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England and Wales High Court (Administrative Court) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> T & Anor, R. (On Application of) v Financial Conduct Authority [2021] EWHC 396 (Admin) (24 February 2021) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2021/396.html Cite as: [2021] 1 WLR 3246, [2021] EWHC 396 (Admin), [2021] WLR 3246, [2021] WLR(D) 116 |
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QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
THE QUEEN on application of (1) T (2) I |
Claimants |
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- and – |
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FINANCIAL CONDUCT AUTHORITY |
Defendant |
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Monica Carss -Frisk QC & Ajay Ratan (instructed by The Financial Conduct Authority) for the Defendant
Hearing dates: 20 and 22 January 2021
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Crown Copyright ©
MR JUSTICE SWIFT:
A. Introduction
(1) whether the Withholding Tax Rebate Strategy, criticised by SKAT as fraudulent, was in fact consistent with an established market practice;
(2) whether SKAT was aware of that market practice;
(3) what, under Danish Law, were the requirements for a valid refund application so far as concerns an applicant's liability to tax under the Withholding Tax Act, and whether the requirement that an applicant had received a dividend entailed that the applicant had to have owned shares in the company that made the payment, and if so the meaning of ownership for that purpose;
(4) the meaning of the requirements applicable under the Denmark-US Double Taxation Treaty;
(5) was there any principle that the provisions of the Double Taxation Treaty could not be relied upon to secure a favourable tax position that was contrary to the purpose and object of the Treaty, and if so, what criteria determine whether a transaction falls into that class.
It is apparent from the Warning Notice that these issues will also be central to any conclusion reached in the RDC proceedings as to whether or not the First Claimant acted in accordance with the requirements of Principle 1.
B. Should the hearing for this application for judicial review take place in public or in private?
C. The merits of the application to stay the RDC proceedings.
"… [Ms France] does not consider that [the First Claimant] has demonstrated that there is a real risk of serious prejudice … if the RDC proceedings are to continue. Further, she considers that if there were such a risk the public interest in determining the allegations of serious misconduct … in these proceedings would justify their immediate continuation."
and then went on to state
"The Panel Chair has considered each of the other factors you mention but does not consider they are indicative of a real risk of serious prejudice from the continuation of these proceedings. As far as any documents generated in the RDC proceedings are concerned, she notes that it is open to you to seek to persuade the Commercial Court Judge to address any unfair advantage [the First Claimant] perceives, by the exercise of case management powers.
In the absence of a real risk of prejudice, it is not necessary to consider the countervailing considerations which would weigh in favour of continuing the RDC proceedings notwithstanding such a risk. Nevertheless, the Panel Chair considers the public interest in seeing that the disciplinary process is not impeded to be particularly strong in this case given that the allegations against [the First Claimant], and the risk he poses to the integrity of the UK financial system if those allegations are made out, are of the utmost seriousness."
"22. The two leading cases are the decision of the Court of Appeal in Brindle … and the decision of the Divisional Court in Smith. The decision of the Court of Appeal in R v Panel on Take-overs and Mergers ex parte Fayed … was only on a renewed application for leave to apply for judicial review of decisions of the Panel not to adjourn its disciplinary proceedings against Mr Fayed, but is nonetheless instructive. There were substantial differences between the approach of the Court of Appeal in Brindle and the Divisional Court in Smith, to which I refer below. However, the general principles were helpfully set out by Dyson J in R v Executive Counsel of the JDS, ex p Hipps (1996) (New Law Transcript 296069202), as follows:
"(i) the court is not concerned with a Wednesbury review of Mr Chance's decision not to adjourn the proceedings. Rather I am required to exercise an original jurisdiction whether to grant a stay: see R v Take-overs and Mergers Panel ex parte Guinness [1990] 1 QB 146, 178G–H, 184C–E, and R v Chance, ex parte Smith (supra) at 1100G.
(ii) the jurisdiction to stay one of two concurrent sets of proceedings must be exercised sparingly and with great care: see R v Panel on Take-overs and Mergers ex parte Fayed …, 531E and R v ICAEW, ex parte Brindle … 310D–E.
(iii) unless a party seeking a stay can show that if a stay is refused there is a real risk of serious prejudice which may lead to injustice in one or both of the proceedings, a stay must be refused: see ex parte Fayed at 531, ex parte Brindle at 316G–H.
(iv) if the court is satisfied that, absent a stay, there is a real risk of such prejudice then the court has to balance that risk against the countervailing considerations. Those considerations will almost always include the strong public interest in seeing that the disciplinary process is not impeded. Ex parte Brindle 310E–G, ex parte Smith 1100G, 1103B–D.
(v) in a case where the balancing exercise is carried out, the court will give great weight to the view of the person or body responsible for the decision as to the factors militating against the stay and the weight to be given to them, but the court is the ultimate arbiter for what is fair: see ex parte Smith 1101F–G, 1102H to 1103F and ex parte Guinness184D–E.
(vi) each case turns on its own facts. Accordingly, only limited assistance can be derived when comparing the facts of a particular case with those of other cases where a stay was granted (as in ex parte Brindle) or where a stay was refused (as in ex parte Smith) …."
"In the course of his skeleton argument, Mr Carnwath submitted that:
'there is no reason to assume that private litigation in connection with auditors' activities should necessarily have priority over the statutory supervision in the public interest.'
I agree. But equally there is no reason (as Mr Carnwath seemed to suggest) that the opposite assumption should be made. Each case must depend on its own facts and the institute's own handbook, para. 14.02, rightly recognises that in some cases it will be appropriate for the statutory supervision to give way ('Disciplinary proceedings must be deferred if they are likely to interfere with the course of justice').
I now turn to the individual factors relied on by Mr Oliver on behalf of Price Waterhouse.
(1) I am satisfied that the degree of overlap between the issues raised in the disciplinary proceedings and those raised in the liquidators' action are so complete as to amount in Mr Oliver's words to virtual total eclipse. In both proceedings the same facts are in issue, and the basic professional standards invoked are identical and non-controversial; the fact that in the action some more controversial embellishments are added does not affect the comparison of the basic standards relied upon. This to my mind is a most important consideration, both because in my judgment it is inherently unfair that two tribunals should contemporaneously be considering the same issue (Conteh v Onslow-Fane, The Times 26 June 1975, CAT No. 291) and because it affects the evaluation of (2) below."
Although he refers to "inherent unfairness" Hirst LJ is careful not to identify that as a decisive matter only a "most important consideration" both for its own sake and because of the practical burdens that parallel proceedings might impose. It is fair to say that Hirst LJ's reference after the passage set out above to the reasoning of Sir John Pennycuick in Conteh v Onslow-Fane is difficult. But this is not a matter the features in either the judgment Nolan LJ, the leading judgment in the case, or the judgment of Steyn LJ.