Jersey Unreported Judgments

Trust - application to call a Kenyan tax expert.

[2024]JRC101

Royal Court

(Samedi)

25 April 2024

Advocate P. C. Sinel for the Plaintiffs

Advocate J. P. Speck for the First Defendant

Advocate D. Evans for the Second and Third Defendants and First and Sixth to Twelfth Third Parties

Advocate P. G. Nicholls for the Second to Fifth Third Parties

judgment

the deputy bailiff:

1.        At paragraph 2 of the Act of Court dated 19 February 2024, I directed:

"...in respect of the suggestion that the Court should give the parties permission to rely on an expert in the field of Kenyan tax legislation, the parties seeking permission to call such evidence should file skeleton arguments no longer than 10 pages in length within 14 days of today, with the Plaintiffs and any other party resisting that application having 14 days to respond; the Court will thereafter resolve that question on the papers."

2.        Counsel for the Second and Third Defendants duly filed a Skeleton Argument pursuant to this direction, seeking leave to adduce evidence of Kenyan law in relation to the Kenyan tax amnesty referred to in the pleadings.

3.        No party has taken the opportunity to file a Skeleton Argument in reply.  Accordingly, I determined the matter pursuant to having regard to the Skeleton Argument filed on behalf of the Second and Third Defendants dated 4 March 2024, recalling that this application was opposed orally by counsel for the Plaintiffs at the recent 19 February hearing and assuming that the Plaintiffs maintain that opposition.

4.        The hallmark of admission of expert evidence is its necessity in order to determine an issue at trial. 

5.        The Plaintiffs plead in the Amended Order of Justice at paragraph 27 that the Third Defendant said that the Agreement at the heart of this case needed to be executed urgently owing (inter alia) to the wish of the Kenyan Government that certain "outside income" be declared for tax purposes.  This was one of the Representations that the Plaintiffs said adduced them to enter into the Agreement and sign the relevant disclaimers and indemnity.

6.        It is pleaded by the Plaintiffs (paragraph 40.5 of the Amended Order of Justice) that, in fact, there was no urgency to execute the Agreement by virtue of Kenyan fiscal legislation, and that the Defendants knew there was no such pressure occasioned by the said Kenyan tax amnesty.

7.        In their Answer, the Second and Third Defendants plead (see paragraph 2.24) that there was an amnesty on foreign assets and income published by the Kenyan Government in June 2016, (defined for the purposes of pleadings as the Kenyan Tax Amnesty), which applied to foreign source income earned on or before 31 December 2016.  The Second and Third Defendants said that it was "crucial" for them that the Agreement was concluded prior to the 31 December 2016 in light of the Kenyan Tax Amnesty.

8.        It is said that there is a dispute as to whether:

(i)        the Kenyan Tax Amnesty, as defined, existed;

(ii)       if it existed, whether it was subject to a deadline of 31 December 2016, and

(iii)      what the Second and Third Defendants said about the Kenyan Tax Amnesty was false.

9.        Plainly, the third matter is not one for expert evidence, but for the Third Defendant to depone to at trial.  But it is said that the history of the Kenyan Tax Amnesty, the date when it was published and the application of it, are matters for expert evidence.

10.     It is accepted that the Third Defendant will give evidence as to when he became aware of the Kenyan Tax Amnesty, his understanding of it, and how his knowledge of the same impacted on the Agreement. 

11.     I agree on balance that such expert evidence is necessary in this case, but it should be narrow in scope and identify:

(i)        If there was a Kenyan Tax Amnesty at the relevant time;

(ii)       What the deadline for compliance was;

(iii)      What the conditions were for taking advantage of the Kenyan Tax Amnesty were; and

(iv)     What steps applicants needed to make to comply with the deadline, if any, and what advantages would accrue to the relevant parties if they met that deadline.

12.     I agree that the costs of obtaining expert evidence on this issue should be relatively limited and should not add in any significant way to the cost or complexity of these proceedings.

13.     Accordingly, I direct that:

(i)        the Plaintiffs and Second and Third Defendants if possible jointly identify and agree to instruct a Kenyan tax and / or legal expert, suitably qualified to express an opinion on these issues identified; and

(ii)       the parties agree the instructions to be sent to the expert identified within fourteen days of receipt of this judgment (once it is finalised).

14.     If the parties are unable to agree the questions and tax expert jointly instructed then, subject to written submissions from both parties, I will be happy to settle any disputes.

No Authorities