R v Grossman
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE SHAW,LORD JUSTICE OLIVER |
| Judgment Date | 04 March 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0304-1 |
| Docket Number | 81/0097 |
| Court | Court of Appeal (Civil Division) |
| Date | 04 March 1981 |
[1981] EWCA Civ J0304-1
The Master Of The Rolls
(Lord Denning)
Lord Justice Shaw
and
Lord Justice Oliver
81/0097
1981 No. 85
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(Mr. Justice Skinner)
Royal Courts of Justice.
MR. ANTHONY SCRIVENER, Q.C. and MR. M. JUMP (instructed by Messrs. Olivestone Hanson ft Peltz) appeared on behalf of the Appellants, the Savings & Investment Bank Ltd.
MR. W. DENNY, Q.C. and MR. R. RHODES and MR. D. STANTON (instructed by the Solicitor to the Inland Revenue) appeared on behalf of the Respondents, the Inland Revenue.
A man called Joseph Grossman was arrested on the 19th September, 1979. On his arrest there was found on him two bank paying-in books. They showed that he had been paying in money to an account of Barclays Bank at Douglas in the Isle of Man. It was a numbered account No. 50783064.
Joseph Grossman was taken before the magistrates sitting at Llantris and in the county of Mid-Glamorgan in Wales. He was charged with fraud on the Revenue. He was granted bail but absconded. On the 14th January, 1981 on arrival at London Airport he was re-arrested. He is now in custody awaiting trial. The Revenue authorities are preparing the case against him. In support of it they wish to inspect and take copies of some of the numbered accounts which are kept at Barclays Bank in the Isle of Man. The Isle of Man is still outside the jurisdiction of these courts.
The question is whether the courts of England and Wales can make an order (under section 7 of the Bankers' Books Evidence Act 1879) so as to require the disclosure of the accounts in the books of Barclays Bank in the Isle of Man.
Before I go into detail, I must describe the nature of the case against Joseph Grossman. It goes back to the days of the "lump". When contractors were engaged on building or other work, they used to engage the workmen as "labour-only subcontractors". In point of law the workmen were not servants but principals. They were paid full earnings without deduction of PAYE. They did not pay insurance stamps. They were not insured against accidents at work. Theoretically they were liable to pay tax on their earnings. In practice they never paid any tax. They were never on the site long enough for the Revenue to catch up with them.
In order to overcome this subterfuge, Parliament passed sections 68 to 71 of the Finance (No. 2) Act 1975. Under it the contractors were bound to deduct 35 per cent of the men's earnings and pay it over to the Revenue—so as to make up for the tax lost by the subterfuge.
But some contractors were allowed to avoid this 35 per cent. If they satisfied the Revenue authorities of various matters, they were granted exemption. One of those who was granted exemption was an English company called J.B.K. Construction Ltd. (J.B.K.). On the 17th November, 1977 it was granted an exemption certificate. But J.B.K. proved to be unworthy of it. It never made any tax returns or paid any tax. So in January 1979 the exemption certificate was cancelled. The Revenue asked for it back. But it was never returned.
The case against Joseph Grossman appears to be this: He is said to have got hold of some of the documents of J.B.K. He got hold of their invoice forms and their exemption certificate. He then fiddled the documents so as to interpose the name of J.B.K. between the contractors and their workmen. Instead of the contractors paying the men their earnings less the 35 per cent for the Revenue, the contractors paid the full amount of the men's earnings by cheques made out in favour of J.B.K. (without deducting the 35 per cent). That money was paid into the numbered account in the Isle of Man. It was drawn out afterwards and used so as to pay the men their earnings: but less only 6 per cent. Joseph Grossman seems to have taken the 6 per cent for himself. Seeing that the men's average weekly earnings came to as much as £40,000, this meant that Joseph Grossman took about £2,400 for himself. The Revenue took nothing.
Those charges are before the court in Wales. I do not say that the charges will be maintained. I have just shown the nature of them so as to show how the point arises. The charges against Joseph Grossman are put on three grounds. The first count is a charge concerning payment made on an invoice by J.B.K., nominally for labour supplied by J.B.K. That payment was put into the numbered account, and the money was collected there. The second count related to his use of the exemption certificate. The third count deals with J.B.K.'s payment to the workmen without making due deductions.
Although the Revenue have a good deal of evidence in support of those charges against Grossman, they desire to obtain what they describe as "confirmatory evidence" by getting the bank accounts into which these money were collected, and out of which they were paid.
I will describe the account at Barclays Bank in the Isle of Man. It is headed "Account Number 50783064, Barclays Bank Ltd., Victoria Street, Douglas, Isle of Man. Account Saving and Investment Bank limited"—(S.I.B.)
At once the question arises: What is Saving and Investment Bank Limited? It is a company registered under Manx law. It has no place of business in England and Wales. It is licensed to operate as a bank under the Manx banking laws. It collects cheques and pays them. It collects them through the medium of the branch of Barclays Bank in the Isle of Man using it as a clearing house. For instance, when a cheque was paid in in favour of J.B.K. for collection, the amount was passed by S.I.B. into Barclays Bank. Barclays collected the money, and it was credited to the account which the Savings and Investment Bank had with Barclays Bank. Then, when J.B.K. wanted to pay out money, they did it by giving a direction to S.I.B.: and the amount would be paid out of this account. Virtually S.I.B. ran the numbered account as though they were themselves a bank with their own customers. Barclays had no knowledge of the names of their customers.
