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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Newsam v Inland Revenue [2002] EWCA Civ 1440 (24 September 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/1440.html Cite as: [2002] EWCA Civ 1440

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)

		Royal Courts of Justice Strand London, WC2 Tuesday, 24th September 2002

1. LADY JUSTICE ARDEN: This is an appeal against the refusal dated 25th May 2002 by Lawrence Collins J to grant an adjournment to Mr Newsam, the applicant today, and the subsequent decision of the judge to strike out Mr Newsam's application for a recision of his Bankruptcy Order alternatively for annulment.
2. The facts of the matter are lengthy and go into events occurring nearly 20 years ago. I would summarise the facts as follows: in 1983 Mr Newsam became the subject of an investigation by the Inland Revenue. From 1984 to 1990 they raised about 19 estimated assessments against Mr Newsam in respect of his business as a motor car dealer. On 8th March 1990 the Revenue signed judgment in default for £90,674.03 for the years 1973/1974 and 1986/1987. Mr Newsam sought a stay of execution and applied to have the judgment set aside. On 23rd May 1990 a stay was granted and Mr Newsam's application to set aside was adjourned pending an investigation by the Revenue into his affairs. On 27th February 1991 there was a meeting with the Revenue at which the Revenue referred to a number of underlying accounting documents with which Mr Newsam had provided them. They include accounts, business records, notes of interviews, statements of assets and liabilities, lists of bank accounts and so on. In the course of the investigation Mr Newsam's accountant, Mr Banin, left the country without returning Mr Newsam's papers to him and this made it difficult for Mr Newsam to conduct negotiations with the Revenue. However, on 12th April 1994, following the investigation, the Revenue agreed to accept £25,000 from Mr Newsam in full satisfaction of his assessments, amounting to £130,000, together with potential (inaudible) of approximately £120,000. The sum of £25,000 was to be paid by instalments; on default of a payment the entire sum would become due immediately. The default judgment was set aside as the result of this agreement.
3. On 23rd April 1994, after the agreement was signed, Mr Newsam wrote to Mr Stephenson, the District Inspector of the Bromley District of the Inland Revenue, saying this:

"Two weeks ago I was coerced into signing an agreement for £25,000, a figure I do not owe. I feel extremely angry at your deliberate refusal to give me a copy of my papers, which were in your possession, to enable me to present my case to the Commissioner in May. This is a serious and malicious act which I hope to address in the near future. My only hope is that I will retrieve my papers from Mr Banin to justify my case. I do not owe this money."

4. Mr Newsam dealt with a number of matters in this letter and listed matters which he termed "injustices" suffered at the hands of the Inland Revenue in the past. The third item was the deliberate, malicious refusal over a copy of his papers, which he said had been in the Revenue's possession for years, in order to jeopardise his case before the Commissioners.
5. On 14th March 1997 the Inland Revenue served a statutory demand for some £28,000 because Mr Newsam had failed to pay any of the instalments, and the sum included in the statutory demand included interest. Mr Newsam complained that he had been induced to enter into the compromise agreement under duress.
6. On 8th September 1998 the Inland Revenue presented a bankruptcy petition against Mr Newsam in the High Court. Before this they had decided, having reviewed their files, that there was no evidence of duress. The matter had also been referred to the Inland Revenue Adjudicator, Mrs Elizabeth Filkin, who on 8th September 1998 also determined that there was no evidence of duress. However, she criticised the Inland Revenue for losing Mr Newsam's papers.
7. The matter came before Chief Registrar James in the High Court on 27th October 1998. The Registrar considered that there was a triable issue and he ordered therefore that the petition be dismissed. However, when the matter was heard by the Registrar, the Registrar was referred to a letter from the Inland Revenue, an Inspector Wray, which made it clear that the Revenue had had accounts back in 1994 when the agreement was signed. However, this was not a matter to which the Registrar referred in his judgment. The Inland Revenue appealed the order of the Registrar to the judge, and on 30th April 1999 Lloyd J, having heard the matter, gave judgment. He reversed the decision of the registrar and made a Bankruptcy Order. Thereafter what the judge said was this:

"What a taxpayer must show, in order to say that an agreement between him and the Revenue is not binding, is that the Revenue, or some officer of the Revenue, has been guilty of some conduct which involves a coercion of the taxpayer's will, with the result of vitiating what would otherwise be his consent to the agreement. The mere economic pressure of the prospect of being made liable to very substantial tax liabilities on an assessment, confirmed on an appeal -- or even varied on an appeal -- is not sufficient. Whether the amount be large or not so large so that the taxpayer cannot easily or at all afford to pay the amount is not a factor which is relevant to the defence of duress."

