An appeal court judge has thrown out an “opportunistic” and “cynical” challenge by a payroll firm over its eligibility for Construction Industry Training Board grant payments.
Hudson Contract Services (now known as Knot Builders) had challenged a February 2024 High Court ruling that found it was not eligible for the majority of grant it argued it was due for the period 2015-18.
Meanwhile, the CITB had launched a cross-appeal against the part of the lower court’s decision that said the firm might have been eligible for some grant in two out of six areas claimed for during a period in 2015-16.
However, in a ruling delivered on Friday (17 January), Lady Justice Elisabeth Laing ruled against Knot and in favour of the CITB on all grounds.
Referring to remarks made in the earlier ruling, she said: “I endorse the [High Court] judge’s comments that the claimant’s arguments were both ‘opportunistic’ and ‘cynical’.”
The judge rejected Knot’s claim that the CITB should have registered it as being liable to pay the levy – in turn allowing it to apply for grants – sooner than it did (in 2016).
She said Knott “had been vigorously asserting for a decade or so that it was not liable to pay the levy, had been represented by solicitors for much of that period, and had launched an application for judicial review, and brought a separate appeal, which it pursued from the [Employment Tribunal] to this court.”
“The aim of all that litigation was to ensure that the claimant should not be found liable to the levy.
“The suggestion that the board breached a statutory duty to register the claimant at some earlier point than it did…or that the claimant could have suffered any disadvantage from not being registered sooner, when it was actively fighting off registration, is untenable.”
In addition, she overruled the lower court’s ruling that the CITB should have waived its rules, which had ruled out the firm from receiving any grant for 2015-16.
Judge Laing also rejected a claim that two out of three eligibility requirements for registration should not have been applied to the firm because they had been removed from its policy during two of the years in dispute.
She said the point was irrelevant because by the time the application for £28m of grants for the period between 2015 and 2018 was made in 2020, the firm was aware of all three requirements, which had been restored.
“The claimant was not treated unfairly,” she said, “as it made the application knowing that the board would apply the three requirements to it.
“A decision that the board was prevented, long after the relevant years had ended, from applying the three requirements to a retrospective application, would not only contradict the clear statutory purpose but would be a perverse triumph of empty form over substance.”
Judge Laing also said that when the firm had applied for the grant, “it did not disclose to the board that, well over two years previously, it had reorganised its business with the express intention of avoiding any liability to the levy”.
In her decision, the judge said that she understood the firm had still not paid any of the £27m levy that three courts have decided it owes the CITB.
During 2018, Hudson Contract Services underwent a restructure and became a wholly owned subsidiary of Hudson Contract Ltd. The parent company continued the trade earlier carried out by Hudson Contract Services.
The subsidiary, renamed Knot Builders Ltd, only continues to exist in order to “defend its position on grant and levy”, according to its managing director.
In 2020, Hudson launched an advertising campaign encouraging SMEs to vote against three more years of the operation of the CITB levy.
