Volaw Trust & Corporate Services Ltd; Mr Berge Gerdt Larsen v The Office of the Comptroller of Taxes

• Jurisdiction: Jersey
• Court: Court of Appeal
• Judge: Michael J. Beloff,Sir John Nutting, Bt.,Sir Hugh Bennett
• Judgment Date: 28 November 2013
• Neutral Citation: [2013] JCA 239
• Date: 28 November 2013

[2013] JCA 239

COURT OF APPEAL

Before:

The Hon Michael J. Beloff, Q.C.; President; Sir John Nutting, Bt., Q.C., and; Sir Hugh Bennett.

Between

Volaw Trust & Corporate Services Limited

First Appellant

Mr Berge Gerdt Larsen

Second Appellant

and

The Office of the Comptroller of Taxes

Respondent

Advocate A. D. Hoy for the First Appellant.

Advocate J. Harvey-Hills for the Second Appellant.

Advocate J. D. Kelleher for the Respondent.

Authorities

Volaw Trust and Corporate Services Limited and Mr B Larsen -v- Income Tax [2013] JRC 095 .

Taxation (Exchange of Information with Third Countries)(Jersey) Regulations 2008.

ABN Amro v FSA 2010 EWCA Civ 323 .

Taxation (Implementation)(Jersey) Law 2004.

Registrar of Restrictive Trading Agreements v Smith (WH) 1969 1 WLR 1460 .

A and Others v Secretary for State for the Home Department 2005 1 WLR 414 .

Secretary of State for the Home Department v AY 2012 EWHC 2054 (Admin) .

Acturus Properties and 47 Others -v- Attorney General [2001] JLR 43 .

Investigation of Fraud (Jersey) Law 1991.

Proceeds of Crime (Jersey) Law 1999.

European Convention on Human Rights.

R v Birmingham CC ex p Ferrero Ltd [1993] 1 All ER 530 .

Bank Mellat No. 2 v HM Treasury 2013 UKSC para 36 .

Sharma v Browne-Antoine [2007] 1 WLR 780 .

Fordham: Judicial Review 6 ^th ed.

AG v Ryan 1980 AC 718 .

Fernando v H&SS Minister [2012] (2) JLR 21 .

Court of Appeal (Jersey) Law 1961.

Datec Electronic Holdings Ltd v UPS Ltd [2007] 1 WLR 1325 .

Quilter v Mapleson 1882 9 QBD 672 .

Lloyd v McMahon 1987 AC 125 .

R (on the application of Hope and Glory Public House) v City of Westminster Magistrates Court 2011 EWCA Civ 31 .

Licensing Act 2003.

Royal Court Rules 2004.

R v Westminster City Council ex p Ermakov 1996 2 All ER 302 .

Civil Procedure 2013 Vol 1.

Practice Direction RC 05/25 (Administrative Appeals).

Wade and Forsyth Administrative Law 10th ed.

Human Rights (Jersey Law) 2000.

Lester, Pannick and Herberg: Human Rights Law and Practice.

B. Larsen Holdings v Norway [2013] ECHR 24117/08 .

Investigation of Fraud (Jersey) Law 1991.

Wilson v First County Trust Ltd 2003 UKHL 40 .

HMRC -v- Ben Nevis (Holdings) Limited [2012] EWHC 1807 (Ch) .

Phillips -v- Eyre (1870) LR 6 QB 1 .

The Boucraa 1994 1 AC 486 .

IRC -v- Commerzbank Attorney General [1990] STC 285 .

Fothergill -v- Monarch Airlines Ltd [1981] AC 351 .

Vienna Convention on the Law of Treaties.

Comptroller of Income Tax -v- AZP [2012] 22 taxmann.com 36 .

Browne v Dunn [1894] 6. LR 67. HL.

Phipson on Evidence 17th ed.

Al Sweady -v- Secretary of State [2009] EWCA 2387 (Admin) .

Prest v Petrodel Resources Ltd & Others [2013] UKSC 34 .

R -v- IRC ex p Rossminster 1980 AC 952 .

Greta Somme -v- Drammen Municipality .

The State -v- Henning Astrup .

Knoop Utv 2012,139.

Taxation — appeal against Royal Court decisions dated 15 and 16 May 2013.

Appeal by the First Appellant against the decision of the Royal Court of 15th May 2013 whereby the Royal Court dismissed an appeal brought in accordance with the provisions of Article 14(1)(c) of the Taxation (Exchange of Information with Third Countries)(Jersey) Regulations 2008; and

Appeal by the Second Appellant from the judgment handed down by the Royal Court on 16 May 2013 whereby the Royal Court specified that a notice dated 28th May 2012 under the Regulations specified above not be set aside or varied.

THE PRESIDENT:

This is the judgment of the Court.

