Cayman Islands Tax Information Authority Appellants v M H Investments J A Investments Ltd Respondents

• Jurisdiction: Cayman Islands
• Judge: Elliott Mottley,Sir John Chadwick
• Judgment Date: 23 April 2015
• Judgment citation (vLex): [2015] CICA J0415-1
• Docket Number: CICA No. 31 of 2013
• Court: Court of Appeal (Cayman Islands)
• Date: 23 April 2015

Between

Cayman Islands Tax Information Authority

Appellants

and

M H Investments

J A Investments Limited

Respondents

[2015] CICA J0415-1

Before

The Right Hon Sir John Chadwick, President

The Hon Elliott Mottley, Justice of Appeal

The Hon Sir George Newman, Justice of Appeal

CICA No. 31 of 2013 G391/2012

IN THE COURT OF APPEAL OF THE CAYMAN ISLANDS

Revised from transcript and Approved released 31 July 2015

Sir John Chadwick

1 By section 4 of the Tax Information Authority Law (Law No. 1 of 2005) (‘the Law’) the Financial Secretary was designated as the Tax Information Authority with the role and functions set out in Part II of that Law. Section 5(2) of the Law provided that the principal functions of the Authority should include (a) executing requests and (b) ensuring compliance with the scheduled Agreements. In that context ‘scheduled Agreement’ meant ‘an agreement for the provision of information in taxation matters, being in agreement which has legal effect in the Islands and which is more particularly set out in a relevant Schedule to this Law’; and ‘request’ included ‘a request made by one of the Parties to the other Party under a scheduled Agreement …’. Section 3(1) provided that the Law should apply for the purpose (inter alia) of giving effect to the terms of a scheduled Agreement as to the provision of information in taxation matters; section 3(3) provided that a scheduled Agreement should have legal effect in the Cayman Islands for such period as was specified in that agreement; and section 3(5) enabled the Governor, by order subject to affirmative resolution, to add a schedule to the Law ‘for the purpose of setting out and giving effect to an agreement for the provision of information in taxation matters.’

2 Part III of the Law (‘Execution of Requests’) comprised sections 7 and 8. In the 2009 Revision, those sections were in these terms (so far as for material):

‘7(1) Upon receipt of a request, and subject to sections 6( 2) and 17(1), the Authority shall determine whether the request is in compliance with the relevant scheduled Agreement … and, if it is determined that there is compliance, the Authority shall execute the request in accordance with, but subject to, the provisions of the relevant scheduled Agreement…

…

8(4) Where, under a request, the Authority considers it necessary to obtain specified information or information of a specified description from any person the Authority shall —

• (a) in the case of information required for proceedings in the territory of the requesting Party or related investigations, apply to a Judge for an order to produce such information; or

• (b) in the case other than that referred to in paragraph (a), issue a notice in writing requiring the production of such information as may be specified in the notice; and such notice may require the information —

  • (i) to be provided within a specified time;

  • (ii) to be provided in such form as the Authority may require; and

  • (iii) to be verified or authenticated in such manner as the Authority may require.

…

(6) … a notice under subsection 4(b) shall have effect notwithstanding any obligation as to confidentiality or other restriction upon the disclosure of information whether imposed by the Confidential Relationships (Preservation) Law 2009 (Revision), any other law or the common law.’

3 In summary, the steps which Part III of the Law required (so far as material in the present context) were these: (i) upon receipt of a request from a party to a scheduled Agreement (defined in section 2 of the Law as the ‘requesting Party’) the Authority was required to determine whether or not the request was in compliance with the terms of that agreement; (ii) if the Authority determined that the request was in compliance with the scheduled Agreement, it was required to decide whether it was necessary to obtain specified information or information of a specified description ‘from any person’; (iii) if the Authority decided that it was necessary to obtain such information, it was required to decide whether that the information to be obtained was information ‘required for proceedings in the territory of the requesting Party or related investigations’ and so within paragraph (a) of section 8(4) of the Law; (iv) if the Authority decided that it was necessary to obtain specified information from a person and that that information was within paragraph (a) of section 8(4), then it was required to apply to a judge for an order for the production of that information; (v) if the Authority decided that it was necessary to obtain specified information from any person, but that that information did not fall within paragraph (a) of section 8(4), then,prima facie, it was required by paragraph (b) of that section to issue – and serve upon the person from whom that information was to be obtained — a notice in writing requiring the production of such information as might be specified in the notice.

