Raising New Issues at Judicial Review: When Might Late be Too Late?
An examination of the recent ruling of the Court of Appeal in AXY & Ors v Comptroller of Income Tax  SGCA 23 on the admissibility of subsequent matters in judicial review proceedings.
The recent decision of the Court of Appeal (CA) in AXY and Ors v Comptroller of Income Tax (AXY)1  SGCA 23. is the first ruling of our Apex Court on the 2013 amended provisions of the Income Tax Act (ITA)2 Cap 134, 2014 Rev Ed. governing the exchange of information (EOI) with foreign tax authorities.
In AXY, the CA affirmed the continued applicability of pre-2013 judicial pronouncements on the foreseeable relevance threshold for Singapore’s EOI with foreign tax authorities under the ITA. This decision is important for its exposition of the legal principles governing the role of the Comptroller of Income Tax (Comptroller) when handling EOI requests.
The CA also made a significant ruling on the admissibility of matters not placed before the Comptroller at the time of his decision but raised in judicial review proceedings to challenge his decision. This is a novel issue which had hitherto,3 AXY and Ors v Comptroller of Income Tax  SGCA 23 (AXY) at . not been adjudicated upon by our Courts. This article discusses the CA’s ruling on this point and its implications for litigants in judicial review proceedings.
- The National Tax Service of the Republic of Korea (NTS) had been investigating five individuals for evasion of Korean taxes and had made an EOI request to the Comptroller under a tax treaty between Singapore and Korea. The relevant EOI provisions in the tax treaty mirror those found in section 105D of the ITA.
- In the EOI request, the NTS had asked for confidential banking information relating to the five individuals under investigation and 51 companies suspected to have been used in the alleged tax evasion (Implicated Companies).
- After several months of communications and clarifications between the NTS and the Comptroller, the Comptroller exercised his powers under the ITA and issued production notices to three banks in Singapore, compelling the disclosure of relevant banking information. This process, including the issuance of the production notices was (as permitted under section 105E(4) of the ITA) conducted covertly, without notice to the individuals concerned (Persons of Interest) and the Implicated Companies.
- After learning about the production notices, three of the individuals concerned applied to the High Court for leave to commence judicial review proceedings against the Comptroller, with a view to obtaining (i) a prohibition order to stop the Comptroller from disclosing the banking information to the NTS; and (ii) a quashing order in respect of the production notices (JR Proceedings). The JR Proceedings were dismissed by the High Court and the individuals in question (Appellants) appealed to the CA.
The Ruling on Subsequent Matters
In AXY, the Appellants had raised two matters in the JR Proceedings which were not before the Comptroller at the time he issued the production notices (but which were brought into being and raised by the Appellants after the JR Proceedings had commenced). The first objection was that they were not tax residents of Korea amenable to Korean tax jurisdiction4 This objection was taken three months after the filing of the JR proceedings in conjunction with the commencement of adjudication proceedings in Korea to dispute tax residency: AXY at . and the second was that the prosecution of tax evasion against them had become time barred in respect of some periods.5 This objection was taken during the JR proceedings. On the strength of these two objections, the Appellants contended that NTS’ EOI request was not “in conformity with the law and administrative practices” of Korea, as required under the Eighth Schedule of the ITA.6 AXY at [26(a)(ii)]. If correct, this objection would go to the legality of the Comptroller’s decision to issue the production notices and would be a ground for impugning the Comptroller’s decision.
This line of argument gave rise to the question of whether subsequent facts and issues raised after the Comptroller’s decision on an EOI request should be considered in determining a challenge brought against the Comptroller’s decision on that request.7 AXY at [31(a)]. In AXY, the CA ruled that it was appropriate to consider the subsequent objections of tax residency and time limitation raised by the Appellants; but held on the facts that neither of these objections affected the validity of the Comptroller’s decision.
In arriving at this view, the CA acknowledged that in judicial review proceedings,8 AXY at . the Court is ordinarily concerned with assessing the legality of the impugned decision by reference to the material before the decision-maker at the time the decision was made. In the CA’s opinion, the danger of admitting fresh evidence in such proceedings lies in the Court finding itself being asked to determine the merits, as opposed to reviewing the legality, of the decision.
