PROCEDURE — hearing in public or private — VAT Tribunals Rules 1986 r 24(1) — assessment to recover allegedly over-claimed input tax — VATA 1994 ss 25, 26, VAT Regs 1995, reg 29, Sixth Directive art 18 — Human Rights Convention arts 6 and 8 — appellant a sole practitioner solicitor — application for hearing of appeal in private —protection of client confidentiality — assertion of risk of damage to reputation — Civil Procedure Rules 1998 Part 39 — no sufficient reason for hearing in private — application refused

MANCHESTER TRIBUNAL CENTRE
 	
A PRACTITIONER	
Appellant
	
- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE
Respondents

			Tribunal:	Colin Bishopp (Chairman)
				Brian Strangward		
Sitting in private in Manchester on 8 December 2003 
Practitioner in person
Jonathan Cannan of counsel, instructed by their solicitor’s office, for the respondents

ANONYMISED DIRECTION

© CROWN COPYRIGHT 2003

DIRECTION
1	On 8 December 2003 we sat to hear the appeal of Practitioner against an assessment made as long ago as September 1999 by which the respondents seek to recover input tax which, they say, Practitioner has over-claimed since he does not have the necessary supporting documentation. Practitioner’s case is that he has secondary evidence which the Commissioners should accept. It is as mundane a dispute as one could imagine, and quite why it has taken so long to come to a hearing is, at the moment, a mystery. It has still not come to a hearing because Practitioner asked for a direction that the appeal be heard in private. We refused his application but since he indicated that he would be considering an appeal against our refusal once he had been able to read our reasons, we concluded that we could not properly proceed to hear the appeal in public, and we postponed it. Counsel for the Commissioners, Jonathan Cannan, agreed that we were compelled to adopt that course.
2	The jurisdiction to make a direction such as Practitioner sought is conferred on the tribunal by rule 24(1) of the Value Added Tax Tribunals Rules 1986 (SI 1986/590):
“The hearing of an appeal shall be in public unless a tribunal, on the application of a party thereto, directs that the hearing or any part of the hearing shall take place in private.”
Neither there nor elsewhere in the Rules is any guidance offered about the criteria by which the tribunal’s discretion is to be exercised. It is, however, apparent from the rule that the presumption is that hearings should be in public; and it is, in practice, very rarely that hearings, or parts of hearings, before this tribunal take place in private.
3	Practitioner gave us three reasons for his application. He was anxious that client confidentiality (he is a solicitor) might be breached if the hearing were in public. He was concerned that his reputation could be affected adversely if it became known that he was making an appeal to this tribunal—others might think he was “in trouble with his VAT” as he put it; and also that a comment apparently made by a Customs officer, and documented, that his accounting records were in poor order would gain wider currency and embarrass him. If the hearing was in public he might be inhibited in pursuing it by those considerations.
4	Practitioner’s argument was based on articles 6 and 8 of the European Convention on Human Rights, and in particular on the protection by the latter of “the right to respect for his family and private life”. It was no answer to say, he argued, that the appeal concerned his business life since he is a sole practitioner and no distinction could be drawn between Practitioner the businessman and Practitioner the private person: they are one and the same. The coming into force of the Human Rights Act 1998 had changed the approach which the courts and tribunals should adopt when considering a request for a private hearing, and much greater weight should be placed now on the respect for private life than might have been the case in the past. Article 6, though also favouring public hearings, did not preclude a private hearing when “the protection of the private life of the parties” so required. There was no need in this case for a public hearing and correspondingly no reason why the tribunal should not accede to his application.
5	Cases such as McNicholas Construction Company Limited (1998, Decision 15575) must be treated with caution, he argued, since they had been decided before the coming into force of the Human Rights Act and rarely even mentioned the Convention. In that case, dishonesty on the part of Practitioner was alleged by the Commissioners. Practitioner applied for a direction that the appeal be heard in private, relying on the dictum of Lord Grantchester in Guy Butler International Limited [1974] VATTR 199 at 201 that an appeal might be heard in private in “exceptional circumstances” which could include a case in which a hearing in public “would be likely to harm Practitioner in the course of his business”. The tribunal refused McNicholas’s application, saying:
 “We accept that harm to an appellant may in appropriate circumstances be a reason for a private hearing. The sort of harm, or the possibility of it, that might warrant a private hearing is where particulars of a secret process which was the property of a party to the proceedings would have to be disclosed. That, we think, is the type of collateral damage that a private hearing should protect; and, we think, that is the sort of harm that Lord Grantchester had in mind. Here, however, the possibility of damage results directly from the allegation [of dishonesty] that is central to the Commissioners’ case … This is not a case of risk of collateral or incidental damage to some asset of McNicholas being caused. Harm to reputation is a risk that inevitably follows from all assessments based on alleged dishonesty on the part of an appellant.”
