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Jersey Unreported Judgments |
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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> Buckley v Minister for Treasury and Resources and Ors [2024] JCA 288 (07 November 2024) URL: http://www.bailii.org/je/cases/UR/2024/2024_288.html Cite as: [2024] JCA 288 |
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Before : |
Sir Timothy Le Cocq, Bailiff, Jonathan Crow CVO KC JA Sir William Bailhache JA Rt Hon James Wolffe KC JA Paul Matthews JA |
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Between |
Lewis Buckley |
Appellant |
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And |
(1) Minister for Treasury and Resources (2) Comptroller of Revenue (3) Judicial Greffier |
Respondents |
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And |
HM Attorney General |
Convened Party |
Advocate H. Brown for the Appellant.
HM Attorney General and Advocate S. A. Meiklejohn for the Respondents and the Convened Party.
judgment
BAILHACHE & WOLFFE JJA (Le Cocq, bailiff, Crow & Matthews JJA concurring):
1. This appeal raises an important issue as to whether or not Jersey legislation is susceptible to judicial review. For this reason, the appeal was heard at a special sitting of the Court comprising five judges, presided over by the Bailiff.
2. This is the judgment of the Court. We address the issues under the following heads:
A. Introduction
B. Relevant features of the Legislative Process
C. Taxes on Land Transactions
D. The Budget Law
E. The Directions
F. The Application for Leave
G. The Proceedings before the Commissioner
H. Time Bar
I. The test for leave to bring a judicial review
J. Grounds 1 and 2 - Are the Budget Law and the decision to make the Acte Opératoire susceptible to judicial review?
K. Grounds 3 and 4
L. Convention rights
3. In 2017, the Appellant entered into two contracts with the States of Jersey Development Company Limited ("the Development Company") to acquire shares in two companies known as Horizon (East) Limited and Horizon (West) Limited. The Development Company is owned by the Government of Jersey and has the purpose of developing the Waterfront at St Helier and regenerating government property. Ownership of the shares would give the Appellant a right to occupy two flats in a development known as the Horizon Development at the Waterfront. Neither flat was to be the Appellant's main residence. Completion of these transactions was envisaged in 2021, but for reasons for which the Appellant was not responsible did not take place until 16 January 2023. The transactions were subject to Land Transaction Tax ("LTT").
4. On 16 December 2022 the States Assembly approved the Finance (Budget 2023) (Jersey) Law 2023 ("the Budget Law"). This introduced a higher rate of LTT and Stamp Duty specific to the purchase of a dwelling acquired for a purpose other than as the purchaser's main residence. On the same date the States Assembly made an Act ("the Acte Opératoire") under Article 12 the Public Finances (Jersey) Law 2019 (the "2019 Law"), giving the Budget Law immediate effect. In terms of Article 65 of the Budget Law, the increased rates of LTT and Stamp Duty came into force on 1 January 2023, before the Budget Law had been sanctioned by order of His Majesty in Council or registered in the Royal Court.
5. If the two contracts into which the Appellant had entered in 2017 had completed before 1 January 2023, he would have been liable for LTT of £4,200. By reason of the new higher tax rate applicable to transactions such as these from 1 January 2023, when those transactions did complete on 16 January 2023, the Appellant's liability was £13,500.
6. As we shall explain further in this judgment, the Comptroller has a statutory power to reduce or remit LTT where in his opinion it is just to do so (and the Judicial Greffier has a like power in relation to Stamp Duty). In exercising these statutory powers, the Comptroller and the Judicial Greffier are obliged to have regard to Directions issued by the Minister for Treasury and Resources. The Minister issued two such directions, the Stamp Duty and Land Transaction Tax Direction 2023/01 and the Stamp Duty and Land Transaction Tax Direction 2023/02 (together "the Directions").
7. On 30 March 2023, the Appellant brought an application for leave to bring a claim for judicial review. In summary, he sought (in Grounds 1 and 2 of his application) to challenge the rate increases effected by the Budget Law itself and/or by the Acte Opératoire which brought the increase into force in advance of Royal Assent. He also sought (in Grounds 3 and 4 of his application) to challenge the terms of the Directions and applied for certain other orders directed against the three Respondents. We set out the Grounds of his application in section F of this judgment.
8. In a judgment handed down on 7 November 2023 the Commissioner (MJ Thompson) refused the Appellant leave to apply for judicial review on Grounds 1 and 2, and granted leave on a limited basis in relation to Grounds 3 and 4. By a further judgment handed down on 18 December 2023 the Commissioner refused leave to appeal his decision in relation to Grounds 1 and 2 but granted leave to appeal against the limits which he had placed on the scope of a judicial review in relation to Grounds 3 and 4. The Appellant renewed his application for leave to appeal before this Court. In a judgment handed down on 8 February 2024, Sir William Bailhache, sitting as a single judge of this Court, granted leave to appeal the Commissioner's decision in respect of all grounds on which at that time leave to appeal had been refused. As a result of this decision, along with the Commissioner's earlier grant of leave, the Appellant has permission to bring before this Court all of the issues on which he did not succeed at first instance.
9. For the reasons which we set out in this judgment we dismiss the appeal against the Commissioner's decision in relation to Grounds 1 and 2. So far as his decision in relation to Grounds 3 and 4 is concerned, we extend the grant of leave to bring a claim for judicial review to the extent of permitting the Appellant to contend: (i) that the application of the higher rate of LTT to the two transactions entered into by the Appellant would be incompatible with his Convention rights under Article 1 of the First Protocol ("A1P1") to the European Convention on Human Rights ("ECHR"); (ii) that the Comptroller was accordingly under a duty, by reason of the Human Rights (Jersey) Law 2000 (the "2000 Law"), to exercise his power to remit the LTT charged on those two transactions; and (iii) that the Minister acted incompatibly with Convention rights in not making specific provision in the Directions in relation to the retrospective application of the Budget Law. We otherwise dismiss the appeal against the Commissioner's decision in relation to Grounds 3 and 4.
10. We need to explain briefly, at this stage, the process by which Laws passed by the States Assembly, and specifically laws concerning taxation, become part of the Jersey statute book.
11. Article 2 of the Legislation (Jersey) Law 2021 ("the 2021 Law") provides:
12. The making of Laws under Article 2(1) of the 2021 Law thus involves the participation of three institutions - the States Assembly, the Sovereign in Council and the Royal Court. This provision was, as we shall explain further below, declaratory of the existing law and reflects longstanding features of Jersey's constitution.
13. Accordingly, it is ordinarily only when a Law has been registered in the Royal Court, following Royal sanction, that the Law becomes part of the statute law of Jersey. However, Article 2(2) of the 2021 Law provides for a taxation draft to be treated as having been made "as a Law" even though it has not yet received the sanction of the Sovereign in Council or been registered in the Royal Court. Article 2(2) refers back to Articles 11 and 12(1) of the 2019 Law which provide:
An "Act" declared by the States under Article 12(1) of the 2019 Law is described as an "Acte Opératoire". The procedure provided for in Article 12(1) recognises that the prudent management of public finances may require a change to tax law to be made in advance of the draft Law's confirmation by Order in Council and registration in the Royal Court - indeed, subject to any commencement provision in the draft Law itself, with immediate effect. There is nothing unusual in such a provision - as Matthews JA pointed out during the hearing of the appeal, analogous provision is made in the UK through the effect given by the Provisional Collection of Taxes Act 1968 to a Budget resolution of the House of Commons, and it has been part of the law of Jersey since well before that.
14. The Stamp Duties and Fees (Jersey) Law 1998 ("the 1998 Law") provides for the payment of Stamp Duty in respect of chargeable documents, which include contracts for the sale of immoveable property. The Taxation (Land Transactions) (Jersey) Law 2009 ("the 2009 Law") provides that LTT shall be charged and due inter alia on the transfer of any share, ownership of which, by virtue of the articles of association of the company, confers a right of occupation of land in Jersey.
15. The amount of Stamp Duty or LTT payable on the purchase of domestic properties is graduated according to the value of the property. The relevant rates of LTT under the 2009 Law on purchases of domestic properties (i.e. properties used wholly or mainly for the purposes of a private dwelling) are set out in Table B in Schedule 1 to the Law. The range is from 0.5% if the value of the transaction does not exceed £50,000 to, where the value of the transaction exceeds £6 million, £449,000 in respect of the first £6 million plus 11% for the excess over £6 million. In terms of Article 6 of the 2009 Law and paragraph 2 of the Schedule to the 2009 Law, as they applied at the time of the Appellant's purchases, the relevant value was the higher of the amount of the consideration payable under the transaction or the gross value of the land to which the transaction related. Paragraph 1 of the Schedule to the 2009 Law states that "gross value" in relation to land means its market value.
