Bilta (UK) Ltd (In Liquidation) v TFS (2023)


Certain amendments to particulars of claim were allowed where they did not distort and extend the trial. The amendments related to evidence that had arisen from German trades that were part of alleged VAT fraud involving the sale and purchase of European Union allowances under the European Emission Trading Scheme.


The claimant applied for permission to amend its particulars of claim and sought a disclosure order.

The parties' proceedings related to the trading of European Union allowances (EUAs) under the European Union Emissions Trading Scheme. It was alleged that the first defendant had acted as a buffer in handling the EUAs which were then sold on to the fourth defendant to be exported. The claimant alleged that the dishonest trading had resulted in them incurring VAT liabilities which they were unable to pay. From the end of July 2009, the supply of EUAs was zero-rated in the UK. At that stage, the first defendant's sales declined sharply. Instead, the fourth defendant's London branch began to sell them from its branch in Frankfurt, which the first defendant purchased. Criminal proceedings were brought against the Frankfurt branch, and a number of companies that supplied them were convicted of tax offences. The claimant's request for disclosure related to trading between the defendants and the London and Frankfurt branches. The amendments the claimant wanted to make concerned reliance on evidence from the German trading between August 2009 to April 2010. It argued that it was highly relevant to their claims, as it supported their allegation that individuals working for the fourth defendant had been dishonest.

The claimant submitted that the fourth defendant had been aware of fraud in other German trading between the parties but had continued trading. It contended that, as it was willing to continue in that trading, it should be inferred that it was also willing to carry out the trading in the instant case with the knowledge that it was linked to VAT fraud. The fourth defendant argued that the amendments referring to the German trading were of peripheral relevance and introducing them into the litigation would make it more complex and costly; allowing the claimant's allegations on the subject would lengthen and distort the trial.


Amendments relating to evidence from the German trading were allowed with a restriction on the trading period mentioned; restricting the period to August-September 2009 rather than August 2009-April 2010 greatly reduced the burden of disclosure and the risk of the trial being distorted. Amendment wording relating to the fourth defendant's dishonesty required disclosure in relation to all the German suppliers that the fourth defendant had contact with. The claimant was not allowed to enlarge on their allegations and the scope of disclosure in that way. The wording therefore needed to be limited to reflect that the amendment did not allow a fishing expedition that would distort and extend the trial. Various amendments were refused as they were of no more than evidential significance to the claimant's claims but potentially could enlarge the scope of disclosure and distract the trial from the real issues. No order was made for disclosure, as standard disclosure would follow on the basis of the amended pleadings. Once standard disclosure had taken place any other disclosure issues could then be raised. In determining the costs of the two applications, although the claimant had been allowed some amendments it could not be said that either party had been wholly successful. A fair order was for the claimant to be ordered to pay 60% of the fourth defendant's costs with the balance of their costs being costs in case. An order for payment on account of £85,000 was made.