6	Practitioner contended that the approach adopted by the tribunal in McNicholas must now be regarded as too restrictive. His argument, as we understood it, was that right to protection of private life should now be given priority over other considerations, and the requirement that the applicant must establish collateral damage of the kind identified by the tribunal set the standard too high. Any prejudice to a party’s private life should be prevented. 
7	Mr Cannan, though taking an essentially neutral stance, remarked that it had never been the practice of the tribunal to hear cases in private save in the most exceptional circumstances. That was true in dishonesty appeals, such as McNicholas, which by their nature had much greater potential for embarrassment of an appellant, or for damage to his reputation, than a case such as this where no moral turpitude was alleged. It had also never been the practice to treat professional people in any different way, just as the civil courts did not grant private hearings in claims for professional negligence. The risks of harm which Practitioner had identified, he said, were imprecise and insubstantial. 
8	He referred us to Storer v British Gas plc [2000] 1 WLR 1237, a decision of the Court of Appeal which, of itself, is of little help save that it quotes with approval (as had also been done in Hodgson v Imperial Tobacco Limited [1998] 1 WLR 1056) the reasons given by Sir Jack Jacob QC in his Hamlyn Lecture in 1987 for public justice, namely “that it removes the possibility of arbitrariness in the administration of justice … by sitting in public, the judges are themselves accountable and on trial. This was powerfully expressed in the great aphorism that ‘It is not merely of some importance but is of fundamental importance that justice should not only be done but should manifestly and undoubtedly be seen to be done.’”
9	While those comments undoubtedly encapsulate what has been the practice in England for many years, they do not address Practitioner’s argument that the climate has changed following the coming into force of the Human Rights Act. The Convention was not mentioned in either Hodgson or Storer, although even if the Act had been in force it was of, at the most, peripheral relevance in Hodgson and of no relevance at all in Storer. The Act post-dated Sir Jack Jacob’s lecture by over ten years.
10	Practitioner’s argument is, however, somewhat striking since it is at odds with what has in fact been the trend in the United Kingdom in recent years. A little later in his Hamlyn Lecture, Sir Jack Jacob identified, as an exception to the general rule that hearings should be in public, those before the Commissioners of Inland Revenue, by whom he meant the General and Special Commissioners. Their jurisdiction, in direct taxes, is directly comparable to the jurisdiction of this tribunal in indirect taxes. In 1987 it was certainly the practice that such hearings were in private, but that practice was changed, for the Special Commissioners in 1994 and for the Generals with effect from 31 December 2002, and the presumption now is that such hearings take place in public (see Special Commissioners (Jurisdiction and Procedure) Regulations 1994 (SI 1994/1811), reg 15 and General Commissioners (Jurisdiction and Procedure) Regulations 1994 (SI 1994/1812), reg 13, as amended by the General Commissioners and Special Commissioners (Jurisdiction and Procedure) (Amendment) Regulations 2002 (SI 2002/2976)). Parliament must be taken to have had the Human Rights Act in mind when those amendments, confirming the presumption in favour of public hearings, were effected.
11	The recent creation of the Financial Services and Markets Tribunal, by the Financial Services and Markets Act 2000, led to intense debate, within Parliament and elsewhere, about whether the tribunal should hear references in public or private. Many references, by their very nature, have the potential to cause considerable harm to reputation if the details reach the public domain. Nevertheless, and with the Human Rights Act in mind, Parliament decided that the presumption should be that hearings take place in public: see the Financial Services and Markets Tribunal Rules, 2001 (SI 2001/2361), rule 17.
12	In the more general context of civil procedure in the courts, as Mr Cannan pointed out, Part 39 of the Civil Procedure Rules does allow for hearings in private, but only in narrowly defined classes of case. Rule 39.2(3) allows for a private hearing when (among other circumstances not relevant here) the case “involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality”. The Practice Direction which supplements that rule indicates that the cases which fall within it are those in which the entire financial standing of one party is in issue, or the information which will be exposed is intrusive, and there is no public, rather than private, interest in the information.
13	The proviso to article 6 of the Convention permits the exclusion from a hearing of the press and public when the court considers that “the protection of the private life of the parties” so requires. However in Håkansson and Sturesson v Sweden (1991) 13 EHRR 1, at para 66, the European Court of Human Rights indicated that there are limits to the circumstances in which a private hearing should be directed:
“The public character of court hearings constitutes a fundamental principle enshrined in paragraph 1 of article 6. Admittedly neither the letter nor the spirit of this provision prevents a person from waiving of his own free will, either expressly or tacitly, the entitlement to have his case heard in public … However, a waiver must be made in an unequivocal manner and must not run counter to any important public interest.” [emphasis added]
14	In article 6, too, there is no guidance about the criteria which are to be taken into account, although we observe that some of the other reasons for hearing a case in private impose the condition that it is “strictly necessary”. We observe too that although the hearing, or part of it, may be in private, judgment is to be pronounced publicly, and the article does not provide for exceptions to that requirement. Article 8.2 prohibits the interference by a public authority (which includes the Commissioners and this tribunal) with the right to respect for a person’s private life “except such as is in accordance with the law and is necessary in a democratic society …”. What is meant by “necessary” and, perhaps even more important, what is meant by “private life” is not defined.
