & Spencer, began by saying that rule 29 was not a free-floating costs provision, but was bound in with the common law and RSC and, latterly, the CPR, in which the definition of costs, as in rule 29, fell.
58. It was important to separate substantive from procedural provisions. The present case was not dealing with the litigant's approach to the court, as in the case of an impoverished plumber having to drop his case because of his impecuniosity: in such a case he might have grounds for complaint under Article 6 of the ECHR. But that is not the present case. This case is to do with the basic law relating to costs, the Appellant having already had recourse to the Tribunal. The position is right at the end of the litigation road, on the border of the national court's territory. Paragraph 59 of the judgment in Marks & Spencer, to which the Appellant referred had no application in this case, because here we are not dealing with the procedure for access to the court. In paragraph 65, the Court held that costs was a matter for the national court. The question is thus one of national law and there is no need to introduce European law.
59. So far as the Appellant raised matters of damages, the Tribunal was not the right forum for a claim for damages or compensation.

Reasons for conclusions

60. The issue which I have to decide can be stated simply: is the Appellant, who was successful in e very element of her appeal, entitled to recover costs in respect of work done and time spent by her in pursuing her appeal at those times when she was acting as a litigant in person?
61. The purpose of an award of costs by a court or tribunal is to reimburse, to a greater or less degree, a successful party for the expense to which he has been put as a result of proceedings taken against him by the other party (or vice-versa) in which the other party has failed. This will normally include fees paid to a solicitor and possibly counsel. In the case of a litigant in person there are of course no such fees, ex hypothesi. Until the passing of the L I P Act 1975 it was not possible for any litigant in person to recover any costs in respect of his own time or work spent researching law, preparing the case, an d appearing in court, unless that litigant in person was a solicitor. No other profession, even those which might be concerned in litigation, not even barristers, could recover costs in respect of such work. The L I P Act itself allowed a litigant in person to recover such costs, but only in certain circumstances. It was expressly limited to civil proceedings in the county court, the Supreme Court, the House of Lords on appeal from the High Court or Court of Appeal, also proceedings in the Lands Tribunal, and "in or before any other court or trib unal specified in an order made under this subsection by the Lord Chancellor": section 1(1)(c). Only two orders have been made under that subsection: first. the L I P (Costs and Expenses) Order 1980, which extended the L I P Act to the Employment Appeal Tribunal, and the L I P (Costs and Expenses) (Magistrates' Courts) Order 2001, which extended the Act to civil proceedings in magistrates' courts. No order has been made which extends the act to the VAT Tribunal.
62. At first sight, therefore, it appears as though the situation as to costs in the VAT Tribunal is as it was before the passing of the L I P Act. Miss Ayling has very helpfully set out the line of authorities which established the position of a litigant in person before the L I P Act came into force. Historically, that begins with London Scottish, in which Brett, MR defined the position at page 875:

"… I should have thought that a person wrongfully brought into litigation ought to be indemnified against the expenses to which he is unjustly put; but there cannot be a perfect indemnity, because it is impossible to determine how much of the cost is incurred through his own over-anxiety. When an ordinary party to a suit appears for himself he is not indemnified for his loss of time; but when he appears by solicitor he is entitled to recover for the time expended by such solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket. He has to pay the fees of the court, that is money paid out of pocket; but for loss of time the law will not indemnify him."

Bowen LJ, agreeing with the Master of the Rolls, pointed out that costs were the creation of statute, and then quoted Lord Coke's Commentary, 2 Inst 288, in which Lord Coke said,

"Here is express mention made but of the costs of his writ, but it extendeth to all the legal costs of the suit; but not to the costs and expenses of his travel and loss of time, and therefore 'costagers' cometh of the verb 'conster', and that again of the verb 'constare', for these costages must 'constare' to the court to be legal costs and expenses."

Bowen LJ gave that passage the following interpretation:

"[Lord Coke's] meaning seems to be that only legal costs which the Court can measure are to be allowed, and that such legal costs are to be treated as expenses necessarily arising from the litigation and necessarily caused by the course which it takes. Professional skill and labour are recognised and can be measured by the law; private expenditure of labour and trouble by a layman cannot be measured. It depends on the zeal, the assiduity, or the nervousness of the individual. Professional skill, when it is bestowed, is accordingly allowed for in taxing a bill of costs, and it would be absurd to permit a solicitor to charge for the same work when it is done by another solicitor, and not to permit him to charge for it when it is done by his own clerk. The question before us does not depend on the privileges of a solicitor. My judgment is the same as that of the Master of the Rolls; the costs claimed, subject to exceptions which have been mentioned, ought to be allowed, because there is an expenditure of professional skill and labour."