8. It seems to me that in what I have recited and summarised of the evidence, there is nothing on the part of either Mr McLaren or Mr Stephenson -- I interpose they were both officers of the Inland Revenue -- which amounts to conduct on their part coercing Mr Newsam's will so as to vitiate his consent. The truth is, as he quite frankly says and has said this morning, that he really had no option. If he had not come to an agreement, he was going to be faced with an appeal hearing in May, there being very little chance that he would have recovered his papers by then. Without those papers he would not have been in a position to argue in support of the appeal that the Revenue's assessment figures were wrong. Either he did a deal with the Revenue, as suggested by Mr McLaren, or he faced an imposed liability of some £250,000 a month or thereabouts later.
9. That is a situation which, of course, is a product of the Revenue's acts in the sense that they made the assessment, but that in itself is not a coercion of Mr Newsam's will. Nor, in my judgment, is anything that Mr McLaren or Mr Stephenson said to him on the occasions that I have mentioned in the first few months of 1994.
10. The matter was then appealed to the Court of Appeal and the members of this court were Morritt LJ and Harrison J. The matter was heard on 24th February 2000 and the Court of Appeal then refused permission to appeal, finding that there was no evidence that the agreement was vitiated by duress. The matter was considered in detail, the court referred to an affidavit of Mr Newsam and it agreed with the conclusions which Lloyd J had come to. There was, however, no allegation based on a withholding of papers.
11. It is important that I should draw attention to what Morritt LJ said at paragraph 28 and 29. He said:

"Before us, Mr Newsam has contended that the Revenue had maliciously and unlawfully withheld his papers from him so as to put him at a disadvantage thereby inducing him to sign the agreement as the only possible course of action open to him in the circumstances.

"The trouble with that allegation is that it was never made before. I have quoted from the relevant passage of his affidavit where he deals with his request to Mr McLaren to use the Revenue's copy of the documents. He does not there say that they were maliciously withheld from him. He admitted that the point was not raised on the bankruptcy petition either before the registrar or the judge, and, in my view, it is not now open to him."

12. In the remaining paragraphs of his judgment Morritt LJ dealt with a number of other matters which he also rejected. I would mention paragraph 33, where Morritt LJ says that Mr Newsam contended that he did not owe the Revenue any money, and Morritt LJ said this:

"I am afraid with that contention likewise, I would say that it does not, in my view, give any ground at all for setting aside the agreement into which he voluntarily entered on 12th April 1994."

