Ms Jennifer Webster v The Commissioners for HM Revenue & Customs

Hearing dates: 12 th & 13 th February 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on 8 March 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

THE HONOURABLE Mrs Justice Collins Rice

Introduction

The Claimant, Ms Webster, was born and raised in the USA. She has been resident in the UK since 2000, becoming a British citizen in 2010. She renounced US citizenship in 2019 for reasons she says are connected to the subject matter of this claim.

Her claim complains about the transfer of some of her UK banking/investment data, between 2016 and 2020, from the Defendants (‘HMRC’) to the US tax authorities as part of a bulk data transfer arrangement. She says this is in breach of her legal rights as a data subject.

The precise nature of her claim, and the procedural consequences accordingly, are now put acutely in issue by an application by the Claimant to dispose of some of HMRC's defence. That application itself has some unusual litigation history, relating to the fact that this litigation has so far been financed, on the Claimant's side, by a funder who is said to be doing so on condition its identity remains undisclosed to the parties and the court.

Legal context

(a) The UK/US tax information regime

The Foreign Account Tax Compliance Act (‘FATCA’) is a piece of US legislation of 2010, aimed at combating tax evasion by US citizens holding bank or investment accounts in other countries. It puts duties on financial institutions outside the US to provide the US tax authorities with regular information about the accounts of US citizens, subject to heavy financial penalties for non-compliance. Some overseas financial institutions may be reluctant to accept US citizen investors because of this regulatory overhead; so some US citizens resident abroad may renounce their citizenship to make it easier to invest locally.

The UK and the US have an intergovernmental agreement (treaty) in place, the broad effect of which includes systematising FATCA compliance by UK banks and other financial institutions, and thereby relieving them of the risk of individual penalties. It requires the UK bodies to report the necessary information about US citizens' accounts to HMRC. HMRC then passes it to the US tax authorities on an annual automatic, aggregate basis, pursuant also to existing double-taxation treaties. And the US tax authorities pass back information on US citizens resident in the UK which is held by them. Similar bilateral treaties exist between the US and the larger economy nations within the EU.

The UK/US intergovernmental agreement is given domestic effect in this country by an Order in Council (the Double Taxation Relief (Taxes on Income) (The United States of America) Order 2002). That has the effect of placing statutory legal duties on HMRC, met by the annual bulk transfer of information about US citizens' UK banking and investment accounts to the US tax authorities. The annual information about US citizens the banks have to pass to HMRC, and HMRC has to pass to the US tax authorities, are: (a) name, (b) address, (c) US tax reference, (d) account number, (e) name of financial institution, (f) account balance and (g) any interest accrued.

(b) Data protection law

Successive data protection regimes applied in the UK in the period of which the Claimant complains. The Data Protection Act 1998 governed the period up to 25 ^th May 2018, and the Data Protection Act 2018 (and the General Data Protection Regulation) thereafter. Each is underpinned by EU law (including, post-Brexit, retained EU law). That EU law is in turn underpinned by the privacy rights derived from Article 8 of the ECHR.

Both regimes contain a set of statutory data protection principles, governing the processing of personal data. Those principles, among other things, require personal data to be processed fairly and lawfully; not to be processed in ways incompatible with the purposes for which they were obtained; and to be adequate, relevant and not excessive in relation to the purposes for which they are processed. Both, in particular, prohibit the transfer of personal data to foreign countries unless those countries ensure an ‘ adequate’ level of protection for the rights and freedoms of data subjects in general, or there are specified safeguards in place for the particular transfer.

Data subjects are given a number of specific statutory rights. In particular, they have a right, if they have suffered any damage or distress by reason of a breach by a data controller of its duties under data protection law, to compensation.

(c) Civil procedure

(i) Judicial Review

Section 31 of the Senior Courts Act 1981 provides as follows:

Application for judicial review

(1) An application to the High Court for one or more of the following forms of relief, namely—

(a) a mandatory, prohibiting or quashing order;

(b) a declaration or injunction under subsection (2); or

(c) an injunction under section 30 restraining a person not entitled to do so from acting in an office to which that section applies,

shall be made in accordance with rules of court by a procedure to be known as an application for judicial review.

(2) A declaration may be made or an injunction granted under this subsection in any case where an application for judicial review, seeking that relief, has been made and the High Court considers that, having regard to—

(a) the nature of the matters in respect of which relief may be granted by mandatory, prohibiting or quashing orders;

(b) the nature of the persons and bodies against whom relief may be granted by such orders; and

(c) all the circumstances of the case,

it would be just and convenient for the declaration to be made or the injunction to be granted, as the case may be.

…

Applications for judicial review are governed by Part 54 of the Civil Procedure Rules. By CPR 54.1:

(1) This Section of this Part contains rules about judicial review.

(2) In this Section –

(a) a ‘claim for judicial review’ means a claim to review the lawfulness of –

(i) an enactment; or

(ii) a decision, action or failure to act in relation to the exercise of a public function.

Part 54 provides that applications for JR are to be filed ‘ (a) promptly; and (b) in any event not later than 3 months after the grounds to make the claim first arose’ ( CPR 54.5(1)). JR proceedings must be commenced by way of the issue of a claim form in the Administrative Court, and by way of an application for permission. The permission stage is a distinctive feature of JR procedure. In considering whether to grant permission for JR, the authorities enjoin the Administrative Court to hold in mind that JR is a remedy of last resort. If there is another route by which the decision can be challenged, which provides an adequate remedy for the claimant, that alternative remedy should generally be used before applying for judicial review. Examples of alternative remedies include internal complaints procedures, review mechanisms, regulatory decisions and appeals (statutory or non-statutory). If the Court finds that the claimant has (or had) an adequate alternative remedy, it will generally refuse permission to apply for judicial review.

By CPR 54.3(2), ‘ a claim for judicial review may include a claim for damages, restitution or the recovery of a sum due but may not seek such a remedy alone’.

(ii) Media and communications claims

Media and communications claims are governed by Part 53 of the Civil Procedure Rules. CPR 53.1 provides as follows:

…

(2) A “media and communications claim” means a claim which—

(a) satisfies the requirements of paragraph ( 3) or (4); and

(b) has been issued in or transferred into the Media and Communications List.

(3) A High Court claim must be issued in the Media and Communications List if it is or includes a claim for defamation, or is or includes—

(a) a claim for misuse of private information;

(b) a claim in data protection law; or

(c) a claim for harassment by publication.

…

(iii) Transfers of claims within the High Court

CPR 30.5 provides as follows:

Transfer between Divisions and to and from a specialist list

(1) The High Court may order proceedings in any Division of the High Court to be transferred to another Division.

(2) A judge dealing with claims in a specialist list may order proceedings to be transferred to or from that list.

(3) An application for the transfer of proceedings to or from a specialist list must be made to a judge dealing with claims in that list.

…

Practice Direction 54A provides, at paragraph 13.1, that in relation to this power to transfer proceedings between Divisions of the High Court, and to and from a specialist list, a court will consider whether a claim ‘ raises issues of public law to which Part 54 should apply’ in deciding whether a claim is suitable for transfer to the Administrative Court.

Litigation history

(a) Pre-action correspondence

On 11 ^th November 2019, the Claimant sent HMRC a letter headed ‘ Pre-Action letter in respect of proposed claim for Judicial Review – Automatic Exchange of Information of Financial Accounts under FATCA’, and opening with ‘ Please treat this letter as a pre-action letter under the Judicial Review Pre-Action Protocol’.

It set out five...