63. Coming forward in time, by 86 years, in Buckland v Watts Danckwerts LJ based his judgment on that of Bowen LJ in London Scottish, as did Sir Gordon Willmer. Danckwerts LJ cited the whole of Bowen LJ's judgment, and described it as "very satisfactory", and concluded:

"Of course, that case was dealing with the position of the solicitor, and therefore it might be said to be not directly in point on the problem which we have to consider, but it appears quite clear from the words used by Bowen LJ that, in the case of a layman, he could not charge for his time, and this seems to me to cover the issue in the present case with regard to the disallowance of the claims for time and labour tendered by Mr Buckland."

Sir Gordon Willmer, agreeing with Danckwerts LJ and with Bowen LJ in London Scottish, said,

"Other professional people, who become involved in litigation and conduct their own cases, may recover something in respect of their own professional skill in so far as they qualify as witnesses and are called as such. Nobody else, however, except a solicitor, has ever been held entitled to make any charge, as I understand it, in respect of the exercise of professional legal skill and it is this which the appellant has sought to do in the present case. I have much sympathy for him … but I can find no ground, either in principle or in authority, for allowing him anything by way of remuneration for the exercise of a professional skill which he has not got."

64. That decision was followed by the passing of the L I P Act, on 1 August 1975. Nothing in that Act, or in its long title, gives any indication of why it is drafted so as to apply to such a limited number of courts. The fact remains, that it does not apply to this Tribunal, and no order has been made under section 1(1)(c) which applies it to this Tribunal. (It is to be noted that the Act does not apply to the VAT Tribunal in Scotland or in Northern Ireland either.) This apparent omission in the law is, Mr McNicholas urged, to be made good when the First-Tier Tribunal (Tax Chamber) Rules 2009 come into force, which is expected to be in April 2009. At present they are in draft form, and a copy of the draft Rules was produced. Rule 10 deals with costs, and rule 10(3) is in point. In its draft form (which, therefore, may not be the form in which it eventually receives the force of law) provides:

"(3) An order under paragraph (1) must not relate to any costs … other than those incurred—

(a) by the person in whose favour the order is made ('the receiving person');

(b) in connection with the proceedings; and

(c) since the proceedings were started in the Tribunal."

These draft Rules are not very helpful in forecasting what the position of a litigant in person will be. There is no meaning given to the word "incurred" in Part 1. The ordinary meaning of the expression "costs incurred" is the amount paid by the person who incurred the costs for something, in this context, which was necessary for the purposes of the proceedings. It does not ordinarily apply to the value which might be put upon work done by a party; such work is usually done by the party himself in order to avoid incurring costs. It is not, so it seems, definite that the 2009 Rules will include a provision which will allow costs to be paid to a litigant in person in respect of his or her own time and work expended upon the proceedings. In any case, those Rules are not in force now and have not been at any time during these proceedings.

65. The next milestone is Nader, decided in the Court of Appeal in October 1993, in which the three other main authorities on this topic were considered in detail. Those were London Scottish, Buckland v Watts, and Ross. Farquharson LJ derived the conventional position as to costs of a litigant in person from the judgment of Danckwerts LJ in Buckland v Watts, where he said (at page 35):

"… it seems to me that the principle is well settled that a solicitor who acts in person for himself can claim to be remunerated for his professional services in so far as they are not rendered un necessary or impossible – as, for instance, with regard to consultation with himself and that kind of thing – and such costs are recoverable by the solicitor, in the case of a laymen who is not a skilled legal person he can only recover his out-of-pocket expenses."

Sir Gordon Willmer's judgment was to the same effect. Farquharson LJ, havng cited that passage, continued:

"That being the conventional position with regard to litigants in person, it follows that if Dr Nader is to succeed on the present appeal he must show that the law concerning costs to be awarded by VAT Tribunals is different and comes in a separate category."

