Jersey Unreported Judgments

Judicial Review

[2023]JRC209

Royal Court

(Samedi)

7 November 2023

Before     :

M. J. Thompson, Esq., Commissioner

 

Advocate H. E. Brown for the Applicant.

Advocate S. A. Meiklejohn for the Respondents and the Attorney General.

judgment

the COMMISSIONER:

Introduction

1.        This judgment contains my decision in respect of an application made by the Applicant for leave to apply for judicial review in respect of certain provisions of the Finance (Budget 2023) (Jersey) Law 2023 ("the Budget Law") and a direction issued by the First Respondent following on from the Budget Law ("the Direction").  In summary, the Budget Law increased stamp duty and land transaction tax ("LTT") on second homes from a range of 0.5% to 10.5% to a range of 3.5% to 13.5% (depending on a property's value) for anyone purchasing a property which is not to be occupied as a main residence.

2.        The Direction set out certain circumstances for the Comptroller in the case of LTT or the Judicial Greffier in the case of stamp duty to consider if it was just to reduce the higher rate of tax or duty that would otherwise be payable as a result of the Budget Law.

3.        The decisions the Applicant sought to set aside were set out in paragraph 3 of the Applicant's application for leave as follows:

"3.1. The decision to enact the Budget Law without properly considering the effects of doing so with only two weeks' notice, prior to the sanction by Order in Council and registering by the Royal Court of the Budget Law and without any proper transitional provisions to protect the existing rights of taxpayers;

3.2. Further and alternatively, the decision to adopt the Budget Law imposing a different rate of tax on purchasers of second residential properties without properly considering the effects of doing so with only two weeks' notice, prior to the sanction by Order in Council and registering by the Royal Court of the Budget Law and without any proper transitional provisions to protect the existing rights of taxpayers;

3.3. Further and alternatively, the decision of the Minister to issue the Directions (i) such that they are subject to the discretion of the Greffier; and (ii) without making any, or any proper, provision for the protection of taxpayers' existing rights; and

3.4. Further and alternatively, the decision not to address the inequities of the Budget Law immediately and instead to "aim" to do so before the end of 2023."

Background

4.        I firstly set out what has led the Applicant to bring the application even though it was accepted that the Applicant had grounds to do so in respect of LTT.  I address later the question of his standing in respect of stamp duty.

5.        In 2017, the Applicant entered into two contracts with the States of Jersey Development Company Limited ("the SJDCL") to acquire flats in a development at the Waterfront known as the Horizon Development.  These contracts were sale and purchase agreements to acquire two flats by way of acquisition of shares in a company known as Horizon (East) Limited ("Horizon").  The right to acquire a share in Horizon gave the Applicant the right to ownership of a flat.  The agreement also contemplated acquisition of certain other shares ancillary to the acquisition of a flat. 

6.        The agreement set out the purchase price agreed between the Applicant and the SJDCL and required the Applicant to pay 10% of the agreed price.  The agreement further required the Applicant to complete acquisition on a flat on notice being given that the relevant part of the Horizon development had been completed.  If the Applicant failed, refused or neglected to complete the transaction, then the Applicant was required to pay one-third of the price agreed to the seller as an agreed estimate of liquidated damages.  For the sake of completeness, I note that the same obligation applied to the seller, if the seller refused to complete when required to do so by the buyer.

7.        The agreement between the Applicant and the SJDCL could not be assigned by the Applicant.  Once the Applicant completed acquisition of a flat, the Applicant was free to sell that flat or to retain it.

8.        In the agreement, when it was entered into, it was anticipated that completion of the relevant part of the development would occur in June 2021.  However, due to the impact of the COVID pandemic, the SJDCL issued various notices delaying completion which ultimately took place in January 2023 in relation to Horizon East.  Other parts of the Horizon development are expected to complete during the remainder of this year. 

9.        Between the Applicant entering into his agreement with the SJDCL, the Budget Law altered the rate of LTT and stamp duty payable for second homes by increasing all the rates across the board by 3%.  For the Applicant, if the property had completed in 2021 as originally contemplated, he would have paid LTT of £4,200, whereas on completion he now has to pay £13,500.  I was informed during the hearing that completion of one flat had occurred and the LTT paid. Completion on the second flat is yet to occur.  I was also informed there was no challenge by the Applicant to the assessment of LTT payable by the Comptroller as distinct from these proceedings.

The enactment of the legislation

10.     I next set out the relevant chronology leading to the passing of the Budget Law. 

11.     On 30 November 2021, the Corporate Services Scrutiny Panel lodged the twenty-second amendment to the proposed Government Plan 2022 to 2025.  The report included the following:

"....with the proposed taxation and impôts duties changes to include the introduction, following a review by the Minister for Treasury and Resources and no later than 31st December 2022, of a higher Stamp Duty rate for 'Buy to Let' investment properties, second homes and holiday homes..."

12.     A specific amendment to page 155 of Appendix 3 of the Government Plan 2022 to 2025 sought to add the following:

"...except that, on page 155 of Appendix 3, after the words "this review will conclude in 2022." there shall be inserted the words "The Minister for Treasury and Resources will introduce a higher Stamp Duty rate for 'Buy to Let" investment properties, second homes and holiday homes no later than 31 December 2022.", in addition to any further changes to Appendix 3 identified as required by the Council of Ministers to reflect the implementation of such a policy."

13.     The report accompanying the Corporate Services Scrutiny Panel amendment contained the following statements:

"7. The Panel has lodged this amendment mindful of the financial gain and wealth associated with Buy to Let property, holiday home and second home purchases, and the contribution it will make to assist with reducing property demand and re-balancing the market towards owner occupiers and first-time buyers."

14.     Paragraph 8 read:

"8. If adopted this amendment will require the Minister for Treasury and Resources to introduce a higher rate of Stamp Duty for "Buy to Let" investment properties, second homes and holiday homes, no later than 31 December 2022. The Panel has outlined a potential rate of 2%, however, acknowledges that further review is needed to consider legislative elements of its introduction. It accepts that the Minister for Treasury and Resources (the Minister) may wish to alter this rate upon review."

15.     The rate of 2% referred to was an additional increase of 2%.  The reference to stamp duty also covered LTT payable on property acquired through ownership of shares.

16.     In relation to the rationale for increasing stamp duty/LTT, paragraph 11 of the report stated:

"11. The Environment, Housing and Infrastructure Panel's Affordable Housing Supply and Delivery Review, found that anecdotal evidence suggested that the demand for, and purchase of, buy-to-let properties by investors may be contributing to higher property prices, and also the availability of affordable properties for first time buyers."

17.     The Panel also referred to the position in the UK at paragraph 14:

"14. It has been highlighted that the changes in the UK resulted in an increased sale to owner-occupiers, or to more sanguine/less affected landlords, and reduced overall residential property transactions. Indeed there was a drop in the ratio of Buy to Let mortgage completions, to 8% in April 2016 versus 18% that took place in February 2016. This has continued in the long term, with 12% of homes in Great Britain being bought by landlords in 2020 down from 16% in 2015. It should be pointed out that the introduction of the surcharge will potentially have a knock-on effect on longer term revenues from UK SDLT."

18.     This led to the following observation at paragraph 16:

"16. Although not statistically representative, the Government Plan Review Panel's public perceptions survey has suggested that there may be acceptance by Islanders of this type of taxation with 28 of 38 (74%) agreeing with higher Stamp Duty for Buy to Let properties and, lower Stamp Duty for first time buyers, with 29 agreeing with Higher Stamp Duty for purchases by those own more than one property."

19.     The amendment brought forward by the Island's Corporate Service Scrutiny Panel was approved by the States Assembly.  This led to media coverage as set out in a local ITV report dated 14 December 2021.

