Laches | Principles.tax

DELAY IN SEEKING REMEDY (LACHES)

- Not applied where difficult to identify correct position and, in any event, no detrimental reliance

"[64] I have touched on the doctrine of laches. It simply does not arise in this case. I cannot begin to imagine the complexity of trying to unravel the background to this case without full disclosure and full documentation. There has been no delay between discovering the mistake and bringing the claim to court in my view. Even if I am wrong on that, then I accept the point that Mr Sykes QC makes about the need for detrimental reliance for the doctrine of laches really to bite. There is no detrimental reliance stemming from any delay and I am not satisfied, even on the factual background, that there has been any delay." (Abadir v. Credit Suisse Trust Ltd [2021] EWHC 2573 (Ch), Chief Master Shuman)

- Query the relevance of prejudice caused to HMRC by delay

"[55] As an equitable remedy, rescission is subject to the doctrine of laches. HMRC refer to Lewin on Trusts, 20th edn at 5-089:

'A claim to rescission or rectification is not within the Limitation Act 1980 but is subject to the equitable doctrine of laches. And so delay and acquiescence may bar a claim to rescission or rectification, certainly where relief is opposed on such grounds. It has been said that the doctrine of laches applies to a party seeking relief "where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material". There must have been some form of detrimental reliance on the part of the person relying on the defence, or a relevant third party, in order for it to succeed.'
[56] In Pitt v Holt, Lord Walker at [142] indicated that HMRC took no point on delay, despite the fact that there had been considerable delay before the claim was issued. The applicability of delay was therefore not considered. It is not self-evident to me that detrimental reliance by HMRC on delay is capable of leading to the refusal of relief on the grounds of laches, in circumstances where the delay does not affect the position as between the disponor and those who benefit or might in future benefit under the disposition. As I have noted above, I consider that the question of unconscionability is to be determined in relation to those affected in this way, separate from public policy considerations. If relief were to be refused because of prejudice to the body of taxpayers more generally, this would seem to be an argument squarely based on public policy.

[57] That issue is, however, a matter for another case in which it is properly before the court. If HMRC wish to rely on prejudice to taxpayers generally as a ground for the refusal of relief, I consider that they must become a party to the claim, and file evidence explaining their position and, of course, affording the other parties to the claim the opportunity to respond by filing evidence themselves. Writing a letter at the eleventh hour and making this sort of point in elliptical terms is not an appropriate way for it to be raised." (JTC Employer Solutions Trustee Limited v. Garnett [2024] EWHC 3128 (Ch), Master Brightwell)