Volaw Trust Summary - Shane Collery QC FN 32

July 3, 2019

Lord Reed delivered the ruling of the Judicial Committee, which also included Lords Kerr, Sumption, Carnwath, Hodge, Lady Arden and Lord Kitchin.

This was an appeal from the Royal Courts of Jersey and the Jersey Court of Appeal which considered the right or privilege against self-incrimination under Jersey customary law and ECHR, art 6.

Volaw Trust and Corporate Services Ltd (‘Volaw’) was one of six appellants. Volaw specialises in the formation and management of trusts and companies either in Jersey or other jurisdictions. The majority of the other appellants were companies registered in either BVI or Jersey. These companies were administered by Volaw and they were linked to a Norwegian national Berge Larsen.

BACKGROUND

The case involved 2 appeals:

An appeal from the issue of a number of TIEA (Tax Information Exchange Agreement) Notices to Volaw issued by the Office of the Comptroller of Taxes and the States of Jersey, seeking ‘documents and records’ from Volaw about Berge Larsen and the companies linked to him. These arose from a TIEA Request by Norway. There had been a TIEA in place between Jersey and Norway since 2008, which was reflected in the Taxation (Exchange of information with Third Countries) (Jersey) Regulations 2008 (‘the 2008 Regulations’).

The ‘1991 Law Notices Appeal’ which arose from Notice issued to Volaw by the Attorney General of Jersey under the Investigation of Fraud (Jersey) Law 1991, which had been triggered by a Letter of Request from Norway. The Notices set out that the Attorney General suspected offences involving serious or complex fraud and believed Volaw held relevant information about the companies. The notice again requested documents and information from Volaw.

Both the TIEA Notice and the 1991 Notice contained a provision that failure to respond without reasonable excuse was a criminal offence. Both the TIEA Notice and the Letter of Request stemmed from a Norwegian tax investigation into alleged tax evasion by Berge Larsen a Norwegian national who used trusts and the companies administered by Volaw.

The TIEA Requests were to obtain information to allow both the collection of taxes and the investigation or prosecution of criminal tax matters. Section 16(c) of the request made clear that the information would be obtainable under [Norwegian] laws and the normal course of its administrative practice in similar circumstances’.

Following representations by Volaw the Attorney General asked Norway if it could guarantee that the documents disclosed would not be used in criminal proceedings against Volaw or its employees, owners or board members. Norway refused to give that assurance.The parties agreed that at the time of the 1991 Notice the appellants were subjects of a criminal investigation in Norway and were ‘charged’ with a criminal offence for the purposes of Article 6 ECHR and that although the request was made to obtain evidence concerning Mr Larsen it was open to the Norwegian authorities to use the evidence for the purposes of a criminal investigation of any of the appellants and the information sought under the 1991 Notice would be potentially relevant to those investigations and potentially self-incriminating.

The appellants challenged the issue of the TIEA Notices using Judicial Review and later the 1991 Notices. That included a challenge to the lawfulness of the notices on the basis that they infringed the appellants’ right not to incriminate themselves under Jersey customary law and article 6 of the ECHR. The Commissioner in the Royal Court of Jersey (Michael Beloff QC) dismissed the application.

By the 2008 Regulations the TIEA Notice appeal lay to the Privy Council rather than the Court of Appeal. The appeal from the 1991 Notice was heard before the Court of Appeal of Jersey which agreed with the reasoning of the Commissioner that privilege against self-incrimination did not apply to pre-existing documents.

The Privy Council granted permission to appeal in both cases.

Subsequently Norway notified the Attorney General it no longer required the documents in the 1991 Law Notice. The Attorney General then notified the appellants that it was starting its own investigation into the case and maintained the 1991 Notice for that reason. It notified the Board that the person under investigation was Volaw.

The Board noted that in recent times International law had sought to respond to the increasing possibilities of tax evasion and that the OECD Conventions on Mutual Assistance in Tax Matters and the Agreement on Exchange of Information on Tax Matters and the adoption of bilateral treaties such as the Jersey/Norway one were a reflection of that. This was a significant matter when it came to came to consider the public interest in these notices.

The Board reviewed the terms of that agreement which was closely modelled on the OECD Agreement. It noted inter alia that Article 6(4) provided that the requested party did not need to provide information which, if it was in the jurisdiction of the requesting party, the competent authority would not be able to obtain under its laws or in the normal course of its administrative practice.

The Board reviewed the 1991 Law and noted that Article 2(7) preserves the privilege against self-incrimination in respect of answers in a compulsory interview but not in relation to the production of documents. That abrogation was a matter of agreement between the parties.Jersey had given effect to its obligations under bilateral tax information exchange agreements through the Taxation (Implementation) (Jersey) Law 2004.This led to the 2008 Regulations. Regulation 10A provided that those the subject of ITEA Notices did not have to provide information subject to LPP. Further that answers in a statement or deposition made by an individual in compliance to a Notice may not be used against an individual in criminal proceedings except those under regulation 15(2) which concerns offences of knowingly or recklessly giving false information or withholding information.

The first issue the Board considered was whether the TIEA Notices and the 1991 Law Notice were compatible with article 6 of the ECHR in so far as they require the production of pre-existing documents. The appellants argued that they were not compatible as the production of incriminating documents in the course of pre-trial investigations is in itself a violation of article 6, even in advance of, or in the absence of, any trial, whether in Jersey or elsewhere. The respondents argued that privilege has no application to pre-existing documents and is in any event not violated in the absence of trial proceedings or where those proceedings would take place in another jurisdiction.

