Jersey Unreported Judgments

Debt - Income Tax - leave to appeal sought by the plaintiff against decision of the Court.

[2017]JRC154

Royal Court

(Samedi)

21 September 2017

Advocate S. A. Meiklejohn for the Plaintiff.

Advocate M. L. Preston for the Defendant.

judgment

the bailiff:

1.        The Plaintiff has a claim against the Defendant in respect of unpaid income tax.  Proceedings were issued, and came before the Court on 1^st September, 2017, when the Plaintiff through his advocate presented the Court with a certificate under the hand of the Comptroller of Taxes for the purposes of Article 44 of the Income Tax (Jersey) Law 1961 ("the Income Tax Law").  By paragraph 1(1) of Article 44:-

"For the recovery by legal process of income tax, or of any balance of income tax, a certificate under the hand of the Comptroller in the following form or to the same effect, stating that the person named therein is in default as regards payment of income tax, shall be sufficient evidence that the amount of tax mentioned therein has been duly charged and assessed, and is in arrear and unpaid ..."

2.        When the claim came before the Royal Court, Advocate Preston, on behalf of the Defendant, sought to place the claim on the pending list.  The Court allowed him to do so and the Plaintiff now seeks leave to appeal against that decision pursuant to Article 13(1)(e) of the Court of Appeal (Jersey) Law 1961.  No appeal is possible against an interlocutory order, such as this one, without leave either from the Court below or from the Court of Appeal.

3.        The test on whether to grant leave to appeal is well established and is set out in Glazebrook v Housing Committee [2012] JLR Note 43 :-

(i)        is there a clear case of something having gone wrong?

(ii)       has there been a question of general principle decided for the first time?

(iii)      is there an important point of law upon which further argument and a decision of the Court of Appeal would be to the public advantage?

4.        In UCC v Bender and others [2006] JLR 269, the Court of Appeal confirmed that it would not interfere with a decision of the Royal Court unless the Royal Court had (a) misdirected itself as to the principles applicable; (b) considered improper matters or failed to consider proper matters; (c) reached a decision that was plainly wrong; or (d) where there had been a change of circumstances after the lower court's decision which would have justified a different decision.  This test was reaffirmed by the Court in Kells v Cashback Limited [2012] JCA 140.

5.        Rule 6/6(1) of the Royal Court Rules provides that a defendant who wishes to defend an action that has come before the Court shall ask the Court to order that the action be placed on the pending list and, provided that the defendant then gives an address for service in Jersey, the Court shall so order.  While that is on the face of it mandatory, it is perfectly plain that the Royal Court has a discretion to refuse to allow a defendant to place the matter on the pending list - see the Privy Council decision in Eves v Hambros Bank (Jersey) Limited [1995] JLR 344 at page 351 where Lord Hoffmann, delivering the judgment of the board, said:-

"Their Lordships consider that despite the mandatory terms of R.6/7(1), any court must have an inherent power to protect other litigants from the abuse of its process."

6.        This was understandably adopted by the Court of Appeal in Kells v Cashback Limited [supra] at paragraph 20 where Montgomery JA said:-

"We are satisfied that the principle stated by the Privy Council in Eves permits the Royal Court to decline to enter an action on the pending list when there is no discernible defence to an action, although this may not be the appropriate procedure in all such cases given the summary nature of the process."

7.        The Court's experience is that there have been cases where judgment has been given in favour of a plaintiff notwithstanding the defendant's request to place the matter on the pending list - a recent example is Investec Bank (Channel Islands) Limited v Booth [2015] JRC 042 - but these are rare occasions.  The proper construction of Rule 6/6(1) coupled with the authorities is that a defendant who wishes to defend may put the action on the pending list unless to do so would amount to an abuse of process.  If there is something in the defendant's position which might raise a defence, the Friday afternoon court is not the time for any detailed argument on the merits.  If there is anything which can properly be raised by way of defence, then the right way procedurally of dealing with that is through an application for summary judgment pursuant to Rule 7 of the Royal Court Rules 2004.

8.        These being the general principles, what arises in this case?

9.        The Plaintiff's case is that the Income Tax Law provides for an appeal under Article 27(1) to the Commissioners of Appeal provided that notice in writing is given to the Comptroller within 40 days of the assessment.  The Comptroller is conferred the power to extend time if satisfied that owing to absence, sickness or some other reasonable cause, the prospective appellant was prevented from appealing within that time, provided that there is not an unreasonable delay.  Article 36 of the Income Tax Law provides for a further appeal to the Royal Court, but only on points of law.

10.      On the facts of this case, the Defendant did not enter a notice of appeal in writing within 40 days of the assessment, and when he applied for an extension of time, that was refused.  That application for an extension was significantly late, by some five months.