16. The 1998 Law and the 2009 Law both provide for reduction or remission of Stamp Duty or LTT. Article 6 of the 1998 Law provides:
The designated officer for these purposes is the Judicial Greffier.
17. Article 8 of the 2009 Law provides in similar terms:
18. Article 13 of the 2009 Law contains the following provision:
19. We observe, at this stage, that Article 6 of the 1998 Law and Article 8 of the 2009 Law confer powers, respectively, on the Judicial Greffier and the Comptroller. These are powers which rest with these two office-holders and which it is their responsibility to exercise as and when the occasion to do so arises. Each of them has the power to remit or reduce the amount of tax charged "in any case where it would, in his or her opinion, be just to do so". In exercising these powers, the Judicial Greffier and the Comptroller are required to "have regard to" any directions issued by the Minister under Article 13. As such the directions do not over-ride the discretion conferred on the Judicial Greffier and the Comptroller. Article 13 provides a useful mechanism enabling the Minister to give policy directions to the relevant office-holders. But it remains ultimately a decision for the Judicial Greffier and the Comptroller, having had regard to the directions, to decide whether the circumstances of any particular case are such that it would be just in that case to remit or reduce the tax which falls to be paid. The directions do not (and could not lawfully) fetter the generality of the power conferred on them to "remit or reduce" the amount of tax charged in any case where, in their opinion, "it would be just to do so" even if the case is not one which is envisaged in directions issued under Article 13.
20. The relevant provisions of the Budget Law had their genesis in a proposed amendment to the Government Plan 2022-25, which was lodged by the Corporate Services Scrutiny Panel of the States on 30 November 2021 - some four years after the Appellant had entered into the contracts to which we have referred above. The amendment proposed that:
21. The accompanying report contained the following explanation:
The phrase a "potential rate of 2%" referred to an increase of 2%. The reference to "Stamp Duty" also covered LTT payable on rights to occupy property acquired through the ownership of shares.
22. The rationale for the proposal was further explained as follows:
23. The States Assembly approved this proposed amendment in December 2021. The policy embodied in the amendment required to be given effect through legislation. Provisions to that effect were included in a draft Budget Law which was lodged for debate with the States Greffe on 31 October 2022 along with a draft Acte Opératoire. Parts 5 and 6 of the draft Budget Law contained provisions amending the 1998 Law and the 2009 Law by imposing a higher rate of Stamp Duty and LTT on the purchase of a dwelling which was not acquired for the purpose of being the transferee's main residence. For LTT this was to be achieved by inserting new provisions into the Schedule to the 2009 Law, which applied tax rates, depending on the value of the property, which were effectively 3% higher than would have been the case for the purchase of a dwelling which was being acquired for the purpose of being the transferee's main residence.
24. Paragraphs 10 to 12 and 14 of the accompanying report stated:
25. According to an affidavit filed by the Second Respondent in these proceedings, the draft Budget Law was lodged in accordance with the Standing Orders of the States, which require a minimum lodging period of six weeks prior to a draft Law being debated, so as to allow States Members to consider the draft in advance of debate and interested members of the public to lobby States Members. A draft of the proposal had previously been sent to key stakeholders in July 2022 and this had been followed by a round table event. Invitations to that event had been sent to members of the finance industry, estate agents, conveyancers and lawyers and some had attended.
26. The Budget Law was adopted by the States on 16 December 2022. It was sanctioned by order of His Majesty in Council on 15 February 2023 and registered in the Royal Court on 24 February 2024.
27. The Acte Opératoire, approved by the States Assembly on 16 December 2022, stated:
Article 65 of the Budget Law provided that the relevant provisions would come into force on 1 January 2023. The effect of the approval of the Acte Opératoire was accordingly that the relevant provisions came into force on that date, in advance of the Budget Law receiving the sanction of an Order of His Majesty in Council or its registration in the Royal Court.
28. The Directions have been produced to us in a single document, which is in the following terms.
"Ministerial Directions for Land Transaction Tax
About Ministerial Directions
Under Article 13 of the Taxation (Land Transactions) (Jersey) Law 2009, the Minister for Treasury and Resources may issue directions to both the Comptroller of Revenue and the Judicial Greffier as to the exercise of their respective discretions in relation to Land Transaction Tax and Stamp Duty.
The Comptroller and the Judicial Greffier will have regard to any directions when they consider if, and to what extent, they exercise this discretion.
Directions which have been applied by the Minister apply equally to Comptroller of Revenue and the Judicial Greffier unless otherwise stated.
Stamp Duty and Land Transaction Tax Direction 2023/01: Reducing the Higher Rate of Stamp Duty and Land Transaction Tax
The following direction is made by the Minister for Treasury and Resources to the Comptroller of Revenue and the Judicial Greffier using powers given to him under Article 13 of the Taxation (Land Transactions) (Jersey) Law 2009 and Article 6 of the Stamp Duties and Fees (Jersey) Law 1998. The Direction outlines the circumstances that may be considered by the Comptroller or Judicial Greffier in respect of reducing, in limited cases, the higher rate of Stamp Duty or LTT charged on the acquisition of a dwelling.
The 'higher rate' applies to a transaction described in Article 3(1)(a) or (b) of the Taxation (Land Transactions) (Jersey) Law 2009 or Schedule 1, 2 or 3 of the Stamp Duties and Fees (Jersey) Law 1998 which relates to land on which there is a dwelling that is acquired for a purpose other than use as the main residence of the person to whom the share or property is transferred. 'Main residence' means the property that is occupied as the person's main residence, whether or not it is in Jersey. However, it is recognised that in individual circumstances, the Comptroller or Judicial Greffier may consider it just to reduce the higher rate of Stamp Duty or LTT to the standard rate.
The Minister directs that in circumstances related to specific acquisitions of a dwelling by a family member where the dwelling is to be occupied as a main residence by another family member the Comptroller or Judicial Greffier should consider if it is just to reduce the higher rate of Stamp Duty or LTT to the standard rate in situations where it is demonstrable that the individual who shall occupy the property as their main residence:
· lacks capacity as per Article 4 of the Capacity and Self-Determination (Jersey) Law 2016
· is prone to substance abuse or compulsive gambling and the holding of the property in the family member's name is deemed to be a protective measure
· is doing so in order to escape an abusive or dangerous spouse or partner
· suffers from serious ill-health in a mental or physical capacity and the acquisition of the property is done so as to care for the individual and their wellbeing
· has been left without their place of residence following an accident or natural disaster
· has been left without their place of residence following the end of a marriage, civil partnership or relationship.
In general, this Direction aims to offer the potential of a reduction in the higher rate of Stamp Duty or LTT charged on the acquisition of a dwelling when the acquisition has as its aim the protection of the individual who shall be living in the property. This Direction is not intended to apply in normal situations when a family member purchases a property for another family member or when the property is purchased as an investment.
The Minister acknowledges that each situation is fact specific and that there may still be circumstances where the imposition of the full charge is inappropriate.
Stamp Duty and Land Transaction Tax Direction 2023/02: Application of the contract price to off-plan purchases
The following direction is made by the Minister for Treasury and Resources to the Comptroller of Revenue and the Judicial Greffier using powers given to him under Article 13 of the Taxation (Land Transactions) (Jersey) Law 2009 and Article 6 of the Stamp Duties and Fees (Jersey) Law 1998. The Direction outlines the circumstances that may be considered by the Comptroller or Judicial Greffier in respect of the value on which the rate of Stamp Duty or LTT charged on the acquisition of a dwelling where it has been purchased based on an off-plan agreement.
The value of a transaction for LTT or Stamp Duty purposes is the higher of the amount of the consideration payable under the transaction or the gross value of the land to which the transaction relates. Paragraph 1 of the Schedule to the LTT Law states that the gross value for these purposes is equal to market value.
The Minister recognises that, for a number of reasons outside the control of the parties to the transaction in question (including in recent times the delays to the construction of properties caused by the COVID-19 pandemic), the gross value of land in Jersey may have increased between the time of entering into a contract and the completion of that contract to an extent that could not have been anticipated by the buyer or seller at the time they entered into the transaction.
The Minister directs that where the conditions described below are met the Comptroller or Judicial Greffier should consider if it is just to proceed as if the 'market value' for the purposes of LTT Law and Stamp Duty Law was the consideration payable under the original transaction contract. The conditions are:
· the land subject to the transaction is or will be occupied for domestic purposes only
· the sale or purchase contract cannot be assigned by the buyer and includes clauses where a deposit payable by the buyer is forfeited, and/or liquidated damages are payable by the buyer in the event that the buyer does not complete the transaction
· the consideration under the transaction has been fixed at a specified amount which was equal to or above market value at the time the contract was entered into
· the contract was entered into on or after 1 January 2017.
