“Ordering Otherwise” and Futurity Pleadings – A Commentary on
AXA Sun Life PLC & Others v HMRC ([2024] EWCA Civ 1430)

Introduction

In November 2024 the Court of Appeal handed down a decision that will reverberate through every extant and future group litigation order (“GLO”) in England and Wales. The Court reconciled two apparently irreconcilable forces: the finality of a binding judgment on GLO issues, and the imperative that courts decide live claims according to correct, up-to-date law. At the same time, the Court dealt a reminder about orthodox pleading discipline in restitutionary tax claims: if the payment has not yet been made, it cannot yet be sued for.

The judgment arose from the long-running CFC/Dividend GLO, begun in 2003 and still not at an end. AXA Insurance UK plc (“AXAIUK”) and AXA Insurance plc (formerly Guardian Royal Exchange Assurance – “GREA”) challenged three preliminary findings of Richards J concerning (i) limitation, (ii) the “set-off” remedy for unlawfully levied advance corporation tax (“ACT”) already utilised, and (iii) whether AXAIUK had pleaded claims to recover corporation tax that materialised years after the relevant foreign dividends were received. HMRC cross-appealed on the pleading point.

The Court of Appeal (Newey, Snowden & Falk LJJ) dismissed AXA’s appeals on limitation and set-off, allowed HMRC’s cross-appeal on pleading, and – crucially – invoked CPR 19.23(1)(a) to “order otherwise”, disapplying an earlier (now wrong) GLO ruling that would have favoured GREA. In so doing the Court articulated:

• a principled test for exercising the “order otherwise” power in CPR 19.23 when later Supreme Court authority overtakes a test-case judgment; and
• a clear rule that a restitutionary tax claim cannot be pleaded in respect of future payments or payments not yet identified with particularity.

Summary of the Judgment

Key holdings

1. Set-off / “Ordering Otherwise”. Henderson J’s 2014 decision in Prudential HC (compounded interest for utilised ACT) was a binding GLO judgment, but the Court “ordered otherwise” so that those findings no longer bind HMRC in claims still to be tried. The exceptional facts – primarily the Supreme Court’s later disapproval of Sempra Metals in Prudential SC – justified departure.
2. Limitation. Henderson J had not conclusively ruled, as a GLO issue, that AXA’s claims were in time. Therefore limitation falls to be decided in accordance with the Supreme Court’s modern test in FII SC2 (constructive discovery of a “worthwhile claim”), not the overruled test from DMG.
3. Pleading. AXAIUK had not pleaded claims to recover (a) corporation tax paid in 2017-2018 or (b) corporation tax paid in 1996-1999 arising from the inability to carry forward unused double-tax-relief (“DTR”) credits. A restitutionary cause of action accrues when the payment is made; the claimant must plead the fact of payment and may not “anticipate” future tax. Consequently:
   • the 2017-2018 claims fall foul of para 51(6) Sch 18 FA 1998 (ouster provision effective from 1 Apr 2010), and
   • the earlier claims fail for want of pleading.

The combined effect is that AXA’s remaining claims will proceed subject to modern limitation law, without the windfall of compound interest on utilised ACT, and confined to tax payments it had actually pleaded before April 2010.

Analysis

a. Precedents Cited and Their Influence

• Sempra Metals Ltd v IRC [2007] UKHL 34 – originally established availability of compound interest in restitutionary tax claims. Disapproved by Prudential SC; pivotal to whether compound interest remains available for utilised ACT.
• Prudential Assurance Co Ltd v HMRC
  • High Court (2013) – Henderson J accepted HMRC’s concession that compound interest was payable on utilised ACT (category (a)). That concession became the critical “wrong law” GLO decision here.
  • Court of Appeal (2016) – maintained award of compound interest (then bound by Littlewoods).
  • Supreme Court (2018) – overruled Sempra Metals; held that simple interest under s 35A SCA 1981 generally suffices; indicated (obiter) that category (a) would likewise fail but respected HMRC’s concession.
• Littlewoods v HMRC [2017] UKSC 70 – simple interest adequate for breach of EU law in overpaid VAT; laid the groundwork for the Supreme Court’s hostility to compound interest windfalls.
• FII Group Litigation
  • FII SC2 (2020) – reformulated mistake “discoverability” test for s 32(1)(c) Limitation Act.
  • FII SC3 (2021) – confirmed no restitutionary claim for utilised ACT after Prudential; approved legislative cure (s 85 FA 2019).
• Salinen (C-437/08) – CJEU decision that failure to carry forward unused foreign-tax credits causes indirect economic double taxation; the doctrinal springboard for AXAIUK’s DTR-carry-forward claims.
• Arnold v NatWest [1991] 2 AC 93 & Virgin Atlantic Airways v Zodiac [2014] AC 160 – explained flexibility of issue estoppel; applied by the Court in deciding when injustice warrants re-litigation.

