Skatteforvaltningen (The Danish Customs and Tax Administration) v Solo Capital Partners LLP (in Special Administration) and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Bryan |
| Judgment Date | 18 October 2019 |
| Neutral Citation | [2019] EWHC 2807 (Comm) |
| Date | 18 October 2019 |
| Docket Number | Case No: CL-2018-000297, CL-2018-000404, CL-2017-000721 AND CL-2018-000211 |
| Court | Queen's Bench Division (Commercial Court) |
[2019] EWHC 2807 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
The Honourable Mr Justice Bryan
Case No: CL-2018-000297, CL-2018-000404, CL-2017-000721 AND CL-2018-000211
Michael Fealy QC and Sam O'Leary (instructed by Pinsent Masons LLP) for the Claimant
Hearing date: 18 th October 2019
APPROVED JUDGMENT
INTRODUCTION
There are before me two applications made by Skatteforvaltningen (“SKAT”) which, in broad summary, seek to modify undertakings that SKAT previously gave in Norwich Pharmacal orders and in worldwide freezing orders.
BACKGROUND
SKAT, which is the equivalent of HMRC in Denmark, alleges that it has been the subject of a massive fraud, whereby it was wrongly induced to pay out the equivalent of some £1.5 billion to bank accounts in England, and in one case Luxembourg, of various English agents. In order to trace the payments made by SKAT pursuant to the fraud and in order to identify the wrongdoers, SKAT obtained Norwich Pharmacal orders (“the NPOs”) against various financial institutions.
Relying on the information obtained under the Norwich Pharmacal orders, SKAT then commenced proceedings and obtained worldwide freezing orders (“the WFOs”) against some of the defendants, which included obligations on the respondents to the WFOs to provide affidavits setting out information relating to their receipts from certain other respondents, and assets derived from such receipts, as well as asset disclosure in the normal way.
In obtaining the NPOs and the WFOs, SKAT gave standard undertakings that it would not use the documents and information obtained for any purpose other than these proceedings without the Court's permission.
In the applications before me today, SKAT is now seeking to be released in part from those undertakings so as to allow it to use the statements of case in these proceedings in certain related civil proceedings in other jurisdictions (“the relevant foreign civil proceedings”).
An important aspect of this application which needs to be borne in mind is that the statements of case are already available to any third party from the Court Office, and it is only by virtue of SKAT's undertakings that it is not able to use the statements of case in those related proceedings.
Further, there has been no application by anyone to seal the court file or prevent members of the public, or any third party, from obtaining copies of the pleadings. The evidence before me, in fact, is that the pleadings, and these proceedings, have been widely reported and not only have they been referred to in media reports but the statements of case have in fact been deployed by the defendants in foreign proceedings.
There are two categories of respondents. Firstly, the respondents to the NPO applications, such as Barclays and RBS. In addition ED&F Man Capital Markets Limited and Indigo Global Partners Limited are defendants to the main proceedings as well as respondents to the NPO proceedings (“the NPO respondents”). The NPO respondents have confirmed that they do not oppose the application in the NPO applications. And secondly, there are the respondents to the WFOs. They are the defendants to the main proceedings against whom SKAT has made serious allegations of dishonesty.
Following the making of these applications, there have been very extensive correspondence with various of the respondents and various points were taken, at least in terms of commenting upon the applications which are sought before me today. Ultimately, and having regard also to certain modifications to the relief that was being sought, none of the respondents are actively opposing the application. In fact, none of the respondents are represented, in terms of advocacy at least, before me today, although given the number of people in court I suspect that a note is being taken for at least some of the respondents.
PREVIOUS APPLICATIONS FOR RELIEF
This is not the first occasion on which relief has been sought from the undertaking. In fact, there have been three previous Orders permitting the use of information and/or documents obtained by SKAT as a result of the NPOs.
Firstly, an Order of Phillips J of 18 June permitting use in connection with applying for and obtaining Preliminary Attachment Orders in Germany and in Dubai, together with an order for the appointment in Dubai of a court officer or expert. Secondly, an Order of Cockerill J of 25 June permitting use for freezing and search orders in the DIFC and to bring substantive proceedings against two of the proposed defendants in the Dubai proceedings. Those proceedings were initiated because the NPO material showed that those potential defendants had received the proceeds of the fraud on SKAT. Thirdly, a further Order of Cockerill J of 12 October permitting SKAT to use a report by Deloitte which exhibited and had been prepared using documents and information obtained pursuant to the NPOs, and also the first affidavit of Jonathan Fortnam, which referred to and exhibited the Deloitte report, for the purpose of pursuing its claims in related proceedings it had commenced in the USA, Dubai, the DIFC and Malaysia.
Ultimately, I have to make a decision in relation to the relief that is sought today, based on the material that is before me today, and applying the applicable principles. I bear in mind, however, that what the applicants are doing, entirely properly, is an incremental approach, as more information becomes available, and also as they have to respond to material that is deployed by others in the foreign proceedings, and that includes the material which is openly available and can be used by those defendants or third parties, but at the moment the applicants, because of the undertaking, are prevented from using or deploying themselves.
On the present application I must exercise my discretion, applying the relevant principles, to the circumstances that have arisen in the present case. However, it is helpful to note the reasoning of the judges that have come before me, including that of Cockerill J. Her reasoning, which is summarised in Mr Fortnam's witness statement, was as follows.
Firstly, much of the material in question had come into the public domain by being read in advance of that hearing by her, which was primarily concerned with the WFOs. Secondly, some of that material had been deployed in Dubai. Thirdly, the application was not one which would cause prejudice to the respondents, and there was no actual opposition from the respondents, who were on notice to the application. Fourthly, there was a strong public interest in assisting SKAT in circumstances where there was potentially an extremely serious and enormous fraud on the Danish Revenue, such that the claims were seeking to provide redress essentially to the Danish taxpayer for the wrongs suffered and to trace the proceeds of fraud. Fifthly, it was therefore appropriate for the Court to give permission for SKAT to use the remainder of the material that had not been referred to in open court. Sixthly, that conclusion was supported, at least in the case of the USA, by the fact that it would have been possible for the courts there to make a request under The Hague Convention and, so far as Cockerill J could identify, such a request would meet the stringent requirements for such a letter to be acceded to in this jurisdiction. Seventhly, even if none of the material was in the public domain it would still be appropriate to grant the relief.
Of that reasoning, Mr Michael Fealy QC, for SKAT, relies in particular on two points. First, the strong public interest which he says obviously applies equally to the application before me today, and also that the application is not one which would cause prejudice to the respondents. Second, the fact that yet more of that material has come into the public domain and has been deployed by third parties in various jurisdictions.
THE LAW
Turning then to the applicable legal principles, these applications, as I foreshadowed, concern the release of undertakings given to the Court. Those undertakings gave the Court control of the documents and information obtained by SKAT “in support of the due administration of justice” ( Marlwood Commercial v Lozeny [2005] 1 WLR 104 at [56] per Lord Justice...
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