The Minister acknowledges that each situation is fact specific and that there may still be circumstances where the market value at the time of completion is appropriate.
The Minister intends to bring law to the Assembly before 31 December 2023 with a view to addressing the underlying concerns, and at such time will seek to grandfather the treatment under this direction for contracts entered into before any law change."
29. On 21 March 2023, Philip Syvret wrote to the Minister, on behalf of a number of purchasers of properties in the Horizon Development (apparently including the Appellant), who were aggrieved by the manner in which the tax had been imposed. He advised that counsel had been instructed to prepare an application for judicial review of "the decision to implement the tax". On 23 March 2023 the Law Officers Department issued a substantive reply. Amongst other things, this stated that since the Budget Law had been passed on 16 December 2022, any application for judicial review would be out of time and that any such application would be opposed.
30. The application which is before us was filed on 30 March 2023. It was directed against: (i) the Minister for Treasury and Resources; (ii) the Comptroller of Revenue; and (iii) the Judicial Greffier. The decisions which the Appellant sought leave to challenge by way of judicial review were described as follows:
Broadly speaking, paragraphs 3.1 and 3.2 (described in these proceedings as "Grounds 1 and 2") sought to challenge the higher rate of LTT and Stamp Duty introduced by the Budget Law, given immediate effect by the Acte Opératoire and brought into force on 1 January 2023, whilst paragraphs 3.3 and 3.4 (described in these proceedings as "Grounds 3 and 4") sought to challenge the Directions and provided the context for seeking an order directed to all three Respondents forbidding them from enforcing the Budget Law in cases such as the Appellant's as well as directing the Minister to bring forward amendments addressing the alleged unfairness of the Budget Law.
31. The application set out the contentions upon which these challenges were advanced under four headings: "Substantive public law unfairness"; "Objectionable retrospectivity"; "Failure to engage in a fair process"; and "Human rights". The contentions were wide-ranging. They included the following:
(i) It was not open to the States Assembly to adopt the Budget Law on the basis that the charges would be applied before the Law had been sanctioned by His Majesty in Council and registered.
(ii) The tax charges were so substantively unfair that to enforce them would be an abuse of power. The Comptroller and the Judicial Greffier were accordingly compelled to exercise their discretion to relieve the tax charges.
(iii) The retrospective nature of the charges infringed the rule of law and frustrated the legitimate expectation of the Appellant and others in the same position as the Appellant that they would be able to complete their purchases on the basis that they had originally calculated.
(iv) Introducing the provisions without the inclusion of transitional provisions was disproportionate to achieve the aim.
(v) The tax charges were discriminatory in that they discriminated between those who already own immoveable property and discriminated indirectly on the basis of nationality, place of residence and/or race.
32. The remedies sought were also wide-ranging. They comprised:
(i) declarations that the tax charges could not be effective until the Law had been sanctioned by His Majesty in Council and registered, that the "attempt to impose" those charges amounted to an abuse of power, and that the Budget Law cannot be enforced against the Appellant since they infringe his legitimate expectations;
(ii) mandatory orders that the Minister seek to table an amendment to the Budget Law to insert "suitable transitional provisions" and that the Comptroller and Judicial Greffier use their management powers in relation to the collection of taxes to forgive any charge arising between 1 January 2023 and the date when the Budget Law is sanctioned and registered;
(iii) under reference to Convention rights, an interpretation of the Budget Law so that no tax charge arises in relation to the Appellant's purchases, which failing a declaration that the Budget Law is incompatible with the Appellant's rights under A1P1 and Article 14 of the ECHR;
(iv) a mandatory order directing the Minister to reconsider the Directions and to reissue them to address the "inequities being experienced by the Appellant", directing the Comptroller and the Greffier to exercise their discretion to relieve him of any burden to pay the additional charges, and directing the Minister, first, to address the "inequities of the Budget Law" immediately rather than to "aim" to do so before the end of 2023 and, secondly, to withdraw the Budget Law amendments until that process had been completed; and
(v) an order directing the Minister, the Comptroller and the Greffier not to enforce the Budget Law amendments in cases where they have retrospective effect and ordering the Minister to seek to amend or replace the Budget Law amendments with legal provisions that "addresses the material unfairness and infringement of" the Appellant's human rights.
33. Following a contested hearing, the Commissioner handed down a judgment on 7 November 2023. He refused leave in relation to Grounds 1 and 2 but granted leave in relation to Grounds 3 and 4 on a limited basis.
34. In relation to Grounds 1 and 2, the Commissioner's conclusions may be summarised as follows.
(i) Judicial review cannot be used to challenge primary legislation passed by the States other than by way of proceedings under the 2000 Law.
(ii) This rule cannot be avoided by calling as respondents the Minister and relevant public bodies rather than the States with a view to challenging the decision to bring forward legislation.
(iii) The same considerations apply to the decision by the States Assembly to make the Acte Opératoire which, the Commissioner considered, fell within the definition of "principal legislation" for the purposes of the 2000 Law.
(iv) The provisions were not devoid of reasonable foundation and accordingly could not be said to be disproportionate and incompatible with A1P1.
(v) Article 14 of the ECHR is a secondary right. Since the Commissioner had found that leave should be refused in relation to the A1P1 claim, the Article 14 claim also fell away. In any event, the allegation of discrimination did not meet the threshold for leave.
(vi) In any event, leave would be refused in relation to Grounds 1 and 2 because the application was brought more than three months after the Budget Law and the Acte Opératoire were approved by the States and was accordingly out of time.
35. In relation to Grounds 3 and 4, the Commissioner's conclusions may be summarised as follows.
(i) There is no general discretion not to collect LTT or stamp duty imposed by law.
(ii) The change effected by the Budget Law was not retrospective. It applied only to transactions which completed after the Law came into force.
(iii) Nevertheless, the Commissioner considered that the Appellant had an arguable case, which justified leave, that the First Respondent had erred in restricting the scope of the concession made in the Directions to those who could establish need, it not being clear to what extent he had considered: (a) extending the concession to purchases made for family members with rights to reside in Jersey who could not afford to acquire property themselves (that being an issue which the Appellant had raised in correspondence); or (b) any form of grandfathering provision other than the discretion to charge tax/duty on the contract price rather than current market value.
(iv) The Second and Third Respondents were not responsible for the scope of the Directions and should be discharged from the proceedings.
36. On 18 December 2023, the Commissioner issued a further judgment, dealing, among other things with an application by the present Appellant for leave to appeal his decision of 7 November 2023. The Commissioner refused leave to appeal in relation to Grounds 1 and 2 but granted leave to appeal against the limits which he had placed on the scope of the leave to advance Grounds 3 and 4 in judicial review proceedings. As we have already noted, Sir William Bailhache, sitting as a single judge of this Court, granted leave to appeal in relation to all grounds in respect of which leave had been refused. He also reversed the discharge of the Second and Third Respondents from the proceedings.
37. The Commissioner considered that the application for judicial review was out of time in respect of Grounds 1 and 2 and that question was brought forward again on appeal. Time limits are applied to judicial review proceedings by Rule 16/3(1) and (2) of the Royal Court Rules 2004. Those limits are subject to the provisions of Rule 16/3(3), which permits an application to be brought forward, though out of time, if certain conditions are satisfied. The provisions balance the need for a judicial review to be brought expeditiously with the possibility that, in the circumstances envisaged in Rule 16/3(3), an application may be allowed to proceed late. The Rules should be applied in accordance with their terms. In the present case, there were arguments - and legitimate uncertainty - as to when time started running. The submissions of Advocate Brown on this subject in this Court were cut short because the Court indicated that, given the importance of the constitutional issues to be determined and the time available for argument, we would extend time for bringing the application to the extent that it was necessary to do so. In the event, for the reasons we set out below, we refuse the appeal so far as it is concerned with Grounds 1 and 2 in any event. That being so, the time bar issue is moot.
38. There was no dispute before us as to the test which falls to be applied when considering an application for leave to bring judicial review proceedings. The Court requires to be satisfied that there is an arguable ground for judicial review which has realistic prospects of success. As the authorities cited by the Bailiff in WE (Jersey) Ltd v. Minister for the Environment [2022] JRC 044 explain, this is a test which is flexible in its application, and is designed to ensure that claims for judicial review proceed if there is an arguable case which merits a full hearing.
39. Grounds 1 and 2 raise a significant issue of constitutional law. These Grounds challenge the decision by the States to pass the Budget Law and to make the Acte Opératoire. The Court is accordingly faced squarely with the question of whether the Court has jurisdiction to review such decisions of the States. In his judgment of 7 February 2024 Sir William Bailhache requested the parties to address a number of questions which could illuminate the central issue in the case. Both parties filed detailed written submissions, which have been of considerable assistance to the Court. We can, though, summarise their contentions briefly, before describing some features of the constitutional history of Jersey, in order to set the scene for our own analysis.