The Board noted the Commissioner has considered the conflicting English authorities bearing on the application of privilege under article 6 to pre-existing documents, and noted that the Court of Appeal had rejected the proposition that the compulsory production of pre-existing documents violated the privilege against self-incrimination at common law or under the ECHR. Th Court of Appeal had focused on Saunders v UK (1996) 23 EHRR where (§69) it was noted the right not to incriminate oneself was primarily concerned with the right to remain silent and does not extend to the use in criminal proceedings of material obtained from the accused using compulsory powers ‘but which has an existence independent of the will of the suspect such as inter alia, documents pursuant to a warrant, breath, blood and urine samples and bodily tissue for the purposes of DNA testing.’ The Court of Appeal in the English cases considered documents to fall into that category and so to fall outside the privilege in article 6.

The Commissioner noted there were other English cases that supported a less categorical approach but preferred the preponderant view based on the decision in Saunders. The Board considered the article 6 and the various cases concerning the right not to incriminate oneself as considered by the European Court of Human Rights over time. It noted that in Ibrahim v UK (applications Nos 50541/08, 50571/08, 50573/08 and 40531/09 the primary purpose of article 6 was to guarantee a fair trial. However, it could be relevant during pre-trial proceedings ‘if and in so far as the fairness of the trial is likely to be seriously prejudiced by an initial failure to comply with them.’

The Board considered European Court cases on the matter and on the basis of the principles set out by the Grand Chamber in Ibrahim and in Jalloh v Germany (2006) 44EHRR 32 and O’Halloran and Francis v UK (2007) 46 EHRR 21 it considered the issue of the compatibility of the TIEA Notices and the 1991 Law Notice in light of four factors to which the European Court has directed attention.

What was the nature and degree of compulsion used to obtain the documents in question? – Volaw alone of the appellants was subject to compulsion in the notices. That compulsion involved a fine for non-compliance. The 2008 Regulations also provided that if Volaw committed an offence under the regulations then its officers might also be liable if they consented to or connived in the commission (Reg 16). The Board’s view however, was that none of the officers were compelled by the notices as they (a) were not addressed to them and (b) the documents were not their documents, not in their possession and they were not compelled to participate in Volaw’s production of them which could be delegated to staff. This level of compulsion was not of the order identified by the European Court in paragraph 267 of Ibrahim. In particular the only situation mentioned there concerned the obtaining of real evidence which involved “Physical or psychological pressure, often in the form of treatment which breaches article 3”. These notices were not of that order.

What was the weight of the public interest in the investigation and punishment of the offences at issue? The Board noted the weight of public interest in international co-operation in the investigation of possible tax avoidance and evasion cannot be doubted. It has particular weight in global financial centres like Jersey. The present case was an illustration of the circumstances that have led to bilateral tax treaties. Only by the recovery of documents from financial service firms such as Volaw can an effective investigation be carried out. The 1991 Notice expressly stated it was to investigate ‘a suspected offence involving serious or complex fraud. There was substantial public interest in the investigation of offences of that nature.

In addition, Volaw was a licensed provider of financial services and there was a substantial public interest in maintaining the integrity of such licensed providers and it was not unreasonable that they should be expected to co-operate with investigations involving their clients. These public interest factors do not justify depriving defendants of a fair trial but they may be strong justification for requiring the provision of information and documents during pre-trial investigations. Whether the documents can be used in a subsequent trial is a separate question.

What use was to be made of the documents and what safeguards were there in the procedure? Here nothing has yet been obtained so it was impossible to predict what use, if any, may be made of them. If they were to be used in a trial against Volaw it would be open to Volow to object to the admission of the evidence on the basis it had been obtained using compulsory powers and the use would violate the privilege against self-incrimination. Norway had signed the ECHR and there was no reason why the Courts in Jersey should seek to anticipate what may occur in Norway following production of the documents. The same is true of the use of the material in Jersey pursuant to the 1991 Law Notice.

As to the question whether the right not to incriminate oneself can apply in relation to pre-trial investigations in one jurisdiction where any trial would take place in another., the Board doubted whether a categorical answer was possible. It may depend on whether the applicant risks suffering a flagrant denial of justice in the requesting country. This point has not been decided by the European Court. Here it did not apply as both Norway and Jersey had signed the ECHR and it cannot be said that the fairness of any trial was likely to be seriously prejudiced by the production of documents pre-trial.

In any trial dishonest intent would have to be proved and the notices called for no admission of liability. The risk of the Notices resulting in unreliable admissions of guilt is negligible.

The Board consequently saw no reason to find at this stage, which had not progressed beyond service of the notices as part an investigation into possible offences, that the requirements of article 6 will not be met re any proceedings brought against the appellants in Jersey or Norway. The notices themselves do not deprive the appellants of their right to a fair trial.

The Board considered the separate appeal point whether Jersey customary law if it applied privilege to the production of pre-existing documents was abrogated in relation to the TIEA notices as it was impliedly in relation to the 1991 Law Notices. The Board noted that there was no doubt under English law privilege in the past has been extended to the production of documents at the pre-trial stage where it would tend to expose the person producing them to criminal sanction ( e.g. Rio Tinto Zinc v Westinghouse Electric Corpn [1978] AC547). In Brannigan v Davison [1997] AC 238 the Board had held in an appeal from New Zealand that the common law privilege has no application where the relevant criminal sanctions arise under a foreign law. Whilst not being bound by a decision from another jurisdiction the Board saw no reason to question the decision in Brannigan or its reasoning. On the assumption that the privilege under Jersey Customary law does extend to pre-existing documents it does not apply where the risk of prosecution arises under the law of another country.

The Board rejected arguments that an opportunity to make representations before a notice was issued was necessary to ensure compatibility with the privilege against self- incrimination. That argument was premised on the assumption the privilege was applicable and that has been rejected.