Jersey Unreported Judgments

Tax.

[2021]JRC075

Royal Court

(Samedi)

15 March 2021

Before     :

Sir William Bailhache., Commissioner, sitting alone.

 

The Applicant did not appear.

Advocate G. G. P. White for the Respondent.

judgment

the commissioner:

Introduction

1.        On 13^th November 2020, the Respondent issued Tax Investigation Enforcement Agreement Notices ("the Notices") in respect of the Bridge 1 Trust ("the Trust") and Mark II Enterprises Limited ("the Company").  The Notices were issued to RBC Trust Company (International Limited) ("RBC") in respect of both entities and pursuant to Regulation 3 of the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 ("the Regulations"), a copy of the Notices was provided by the Respondent by post to the Applicant. 

2.        The Applicant sought a confirmation from the Respondent that he would stay the transmission to the Dutch Tax Authorities ("the Dutch Competent Authority") of the documents received pursuant to the issue of the Notices.  The Respondent refused that request for a stay on transmission, and in consequence, the Applicant has applied for leave to issue judicial review proceedings in relation to that decision.  The application was issued on 10^th December, which is accepted as having been issued in time, being within 14 days of the date (26^th November 2020) upon which the Respondent accepts that the Applicant receive notice of the TIEA request, 14 days being the period within which judicial review proceedings must be brought in accordance with Regulation 14(1)(c) of the Regulations.  If the decision to issue the Notices was lawful, it would seem that the decision to transmit the information would likely also be lawful.  Indeed, at least some of the grounds advanced for challenging the decision to refuse a delay in transmission are in reality grounds for challenging the decision to issue the Notices. 

3.        The Application for leave was based on four grounds:

(i)        The decision was unreasonable and/or irrational as the Respondent did not place adequate weight on the risk that transmitting the documents to the Dutch Competent Authority risked rendering proceedings on foot in the Netherlands nugatory in whole or in part. 

(ii)       The Respondent failed property or at all, to take into account, the possibility that the TIEA requests are contrary to public policy in Jersey including because they amount to a fishing expedition and because they do not either specify with the greatest detail possible the information being sought and/or do not establish a nexus between the information requested and the subject of the inquiry or investigation.  As a result, the request and the subsequent notices do not relate to "foreseeably relevant tax information". 

(iii)      The Respondent erred by failing to cause the Dutch Competent Authority to limit its request to information and documents within the temporal scope of the Tax Information Exchange Agreement between Jersey and the Kingdom of the Netherlands, the request covering more than 20 years since the Trust and the Company were created in 1999. 

(iv)      The information used by the Dutch Competent Authority in order to make the TIEA request resulting in the issue of the Notices was unlawfully received and breached the Applicant's rights under Article 8 of the European Convention on Human Rights (ECHR).  Specifically, the Dutch Competent Authority received information from the Dutch investigative authorities responsible for the criminal procedure against the Applicant's tax adviser, using criminal powers of seizure, thus providing the Dutch Competent Authority with information the latter would not ordinarily have the power to seize and which it is not entitled to have or use against the Applicant. 

4.        The application for judicial review concluded that there were arguable grounds which had a realistic prospect of success.  The Respondent thus has a duty of candour to provide to the Court all relevant facts and reasoning underlying the decision to issue the Notices and whilst it was conceded that the default position is that letters of request were not disclosable, such disclosure might be ordered in a proper case of which the instant case was said  by the Applicant to be one.  

5.        The application for judicial review was supported by an affidavit sworn by the Applicant on 10^th December 2020.  In his affidavit, he set out that he and his wife had left the Netherlands and moved permanently to Switzerland in December 2009, and they were resident in Switzerland for all material purposes.  Contrary to the Applicant's assertions, the Dutch Tax Authority claimed in 2017 that they were still resident in the Netherlands for tax purposes, which had consequences for the tax assessment relating to the year 2008.  The Applicant explained that there had been a criminal investigation in 2018 of his Dutch tax adviser during which a very broad seizure of evidence had taken place.  Neither he nor his wife were suspects in the criminal investigation, nor was the tax adviser accused of any wrongdoing in relation to the Applicant's tax affairs.  As a result of the seizure of information relevant to him, the Applicant had initiated administrative proceedings in the Netherlands challenging the lawfulness of the exchange of information between the investigative authorities and the Dutch Competent Authority, and seeking an order preventing further use of this information by the latter on the basis of an alleged infringement of his rights under Article 8 of the ECHR.  The essence of the argument appears to be that information was obtained for the purposes of a criminal investigation and then exchanged, allegedly in breach of Dutch law, with administrative officials who had tax gathering powers.  Accordingly, the Applicant contends in Jersey that if he is successful in the Netherlands in his challenge to the lawfulness of the exchange of information with the Dutch Competent Authority, the TIEA request to the Respondent will be based upon information unlawfully obtained and will no longer be capable of being used as a matter of Dutch law.  In that event, it would be wrong for the Respondent to act in Jersey on that request.  The Applicant expected an initial decision on his objection to be taken at the latest by 19^th February.  I am not aware at the date of this judgment as to whether such a decision has been given, or if it has, what it is.  

