Judicial Review - reasons for granting the application

[2021]JRC184

Royal Court

(Samedi)

6 July 2021

Advocate M. W. Cook for the Applicants.

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

judgment

the bailiff:

1.        On 1^st March 2021, I sat to hear an application for leave to bring an application for judicial review against Notices served by the Jersey Competent Authority (“the Respondent”) on Triton Administration (Jersey) Limited (the “Second Applicant”) relating to the tax affairs of Peder Erik Prahl (“First Applicant”) .

2.        Shortly thereafter, on 5^th March 2021, I granted leave to the Applicants to make an application for judicial review.  I now intend to give very brief reasons for doing so to assist the parties in the forthcoming judicial review hearing.

3.        I had the benefit of two affidavits from the First Applicant and two affidavits from a director of the Second Applicant in support of the application for leave to bring judicial review proceedings.  I did not have before me any affidavit or other evidence tendered on behalf of the Respondent.

4.        In terms of the appropriate test to apply in considering the matter of permission the parties put before me Chapter 16 of Smith’s Judicial Review (8^th Edition) in which at Paragraph 16-049 the learned author states:

“No comprehensive statement of the criteria for determining applications for permission exists.  During the mid-1990s, concerns were expressed that the arrangements then in place led to unacceptable disparities of approach in ways different nominated judges dealt with applications for leave (now “permission”) to commence judicial review claims.  In 2000, the Bowman Committee recommended that there be a statutory presumption that permission should be given if the claim discloses an arguable case, but this was not implemented.  The Senior Courts Act 1981 s.31 and CPR Pt 54 refer expressly to only two grounds on which permission should be refused: where there has been delay in applying to the court; or where the claimant does not have a sufficient interest in the matter to which the claim relates.  However, the standing requirement is of limited importance at the permission stage and is designed merely to weed out cranks, mischief makers and busy bodies.  The issue of delay is a more substantial hurdle and it is not unusual for permission to be refused on this ground.  Delay and standing may be reconsidered at the full hearing.  What it tolerably clear is that the test for permission is whether the application is “arguable” or has a “realistic prospect of success”.  What that means in a given case will depend on all the circumstances and the nature of and gravity of the issue to be argued.  To be arguable means more than to be potentially arguable on a purely speculative basis and in the hope that the case may strengthen when more documents are obtained.”

5.        I was referred to a number of other authorities which touched upon the substantive arguments on the merits of the case in the context of whether or not permission to bring judicial review proceedings should be granted.  I do not propose to refer to those authorities in this very brief judgment given that they will almost certainly be dealt with at some greater length in the judgment that issues when the judicial review application is itself heard.  At this point, I simply needed to be satisfied that the case before me was arguable or had a realistic prospect of success. 

6.        The First Applicant is a Swedish national who is currently living in Sweden, so I understand from the evidence before me.  For a substantial period, however, and throughout all of the time covered by the Notices issued by the Respondent, he was not resident in Sweden and was tax resident either in the United Kingdom or in Jersey and paid taxes in both of those jurisdictions.  This made the application before me somewhat unusual in that in other cases before the Court the taxpayer was resident in the foreign requesting jurisdiction.

7.        In essence, the grounds for the application relate firstly to the terms of the two notices which it is asserted are defective in as much as they do not adequately specify what tax information is required. 

8.        Secondly, the application is made on the basis that the tax information could not be “foreseeably relevant” to the administration or enforcement of the domestic laws of “the requesting country” and accordingly, is not issued in accordance with Regulation 2 of the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008 (“the Regulations”), because at all material times the First Applicant was resident for tax purposes in Jersey and not in the requesting state.  This, so it is argued, raises a number of issues relevant to the approach by the Respondent to the exercise of its powers under those Regulations which have never previously been considered by this Court.

9.        It is also argued that, thirdly, the Respondent has been inconsistent in its approach and whilst it might be acceptable in most cases, as the Respondent appears to have done, to rely upon the representations of the foreign tax authority as justification for issuing a notice, that cannot be applicable where the taxpayer was resident in Jersey, a fact which would have been known to the Respondent and was indeed brought to its attention.  Other arguments are advanced under the double taxation agreement between Jersey and Sweden entered in 2^nd October 2008, and arguments are also raised on the fact that the question of whether or not the First Applicant is tax resident in Sweden is an open one and so far unresolved by, the Swedish Authorities.  He is being cooperative in connection with the Swedish Tax Authorities enquiries and he argues that the approach taken is inconsistent with the Swedish legal position.

10.      The First Applicant also argues that he has not refused to provide any of information to the Swedish Tax Authorities and, lastly, that the Respondent has not operated a fair procedure because neither the First Applicant nor the Second Applicant had been informed of the basis of the request for information underlying the Notices issued.

11.      I do not in this judgment propose to go into greater detail.  The Respondent presents contrary arguments but to my mind none of those arguments suggests that the arguments raised by the Applicants in this case are other than arguable.

12.      A number of novel points arise including the argument by the First Applicant that, as a tax resident in Jersey at the material time, the Respondent had information that he should have made available to the Swedish Tax Authorities showing that they could not seek the information or there may be an argument to say that the information they were seeking to obtain was not foreseeably relevant.

13.      The Respondent has argued before me that it was not necessary to provide any information at the leave stage and only if leave were to be granted would it be necessary for the Respondent to provide information.  This is in accordance with the requirement of confidentiality which, it was submitted by Advocate White, is contained in the appropriate Treaty and is the international standard.

14.      It appears to me that the difficulty with the Respondent’s position is that if it does not need to answer then he cannot show that he has behaved in a manner that is reasonable, appropriate or lawful and provided, therefore, there is some basis for saying that judicial review application on the facts put before me by the Applicants might succeed, then that is of itself sufficient basis for granting leave. 

15.      Much argument was put before me as to the relevance of Swedish law.  I tentatively accept the position that it is not for this Court and certainly not for the Respondent to make any determinations of Swedish Law.  The Respondent’s obligation probably runs no further than to reasonably act in connection with points that are made to it.  The reasonable action would be to raise points with the Swedish Competent Authority, and in my view, return to the potential taxpayer explaining what the responses to those enquiries were.  It would not be unreasonable for Jersey Competent Authority to proceed on the basis that a Competent Authority in a foreign jurisdiction will know what the law of that jurisdiction is and what it means.

16.      Before me, however, there was no information as to what questions had been asked by the Respondent and what answers have been received.  There was no information relating to whether or not the Respondent has talked about the First Applicant’s Jersey tax residence status and asked what the effect of that was and, absent that, it is difficult for any assessment to be made as to whether the Respondent has behaved reasonably in all of the circumstances.

17.      It seems to me that it was impossible for me to say that the Applicants did not have a reasonable prospect of success or at the very least an arguable case and, accordingly, I granted leave to make an application for judicial review on all of the grounds sought in the application by the Applicants.

Authorities

Smith’s Judicial Review (8th Edition). 

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