Hobbs Close Ltd v The Commissioners for HMRC & Anor
Decision date: 4 August 2023
Neutral citation: [2023] UKFTT 696 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
HMRC applied for a third-party costs order under rule 10(1)(c) FTT Rules to make Mr Sameer Dhanji jointly and severally liable with Hobbs Close Ltd for HMRC's costs of three struck-out appeals. The Tribunal found jurisdiction and that the case was exceptional because Mr Dhanji, as sole director/shareholder, had driven a hopeless appeal in bad faith and for personal benefit, so HMRC was in principle entitled to a third-party order. However, having regard to Mr Dhanji's undisputed impecunious financial position under rule 10(5)(b) and the overriding objective, the Tribunal declined to make him personally liable and dismissed the application.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
Where a taxpayer has not opted out of the costs regime in a complex FTT case, the Tribunal may make a third-party costs order against a non-party who is effectively the real party to the litigation; such orders are exceptional and may be justified where the non-party instigated or pursued proceedings in bad faith or for personal benefit, but the non-party’s financial means must be considered before imposing personal liability.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal noted that failure to warn a third party of a possible costs application is a highly material factor, though not necessarily dispositive; and that the Tribunal may exclude specific categories of costs (for example, extensive forensic investigation costs) from a third-party order where the third party did not approve or understand those lines of argument.