20.     In relation to the conclusions of the Corporate Services Scrutiny Panel, the Panel had approached the Jersey Estate Agents Association to make a submission as set out in a letter dated 23 November 2021 to the president of that association.  That letter invited responses by 25 November 2021, i.e. only two days. Advocate Brown was critical of the shortness of this timetable because it meant there was no general consultation with the public.

21.     The draft Budget Law was lodged for debate with the States Greffe on 31 October 2022. Paragraphs 10 to 12 of the accompanying report stated at follows:

"10. Following the States' adoption of an amendment to Government Plan 2022-25 brought forward by the Corporate Services Scrutiny Panel, proposals have been developed to charge higher rates of Stamp Duty on the purchase of properties that are acquired for any purpose other than to be used as a person's main residence. This includes buy-to-let properties, second homes, and holiday homes. The higher rate will also be applied to relevant transactions subject to Land Transactions Tax ('LTT') and Enveloped Property Transactions Tax ('EPTT").

11. Economic analysis has assessed the potential impacts on revenue and owner- occupation. It is suggested that the measure could modestly increase revenue and stimulate additional purchases by owner-occupiers.

12. It is proposed that the higher rate is set at 3 percentage points above the normal rate of tax for residential property from I January 2023."

22.     Paragraph 14 also referred to a wider review of stamp duty as follows:

"14. The wider review of Stamp Duty (scheduled to conclude in the summer of 2023) will present a further opportunity to review the market impact of the higher rate, albeit based on a relatively short period of time."

23.     Appendix 2 to the report addressed the human rights implications of the draft Budget Law and stated the following:

"These Notes have been prepared in respect of the Draft Finance (2023 Budget) (Jersey) Law 202- (the "draft Law") by the Law Officers' Department. They summarise the principal human rights issues arising from the contents of the draft Law and explain why, in the Law Officers' opinion, the draft Law is compatible with the European Convention on Human Rights ("ECHR")."

24.     The draft Budget Law that went before the States contained an explanatory note in relation to Article 47 as follows:

"Article 47 makes amendments to Article 1 of the Stamp Duty Law to define a "relevant property" for the purposes of charging a higher rate of stamp duty on homes that are acquired for a purpose other than use as the main residence. It also provides that "main residence" means the property the person occupies as their main residence whether it is in Jersey or not."

25.     A similar explanation was provided for Article 53 which made the same change for LTT as follows:

"Article 53 amends the Schedule to the LTT Law. The amendments do two things. First they amend the fee payable for various transactions so that they are aligned with the Stamp Duty Law. Second, they insert a new paragraph 5 that makes provision for, and sets out, a higher rate of tax to be payable in relation to a transaction in respect of land on which there is a dwelling that is acquired for a purpose other than use as the main residence of the person to whom the share is transferred."

26.     The final version of the Budget Law was adopted by the States on 16 December 2022.  It was sanctioned by order of His Majesty in Council on 15 February 2023 and registered by the Royal Court on 24 February 2023. 

27.     Pursuant to Article 65, the Budget Law came into force on 1 January 2023, apart from Articles 44, 45 and 49 which are not relevant to this application. 

28.     The reason that the Budget Law came into force on 1 January, although it was not approved by Order of His Majesty in Council until 15 February 2023 and was not registered in the Royal Court until 24 February 2023, is due to the combined effect of Article 12 of the Public Finances (Jersey) Law 2019 and Article 2 (1) of the Legislation (Jersey) Law 2021.

29.     Article 11(1) of the Public Finances (Jersey) Law 2019 provides as follows:

"11 Lodging of taxation draft

(1) If a lodged government plan proposes imposing or varying a tax for the next financial year, the Minister must lodge draft legislation containing a taxation draft that implements the proposal in sufficient time for the taxation draft to be debated and approved by the States before the start of that financial year."

30.     Article 12(1) of the Public Finances (Jersey) Law 2019 provides as follows:

"12 Taxation draft may be given immediate effect

(1) The States may by Act declare that, on the Act being made, a taxation draft in a draft Law has effect as if the draft Law had been passed by the States, confirmed by Her Majesty in Council and registered in the Royal Court."

31.     The effect of such a piece of legislation was determined by Articles 2(1) and 2(2) of the Legislation (Jersey) Law 2021 which reads as follows:

"2        Making of Jersey Legislation

(1)     A Law is made -

(a)     by being adopted by the States Assembly;

(b)     by being sanctioned by order of Her Majesty in Council; and

(c)     by being registered in the Royal Court.

(2)     A taxation draft declared by Act of the States to have effect under Article 12(1) of the Public Finances (Jersey) Law 2019 is to be treated as having been made as a Law even though it has not yet completed the steps referred to in paragraph (1)(b) and (c).

32.     In other words, as long as the appropriate Act of the States is passed in compliance with Article 12(1) of the Public Finances (Jersey) Law 2019, the relevant law is deemed to have been passed even though the processes that ordinarily followed otherwise have not yet taken place.

33.     The draft Act declaring that the draft Budget Law would have immediate effect was lodged on 31 October 2022, i.e. the same date as the Budget Law was lodged.  The draft provided as follows:

"IT IS DECLARED that, on the making of this Act, the taxation draft entitled the Finance (2023 Budget) (Jersey) Law 202- (lodged au Greffe on 31st October 2022 by the Minister for Treasury and Resources (P.102/2022), as [amended and] adopted this day in third reading by the States) has immediate effect as if that draft had been confirmed by His Majesty in Council and registered in the Royal Court on the date of the making of this Act."

34.     The draft Act was approved by a vote passed by the States on 16 December 2022, as recorded on the States Assembly website, the relevant extract of which was placed before us in evidence.

35.     The proposal to increase stamp duty was subject to some media publicity as is evidenced by another local ITV online report dated 28 November 2022.

36.     There also appeared to have been some consultation about the proposed increase to 3% as set out at paragraph 11 of the affidavit filed by the Second Respondent dated 19 July 2023:

"11. Paragraph 23: it is incorrect to say there was no consultation on the increase to LTT. A draft was sent to key stakeholders in July 2022 and this was followed by a round table event. Invitations were sent to members of the finance industry, estate agents, conveyancers and lawyers and some attended. The draft Finance (Budget 2023) (Jersey) Law 202- (P.102/2022) was also lodged au Greffe on 31 October 2022 (RS 1/27), in accordance with Standing Order 26(4) of the Standing Orders of the States of Jersey which provides a minimum lodging period of six weeks prior to a draft Law being debated. The lodging period allows States Members to consider the draft in advance of debate and for members of the public to be made aware of the detail of the changes (the overarching policy having been made clear in the earlier published Government Plan 2022-2025) and members of the public can if they wish lobby States Members on if they are opposed to the changes proposed."

37.     The Applicant had become aware that legislation had been passed increasing stamp duty and LTT by 22 December 2022 because, on this date, he wrote by email to Deputy Warr, the Housing Minister, whichincluded the following:

"The position which arises is not only arbitrary in terms of what constitutes 'gross value' by virtue of the inconsistency and uncertainty in valuation for the Horizon development at least, but which leaves many purchasers in a position where, at short notice, they are now forced to find significant and unanticipated funds to meet the Stamp Duty increase. This may result in purchasers defaulting in breach of contract of their terms of purchase because of their inability to find significant extra funds to satisfy the increased and arbitrary Stamp Duty charge. The results are likely to be disastrous with purchases having to forego their purchase and their deposits paid.

The imposition of a Stamp Duty increase at short notice and within its terms affecting in particular the hugely delayed Horizon development, at no fault of purchasers, is a disgrace. Many purchasers are and have been ready to complete for some considerable time.

