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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Pender v GGH (Jersey) Limited (Royal Court : Hearing (Civil)) [2025] JRC 047 (17 February 2025) URL: https://www.bailii.org/je/cases/UR/2025/2025_047.html Cite as: [2025] JRC 47, [2025] JRC 047 |
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Companies - payment on account
Before : |
A. R. Binnington, Esq., Commissioner |
Between |
Daniel John Pender |
Plaintiff |
And |
GGH (Jersey) Limited |
First Defendant |
|
Punter Southall Group Limited |
Second Defendant |
|
Simon Anthony John Davis |
Third Defendant |
Advocate R. S. Christie for the Plaintiff.
Advocate W. A. F. Redgrave for the Second Defendant.
judgment
the COMMISSIONER:
1. This is the Court's decision in relation to an application made by the Plaintiff, and described by him as urgent, for a payment on account of liability in respect of a judgment sum which will be confirmed when the Court hands down its final judgment in relation to quantum. The Plaintiff asserts that the urgency arises from his having had to file his tax return on 31 January 2025, which included a substantial CGT liability (approximately £8 million) in relation to a best estimate of the judgment sum, which has not yet been finally confirmed.
2. The present application was foreshadowed in the Plaintiff's skeleton argument for a hearing on 17 December 2024 which concerned the Second Defendant's request for a further hearing on the question of valuation.
3. In that skeleton argument, Advocate Christie said this -
"..without waiving privilege over the detail of the advice, (the Plaintiff) is now obliged to declare a UK Capital Gains Tax position on 31 January 2025 -“ i.e. a little over a month away -“ which requires him to state the amount which he expects to receive in relation to the litigation. If judgment has not been handed down before that date the starting point is that he will immediately owe HMRC approximately 20% of the best estimate sum declared, payable on 31 January 2025, and while there are potentially ways to seek (in HMRC's discretion) to defer payment of some of the tax, he will be entirely at the mercy of HMRC in terms of whether they accept a partial deferment. Given that Mr Pender has had to pay away the bulk of the sums already received in litigation funding and costs (none of which, incidentally, is tax deductible) he will not be able to pay the tax, and his ability to pay the proportion of it which HMRC are likely to demand is in question. Mr Pender wishes to notify the Court of these issues because, in addition to it illustrating the need for clarity as to when final judgment may become available, it may be that Mr Pender has to make an application in January 2024 (sic) for some or all of the £20m held in Court to be released to him."
4. The position of the Second Defendant was that as it had been asked to respond to a request based on an urgent need for funds to pay a tax liability, it was entitled to understand the basis for the claimed urgency, and the need for the sum sought. Despite correspondence between the parties, the Second Defendant submitted that its questions had not been answered. The unanswered questions were -
(i) Why, as a matter of UK tax law, does the Plaintiff say that he has to pay tax now, in respect of the tax year 2023-4, on a judgment sum that he has not yet received, and that has not yet been quantified?
5. There is a considerable lack of trust between the Plaintiff and the Second Defendant, and this litigation has been hard-fought.
6. Thus far, £14,432,255 has been paid on account of liability, in two tranches and the Second Defendant has paid £20 million into Court.
7. Advocate Christie argued that if the further £20 million held in Court were to be released, the total amount paid would come to £34,432,255 and suggested that there is no realistic chance of the final figure being less than that amount.
8. In correspondence, the Second Defendant summarised its position in the following terms:
"The correspondence of the last week ought to demonstrate that our client has been willing to engage with the plaintiff's request to try to satisfy itself that an urgent release of funds was necessary. However, at present, our client's position is that if there is no such tax immediately due (or not to the extent of £8.5m), and no other reason has been given for a payment on account, then no release is necessary. In those circumstances, PSG would be content for the funds to remain with the Court, pending judgment, which is expected shortly."
9. Advocate Christie submitted that once a payment on account is justified by urgency, it was not appropriate to tie the size of the payment on account to the specific urgency in question. He therefore argued that there was no reason why the full £20 million paid into Court should not be released to the Plaintiff. He suggested that if the discretion threshold for a payment on account of liability is met, the test for the Court is what amount is below the minimum sum that will be payable, calculated on a conservative basis.