6.        As to the fishing expedition objection, the Applicant contends that the Notices contained broad and open-ended requests that go well beyond a proper tax information investigation.  He says they are drafted so broadly as effectively to require disclosure of all and any records held on the Trust and the Company by RBC, and that this shows that there cannot be any adequate nexus with the actual tax investigation which is proceeding.  On temporality, he asserts that as the Jersey/Netherlands Tax Information Exchange Agreement relates in terms of civil tax matters only to those arising after 1^st March 2008, the obtaining of documents over a 20-year period is unjustifiable.  In all circumstances, the Applicant contends that the Respondent ought to have acquiesced in his request to hold the information in Jersey rather than send it at this stage to the Dutch Competent Authority which might well be found not to be entitled to it. 

7.        The objections were substantially put to the Respondent by emails dated 7^th and 9^th December.  On 10^th December, the Deputy Director of the Respondent, Mr Luc Rochefort responded to say that the Respondent was not going to stay the requirements of the Notices; it was confident that the tax information sought under the Notices was in conformity both with the Jersey - Netherlands TIEA and with the Regulations; that the information sought was foreseeably relevant to an investigation for the purposes of assessment and/or collection of the Dutch taxes covered by the TIEA; and that there was nothing illegal, irrational or unreasonable about the collection and transmission of the tax information in those circumstances.  In particular, the Deputy Director concluded in this way: 

"the possibility that the outcome of certain litigation in a foreign jurisdiction might ultimately prevent a foreign requesting authority from later making use of tax information that has been exchanged by Jersey under a TIEA is not a relevant criterion for determining the legality, rationality and reasonableness of responding to a request from that foreign authority under the TIEA in accordance with the [Regulations]."

8.        Unconditional leave to commence judicial review proceedings was given to the Applicant by the Bailiff on 11^th December 2020.  No reasoned decision (as In the matter of an application for Judicial Review by Volaw Trust and Corporate Services Limited and Six Others [2015 (1) JLR 19] or Larsen and Volaw Judicial Review [2014] JRC 232) accompanied the granting of such leave, and one therefore assumes that the Bailiff considered that all of the grounds upon which the application for leave was sought were arguably established on the material before him - see Warren v Lt Governor [2017] (1) JLR 291 at paragraph 4 where Beloff, Commissioner, said:

"For an application for judicial review to succeed, the Royal Court would have to be satisfied that His Excellency's decision was unlawful, irrational or flawed by procedural impropriety (Planning and Environment Committee v Lesquende Limited 1998 JLR1) and for present purposes I must be satisfied that one or more of those grounds is arguably established on the material before me."

9.        On 23^rd December, the Respondent applied, pursuant to Rule 16/6 of the Royal Court Rules 2004, to have the leave set aside.  It was open to the Respondent to make that application as he was not convened to appear before the Bailiff to make representations prior to the granting of the leave in question by the Bailiff.  The application to set aside the granting of leave was supported by an affidavit from Mr Rochefort, also dated 23^rd December 2020, in which he sets out the facts on which reliance is placed.  The application to set aside the grant of leave was served upon the Applicant.  On 28^th January 2021, Advocate Lindop of Messrs Carey Olsen, on behalf of the Applicant, wrote a letter to the Bailiff's Judicial Secretary to confirm that he was not instructed to appear in Court upon the basis that the Applicant was a private individual who faces a substantial ongoing burden of funding legal proceedings in two jurisdictions and wished to conserve his finite resources for a substantive judicial review hearing in Jersey in addition to the various Dutch proceedings.  On behalf of the Applicant, Advocate Lindop submitted in his letter that the grounds for judicial review had already been well made out for the purposes of establishing an arguable case for judicial review which clearly exceeded the minimum threshold for granting leave.  Accordingly, at the hearing to set aside the granting of leave, only Advocate White, on behalf of the Respondent, appeared. 

