Volaw Trust and Corporate Services Ltd and Larsen v Comptroller of Taxes

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: Beloff, Nutting and Bennett, JJ.A.
• Judgment Date: 28 November 2013
• Date: 28 November 2013

COURT OF APPEAL

Beloff, Nutting and Bennett, JJ.A.

A.D. Hoy for the first appellant;

J. Harvey-Hills for the second appellant;

J.D. Kelleher for the respondent.

Cases cited:

(1) A v. Home Secy. (No. 2), [2005] 1 W.L.R. 414; [2004] H.R.L.R. 38; [2004] EWCA Civ 1123, dicta of Neuberger, L.J. followed.

(2) AI Airports Intl. Ltd. v. Pirrwitz, 2013 (2) JLR N [28], referred to.

(3) Acturus Properties Ltd. v. Att. Gen., 2001 JLR 43, considered.

(4) Att.-Gen. v. Ryan, [1980] A.C. 718 ([1979] UKPC 33); [1980] 2 W.L.R. 143, referred to.

(5) Bank Mellat v. Treasury, [2013] 4 All E.R. 495; [2013] Lloyd's Rep. F.C. 557; [2013] UKSC 38, referred to.

(6) Bernh Larsen Holding AS v. Norway, [2013] ECHR 24117/08, considered.

(7) Browne v. Dunn (1893), 6 R. 67, considered.

(8) Datec Electronics Holdings Ltd. v. United Parcels Serv. Ltd., [2007] 1 W.L.R. 1325; [2007] 4 All E.R. 765; [2007] Bus. L.R. 1291; [2007] 2 Lloyd's Rep. 114; [2007] 1 C.L.C. 720; [2007] UKHL 23, referred to.

(9) Fernando v. Health & Social Servs. Min., 2012 (2) JLR 21, referred to.

(10) Fothergill v. Monarch Airlines Ltd., [1981] A.C. 251; [1980] 3 W.L.R. 209; [1980] 2 All E.R. 696; [1980] 2 Lloyd's Rep. 295, referred to.

(11) Greta Somme v. Drammen Municipality, considered.

(12) H.M. Rev. & Customs v. Ben Nevis (Holdings) Ltd., [2012] S.T.C. 2157; [2012] B.T.C. 240; [2012] EWHC 1807 (Ch), considered.

(13) Home Secy. v. AY, [2012] EWHC 2054 (Admin), referred to.

(14) Hovda, Norway, referred to.

(15) Income Tax Comptroller v. AZP, [2012] SGHC 112, distinguished.

(16) Inland Rev. Commrs. v. Commerzbank A.G., [1990] S.T.C. 285, referred to.

(17) Inland Rev. Commrs. v. Rossminster Ltd., [1980] A.C. 952; [1980] 2 W.L.R. 1; [1980] 1 All E.R. 80; [1980] S.T.C. 42, referred to.

(18) Kaplan, In re, 2009 JLR 88, considered.

(19) Knoop, Utv., 2012, 139, considered.

(20) L'Office Chefifien des Phosphates v. Yamashia-Shinnihon SS. Co. Ltd. (The Boucraa), [1994] 1 A.C. 486; [1994] 2 W.L.R. 39; [1994] 1 All E.R. 20; [1994] 1 Lloyd's Rep. 251, referred to.

(21) Lloyd v. McMahon, [1987] A.C. 625; [1987] 2 W.L.R. 821; [1987] 1 All E.R. 1118, distinguished.

(22) Norway v. Henning Astrup, considered.

(23) Pell Frischmann Engr. Ltd. v. Bow Valley Iran Ltd., 2008 JLR 311, referred to.

(24) Phillips v. Eyre(1870), L.R. 6 Q.B. 1, considered.

(25) Prest v. Petrodel Resources Ltd., [2013] 2 A.C. 415; [2013] 3 W.L.R. 1; [2013] 4 All E.R. 673; [2013] 2 FLR 732; [2013] W.T.L.R. 1249; [2013] UKSC 34, considered.

(26) Quilter v. Mapleson(1882), 9 Q.B.D. 672, referred to.

(27) R. v. Birmingham C.C., ex p. Ferrero, [1993] 1 All E.R. 530, [1991] C.O.D. 476; (1991), 3 Admin. L.R. 613; 89 L.G.R. 977, referred to.

(28) R. v. Home Secy., ex p. Pierson, [1998] A.C. 539; [1997] 3 W.L.R. 492; [1997] 3 All E.R. 577, referred to.

(29) R. v. Westminster C.C., ex p. Ermakov, [1996] 2 All E.R. 302; [1996] 2 F.C.R. 208; (1995), 8 Admin. L.R. 389; [1996] C.O.D. 391, referred to.

(30) R. (Al-Sweady) v. Defence Secy., [2010] H.R.L.R. 2; [2010] U.K.H.R.R. 300; [2009] EWHC 2387 (Admin), referred to.

(31) R. (Amro Intl. S.A.) v. Financial Servs. Auth., [2010] 3 All E.R. 723; [2010] Bus. L.R. 1541; [2010] 2 B.C.L.C. 40; [2010] EWCA Civ 123, considered.

(32) R. (Hope & Glory P.H. Ltd.) v. Westminster Mags.' Ct., [2011] 3 All E.R. 579; [2011] P.T.S.R. 868; [2011] EWCA Civ 31, considered.

(33) Registrar of Restrictive Trading Agreements v. W.H. Smith & Son Ltd., [1969] 1 W.L.R. 1460; [1969] 3 All E.R. 1065, referred to.

