“The entire state administration is perceived in case law as one unit. This is consistent with the fact that [the monarch] is understood in The Constitutional Act as a collective term for all the ministries under the executive power … . The fact that the state is a single entity has, among other things, the consequence that different state authorities can set off a claim against a citizen across authority boundaries … . Although the State is perceived as an entity, it is the specific administrative authority responsible for the subject matter that acts as plaintiff or defendant on behalf of the State … .”
“If a person who is liable to pay tax pursuant to section 2 hereof or section 2 of the Danish Corporation Taxation Act has received dividends, royalties or interest, of which tax at source has been withheld pursuant to sections 65-65D which exceeds the final tax under a double taxation treaty, …, the amount must be repaid within six months from the receipt by [SKAT] of a claim for repayment. …”
“Explanation of dividend compensation payments Short sellers who sell shares cum-div and settle ex-div are liable to pay a dividend compensation payment to their custodians. … Long buyers who buy shares cum-div and settle ex-div must receive a dividend compensation payment from their custodians. Such payments are documented as dividend credit advice notices. Under Danish Tax Law, these payments are considered dividend income for tax purposes.” (underlining for my emphasis); and the slide before the diagram reproduced at paragraph 81 above asserted that “Even though shares and cash are not created or destroyed, the existence of the “legal loophole” results in long buyers becoming entitled to WHT reclaims due to the presence of short sellers”
“Please find enclosed a tax reclaim form together with evidence of payment and tax deduction paid on the above client’s securities”
“Please find attach a reclaim application to obtain a full refund of Danish dividend tax for a [qualifying US pension fund / Malaysian company] within the meaning of the Double Taxation Convention concluded between Denmark and [the United States of America / Malaysia]”
“please find enclosed a reclaim application form from a qualifying [US pension fund / Malaysian corporation] for a complete refund of Danish Dividend Tax that was previously withheld in relation to their investments”
“please find enclosed a reclaim application form from a qualifying US pension fund for a complete refund of Danish Dividend Tax that was previously withheld in relation to their investments”
“However, through the leverage facility of our custody platform, the [USPFs] will take on positions in excess of this size and thus become eligible to be considered QIBs, at which point we would like to categorise them as QIBs and retain this categorisation for them as their holdings would fluctuate above and below this level.”
“After some digging, we believe we can clear [European single stock futures] for QIBs. We found that a QIB can be an employee benefit plan defined by Erisa, as long as it manages$100 mm of assets or more. The clients we deal with are 401k pension plans, and they would have over$100 mm under management. I would like to know if these plans would be considered to be QIBs.”
“It looks like some of the crossing business is triggering market abuse flags at the exchange.”
“Can we get together to discuss? I’ll skype you all in 5.”
“As part of our [GSS] business, [SCP] provides clients with a futures clearing service through an omnibus client account held with JPM. Our client base is purely institutional and made up primarily of brokers and institutional investors. The commercial rationale behind the business is to charge clients a premium for a facility to clear through a Global Bank such as JPMorgan where they would not normally have direct access to such a provider. The business has been running for over a year now and continues to be profitable. Significant resources have been deployed to build adequate control systems and risk is closely managed by ensuring that we only clear equal and opposite trades crossed by a third party broker.”
“MR RABINOWITZ: … So opacity was the order of the day Mr Shah, yes? A: As regards competitors, yes.”
“today’s trades/activity is in meltdown for about a dozen different reasons. Pogo [Mr Patterson], Nirav [Patel] and me are in the office trying to sort. I have said a million times before that we need a system. We need a developer hired asap”
“We can confirm that the trades are good trades. Please be aware that the reported trades are the unwinding by clients of their positions [true]. They follow the closure of clients’ OTC derivative hedges which were closed with the clients’ brokers at the market closing price [misleading spin]. We as clearer had imposed a limit of€75m per ticket as so [sic.] you see the trades occurring in batches of the same size [misleading spin]. All trades were executed OTC by the clients’ brokers [half-truth at best, cloaking Solo’s role as director of all trading, and a gross spin on the fully automated Solo Model then in operation].”