13. That, then, was the decision of this court. In April 2000 Mr Newsam made an application to the High Court under Section 282(1) of the Insolvency Act 1986 for the annulment of the Bankruptcy Order. The matter came before Rimer J on 22nd May 2000. Rimer J refused an adjournment and dismissed the application. The order was the result of Mr Newsam's failure to indicate any new grounds for challenging the Bankruptcy Order, other than the grounds previously argued in the High Court and the Court of Appeal and disposed of there.
14. On 30th January 2002 Mr Newsam applied to annul the order of Lloyd J under Section 282(1)(a) of the Insolvency Act 1986 on the grounds that it should not have been made, and alternatively sought an order under Section 375(1) rescinding the order made by Lloyd J or reversing the order of Rimer J. The Inland Revenue applied to strike out Mr Newsam's application on various grounds, including that it disclosed no relevant facts or changes in circumstances which would give any ground for altering the orders already made.
15. The Revenue's application was ordered to be heard on the date for the hearing of the application by Mr Newsam, and Mr Newsam's application was adjourned to be heard immediately following the Revenue's ordinary application, and by the same judge. The matter came before Lawrence Collins J, and Lawrence Collins J ordered that the Revenue's application should be heard first. At that point Mr Newsam applied for an adjournment, a matter to which I will return, and that was an application which the judge refused, and which is the subject of Mr Newsam's application today. Lawrence Collins J, as I have said, struck out Mr Newsam's ordinary application and directed that Mr Newsam should pay the Revenue's costs.
16. I will now go to the judgment of Lawrence Collins J. Having set out the facts, the judge dealt at paragraph 12 with the question of an adjournment. He refused an adjournment because Mr Newsam had not been represented before the Registrar, or Lloyd J, or Rimer J, or the Court of Appeal. The judge took the view that he was very familiar with the issues in this case and, moreover, there were a large number of papers available to the court in any event, and if the court was in difficulties because Mr Newsam was a litigant in person, it would be the obligation of the counsel for the Inland Revenue to draw the court's attention to matters which might assist Mr Newsam.
17. The judge then summarised Mr Newsam's case: firstly that he would not have signed the agreement if the Revenue had not refused copies of the papers. Secondly, he had no sufficient chance to read the authorities cited to Lloyd J. That, however, was a matter which had already been dealt with in the Court of Appeal's judgment. Thirdly, he had written to the European Court of Human Rights and had had no proper reply from them or the Revenue. Fourthly, Mr McLaren would not give him copies of invoices so that he could investigate them, and Mr Stephenson had often told him that he was "going to get me" and "relied on other events surrounding the hearing before the General Commissioners on 20th January 1994." That was a hearing which was in fact adjourned and so, as I say, nothing turns on it.
18. Fifthly, Mr Stephenson had offered a deal by which he paid £60,000 in instalments, which Mr Newsam had refused, and Mr Newsam said that Mr Stephenson said he would ensure that the General Commissioners assessed his tax at £250,000. I have not been concerned with that matter.
19. The last matter was that Mr Newsam signed the agreement in desperation since he did not wish to face Mr Stephenson, who had made so many threats for obtaining an exaggerated assessment of his tax. He thought that he might be able to reopen the assessment once he had recovered his papers from Mr Banin, and there was no point trying to appeal the assessment without any papers.
20. The judge examined the letter of 23rd April 1994, which I have already read in material part. The judge stated that it was shown that Mr Newsam had complained within two weeks of the agreement about Mr McLaren's deliberate withholding of copies. In paragraph 15 the judge said that Mr Newsam had put material before the court which suggested that the Revenue had been misleading about the fate of the papers which they held. Mr Newsam claimed that the Revenue had shredded his papers, that the bankruptcy petition was fraudulent and that there was malicious conspiracy.
21. The judge, in the final paragraph of his judgment, rejected Mr Newsam's arguments. He said that there was no change in circumstances which justified the exercise of the jurisdiction on which he relied; there was no evidence of duress vitiating consent; there was no new material for consideration by the court; that the Court of Appeal had considered the fairness of the hearing before Lloyd J; and that the letter of 23rd of April merely raised the complaint and alleged that the failure to provide copies was malicious.
22. In the judge's judgment that did not affect the substance of the claim, nor did the allegations of deliberate withholding of papers after the settlement agreement have any relevance at all to the question of whether the agreement to pay £25,000 was binding.
23. In his argument before me, Mr Newsam has in effect relied on five matters with which I must deal. First, he contends that there is an arguable case that the judge's decision on adjournment was wrong. Second, he refers to the letter dated 10th October 1998 from Inspector Wray. He states that that shows that the Revenue had documents in 1994, when he signed the agreement, and therefore could have given them to him.
24. Mr Newsam has produced an affidavit of Miss Susanne Daniel, which he says was not before the judge, which states that Chief Registrar James was referred to a letter from Inspector Wray, to which I have already referred. Lawrence Collins J did however have the Registrar's notes, which are to the same effect -- see the letter dated 30th April 2002 from the Court Service to Mr Newsam, which is at page 63 of the red file before me. In addition there is a letter dated 21st October 1998 to the same effect from Inspector Wray to Mr Newsam personally at page 21 of the bundle of documents used before the judge. It says:

"I am writing to confirm that I have reviewed the records, which you supplied, in respect of the years 1973/74 to 1990/91 and advise that these are no different to the original records submitted, except for the amendments made to the accounts to include a private use adjustment for both telephone and motor expenses. There is [sic], therefore, no grounds to re-open the investigation which was concluded on 12 April 1994."