15	We turn therefore to the jurisprudence of the European Court of Human Rights for some guidance. It becomes apparent from doing so that what is meant by “respect for his private life” is that an individual is entitled to live his life as he chooses, subject only to the permitted exceptions: see, for example, Niemitz v Germany (1992) 16 EHRR 97, at para 29. However, that does not mean that he can behave as he wishes, without restriction: “regard must be had to the fair balance that has to be struck between the general interests of the community and the interests of the individual, the search for which balance is inherent in the whole of the Convention” (see Sheffield and Horsham v United Kingdom (1998) 27 EHRR 163, at para 52). The Court does regard some intrusions on privacy, not of themselves preventing a person from behaving as he wishes, as contraventions of article 8: telephone tapping is an example (Malone v United Kingdom (1984) 7 EHRR 14). However, it is apparent that if they are to be regarded as breaches of article 8 such intrusions must be invasive, and not justified in the wider public interest.
16	We were not persuaded that there is any merit in Practitioner’s argument that he, as a sole practitioner, was to be treated differently from solicitors practising in partnership. Nor do we think he is entitled to any greater protection than would be available to a director of a limited company. In our view, a person’s entitlement to the rights enshrined in the Convention is not affected by the capacity in which he is acting when they arise. There is nothing in the Convention which suggests that some categories of individual have greater rights than others, or that a right which a person might have as a sole practitioner is lost if he enters into a partnership.
17	The issue between the parties in this case is, in essence, whether Practitioner is entitled to retain money to which the Commissioners, representing the public purse, maintain he has no entitlement. It is for Practitioner to establish his right: that is so in domestic law (see Value Added Tax Act 1994 sections 25 and 26 and the VAT Regulations 1995 (SI 1995/2518) reg 29) and in European law (see the Sixth VAT Directive (77/388/EEC) article 18 and Rompelman v Minister van Financiën (Case 268/83) [1985] ECR 655 at 665). There can be no possible basis on which Practitioner is entitled to the protection of article 8 in that context: it is, self-evidently, in accordance with the law and, equally self-evidently, necessary in a democratic society that taxpayers seeking a refund of tax should produce the evidence by which their claims are to be tested. Requiring the production of such evidence could not, in our view, conceivably be regarded as invasive of a person’s privacy. The requirement does not restrict Practitioner’s ability to live his life as he chooses; it merely requires him to demonstrate that he is entitled to demand that the public purse should pay or credit to him a given sum of money. Even if that could be regarded as an invasion of his privacy, it is clearly a matter within the contemplation of paragraph 2 of article 8 (and, for that matter, the second paragraph of article 1 of the First Protocol).
18	Can it, however, be said that while Practitioner must produce the evidence to the Commissioners and, in the event of a dispute such as that which has arisen here, to the tribunal, the nature of the dispute must be concealed, any evidence led by the parties and submissions made on their behalf must be heard behind closed doors, and the outcome of the appeal, in the shape of the tribunal’s written decision, must remain confidential to the parties? In our view, the answer to that question is clearly no.
19	It  is apparent from those extracts of the Convention we have set out and from the Strasbourg jurisprudence (particularly Sheffield and Horsham v United Kingdom) that a balance must be struck between the public interest and the individual’s rights. The public interest in open justice, and the reasons for it, were described by Sir Jack Jacob. There is the further public interest in this case that all appeals before this tribunal are between citizen and state; other citizens are entitled to know that the tribunal is applying the law correctly and fairly. That entitlement is not compatible with holding hearings in private. Practitioner asks us to set aside that public interest in favour of secrecy, because of nebulous fears for his reputation. Even if those fears were real and substantial, they do not come close to the risk to reputation which inevitably follows an allegation of dishonesty; yet in McNicholas, a decision whose authority has not, in our judgment, been diminished in any way by the coming into force of the Human Rights Act, and with which we entirely agree, even that risk was regarded as insufficient to justify a private hearing.
20	Any risk of a breach of client confidentiality can be addressed by the simple expedient of not mentioning the names of Practitioner’s clients, or the nature of their business, either at the hearing or in the resulting decision, or by using pseudonyms; but that does not require a hearing in private, and the parties agreed that there would be no practical difficulties in the way of dealing with the matter in that fashion.
21	For those reasons we dismissed Practitioner’s application that the hearing should be in private. If no notice of appeal, or application for judicial review, has been lodged by him before the expiry of 56 days after the release to the parties of this direction, the appeal is to be set down to be heard at Manchester in public, on the first available date.
22	The costs of and occasioned by this hearing are reserved to the tribunal ultimately disposing of the case.

COLIN BISHOPPChairmanRelease Date: 12 December 2003