Suspect's wife wins bid to challenge Jersey disclosure order

Friday 20 January 2023

A woman whose husband is the subject of a criminal probe in another country is challenging a disclosure notice from the Comptroller of Revenue in the Royal Court.

The woman took to the Royal Court at the end of December to request a judicial review of the notice, which was brought under a tax information exchange agreement with the investigating country.

It required corporate and private client administration services provider JTC to share information about two trusts of which the woman maintained she was the settlor.

In an anonymised judgment published this week, the Bailiff refused to grant leave on the grounds of "procedural impropriety", as he was satisfied there was a legitimate connection between the investigation into the tax affairs of the woman's husband – a taxpayer of the country concerned – and the information sought by the foreign jurisdiction.

However, Sir Timothy Le Cocq ultimately decided to approve the woman's request, and expressed concern that the Comptroller's notice of disclosure was "arguably" framed too widely when it required the disclosure of "all correspondence" between the financial services provider and their clients.

"I do not make any final determination in that respect but it seems to me that there is at least a prima facie argument that the request has been granted in too wide terms. In the circumstances I grant leave to apply for a judicial review on the sole ground that the notice is arguably too widely drawn and should be restricted only to information that is foreseeably relevant to a tax investigation into Y," he said.

The woman had also argued, through Advocate Steven Baker, that it was unfair that she could not obtain an explanation as to why the disclosure notice had been issued by the Comptroller without first securing permission for a judicial review of his decision.

Summarising her complaint, the Bailiff said: "In other words, the applicant must first show arguable grounds upon which the notice can be impugned before any substantive explanation for the decision giving rise to the notice can be given. It is argued that this circularity is unfair and that unfairness has been recognised by the court on other occasions.

"It is therefore argued that the position that the applicant finds herself in is offensive to natural justice because she is being, in effect, excluded from the ability to challenge a legal process to which she is subjected."

However, the Bailiff added that, whatever the force of such an argument, it was the case that since her application for leave to appeal had been filed, an affidavit had been produced by the Deputy Director of Revenue Jersey, setting our further details of the inquiries.

These included the claim by the foreign jurisdiction that the man was currently under investigation for allegedly committing a tax fraud, that with his wife he was beneficial owner of two companies in another country, and settlor and beneficiary of the two Jersey trust's referred to in the Comptroller's notice.

The Bailiff noted that the applicant was aware her husband was the subject of criminal proceedings in the foreign jurisdiction but maintained that they were not tax-related.

"It is therefore assumed, for the purposes of the appellant's argument, that the tax investigation to which the notice pertains is distinct from the criminal proceedings facing Y in Country A," he said.

Giving his decision to allow a judicial review only on the limited point of the notice's breadth, Sir Timothy said: "...an investigation into the affairs of a taxpayer would normally, where the taxpayer has accumulated significant wealth, extend into entities where individuals to whom the taxpayer might expect to be intimately related and close to and have a common financial interest and connection."