40. In her oral submissions before us, Advocate Brown emphasised that this case was concerned only with the (perhaps unusual) situation arising in this case, where the Appellant has been subjected to a higher rate of tax on the basis of a Law which had not yet, at the critical date, received the sanction of His Majesty in Council or been registered in the Royal Court. She contended that whatever might be the position following the Sovereign's sanction, the decision of the States Assembly to make the Budget Law and to apply it in advance of sanction by virtue of an Acte Opératoire was susceptible to judicial review.
41. Advocate Brown relied on the requirement for the Sovereign's sanction to support her contention that the States are not "sovereign" or supreme. She submitted that cases which are concerned with the position of the UK Parliament are not relevant to the different constitutional arrangements of Jersey. Although she accepted that judicial review of a decision by the States to pass a Law is available only in "exceptional circumstances", she contended that decisions of the States do not enjoy the same immunity from review by the courts as do Acts of the UK Parliament. Further, under reference to R (On the Application of Sir David Barclay and Another) v. Lord Chancellor and Others [2014] UKSC 54 ("Barclay No. 2"), she contended that an Order in Council sanctioning a Law passed by the States is in any event susceptible to judicial review.
42. Advocate Brown further contended that the Budget Law, or at least its application to a case such as the Appellant's, was so "fundamentally flawed" as to justify judicial review. She characterised it as "egregious retrospective legislation". There was, she contended, no proper consideration of its effects and no meaningful public consultation. She criticised the evidential foundation for the proposition that the higher tax rate would have the intended effect on the housing market. The Law purported to take effect prior to sanction by Order in Council or registration. As a result, there had been no opportunity for the Privy Council to review and consider any of the issues arising before the Law was applied to the Appellant. There were no proper transitional provisions to protect the existing rights of taxpayers such as the Appellant.
43. The Attorney General, presenting submissions on his own behalf and for the Respondents, contended that Grounds 1 and 2 raise issues which are not justiciable in the courts. The courts are not equipped to address the legislative judgments which had been made by the States. The judicial review jurisdiction of the Royal Court is concerned with the abuse of executive power. It is not concerned with principal legislation. He contended that, in relation to domestic matters, the States Assembly is "sovereign and supreme". The legislative competence of the States Assembly is not subject to legal limits. Further, as a matter of longstanding practice and usage, the Crown in Council does not legislate for Jersey in relation to domestic matters without the agreement of the States Assembly.
44. The Attorney General compared the role of the Sovereign in sanctioning a measure passed by the States Assembly, at least in relation to domestic affairs, to Royal Assent to an Act of the UK Parliament. An Order in Council granting sanction would not, on democratic principles, be susceptible to judicial review. He contended that any delay or refusal of sanction would be susceptible to judicial review, including by reference to its compatibility with Article 3 of the First Protocol to the ECHR.
45. The Attorney General contended that the present proceedings were, as regards Grounds 1 and 2, incompatible with the privilege of the States, as provided for in Article 34 of the States of Jersey Law 2005 (the "2005 Law"). He further contended that the same analysis applies to the decision to make the Acte Opératoire, which was legislative in nature and which was given the force of law by the 2019 Law and the 2021 Law. He contended, further, that the structure of the 2000 Law is consistent with, and confirms, this analysis. The 2000 Law presupposes that, if it is contended that principal legislation is incompatible with Convention rights, the only remedy is a declaration of incompatibility which does not strike down the Law in question.
46. As Baroness Hale of Richmond observed in Barclay No 2 at paragraphs 6 and 8:
47. The link with the Sovereign derives from the Norman Conquest of England in 1066. Jersey was, with Guernsey, an integral part of the Duchy of Normandy; and after the Norman Conquest, the Duke of Normandy was also King of England. When the King of France succeeded in taking possession of continental Normandy from King John in 1204, Jersey and Guernsey remained in the possession of and retained their allegiance to the Kings of England as successors to the Dukes of Normandy. Accordingly, the Succession to the Crown (Jersey) Law 2013 (which makes provision for "succession to the Crown in right of the Bailiwick of Jersey"), proceeds on the following Preamble: "WHEREAS Her Majesty is Sovereign of the Bailiwick of Jersey, such Realm being anciently part of the Duchy of Normandy, in right of Her illustrious and royal Predecessor, William, Duke of Normandy and King of England".
48. Successive monarchs, up to and including King James II, issued Royal Charters which confirmed the liberties and privileges of Jersey. The Report of the Commissioners appointed to inquire into the Civil, Municipal and Ecclesiastical Laws of the Island of Jersey 1861 summarised (at page iv) the chief privileges granted to the Channel Islands by the Royal Charters: "insofar as they have any connexion with the subjects of [the Commission's] enquiry" as "a local judicature for each of the islands of Jersey and Guernsey respectively, consisting of a Bailiff appointed by the Crown, and 12 Jurats, elected from the native Islanders, with jurisdiction (subject to certain reservations and exceptions) in all cases civil and criminal arising within the Island; exemption of the Islanders from taxation without their own consent; and the right of importing into England duty free all articles of the growth, produce or manufacture of the Islands". The "local judicature" which was recognised by the Royal Charters is, of course, the Royal Court and amongst the privileges granted to the island was confirmation that the writ of the English courts would not generally run in Jersey (see the Charter of Elizabeth I of 27 June 1562, a translation of which is conveniently set out in the preamble to the Service of Process and Taking of Evidence (Jersey) Law 1960).
49. The Commissioners' Report of 1861 identified (at page v) the following as sources of the law of Jersey, in addition to customary law and the Royal Charters: (i) Orders of the Sovereign in Council; (ii) Laws passed by the States, or before 1771 by the Royal Court, and allowed by the Sovereign in Council; (iii) Local Ordinances of the States, in force for not more than three years, without the express allowance of the Crown, if not expressly disallowed; and (iv) Acts of the Parliament of the United Kingdom. Even at the date when the Commissioners reported, the Sovereign's power to legislate by Order in Council for Jersey was controversial (the Attorney General and members of the local bar considered there was no such power) but in any event that power was qualified by a requirement for an Order in Council to be registered in the Royal Court before it could take effect in Jersey law, and by the power of the Royal Court to suspend registration so as to protect the rights and privileges which had been recognised in the successive Royal Charters: see the Order in Council of 21 May 1679, confirmed by Article 12 of the Royal Court (Jersey) Law 1948. Likewise, as a result of the Order in Council of 28 March 1771 (the "Order in Council of 1771") Acts of the UK Parliament which extended to Jersey only had effect in Jersey law upon registration in the Royal Court. And developments since have reinforced Jersey's autonomy in domestic affairs. Thus, the States' claim that they had power to make and renew Ordinances in respect of municipal matters (what the Commissioners called "Local Ordinances") triennially without consent from the Sovereign was accepted by an Order in Council of 14 April 1884 (for a recent example of the use of this power, see the Unlawful Public Entertainments (Jersey) Regulations 2024). And Article 31 of the States of Jersey Law 2005 contains provisions designed to ensure that an Act of the UK Parliament or an Order in Council extending an Act of Parliament to the island will be registered in the Royal Court only if the substance of the provisions which affect Jersey has been agreed by the States.
50. Le Quesne's Constitutional History of Jersey, published in 1856, states:
The States of Jersey accordingly appears to have emerged as the Island's representative legislature "without any special legislative enactment". It owes its foundation neither to any Order in Council nor to any Act of the Westminster Parliament.
51. In the eighteenth century uncertainties arose because both the States of Jersey, consisting of the Bailiff, Jurats, Connétables and the Rectors of the ancient parishes, and the Royal Court, consisting of the Bailiff and Jurats asserted the right to legislate for Jersey. The Order in Council of 1771 annexed the Code of Laws approved by the States and also confirmed: (i) that as between the States and the Royal Court, it is only the States which have power to adopt provisional Laws or Ordinances for Jersey; and (ii) that whilst the States may adopt provisional Laws or Ordinances, these may not remain in force for longer than three years without Royal Assent. It also re-enacted the Order in Council of 1679 and extended to Acts of the UK Parliament the requirement for registration in the Royal Court.
52. The Order in Council of 1771 accordingly established the procedure for enacting Island legislation which is now reflected in the terms of Article 2 of the 2021 Law - namely, that a Law is made by being: (a) adopted by the States Assembly; (b) sanctioned by order of His Majesty in Council; and (c) registered in the Royal Court.
