Jersey Unreported Judgments

Judicial Review

[2021]JRC177

Royal Court

(Samedi)

25 June 2021

Before     :

Sir Michael Birt, Commissioner, sitting alone

 

Advocate J. Harvey-Hills for the Applicants.

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

judgment

the COMMISSIONER:

1.        On 8^th April 2021, the Applicants applied for leave to apply for judicial review in respect of the decision of the Respondent to issue a Notice ("the Notice") to JTC (Jersey) Limited ("JTC") pursuant to Regulation 3 of the Taxation (Exchange of Information with Third Countries) (Jersey) Regulations 2008, ("the Regulations") seeking information about any entities or other arrangements in respect of which the taxpayer, who is resident in India, was identified as a beneficial owner or controlling person.  The Notice was issued pursuant to a request from the Indian Tax Authorities.

2.        On 13^th April 2021, the Deputy Bailiff ordered that the application for leave should be determined after an inter partes hearing following service of the application upon the Respondent.  This hearing duly took place before me on 16^th June 2021.  At the conclusion of the hearing, I granted leave in respect of all three grounds relied upon by the Applicants.  I gave a short ex tempore judgment granting leave and it is not necessary in this judgment to refer to the merits.

3.        However, one point was raised in the papers about the applicable time limits for applying for judicial review in respect of a notice issued under the Regulations and the parties agreed that it might be helpful to have a short judgment on this aspect.

The relevant Regulation

4.        The question of time limits for applying for leave to apply for judicial review is dealt with in Regulation 14 of the Regulations, the relevant parts of which are as follows:

"14.  Judicial Review:  Limitations

(1)      Despite any Rule made to the contrary under the Royal Court (Jersey) Law 1948, an application for leave to apply for judicial review may not be made:

(a)      by a taxpayer, against a requirement made of that taxpayer under Regulation 2, later than 14 days after the requirement arose under Regulation 2;

(b)      by a person, against a requirement made of that person in a third party notice, later than 14 days after the third party notice was given to that person under Regulation 3; or

(c)      by a taxpayer, against a requirement made of a third party in respect of that taxpayer, later than 14 days after the copy of the third party notice was given to that taxpayer under Regulation 3.

(2)      An application for judicial review may not be made on any of the following grounds;

(a)      that the competent authority for Jersey has not provided the third party notice to a taxpayer within the time limits specified in Regulation 3(4);

(b)      that the competent authority for Jersey has not provided the third party notice to the taxpayer on a ground mentioned in Regulation 3(5);

(c)      that the competent authority for Jersey has prohibited a third party from disclosing the third party notice to the taxpayer, or any information relating to the notice to the taxpayer on a ground mentioned in Regulation 3(5); or

(d)      that the competent authority for Jersey has required tax information to be authenticated in a manner that is not required for the purposes of Regulation 10B(iii)."

5.        As can immediately be seen, there is an important difference between paragraphs (1) and (2) of Regulation 14.

6.        Paragraph (2) is applicable to any application for judicial review; it is not limited by reference to who has brought the application. 

7.        Paragraph (1), on the other hand, only applies to an application for leave brought by a taxpayer (sub-paragraphs (a) and (c)) or by a third party to whom the notice has been issued (sub-paragraph (b)).  It is not on its face applicable to any other party who applies for leave to seek judicial review.

8.        It was common ground between the parties in this case that the Applicants are neither the taxpayer nor the recipient of the third party notice for the purposes of Regulation 14(1).  The recipient of the notice is JTC and the taxpayer is the individual, resident in India, who is named in the Notice.

9.        On the other hand, the Applicants have standing to seek leave to apply for judicial review.  On the information presented to the Court, they are companies incorporated in Jersey (and in one case Guernsey).  The First Applicant is a wholly owned subsidiary of a company incorporated in India called Bharti Overseas Private Limited ("BOPL").  The other five Applicants are wholly owned direct or indirect subsidiaries of the First Applicant.  The taxpayer is an indirect shareholder in BOPL.  The Applicants have standing to apply for judicial review because it is information about their affairs which would be disclosed pursuant to the Notice.  However, they are not the taxpayer, nor are they the person who is being required to provide information pursuant to a third party notice.

10.      In my judgment, it is abundantly clear that the time limits set out in Regulation 14(1) do not on their face apply to parties other than the taxpayer or the recipient of a third party notice i.e. in this case, JTC.  There is simply no reference in paragraph (1) to anyone other than a taxpayer or a recipient of the notice.  This is to be distinguished from paragraph (2), which is clearly of general application, in that it states simply that an application for judicial review may not be made on certain specified grounds.  It says nothing about who is bringing the application for judicial review, unlike paragraph (1).  It therefore applies to all judicial review applications in respect of a notice under the Regulations.