The test to be applied

10.      Rule 16/6 of the Royal Court Rules 2004 indicates that an order may be made setting aside the leave granted if the Court is satisfied that the Applicant did not disclose all material facts in the application or that for some other substantial reason it is just to make such an order.  Neither in the application to have leave set aside nor in the affidavit of Mr Rochefort is there any material to support the argument that the Applicant did not disclose all material facts in his application for leave.  There is considerable criticism of the assertions by the Applicant as to the law which falls to be applied, but there is no suggestion that material facts were misstated or not provided to the Bailiff.  In those circumstances, the application to have the leave set aside rests upon the assertion that "for some other substantial reason it is just to make such an order."

11.      Both in the application to have the leave set aside and in the affidavit of Mr Rochefort, substantial attention is paid to the grounds upon which the Applicant contended before the Bailiff that leave to commence judicial review proceedings should be given were wrong.  In other words, the Respondent has addressed the substance of the argument which the Applicant put before the Bailiff.  However, the mere fact that leave has been given means that the Bailiff was satisfied that this was not a hopeless, frivolous, or vexatious claim, and that there was an arguable case fit for further consideration.  It is clear that very little assistance can be obtained procedurally from the position in England and Wales because under CPR Rule 54.13, nobody can apply for leave to be set aside where that person has been served with the claim form.  That process gives a respondent an opportunity to say why leave should not be given in the first place.  That is not a procedure which we have followed here, although in a proper case it is open to the judge considering an application for leave to convene the putative respondent.  However, the CPR commentary does make it clear that even in circumstances where the Respondent had not been served, which is very unusual, the jurisdiction created by CPR 54 is one to be exercised very sparingly.  It is also said that the English court has an inherent jurisdiction to set aside leave, as indeed I think is the case in the Royal Court as well.  

12.      In considering this question of when it is appropriate to set aside leave granted ex parte, it is helpful to refer to R v Secretary of State for the Home Department ex parte Chinoy (1992) 4 Admin LR457, [1991] Lexis citation 2810.  This was an application by the Secretary of State for the Home Department to set aside leave to move a judicial review granted to Mr Chinoy, the applicant, who was a citizen of Pakistan.  Mr Chinoy was indicted by a Federal Grand Jury in Florida to stand trial on charges of conspiracy in connection with the proceeds of drug trafficking.  He was arrested in London in October 1988 under a provisional warrant issued under Section 8(2) of the Extradition Act 1870 and Article 8 of the Treaty governing extradition between the United Kingdom and the United States.  Ultimately, an order for his extradition was made, a decision in respect of which Mr Chinoy sought judicial review in order that it might be quashed.  The grounds were that the order of the Secretary of State was illegal; that he was precluded from making an order by virtue of the United Kingdom's obligations under the ECHR; and that the Order was one which no reasonable Secretary of State properly directing himself on the relevant law, could have reached.  He was given leave to move to judicial review, which led to the application by the Secretary of State to have the leave set aside. 

13.      The point was taken on appeal that there was no jurisdiction or power in the Court to set aside leave granted ex parte.  That does not arise here of course because the rules of the Royal Court expressly provide for such an application to be made - another way of putting that is that, by rule, the court has effectively ordered that any grant of leave is subject to liberty to apply.  

14.      The next issue argued however, was that if there were jurisdiction to set aside the grant of leave, it should only be exercised in the case of non-disclosure or in the case of new factual developments since the date of the grant of leave.  To that, Bingham LJ said this:

"I would unhesitatingly accept that those are grounds upon which the court could exercise its discretion to set aside leave previously given.  But I would not accept the suggestion that the court's jurisdiction may only be exercised when non-disclosure or new factual developments are demonstrated.  It seems to me that it is a jurisdiction which exists and which the court may exercise if it is satisfied on inter partes argument that the leave is one that plainly should not have been granted.