11.      The Plaintiff therefore contends that as there has been no appeal against the assessment, the certificate of the Comptroller under Article 44 is conclusive and there can be no defence.  Thus, it is said that it was an abuse of the process for the action to be placed on the pending list.  The Plaintiff expressed concern through Advocate Meiklejohn that by allowing the case to go on the pending list, the Court had taken a step which would result in taxpayers regularly securing a delay by placing the claim on the pending list when there was in reality no defence.  This was the point of principle which it was said the Court had decided for the first time.

12.      The defence contention on 1^st September accepted that the Defendant was late in seeking to appeal, but it was denied that the assessment was correct.  Advocate Preston contended that the Defendant had an Article 6 Convention Right to a fair trial of his application to appeal out of time, and that he was entitled to a fair trial of the Plaintiff's contention that the Comptroller's assessment was conclusive.  The Court was advised on 1^st September that the Defendant had through Advocate Preston lodged an appeal against the assessment again that very morning.

13.      On this application for leave to appeal, it is contended by Advocate Meiklejohn on behalf of the Plaintiff that there is a statutory procedure for appealing assessments, and that the Commissioners of Appeal satisfy the independence and impartiality requirements of Article 6 of the ECHR.  In any event there is an ultimate appeal to the Royal Court, which is an Article 6 compliant body.  Accordingly it is said that the whole process is Article 6 compliant.

14.      It seems to me that there are two areas which are arguable.  The first is whether the provisions of the Income Tax Law which enable the Comptroller to decide whether the time for appealing his own assessment can be extended is Article 6 compliant.  I express no view on that, but it seems to me that the Comptroller's decision not to extend time in any case is theoretically susceptible of criticism either on judicial review grounds or on the grounds that it is not a Convention compliant process.  Whether that is sufficient to provide a defence under the Human Rights Law and require the Royal Court to read down the Income Tax Law so that it operates in a Convention compliant way seems to me to be arguable.  That may be a relevant consideration in relation to the second argument, to which I now turn.

15.      That second argument is whether Article 44(1), properly construed, does not provide that the Comptroller's certificate is sufficient evidence, but in fact provides that it is conclusive evidence.  The difference between the two is that if it amounts to the latter, it does not matter much what evidence or defence is put up by the Defendant, because the Comptroller's certificate is conclusive.  On the other hand, if the Comptroller's certificate means only that there is sufficient evidence that brings with it the judgment call on the part of the court of trial as to how the strength of that sufficiency is to be balanced against the evidence or defence which the Defendant puts up in reply.  It was said by Advocate Meiklejohn that there were circumstances when the certificate would not be conclusive - such as when there was evidence the tax bill had been paid - but these cases would be very rare.

16.      In my judgment, the argument over the construction of Article 44 of the Income Tax Law is one which would merit the attention of the Court of Appeal as being an important question of law upon which argument and a decision of the Court of Appeal would be to the public advantage.  However I do not think that this issue arises directly out of the decision of the Court on 1^st September, which was not on that subject but was only a decision to allow the case to go on the pending list against the background of the Royal Court Rule and the decisions of the Court of Appeal and Privy Council referred to above.  In my judgment, the decision of the Royal Court to place the action on the pending list merely recognised that there might be a potential defence, and in those circumstances it was appropriate that Rule 6/6 should be given effect.  Accordingly, this is not a matter in my judgment which should trouble the Court of Appeal at this stage, not least because the Court of Appeal would be asked to address the position in a vacuum without agreement, necessarily, on the facts.

17.      I note also that the Glazebrook decision on when leave to appeal should be given refers to the desirability of "further argument" before the Court of Appeal.  I can well see that the decision in the present application might have gone the other way if there had in truth been any argument at all so far.  There has not, other than on this application for leave to appeal.  Indeed it is because there was no real argument but because the Court accepted the defence contention that there was a possible defence that the case was placed on the pending list and Advocate White was invited, on behalf of the Plaintiff, to consider whether an application for summary judgment should be made.  The adoption of that procedure would indeed enable leave to appeal to have been considered on the basis that "further argument" could take place on the points of law arising out of the construction of the Income Tax Law. If I were to grant leave to appeal now, it means that the Court of Appeal would be faced with deciding a point of law without the benefit of the views of the Royal Court on the point, and, absent unusual circumstances, I consider that to be undesirable in principle on a procedural issue of this kind.

18.      For these reasons, I refused leave to appeal, and awarded standard costs against the Plaintiff in respect of costs incurred of and incidental to the application for leave to appeal.

Authorities

Income Tax (Jersey) Law 1961.

Court of Appeal (Jersey) Law 1961.

Glazebrook v Housing Committee [2002] JLR Note 43.

UCC v Bender and others [2006] JLR 269.

Kells v Cashback Limited [2012] JCA 140.

Eves v Hambros Bank (Jersey) Limited [1995] JLR 344.

Investec Bank (Channel Islands) Limited v Booth [2015] JRC 042.

Royal Court Rules 2004.