Purchasers acquiring from JDC, a Government owned organization, have been locked in from the earliest December 2017 in good faith. While Government is entitled to adjust the taxation regime, to do so in such a way and at such short notice timed within weeks of completion of a hugely delayed project is not only cynical, crippling purchasers at short notice, it beggars belief.

Investors come in many forms including those who are seeking to acquire property for their locally born children in order that they may get a foot on the property ladder and remain in the Island in circumstances where, given property prices, there is no opportunity for them to otherwise acquire. This is beneficial to the island in so many ways and not least relieving some of the pressure faced by Government, through Andium, to house its population."

38.     The email complained as follows:

"The level of failure within the States in advancing this proposal with almost immediate effect and in its current terms is astounding. While a Stamp Duty increase maybe an entirely acceptable arrangement on sale value, to suddenly impose this surcharge at short notice on an arbitrary 'gross value' basis, or indeed any basis, is both punitive and damaging, placing many people in legal and financial peril."

39.     On 6 January 2023, the Comptroller wrote to the Law Society of Jersey and other key stakeholders, which letter included the following:

"Ministers are also conscious that some perverse outcomes might arise as a result of the exceptional circumstances arising from the delayed construction of dwellings during lockdown, possibly restricting access to the duty/tax rates available to first-time buyers or affecting people's intentions with respect to occupying dwellings. Ministers have asked the Judicial Greffier and myself to use the limited discretion permitted to us under the relevant laws and we will do so on a case-by-case and exceptional basis."

40.     This letter led to the First Respondent issuing the Direction pursuant to Article 13 of the Taxation (Land Transactions) (Jersey) Law 2009.  The Direction stated as follows:

"Under Article 13 of the Taxation (Land Transactions) (Jersey) Law 2009, the Minister for Treasury and Resources may issue directions to both the Comptroller of Revenue and the Judicial Greffier as to the exercise of their respective discretions in relation to Land Transaction Tax and Stamp Duty.

The Comptroller and the Judicial Greffier will have regard to any directions when they consider if, and to what extent, they exercise this discretion.

Directions which have been issued by the Minister apply equally to Comptroller of Revenue and the Judicial Greffier unless otherwise stated."

The Minister directs that in circumstances related to specific acquisitions of a dwelling by a family member where the dwelling is to be occupied as a main residence by another family member, the Comptroller or Judicial Greffier should consider if it is just to reduce the higher rate of Stamp Duty or LTT to the standard rate, in situations where it is demonstrable that the individual who shall occupy the property as their main residence:

....

"The Minister directs that in circumstances related to specific acquisitions of a dwelling by a family member where the dwelling is to be occupied as a main residence by another family member, the Comptroller or Judicial Greffier should consider if it is just to reduce the higher rate of Stamp Duty or LTT to the standard rate, in situations where it is demonstrable that the individual who shall occupy the property as their main residence:

lacks capacity as per Article 4 of the Capacity and Self-Determination (Jersey) Law 2016

is prone to substance abuse or compulsive gambling and the holding of the property in the family member's name is deemed to be a protective measure.

is doing so in order to escape an abusive or dangerous spouse or partner.

suffers from serious ill-health in a mental or physical capacity and the acquisition of the property is done so as to care for the individual and their wellbeing has been left without their place of residence following an accident or natural disaster .

has been left without their place of residence following the end of a marriage, civil partnership or relationship.

 In general, this Direction aims to offer the potential of a reduction in the higher rate of Stamp Duty or LTT charged on the acquisition of a dwelling when the acquisition has as its aim the protection of the individual who shall be living in the property. This Direction is not intended to apply in normal situations when a family member purchases a property for another family member, or when the property is purchased as an investment. The Minister acknowledges that each situation is fact specific and that there may still be circumstances where the imposition of the full charge is appropriate."

41.     The Direction also stated that the market value for the purposes of LTT and stamp duty for delayed off-plan sales would be the contract price entered into, not the market value at the time of completion.

42.     The Direction concluded with the following statement:

"The Minister intends to bring law to the Assembly before 31 December 2023 with a view to addressing the underlying concerns, and at such time will seek to grandfather the treatment under this direction for contracts entered into before any law change."

43.     The application for leave to bring judicial review proceedings was lodged on 30 March 2023.

The Applicant's submissions

44.     Advocate Brown for the Applicant made the following written and oral submissions.  These followed on from a detailed affidavit filed by the Applicant setting out his concerns, all of which I have carefully considered.

45.     The Applicant had standing to apply for judicial review in respect of stamp duty as well as LTT.  The threshold required was that he has a legitimate concern and was not a busybody.  He had that concern by virtue of acquiring additional property, which was not his main residence.  Alternatively he had an interest in reviewing whether legislation had been properly enacted.  He also relied on Scott v Minister for Treasury and Resources [2020] JRC 095.  There was finally a strong public interest in issues about LTT and stamp duty being dealt with at the same time.

46.     This was a new tax that had been imposed without general consultation with the public.  To the extent that there was consultation with certain representatives, this did not go far enough.  In relation to a failure to consult, Advocate Brown contrasted the position in Jersey with that in the UK and Guernsey where there was extensive general consultation which was not restricted to a group of stakeholders.  A wider consultation would have been sensible and would have answered accusations of unfairness.  The lack of consultation was so unfair as to amount to an abuse of process.

47.     The written application contended that it was not open to the States Assembly to adopt the Budget Law on the basis that tax charges applied from 1 January 2023.  This was accompanied by a submission that the States did not have the requisite supremacy unlike the UK Parliament to be exempt from judicial review.  However in oral submission, Advocate Brown appeared to row back from this position.  Instead she contended that the decision to apply the law and enforce payment of the tax was open to challenge for second homes. 

48.     Despite this apparent concession, the Applicant also contended that the States in approving the legislation could not cure the procedural defects of failing to consult, failing to include appropriate grandfathering provisions and applying the tax retrospectively.  This failure to consult meant that the process of enacting the Budget Law was subject to judicial review.

49.     Although Advocate Brown accepted judicial review could not apply to approval of the Budget Law by His Majesty in Council, she contended that judicial review could be sought in respect of the States passing an act purporting to give the Budget Law effect from 1^st January 2023.  A successful judicial review challenge setting this aside would lead to the Budget Law not being enforceable until 15 February 2023.

50.      Advocate Brown also contended that if the enactment of the Budget Law was valid it should still not be enforced, and the First Respondent had a discretion not to do so.  The respondents also had a discretion not to charge tax at least where to do so would be procedurally unfair (see R (Hely-Hutchinson) v Revenue and Customs Commissioners [2018] 1WLR 1682).

51.     This led to the submission that the Direction issued did not go far enough and should have covered other situations.  Ultimately, the position of the Applicant was that the increase should be waived completely in respect of anyone who had entered into an off-plan sale prior to the enactment of the Budget Law.  The enforcement of legislation was accordingly unfair because it led to large financial penalties on those who had made financial commitments many years earlier.  This meant there were a significant group of taxpayers who had been unfairly disadvantaged at the expense of other taxpayers by the increase in stamp duty years after they had entered into contracts to purchase property, the enforcement of which had been delayed due to circumstances beyond their control.

52.     Advocate Brown was particularly critical that it was the States, through the SJDCL, that was benefitting significantly from the changes to Stamp duty/LTT. 

53.     Applicant also contended that the imposition of additional stamp duty was an infringement of property rights contrary to Article 1 of the First Protocol to the European Convention on Human Rights which provides as follows:

"Article 1

Protection of property

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

54.     The Applicant also stated that the imposition of the increased rate of tax amounted to discrimination between those owning property and those who did not because there was no justification for imposing different rates of tax on those acquiring a property for use as a main residence and on those who were using it for some other purpose.  Alternatively, discrimination was said to be indirect because the tax was likely to apply disproportionately to non-Jersey nationals because it applies to those not living in the property and therefore was more likely to apply to those from outside the island.