I would, however, wish to emphasise that the procedure to set aside is one that should be invoked very sparingly.  It would be an entirely unfortunate development if the grant of leave ex parte were to be followed by applications to set aside inter partes which would then be followed, if the leave were not set aside, by a full hearing.  The only purpose of such a procedure would be to increase costs and lengthen delays, both of which would be regrettable results.  I stress therefore that the procedure is one to be invoked very sparingly and it is an order which the court will only grant in a very plain case.  I am, however, satisfied, as I have indicated, that the court does have discretion to grant such an order if satisfied that it is a proper order in all the circumstances.  Therefore, I reject the first ground upon which the applicant resists this order."

(emphasis added)

15.      On the facts and on the application of the law in that case, the Court of Appeal did in fact set aside the leave granted ex parte to move for judicial review.  It is clear that an important part of that decision was that the ECHR was not at that stage part of the domestic law of the land.  On a proper construction of the Extradition Act and the relevant treaty with the United States, the Court considered that the grounds in law, upon which it was said that the Secretary of State ought to have refused the request for extradition, simply did not exist. 

16.      In my judgment, the summary of Bingham LJ, as he then was, as set out above is helpful.  Thus, material non-disclosure, new factual developments since the grant of leave, or the leave for any substantial reason being plainly not justified would be good reasons for setting aside the grant of leave but the jurisdiction to do so should be exercised sparingly.  Those being the principles, I now turn to the application in question.

Discussion

17.      In much of the argument which I heard from Advocate White, he emphasised that the Applicant had come up with no knockout blow as to why the decision of the Respondent was wrong; but that is not the test which I have to consider for the purposes of an application to set aside leave.  Indeed it seems to me that the right test is quite the reverse - given that the Bailiff has already decided that there is an arguable case for judicial review, the "substantial reason" which needs to be shown for the purposes of Rule 6/16 must in my judgment be something akin to a knockout blow against the assertions put forward by the Applicant.

18.      On an application for leave the court does not generally expect to have more than an hour's oral argument.  The Applicant has to show is that there is something properly arguable which justifies the giving of leave.  Similarly, the application to set aside leave should not take up a great deal of time and should not be an excuse to argue out the issues in detail.  The Bailiff has exercised his discretion and unless there is something clearly wrong with that exercise, it should be respected. 

19.      It would also be undesirable for me in this judgment to analyse in great detail the points which have been made by Advocate White on behalf of the Respondent.  Any comments I do have to make in that regard would be provisional, not least because there will be a full argument at a later stage; but in deference to the elaborate submissions which have been made, I will touch on some of those arguments now.

20.      I take first Ground 2 of the application for leave.  The Respondent contends that he should not have duties placed upon him in a judicial review application to provide detail about the request of a foreign requesting authority that is itself subject to international standards of confidentiality before he has an opportunity to demonstrate that there has actually been no substantive reason advanced of impropriety, illegality or irrationality/unreasonableness on his part, or before he is given the opportunity to reduce the grounds on which leave is given.  That is really a complaint that he should not, as a result of leave being given, find himself in the position of having to provide information which might in fact support the granting of judicial review.  It is asserted that the substantial complaints of impropriety, illegality, irrationality or unreasonableness must be demonstrated before it is required to give information about the nature of the request.  Thus, it is said that the Notices - which are really pro-forma notices - do not have to set out what the nexus between the request and the taxpayer investigation is, and they do not purport to do so.  The Respondent might have information given to him in the request from a foreign tax authority that legitimates his view that the information requested is foreseeably relevant to that investigation.  He is not obliged to produce the foreign authority's request.  As far as the Respondent is concerned, the Notices which he has issued in this case in accordance with the Regulations and the legality, rationality and reasonableness of the issue of those Notices cannot be determined by reference to the information in the Notices themselves but only by reference to the information provided from the Dutch Competent Authority, which in fact the Applicant does not know and is not entitled to see unless leave is given. 

21.      I recognise the comments made by Commissioner Beloff in paragraph 4 of his judgment in Larsen -v- Comptroller of Taxes and Anor [2015] (2) JLR 209 to the effect that Notices are simply machinery to assist in a process of investigation by a foreign state which, absent guilt, have no adverse consequence for the taxpayer other than those intrinsic to the investigation, and so on.  However, I have to say that I find the Respondent's approach to reflect an intrinsically unattractive argument.  It amounts to saying that a person affected by administrative action and whose privacy rights are being invaded by the state can only challenge that action if he shows that the action was unlawful, and he is not entitled to information to demonstrate that the action was unlawful until he has shown that it was unlawful.  In my judgment that is circular and at least arguably not in accordance with authority - see for example Housing Committee v Phantesie Investments Limited [1985-86 JLR 96] where at page 112 Neill JA said this:

"...the disappointed applicant was entitled to more than a playback of the statutory provision, a method of proceeding which in some of the American administrative law cases is called "parroting the statutory language"."    