53. We note that successive laws have been adopted by the States Assembly (and sanctioned by order of the Sovereign in Council) to regulate the constitution of the States Assembly itself - see for example various laws in the nineteenth century and the Assembly of the States (Jersey) Law 1948 and the States of Jersey Law 1966. The contemporary constitution of the States is provided for in the 2005 Law, which proceeds on the following Preamble:
54. The substantive provisions of the 2005 Law effected significant reforms directed to these principles. For example, consistently with the commitment to democratic governance, Article 2(3) of the 2005 Law provides that only elected members of the States (i.e. Deputies elected in accordance with the Law and the Connétables of the twelve parishes of Jersey, who are elected to that office) have the right to vote, and the right of veto formerly enjoyed by the Lieutenant Governor and the right of dissent formerly enjoyed by the Bailiff were abolished. Whereas previously the States Assembly exercised both legislative and executive powers, Part 4 of the 2005 Law established a ministerial system of government. It provides for a Council of Ministers, selected by the States, with executive functions, including the function of discussing and agreeing their policy on external relations and the function of discussing and prioritising executive and legislative proposals. And consistently with the recognition that Jersey has autonomous capacity in domestic affairs, Article 31 contains provision designed to ensure that the States Assembly has an opportunity to signify its views on any proposal to apply or extend to Jersey a provision in an Act of the UK Parliament. That Article further provides that if an Act of the UK Parliament containing such a provision, to which the States has not signified agreement, is presented to the Royal Court for registration, the Royal Court will refer it to the Chief Minister, who will refer it to the States.
55. Although the Preamble to the 2005 Law draws a distinction between domestic and international affairs that distinction is not reflected in any statutory (and therefore justiciable) limit on the powers of the States to adopt Laws. It is open to the States, subject to sanction by order of the Sovereign in Council and registration in the Royal Court, to adopt a Law to repeal or amend any existing legal provision or rule of law applicable in Jersey. Such a law may, for example, make provision for the constitution of the States (as in the 2005 Law), may repeal or amend provisions in Acts of the UK Parliament (for example, the Shipping (Jersey) Law 2002), may bind or affect the Crown (for example, the Succession to the Crown (Jersey) Law 2013), and may make provision for the prosecution and punishment in Jersey of acts committed elsewhere (for example, Article 8 of the Crime (Transnational Organised Crime) (Jersey) Law 2008). Because the distinction between domestic and international affairs is not reflected in any statutory or justiciable limit on the competence of the States to adopt Laws, the States may, subject to sanction by order of the Sovereign in Council and registration in the Royal Court, adopt a Law, for example, to implement an international treaty which applies to Jersey (as it has on many occasions one such example being the 2000 Law, giving effect domestically to the European Convention on Human Rights).
56. In Syvret v. Bailhache [1998] JLR 128 (a case on States privilege which predated the enactment of the 2005 Law) the Commissioner (Beloff QC) made the following observations:
These important statements of constitutional principle, which we endorse, underpin the law on States privilege, which is now contained in Part 5 of the 2005 Law.
57. Part 5 was amended to reinforce the privileges of the States by the States of Jersey (Amendment No. 9) Law 2021. The Projet de Loi which introduced those amendments observed that Parliamentary privilege comprises:
Among other things, the 2021 Amendment removed previous statutory provisions relating to Standing Orders, which might have raised a question, for the reasons explained by Lord Rodger in Whaley v Watson [2000] SC 340, 344-5, as to whether decisions under and by reference to Standing Orders were justiciable. It made clear (Article 48(2)) that:
Article 34 of the 2005 Law, inserted by the 2021 Amendment, is in the following terms:
These rules fall to be read subject to specific provision in other legislation. For example, Article 8(1)(ii) of the Human Rights (Jersey) Law 2000 envisages proceedings against the States Assembly in respect of acts which are unlawful by reason of Article 7(4) of that Law.
58. Although Grounds 1 and 2 of the Appellant's application are framed as a challenge to the decision of the States to pass the Budget Law and to make the Acte Opératoire, the application for judicial review was directed not against the States, but against the Minister. This was misconceived. Although the Minister presented the Bill and invited the States to agree to the Acte Opératoire, the Minister does not represent the States in its legislative capacity, his vote being merely one in forty-nine; nor can he be held personally accountable in the Royal Court for the collective decision of the States to adopt the Law or to agree to the Acte Opératoire. This difficulty cannot be avoided by treating the challenge as one against the Minister's decision to present the Bill or to invite the States to agree to the Acte Opératoire. Since these were preliminary steps which could not have any effect on anyone's legal position, unless and until the States Assembly agreed to them (which it might not do), they are not susceptible to judicial review. In any event, the Minister's acts of presenting the Bill and inviting agreement to the Acte Opératoire are part of the States proceedings, such that a challenge to the Minister in relation to those acts would fall foul of Article 34(1) of the 2005 Law.
59. In substance, what the application seeks to challenge is the decision of the States to adopt the Budget Bill and to agree to the Acte Opératoire. Any challenge to these decisions was bound to fail, not simply because the application was directed against the Minister, but for more fundamental reasons.
60. In AXA v. Lord Advocate [2012] 1 AC 868, in the context of a discussion of judicial review of Acts of the Scottish Parliament, a legislature which, unlike the States of Jersey, was established by Act of Parliament and is subject to express statutory limits on its legislative competence, Lord Reed made the following observations which, though made in a context which is different from the one we are considering, are of general application:
61. In the present case, we are concerned with an application which invites the Royal Court to review a decision by the Island's legislature to adopt a Law, namely the Budget Law. The States Assembly is a representative legislature, whose function is, among other things, to adopt Laws for Jersey. The constitutional principles to which we have referred at paragraph 56 make it, as a general rule, wholly inappropriate for the Royal Court to engage in an exercise of the kind which the Appellant invites us to undertake other than to the extent contemplated in and authorised by legislation (notably Article 4 of the 2000 Law).
62. As we have explained at paragraph 55, there is (by contrast with the devolved legislatures within the United Kingdom) no statutory limit justiciable in the courts which defines the legislative competence of the States Assembly. That Assembly has plenary legislative power (subject only, as we mention below, to the possible jurisdiction of the Court to intervene on the procedural grounds mentioned in paragraph 63, or in extreme circumstances such as those envisaged in paragraph 66). It is for the Assembly and its members to decide for themselves what purposes or policies to pursue in the Laws which they adopt and what considerations are relevant to the exercise of legislative judgment which they are called on to make. Decisions of the Assembly to adopt a Law accordingly cannot be susceptible to review on the ground that those decisions pursue improper purposes or upon an allegation that members of the States have taken into account irrelevant considerations or have failed to take into account relevant considerations. As Lord Reed observed in AXA (paragraph 148), "[l]aw-making by a democratically elected legislature is the paradigm of a political activity, and the reasonableness of the resultant decisions is inevitably a matter of political judgment". There is no scope for contending that such a decision is unlawful on the grounds of irrationality in any sense which would be justiciable by the courts.
63. The only statutory provisions governing the procedure to be followed by the States are those set out in Articles 15 and 16 of the 2005 Law, which provide for a quorum and for majority decision-making. Otherwise, it is for the States Assembly to decide for itself how to organise its business, including what procedures are to be followed before it decides to adopt a proposed Law or to take any other decision. Accordingly, subject only, perhaps, to a challenge by reference to one of those two Articles, decisions by the States to adopt a Law are not susceptible to challenge on procedural grounds. A challenge, such as that advanced in the present case, of a lack of consultation has no applicability to a representative democratic legislature engaged in considering principal legislation. The members of such a legislature may receive representations and obtain information in different ways. It is left to the judgment of members of the States Assembly and to the States Assembly collectively, to decide whether or not, and if so how, to ingather relevant information and to decide whether they have sufficient information upon which to proceed to adopt a Law. It is for the Assembly to decide whether it is satisfied that a Law should be adopted in the form and with the wording proposed to it. The States' decision to adopt a Law requires "no justification in law other than the will of" the legislature itself, to adapt Lord Reed's words in AXA, paragraph 147.
64. As the Attorney General submitted, the 2000 Law presupposes that a Law which has been adopted by the States - even a Law which is incompatible with Convention rights - cannot be struck down in judicial review proceedings. Although, by virtue of the 2000 Law, the jurisdiction of the Royal Court may be invoked with a view to determining whether a provision in principal legislation (which includes any Law) is incompatible with Convention rights, the only remedy for a finding to that effect is a statutory declaration of incompatibility. The validity of the Law itself remains unaffected. It would be for the States Assembly to decide whether or not to respond to such a declaration by amending the Law.
65. The Appellant's application for judicial review does not challenge directly the Order in Council by which the Sovereign in Council granted sanction to the Budget Law. Standing the focus of the application on the decision of the States Assembly, we do not require to determine whether an order by the Sovereign in Council granting sanction to a Law passed by the States can be challenged by way of an application for judicial review in the Royal Court. It would, though, be paradoxical if the addition of Royal sanction to the legislative expression of Jersey's representative legislature were to weaken the force of the constitutional principles to which we have referred. It seems to us that, quite apart from the question of whether the Royal Court has jurisdiction, those principles would require any Court to refuse an application for judicial review of an Order in Council granting sanction to a Law which has been adopted by the States.