25. Mr Newsam thirdly relies on a letter of 23rd April 1994, to which I have referred. Fourthly, he relies on the meeting of 27th February 1991, to which I have also referred. However, this deals with events in 1991 and cannot therefore, as it seems to me, be of any real assistance in relation to the agreement signed in 1994. Fifthly, he relies on an event in the Croydon County Court, where Mr Newsam had presented an application to set aside the statutory demand. He agreed to its being withdrawn, but in fact the order of the court was for its dismissal. He says that the petition could not have proceeded if the right order had been made. However, this is a matter he knew about at the time and therefore, as it seems to me, cannot be a matter which founds any complaint at this stage.
26. So the real matters in issue are the first three, which I will now deal with, the first being the adjournment. Mr Newsam puts it two ways. First he says that he wanted to get some more evidence before the judge, namely a sworn statement from Mr Guram. Mr Guram was a practising accountant. The Revenue apparently took the view that Mr Newsam had had advice from Mr Guram, and Mr Newsam wanted to obtain evidence in sworn form from Mr Guram to show he had not had any independent advice when he signed the agreement.
27. He also wanted to obtain a statement from Mr Harding but it is not clear to me what that would have dealt with. The fact of the matter is that these are not matters that he mentioned to Lawrence Collins J at the time and therefore cannot be a ground for impeaching his decision at this stage. The real ground is that Mr Newsam wanted to be represented, but Mr Newsam had no right to be legally represented. I appreciate he had lost his legal advisers very shortly before the hearing, but that is a matter which the judge took into account, and the judge was satisfied that there would be no prejudice to Mr Newsam if he allowed the hearing to continue. It is not shown, as it seems to me, that there is any case for saying the judge omitted to consider any relevant consideration. He took into account the question of whether Mr Newsam could adequately represent himself, and in the light of the previous experience and the quantity of documentation, he took the view that he could. Mr Newsam has not suggested that there was any matter at which he was put at a disadvantage. Accordingly, it seems to me, there is no triable issue on the adjournment point.
28. I now turn to the two remaining matters. The first is the letter of October 1998 from the Inland Revenue, to which the Registrar referred in the hearing. He said in his notes:

"The accounts do not disclose any material difference since the original accounts."

29. The judge took the view that the letter was to the same effect. I accept that it must be that the Revenue had documents in their possession at the time that this letter was written, alternatively at the time that the agreement was signed in 1994, which is the material date. Otherwise they could not have considered those documents at a later stage. However, although the word "records" is used, it seems to me that that must be a reference to accounts rather than to records. Accordingly, it seems to me that the fact that this letter was written does not, as Mr Newsam submits, conclude his case.
30. Mr Newsam has submitted to me that it is sufficient for his purpose to show that the Revenue maliciously withheld papers. This letter is helpful in showing that they must have had some papers, but it seems to me that those papers, so far as this letter is concerned, were probably only the accounts. However, for the purposes of the final point I will assume that the Revenue did have the relevant documents in 1994 and consider the final point based on the letter of 23rd April 1994.
31. At this point I must say a little about the law of duress. The Court of Appeal and Lloyd J took the law from the decision of the Privy Council in Pao On v Lau Yiu Long [1980] Appeal Cases 614 at 635/6. It is sufficient, I think, if I read simply the paragraph at 635b. It is from the advice of the Privy Council, which was given by Lord Scarman:

"Duress, whatever form it takes, is a coercion of the will so as to vitiate consent. Their Lordships agree with the observation of Kerr J in Occidental Worldwide Investment Corporation v Skips A/S Avanti [1976] 1 Lloyd's Report 293, 336 that in a contractual situation commercial pressure is not enough. There must be present some factor 'which could in law be regarded as a coercion of his will so as to vitiate his consent'. This conception is in line with what was said in this Board's decision in Barton v Armstrong [1976] A.C.104, 121, by Lord Wilberforce and Lord Simon of Glaisdale -- observations with which the majority judgement appears to be in agreement. In determining whether there was a coercion of will such that there was no true consent, it is material to inquire whether the person alleged to have been coerced did or did not protest; whether, at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy; whether he was independently advised; and whether after entering the contract he took stops to avoid it. All these matters are, as was recognised in Maskell v Horner [1915] 3K.B.106, relevant in determining whether he acted voluntarily or not."