Farquharson LJ then referred to the VAT Act 1983, which enabled the Commissioners to make the necessary rules, namely the VAT Tribunals Rules 1986.He referred to rule 29(1) and (2), and to the reference in (2) to RSC O 62, which "shall apply, with the necessary modifications, to the taxation of costs" as if the proceedings in the Tribunal were a cause or matter in the Supreme Court.

66. Farquharson LJ continued, at page 810b,

"It will be seen that under r 29(1(a) the value added tax tribunal may itself determine the amount of costs of, incidental to and consequent on, the appeal. Alternatively, the tribunal may direct that such costs of the successful party may be taxed by a taxing master of the Supreme Court. In the latter event, the provisions of RSC Ord 62 shall apply with the necessary modifications. Plainly the reason for these alternatives is that the tribunal, acting under para (a), can itself assess the costs in a simple case. A direction for taxation under para (b) will be made when the assessment of costs is likely to be complicated – as in the present case. It is not to be supposed that if the tribunal itself assesses the costs it can make its determination capriciously, or on any basis which is not justified by law. In other words, the relevant law governing the assessment of costs in this context is the same whether the costs are determined by the tribunal or by the taxing master."

Farquharson LJ then dealt with Dr Nader's contention that the combination of r 29 and O 62, r 18 meant that solicitor costs were allowable to a litigant in person. Farquharson LJ the referred to the effect of section 1 of the 1975 Act, an d cited the judgment of Simon Brown J in Ross at page 356:

"It is clearly apparent from the terms of the decision that the chairman was invoking the provisions of r 29(2) to reach his conclusion, but that of course necessarily involved him in treating value added tax tribunals for all the world as if they were specified in an order under section 1(1)(c) of the 1975 Act. As was pointed out in Wendy Fair Market Club v Customs and Excise Commissioners (LON/77/400, unreported) such an order is conspicuously lacking. In short it appears to me that the tribunal here fell into the error of supposing that even absent such an order, r 29 can be construed so as to import RSC Ord 62, including its new r 18, without modification and thereby enlarge the power of the tribunal in regard to awards of costs. That approach in my judgment was not open to the tribunal. I have no doubt at all that under r 29 the power of tribunals to award costs is confined to sums which were recoverable at common law. That power was wholly unaffected by the 1975 Act and that position in turn remains wholly unaffected by r 29(2)'s reference to RSC Ord 62. The application of the provisions of that order is expressly stated to be subject to 'necessary modifications'. Those include such modifications as are required to reflect the true position in law, here the disregarding of new r 18."

Farquharson LJ agreed with Simon Brown J, adding, at page 812b,

"To say that r 29, or RSC O 62 r 18, is a sufficient basis to alter the common law rules relating to costs is to rewrite the statute so as to include value added tax tribunals. It is plain that r 18 was intended to provide the machinery for implementing the 1975 Act. It is significant that the commencement orders for r 18 and the 1975 Act came into effect on the same day, 1 April 1976. Rule 18 would not have been drafted to conflict with the 1975 Act but to apply it in the circumstances prescribed by the same Act. Accordingly, while the machinery is in place, the trigger mechanism has not been applied. Rule 18 is concerned only with those proceedings identified by the 1975 Act and not to those which are omitted."

67. Beldam LJ, concurring, having referred to the state of the law, and to the fact that no order has been made under section 1(1)(c) of the 1975 Act, asked himself (at page 814c),

"Can it have been the intention of the commissioners when they made the rules, and of Parliament in approving them, that a different basis iof costs should apply merely because the chairman is of the opinion that he cannot, at the moment when he is asked to assess the costs, quantify them, and so decides, under rule 29(1)(b), that the costs should be taxed by a taxing master of the Supreme Court? In my view, it cannot."

But, says the Appellant, the law, particularly the common law, has changed since then.