10. Advocate Christie referred to this Court's decision on 3 August 2023 concerning the Plaintiff's application for a payment on account of liability which was sought in order that the Plaintiff could settle his litigation funder's costs. In that decision we stated:
11. In his skeleton for the hearing that led to that judgment, Advocate Chistie had asserted that:
"There is English authority that such an order is appropriate in the case of unfair prejudice claims, especially where the Plaintiff is under financial pressure. In In the Matter of Annacott Holdings Limited [2011] EWHC 3180 at paragraphs 22, 28, 29, 31-32, the Judge was satisfied that the amount requested for the Plaintiff's hardship, and awarded, was "significantly below the minimum that [the Plaintiff] is likely to be entitled to receive."
12. In Annacott Holdings Limited [2011] EWHC 3180, H.H. Judge Hodge Q.C. stated (at para 21):
13. It is the view of this Court that not only should the Plaintiff demonstrate a real need for immediate funds, but the Court may also take into account the amount that is the subject of the "real need". The Court, in exercising its discretion, should of course also have regard to the minimum amount that will be due to the Plaintiff when a final judgment on quantum is delivered but it is not bound to award that sum.
14. To the extent that it may be argued that the Court should disregard the amount required by the Plaintiff to satisfy an urgent liability, the Court therefore disagrees with the Plaintiff's assertion, at paragraph 17 of his skeleton argument, that "once a payment on account is justified by urgency, it is not appropriate to tie the size of the payment on account to the specific urgency in question".
15. It is unfortunate that the Plaintiff did not feel able to provide evidence to the Second Defendant to answer the points raised by it. Given the Plaintiff's concern at the Second Defendant being given details of his personal circumstances the issue as to the manner in which the liability has arisen could, for example, have been dealt with by a statement from the Plaintiff's tax advisers based on general principles, rather than on a detailed analysis of the Plaintiff's own position. However, it could also be said that given that the liability and the possibility of such an application as this being made was foreshadowed in his skeleton argument for the hearing on 17 December 2024, to which we have already referred, it was open to the Second Defendant to obtain their own tax advice on the matter.
16. The Court has had regard to the confidential affidavit but has borne in mind that it has not been seen by the Second Defendant, which has therefore not had the opportunity to challenge it.
17. Counter-intuitive as it may seem that a liability to tax has arisen on funds not yet received by the Plaintiff, the Court is satisfied that the Plaintiff has filed his tax return for 2023/2024 in accordance with advice received from his tax advisers, Messrs Rawlinson & Hunter, reporting an estimated figure of £42,000,000 in respect of the disposal of his interest in the First Defendant, this disposal having arisen as a result of the Court's judgment on liability. It may well be, as suggested by the Second Defendant, that another tax adviser might argue that a taxable event has not yet arisen but on the evidence before the Court there is a substantial liability arising from the disposal that needs to be satisfied.
18. Furthermore, according to the Plaintiff's tax advisers, the payment date for the tax on a disposal that occurred in the tax year 6 April 2023 to 5 April 2024 is 31 January 2025. Late payment interest accruing on the sum is due at 7.5% from 31 January 2025.
19. In relation to the Second Defendant's assertion that the Plaintiff has not explored the possibility of a partial deferral of the amount due, it would appear that the Plaintiff's tax advisers have been exploring both a late payment arrangement and payment by instalments, but both have an uncertainty of outcome as they depend on HMRC exercising a discretion, rather than there being an absolute entitlement. Meanwhile late payment interest will continue to accrue, and a 5% late payment penalty will arise if the liability is not paid by 28 February 2025.
20. The Plaintiff has however disclosed in his affidavit, quite properly given that it is not being shared with the Second Defendant, that he was able to pay £3,219,359.22 on 31 January 2025, part of which was in respect of other personal tax liabilities and on account of the next year's liabilities. This leaves a balance due of approximately £5,000,000.
21. The Court has had to balance the Plaintiff's immediate needs against the minimum amount that the Plaintiff is likely to receive but has also taken into account that the Second Defendant has, somewhat unusually, been put in a position where it has not had sight of the evidence upon which the application has been based. In these circumstances the Court orders the immediate release to the Plaintiff of £5,000,000 from the funds paid into Court by the Second Defendant.