66. In argument before us, the Attorney General accepted (by reference to the observations of Lord Reed at paragraphs 149-153 of his judgment in AXA) that one could postulate, for the sake of argument, extreme cases in which legislation adopted by the States and sanctioned by an order of the Sovereign in Council would be so incompatible with the rule of law that the situation might call for judicial intervention either in the exercise of the Royal Court's power to decline to register the Order in Council or otherwise. But we do not require to determine in this case whether or not, and if so when, the Royal Court could indeed ever exercise any such power. The present application for leave proceeds on conventional judicial review grounds; and on no view do the allegations in this case justify the Court in reaching a view as to what the position would be should such an unlikely situation arise.
67. We have been able to reach conclusions on the issue before us without relying on any analogy with the position or nature of the UK Parliament and without relying on concepts such as "supremacy" or "sovereignty", which tend to beg the question at issue rather than to answer it. The right approach, in our view, is to address the constitution and law of Jersey on its own terms. There are important differences between the constitutional history of the UK and Jersey and between the legislative process in the UK and that in Jersey. Nevertheless, the core of the orthodox understanding of parliamentary sovereignty in the UK is the doctrine that the UK Parliament (i.e. the King in Parliament) may enact any law (except a law which would limit the legislative competence of future Parliaments), with the consequence that an Act of Parliament is not susceptible to judicial review in any court (except to the extent provided for by an Act of Parliament itself, such as the Human Rights Act 1998). For the reasons we have explained above, subject only to the possible qualifications which we have mentioned in paragraphs 63 and 66, Jersey legislation which has been enacted in the manner described in Article 2 of the 2021 Law (i.e. which has been adopted by the States Assembly, been sanctioned by order of the Sovereign in Council, and been registered in the Royal Court) can, likewise, change any existing rule of Jersey law and is, likewise, not subject to judicial review in the Jersey courts. Thus, with those possible qualifications, such legislation exhibits the two features which the orthodox understanding of the UK doctrine of Parliamentary sovereignty accords to Acts of the UK Parliament.
68. In this case, the Budget Law was sanctioned by order of the Sovereign in Council. We need not address any of the legal questions which might arise were the Sovereign in Council to withhold sanction from a measure which has been adopted by the States Assembly. Those would be better addressed should a situation arise where they require to be determined.
69. We can deal shortly with the decision of the States to make the Acte Opératoire. The Notice of Appeal does not challenge the Commissioner's view that the decision to make the Acte Opératoire falls within the definition of "principal legislation" in the 2000 Law. The Commissioner's reading of the 2000 Law is justified by the terms of Article 12 of the 2019 Law and Article 2 of the 2021 Law. The combined effect of those provisions is that, by virtue of the Acte Opératoire, the taxation draft "is to be treated as having been made as a Law". It seems to us that this deeming effect falls to be applied when applying the definition of "principal legislation" in the 2000 Law and that the taxation draft is, as the Commissioner concluded, to be treated as a "Law" for the purposes of that definition. And the decision to make the Acte Opératoire can properly, it seems to us, be characterised as an exercise of legislative judgment (indeed, it is an exercise of legislative judgment bound up with the decision to adopt the Budget Law) to which the constitutional principles which we have discussed above apply as they apply to the decision to adopt the Budget Law itself.
70. It follows that, except insofar as Grounds 1 and 2 are directed to remedies under the 2000 Law (which we address below) the appeal in relation to those Grounds must be dismissed. We will address the case which the Appellant advances against the Budget Law and the decision to make the Acte Opératoire under reference to the 2000 Law and Convention rights after we have considered Grounds 3 and 4.
71. As we have observed, the Commissioner granted leave to bring a judicial review of the Minister's decision to issue the Direction on limited grounds - namely, on the basis that there was a realistic argument that he had erred by limiting the concession to those who could establish need and that it was not clear to what extent he had considered: (a) extending it to purchases made for family members with rights to reside in Jersey because they could not afford to purchase property themselves (paragraph 153 of his judgment); and (b) grandfathering provisions (paragraph 155 of his judgment).
72. The Commissioner rejected arguments advanced before him (paragraphs 148-152) to the following effect: (i) the increases in LTT and Stamp Duty were substantively unfair because they created a windfall for the States (as the owner of the Development Company) and were retrospective; and (ii) the Respondents had a discretion not to enforce LTT or Stamp Duty in circumstances where it would be substantively unfair to do so and should exercise that discretion in relation to these increases. The argument was advanced under reference to R (Hely-Hutchinson) v. Revenue and Customs Commissioners [2018] 1 WLR 1682. The Commissioner held: (i) that Hely-Hutchinson does not support the contention that the charges to LTT and Stamp Duty should not be collected at all (paragraph 150); (ii) the contention that the States enjoy a windfall has no merit because the Development Company has its own legal personality and the changes to duty apply to all off-plan sales (paragraph 151); and (iii) the tax applied to all transactions completed after the Law came into force and in that sense was not retrospective (paragraph 152).
73. Before us, Advocate Brown renewed these contentions. She contended that the Commissioner had referred to the wrong passage in Hely-Hutchinson. She contended further that the Comptroller and the Judicial Greffier had failed to exercise their discretion to mitigate substantive unfairness; and that the Directions were deficient in that they prevented those office-holders from exercising their discretion in that way. In addition to Hely-Hutchinson she referred to R v. IRC, ex parte National Federation of Self Employed and Small Businesses Ltd [1982] AC 617, R v. IRC, ex parte Preston [1985] 1 AC 835, R v. IRC, ex parte MFK Underwriting [1990] 1 All ER 91, R v. IRC, ex parte Unilever [1996] STC 681, R v. Customs & Excise Commissioners, ex parte Kay & Co Ltd [1996] STC 1500, and Al Fayed v. Advocate General for Scotland [2004] STC 704. She relied on these cases for the proposition that it would be within the powers of the Comptroller and the Judicial Greffier not to charge LTT and Stamp Duty where to do so would be substantively unfair. She submitted specifically that it would be substantively unfair to charge the tax on those on whom it operated retrospectively and who had purchased from the Development Company. She reiterated the contention that it was unfair for the States to impose a higher rate of tax on individuals who had already transacted with the Development Company at the date when the Budget Law was passed. There was a clear retrospectivity. Further, the Minister was both responsible for the Development Company and was also the promoter of the increased tax. The States obtained, she said, a "windfall" by reason of the increased tax on property transactions with the Development Company which had been delayed through no fault of the purchaser.
74. The Respondents deny that there is any substantive unfairness or that the Budget Law operates retrospectively. The charge to LTT arises when a property is purchased and not before. There was no legitimate expectation on the part of the Appellant. His only legitimate expectation was to be taxed in accordance with the law. So far as there was any unfairness arising from the change in the law and the delay in completion of transactions such as those to which the Appellant was party, that had been substantially ameliorated by the concession envisaged in the Directions envisaging that the Comptroller could charge LTT on the contract price rather than on the market value when the transaction completed. The relationship between the States and/or the Minister and the Development Company is, say the Respondents, a red herring.
75. During her submissions Advocate Brown attacked both the terms of the Directions and what she characterised as a failure by the Comptroller to exercise his discretion to remit or reduce LTT. We queried whether the Comptroller had, in fact, ever been asked to take, or had taken a decision in relation to the Appellant's case which could properly be the subject of challenge. It would appear that, at the date when the application was brought before the Court, there had been no decision by the Comptroller in relation to the Appellant's case, but that, during the proceedings before the Commissioner, Advocate Meiklejohn, on instructions, advised the Court that the Comptroller would not exercise the power to remit LTT in his case (other than, presumably, by treating the contract price as the value upon which the tax would be charged).
76. As we have already explained, in relation to LTT and Stamp Duty, the Comptroller and the Judicial Greffier have an express statutory power to remit or reduce the tax charged where in the opinion of the relevant office-holder it would be just to do so. The context for the exercise of judgment which they are called on to make is their prima facie duty to collect the taxes which the Island's legislature has determined should be collected. But, within that context, those office-holders have a general power to remit or reduce the tax charged where, in their respective opinions, it would be just to do so. In exercising that power, each of the Comptroller and the Judicial Greffier is obliged to take into account the terms of any Directions issued by the Minister. But the judgment as to whether it would be just to remit or reduce tax is, ultimately, one for the relevant office-holder to make, on the basis of the facts and circumstances of the individual case.