Introduction

1 This is an appeal from the judgment of the Royal Court (Page QC Commissioner and Jurats Fisher and Liston of 16 May 2013 ( [2013] JRC 095) (“the Judgment”) by which the Royal Court upheld the decision of the Jersey Deputy Comptroller of Taxes (“the Comptroller”) to serve a notice dated 28th May, 2012, (“the May 2012 Notice”) on Volaw Trust & Corporate Services Limited (“Volaw”) pursuant to regulation 3(2) of the Taxation (Exchange of Information with Third Countries)(Jersey) Regulations 2008 (“the 2008 Regulations”). The May 2012 Notice requires the production by Volaw of certain categories of documents and a small number of individually specified items said to be relevant to the tax affairs, in Norway, of a Norwegian national and resident, Mr Berge Larsen, and was served in response to a request made by the Norwegian Tax Authority (“NTA”) on 26th February, 2010, (“the Request”) pursuant to an agreement made between Jersey and the Kingdom of Norway for the exchange of information relating to tax matters (“the JN TIEA”). The appellants are Volaw and, as the 2008 Regulations permit, Mr. Larsen himself.

2 The resolution of the appeal turns primarily on construction of the 2008 Regulations (which have not previously fallen for consideration by this Court) and their application to the particular facts of the present case. The former element raises issues of general importance: the latter element of importance to the parties themselves. Underlying the dispute is the tension between the private interest in commercial confidentiality and the public interest in international co-operation in the investigation of potential tax evasion. In ABN Amro v FSA 2010 EWCA Civ 323 Stanley Burnton LJ said of the latter÷ at paragraph 38:–

“Financial enterprises and financial transactions are increasingly international … It is therefore of the greatest importance that national financial regulations co-operate particularly where there are suspicions or allegations of fraud or other misconduct.”

The J/N TIEA

3 Jersey's power, to conclude bilateral agreements such as the J/N TIEA, notwithstanding the United Kingdom's responsibility in international law for its international relations, derives from delegation contained in a Letter of Entrustment [and see generally C. Powell Recent International Tax Initiatives: JGLR October 2013 p. 285 esp para 11].

4 The J/N TIEA was executed in Helsinki on 28 ^th October, 2008, and came into force on 7 ^th October, 2009. Its key Articles are as follows:–

Article 1 ( “Scope of the Agreement”) provides:–

“The Parties shall provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Parties concerning the taxes covered by this Agreement, including information that is foreseeably relevant to the determination, assessment, recovery and enforcement or collection of tax with respect to such persons subject to such taxes, or to the investigation of tax matters or the criminal prosecution of tax matters in relation to such persons. …………….”

“The rights and safeguards secured to persons by the laws or administrative practice of the requested Party remain applicable to the extent that they do not unduly prevent or delay effective exchange of information.”

Article 2, ( “Taxes Covered”) provides:–

“1. This Agreement shall apply to the following taxes imposed by the Parties:

• (a) in the case of Jersey:

  • (i) the income tax;

  • (ii) the goods and services tax;

• (b) in the case of Norway:

  • (i) the tax on general income (“skatt på alminnelig inntek”);

  • (ii) the tax on personal income (“skatt på personinntekt”);

  • (iii) the special tax on petroleum income (“særlig skatt på petroleumsinntekt”);

  • (iv) the resource rent tax on income from production of hydroelectric power (“grunnrenteskatt på inntekt fra produksjon av vannkraft”);

  • (v) the withholding tax on dividends (“kildeskatt på utbytter”);

  • (vi) the tax on Remuneration to non-resident artistes (skatt på honorar til utenlandske artister m.v.”), etc.; and

  • (vii) the value added tax (“merverdiavgift”).”

Article 3 ( “Definitions”) paragraph 1 defines:–

“(d) the competent authority as … in the case of Norway the Minister of Finance or the Ministers' authorised representative”

“(f) “criminal tax matters” 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.” (our emphasis)

and information (h) “as any fact statement or record in whatever form”.

Article 4 ( “Exchange of Information upon Request”) provides:–

“(3) If specifically requested by the competent authority of the requesting party the competent authority of the requested Party [Jersey in the present case] shall provide upon request by the requesting Party [Norway] information under the Article to the extent allowable under its domestic law for the purposes referred to in Article 1.”

Article 4.5 provides:–

“Any request for information shall be formulated with the greatest detail possible and shall specify in writing:

(a) the identity of the person under examination or investigation;

(b) the period for which the information is requested;

(c) the nature of the information requested and the form in which the requesting Party would prefer to receive it;

(d) the tax purpose for which the information is sought;

(e) the reasons for believing that the information requested is foreseeably relevant to tax administration and enforcement of the requesting Party, with respect to the person identified in subparagraph (a) of this paragraph;

(f) grounds for believing that the information requested is present in the requested Party or is in the possession of, or obtainable by, a person within the jurisdiction of the requested Party;

(g) to the extent known, the name and address of any person believed to be in possession of or able to obtain the information requested;

(h) a statement that the request is in conformity with the laws and administrative practices of the requesting Party, that if the requested information was within the jurisdiction of the requesting Party then the competent authority of the requesting Party would be...