55.     Advocate Brown was critical of the effect of the tax as infringing property rights because it was not a control of who might control property but was simply an attempt to discourage individuals from buying property.  It was therefore not a control of property but a tax. The decision in Osment v Chief Minister [2020] JRC 008 did not therefore assist because that case related to controls under Control of Housing and Work (Jersey) Law 2012 and not the imposition of a tax.

56.     The Applicant's invocation of an infringement of his human rights therefore led him to seek a declaration of incompatibility pursuant to Article 5 of the Human Rights (Jersey) Law 2000.  This appeared to be a partial rowing back from the relief sought in the application for leave where the Applicant sought, at paragraph 6.1, a mandatory order that the Respondent table an amendment to the Budget Law to insert suitable transitional provisions.  Mandatory orders were also sought against the Second and Third Respondents that they use their powers of management "to forgive any charge arising between 1 January 2023 on the date upon which the Budget Law is in fact sanctioned and registered".

57.     The Applicant also contended that the statute was retrospective by reference to Secretary of State for Social Security v Tunnicliffe [1991] 2 All ER 712.  What needed to be considered was whether the law had been altered in a manner that was unfair to those affected.

58.     The Budget Law had also frustrated the legitimate expectation of the Applicant to complete his acquisition on the basis originally contemplated when he entered into an agreement with the SJDCL.

59.     It was also contended that the Budget Law lacked proportionality because there was little or no evidence that the aims behind the legislation would be achieved.  It was disproportionate to put the burden on those acquiring property which was not a main residence on the basis of a lack of evidence.  In such circumstances, the Court had power to issue a declaration of incompatibility which required the court to make a value judgment that the means employed by the statute (the Budget Law) to achieve the policy objective were appropriate and not disproportionate (see Wilson v First County Trust [2004] 1 AC 816 and C R Smith Glaziers (Dunfermline) v Customs and Excise [2003] STC 419).

60.     In relation to the timing of the application, this was made within three months of the legislation coming into force.  By analogy, the Applicant relied on the case of Burkett and Another v Hammersmith and Fulham London Borough Council [2002] UKHL 23, where the House of Lords ruled that the time for a challenge to the grant of planning permission ran from the date of the grant, not from the date of the resolution authorising the grant. Prior to 1 January, there was no ability to challenge the legislation because no tax could be charged.

61.     In so far as the reasons for the delay, the Applicant spent as much time as he reasonably could in trying to resolve matters through alternative remedies.  The period of delay was also relatively short and caused no prejudice to the Respondents.

62.     In relation to the operative Act purporting to bring the Budget Law into force on 1^st January 2023, the Act should have referred expressly to Article 65 of the Budget Law.  As it did not do so, then the requirements to enact the Budget Law had not been met .

63.     In the alternative, it was not necessary to use the process of a taxation draft because the process of obtaining approval of legislation had been speeded up in any event.

64.     Advocate Brown also reminded me of the legal test for leave for judicial review set out in Warren v Lieutenant Governor [2017] 1 JLR 291.  The threshold for leave was therefore to remove claims that were hopeless for reversal or trivial, and it was contended the Applicant exceeded that threshold.

The Respondents' submissions

65.     Advocate Meiklejohn for the Respondents made the following contentions.

66.     Generally, the Budget Law, as primary legislation, was not subject to judicial review (other than under Article 5 of the Human Rights (Jersey) Law 2000).

67.     Article 5(1) of the Human Rights Law provides as follows:

"(1) If in any proceedings in which a court determines whether a provision of principal legislation is compatible with a Convention right, the court is satisfied that the provision is not so compatible, it may make a declaration of incompatibility."

68.     The suggestion that the Budget Law was not properly enacted was incorrect.

69.     The Budget Law was not retrospective in its effect as it only applied to property acquired after it came into effect.

70.     In relation to whether or not the Budget Law was amenable to judicial review, Advocate Meiklejohn criticised the application as being unclear and in places contradictory.  He pointed in particular to paragraph 3.1 and 3.2 of the Applicant's application which sought to challenge the decision to "enact" and "adopt" the Budget Law.  This clearly had to be challenges to the States passing primary legislation. 

71.     He also referred to paragraph 48.3 of the Applicant's affidavit which, on the one hand, said that the Applicant was not seeking a judicial review of the enactment of legislation, but then said in the same paragraph that he was challenging the decision of the Respondents to impose the tax charges on the basis that the Budget Law had been enacted, despite the fact that "they have not been so enacted".

72.     Advocate Meiklejohn also set out the chronology of events leading to the passing of the Budget Law as set out above and submitted that all relevant requirements in relation to the passing of the Budget Law had been met. 

73.     In addition, the decision was one of the States Assembly.  The Respondents could not therefore be parties to a claim for decisions taken by the States Assembly.  Nor could a claim lie against them for implementing legislation adopted by the States Assembly.

74.     He also criticised the attempt to draw a distinction on the basis of Parliamentary Sovereignty as being misconceived. The fact that primary laws require Royal Assent had no bearing on the question of whether such laws are subject to judicial review.  In addition, he referred to Jersey's autonomy in domestic affairs as reiterating the preamble to the States of Jersey Law 2005.

75.     Insofar as the Applicant relied on Royal Court Rule 16/1 which provided for applications for judicial review against decisions of a public body, this provision had been considered by the Court of Appeal in Pearce v Minister for Home Affairs [2022] (2) JLR 256, where the Court of Appeal had concluded that the expression 'public authority or body' should receive the same interpretation in Part 16 of the Royal Court Rules as was found in Article 7 of the Human Rights Law.  Article 7 expressly excluded the States Assembly from the definition of a public authority. 

76.     The States was not acting in an administrative capacity when passing the Budget Law but was rather acting in a legislative capacity.

77.     It was not for the Courts to be drawn into debates on the merits of legislation (see AG v Pitman and Southern [2009] JRC 108 at paragraph 18).

78.     Finally, he relied on Article 34(1) to the States of Jersey Law 2005 which provided that "No civil or criminal proceedings may be instituted against any persons for anything that constitutes States proceedings".

79.     In relation to the enactment of the Budget Law through a taxation draft, this was clearly in compliance with the terms of Article 2(1) of the Legislation (Jersey) Law 2021.  The mechanism used was to avoid delays in receiving Royal assent which would prejudice the Government of Jersey from being able to effectively operate its revenue system.

80.     The legislation was not retrospective.  It applied to completions of property transactions that took place after the Law came into force.  The application of the higher rates of tax for second homes was no more retrospective than any general rise in stamp duty where a sale and purchase agreement had been entered into, but completion had not taken place prior to enactment of the Budget Law. It applied to all off-plan sales whether through the SJDCL or any other developer.

81.     In relation to the timing of the application, the Court was required to be satisfied, if an application was made after three months, that there was good reason for the application not having been made within that period.  The Respondents' contended that no such reason had been established.

82.     In addition, granting leave would be detrimental to good administration, so leave should be refused.

83.     In relation to the reason advanced by the Applicant at paragraph 45 of his affidavit, Advocate Meiklejohn contended this was not a good reason.  Whilst attempts to resolve a matter without recourse to the Courts was not to be criticised, this could be done in parallel and was not a good reason in itself for failing to bring proceedings within time.

84.     He accepted that there was a discretion not to enforce tax and that was in principle capable of being subject to judicial review.

85.     He distinguished the Hely-Hutchinson case on the basis that decision was considering whether there was unfairness based on the withdrawal of incorrect guidance.  The case was about HMRC changing its policy, not about a change in the law by the primary legislature.

86.     The decision in Burkett did not assist. It was a decision about the timing of the grant of planning permission, not when a law had been passed by the States. 

