Simon Halabi (as executor of the estate of X, deceased) v Mark Wilson (as trustee in bankruptcy of Simon Halabi) and HM Revenue and Customs

JurisdictionJersey
CourtCourt of Appeal
JudgeJames W. McNeill,George Bompas,Sir Wyn Williams Kt
Judgment Date02 July 2018
Neutral Citation[2018] JCA 114
Date02 July 2018

[2018] JCA 114

COURT OF APPEAL

Before:

James W. McNeill, Q.C., President;

George Bompas, Q.C., and

Sir Wyn Williams Kt

Between
Simon Halabi (as executor of the estate of X, deceased)
Appellant
and
Mark Wilson (as trustee in bankruptcy of Simon Halabi)
First Respondent

and

Her Majesty's Revenue and Customs
Respondent

Advocate J. Harvey-Hills for the Appellant.

Advocate W. A. F. Redgrave for the First Respondent.

Advocate D. P. Le Maistre for the Second Respondent.

Authorities

Ariel -v- Halabi [2018] JRC 006A .

Finance Act 2008.

Bankruptcy (Désastre) (Jersey) Law 1990.

Trusts (Jersey) Law 1984.

Re M Trust [2012] (2) JLR 51 .

Re AG (Manchester) Limited (in liquidation) [2005] JRC 035D .

Attorney General v De Keyser's Royal Hotel Limited [1920] AC 508 .

Re X (A Child) [2016] 3 WLR 1718 .

R (Ingenious Media PLC) v Revenue and Customs Commissioners [2016] 1 WLR 4164 .

Mayo Associates and others v Cantrade and others [1998] JLR 173 .

Dicey, Morris and Collins, The Conflict of Laws (15th edition).

Government of India v Taylor [1955] AC 491 .

Re Tucker [1987] JLR 473 .

Bankruptcy Act 1914.

Re State of Norway's Application (Nos 1 and 2) [1990] 1 AC 723 .

R (on the application of Jimenez) v The First-tier Tribunal (Tax Chamber) [2017] EWHC 2585 (Admin).

R (Derrin Bros Properties Limited) v First-tier Tribunal (Tax Chamber) [2016] 1 WLR 2423 .

R (Smith) v Oxfordshire Assistant Deputy Coroner [2011] 1 AC 1 .

Evidence (Proceedings in Other Jurisdictions) Act 1975.

European Convention on Human Rights.

United Capital Corporation Limited v Bender and others [2006] JLR 269 .

The C Trust [2010] JRC 001 .

R v Grossman (1981) 73 Cr App R 302 .

Mackinnon v Donaldson Lufkin & Jenrette Securities Corp [1986] 2 WLR 453

Trust — appeal against a judgment of the Royal Court dated 10 January 2018

THE PRESIDENT:
1

This appeal is made in respect of a judgment of the Royal Court (Birt Kt, Commissioner, with Jurats Crill and Ramsden) dated 10 January 2018 ( Ariel -v- Halabi [2018] JRC 006A) given in respect of an application by the trustee in bankruptcy of Simon Halabi (the “trustee”), the present appellant. Following Orders issued by the Royal Court in 2012 and 2013, the appointment of the trustee had been recognised in Jersey and the trustee had been able take possession of certain documents or other materials (the “Confidential Materials”) recovered from various institutions in Jersey for the purpose of administering the bankruptcy. Having been issued with an information notice, issued pursuant to Schedule 36 of the United Kingdom Finance Act 2008 (the “Information Notice”) by the Second Respondent (“HMRC”) in England, requiring production of the Confidential Materials, the trustee applied to the Royal Court for directions as to whether compliance with that notice would amount to a breach of the Orders referred to above and, if so, as to whether leave and, separately, variation, should be granted to allow compliance with the notice.

2

As the learned Commissioner indicated at the commencement of the judgment below, the application raised difficult issues as to the approach of the Court when it had authorised material to be available for a specific purpose and where the recipient then became subject to measures in his home jurisdiction requiring supply of that material for a different purpose.

Background
3

At the outset it is appropriate to mention two particular points. The first is to note that the appellant (“Mr. Halabi”) participates in these proceedings not in his personal capacity but as executor of the estate of the late X, his mother. The second is to note that the present trustee, Mr. Wilson, is the third to hold the position as trustee in bankruptcy of Mr. Halabi. Of the Orders already referred to, that obtained in October 2012 was obtained by his predecessor, Mr. Carton-Kelly, and that of 2013 by Mr. Carton-Kelly's successor, Mr. John David Ariel. Mr. Ariel commenced the present proceedings as representor, but was replaced by Mr. Wilson on 24 November 2017 due to the impending retirement of Mr Ariel.

