Bowview Overseas Ltd v Aleman, Cordero, Galindo & Lee Trust (BVI) Ltd
| Jurisdiction | British Virgin Islands |
| Judge | ‘Ellis J’ |
| Judgment Date | 27 February 2020 |
| Judgment citation (vLex) | [2020] ECSC J0227-1 |
| Docket Number | Claim No. BVIHCV 2017/0156 |
| Court | High Court (British Virgin Islands) |
| Date | 27 February 2020 |
EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
Claim No. BVIHCV 2017/0156
In the Matter of Section 9 of the Mutual Legal Assistance (Tax Matters) Act, 2003
And in the Matter of Section 100 of the Business Companies Act, 2004
And in the Matter of Bowview Overseas Limited and Navigator Finance Limited
and
Mr. Jonathan Addo and Mr. Christopher Pease, Counsel for the Claimants
Mr. Gerard Clarke and Mr. Gurprit Mattu, Counsel for the Defendant
Mrs. Kaidia Edwards-Alister, Counsel for the First Interested Party
Mr. Stephen Grayson and Ms. Dian D. Fahie, Counsel for Second and Third Interested Parties
On 2 nd March 2017 the International Tax Authority (“ITA”) issued a notice to produce information, which required the First Claimant to produce copies of documents specified in a schedule to the notice. The schedule indicated that the person or entity of interest was the First Claimant, and listed categories of documents that the First Claimant was required to provide to the ITA within ten working days. On 9 th March 2017 the ITA also issued a notice to produce information, which was addressed to the Second Claimant and required the Second Claimant to produce similar, albeit slightly expanded, categories of documents to those the First Claimant was asked to provide to the ITA.
The Notices explained that section 5(1) of the Mutual Legal Assistance (Tax Matters) Act 1 (“MLA”) provides that the ITA may, “ for the purpose of complying with a request, by notice in writing, require a person or entity whether acting in an agency or fiduciary capacity, including nominee or trustee, to provide such information as may be specified in the notice, provided that the person or entity is reasonably believed to be in the possession or control of the information to which the notice relates” (emphasis added). The notices indicated that the Claimants were reasonably believed to be in the possession or control of the information being requested.
The notices also pointed out that, pursuant to section 5(6) of the MLA, “a person who, without lawful or reasonable excuse, fails to comply with a notice issued under section 5(1) commits an offence and is liable on summary conviction or conviction on indictment to a fine or imprisonment”.
Critically, the notices both referenced section 9 of the MLA and stated as follows:
“The particulars of, and all matters relating to this notice, including any attachments, are to be treated as confidential in accordance with section 9 of the Act. You may not disclose the fact of the receipt of this notice, or any of the particulars required or documents produced or information supplied, to any other person, except your Attorney without the express written consent of the International Tax Authority, Virgin Islands. Your Attorney is also bound by section 9 of the Act.”
The Defendant is the registered agent for the Claimants and its office serves as the Claimants' registered office. Consequently, when the notices were sent to the Claimants they were also sent to the offices of the Defendant. According to the affidavit of Ayana Liburd the notices were received by the Defendant in sealed envelopes, which the Defendant did not open. Instead, the Defendant forwarded the sealed envelopes to the ‘client of record’ (i.e. the nominated point of contract) for the Claimants.
The Claimants subsequently contacted the Defendant and requested that the Defendant send correspondence to the ITA on their behalf, including documents which were intended to comply with the notices. The Defendant sent the documentation relating to the Second Claimants but did not send the documentation relating to the First Claimant.
After the Claimants had instructed the Defendant to send documentation to the ITA, they subsequently came to the view that the notices were invalid because they did not provide the Claimants with sufficient information regarding the nature and purpose of the request giving rise to the notices. In light of this, the Claimants sought to ascertain precisely what information had been provided to the ITA or to any other tax authorities by the Defendant in its capacity as registered agent for each of the Claimants (“the Requested Material”).
The Defendant has refused to provide the Requested Material to the Claimants. In refusing to provide the same, the Defendant asserted that requests from the ITA, or any regulatory authority, generally contain a statutory mandate to a recipient not to disclose any matters contained within it.
By letter sent on behalf of the Claimants to the Defendant on 8 th June 2017, the Claimants advised the Defendant that it is obliged to comply with their requests given that the Defendant is the registered agent of the Claimants and owes them fiduciary duties.
The Claimants contend that any stipulation within a notice issued by the ITA, or any other regulatory authorities, that the notice must be treated confidentially, would not serve to prevent a registered agent from providing their principal with the information regarding the request in circumstances where the information requested belongs to the principal and/or where the registered agent is asked to produce such information in its capacity as agent for the principal. They further contended that any confidentially requirements imposed on registered agents by the terms of a notice issued by the ITA or another regulatory authority cannot serve to prevent a registered agent from notifying their principal of the notice or in how they responded to it on their principal's behalf.
The Claimants further contend that where a principal is not made aware of the terms of any notice affecting it, it would be deprived of the opportunity to verify its validity and, where necessary, to refuse to provide the information requested if the notice is deemed to be invalid. Given the confidential and highly sensitive nature of the information that is commonly requested under such notices, the Claimants contend that it is critical that a principal be afforded an opportunity to challenge a notice. Moreover, the Claimants contend that their directors are entitled to the material requested in accordance with their rights under section 100 of the BVI Business Companies Act 2004 (“the BCA”) which provides them with a right to inspect and take copies of all documents and records of the Claimants.
In the claim herein, the Claimants seek an order compelling the Defendant to disclose to the Claimants all information and documentation that the Defendant has provided to the ITA and/or any other regulatory authority, in its capacity as registered agent for the Claimants including but not limited to any information and documentation produced to the ITA pursuant to the notices. In the alternative, the Claimants seek an order permitting them to issue a witness summons on a representative of the Defendant.
The evidence discloses that since the commencement of the proceedings, the Claimants have obtained a copy of the books and records that are held by the Defendant. The books and records were produced pursuant to a request being made under section 100 of the BCA. However, the Claimants contend that the documentation provided does not confirm whether or not the Defendant has provided any further information to the ITA on behalf of the Claimants, other than that which the Claimants instructed the Defendant to provide. They therefore maintain their claims under section 100 of the BCA.
It follows that the Court must first consider whether section 100 of the BCA has any application on the facts of this case.
The Claimants seek the disclosure of the Requested Material as part of the documents and records of the Claimant companies, which their directors are entitled to inspect under section 100 of the BCA. That section provides as follows:
100. Inspection of record
1) A director of a company is entitled, on giving reasonable notice, to inspect the documents and records of the company:
a) in written form;
b) without charge; and
c) at a reasonable time specified by the director;
and to make copies of or take extracts from the documents and records.
2) Subject to subsection (3), a member of a company is entitled, on giving written notice to the company, to inspect:
a) The memorandum and articles;
b) The register of members;
c) The register of directors; and
d) Minutes of meetings and resolutions of members and of those classes of members of which he is a member;
and to make copies of or take extracts from the documents and records.
3) Subject to the memorandum and articles, the directors may, if they are satisfied that it would be contrary to the company's interests to allow a member to inspect any document, or part of a document, specified in subsection (2) (b), (c) or (d), refuse to permit the member to inspect the document or limit the inspection of the document, including limiting the making of copies or the taking of extracts from the records.
4) The directors shall, as soon as reasonably practicable, notify a member of any exercise of their powers under subsection (3).
5) Where a company fails or refuses to permit a member to inspect a document or permits a member to inspect a document subject to limitations, that member may apply to the Court for an order that he should be permitted to inspect the document or inspect the document without limitation.
6) On an application under subsection (5), the...
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