CourtRoyal Court
JudgeCrill, Bailiff:
Judgment Date07 July 1988
Date07 July 1988
Crill, Bailiff:

R.J. Michel for the trustee;

W.J. Bailhache for Advocate Clyde-Smith;

P.M. Bailhache, Attorney General, as amicus curiae.

Cases cited:

(1) Att.-Gen. (New Zealand) v. Ortiz, [1984] A.C. 1; [1982] 3 All E.R. 432; [1982] 2 Lloyd's Rep. 224; (1982), 126 Sol. Jo. 429; [1982] Com. L.R. 156; 79 L.S. Gaz. 919; on appeal, [1984] A.C. 1; [1983] 2 All E.R. 93; [1983] 2 Lloyd's Rep. 265; (1983), 127 Sol. Jo. 307, dictum of Lord Denning, M.R. applied.

(2) Ayres v. Evans (1981), 56 Fed. L.R. 235; 39 Aust LR 129, distinguished.

(3) Banco de Vizcaya v. Don Alfonso de Borbon y Austria, [1935] 1 K.B. 140; [1934] All E.R. Rep. 555; (1934), 151 L.T. 499; 50 T.L.R. 284; 104 L.J.K.B. 46; 78 Sol. Jo. 224.

(4) Buchanan (Peter) Ltd. v. McVey, [1955] A.C. 516; [1954] I.R. 89; (1951), 90 I.L.T.R. 121, dictum of Kingsmill Moore, J. followed.

(5) Debtor, Re a, ex p. Viscount of Royal Ct., [1981] Ch. 384; [1980] 3 All E.R. 665.

(6) Le Marquand v. Chiltmead Ltd., 1987-88 JLR 86.

(7) Madzimbamuto v. Lardner-Burke, [1969] 1 A.C. 645 ([1968] UKPC 18); [1968] 3 All E.R. 561; (1968), 112 Sol. Jo. 1007.

(8) Moore v. Mitchell (1929), 30 F. (2d) 600.

(9) Norway (State of) Application, In re, [1987] Q.B. 433; [1989] 1 All E.R. 661; sub nom. Re Jahre v. State of Norway, [1986] 1 Lloyd's Rep. 496; on appeal, [1989] 1 All E.R. 745, dicta of Kerr, L.J. applied.

(10) Norway (State of) Application (No. 2), In re, [1989] 1 All E.R. 701; [1988] 1 FTLR 293; on appeal, [1989] 1 All E.R. 745, dictum of Woolf, L.J. followed.

(11) Osborn, In re, ex p Trustee, [1931-32] B. & C.R. 189.

(12) Overseas Ins. Brokers Ltd., Re, 1966 J.J. 547, dictum of Le Masurier, Bailiff followed.

(13) Tax Commr. (Fedn. of Rhodesia) v. McFarland, 1965 (1) S.A. 470, dicta of Vieyra, J. followed.

(14) Tucker, In re, ex p. Tucker, [1987] 1 W.L.R. 928; [1987] 2 All E.R. 23; (1987), 131 Sol. Jo. 938; on appeal, [1988] 2 W.L.R. 748; [1988] 1 All E.R. 603; [1988] 1 FTLR 137, observations of Dillon, L.J. followed.

(15) Tucker (No. 2), In re, [1988] 1 W.L.R. 497; [1988] 2 All E.R. 339; (1988), 132 Sol. Jo. 536.

(16) Tucker, Re, Royal Ct. of Guernsey, September 30th, 1987, unreported, applied.

(17) Tucker, In re, 1988 FLR 154 (Isle of Man), distinguished.

(18) Walmsley, Re, 1983 J.J. 35, dicta of Crill, Deputy Bailiff applied.

(19) Williams & Humbert Ltd. v. W. & H. Trademarks (Jersey) Ltd., [1988] A.C. 368; [1986] 1 All E.R. 129; (1985), 130 Sol. Jo. 37, considered.

Additional cases cited by counsel:

Bolan (Marc) Charitable Trust, In re, 1981 J.J. 117.

Brokaw v. Seatrain UK Ltd., [1971] 2 All E.R. 98.

Burchard v. Macfarlane, ex p. Tindall, [1891-4] All E.R. Rep. 137.

Debtor, In re a, ex p. Trustee v. Clegg, [1968] 1 W.L.R. 788.

Emery's Invs. Trusts, Re, Emery v. Emery, [1959] 1 All E.R. 577.

Gibbons, In re, ex p. Walter, [1960] Ir. Jur. Rep. 60.

Gold Co. Ltd., Re, [1874-80] All E.R. Rep. 957.

Greys Brewery Co., In re (1883), 25 Ch. D. 400.

International Power Indus. NV, Re, [1985] BCLC 128.

Jackson, In re, [1973] N.I. 67.

Jobas Ltd. v. Anglo Coins Ltd., 1987-88 JLR 359.

Lotus, The, (1927) P.C.I.J. Reports, Series A, Judgt. No. 9.

Maundy Gregory, In re, ex p. Norton, [1935] Ch. 65.

Metropolitan Bank, In re, Heiron's Case (1880), 15 Ch. D. 139.

Morris, In re, Royal Ct. (1967), 256 Ex. 280, unreported.

Norwich Equit. Fire Ins. Co., In re, (1884), 27 Ch. D. 515.

Official Receiver v. Clore, 1983 J.J. 43.

Oklahoma (State of) v. Rodgers (1946), 165 ALR 785.

Priestly v. Clegg, 1985 (3) S.A. 955.

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

Radio Corp. of America v. Rauland Corp., [1956] 1 All E.R. 549.