77. We reject Advocate Brown's submission that the Directions fetter the discretion of the Comptroller or the Judicial Greffier. The Directions are carefully framed in terms which expressly recognise their nature, and the continuing responsibility of the Comptroller and the Judicial Greffier to exercise their judgment in terms of the relevant statutory provisions. Were the Comptroller or the Judicial Greffier to treat the Directions as if they contained an exhaustive definition of the circumstances in which their discretion could be exercised, and on that view, failed to apply their minds correctly to the statutory test which they must apply, that would provide a basis for a challenge to their decision. We do not know the basis upon which instructions were given by the Comptroller, in the context of the proceedings in the Royal Court, that the power to remit would not be exercised in the Appellant's case; but if it is correct that no decision has in fact been made, that statement could not foreclose the proper exercise by the Comptroller of the statutory power which rests with him. If, on the other hand, a decision has already been made, that decision could in principle (though subject to the application of the statutory time bar) be challenged by way of judicial review.
78. Since the Comptroller and the Judicial Greffier have an express statutory power to remit or reduce the tax charged, the UK authorities which are concerned with HMRC's general powers of management are not directly applicable. If the circumstances were such that to charge the tax would be a breach of the taxpayer's legitimate expectations, no doubt it would be just to remit the tax; but, as the authorities from the UK show, that is a narrow ground, which might arise for example in circumstances in which a taxpayer, which has put its cards on the table, has received a specific assurance or undertaking from the taxing authority. There is nothing in the present circumstances, so far as shown to us, which would give rise to such a basis for challenge. Equally, if such a decision were to be incompatible with the taxpayer's Convention rights, it would follow that it would be just to remit the tax.
79. We agree with the Commissioner that it would not be open to the Comptroller or the Judicial Greffier (or indeed the Minister, when exercising his power of direction) to thwart the legislation by declining to collect the new higher rate of LTT or Stamp Duty. The starting point must be that the Budget Act, which falls to be treated as a Law, has imposed the higher rate and the prima facie duty of the Comptroller and the Judicial Greffier is to collect that tax. We also agree with the Commissioner that there is no merit in the Appellant's reliance on the relationship between the States and the Minister and the Development Company. It is not contended, for example, that the higher rate of tax is targeted at individuals who have purchased from the Development Company, or that the Development Company has deliberately delayed completion in order to enable the States to take advantage of the higher rate of tax. The new tax is a general measure, which happens to apply to these transactions, as it does to others.
80. On the other hand, we consider that the Commissioner went too far too fast in concluding that it was unarguable that the tax has retrospective application. He is, of course, correct that the higher rate is applied only to transactions which completed after the Budget Law came into force on 1 January 2023 and, in that sense, the law applies prospectively. Nevertheless, whenever an increased tax rate is applied to an existing transaction, it has the effect, at least potentially, of altering assumptions which may have been made as regards the incidence of tax on which the parties have transacted. To the extent that the higher rate applies to existing transactions, it could arguably be said to have an element of retrospective application. We recognise that the introduction of a change in the tax regime may often affect pre-existing arrangements. We recognise that Stamp Duty and LTT are charged on completion of a transaction and, accordingly, anyone who enters into a contract for the purchase of land therefore runs the risk that the tax rate will change before completion. We also recognise that the Directions mitigate the impact by indicating that the Comptroller may use the contract price as the relevant value for charging LTT. However, it seems to us that the application of the higher rate to a pre-existing contract is a consideration which could potentially, at least in some circumstances, justify remitting or reducing the tax.
81. This is a point which is already encompassed within the grounds which the Commissioner has allowed to go forward - specifically the point which he recognised was arguable, that the Minister had not sufficiently taken into account the question of "grandfathering". We express no view one way or the other on the merits of the arguments. But as we shall explain in the next section, it is further arguable that the application of the tax to existing transactions is incompatible with the Appellant's Convention rights, such that it would necessarily be just to remit the tax in his case. That is an additional contention which, as we shall explain, we consider the Appellant should be allowed to advance in the context of his challenge to the scope of the Directions and his application for an order against the Comptroller in relation to the collection of the higher rate of tax.
82. The 2000 Law gives effect in Jersey law to the Convention rights which are set out in the schedule to the 2000 Law. Those rights include A1P1 and Article 14 of the ECHR. These are in the following terms:
83. Article 4 of the 2000 Law provides that, so far as it possible, principal and subordinate legislation is to be read and given effect in a way which is compatible with the Convention rights. "Principal legislation", defined in Article 1, includes any Law, and thus includes the Budget Law and, for the reasons we have explained above, the taxation draft declared by the Acte Opératoire to have effect as a Law. Article 5 empowers the Court to make a declaration that a provision of principal legislation is incompatible with the Convention rights. Article 7 provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right. The States Assembly is not generally a "public authority" for these purposes, though Article 7(4) provides that it is unlawful for the States Assembly to make subordinate legislation which is incompatible with a Convention right or to acquire land by compulsory purchase in a manner which is incompatible with a Convention right. Since we have concluded that the taxation draft falls within the definition of "principal legislation", it is not "subordinate legislation" for these purposes.
84. With regard to the decision in MA v. Finland [2003] 37 EHRR CD210, to which he was referred, the Commissioner took the view that for a challenge to the Budget Law under A1P1 to succeed, "the imposition of the tax has to be 'devoid of reasonable foundation'." He agreed with the Respondents that this threshold had not been met. He took the view that the object of the measure was "to discourage property being acquired in Jersey as investment properties, second homes or holiday homes in order to rebalance the market towards owner occupier and first-time buyers". Since a similar approach had been taken in the UK and Guernsey, he did not consider that the means proposed were disproportionate. Since he found that leave should not be granted in respect of the alleged breach of A1P1, he considered that "the claim on the basis of discrimination must also fall away"; but in any event he did not see how the suggested distinction between property owners and non-property owners fell within Article 14 and considered the argument that there was indirect discrimination against non-Jersey national was a speculative argument with no justification.
85. Before us, Advocate Brown presented her case in relation to Convention rights on two fronts. First, she contended that the legislation increasing the tax rate on second homes was, itself, incompatible with A1P1 and with Article 14 taken with A1P1. She characterised the aim of the legislation as being to deter the purchase of second homes and thereby to increase the availability of homes for first time buyers. She criticised the quality of the material which was said to support the conclusion that the tax increase would in fact achieve that aim and, on that footing, contended that the measure was not rationally connected to the aim and was, in any event, disproportionate and therefore incompatible with A1P1. Secondly, she contended that the legislation was incompatible with A1P1 insofar as it applied to transactions such as those in issue in the present case, where a contract had been concluded before the Law came into force. She contended, in particular, that the application of the measure to pre-existing transactions was not rationally connected with the aim of the legislation as she characterised it.
86. The Respondents contended that the provision for the higher rate of tax was compatible with Convention rights. They accepted that the Budget Law is a "control of the use" of property. The justification for the measure, they said, in their written submission, was "to help alleviate the continuing demand for property in the Island" although in oral argument Advocate Meiklejohn also did not exclude that part of the aim was to raise revenue. They relied on Osment v. Chief Minister [2020] JRC 008, paragraphs 22-26, which summarised the cases which had recognised this as a legitimate aim justifying the strict statutory controls on access to work and the property market in Jersey. Contracting States have a wide margin of appreciation in relation to tax measures and this measure was, they submitted, well within that margin. Whilst the Respondents accepted that the legislation distinguishes between those who do not intend to use the property as their main residence and those who do, they did not accept that there was any discrimination on grounds of nationality, race or place of residence. Even if Article 14 is engaged, there is an objective and reasonable justification for the measure, and it is compatible with Article 14.
87. The Respondents contended, further, that the legislation was not truly retrospective. The charge to tax was levied on completion of the contract (i.e. when the property was conveyed). Individuals entering into contracts for the purchase of land or for the purchase of shares which would trigger LTT took the risk that the tax rate would change between the date of contract and conveyance. In any event, there were certain mitigating factors. The Minister's Direction provided for the tax to be levied on the contract price rather than the market value even if the latter was higher. By reason of the increase in property prices, individuals such as the Appellant were not out of pocket even taking into account the additional tax. Further, if they found the additional tax too burdensome, they could, it was suggested, sell the property. Even if the retrospective application of the higher rate of LTT would be incompatible with Convention rights, it did not follow that the Budget Law itself was incompatible since that could be addressed through the powers of the Comptroller and the Judicial Greffier to remit or reduce the tax payable, and the power of the Minister to give directions which those office-holders would be required to take into account.
88. The Appellant's primary contention challenged the compatibility with Convention rights of the introduction of the higher rate of tax as such. We agree with the Commissioner that this case does not satisfy the test for leave.