b. The Court’s Legal Reasoning

1. Interpreting CPR 19.23(1)(a).
   • A GLO judgment binds every claimant on the register “unless the court orders otherwise”. The Court analogised the power to disapply with the recognised exceptions to issue estoppel. Ordering otherwise will be rare, but may be justified where (i) the earlier decision is known to be wrong in law, (ii) the party bound had no realistic opportunity to appeal, and (iii) leaving it uncorrected would force the trial court to apply erroneous law.
   • The AXA facts were exceptional: HMRC’s concession on compound interest (category (a)) in 2013 could not reasonably have been contested until Littlewoods and Investment Trust Companies revealed the instability of Sempra Metals. Prudential SC later exposed Henderson J’s ruling as wrong. Applying it would create incoherent, unequal outcomes within the same GLO while the rest of the tax world followed the Supreme Court.
   • The Court therefore “ordered otherwise”, freeing HMRC to rely on Prudential SC and FII SC3 against GREA.
2. Limitation. Although AXA argued that Henderson J had already declared the claims “in time”, the Court found that the 2014 declaration merely accepted (as common ground) that s 32(1)(c) applied if statute-bar ouster provision s 320 FA 2004 fell. It did not determine the discoverability date. Hence limitation must now be assessed under the worthwhile-claim test in FII SC2.
3. Pleading standards and futurity.
   • A restitution claim requires pleading the actual payment, enrichment, and unjust factor. Future or merely “liable to be paid” sums do not crystallise a cause of action.
   • AXAIUK’s 2003 and 2009 pleadings targeted Year-1 corporation tax levied outright on foreign dividends, not the knock-on Year-2 liabilities later identified in Salinen/FII SC3. Nor could they plead the 2017-2018 payments that had yet to occur.
   • Consequently those claims were never “made” before 1 Apr 2010 and are now ousted by para 51(6) Sch 18 FA 1998.

c. Impact of the Decision

• GLO Case Management. Courts now have authoritative guidance on when to invoke “order otherwise”. Test-case results are still presumed binding, but if supervening Supreme Court authority renders them plainly wrong, later claimants need not be shackled.
• Tax Restitution Claims.
  • Compound interest for utilised ACT is effectively dead for any claim not already final. Claimants must rely on statutory interest under s 85 FA 2019.
  • Pleadings must specify actual payments; “inchoate” or future liabilities cannot be sued upon until crystallised.
  • Where loss derives from inability to carry forward DTR credits, claimants must identify Year-2 (or later) tax payments and plead them expressly.
• Limitation Landscape. The judgment underscores that any claimant still relying on the overruled DMG “declaratory judgment” test faces renewed limitation scrutiny under the “worthwhile claim” benchmark.
• Equality Across Litigation Groups. By aligning CFC/Dividend GLO claims with the prevailing law, the Court removed an anomaly that would otherwise have gifted AXA claimants a windfall unavailable to similarly-situated taxpayers outside the register.

Complex Concepts Simplified

• GLO Issues & “Order Otherwise”. A GLO lets many similar cases be managed together. When a test-case judge decides a “GLO issue”, that ruling binds everyone on the group register. CPR 19.23(1)(a) lets the court later declare: “that earlier ruling does not bind you” – but only if justice demands it.
• Utilised ACT. ACT was a tax paid when a company paid a dividend. If, years later, that ACT was offset against mainstream corporation tax (“utilised”), the company had effectively lent the money to HMRC in the interim. Claimants sought compound interest on that “loan”.
• Double-Tax Relief (DTR) and “Year-2 Tax”. When a UK company received a foreign dividend, it could credit overseas tax (“DTR”) against its UK tax. If the company had losses or other reliefs, the DTR might go unused and, under old rules, disappear. The CJEU said that if the unused credit later forced the company to pay more UK tax in a subsequent year, that later tax was unlawful.
• Futurity Pleading Problem. You can only sue for money already paid. Saying, “I will probably pay tax next year and want it back” is premature. The law sees no “unjust enrichment” until money leaves your pocket.

Conclusion

AXA Sun Life v HMRC refines two critical areas of English civil procedure and tax restitution law:

• First, it delineates when courts may disapply (or “order otherwise” in respect of) previous GLO judgments that have been overtaken by higher-court precedent. The guiding star is justice: avoiding the perpetuation of known legal error while preserving the efficiency and certainty that GLOs were designed to achieve.
• Second, it re-asserts traditional pleading orthodoxy. A restitutionary claimant must plead the concrete facts that complete the cause of action – principally the actual payment. Future or speculative payments, however inevitable, lie beyond the reach of an existing claim form.

Together, these holdings ensure that large-scale group litigation remains manageable and principled, even when the legal landscape evolves dramatically during protracted tax disputes. Practitioners involved in GLOs or tax restitution claims must now:

1. Audit existing GLO orders for decisions that may have been superseded and consider whether an “order otherwise” application is viable or defensible.
2. Scrutinise pleadings to confirm that every tax payment claimed is both made and specifically alleged – especially if the claim predates April 2010.
3. Re-assess limitation positions on the basis of FII SC2, not DMG.
4. Abandon hopes of compound interest on utilised ACT outside the narrow confines of already-decided cases.

By blending procedural fairness with doctrinal accuracy, the Court of Appeal has provided a map for navigating the remaining shoals of the CFC/Dividend GLO and any future mass tax litigation.