Walsh v National Irish Bank

• Judge: McKechnie J
• Judgment Date: 04 May 2007
• Court: High Court

HEADNOTE

High Court – 4 May 2007

Background:

1. In the Revenue Commissioners there is a branch known as the Investigations and Prosecution Division and within that, a section described as the Offshore Assets Group was established in 2001. The essential purpose of this group was to identify, and thereafter to deal with Irish residents, who might have sought to evade their tax liability by the use of offshore accounts. Mr Paul Walsh, the applicant in this Notice of Motion, is a Principal Officer with the Revenue Commissioners and is attached to this Offshore Assets Group. As an Authorised Officer for the purposes of the statutory provisions hereinafter mentioned and having duly obtained the consent in writing of a Commissioner, the said Mr Walsh caused the within application to issue on the 24th February 2006.

2. The respondent is the National Irish Bank Limited, which, as a licensed Banker, is authorised to conduct business in this State. In 1991 it opened a Branch in the Isle of Man and provided inter alia deposit facilities until December 2002, when it surrendered its banking licence to the Isle of Man authorities. The remaining deposits at that time were closed, either by way of transfer to other banks or by cheque to the relevant customer. It also has a sister bank, Northern Bank Limited which is the biggest retail bank in Northern Ireland. At one time Northern Bank (IOM) Limited, which incidentally operated the respondent’s branch in that jurisdiction under a service agreement, was also an associate of the respondent company. Both National Irish Bank and Northern Bank Limited were acquired by the Danish Banking group, Danske, in March 2005. Today they remain wholly owned subsidiaries of that group.

3. As part of its ongoing investigations into the identification of all Irish residents, who might have used offshore accounts for the purposes of tax evasion, the Chairman of the Revenue Commissioners held a series of meetings with various financial institutions in December 2003. Mr Frank Daly requested each of these institutions, through their Chief Executive Officers, to fully co-operate with the formal investigation which was then scheduled to commence at the beginning of April 2004. In the intervening period provision was made for any taxpayer to make a voluntary disclosure of ‘default liability’ relative to such offshore accounts. Each of the institutions in question, including the respondent bank, agreed to offer such co-operation as requested.

4. By reason of certain information which had been received by the Commissioners, the Offshore Asset Group came to the view that in furtherance of this investigation, the Revenue should use the powers contained in s 908 of the Taxes Consolidation Act 1997 as substituted by s 207 (i) of the Finance Act 1999. One of the banks in respect of which it sought to invoke these statutory provisions, was the respondent. As a result, the present application was commenced by way of a Notice of Motion dated the 24th February 2006.

5. In that Motion, Mr Walsh who ultimately of course is acting on behalf of the Revenue Commissioners, seeks an order from this court directing the respondent to furnish the information, documentation and particulars set forth in an Appendix to his grounding affidavit sworn on the 24th February 2006. That Appendix has three separate paragraphs, namely (A), (B) and (C). The first two are addressed respectively to Northern Bank Limited and Northern Bank (IOM) Limited. Having had no objection to supplying the information requested in these paragraphs, the President of this Court by order dated the 27th March 2006, directed the respondent to so do. That order, which was made with the consent of the bank, has not been challenged by any third party and accordingly remains operative to this day.

Information Requested:

6. The respondent bank however does have an objection to furnishing what has been requested at paragraph (C) of this Appendix. That particular request seeks an order “…that…in relation to persons holding deposits with the Isle of Man branch of National Irish Bank, the respondent do make available for inspection by the applicant, from books, records or documents maintained by the respondent or from books, records or documents to which the respondent has access, the following information:

(C) A schedule, whether in electronic or paper form, of all deposit holders with an address in the State having accounts with the Isle of Man branch of National Irish Bank where the balance on the account exceeded £5,000 or €6,350 at any time setting out:

• (1) The name and address of the account holder,
• (2) The date the account was opened and the amount of the opening balance,
• (3) The maximum balance on the account over the life of the account, and
• (4) If applicable the date of closure of the account.”

A time schedule for the supply of this information is then set forth.