11.      On behalf of the Respondent, Advocate White accepted that this was the position.  It has also been accepted in two previous cases, to which I refer below, that this is the natural construction of paragraph (1).

12.      However, there is some suggestion in those two cases that, by application of the principle of construction set out in Inco Europe Limited v First Choice Distributors [2000] 1 WLR 586, the Court may be able to interpret paragraph (1) so as to apply to applicants other than the taxpayer or the recipient of the notice notwithstanding the clear terms of the paragraph to the contrary.

13.      In Larsen v Comptroller of Taxes [2015] (2) JLR 209, Commissioner Beloff  QC, was faced with a number of challenges to the vires of the Regulations.  One of the grounds of challenge was to the effect that Regulation 14(1) resulted in a discriminatory application of article 6 ECHR because different time limits applied to different categories of applicant, in that taxpayers and recipients of a notice were caught by the 14-day limit specified in Regulation 14(1) whereas other applicants were not. 

14.      Commissioner Beloff (at paragraph 67 of his judgment) accepted that Regulation 14(1) had this effect.  Furthermore, he was not willing to use article 4 of the Human Rights (Jersey) Law 2000, so as to read in words to remedy the position.  As he said at paragraph 69:

"69. Inserting the phrase "other persons with standing" into regs 14(1)(b) and 14A(2)(b) would eliminate the alleged discrimination as to time limits, if nothing else, in favour of other persons with standing but I would, absent compelling precedent or persuasive authority, be uneasy about using art 4 to subtract rights from persons currently enjoying them rather than to confer rights upon persons who did not."

15.      However, he went on to hold that the same result could be achieved by existing common law principles of construction.  Thus he said at paragraph 70:

"70.  The same destination can, however, be reached by application of principles freestanding of the human rights context, as explained in [Inco] at 592 where it was held:

"The court must be able to correct obvious drafting errors.  In suitable cases, in discharging its interpretative function, the court will add words, or omit words or substitute words," albeit with "considerable caution" where it is abundantly sure of three matters:

(1)      [T]he intended purpose of the statute or provision in question;  (2) that by inadvertence, the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily the precise words Parliament would have used, had the error in the Bill been noticed."

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

71.      In my view, all three conditions are manifestly fulfilled.  It was argued that there was no clear indication of Parliamentary intent but it seems obvious to me that the States envisaged that, in order to fulfil their perceptible purpose, the time limits must be applied to whoever enjoyed standing."

16.      Despite this passage, in the proceedings which gave rise to his judgment, Commissioner Beloff also had to consider an application for judicial review in relation to a similar notice issued under the Regulations by an entity known as Fiduciana Trust (Cyprus) Limited which was neither the taxpayer nor the recipient of the notice.  The Commissioner considered the merits of that application despite the fact that, as set out in paragraph 153 of his judgment, Fiduciana's application for leave to apply for judicial review was made some 6 weeks after service of the notice on the recipient, i.e. it fell outside the 14 day period measured from the date of service on the recipient.

17.      The matter was also touched upon by the Court of Appeal when Commissioner Beloff's decision was appealed at Larsen v Comptroller of Income Tax [2016] (2) JLR 198.  On appeal, the key issue was whether the provision in the Regulations removing the right of appeal to the Court of Appeal and replacing it with a direct right of appeal to the Privy Council was ultra vires.  The Court of Appeal held that it was not and that accordingly the Court of Appeal had no jurisdiction to consider the appeal.  It follows in my judgment that anything said in relation to the time limits in Regulation 14(1) was obiter and cannot be binding upon me.

18.      At paragraph 35 of its judgment, the Court of Appeal essentially endorsed the reasoning of Commissioner Beloff by reference to the decision in Inco but went on to say this:

"36.   In any event, even if the Inco approach is inapplicable, and there is a person who does not receive the notice but has standing to challenge by way of application for judicial review, there appears to be a sound basis, an objective reason, for allowing that person to avoid the strict time limits imposed by reg 14(1).  That person's situation is not "truly analogous" keeping in mind that "a rigidly formulaic approach is to be avoided ....."

19.      The principle of construction set out in Inco is well established, but it is important to bear in mind its limited nature.  The relevant part of the speech of Lord Nicholls of Birkenhead in Inco at 592 is as follows:

"I freely acknowledge that this interpretation of section 18(1)(g) involves reading words into the paragraph.  It has long been established that the role of the courts in construing legislation is not confined to resolving ambiguities in statutory language.  The court must be able to correct obvious drafting errors.  In suitable cases, in discharging its interpretative function the court will add words, or omit words or substitute words.......