68. How, then, has the law changed? Mr McNicholas says that it has changed because European law must now be imported into it, and that European law contains the paramount principle of equality: therefore the law of England and Wales must be applied in such a way that that principle is given effect. The situation, without importing the requirement of equivalency, says Mr McNicholas, is fundamentally unfair, and tribunals, including the VAT Tribunal, are now using the CPR as a guideline on costs. He instanced also the Competitive Appeals Tribunal Rules 2003 (see paragraph 24 above). But it seems to me that one set of tribunal rules and two instances of reference to CPR purely as a guideline by the VAT Tribunal are not enough to indicate a "general position"; and there will always be a class of litigant in person in such a position that no time costs will have been incurred. In order to apply the principle of equality, Mr McNicholas contends, "robust techniques" should be applied to national legislation to make it compatible with European law (see IDT, per Arden LJ, at page 1280). Mr McNicholas maintains that the Appellant does not seek to depart from rule 29 or from the decision of the Court of Appeal in Nader, on the contrary, that she relies upon them. I therefore turn to look at what has happened since Nader, decided in 1993, that has changed the common law in such a way that costs which are recoverable by a litigant in person are no longer "confined to sums which were recoverable at common law" as Simon Brown J expressed it in Ross (at page 356).
69. The principle argument on behalf of the Appellant was that no submissions had been made to the Court of Appeal in Nader as to the position in European law. The Tribunal has to take account of the European basis of tax law and apply it, contended Mr McNicholas. But this is an application foir ciosts: tgax law is not involved. Mr MacNicholas referred to four decisions of the European Court of Justice. The first was Albert Ruckdeschel, which was concerned with production refunds for certain products, one such, for quellmehl, having been abolished by the Member State, which provoked proceedings on the ground of discrimination between producers and consumers. Such discrimination was expressly forbidden by Article 40(3) of the Treaty, though that Article did not refer in clear terms to the relationship between different industrial or trade sectors. The Court said (paragraph 7),

"This does not alter the fact that the prohibition of discrimination laid down in the aforesaid provision is merely a specific enunciation of the general principle of equality which is one of the fundamental principles of Community law. This principle requires that similar situations shall not be treated differently unless differentiation is objectively justified."

The Appellant relied in particular upon this passage. The case concerned matters of substantive law, not administrative law; however the Court stated the fundamental principle that similar "situations shall not be treated differently", wording which is probably wide enough to include both. It is not clear with what the Appellant is comparing her situation when contending that she has been discriminated against. Perhaps she is saying that she, quâ litigant in person, is the victim of discrimination as against all other litigants who are not litigants in person. That would, it seems to me, be a reasonable comparison. But it also seems to me that it does not really assist the Appellant. Rule 29 provides that either party may be awarded costs. There is no discrimination there. The rules of common law themselves are what has confined the costs recoverable by a successful party. Until the L I P Act 1975 there was no statutory provision relating to a litigant in person's costs and what they might include. The 1975 Act does not apply to the VAT Tribunal. There is no discrimination as between one litigant in person and another: there is a difference, an objective difference, between a litigant in person and a litigant who has legal representation. There is also a difference between an unqualified litigant in person and one whose profession is such that when working upon his own case he is exercising his professional skill and knowledge. Even a solicitor cannot recover costs in respect of consulting himself or attending upon himself, even though these activities may be time-consuming. Nor can a litigant in person represented by a professional other than a solicitor recover the costs of that professional in doing what a solicitor might otherwise do: see Agassi at paragraph 80. It seems to me that the Appellant is in the same position as any other litigant in person. It is also the case that a represented litigant who has had to spend his own time in court at hearings cannot recove his time costs of so doing. There are probably also cases in which a litigant in person has incurred no, or negligible, time costs.

70. The other European cases to which Mr McNicholas referred were Léa Jorion, Brasserie du Pêcheur, and Marks & Spencer. In the first of these, the Court held that a Member State must not prevent the exercise of a right derived from European law by means of complex technical rules. The only rule relevant to the present case is rule 29, which is by no means complex. But in any event, the "right" sought to be exercised is not one which is derived from European law. Further, Lêa Jorion is about a substantive law. Moreover, the Appellant has not been denied the exercise of a right. She has exercised her right of appeal, and has succeeded. She has made an application for costs, and has succeeded in recovering such costs as are recoverable at common law (subject to the assessment of the amount of those costs). The latter is a right which is not derived from European law. Her present application for costs is for costs which fall outwith the "sums recoverable at common law". Anyone, rich or poor, may elect to be a litigant in person. Moreover the VAT Tribunal is not the only tribunal in which a litigant in person's time costs cannot be recovered.
71. Brasserie du Pêcheur was a case concerning a failure to implement, in domestic law, an EC directive. That is not the present case. But it was cited for the Advocate General's opinion, that with equal situations everyone has the right to effective judicial protection. As mentioned in paragraph 57 above, this Appellant has had precisely that. Marks & Spencer was a case on the unjust enrichment (as contended by Customs) resulting from a refund of tax mistakenly paid. In paragraph 54 of his opinion the Advocate General observed that the Court had recognised, in Marks & Spencer (No 1) at paragraph 44 the principles of equivalence and effectiveness and