4

Turning to the background, in March 2010 Mr. Halabi was declared bankrupt by the High Court in London and a trustee in bankruptcy was appointed on 9 April. Mr. Halabi's automatic discharge occurred on 30 March 2011, with administration of the estate in bankruptcy continuing in the hands of the trustee.

5

As part of the trustee's administration he sought and obtained a Letter of Request from the High Court in London seeking the assistance of the Royal Court in Jersey (a) by exercising its jurisdiction pursuant to Article 49 of the Bankruptcy (Désastre) (Jersey) Law 1990 (“the Bankruptcy Law”) in order to have the trustee's appointment recognised within this jurisdiction and (b) to vest the trustee with appropriate powers to be exercised in Jersey. Article 49 is aimed at facilitating the management of cross-border insolvencies, in particular by allowing for recognition in Jersey of an insolvency representative appointed in a recognised overseas jurisdiction and by enabling the representative to be clothed with powers in Jersey to identify and gather in assets for administration in the insolvency. The Article is in the following terms:

“49 Assistance for other courts in insolvency matters

  • (1) The court may, to the extent it thinks fit, assist the courts of a relevant country or territory in all matters relating to the insolvency of a person, and when doing so may have regard to the extent it considers appropriate to the provisions for the time being of any model law on cross border insolvency prepared by the United Nations Commission on International Trade Law .

  • (2) For the purposes of paragraph (1), a request from a court of a relevant country or territory for assistance shall be sufficient authority for the court to exercise, in relation to the matters to which the request relates, any jurisdiction which it or the requesting court could exercise in relation to these matters if they otherwise fell within its jurisdiction.[114]

  • (3) In exercising its discretion for the purposes of this Article the court shall have regard in particular to the rules of private international law .

  • (4) In this Article “relevant country or territory” means a country or territory prescribed by the Minister.”

6

On 26 October 2012, upon an application to the Royal Court by the trustee to accede to the terms of the Letter of Request, the Royal Court, by Act of Court, issued an appropriate order (the “Recognition Order”). The Recognition Order recognised the appointment and gave the trustee authority in Jersey to exercise all of the powers which he was entitled to exercise in England and Wales to the extent that they would not be contrary to Jersey Law. Further, it conferred specific authority to obtain material from a number of named parties in relation to certain trusts and other entities.

7

Paragraph 9 of the Recognition Order stated:

“Save with the leave of this Court, the Representor shall only use the information or documents so produced for the purposes of the administration of the estate in bankruptcy of Mr. Halabi, in whichever jurisdiction, under the direction of the High Court.”

8

The trustee duly took possession of the Confidential Materials from various institutions in Jersey under the authority of the Recognition Order.

9

Separately, in January 2013, Barclays Private Bank & Trust Limited, in its capacity as trustee of the A Trust, issued a representation seeking directions from the Royal Court pursuant to Article 51 of the Trusts (Jersey) Law 1984 (the “Barclays Proceedings”). The trustee sought to be joined, and was joined, to the Barclays Proceedings on the basis that the estate in bankruptcy was a substantial creditor of the A Trust, which was insolvent. On 22 November 2013 the Royal Court issued a consent order (the “Consent Order”) in the Barclays proceedings.

10

Paragraph 1 of the Schedule to the Consent Order required that the trustee be provided with all pleadings, acts of court, affidavits, documentary evidence, skeleton arguments and bundles filed in connection with the Barclays Proceedings, subject to redaction of confidential information. The direction contained the following proviso:

“Provided always that such disclosure shall not be used for any purpose other than the Representation and shall not be disclosed to any third parties, other than to the parties [sic] legal advisers, and in particular shall not be disclosed to any of the Defendants in the Actions described in paragraph 4 below.”

11

At paragraph 9 of the Consent Order, a specific liberty to apply was conferred.

12

Pursuant to the Consent Order the trustee duly received some of the Confidential Materials.

13

In April 2014, at about the same time that the trustee notified HMRC that a creditors' meeting would take place on 28 April and would bring Mr. Halabi's bankruptcy proceedings to an end, HMRC indicated to the trustee that it intended to apply to the First-tier Tax Tribunal in England (the “FTT”) for permission to issue an Information Notice pursuant to paragraph 2 of Schedule 36 of the Finance Act 2008 for the purpose of seeking access to records held by the trustee. The proposed Information Notice required the trustee to produce to HMRC, amongst other matters, all documents and information received pursuant to the Recognition Order and the Consent Order.

14

As a result of various related proceedings and appeals between the trustee and HMRC, judgment from the FTT approving the terms of the Information Notice sought by HMRC was not given until 9 May 2017. A detailed narration of those proceedings does not appear necessary for present purposes; but it will be found at paragraphs 15 to 23 of the judgment below. Two matters, however, are of importance. The...

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