22.      One can conceive that in some cases it might be demonstrably unfair, if, as I perceive it to be, the position which the Respondent asserts is as set out in paragraph 20 above.  That is not to say that the taxpayer is entitled to a grant of leave in order that he may challenge the request and obtain information as to its basis.  He has to show a prima facie case - an arguable case - that the competent authority has acted illegally, irrationally or with some impropriety such as would justify the grant of judicial review.  In considering any application for leave, the court will have in mind, as Beloff, Commissioner, said, that this is an investigative process where the object is the gathering of information and not at that stage the taking of action necessarily adverse to the tax payer once it has been obtained, other than the invasion of privacy and any possible effect on the taxpayer's contractual relationships with service providers.  Whether the taxpayer has crossed the threshold of showing a prima face case is precisely the matter which the Bailiff had to consider when deciding whether or not leave should be granted. 

23.      In the present case, there does seem to me prima facie to be a basis upon which the Applicant is entitled to some further information about the request which the Respondent has received from the Competent Authority for the Netherlands.  Regulation 3, so far as is material for these purposes, provides as follows:

"(1)     Where the Competent Authority for Jersey decides to respond to a request concerning a tax payer, the Competent Authority for Jersey shall require a third party, being a person other than the tax payer, to provide to the Competent Authority for Jersey all such tax information that the Competent Authority for Jersey requires for that purpose.

...............

(3)       Where a third-party notice does not name the taxpayer to whom it relates, it must provide an account number or other identification for the tax information required.

.............."

24.      By letter dated 13^th November 2020, the Respondent wrote to the Applicant to indicate that he had received a request for information from the Competent Authority for the Netherlands in respect of his tax affairs.  However, the Notice issued to RBC Trust Company (International) Limited does not appear to comply with Regulation 3(3) because it does not name the tax payer nor the tax identification number for the tax payer other than there is a specific request for details "of any payments made by the Trustees of the Bridge I Trust to [the Applicant] between 1 January 2008 and 21 December 2019, whether directly or indirectly, and by whatever means."  It also sought all correspondence between the Trustees and the Applicant. 

25.      The position is essentially the same in relation to the Notice in respect of the Company. 

26.      It may be that RBC Trust Company (International) Limited would be entitled to assume (as it appears it did) that the tax payer whose affairs are being investigated, is the Applicant; but as is so often said, tax affairs are private to the individuals concerned, and the recipient of the Notice, when considering the extent to which it should comply with it or challenge it as the case may be, is entitled to know with precision whose tax affairs are being enquired into.  The pro forma notice does not appear to say so.  That makes it difficult to assess whether the very wide range of information which is sought is foreseeably relevant to tax information in relation to the taxpayer who is not in terms identified.  It means also that it would be very difficult to place restrictions on the transmission of information which is irrelevant to the taxpayer but is within the scope of the Notices, perhaps affecting other third parties. 

27.      For this reason alone, notwithstanding that reasons may not be required for the sending out of notices, it seems to me to be clear for the purposes of this appeal that the Applicant's objections on the grounds of a fishing expedition cannot be the subject of any knockout blow on the part of the Respondent, leave already having been given by the Bailiff in this respect, and ground (2) of the Applicant's original grounds in the application to the Bailiff (which go much further than the point I have mentioned above) seems to me to be clearly arguable.