87.     In relation to Article 1 of the First Protocol, Article 1 gave a state a wide margin of appreciation in taxation as set out in M A v Finland (Admissibility) (ABB 27793/95) [2003] 37 ECHR 712.  The imposition of tax to infringe Article 1 had to be "devoid of reasonable foundation".  That threshold had not been met.

88.     In relation to consultation, the fact that other jurisdictions had taken a different approach did not give rise to a basis for judicial review.  There was no obligation to consult, and the States had complied with all the requirements necessary in order to pass legislation.  The lack of consultation was also not a human rights point.  It was for the Government of the day to decide how far to consult on any legislation.

89.     He also disputed that any form of discrimination arose.  The comparator relied upon was not a valid one.  As the imposition of tax under Article 1 of the First Protocol 1 was proportionate, so it was proportionate for the purposes of any discrimination challenge.

90.     The legislation was not retrospective in the sense that it did not impose a new duty in respect of events already past (see Secretary of State for Social Security v Tunnicliffe [1991] 2 All England 1712 at page 724).

91.     In relation to the Direction issued by the Minister, the Comptroller and Judicial Greffier both had general discretions to remit or reduce the amount of LTT or stamp duty payable.  This general duty was not fettered by the Direction the Respondent had issued. 

92.     The Direction issued had also been favourable to the Applicant because instead of requiring LTT (or the equivalent stamp duty) to be assessed on current market value, the First Respondent had accepted that the market value would be the contract price agreed.

93.     In relation to the joining of the Second and Third Respondents, there was no decision they had made to attack.  The attack was only on the scope of the Direction issued by the First Respondent.  The Decision could not be said to be irrational because concessions had been granted to certain groups of individuals.

94.     There was also no reasonable prospect of success to argue that the Law should not be enforced at all for anyone who had entered into an off-plan sale prior to the Budget Law coming into force.

Submissions in reply

95.     In reply, Advocate Brown, for the Applicant, made the following points.

96.     Firstly, judicial review was not a civil proceeding but a public law remedy. 

97.     The Directions issued were administrative and therefore were capable of challenge under Article 7 of the Human Rights (Jersey) Law.

98.     The Second and Third Respondents were appropriate parties because the Direction restricted the discretion otherwise vested in them.  Instead, they should have issued their own policies.  There was therefore an error by the First Respondent in restricting the exercise of discretion of the Second and Third Respondents.

99.     The raising of stamp duty was a new tax brought into effect without consultation which led to unfairness.  This disadvantaged a group of individuals.

100.   In relation to the unfairness, the Minister recognised there was a problem, but the Direction did not go far enough.  This led to the submission that the Minister should have issued a direction to remedy the legislation and the failure to do so because the lack of grandfathering was perverse. 

101.   The imposition of any tax had to be used as a control in respect of the use of property not to raise revenue. 

102.   Finally, there was a general recognition that the legislation was problematic because the First Respondent had been asked by Ministers to complete a wider review of stamp duty and to bring any changes into effect for 2024.

Discussion and decision

103.   I start by reference to the locus of the Applicant to bring the application for judicial review.  As noted above, this was conceded in respect of the challenge to LTT, but not in respect of stamp duty.  In this case, the changes to stamp duty and LTT are identical, although contained in different provisions of the Budget Law.  The Direction also covers both LTT and stamp duty. 

104.   In Scott v The Minister for Treasury and Resources [2020] JRC 095 at paragraph 17, Commissioner Clyde-Smith stated the following:

"17. I draw from these authorities the proposition that, whilst there may be simple cases in which leave should not be granted because the person has no interest at all, applications by "busybodies" which are tantamount to an abuse of the process, in other cases, as per the Court of Appeal in Cooper v The Attorney General, consideration of "sufficient interest" at the leave stage requires an examination of all the material before the Court. As a citizen the Applicant is perfectly entitled to be concerned about decisions in relation to the Island's reserves which he contends are illegal, irrational or flawed by procedural impropriety (as per R v Somerset County Council and ARC Southern Limited ex p. Dixon) and I decline therefore to deal with the question of his sufficient interest in isolation and without considering whether he has arguable grounds for judicial review which have a reasonable prospect of success."

105.   Applying this test, if therefore I am satisfied that the Applicant has grounds for judicial review in relation to LTT, this should extend to stamp duty.  This would not be the Applicant acting as a busybody, but rather raising concerns about what taxes are payable on the acquisition of second homes, whether by way of LTT or stamp duty. 

106.   In relation to the applicable test on an application for leave, this was considered in Warren v Lieutenant Governor [2017] 1 JLR 291.  The most recent review of this was W E (Jersey) Limited v Minister for the Environment [2022] JRC 044, where the Bailiff summarised the relevant test as follows:

"19. Both WE and the Minister referred to different cases when illustrating the test but in effect there is agreement as to the way that the Court should approach this matter. In X v Minister for Home Affairs [2018] JRC 222 the Royal Court set out the test approved by Commissioner Beloff and Warren v Lieutenant Governor [2017] (1) JLR 291 in the following terms:

3.  The test for such leave in this jurisdiction, as applied in Welsh v. Deputy Judicial Greffier (7), is that set out by the Privy Council in Sharma v. Browne-Antoine (6) ([2007] 1 WLR 780, at para. 14(4)):

"The ordinary rule now is that the court will refuse leave to claim judicial review unless satisfied that there is an arguable ground for judicial review having a realistic prospect of success and not subject to a discretionary bar such as delay or an alternative remedy: see R v Legal Aid Board, Ex p Hughes (1992) 5 Admin LR 623, 628 and Fordham, Judicial Review Handbook 4^th ed (2004), p 426. But arguability cannot be judged without reference to the nature and gravity of the issue to be argued. It is a test which is flexible in its application."

4.  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 & Environment Cttee. V. Lesquende Ltd. (4)) and for present purposes I must be satisfied that one or more of those grounds is arguably established on the material before me."

20. In Sharma v Brown-Antoine referred to in the citation above, the Judicial Committee of the Privy Council said:

"It is not enough that a case is potentially arguable: an applicant cannot plead potential arguability to "justify the grant of leave to issue proceedings upon a speculative basis which is hoped the interlocutory processes of the Court may strengthen ..

21. In Holmes v Law Society [2018] JRC 010 the Court said that the test for granting leave to proceed with a claim for judicial review is focussed on arguability and it has been described as:

"A threshold stage designed to eliminate claims that are hopeless, frivolous or trivial and to ensure that the claims only proceed if there is arguable case that merits a full hearing with all parties and all relevant evidence.""

107.   I note in particular that Commissioner Page used the expression "realistic prospect of success".  The Bailiff, in W E (Jersey) at paragraph 20, emphasised that it was not enough that a case was "potentially arguable" leading to his conclusion, by reference to Holmes v Law Society [2018] JRC 010, that the threshold stage of seeking leave was "to ensure that the claims only proceed if there is an arguable case that merits a full hearing with all parties and all relevant evidence".

108.   In my judgment, there is no difference between what Commissioner Page and the Bailiff were saying.  I consider that both were recognising that the scope of the threshold is not just to refuse leave in respect of cases that are hopeless or bound to fail, or arguments advanced which do not get off the ground at all.  Rather both judges were recognising that the bar is higher, whether you are looking at a realistic prospect of success or an arguable case that merits a full hearing.  As noted in W E Jersey, potential arguability is not enough.  It should also not be forgotten that the onus is on the Applicant to persuade a judge that leave should be given and that the test is one which is flexible in its application and has to be reviewed by reference to the decision under challenge and the material before the Court. 