This power is confined to plain cases of drafting mistakes.  The courts are ever mindful that their constitutional role in this field is interpretative. They must abstain from any course which might have the appearance of judicial legislation.  A statute is expressed in language approved and enacted by the legislature.  So the courts exercise considerable caution before adding or omitting or substituting words.  Before interpreting a statute in this way the court must be abundantly sure of three matters:  (1) the intended purpose of the statute or provision in question; (2) that by inadvertence the draftsman and Parliament failed to give effect to that purpose in the provision in question; and (3) the substance of the provision Parliament would have made, although not necessarily of the precise words Parliament would have used, had the error in the Bill been noticed.  The third of these conditions is of crucial importance.  Otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation......

Sometimes, even when these conditions are met, the court may find itself inhibited from interpreting the statutory provision in accordance with what it is satisfied was the underlying intention of Parliament.  The alteration in language maybe too far-reaching.  In Western Bank Limited v Schindler [1977] Ch 1, 18, Scarman LJ, observed that the insertion must not be too big, or too much at variance with the language used by the legislature.  Or the subject matter may call for a strict interpretation of the statutory language, as in penal legislation........"

20.      I am happy to accept that, when enacting Regulation 14(1), the States by inadvertence omitted to give consideration to the position of an applicant for judicial review who has standing but is not the taxpayer or the recipient of the notice.  However, with great respect, I part company with Commissioner Beloff in that I do not find myself "abundantly sure" of the substance of the provision which the States would have enacted had it thought of the matter; and Advocate White on behalf of the Respondent did not seek to persuade me otherwise.

21.      At paragraph 71 of his judgment, Commissioner Beloff said that "the time limits must be applied to whoever enjoyed standing."  The difficulty with this concept is that Regulation 14(1) contains two different starting points for the 14-day period.  In the case of the recipient of the notice, it is 14 days after the notice was given to the recipient under Regulation 3; and in the case of the taxpayer, it is 14 days after the copy of the third party notice was given to the taxpayer under Regulation 3.  It is therefore not clear which of these dates (if either) would be the relevant starting point for the 14-day period in respect of an applicant who is neither a taxpayer nor a recipient of the notice.

22.      Furthermore, there is no provision in the Regulations containing a requirement that a notice be served on any person other than the taxpayer and the recipient of the notice.  Therefore, there is no obvious or comparable starting point for a 14-day period in respect of such a person.  As the Court of Appeal said at paragraph 36 of its judgment, there appears to be a sound basis, an objective reason, for allowing such person to avoid the strict time limits imposed by Regulation 14(1).  The States might choose to run any limitation period from the date that an applicant becomes aware of the notice, but one can envisage the possibility of the States choosing some other date.

23.      In the circumstances, I find it impossible to be "abundantly sure" what period (and starting from what point) the States would have fixed upon had it thought of the matter when enacting the Regulations.  I am not therefore satisfied as to the third element of the three limbed test described in Inco and, as Lord Nicholls made clear, the third condition is of crucial importance, as otherwise any attempt to determine the meaning of the enactment would cross the boundary between construction and legislation.

24.      This leads to the conclusion that Regulation 14(1) means what it says and does not apply to applicants other than a taxpayer or the recipient of a notice.  In my judgment, the time limit applicable to the Applicants is therefore the normal time limit for seeking leave for judicial review, namely that the application must be brought "promptly" and in any event within three months.  In this case, it is agreed that the Notice should be treated as having been served on JTC on 26^th January 2021 and the application for leave to apply for judicial review was filed by the Applicants on 8^th April 2021.  It is not clear when the Notice was given to the taxpayer.  The application was therefore not brought within 14 days of service of the Notice on JTC, but I am satisfied that the application was brought promptly and it is within the three-month period.

25.      I am conscious that Regulation 14(1) may not achieve what the States thought it did.  However, it seems to me that it is a matter for the States to consider whether it wishes to introduce a time limit, which is shorter than the normal judicial review time limit, for persons other than taxpayers and recipients of a notice and if so, what such period should be and from what date it should be calculated.

Authorities

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

Inco Europe Limited v First Choice Distributors [2000] 1 WLR 586. 

Larsen v Comptroller of Taxes [2015] (2) JLR 209. 

Human Rights (Jersey) Law 2000. 

Larsen v Comptroller of Income Tax [2016] (2) JLR 198.