28.      The Respondent asserts that the Notices do not need to set out information which establishes that they are lawfully issued having regard to the Regulations and the Tax Information Exchange Agreement with the Netherlands.  In that context, he relies upon the decision of this Court (Commissioner Clyde-Smith) in Taylor Fladgate and Yeatman Limited v Comptroller of Taxes [2014 (1) JLR 342].  That case does not assist him.  It was a decision on the facts by the Royal Court that the application for leave should be refused because, as the Commissioner put it, he could see "no prospect of the Court being persuaded on these frankly weak grounds to quash the decision and effectively require Comptroller to conduct his own investigation into the investigation being conducted by the Portuguese Competent Authority or to hold his own mini trial."  That conclusion on the facts at the leave stage was no doubt made possible by the fact that the Commissioner had had put before him a significant amount of information not only about the request which was made to the Comptroller but also about exchanges of email correspondence between the Comptroller and the Portuguese tax authorities which demonstrated that the Comptroller was acting absolutely in accordance with the terms of the Tax Information Exchange Agreement.  By contrast in the present case, nothing has been put before me - neither the request from the Dutch Competent Authority  nor any information as to what the Respondent has done to satisfy himself that the request ought to be treated with a positive response.  The affidavit from Mr Rochefort goes nowhere near that detail, and in connection with the fishing expedition objection, really says no more than that the Jersey Competent Authority is obliged to determine whether the request falls within the terms of the TIEA; it had done so and was so satisfied and therefore that was an end to the matter.  

29.      In the circumstances, I am not willing to say that there is anything substantively wrong with the Bailiff's decision on Ground (2).

30.      I now turn to Grounds (1) and (4) which I take together.  Ground (1) is that the Dutch proceedings, which go to the heart of the validity of the request to the Respondent, may be rendered nugatory in whole or in part if the Respondent transmits the documents to the Netherlands.  It is said that if it turns out to have been unlawful for the Dutch Competent Authority to use the information it had to make the request to the Respondent, then it will follow that any transmission of documents by the Respondent to the Dutch Competent Authority will lead to an order that the documents so transmitted will have to be destroyed.  The essence of Ground (4) is that the issue of the Notices pursuant to an unlawful request breached the Article 8 Convention rights of the Applicant, and transmitting the documents to the Dutch Competent Authority would be an interference with those rights which cannot be remedied after the event. 

31.      The Respondent says that the risk that judicial proceedings on foot in the Netherlands may be rendered nugatory is not a factor that the Jersey Competent Authority is properly required to take into account in determining whether to exchange tax information with the Netherlands.  It is said that there is no arguable case that there is any duty under Jersey Law which makes it incumbent on the Jersey Tax Authority to preserve the position of parties to litigation in another jurisdiction.  The only issue for the Respondent is whether there is a valid request under the Tax Information Exchange Agreement.  In respect of Ground (4), the argument is similar - the position at present is that there has been no actual ruling in the Netherlands that the Applicant's rights under Article 8 of the ECHR have been unlawfully infringed.  It is said that the Respondent is not obliged as a matter of Jersey Law to carry out a mini trial of Dutch Law issues.  It is lawful for the information sought in the request to be provided in response to Notices and then exchanged and this complies with the global standards of tax information exchange which is of importance to Jersey's international economic standing as a financial centre. 

32.      Once again the test I apply on whether I should limit judicial review by removing the leave to argue these points before the Court is whether the Respondent has put up a knockout blow which would make the contentions of the Appellant unarguable.  I review that against the fact of the decision of the Bailiff that these grounds of objection by the Applicant are arguable.

33.      It is clear to me that there is an argument to be had as to whether the Applicant should succeed on these grounds.  There is clear local authority to the effect that it is not the job of the Jersey Competent Authority to carry out a mini trial in order to establish the position of the requesting authority under its own law - see Larsen (no. 1) [2013] (2) JLR 499 at  paragraph 197.  At the same time, there is also some authority for the proposition that the requested authority must conduct - because it is reasonable to do so - a sufficient enquiry in an appropriate case so as to be satisfied that it would be proper to exercise these statutory powers conferred upon him.  In many cases, given the quite regular exchanges between tax authorities of different countries, there will be no reason for the Competent Authority in Jersey to be unduly troubled by the request which has been received; but the position may be different where the domestic authority is put on notice of particular difficulties which have arisen in the requesting country.  It seems to me that it is arguable that the validity of a request does not depend only upon an analysis of that request against the terms of the Tax Information Exchange Agreement; because it might be the case that it is unreasonable for a Competent Authority in Jersey to respond to a request which was unlawful under the laws of the country governing the competent authority making it.  I remind myself that the question today is whether the Bailiff's leave should be set aside, not whether the Applicant is necessarily correct in his complaints.  In my judgment, it is arguable that there is a different duty imposed on the Respondent receiving a request from a foreign tax authority where the Respondent is put on notice that the validity of that request is being challenged in the courts of the foreign country concerned. 