109.   What I therefore draw from the previous authorities is that when considering a leave application, a judge has to be satisfied that there is an issue that requires a full hearing with the costs that that necessarily involves.  In particular, where what is alleged is irrationality or procedural impropriety, the question for the judge is whether the issue raised is one that requires determination by the Jurats.  In other words, does the issue raised based on all the material before the judge give rise to competing arguments, either of which might persuade the Jurats (or a judge on a pure point of law) with the benefit of all the evidence and full argument. If so, then leave should be granted. If, on the other hand, the arguments raised are fanciful or improbable then leave should be refused.

110.   Although not cited by either party, in Imperium Trustees (Jersey) Limited [2023] JCA 057, in granting leave to appeal, the Court of Appeal observed at paragraph 105: "The Appellant must satisfy the court that it has an arguable ground of judicial review, with realistic prospects of success, which merits investigation at a full hearing" (emphasis added).  This observation, while made without full argument, appears to support the conclusions I have reached.

111.   The approach I have adopted is also consistent with the overriding objective to deal with all cases justly and at proportionate cost.

112.   With the above legal principles in mind, I next consider the decisions set out at paragraph 3 above where the Applicant seeks leave.  It is convenient to take the first and second grounds together, namely "the decision to enact the Budget Law" and the decision "to adopt the Budget Law", followed by grounds three and four which relate to the Direction.

113.   In relation to the challenges to the Budget Law, I agree with the criticism of Advocate Meiklejohn that this part of the application is unclear and in places contradictory.  The words I have just quoted from paragraphs 3.1 and 3.2 on their face, seek to set aside a decision of the States Assembly to approve and pass the Budget Law.  I cannot read this as anything other than a challenge to this decision by the States Assembly.  This is itself problematic as the Applicant seeks relief against respondents who were not the decision makers to enact or adopt the Budget Law. 

114.   I also agree with Advocate Meiklejohn that paragraph 48.3 of the Applicant's affidavit is very difficult to understand.  While the Applicant states he is not seeking a judicial review of the enactment of legislation by the States Assembly and instead challenges the decision of the Respondents to impose the tax charges, he qualifies this by saying "despite the fact that (1) they have not been so enacted and (2) in the absence of the application of the procedure for treating a taxation draft as being enforced prior to the registration of the Budget Law". This reads as a challenge to the enactment of the Budget Law.  This apparent qualification also does not sit with the language used in grounds 1 and 2 of the application itself.

115.   The Applicant also raises the argument that there was a lack of consultation by the States which was so unfair as to amount to an abuse of process.  I cannot construe this submission as being anything other than an attack on the legislation passed by the States.  For such a charge to have any consequence (apart from human rights concerns which I address later), what follows from an alleged failure to consult again is a suggestion that the legislation was not properly enacted. The submission that the process of enacting the Budget Law was subject to judicial review leads to the same conclusion.

116.   The conclusion that the Applicant was seeking to challenge the legislation passed by the States, can also be seen from the remedies sought in the application for leave.  At paragraph 6.1, the Applicant seeks:

"...a mandatory order that the First Respondent seeks to table an amendment to the Budget Law that seeks to insert suitable transitional provisions into the Budget Law."

117.   This is an application for an order from the Court requiring the Treasury Minister to amend the Budget Law and cannot be construed as anything other than a challenge to legislation passed by the States. 

118.   In paragraph 6.2, what was sought was "a declaration that the attempt to impose them amounts to an abuse of power".  While Advocate Brown suggested that this related to enforcement of the tax rather than the passing of the Budget Law, in my view the application was framed this way because in reality what was challenged was the passing of the Budget Law by the States but the Applicant did not want to appear to do so because of the difficulties of making such a challenge. The power granted to charge LTT or stamp duty is a power legislated for by the States.  The alleged abuse therefore comes from the passing of the legislation itself, rather than it from the Comptroller of Income Tax or the Judicial Greffier enforcing legislation passed by the States.

119.   Although the written submissions of the Applicant filed in reply suggested that the States of Jersey did not have the requisite supremacy, unlike the UK Parliament, to be exempt from judicial review in relation to primary legislation, Advocate Brown correctly rowed back from this position in oral submission.  However, the fact that the written papers filed contained this argument further supports the conclusion that what the Applicant is seeking to do is to challenge primary legislation passed by the States.  However, in light of the oral concession by Advocate Brown that she was not challenging the supremacy of the States to pass primary legislation, it is not necessary to respond in detail to the various articles and authorities she referred to beyond a brief reference to the States of Jersey Law 2005.  The first preamble to that legislation states as follows:

"WHEREAS it is recognized that Jersey has autonomous capacity in domestic affairs."

120.   This well-known statement clearly extends to primary legislation passed by the States of Jersey. 

121.   Article 34(1) of the States of Jersey law also states as follows:

"34 Privilege of States' proceedings

(f)          No civil or criminal proceedings may be instituted against any person for anything that constitutes States' proceedings."

122.   It is clear from Article 1/1A of the Royal Court Rules that civil proceedings covers "all causes or matters other than proceedings to which Criminal Procedure Rules apply".  Judicial review applications are dealt with in Part 16 of the Royal Court Rules. I therefore reject the argument that judicial review proceedings are not civil proceedings, which means that the application by the Applicant, where he challenges the decision of the States to enact or adopt the Budget Law, falls foul of Article 34(1).

123.   More broadly judicial review cannot be used to challenge primary legislation passed by the States. In Burt and Burt v States [1996] JLR 1, in relation to a judicial review challenge to a decision by the States to exercise powers of compulsory acquisition, the Court of Appeal drew a distinction between the States acting in an administrative capacity and not in a legislative capacity, at page 6 as follows:

"When the question arises as to the extent to which such a decision of the States is reviewable by the court, it is important that that question be answered with full recognition that this is the position, that is to say, that the decision was reached by the States acting in an administrative capacity and not in a legislative capacity."

124.   The clear implication from this passage is that decisions made in a legislative capacity cannot be challenged before the courts.

125.   The Court of Appeal in Pearce took the same approach where at paragraph 20 the Court of Appeal stated as follows:

"Article 7 of the Human Rights Law provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right, and the definition of "public authority" includes any person whose functions are functions of a public nature except where, in relation to a particular act, the nature of the act is private. In our judgment, the expression "public authority or body" should receive the same interpretation in Part 16 of the Royal Court Rules as is found in art. 7 of the Human Rights Law. That is implicit both in the test provided by para. (2) of r.16/1, as to whether the duty is owed in public law, and by the requirement for the Bailiff to have regard to all the circumstances of the case and the nature of the matters in respect of which relief is sought under para. (3). Nonetheless, the fact that the rule creates in secondary legislation an impediment on what is otherwise an unimpeded right in primary legislation to bring proceedings creates a potential difficulty."

126.   The context of the above observation follows on from certain articles of the Human Rights (Jersey) Law 2000.  Firstly, in Article 1, I refer to the definition of principal legislation:

""principal legislation" means any -

(a) Law;

(b) Act of Parliament applying directly to Jersey;

(c) Measure of the Church Assembly or General Synod of the Church of England which has effect in the Island in accordance with the provisions of a scheme under the Channel Islands (Church Legislation) Measure 1931, as amended;

(d) Order in Council extending to Jersey an Act of Parliament, with or without adaptation, exception or modification;

(e) triennial Regulations; and

(f) Order in Council made in exercise of Her Majesty's Royal Prerogative which applies to Jersey,

and includes any Regulations, an Order or other instrument made under principal legislation (whether in Jersey or in the United Kingdom) to the extent to which it operates to bring one or more provisions of that legislation into force or amends any principal legislation." (emphasis added)

127.   Article 5(1) provides as follows:

"5 Declaration of incompatibility

(1) If in any proceedings in which a court determines whether a provision of principal legislation is compatible with a Convention right, the court is satisfied that the provision is not so compatible, it may make a declaration of incompatibility."