Regazzoni v. K.C. Sethia (1944) Ltd., [1956] 2 All E.R. 487.

Rolls Razor Ltd. (No. 2), Re, [1969] 3 All E.R. 1386.

Scharrer, In re, ex p. Tilley (1888), 20 Q.B.D. 518.

Tournier v. National Provl. & Union Bank of England, [1923] All E.R. Rep. 550.

Woodman v. Viscount of Royal Ct., 1975 J.J. 263.

X AG v. A Bank, [1983] 2 All E.R. 464.

Legislation construed:

Bankruptcy Act 1914 (4 & 5 Geo. V. c.59), s.122:

"The High Court . . . and every British court elsewhere having jurisdiction in bankruptcy and insolvency . . . shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy, and an order of the court seeking aid, with a request to another of the said courts, shall be deemed sufficient to enable the latter court to exercise, in regard to the matters directed by the order, such jurisdiction as either the court which made the request, or the court to which the request is made, could exercise in regard to similar matters within their respective jurisdictions."

This section has now been replaced by the Insolvency Act 1986 (c.45), s.426.

Bankruptcyreciprocal enforcement of ordersforeign revenue claimspetition by English trustee in bankruptcy to examine Jersey witness, pursuant to Bankruptcy Act 1914, s.122, subject to public policy of non-enforcement of foreign revenue lawsif UK Inland Revenue sole creditor seeking to enforce tax claim, petition barred as indirect attempt to enforce foreign revenue law

The trustee in bankruptcy sought an order from the Royal Court to act in aid of and be auxiliary to an English High Court order, made pursuant to the Bankruptcy Act 1914, s.122.

During the administration of a bankrupt's estate in England, most of the creditors were paid off by third parties or had their debts waived or withdrawn, leaving as remaining liabilities only those due to the Inland Revenue and one ordinary creditor. The trustee was funded in the administration by the Inland Revenue.

As information was required from the bankrupt's legal representative in Jersey, Advocate Clyde-Smith, concerning undisclosed assets of the bankrupt held in offshore trusts, the trustee in bankruptcy obtained an order from the English High Court requesting the Royal Court to act in aid of and be auxiliary to the English High Court, as provided by the Bankruptcy Act 1914, s.122, which extended to Jersey. The order sought a private examination of, and the production of documents by, the advocate.

Consequently the trustee applied to the Royal Court for an order in aid under s.122 but before the application was heard, the one ordinary creditor in the proceedings withdrew his claim.

Although both the trustee and the advocate made submissions, the Royal Court sought to resolve the application for the order on the basis of the contentions of the Attorney General as amicus curiae, who submitted that it was necessary to determine whether (i) in its application in Jersey, s.122 was subject to the public policy that courts will not enforce the revenue laws of a foreign state; (ii) the examination of the advocate with or without documents amounted to an indirect attempt to enforce a foreign revenue law contrary to that policy; and (iii) a request for such examination pursuant to s.122, when the sole creditor was the UK Inland Revenue, also amounted to such indirect enforcement.

Held, dismissing the application:

(1) In its application to Jersey, the Bankruptcy Act 1914, s.122, was subject to the public policy that courts will not enforce the revenue laws of a foreign state: the practice of the Royal Court to that effect was binding and although it was a British court within the terms of s.122, for tax purposes it waswithin certain defined limitsthe court of an independent state. Notwithstanding the mandatory wording of s.122, the section merely enabled the court to act in aid and where the sole object of seeking aid was to enforce a foreign revenue claim then the court could exercise its discretion to refuse such aid. In the present case, the Inland Revenue was the sole creditor and it was funding the trustee to the extent that the bankrupt's funds were inadequate. The trustee's application was in effect a request to examine the Jersey advocate in a tax bankruptcy and it was therefore subject to the public policy binding the court (page 485, line 6 - page 486, line 25; page 494, lines 1-35; page 499, lines 11-26).

(2) The examination of the advocate with or without documents and a request for such examination pursuant to s.122, when the sole creditor was the UK Inland Revenue, amounted to an indirect attempt, contrary to public policy, to enforce a foreign revenue law. There was no valid distinction between enforcing a tax debt or attempting to do so by a collection of that debt (whether or not it was for the benefit of some other creditors in addition to the Revenue) and the seeking of information to assist in recovering the debt. In each case, the court had to scrutinise the substance of the claim and if the effect of making an order would be to enable the trustee to enforce, however indirectly, a revenue claim as a result of information so obtained, the application had to be rejected. In the present case, the trustee required the information in order to recover the bankrupt's assets, to settle the debts and to account for any balance to the bankrupt: the settlement of the debts would mean, in effect, the payment of the Revenue's claim. Consequently, the Royal Court had no jurisdiction to grant the request (page 500, line 15 - page 501, line 24).

CRILL, BAILIFF: This case arises from the bankruptcy in England of Roy Tucker ("the bankrupt"). An agreed statement of facts was prepared by counsel which is as follows:

"STATEMENT OF AGREED FACTS 1. On July 22nd, 1985 a receiving order was made in the High Court of England and Wales under the provisions of the Bankruptcy Act 1914 against ROY CLIFFORD TUCKER ('the bankrupt'). On September 2nd, 1985, Colin Graham Bird ('the trustee') was appointed the bankrupt's trustee in bankruptcy.

2. The petitioning creditors were four in number.

3. The bankrupt submitted a statement of affairs dated August 20th, 1985, which showed assets valued at about 362,000, unsecured liabilities of about 21,878 and a contingent liability to the Inland Revenue...

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