(34) Sharma v. Browne-Antoine, [2007] 1 W.L.R. 780; [2006] UKPC 57, referred to.

(35) Wilson v. First County Trust Ltd. (No. 2), [2004] 1 A.C. 816; [2003] 3 W.L.R. 568; [2003] 4 All E.R. 97; [2003] H.R.L.R. 33; [2003] U.K.H.R.R. 1085; [2003] UKHL 40, considered.

Legislation construed:

Royal Court Rules 2004 (Revised Edition, ch.07.770.72, 2013 ed.), r.15/1: The relevant terms of this rule are set out at para. 43.

r.15/2: The relevant terms of this rule are set out at para. 43.

r.15/3: The relevant terms of this rule are set out at para. 43.

Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 (Revised Edition, ch.17.850.30, 2013 ed.), reg. 1A(1): The relevant terms of this paragraph are set out at para. 8.

reg. 3: The relevant terms of this regulation are set out at paras. 10 15.

reg. 14: The relevant terms of this regulation are set out at para. 33.

reg. 16A: The relevant terms of this regulation are set out at para. 8.

Agreement between Jersey & the Kingdom of Norway for the Exchange of Information relating to Tax Matters (2009), art. 1: The relevant terms of this article are set out at para. 4.

art. 2: The relevant terms of this article are set out at para. 4.

art. 3: The relevant terms of this article are set out at para. 4.

art. 4: The relevant terms of this article are set out at para. 4.

art. 6: The relevant terms of this article are set out at para. 4.

art. 7: The relevant terms of this article are set out at para. 4.

art. 10: The relevant terms of this article are set out at para. 4.

European Convention for the Protection of Human Rights and Fundamental Freedoms (Rome, November 4th, 1950; Treaty Series 71 (1953)) (Cmnd. 8969) (Human Rights (Jersey) Law 2000 (Schedule 1, Part 1)), art. 6(1): The relevant terms of this paragraph are set out at para. 48.

art. 8(1): The relevant terms of this paragraph are set out at para. 50.

Texts cited:

Bennion on Statutory Interpretation, 5th ed., at 317 (2008).

Fordham, Judicial Review, 6th ed., para. 17.3.7(c), at 88; paras. 17.4.9 17.4.10, at 192; para. 21.1.7(c), at 230; para. 59.5.7, at 600; para. 60.2, at 625; para. 62.4.8, at 674 (2012).

Lester, Pannick & Herberg, Human Rights Law & Practice, 3rd ed., para. 3.14, at 119 120; para. 4.6.24, at 299 (2009).

Phipson on Evidence, 17th ed., para. 12 12, at 354 (2010).

Powell, Recent International Tax Initiatives, 2013 Jersey & Guernsey Law Review 285, para. 11, at 289.

Wade & Forsyth, Administrative Law, 10th ed., at 432 434 (2009).

Taxation — exchange of tax information — provision by other persons of information about taxpayer — principles to be applied when considering, under Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008, reg. 3(1), whether reasonable grounds for believing (a) taxpayer might fail, or might have failed, to comply with foreign tax law; and (b) failure led or likely to lead to serious prejudice to proper assessment or collection of tax — (i) Comptroller to consider all available information, and sources; (ii) information need not be verified by affidavit or take particular form; (iii) Comptroller may request clarification or further information; and (iv) Comptroller not required to determine disputes between requesting state and persons affected by request, but solely whether reg. 3 satisfied

The respondent served a notice on the first appellant under the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008.

Pursuant to an agreement between Jersey and Norway for the exchange of information relating to tax matters ("the TIEA"), the Norwegian Tax Authority requested assistance in relation to criminal tax matters concerning the second appellant, a Norwegian national, and companies believed to be closely connected to him. Under art. 1 of the TIEA, the purposes for which information could be provided included the administration and enforcement of the parties' domestic tax laws and the criminal prosecution of tax matters. The TIEA came into force in October 2009. Article 10 provided that the agreement had effect (a) for all criminal tax matters on that date; and (b) for all other matters on that date but only in respect of the following tax year. "Criminal tax matters" were defined in art. 3(1)(f) as "tax matters involving intentional conduct whether before or after the entry into force of this Agreement which is liable to prosecution under the criminal law of the requesting Party."

Two expert witnesses gave evidence as to Norwegian tax law. Their opinions differed markedly, mainly because of different assumptions about the facts to which the law was to be applied. The appellants' expert considered that the second appellant could only be liable to income tax if there had been a distribution to him by way of dividend from one of the companies concerned, of which there was no evidence, whereas the expert for the Comptroller suggested that, depending on what the facts were found to be, there were at least three ways in which the second appellant might be liable to income tax.

The requested information concerned four companies for whom the first appellant acted as financial services provider in Jersey. The second appellant and his closely related companies had been under investigation by the Tax Authority in Norway for some time. The Authority suspected that the second appellant had interests in some of the companies that he had failed to declare, that there had been incorrect pricing in connection with sales of shares and option agreements, as well as income ascribed to the wrong taxpayer and the antedating of financial contracts, and that the transactions constituted "a cost-free transfer of values to the benefit of [the second appellant] which the Tax Administration regards as taxable income to him."

The Jersey Deputy Comptroller of Taxes (here "the Comptroller") served a notice on the first appellant under the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008, requiring the production by the first appellant of certain categories of documents and a small number of specified items said to be relevant to the tax affairs, in Norway, of the second appellant. Under reg. 3, the Comptroller could require a third party to provide tax information. Paragraph (1) of the regulation provided that the regulation applied "if the Comptroller...