128.   Article 7(2) defines a public authority as follows:

"(2) In this Article "public authority" includes -

(a) a court or tribunal; and    

(b) any person certain of whose functions are functions of a public nature, but does not include the States Assembly or a person exercising functions in connection with proceedings in the States Assembly." (emphasis added)

129.   Returning to the Court of Appeal judgment in Pearce, this part of the Court of Appeal's reasoning was clearly concluding that, for the purposes of applications for judicial review under Royal Court Rule 16, the States Assembly is not a public authority, just as it is not a public authority for the purposes of Article 7 of the Human Rights Law.

130.   This means that the only basis upon which the Courts may review principal legislation passed by the States of Jersey is that if principal legislation is incompatible with an applicant's rights under the European Convention on Human Rights.  Otherwise, the Courts cannot review principal legislation and leave should be refused in respect of any application that seeks to do so.  I regard the principles in Burt and Pearce as being binding upon me and of general application.

131.   This conclusion means, in relation to grounds 1 and 2 that, apart from human rights issues, the passing of the Budget Law is not capable of being challenged by way of an application for judicial review.  I consider that the Applicant was well aware of this principle which was why he did not join the States of Jersey as a respondent but instead sought to find a way round the clear principles I have set out above.  Regrettably this approach led to the contradictions to which I have referred and to Advocate Brown attempting to dance on the head of a pin in her written and oral submissions.

132.   My conclusion means that principal legislation can be passed by the States without any consultation as long as the requirements of the States Assembly itself are met for placing legislation before it and that legislation being passed in accordance with the States' own rules, and no challenge can be brought other than on human rights' grounds.  While a lack of consultation on a proposed law might be politically unwise or may lead to a review of any such draft legislation by Scrutiny, thus lengthening the process for the passing of legislation, the public have no right to challenge legislation passed by the States simply because there has been no consultation about it. 

133.   My conclusions also apply to the passing of the taxation draft.  Such a draft falls within the definition of principal legislation under the Human Rights Law and so the Court's power is limited to making a declaration of incompatibility under the Human Rights Law if persuaded to do so.  The definition of principal legislation again means that the Courts cannot otherwise review a decision of the States to bring legislation into effect.  In my judgment, such legislation itself is principal or primary legislation, as distinct from secondary legislation which is open to challenge. 

134.   In any event, the Applicant's criticisms of the taxation draft do not meet the threshold for granting leave.  I do not consider that a taxation draft has to refer to the specific section of the statute which allows for the States to bring a piece of legislation into force.  The wording of the draft Act set out at paragraph 23 above is clear and nothing else was needed to be added for the States to understand what it was they were approving.  The taxation draft therefore complied with Article 12(1) of the Public Finances (Jersey) Law 2019 and Articles 2(1) and 2(2) of the Legislation (Jersey) Law 2021 set out at paragraphs 30 and 31 above.

135.   The challenge to the taxation draft, as with the challenge to the Budget Law, cannot therefore be the subject of a judicial review application.  If I am wrong in that conclusion it does not, in any event, meet the requisite threshold because the taxation was drafted in accordance with the relevant legislation permitting such drafts.

136.   The difficulty with the Applicant's application can also be seen by the concession by Advocate Brown that the decision by His Majesty in Council to approve the Budget Law was not subject to judicial review.  Logically this concession must mean that the legislation as a whole was not subject to judicial review once approved by His Majesty. Otherwise the position would be that the process of obtaining His Majesty's consent was not subject to judicial review but the substantive legislation he had approved could be. Such a situation would be absurd as well as contrary to principle.

137.   The concession also means that the Applicant's challenge was that the Budget Law did not have effect between 1 January 2023 and 15 February 2023 with the consequence that the States did not have any ability to charge any taxes between 1 January 2023 and 15 February 2023.  Yet that is the very purpose of a taxation draft. In response to this analysis, Advocate Brown sought to distinguish an increase in stamp duty for second homes as a new tax from allowing the Comptroller to continue to raise and collect income tax. However, the Applicant's written challenge did not draw this distinction and was clearly a challenge that the Budget Law had no effect at all until approved by His Majesty in Council. Such a challenge is one that clearly does not meet the threshold for leave being granted.

138.   I next consider the Applicant's reliance on the European Convention on Human Rights and, in particular, Article 1 of the First Protocol set out at paragraph 53 above.  Such a challenge allows the Court to make a declaration of incompatibility, in other words to declare that, in this case, the charging of additional stamp duty or LTT on second homes breaches Article 1 of the First Protocol.

139.   In relation to this argument, for such a challenge to succeed by reference to M A v Finland, the imposition of tax has to be "devoid of reasonable foundation". I agree with Advocate Meiklejohn that this threshold has not been met.  There is no limit within the second paragraph of Article 1 on what laws might be used to "control the use of property".  In particular, there is no limitation preventing such control from being through the imposition of additional charges or taxes.

140.   The Applicant's criticisms in relation to the raising of stamp duty tax is that there was a lack of justification for imposing different rates of tax.  I cannot accept that submission as meeting the requisite threshold in order to grant leave.  In that regard, while the Applicant was critical of the States for not consulting more widely compared to the UK or Guernsey, what was introduced in the UK and Guernsey were additional rates of duty for second homes.  It is difficult therefore to see why such charges in Jersey fall outside the rights of the State referred to in the second paragraph of Article 1 of the First Protocol.

141.   I accept in reaching this conclusion that the test for granting leave requires me to decide "whether the means employed by the statute to achieve a policy objective is appropriate and not disproportionate in its adverse effect".  This involves a "value judgment by the Court made by reference to the circumstance prevailing when the issue has to be decided" (see Wilson v First County Trust 204 1 AC 816 at paragraph 62).

142.   In CR Smith Glaziers, also referred to by the Applicant, the test was stated by Lord Hoffman to be as follows:

"But in general European law would require them to satisfy the principle of proportionality in its broad sense, which, following German law, is divided into three sub-principles; first, a measure must be suitable for the purpose for which the power has been conferred; secondly, it must be necessary in the sense that the purpose could not have been achieved by some other means less burdensome to the persons affected and thirdly, it must be proportionate in the narrower sense, that is, the burdens imposed by the exercise of the power must not be disproportionate to the object to be achieved." [Emphasis added]

143.   Advocate Brown argued that the burdens imposed were disproportionate because of the amount of extra LTT or stamp duty payable.  The object in this case was clear from the material placed before the States, namely, to discourage property being acquired in Jersey as investment properties, second homes or holiday homes in order to rebalance the market towards owner occupiers and first time buyers.  Given that a similar approach had been taken in the UK and Guernsey, as noted above, I was not persuaded that the means proposed were disproportionate.  Where the increase has greatest effect compared to stamp duty payable as a primary home is for properties of a lower value.  The more valuable a property, the lower the amount of additional stamp duty payable.  The approach taken by the States in my judgment does not therefore meet the threshold to show that the approach of the States was devoid of reasonable foundation. 

144.   I have also to deal with the issue of discrimination.  Discrimination, however, only arises where there is an arguable breach of a convention right.  In Osment v Chief Minister [2020] JRC 008, which was an administrative appeal against a decision to refuse the applicant a business licence, the Royal Court, in relation to the effect of Article 14 and discrimination, stated as follows:

"25. As regards Article 14 ECHR, this Article is a secondary ECHR Article which must be read together with a primary Article, such as Article 8. There was no foundation in the suggestion that Mr Osment had enjoyed less favourable treatment (as regards any of the primary ECHR rights) than a comparator (i.e. an analogous person in a similar situation but without his disability). He has been refused his business licence because he is Registered, not because of any disability."