"also the general principles of law which form part of the Community legal order. This in particular includes the obligation to comply with the principle of equal treatment and – in the VAT field – the principle of fiscal neutrality…."

Applying those principles, the Court said, at paragraph 36, that where a Member state retains an exemption with refund of input tax in its national legislation,

"…the general principles of Community law, including that of fiscal neutrality, apply so as to give a trader who has made such supplies a right to recover the sums mistakenly charged in respect of them."

The subject-matter of the case was not similar to the present case, and did no more, in this context, than to repeat the principle of equivalency. Miss Ayling pointed out that in paragraph 65 the Court said that costs (of the application to the Court) were a matter for the national court.

72. What assistance are these European decisions to the Appellant? Have they the result that, specifically, any litigant in person in any tribunal, whether included by the L I P Act or not, should be able to recover costs, if successful, in respect of his own time spent dealing with the litigation, as though he were a solicitor? The subject-matter of each is quite different from the present case. The only common point is the statement of the principle of equivalency in Ruckdeschel and Marks & Spencer. I must therefore consider whether that statement of principle is such as to affecting the nature of an award of costs, and, if so, has it been assumed into the common law of England and Wales?
73. The principle is stated in cases and contexts which are very different from the present, in that their contexts had nothing to do with domestic administrative matters of a national court, which is what governs costs. But even if it did so apply, there exists equality in that all litigants in person are treated in the same way, and solicitors are entitled to their time costs only because of their position as practising in the law. Incidentally, they are also officers of the court. It is also to be noted that solicitors may not recover costs "for the solicitor consulting himself, or instructing himself, or attending upon himself" (Brett MR in London Scottish, at page 875). It may be that much of what a litigant in person would spend his time on would be included in those and similar categories. That being so, except for the statements of principle, I do not find that the European cases cited take the Appellant very far towards success.
74. Although Mr McNicholas stressed the point, that European law was not considered by the Court of Appeal in Nader, two authorities, much later than Nader were cited. First, Sisu Capital Fund and ors v Tucker and ors [2005] EWHC 2321 (Ch), which was a decision on a point of principle which would arise in the detailed assessment of costs. The submission in point was summarised by Warren J:

"Mr Briggs … submits that the entirety of the [accountant's] costs should, subject to detailed assessment, be recoverable. In summary, he says that the term "costs", and the indemnity intended to be provided by an order for costs, is broad enough to encompass a litigant's expenditure of time just as much as his expenditure of money subject to the qualification that the court must be able to quantify the amount of money which the expenditure of time gives rise to."

Warren J then reviewed earlier decisions, starting with London Scottish, and including a number of cases not cited in this application. He also considered Malkinson v Trim [2003] 1 WLR 463 CA (also not cited before me, but of which an important part of the judgment of Chadwick J was cited, deriving six principles from London Scottish. Warren J set out Chadwick J's rationale of the position iof a solicitor, at paragraph 22 of his judgment (paragraph 31 of Warren J's judgment):

"…the basis of the principle that a solicitor who acts for himself in litigation is entitled to compensation, by way of costs, for his time and trouble is a recognition that he (in common with any other litigant) ought to be indemnified against the expense to which (on the hypothesis that he has been successful in the litigation) he has been unjustly put. The special position of a solicitor is that he does not need to employ others to provide professional skill and knowledge in the conduct of litigation. He can provide that skill and knowledge himself. Further, there is no difficulty in measuring what it costs him to do so; and there is a potential saving in costs if he is not discouraged from doing so."

