The Proportionalities of Litigation: through the lens of the M&S Strawberries and Cream Sandwich

With Wimbledon feeling like a lifetime ago, it would be easy to forget the exciting debate at that time over the VAT classification of Marks and Spencer’s viral strawberries and cream sandwich (exciting only for solicitors and accountants, perhaps).

The M&S sandwich had solicitors and accountants alike thinking about the classification of confectionary. If the strawberry sandwich, like its name, could be classed as a sandwich, then the standard rate of VAT would not be charged. If it was classified as confectionary, the standard rate of VAT would be charged. The impact, of course, could be significant; either M&S would need to absorb the burden in its pricing, or the increase would be passed on to the consumer.

Whilst these considerations may be somewhat simplistic, it does bear thinking about in the context of proportionality.

The 1991 Jaffa Cake case

It may be helpful to reflect on a famous case that took place in 1991, specifically, whether the noble Jaffa Cake could be considered, like its name, a cake. Her Majesty’s Customs and Excise, as it was then known, took issue with its the classification. A long, expensive legal battle ensued until it was determined that the Jaffa Cake was, indeed, a cake and would therefore be exempt from the standard rate of VAT.

It is difficult to imagine the scale of the loss for HMRC, and the savings for the consumer over the last 34 years. It raises the question – if McVitie’s backed down, how much would we be paying for Jaffa Cakes now?

The classic Greggs sausage roll

It would be helpful to consider Greggs in the context of proportionality, given that most of have us have experienced the disappointment of biting into a cold sausage roll (or its vegan counterpart). As these sausage rolls are cooked and then left to cool, rather than cooked specifically for consumption while hot, means that your sausage roll is not subject to the standard rate of VAT.

If HMRC challenged Greggs, arguing that the sausage rolls should be subject to the standard rate of VAT, and Greggs sells over 100 million sausage rolls a year, clearly the 20% increase could significantly impact both Greggs and the consumer. Litigating the issue through the Tribunal would therefore be proportionate to the monies in dispute.

Whilst these large-scale tax disputes can feel like another world, proportionality, in all cases, is applicable in both the biggest and the smallest of cases.

Proportionality in litigation

In litigation, proportionality means simply ensuring that the cost, time, and effort expended on a case is reasonable, as well as appropriate for the nature, the importance, and the complexity of the issues it deals with. Litigation can often be an expensive business, but it is important in all cases that those costs should be reasonable. The overriding objective for the court is to ensure cases are dealt with justly and at a proportionate cost. This key objective remains are the forefront of your solicitor’s mind, and the mind of the judge.

In a commercial dispute dealing with a breach of contract, the goal is for the court to award damages to compensate the injured party for their losses, so they can be put in the financial position they would have been if the contract had been fulfilled.  If the extent of the damages is £500,000, then the cost, time and effort expended on that case should reflect the sums in dispute. In such a case, spending £200,000 with a view to recovering £500,000 may be proportionate (but each case is different, and will be assessed individually).

It is also important to note that, often, one person’s value of a case will differ to that of another. This is particularly the case where the remedy is not as clear as a claim for money where the assessment is simply legal costs vs the sums claimed.

In a dispute over a right of way where the absence of that right would leave a property landlocked, the legal costs would clearly be proportionate to the issues in dispute. A declaration that a right of way exists, in that case, is fundamental to the saleability, value and use of the property in question – even if value is not assessed in the usual way

In  harassment cases, the costs incurred in relation to obtaining an injunction could, to that individual, be small pickings if that injunction enables them to move on with their life. While there may not necessarily be a financial element, the personal impact makes it substantial and worthwhile.

How can Redkite help you?

At Redkite, with every case, we will discuss:

• What is your objective;
• How much it will likely cost to achieve that objective; and
• What are the risks.

If you or a loved one have found yourself in the midst of a legal dispute, then please get in contact with our leading team of litigation experts here at Redkite Solicitors.

This article was written by Redkite Solicitors, Kieran Palfrey. To find out more about Kieran and his team, visit his website profile here.