145.   As I have found that leave should not be granted to the Applicant for a breach of Article 1 of the First Protocol, the claim on the basis of discrimination must also fall away.  However, for the sake of completeness, I am not persuaded in any event that the assertion of direct or indirect discrimination meets the requisite threshold.  It is not clear to me how the suggested distinction of direct discrimination between property owners and non-property owners falls within Article 14 and the grounds identified there.  In relation to the suggestion of indirect discrimination based on the tax being likely to apply disproportionately to non-Jersey nationals, no evidence was produced in support of this suggestion.  In my judgment, this was a speculative argument with no justification. 

146.   If I am wrong in the above conclusions, I would refuse leave in respect of grounds 1 and 2 because the application was brought more than 3 months after the Budget Law and the taxation draft were approved by the States.  As the challenge was to the passing of this legislation, a justification is required where any such challenge is brought outside the 3 month time limit in Royal Court Rule 16/1.  Firstly the Burkett case does not assist because that is a decision about the date of the grant of planning permission as distinct from the date of the decision being made to grant planning permission.  There is no planning permission until an actual grant.  The analogy does not assist with when the time limit starts to run to bring an application for judicial review to challenge the approval of legislation.  Secondly, the justification that the Applicant was attempting to resolve matters without resort to the judicial review process is not a ground to extend time as such an argument could be raised in any application for judicial review.  While I do not wish to discourage individuals from seeking to resolve a complaint on an amicable basis, if such a process does not bear fruit, then a potential applicant must issue proceedings as soon as possible and no later than the three month deadline.  To rule otherwise could lead to challenges to decisions of a public authority long after they have been made which does not produce good administration.

147.   Finally in relation to grounds 1 and 2, insofar as the Applicant is making a general suggestion that the increases to LTT and stamp duty were unfair and were retrospective, these arguments are not a basis to challenge the enactment of the Budget Law or bringing it in into effect.  However, they are capable of being relevant to the Applicant's challenges found in grounds 3 and 4 to the Direction issued by the First Respondent to which I now turn.

148.   In relation to Grounds 3 and 4, I firstly deal with the argument that the Respondents had a discretion not to enforce collection of LTT or stamp duty.  However, the Hely-Hutchinson case, which Advocate Brown relied upon, is about the effect of the Inland Revenue issuing guidance which stated that previous guidance was wrong and HMRC no longer following the tax treatment contained in the earlier guidance.  The Court held that in such circumstances that a taxpayer could only rely on the previous guidance where it would be so unfair as to amount to an abuse of process for HMRC not to give effect to the taxpayer's expectation.

149.   At paragraph 39, the following distinction was drawn:

"39. In R v Inland Revenue Comrs, Ex p MFK Underwriting Agents Ltd [1990] 1 WLR 1545 , Bingham LJ, with whom Judge J agreed, held that judicial review could not compel HMRC to act contrary to its statutory duty: pp 1566-1567. HMRC had no general discretion to remit taxes but they had a general managerial discretion as to the best means of collecting tax. This discretion could properly include the issue of guidance: p 1568."

150.   The difficulty with the present claim by the Applicant is that he is contending that the Comptroller of Income Taxes should not generally collect taxes, even though the States had passed a law changing the rate of tax payable.  To the extent that leave is sought to contend that the changes to LTT and stamp duty should not be collected at all, Hely-Hutchinson does not support such an argument which therefore does not meet the threshold for granting leave.

151.   Linked to the above argument is the suggestion that the increases to LTT and stamp duty were unfair as they created a windfall for the Sates because of the number of off-plan sales entered into by the SJDCL in relation to the Horizon development. This argument has no  merit as it fails to recognise that the SJDCL has its own legal personality and that the changes to duty applied to all off-plan sales.

152.   In relation to the argument that the tax was retrospective, I cannot accept this submission.  The tax applied to all transactions completed after the law came into force.  In that sense, it was not retrospective.  The event of completion had not occurred and therefore the new tax applied to all completions after 1st January 2023.  Again, therefore, this argument does not meet the requisite threshold. 

153.   What, however, I have concluded is open to a full hearing is the scope of the Direction issued by the First Respondent.  I note that the Direction in one sense was favourable to the Applicant and others in a similar situation because a discretion was exercised to charge stamp duty on the basis of the contract price paid for off-plan sales, rather than the current market value of the property.  Despite this benefit, the criticism of the Applicant that the Direction did not go far enough, in my judgment meets the required threshold.  This is because it is a realistic argument that the First Respondent erred by limiting the concession to those who could establish need.  It is not therefore clear to what extent the First Respondent considered extending the concession to property purchases made for family members with rights to reside in Jersey because they could not afford to acquire property themselves, as the Applicant raised in his letter of 22 December 2022.  A person acquiring a property for a child to rent on a subsidised basis or to occupy rent free could be the provision of a home for someone who could not otherwise afford the same.  At present there is no evidence suggesting to what extent this issue was considered.

154.    I appreciate in setting out this possibility that such a scenario may be open to abuse and any concession might require appropriate safeguards to ensure that the provision of any property for close family members was only for those who could not afford appropriate accommodation. These are political value judgments for the First Respondent to make.  However these potential difficulties are just part of the question raised by the Applicant and do not prevent leave being granted for this discrete question.

155.   Secondly, it is not clear to what extent the First Respondent considered any other form of grandfathering provisions for those who had contracted to purchase property before a certain date where the possibility of an increase in stamp duty on second homes was not on the radar.  I accept there is a judgment to be made about any cut-off date and whether the cut-off date applies to all properties or those only of a certain value.  Again, however, it is not clear whether the issue was considered at all either from the Direction or the evidence filed on behalf of the Respondents.  Leave is therefore given on this basis for grounds 3 and 4. 

156.   Finally, in relation to Grounds 3 and 4, the Second and Third Respondents are not necessary parties in relation to the scope of any direction issued by the First Respondent.  There is no decision they have made which can be reviewed. Accordingly, they are discharged from these proceedings and leave is only given in respect the First Respondent.

157.   For all these reasons, the application for leave is refused on the first two grounds, but is granted in respect of the third and fourth grounds against the First Respondent only on the limited basis set out in this judgment.  However, given the intention of the First Respondent to review stamp duty and LTT more generally before the end of this year, it may be sensible that any final hearing only takes place in 2024 which also allows the First Respondent time to consider this judgment. 

Authorities

Finance (Budget 2023) (Jersey) Law 2023. 

Public Finances (Jersey) Law 2019. 

Legislation (Jersey) Law 2021. 

Taxation (Land Transactions) (Jersey) Law 2009. 

Scott v Minister for Treasury and Resources [2020] JRC 095. 

R (Hely-Hutchinson) v Revenue and Customs Commissioners [2018] 1 WLR 1682. 

Osment v Chief Minister [2020] JRC 008. 

Control of Housing and Work (Jersey) Law 2012. 

Human Rights (Jersey) Law 2000. 

Secretary of State for Social Security v Tunnicliffe [1991] 2 All ER 712. 

Wilson v First County Trust [2004] 1 AC 816. 

C R Smith Glaziers (Dunfermline) v Customs and Excise [2003] STC 419. 

Burkett and Another v Hammersmith and Fulham London Borough Council [2002] UKHL 23. 

Warren v Lieutenant Governor [2017] 1 JLR 291. 

States of Jersey Law 2005. 

Pearce v Minister for Home Affairs [2022] (2) JLR 256. 

Royal Court Rules

AG v Pitman and Southern [2009] JRC 106. 

States of Jersey Law 2005. 

M A v Finland (Admissibility) (ABB 27793/95) [2003] 37 ECHR 712. 

W E (Jersey) Limited v Minister for the Environment [2022] JRC 044. 

Holmes v Law Society [2018] JRC 010. 

Imperium Trustees (Jersey) Limited [2023] JCA 057. 

Burt and Burt v States [1996] JLR 1.