4 It is important, however, to have in mind the qualifying words ‘subject to Sections 6( 2) and 17(1)’ at the commencement of section 7(1). Section 6(2) is not in point in the present case. Section 17(1) of the Law — which is in point — was in these terms (so far as material):

‘17(1) Subject to subsection (2), a person who is the subject of a request for information solely in relation to a matter which is not a criminal matter or an alleged criminal matter, shall if his whereabouts or address is made known to the Authority, be served with a notice by the Authority advising of the existence of a request specifying that person, the jurisdiction making the request and the general nature of the information sought; and any person so notified may within fifteen days from the date of receipt of the notice, make a written submission to the Authority specifying any grounds which he wishes the Authority to consider in making its determination as to whether or not the request is in compliance with the provisions of the relevant scheduled Agreement…, including any assertions that the information requested is subject to legal privilege.’

Section 17(2) of the Law required that the Authority should consider any written submission made in compliance with section 17(1); but should not be obliged to permit or consider any oral submission by or on behalf of any person who was the subject of a request for information. Further, section 17(4) provided that nothing in the Law required the Authority to search for or conduct inquiries into the address or whereabouts of any person who was the subject of a request in order to serve a notice to that person pursuant to section 17(1).

5 The effect of those provisions was that the obligation on the Authority to serve on a person who was the subject of a request a notice advising of the existence of the request arose if, but only if, the request was for information solely in relation to a matter which was not a criminal matter or an alleged criminal matter and the whereabouts or address of the person who was the subject of the request had been made known to the Authority. But in circumstances where the obligation to serve a notice did arise under section 17(1) of the Law: (i) the notice must advise (a) of the existence of the request, (b) of the requesting Party and (c) of the general nature of the information sought; (ii) the person notified under section 17(1) had 15 days in which to make a written submission to the Authority ‘specifying any grounds which he wishes the Authority to consider in making its determination as to whether or not the request is in compliance with the relevant scheduled Agreement,’; and (iii) the Authority was required to consider any written submission made in compliance with the provisions of that section. I should add that, although it is clear that section 17(1) required the Authority to consider written representations made by a person who was the subject of a request for information when determining, for the purposes of section 7(1) of the Law, whether the request is in compliance with the relevant scheduled Agreement, it might be said that section 17 left open the question whether the person on whom a section 17(1) notice had been served was entitled to make representations in relation to the further question which the Authority would need to address if it did determine that the request was in compliance with the relevant scheduled Agreement: that is to say, the question whether the information which the Authority considered it necessary to obtain was required ‘for the proceedings in the territory of the requesting party’ (and so fell within section 8(4)(a) of the Law) or was not so required (and so fell within section 8(4)(b)).

6 Section 20(1) of the Law was in these terms:

‘20(1) Without prejudice to section 8(13), if so instructed by the Authority, the particulars of and all matters relating to a request shall be treated as confidential, and no person who is notified of a request, or is required to take any action, or produce any document or supply any information in response to or in relation to any matter to which a request relates, shall disclose the fact of the receipt of such request or any of the particulars required or documents produced or information supplied to any other person, except that person's attorney-at-law and such other persons as the Authority may authorize, for such period as he may be notified by the Authority.’

The effect of that provision was that both a person (if any) on whom a notice under section 17(1) of the Law and a person on whom a notice to produce under section 8(4)(b) had been served could be instructed by the Authority not to disclose to anyone else — including, in particular the relevant taxpayer — the fact that there had been a request or the fact that a notice to produce had been issued.

7 Before turning from the provisions in the Law — as they were before amendment in 2012 and...