That said, the CA referred to instances where the English Courts had taken changed circumstances and further developments after the impugned decision into consideration in judicial review proceedings.9 AXY at – citing Regina v Secretary of State for the Home Department, Ex parte Launder  1 WLR 839; R v Inner London North Coroner, ex parte Touche  2 All ER 752; and Regina (British Broadcasting Corporation and another) v Secretary of State for Justice  1 WLR 964. The CA noted that the “default position” of barring consideration of material arising after the impugned decision was made is “not an absolute one”.10 AXY at .
In the view of the CA,11 AXY at . a departure from the default position would be “justified only” in circumstances that are “unusual, if not exceptional” . The assessment of a covert EOI request by the Comptroller would be one such unusual situation. As explained by the CA:12 AXY at .
“Ordinarily, the Comptroller is required to serve notice of an EOI request on the person(s) of interest pursuant to s 105E(1) of the ITA if the request relates to protected information. However, the Comptroller may act in a covert manner without notice to the person(s) of interest in the circumstances set out in s 105E(4)[.]”
Where the exception under section 105E(4) of the ITA is invoked, the first opportunity that a Person of Interest would have to raise any concern with the Comptroller’s decision would be after the issuance of the corresponding production notice. In such an event:13 AXY at .
“The Comptroller should not be shielded from judicial review if a person of interest is able to satisfy the court that the basis of the Comptroller’s decision was in fact incorrect … [I]f it can demonstrably be shown within a reasonable time of the Comptroller’s initial decision that the EOI request in question has not in fact satisfied the Eighth Schedule requirements such that the touchstone of foreseeable relevance has not been established, there is no reason for the Comptroller not to reconsider his initial decision on that request.” [Emphasis in original]
Implications of the Ruling
The CA’s ruling on subsequent matters raises important questions for first instance decision-makers and persons affected by decisions of public bodies.
- Should decision-makers now take a different approach to fresh matters that are brought to their attention after their decisions have been made?
- How wide is the latitude accorded to affected persons to belatedly raise new matters to the decision-maker or the Court?
A Narrow Inroad
For the reasons below, the AXY inroad appears to be a narrow one.
First, the CA had held that the default position is that the legality of an impugned decision be assessed by reference to the material before the decision-maker at the time of his decision.14 AXY at ,  and [84(e)]. Departure from the default position is justified only in circumstances that are “unusual, if not exceptional”.15 AXY at . In AXY, the assessment of a covert EOI request qualified as an “unusual”16 AXY at . situation because the first opportunity given to a Person of Interest to raise his objection(s) would be after the issuance of the production notice. Recognising a departure from the default position in such a situation ensures justice and fairness. As observed by the CA:17 AXY at .
“The common rationale justifying the court’s departure from the default position is the emphasis on achieving justice and fairness.”
It becomes immediately clear that to bring oneself within the AXY exception, it would have to be demonstrated that (i) the situation is unusual or exceptional; and (ii) it would be just and fair for the case to be taken outside the default position. This is by no means a low bar.
Second, in formulating the basis for considering subsequent matters, the CA had emphasised that such subsequent matters need to have been raised “within a reasonable time” of the initial decision.18 AXY at  and [84(f)].What constitutes reasonable time is clearly fact dependant. Although this point was not expressly dealt with in the CA’s application of the principle to the facts in AXY, the CA’s consideration of the subsequent matters raised by the Appellants would appear to suggest that these matters had been raised within reasonable time. However, the timing would also appear to have been a factor taken against the Appellants since (i) the CA expressly noted that the tax residency objection was not an issue before the Comptroller and was brought into being only three months after the filing of the JR Proceedings and four months after the issuance of the production notices;19 AXY at . and (ii) the CA made similar observations in relation to the time limitation objection.20 AXY at . Regardless, the reasonable time stipulation is clearly an important rider.
Third, it bears mention that AXY was not regarded by the CA as a true exception of the default position.21 AXY at  read with . The CA had likened AXY to the English case of BBC v Secretary of State for Justice which,22  1 WLR 964. in the words of the CA, should “probably not be regarded as a true exception to the default position”.23 AXY at . As noted by the CA:24 AXY at .