Malkinson v Trim was decided under the CPR. Warren J went on to say, in paragraph 34,

"… I can see no reason to apply a different approach in the application of the CPR from that which applied to the RSC in determining what expenditure, whether of time or money, could in principle be brought into account on a detailed assessment. The principles derived from the authorities, and the re4asoning of those authorities, applies equally to the CPR as to the RSC. That is the approach which Stanley Burnton J applied without hesitation in [Admiral Management Service Ltd v Para-Protect Europe Ltd [2002] 1 WLR 2722], and there is not a hint that that approach was in any way qualified or affected by the CPR in the judgment of Chadwick LJ in Malkinson v Trim in circumstances where I would have expected to see some mention of it if there had been a change of approach."

Having restated the principle as found in London Scottish, he observed that that principle had been applied for many, many years consistently. He pointed out that a litigant represented by a solicitor could not, so far as concerned his own time, be in any better position than a litigant in person would be. He compared the position with that of a company represented by one of its directors (see Jonathan Alexander Ltd v Proctor [1996] 1 WLR 518) . He mentioned the special provision made for solicitors under CPR 48.6(6), and concluded (in paragraph 38):

"There is no similar provision in the case of other professionals. CPR 48.6 and 48PD 52.5 draw no distinction between a litigant who happens to be a professional other than a solicitor (or other person entitled to conduct litigation) and an ordinary litigant in person; they reflect the approach that the London Scottish Benefit \Society case is restricted in its operation to solicitors. In my judgment that is a correct approach: and it would be an inadmissible extension of that case to treat the principle established by it to other professionals."

It seems to me that there is no real difference between a professional who is not a solicitor who is acting as a litigant in person and any other litigant in person.