In essence it is claimed by National Irish Bank that this Court has no jurisdiction to make the order as sought. It makes this submission on the basis that the target of the order relates to a branch of the respondent bank which was then located in the Isle of Man and not to a branch which was or is resident in this jurisdiction.

Section 908:

7. Section 908 of the Taxes Consolidation Act 1997, as substituted by s 207 (i) of the Finance Act 1999 (hereinafter referred to as s 908 or s 908 of the 1997 Act) reads as follows:-

“908 – (1) In this section –

‘judge’ means a judge of the High Court,

‘a taxpayer’ means any person including -

• (a) a person whose identity is not known to the authorised officer, and a group or class of persons whose individual identities are not so known, and
• (b) …

(2) An authorised officer may, …make an application to a judge for an order requiring a financial institution, to do either or both of the following, namely –

• (a) to make available for inspection by the authorised officer, such books, records or other documents as are in the financial institution’s power, possession or procurement as contain, or may (in the authorised officer’s opinion formed on reasonable ground) contain information relevant to a liability in relation to a taxpayer,
• (b) to furnish to the authorised officer such information, explanations and particulars as the authorised officer may reasonably require, being information, explanations and particulars that are relevant to any such liability,

and which are specified in the application.

(3) An authorised officer shall not make application under subsection (2) without the consent in writing of a Revenue Commissioner, and without being satisfied –

• (a) that there are reasonable grounds for suspecting that the taxpayer, or, where the taxpayer is a group or class of persons, all or any one of those persons, may have failed or may fail to comply with any provision of the Acts,
• (b) that any such failure is likely to have led or to lead to serious prejudice to the proper assessment or collection of tax (having regard to the amount of a liability in relation to the taxpayer, or where the taxpayer is a group or class of persons, the amount of a liability in relation to all or any one of them, that arises or might arise from such failure), and
• (c) that the information –
• is relevant to the proper assessment or collection of tax.

(4) …

(5) Where the judge, to whom an application is made under subsection (2), is satisfied that there are reasonable grounds for the application being made, the judge may, subject to such conditions as he or she may consider proper and specify in the order, make an order requiring the financial institution –

• (a) to make available for inspection by the authorised officer, such books, records or other documents, and
• (b) to furnish to the authorised officer such information, explanations and particulars,

as may be specified in the order.

(6)…

(7)…

(8)…

(9)…”

8. On the evidence laid before this Court, I am satisfied that the various conditions or requirements specified in sub-s (3) of s 908, have been satisfied in this case. In particular there is evidence confirming, that the applicant, as an Authorised Officer, has received the written consent of a Revenue Commissioner to make this application; that there are reasonable grounds for suspecting that a taxpayer, (as so defined), may have failed or may fail to comply with a provision of the Taxes Consolidation Act, as amended; that such failure is likely to have had or may lead to serious prejudice to the proper assessment or collection of tax and that (subject to the core point in the case) the information sought is likely to be contained in the books, records and other documents the subject matter of this application.

In fact no issue has been taken on the Revenue’s ability to satisfy the court with regard to these matters. Instead the point of objection is more fundamental and is jurisdictional based.

Evidence of Isle of Man Law:

9. Before outlining the submissions made on this application, there has been an exchange of correspondence between the parties which should be referred to. The first letter dated the 7th November 2005, is from Messrs Matheson Ormsby and Prentice, sent on behalf of the respondent bank to the Revenue Commissioners. Attached to this, was a Letter of Advices, received from a firm of Advocates, Solicitors and Attorneys based in the Isle of Man. This letter offered an opinion on Manx Law relative to the issues in this case. The Revenue responded on the 7th February 2006.

10. Messrs Mann and Partners, in their letter of 2nd November 2005, advised as follows:-

(1) Every bank owes an obligation of confidentiality to its customers – see Tournier v National Provincial and Union Bank of England [1924] 1 KB 461. That obligation however is not absolute and may be derogated from in the following circumstances:-

• “(a) where disclosure is under compulsion of law;
• (b) where there is a duty to the public to disclose;
• (c) where the interests of the bank require...