Mark Twain once said “Rumours of my death have been greatly exaggerated.”
Today’s newspapers in Scotland have pronounced the last rites over Rangers Football Club. However, I suggest in this piece that the Death Certificate could have been signed prematurely, and that there remains an option, by taking on HMRC in court, which might give Duff & Phelps and Mr Green enough “oxygen” to keep Rangers alive into next season and potentially an increased offer to creditors.
The answer to the question at the top of the page is “yes”, in that an administrative decision, as this is, and carried out by a public authority, can generally be subject to consideration and review by the Court. In reality, there are various reasons why, even if it did not succeed, it could still work to the advantage of Rangers and of Mr Green.
I thought about it when reading Mr Green’s thoughts from yesterday as detailed on the official Rangers website. I have added emphases to the relevant parts of the edited article.
Green had hoped his group could take control whilst keeping the current company in operation and had been led to believe that was likely to happen. But he feels the goalposts have been moved somewhat and is hugely frustrated by a move which leaves his investors with little option but to revert to an alternative plan.
“It’s massively disappointing and I think to some extent we have been misled by HMRC,” Green said.
“Duff and Phelps have consistently said to me that they were in dialogue with HMRC and that they hadn’t rejected the CVA route.
“Irrespective of what I was being told by HMRC, my own advisors at Deloitte have been in dialogue with them too.
“To see them today saying this is a ‘policy decision’ leaves me speechless. If that’s the case, is that a policy that was invented this week?
“It would also have removed the false hope from Rangers fans. There is no possible way that this is better for creditors.
“I’ve read HMRC’s statement which says they’ve chosen this route so that they can pursue former directors. I’m not a lawyer but if a former director has done something wrong, he should be pursued. I don’t believe turning down a CVA is a price worth paying to pursue previous directors.”
There is no appeal against the decision of HMRC to reject the CVA proposal. However, as a public authority, and acting in a discretionary matter, subject to published policies, HMRC has a duty to obey the law, and to act fairly within the terms of it.
The HMRC website specifically recognises this duty and the option of Judicial Review. It states:-
“For most tax matters there are appeal procedures set out in law that enable disputes between the customer and HMRC to be settled. But in some cases there is no right of appeal to the tribunal against HMRC actions.
This is mainly where the decision made is in relation to a discretionary matter, for example a decision on whether a late claim should be accepted, or the application of Extra-Statutory Concessions. Where there is no statutory right of appeal a customer may turn to judicial review to take the dispute forward.
A customer may seek judicial review if they believe that an HMRC officer is not carrying out, or is delaying in carrying out their duties, has assumed powers to which they were not entitled or did not properly exercise their discretion, for example by refusing to apply an Extra-Statutory Concession.
Judicial review may also look at HMRC decisions where the dispute is not about whether the decision is technically correct but where a customer claims that they were misdirected and in consequence suffered disadvantage, for example that a return is wrong because they relied on incorrect advice received from HMRC.
Judicial review may also consider cases where the customer believes that an HMRC officer has not listened properly to their representations or has acted in a way that appears to be unfair.”
HMRC accepts, as it has to, the obligation to ensure that its decisions are fair and reasonable and procedurally sound.
Accordingly, it cannot take account of irrelevant factors, or ignore relevant ones, when arriving at its decision.
It must not make an unreasonable decision. An unreasonable decision is one that no reasonable authority could have come to in the same circumstances and having the same information.
There must be no question of bias or undue influence.
The policy being implemented must also be legitimate in connection with the rules applicable to the particular area.
The authority must act fairly and ought not to mislead parties as to its procedures or intentions.
Finally, and most relevant here, those responsible for the implementation of a policy must be prepared on the one hand to be consistent and on the other hand they must be prepared to consider cases which do not come within it in order to decide if an exception should be made. As Sedley J. said in R v Ministry of Agriculture, Fisheries and Food, ex parte Hamble Fisheries(Offshore)  1 All ER 714 at 722 a-c:
‘there are two conflicting imperatives in public law: the first is that while a policy may be adopted for the exercise of a discretion, it must not be applied with a rigidity which excludes consideration of possible departure in individual cases … the second is that a discretionary public law power must not be exercised arbitrarily or with partiality as between individuals or classes potentially affected by it … The line between individual consideration and inconsistency, slender enough in theory, can be imperceptible in practice .’
There is also the matter of legitimate expectation. Lady Cosgrove considered this in McPhee v North Lanarkshire Council 1998 SLT 1317 where she noted:-
“The proposition advanced by counsel for the respondents was that while a public body must have regard to the legitimate expectations which arise from an assurance it has given, it may depart from such an earlier assurance when it comes to take a decision in the exercise of its statutory discretion but in doing so it will be tested by reference to whether or not the decision in question was one which was reasonable in the Wednesbury sense (Associated Provincial Picture Houses Ltd v Wednesbury Corporation). It was important to bear in mind that the expectation said to have been raised in the present case was in respect of a matter of substance rather than of procedure. Reference was made in this connection to the opinion of Hirst LJ in R v Home Secretary, ex p Hargreaves at  1 WLR, p 921: “On matters of substance (as contrasted with procedure) Wednesbury provides the correct test” His Lordship characterised as heresy the rejection by Sedley J in Hamble Offshore Fisheries of the proposition that neither precedent nor principle goes further than the enforcement of legitimate procedural expectations. The basis of the attack on Sedley J’s approach was that the authorities cited by him dealt only with alleged procedural irregularities on the part of a minister in respect of which it was appropriate for the court to conduct an inquiry into the fairness of the procedure followed, but not with decisions on matters of substance.