32. So it is not enough to show, as I have assumed, that the Revenue withheld documents improperly. It has to be shown that the effect of their so doing was a coercion of Mr Newsam's will, so as to vitiate his consent to the agreement. In considering that question it is material to consider whether he protested, whether he had any alternative course open to him, whether he was independently advised and so on.
33. Now, the letter of 23rd April 1994 was not before the Court of Appeal or Lloyd J on the previous applications. It apparently has only just been uncovered after being lost with other documents. In his evidence in the proceedings before Lloyd J, as quoted by Lloyd J and the Court of Appeal, Mr Newsam said this, and it is quoted at paragraph 18 of Morritt LJ's judgment:

"Mr McLaren phoned on Monday, stating that he was transferred to Dartford and that he was clearing his desk with a view to leaving the following Wednesday. I told him that it was important that I see him as soon as possible to discuss my tax affairs and loss of my papers. He suggested I meet him at his office that morning. On my arrival I pointed out the grave position I was in -- without my papers I was unable to fight my case. I also pointed out that having investigated me for so many years he was able to evaluate my true earning power. He stated that whatever figure was decided between us it would have to be sanctioned by Mr Stephenson.

"He also pointed out that my papers were on Mr Stephenson desk and that he would be dealing with my papers personally. He also stated that he would not like -- were he in my shoes -- Mr Stephenson handling his affairs. I was desperate. Mr McLaren knew that Mr Stephenson had gone over the top on several occasions in a threatening manner when dealing with my affairs. He also treated Mr McLaren like a schoolboy -- shouting at him in my presence on several occasions.

"That day I signed an agreement to pay £25,000 in sheer desperation. I had £21.07 credit in my bank and arrears on my mortgage of £654.18 with the Alliance and Leicester. My partner Sue Daniel at that time had an overdraft at her bank of £1,876.39. I signed under duress. I knew that I would have been unable to pay -- I only hoped that I would retrieve my papers and with them attend a Commissioners Contentious Hearing to prove my case."

34. While that refers to the loss of documents, the real point being made is that Mr Newsam signed the agreement in what he describes as "sheer desperation". He knew that he was unable to pay, he hoped to retrieve the papers and with them to attend the Commissioner's Contentious Hearing to prove the case.
35. In the letter of 23rd April 1994, Mr Newsam is saying that he felt extremely angry at the papers having been refused to him. He does not, however, say in that letter that he would not have signed the agreement if that refusal had not been made. It is quite clear from the letter that what he proposed to do was in effect to sign the agreement and then not to pay, but rather to go to the Commissioners and dispute the matter before them. Moreover, he hoped to retrieve the papers from Mr Banin to justify his case in order to show that he did not owe the money.
36. Before me today Mr Newsam said that his whole aim was to go to the Commissioners and that the bank statements and cheque books would show that he did not owe any money, and that he was not going to pay. He added that this was not commercial pressure, and that he could in fact pay from the proceeds of his house. I am not inclined to accept that statement in the light of what he said in his affidavit before Lloyd J, and which I have read.
37. It seems to me it is clear that Mr Newsam did not sign the agreement under coercion as a result of the refusal of his papers; rather he believed that he could get the papers from Mr Banin, or that he would be able to refuse to pay and to have the matter adjudicated by the Commissioners. In those circumstances it seems to me that there is no triable issue on this point as would now justify an appeal against the order of Lawrence Collins J.
38. All in all the material is very similar to that which has already been considered by the court, but even making the assumption favourable to Mr Newsam that the refusal was malicious and wrongful, and also accepting that the letter of 23rd April 1994 was a complaint, albeit after the event, a complaint about the same time as the agreement was signed, it does not seem to me that Mr Newsam has a triable issue on the further point that the refusal of the papers was what caused him to sign, or that he had no alternative. He felt that he did have alternatives and was hoping be able to show by other means that he did not owe the Revenue money. In those circumstances I must dismiss the application.
ORDER: Application dismissed.