“[T]he Comptroller had expressly stated that it was, and remained, his position that the information sought in the [r]equest was foreseeably relevant and met the gateway requirements listed in the Eighth Schedule. Hence, the Comptroller in fact had the opportunity to consider the subsequent material raised by the Appellants, and had continued to stand by his decision right up to the time of the hearing in the court below. This was similar to the situation in BBC v Secretary of State for Justice (see – above). In these circumstances, we thought it appropriate to consider the subsequent material presented …” [Emphasis in original]
Thus, there was an even narrower (factual) basis upon which the subsequent matters in AXY were admitted in the JR Proceedings.
Implications for Decision-Makers
It is the view of this writer that whilst AXY may have refined, it has not radically changed, the rules of engagement for decision-makers as to the treatment of subsequent matters.
- The CA’s ruling does not go so far as to suggest that in every case, a decision-maker is legally bound to consider fresh matters brought to his attention after his decision has been made. In the preponderance of matters handled by decision-makers, this would not be the case.
- The CA’s ruling does however foreshadow the possibility of the unusual or exceptional situation arising, where it would be fair and just for the decision-maker to take subsequent matters into consideration, when they have been raised within reasonable time. Precisely how far the courts might be prepared to recognise future exceptions (in addition to that recognised for covert EOI processes) remains an open point.
Implications for Affected Persons
- At a general level, it unclear what further exceptions to the default position might be recognised in the future. It is however evident that potentially affected persons should not assume that the threshold for recognising exceptions can be easily met. Instead, such persons should always ensure the comprehensiveness and completeness of their representations to the decision-maker before the decision is made. If subsequent matters (going to the legality of the decision) emerge, these should be promptly brought to the attention of the decision-maker. The raising of subsequent matters after judicial review proceedings have already been commenced, should as far as possible, be avoided.
- At the specific level, the latitude granted to Persons of Interest in covert EOI processes to raise new matters is subject to a “reasonable time” qualification. This is a fact sensitive consideration. One would minimally be expected to act with promptitude, having regard to all the circumstances of the case. It should be borne in mind that the exchange of information amongst tax authorities lies in a field where international comity holds sway and local Courts invariably defer questions of foreign domestic law to the relevant foreign Court and authorities.25 ABU v Comptroller of Income Tax  2 SLR 420 at  and ; Comptroller of Income Tax v BLM  1 SLR 123 at  and Comptroller of Income Tax v BJY & Ors  4 SLR 801 at . See also AXY at [84(c)] and . Given that tax residency and time limitation are quintessentially questions of foreign domestic law, Persons of Interest in EOI processes must also carefully consider how (if tax residency and time limitation objections are to be made), they should be timed in the foreign jurisdiction and before the Comptroller, so as to satisfy both the international comity and reasonable time imperatives.
|↑1|| SGCA 23.|
|↑2||Cap 134, 2014 Rev Ed.|
|↑3||AXY and Ors v Comptroller of Income Tax  SGCA 23 (AXY) at .|
|↑4||This objection was taken three months after the filing of the JR proceedings in conjunction with the commencement of adjudication proceedings in Korea to dispute tax residency: AXY at .|
|↑5||This objection was taken during the JR proceedings.|
|↑6||AXY at [26(a)(ii)].|
|↑7||AXY at [31(a)].|
|↑8||AXY at .|
|↑9||AXY at – citing Regina v Secretary of State for the Home Department, Ex parte Launder  1 WLR 839; R v Inner London North Coroner, ex parte Touche  2 All ER 752; and Regina (British Broadcasting Corporation and another) v Secretary of State for Justice  1 WLR 964.|
|↑10||AXY at .|
|↑11||AXY at .|
|↑12||AXY at .|
|↑13||AXY at .|
|↑14||AXY at ,  and [84(e)].|
|↑15||AXY at .|
|↑16||AXY at .|
|↑17||AXY at .|
|↑18||AXY at  and [84(f)].|
|↑19||AXY at .|
|↑20||AXY at .|
|↑21||AXY at  read with .|
|↑22|| 1 WLR 964.|
|↑23||AXY at .|
|↑24||AXY at .|
|↑25||ABU v Comptroller of Income Tax  2 SLR 420 at  and ; Comptroller of Income Tax v BLM  1 SLR 123 at  and Comptroller of Income Tax v BJY & Ors  4 SLR 801 at . See also AXY at [84(c)] and .|