The position now is that the Revenue authorities want disclosure of the Saving and Investment Bank's account with Barclays Bank at the Douglas, Isle of Man, Branch. They want the books relating to it. They feel that if they can get the books of account it will help them in their case in Wales against Joseph Grossman. They think that, by tracing the figures, they can marry the items up which were paid in for collection by J.B.K. and those which were paid out. That is the purpose of the inspection and discovery which is sought under the Bankers' Books Evidence Act.
In 1979 officers of the Revenue went to the Isle of Man. They sought an order under the Manx Bankers' Books Evidence Act 1935. They applied for an order to inspect and take copies of the books of the Isle of Man Branch of Barclays Bank. When that application came before the Deemster in the Isle of Man, he would have nothing of it. He refused to allow proceedings to be brought in the Isle of Man to facilitate court proceedings in Wales. The application did not come within the Isle of Man Bankers' Book Evidence Act at all, because that only applies to legal proceedings in the Isle of Man. To use this Act for proceedings to be held in Wales was quite out of the question. According to the newspapers, the Deemster gave a stern warning to the United Kingdom tax authorities. He said that no such application could be made in the Isle of Man.
There the matter rested. Nothing was done for a while because Joseph Grossman jumped his bail. He was re-arrested in January of this year, and was placed in custody. The Revenue authorities then decided that the best way of dealing with the matter was to apply to the English courts under the English Bankers' Books Evidence Act 1979—so as to facilitate the proceedings in Wales. Accordingly, they sought an order from the High Court of Justice in England addressed—not to Barclays Bank in the Isle of Man—but to Barclays Bank Ltd. at 54 Lombard Street, London. They went before Mr. Justice Skinner on the 12th February, 1981. They put an affidavit before him. It did not have to be served on anyone. According to section 7 of the Bankers' Books Evidence Act it can be done "with or without summoning the bank or any other party". After reading the affidavit, Mr. Justice Skinner made this order:
"Upon hearing Counsel for Her Majesty's Commissioners of Inland Revenue
And upon reading the Affidavit of John Robert Dodsworth filed the 12th. February 1981
IT IS ORDERED THAT Her Majesty's Commissioners of Inland Revenue or their servants be at liberty to inspect and take copies of all entries in the books of Barclays Bank Limited, Victoria Street, Douglas, Isle of Man relating to the account number 50783064 of the Savings and Investment Bank Limited so far as it relates to J.B.K. Constructions Limited, and of Barclays Bank Limited 60 union Street, Broadmeads, Bristol relating to the account of J.B.K. Constructions Limited, between 15th. May 1979 and 4th. October 1979"—directed, as I have said, to Barclays Bank Limited, 54 Lombard Street, London, E.C.3.
That application was made ex parte. It was served on Barclays Bank in London. They notified S.I.B. Then Barclays Bank in London considered what to do. They wrote a letter saying that they were taking a neutral stance: they would await the decision of the court. But S.I.B.—quite independently of Barclays Bank—sought to set the order aside. They said, "We are a customer of Barclays Bank in the Isle of Man. The Revenue are asking Barclays Bank to produce our account with them. It...
To continue reading
Request your trial
-
Bonalumi v Secretary of State for the Home Department
...Justice Glidewell was taken by the Registrar of Civil Appeals. It was pointed out by counsel that there was a decision of this court in Regina v. Grossman, [1981] 73 Criminal Appeal Reports, p.302, in which a court consisting of Lord Denning, Master of the Rolls, Lord Justice Shaw and Lord......
-
Mahme Trust v Lloyds TSB Bank Plc
...case of a bank, having overseas branches, falls to be dealt with differently. He placed reliance on the decision of the Court of Appeal in Re Grossman [1981] 73 CAR 302 and of Hoffmann J. in Mackinnon v Donaldson [1986] Ch. 482. In Re Grossman the Inland Revenue wished to obtain informatio......
-
Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation
...... 459D–F , 460A–B , E , 465D–F ). . Reg. v. Grossman ( 1981 ) 73 Cr.App.R. 302 , C.A. applied. . British South Africa Co. v. De Beers Consolidated Mines Ltd. [ 1910 ] 2 Ch. 502 , C.A. and Acrow (Automation) Ltd. v. Rex Chainbelt Inc. [ 1971 ] 1 W.L.R. 1676 , C.A. distinguished. . Bankers Trust Co. v. Shapira [ 1980 ] 1 ......
-
Re Bankamerica Trust & Banking Corporation (Cayman) Ltd
...J. applied. (3) Norway”s (State of) Application, In re (No. 2), [1990] 1 A.C. 723; [1989] 1 All E.R. 745. (4) R. v. GrossmanUNK(1981), 73 Cr. App. R. 302; 1981–83 MLR 20, dicta of Lord Denning, M.R. applied. (5) Tournier v. National Provncl. & Union Bank of England Ltd., [1924] 1 K.B. 461; ......
-
A critical examination of how contract law is used by financial institutions operating in multiple jurisdictions.
...under the Act to a foreign country, under certain conditions. (67) [1989] 1 QB 728, 770-1 (Staughton J). (68) See, eg, R v Grossman (1981) 73 Cr App R 302, 309 10 (Lord Denning, Shaw LJ and Oliver MR); X AG v A Bank [1983] 2 All ER 464, 479 (Leggatt J); FDC Co Ltd v Chase Manhattan Bank NA ......