89. The Strasbourg caselaw on A1P1 has noted that this Article comprises three distinct rules. In National and Provincial Building Society v. UK [1998] 25 EHRR 127, which concerned a tax measure, the Court described these rules as follows (paragraph 78):
90. The Court further stated (paragraph 80):
91. In the present case, it is not in dispute that the Budget Law is a measure which falls to be treated as a control of the use of property to secure the payment of taxes. The aim identified in the Respondents' written submissions - namely, "to help alleviate the continuing demand for property in the Island" - is clearly a legitimate one (as would be the raising of revenue, if that was part of the purpose). Advocate Brown contended that there was very little evidence that the imposition of the higher rate of tax would achieve the aim of alleviating the demand for property on the Island, such that the means could not be connected to the ends; and, in any event, she contended that the imposition of a significantly elevated rate of tax meant that the tax did not strike a fair balance. We do not agree. Proceeding on the basis that the aim was the one specified in the Respondents' written submissions, the view that the imposition of a higher rate of tax specifically on homes which are not to be occupied as the purchaser's main residence would or could have an effect on the property market such as to pursue the objective in question cannot be said to be one which is "devoid of reasonable foundation". It is a legislative judgment about the effect of the measure which has prima facie plausibility. Nor can it be said that the imposition of a higher rate of tax on second homes, representing an increase of only about 3% on the applicable tax rate, does not strike a fair balance having regard to that aim.
92. Contrary to the Commissioner's view, however, referred to at paragraph 84 above, it does not necessarily follow that the claim in relation to Article 14 (read with A1P1) also falls away. Article 14 is concerned to prevent discrimination in the enjoyment of Convention rights. It may be engaged when the circumstances fall within the ambit of a protected right, even though there is no breach of that primary protected right. Further, the grounds which may engage a requirement for justification under Article 14 are not limited to those which are specifically listed in that Article. As Advocate Brown pointed out, the Grand Chamber in Chassagnou v. France [2000] 29 EHRR 615 found that a law which differentiated between large and small landowners in relation to hunting rights was incompatible with Article 14 (read with Article 11). We do not accordingly exclude the possibility (though we do not decide) that the distinction between those who acquire property as their main residence and those who acquire property for other purposes could be regarded as a distinction on the grounds of a "status" which would call for justification under Article 14. Nor do we exclude the possibility (though we do not decide) that the Law may have indirectly discriminatory effects, for example on persons who are not permanently resident in Jersey. But, even if Article 14 is engaged, we are satisfied - for the reasons which we have already explained in relation to A1P1 - that the primary distinction drawn by the relevant provisions of the Budget Law (between purchasers of a main residence and others) pursues a legitimate aim and is justified by reference to that aim. Any indirect impact which the measure may have is also justified on the same basis.
93. The Appellant's secondary contention challenges the compatibility with Convention rights of the application of the higher rate of tax to transactions which were already legally binding when the Law was enacted. We have concluded that this secondary contention has realistic prospects of success, at least in a case such as the Appellant's where the transactions were already binding under penalty before the Corporate Scrutiny Panel lodged the amendment in November 2021, and accordingly that the Appellant should be granted leave to advance, as part of his case under Grounds 3 and 4, the contentions: (i) that it would be unlawful (because incompatible with his Convention rights) for the Comptroller to charge the higher rate of LTT on the two transactions to which we have referred; and (ii) that it was unlawful (as incompatible with Convention rights) for the Minister not to address in the Directions the retrospective application of the higher rate of tax to transactions which were already legally binding. Since we are extending the grant of leave we do not prejudge the merits of the arguments which will fall to be addressed by the Commissioner, but we should explain why we take this view.
94. In P. Plaisier BV v. The Netherlands, Application No. 46184/16, 14 November 2017, a Chamber of the European Court of Human Rights discussed retrospective tax legislation. That case concerned a high wages levy imposed by the Netherlands as one of a package of budgetary measures responding to the worldwide economic crisis of 2012. The levy was challenged inter alia on the basis that it applied retrospectively. The Court made the following observations (paragraphs 84-85):
95. On this issue the Court concluded (paragraph 88):
96. Taking into account the State's margin of appreciation in tax matters, the measure "did not upset the balance which must be struck between the demands of public interest and the protection of the applicant companies' rights" (paragraph 98).
97. In paragraph 84 of the judgment, which we have quoted above, the Court articulated the following statement of principle:
This statement indicates that, as a general rule, a taxpayer has an interest in being able to predict his or her tax liabilities in advance. This judgment further suggests that, although that interest does not result in a prohibition of retrospective tax legislation, such legislation must be justified by "specific and compelling reasons".
98. We need not, for the purposes of granting leave, decide whether this is a correct or definitive statement of the legal position. It suffices for the purposes of granting leave, that it appears to us to be open to argument: (i) that legislation imposing a higher tax, or at least a new tax, on transactions to which the parties are already legally committed (at least before the intention to legislate for the higher tax, or new tax, has been announced) may, by reference to this authority, be characterised as "retrospective". We observe that in the present case, the Appellant was contractually committed to the transactions before the Corporate Scrutiny Panel recommended the higher rate of tax which was eventually given effect through the Budget Law. That higher rate (which was applicable only on certain classes of transaction) was accordingly not something which he could specifically have anticipated when entering into those transactions.
99. If that is so, then it is also arguable, looking to the Chamber judgment in P. Plaisier BV that there is an onus on the State to explain and justify why the legislation is being applied in that way; indeed, that the retrospective effect would require to be supported by "specific and compelling reasons". The cases referred to in P. Plaisier BV provide various illustrations of the kinds of justification which have been accepted, though these are not necessarily exhaustive.
100. As we have observed, the Respondents themselves have explained the aim of the legislation as being to "help alleviate the continuing demand for property in the Island" although in oral submissions Advocate Meiklejohn did not exclude that part of the aim was to raise revenue. We do not need to decide, for present purposes, whether that should be regarded as part of the aim. It suffices to note that it is arguable that the imposition of the higher rate of tax on existing transactions to which the parties are already legally bound (albeit the transaction has not yet completed) is not rationally connected with the aim of helping to alleviate the continuing demand for property in the Island because ex hypothesi the purchase is one to which the purchaser is already legally committed. Further, in light of the conclusion of the Court in P Plaisier BV at paragraph 88 it seems to us to be open to argument that an aim which is "merely budgetary" would not be enough, though we do not express any concluded view on that question.
101. In argument, Advocate Meiklejohn advanced a number of contentions in answer to these points. He contended, for example, that in the context of LTT and Stamp Duty, which is always applied on completion of a transaction, there is no relevant retrospectivity, in that the taxpayer contracting to purchase land always takes the risk that the rates will change before completion. He also contended that the purchaser who found that, by reason of the higher rate of tax, the purchase was too costly, could sell the property on. Given the appreciation of property values, there was no relevant unfairness or disproportionality.
102. It would not be appropriate for us to comment one way or another on the competing arguments. It suffices that the contention that the application of the higher rate to a case such as the Appellant's, where he was already contractually bound some years before the Scrutiny Panel proposed the higher rate of tax on transactions such as this, would be incompatible with his Convention rights appears to us to be an arguable one, which satisfies the test for leave.
103. It does not follow that the Budget Law itself (or the taxation draft, given effect by the Acte Opératoire) would be incompatible with the Appellant's Convention rights. That is because the statutory regime into which the changes in the law effected by the Budget Law (and the taxation draft given effect by the Acte Opératoire in advance of sanction by order of the Sovereign in Council) contains a mechanism which would allow LTT to be levied in a manner which respects the Appellant's Convention rights and those of any other people in a like position. If it were to be the position that levying the higher rate on the Appellant in relation to the two transactions at issue were to be incompatible with his Convention rights, it would necessarily follow that it would not be "just" to charge the higher rate, and the Comptroller would be bound to exercise the power which is open to him to remit the tax.
104. It may be that the power which the Comptroller and the Judicial Greffier have to remit or reduce the tax in circumstances where this is necessary in order to respect Convention rights would also be an answer to any contention that the Minister acted incompatibly with Convention rights in not making specific provision in the Directions in relation to the retrospective application of the Budget Law to cases such as the Appellant's, but, given the terms upon which the Commissioner has already granted leave to challenge the Directions, we do not propose to exclude any argument which the Appellant might wish to advance to that effect.
105. We accordingly propose to extend the leave already granted in respect of Grounds 3 and 4 so as to allow the Appellant to contend: (i) that the application of the higher rate of LTT to the two transactions entered into by the Appellant would be incompatible with his Convention rights under A1P1; (ii) that the Comptroller was and is accordingly under a duty, by reason of the 2000 Law, to exercise his power to remit the LTT charged on those two transactions; and (iii) that the Minister acted incompatibly with Convention rights in not making specific provision in the Directions in relation to the retrospective application of the Budget Law to cases such as this one.