34.      That question seems to have arisen in the case of mutual legal assistance on a criminal investigation, see Durant International Corporation and others v AG [2006] JLR 112 where at Paragraph 36, Sumption JA said this:

"I will deal first with the arguments based on the Appellant's alleged desire to challenge the authenticity of the letters of request or the authority under which they were issued.  This is the Appellant's main point but, in my judgment, there is nothing in it.  What the Attorney General may appropriately do with the information that he has gathered must depend on the statutory powers vested in him as a matter of Jersey Law and on the manner in which he proposes to exercise them, which must be both rational and fair."

35.      In that case, the statutory powers of the Attorney General were those set out in Article 2 of the Investigation of Fraud (Jersey) Law 1991, which powers are not circumscribed by the lawfulness of the request made to him by the foreign authority. But that is not necessarily the position here. An argument that it is prima facie unreasonable to act on a third country's request when the validity of that request was currently under review in the courts of the third country is capable in my judgment of success - in other words, the point is arguable. Neither the Respondent nor the Court is asked to decide a point of foreign law; but what is said is that in the context of judicial review, the Court is entitled to question whether, as a public authority under the Human Rights (Jersey) Law 2000, the Respondent would be acting reasonably in eschewing the possibility that there might shortly be a decision of a foreign tribunal which in terms assessed the objections in foreign law which go to the essential status of the foreign competent authority to make the request.

36.      There is arguably a significant difference between saying that the Respondent is not bound to carry out a mini trial of the investigation of the foreign competent authority when he does not have the basic information necessary to do so and on the other hand saying that even when he knows of the objections being taken, he has no obligation to satisfy himself there is nothing in them.  The argument might be that he must have reasonable grounds for believing there is nothing in the objections, and have taken appropriate steps to satisfy himself that that is so. 

37.      If the Respondent, knowing of the objections which are made, fails at least to identify why those objections are wrong and instead merely relies on an assertion he has complied with his treaty obligations, he is likely to be unsuccessful in setting aside the granting of leave - see Haskell v Comptroller of Taxes [2017] (1) JLR 230 at paragraphs 20 - 30 and 33-34.

38.      The remaining ground of the application for judicial review is that of temporality - the Tax Information Exchange Agreement with the Netherlands was entered in 2008 for civil requests, and on that basis it is said that it would be unreasonable and/or illegal to obtain documentary evidence which pre dates the coming into force of that agreement for civil tax purposes.  Once again, in my judgment, there needs to be a firm basis upon which one can say that the Bailiff was wrong to grant leave for this argument to be maintained.  I find it impossible to do so at this stage.  Instinctively, one might accept the proposition that in relation to civil tax claims due in respect of the years after 2008, some information in relation to earlier years may be relevant; which would suggest that any absolute objection by the Applicant to any information from earlier years becoming available would be unfounded.  At the same time, the temporality issue is one which, when joined with the breadth of the disclosure sought does raise overall a question which in some cases may need to be addressed.  Whether this is one of them is impossible to say at this stage because I do not have the information on which to reach a conclusion.  I cannot, however, say that the learned Bailiff was wrong to grant leave on this ground because the matter is one which may be arguable. 

39.      For these reasons, the application to revoke the leave granted to the Applicant is refused.

Authorities

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

European Convention on Human Rights. 

In the matter of an application for Judicial Review by Volaw Trust and Corporate Services Limited and Six Others [2015] (1) JLR 19

Larsen and Volaw Judicial Review [2014] JRC 232

Warren v Lt Governor [2017] (1) JLR 291

Royal Court Rules 2004.

R v Secretary of State for the Home Department ex parte Chinoy (1992) 4 Admin LR457, [1991] Lexis citation 2810.

Larsen -v- Comptroller of Taxes and Anor [2015] (2) JLR 209

Housing Committee v Phantesie Investments Limited [1985-86] JLR 96

Taylor Fladgate and Yeatman Limited v Comptroller of Taxes [2014] (1) JLR 342

Larsen (no. 1) [2013] (2) JLR 499.

Durant International Corporation and others v AG [2006] JLR 112

Investigation of Fraud (Jersey) Law 1991. 

Human Rights (Jersey) Law 2000.

Haskell v Comptroller of Taxes [2017] (1) JLR 230