Reference was also made by counsel to R v Beatrix Potter School, ex p K  E.L.R. 468 as an example of the application of the proposition advanced by him. In that case the applicant, K, was a pupil attending the Beatrix Potter nursery school. The headmaster of the main school confirmed that a place was available for her by letter to her parents dated 19 July 1996 stating that K would enter school on the morning of 9 September 1996. On receipt, the applicant’s mother bought her a school uniform but later that day the head teacher rang up and told her that the offer was withdrawn. It was argued that the offer gave rise to a legitimate expectation based on an express promise which was relied on and gave rise to some detriment. The court dismissed the application and held that while all the factors necessary to give rise to legitimate expectation existed, that was only a factor to be taken into account in deciding whether the respondent had acted Wednesbury unreasonably. In considering the Wednesbury principle and whether the withdrawal of the offer was unreasonable, the court came to the clearest conclusion that it was impossible to categorise the decision to withdraw the offer as Wednesbury unreasonable. In relation to legitimate expectation Popplewell J said (at  ELR, p 476): “Legitimate expectation is in my view a factor to be taken into account in deciding whether the respondents have acted Wednesbury unreasonably. In some cases it might be the only factor and would therefore be wholly decisive in an applicant’s claim. In other cases it may be no more than one of the matters to be taken into account. It is really an aspect of the general public law obligation and the obligation on the respondents not to act unreasonably” .
Reference was also made to R v London Borough of Brent, ex p McDonagh, (1989) 21 H.L.R. 494 a case in which the applicant who was a traveller was furnished with a letter stating inter alia that the respondents, the local authority council, intended to take action to limit the number of travellers on the site she was then occupying but that in the meantime no action would be taken against the recipients of the letter pending the availability of a proper site. The applicant was subsequently evicted and sought judicial review on the basis that she had a legitimate expectation arising from the letter sent to her by the respondents that she would not be evicted from the site without either being offered an alternative pitch or at the very least without being informed of the proposal to be evicted and being given the chance to make representations. It was held that the said letter from the respondents did give rise to such a legitimate expectation and the respondents’ decision was quashed with the effect that it was open to them to reconsider the matter and to reach a fresh decision taking into account the representations of the applicant.”
How is this applicable to Rangers?
From what Mr Green has said, he considers that he has been misled by HMRC. He states that HMRC have been in ongoing discussions with his advisers and with Duff & Phelps. He does not accept that this is even-handed policy implementation, and doubts if the policy either existed, or if it did, if it had been considered.
He also disagrees with the substance of the decision, namely that the rejection of the CVA by HMRC is not in the best interests of creditors. He refers to “false hope” being given to Rangers fans.
On one reading this raises potential arguments under the following headings:-
1 Legitimate expectations – if it can be shown that HMRC, either explicitly or implicitly, indicated that a CVA was going to be acceptable to them;
2 Procedural unfairness – if HMRC has misled Rangers, D&P and Mr Green; and
3 Wednesbury unreasonableness in relation to the decision itself.
Each of these on its own would give a ground for challenging the HMRC decision. An application for Judicial Review would need to be lodged at the Court of Session, and there would be a first hearing to determine if there was a stateable case. In relation to Rangers’ Judicial Review of the SFA Disciplinary process, the parties agreed that the facts were not in dispute and as it was simply a dispute on legal interpretation, the first hearing was in effect the full hearing.
Such a concession could in theory be made here, but I suspect that HMRC would not agree that what was alleged by Mr Green was said, or at best that Mr Green/Rangers/D&P have misinterpreted it.
Therefore, if the case got through the first hearing a full hearing would be needed, and even on an expedited basis that would be some time ahead. That would therefore, I suggest, leave Rangers in limbo, but with D&P still in place.
The Court would not tell HMRC to accept the CVA, unless there were very clear grounds giving rise to the “legitimate expectation” which would bar HMRC from backtracking. Instead the court would, at best, order HMRC to re-consider its opposition to the CVA.
How might this benefit Rangers/Mr Green?
If the CVA decision was left “up in the air” pending a full hearing, then D&P would be able to argue that the existing Rangers (In Administration) was entitled to play in the SPL in season 2012-2013 no questions asked, subject to any separate disciplinary matter arising of course.
That might allow Mr Green and his consortium to raise more funds; might allow some progress to a settlement of the Rangers v Collyer Bristow case; and could allow there to be a favourable outcome for Ticketus pursuing Mr Whyte and his companies in relation to the guarantee. Anything recovered by Ticketus from Mr Whyte reduces their claim to the CVA pot.
Therefore, potentially, a Judicial Review action, even where it fails at a full hearing, could allow D&P to stay in place and to increase the size of the fund for distribution to creditors.
The next question would be how Mr Green funds Rangers (In Administration) in the SPL. However knowing that the club would be in the SPL would, I am sure, lead to sales of many season tickets, though some will be unsold due to the uncertainty of the situation. Therefore, an ongoing Rangers, perhaps funded by a couple of strategic player sales, could be in position to make an increased offer a few months down the line. At that stage, how would HMRC react?
For the reasons advanced, I think it would be a long shot to successfully overturn the HMRC decision. It is less so to get past a first hearing.
It would buy Mr Green and D&P time to get a better deal for creditors, which after all is D&P’s job.
Maybe, just maybe, we will see Counsel for Rangers on his feet in the Court as soon as HMRC casts its vote against the CVA?
Of course, all this would be rendered moot if Ticketus voted against the CVA as well, and their vote was sufficient to block it as well. Suddenly, after Ticketus having become irrelevant to the CVA yesterday, their vote could still have a bearing on what, if any, future Rangers Football Club has.
Posted by Paul McConville