75. Another case, coming after Nader and all the European cases except Marks & Spencer was Agassi v Robinson (Inspector of Taxes) (No 2) [2006] 1 WLR 2126 CA, which was specifically concerned with the taxpayer's costs as a litigant in person. In that cased the taxpayer had instructed a firm of tax advisers, who in turn had instructed counsel, without the intervention of a solicitor. The tax advisers were also not authorised litigators for the purposes of section 28(2)(a) of the Courts and Legal Services Act 1990. The case was concerned with the question whether the taxpayer was entitled to recover costs in respect of the fees and expenses of the tax advisers. It was held that he was a litigant in person, and that the real issue was whether he was entitled to recover costs in respect of the fees and expenses of the tax advisers. It was held that he was a litigant in person, and that the real issue was whether he was entitled to recover the costs of the tax advisers in his capacity as a litigant in person. Dyson LJ, delivering the judgment of the court, began (in paragraph 59) with CPR 43(2)(1)(a), which defined "costs" as those "allowed to a litigant in person under rule 48.6". The court said that the L I P Act 1975 was designed to reverse the effect of Buckland v Watts, and went on to say that Mr Agassi's right to recover costs was derived solely from rule 48.6. It was held that the taxpayer was not entitled to recover the costs of the tax advisers providing general assistance to counsel in the conduct of the appeals.
76. As Miss Ayling pointed out, no reference was made by counsel or the court to any European dimension of the law relating to costs. It would have been open to either party to do so, or to the court to inquire of either party what the European principle concerned recovery of costs by a litigant in person. Sisu was a more closely similar case, and there was no mention of European law in it either. The application of the law in both cases seems to illustrate that, whether it has moved on or not, the common law on this topic has not changed.
77. Brief reference was made to McVicar v United Kingdom (Application No 46311/99) in the ECHR in 2002. That was a case concerning the refusal of legal aid to the applicant as the defendant in a libel action. The Court held that there had been no violation of Article 6.1 nor of Article 10 of the European Convention on Human Rights. That decision did not afford any real assistance in the present case, save that by analogy equality did not prevail so as to oblige the law of England to provide legal funding for a litigant in a particular type of litigation. In such a case, the parallel is closer to what the Appellant has argued, in that in that case the defendant might have been denied effective access to the court to defend himself, unlike the present case. Perhaps a fortiori, the court might not consider that a right was being denied to a litigant in person in respect of time costs?
78. The starting point is London Scottish. That decision has, as is clear from those judgments in which it has been considered and followed, become a principle, and has continued to be applied ever since 1884. It is still applied, thirty years after the enacting of the L I P Act in 1975, and although the United Kingdom has been a Member State of the European Community for many years. It was reaffirmed in Nader in 1993. Following that case, rule 29 was amended, but only for the purpose of bringing in Part 47 of the CPR instead of O 62 of the former RSC in rule 29(2). Rule 29(2) is expressed to apply only where a direction is given under rule 29(1)(b), where the costs are to be assessed by the taxing master, and is worded as an alternative to rule 29(1)(a). Therefore, rule 29(2), and the reference to CPR 47 has no application in the present mater unless and until a direction is made that the assessment of costs be taxed by the taxing master.
79. Nader left the matter in the same position as it had been after London Scottish and Buckland v Watts: that a successful litigant in person cannot recover costs other than such "sums as were recoverable at common law": that is, out-of-pocket expenses. It is plain from all the cases cited that that applies to all litigants in person except solicitors acting in person, and they are restricted to such costs as could have been incurred by instructing another solicitor, and do not include, obviously, consulting themselves, attending on themselves, and the like. The reason for this is explained in Malkinson v Trim by Chadwick LJ (see paragraph 62 above).
80. If the common law has moved on in the way in which Mr McNicholas contends, this does not appear to have been reflected in any of the cases decided since Nader; indeed, in Sisu, Warren J's judgment begins and ends with London Scottish. This Tribunal is bound by all those decisions, and could only depart from them if it were wholly clear that the common law had moved thus dramatically forward and in the direction suggested. Those decisions are, indeed, a part of the common law.
81. The suggestion that this Tribunal could and should apply "robust techniques" to import something into the interpretation of rule 29 is, in reality, a suggestion that the Tribunal should do considerably more than merely interpret that rule in order to include, in the way contended for, the principle of equivalency. It would be necessary, it seems to me, to rewrite rule 29 so as, first, to include a definition of "costs", and then to include in the rule a provision such as might have been included in an order made by the Lord Chancellor under the 1975 Act, notwithstanding that no such order has been made, and has been judicially described as "conspicuously lacking". I also remind myself that Arden LJ, at paragraph [88] of IDT, said that the House of Lords had recognised the force of the mandatory obligation in section 3 of the Human Rights act 1998, which, however, permits only interpretation and not rewriting of legislation which goes beyond mere interpretation. That principle must also apply in this Tribunal. The robust techniques needed here would go far beyond mere interpretation, and are probably a matter for Parliament.
82. Mr McNicholas also referred to the overriding objective of the CPR, that of enabling the court to deal with cases justly. A litigant in person in the VAT Tribunal started off, so far as costs are concerned, in an unequal position, whereas the interpretation of rule 29 which the Appellant urges would put a litigant in person on an equal footing. In this matter, the CPR are not engaged, except as mentioned in paragraph 66 above, so that CPR 1.1 does not assist the Appellant. It is normally the aim of any tribunal to deal with cases justly, and that is certainly true of this Tribunal. But in this matter this Tribunal is bound by the combination of statute law and common law, including a long line of judicial decisions, which I have endeavoured to make plain above. It is not Customs' contention that a litigant in person should not be able to recover costs: they say that he may indeed recover such costs as the law allows. The discretion of the court is a two-way discretion. Not merely one-way as the Appellant contends: the expression "costs" can only mean such costs as the successful party is entitled to recover.
83. For all the above reasons, I must conclude that this successful Appellant is not entitled to recover her costs of the appeal except in respect of her out-of-pocket expenses, and, specifically, not in respect of the time which she, as a litigant in person, spent on preparing the case and carrying it on. Accordingly, I must dismiss this application.

Costs of this application

84. Both parties asked for their costs in the event of being successful in this application. This has been an important point of law, which may well go further. It is probably a point which needed to be examined again in the light of the changes over the last 15 years, since Nader. Whilst it would be usual for the successful party to be paid its costs, I am mindful of the importance of the point, and also of the fact that after a considerable number of years, Customs quite suddenly withdrew all their decisions against which the Appellant was appealing. No reason that I know of was given, but the thought does occur to me, if then, after six years and more, why not earlier? In the circumstances, my inclination is to make no order as to costs. However, I will not make that direction final until 28 days after the date of release of this decision. I give each party liberty to address this Tribunal further on the matter only of the costs of this application; any such application must be made within that period of 28 days.

ANGUS NICOL

CHAIRMAN

RELEASED: 22 December 2008

LON/2000/1392