“• Were these market facing trades? These trades were OTC and Broker facing • Was there a change of legal ownership? Yes • Was there a change of beneficial ownership? Yes”
“We have spoken with some of our clients and explained that we need to respond to your query. The clients are reluctant to share their intellectual property with us but we understand that the equity trades which we report are the hedges to OTC derivatives. The clients advise that their books are fully hedged for market risk. (Nothing in the first two sentences was true. Solo’s clients had neither input nor even knowledge of these LSE enquiries. The party with ‘intellectual property’, who was indeed unwilling to share it, in my judgment vehemently so, was Sanjay Shah. On a point of detail for the second sentence, of course, in ordinary logic, if Product A hedges Product B, equally Product B hedges Product A. But it was misleading to suggest that there was a derivatives trading strategy, as part of which equity trades were used to hedge market risk.) The motivation for trading is to take advantage of the small differences in the implied financing rates in the OTC derivatives market and the stock lending market. The clients buy or sell equities, which are then borrowed or lent on to their stock lending counterparties. (The second sentence, taken on its own, could have been true. But it was in the context of Solo’s prior confirmation that legal and beneficial ownership of equities was transferred, making it misleading. The first sentence was false. Small pricing differences of that kind could in theory have been the target of an arbitrage strategy of some kind. But not only was that not the trading strategy in the Solo Model, the impact, if any, of those differences on how Solo Model trades would turn out was retrospectively adjusted out.) Chronologically, it appears the equity hedges are only initiated when the clients have an OTC derivative and stock lending trade which they would like to execute. (This was dishonest nonsense, given Sanjay Shah’s understanding of the Solo Model trading strategy, design and implementation.) The clients noted that the trade volumes are not unusual compared to previous years. (This was substantially false. First, again, Solo’s clients had not ‘noted’ any such thing, having not been involved at all in how the LSE’s enquiries should be answered. Second, while the total Solo Model traded volume being unwound in May-June 2015 (from trading around February-March 2015 dividend dates) was similar to the total traded volume for the whole of 2014 (c.2.3bn vs. c.2.1bn), it was larger by an order of magnitude against 2012 (c.79m, albeit only from the smaller second half of the year) and 2013 (c.381m for the full year).) It is worth noting that the volume reported doesn’t reflect that we have many (over 100) clients trading so that each client’s volume is small compared to the overall volume that is reported. (That was true but misleading, given that the large number of trading clients was a deliberate construct of the Solo Model precisely to mask the fact that a huge volume was being traded on a coordinated basis by Solo.) We hope that this answers your queries in full.”
“i think thats fine. this year the clearing fees are a flat monthly rate so there should be no spikes”
“Pension funds end up with 4% of the P&L after all fees”
“… dividends are the distribution of profits from the legal entities that can distribute profits to the persons who own shares in the legal entity. In Denmark, these include share dividends and dividends paid by a limited liability company to its shareholders. Abroad, the legal entities, the ownership interests in them and the distributions to the owners may have different designations. … The law of the country where the distributor of the dividends is resident determines which types of income are covered by Article 10 … .”
“If a source country withholds tax on dividends at a higher rate than agreed in the [DTT], the overpaid tax can be refunded … For a refund of Danish dividend tax, the forms 06.002 (Switzerland), 06.005 (Germany) and 06.003 (all other countries) which can be found at www.skat.dk are used. One form must be completed per Danish company paying the dividends. The form must be signed by the tax authorities of the country of residence, which must confirm that the recipient of the Danish dividend is domiciled/resident in that country.”
“Dividend entitlement is based on traded position at ED [i.e. ex-date]. The CSD [i.e. VPS] will credit accounts only when position settles (this should not impact entitlement)”
“3 CONTEMPLATED TRANSACTIONS USPF contemplates to make the following transactions: 1) USPF purchases Danish exchange traded equities (the “Equities”) (either via a regulated inter-dealer broker or via purchasing Eurex single-stock, physically delivered listed flex future contracts regarding the relevant Equities); 2) The purchase of the Equities will take place prior to the ex-dividend date but no later than the dividend approval date meaning the date where the dividend is finally approved for distribution (generally meaning the date of the annual general shareholder’s meeting) (“Dividend Approval Date”). The settlement date for the purchase of the Equities will be on or after the dividend record date. In the case of physically delivered listed futures contracts, the expiry date of the futures contract will be no later than the Dividend Approval Date; 3) USPF will receive the dividend which has been declared on the Equities on Dividend Approval Date (the “Danish Dividend”); 4) On purchase of the Equities, USPF will hedge its long exposure on the Equities by selling exchange-traded, cash-settled single stock futures over the Equities (the “Short Derivative”). The price of the Short Derivative will take into account a proportion of the expected Danish Dividend in calculating the strike price of the Short Derivative but no adjustment will be made if the actual dividend amount is more or less than the expected dividend amount; 5) On or after the ex-dividend date USPF will sell the Equities via an inter-dealer broker. The settlement date for the sale of the Equities will be the same date as the settlement date of the purchase of the Equities in 2) above. At the same time, USPF will enter into a long futures position over the Equities in order to close out the short futures position created in step 4 above The long futures position will expire on the same date as the short futures position created in step 4 above; 6) It is possible that in the period until sale, the Equities would be lent out under a stock loan (using a standard Global Master Securities Lending Agreement) to an unrelated party (which could be located in any jurisdiction) in order to minimize financing costs. The period of the stock loan is not expected to exceed 3 months and the stock loan would be cash collateralised. The stock loan transaction may be entered into on or after dividend record date (with settlement of the stock loan occurring on the same day) but always after Dividend Approval Date and the borrower of the Equities would not receive any dividend on the Equities.”
“4 ASSUMPTIONS For the purpose of this Opinion, we have assumed that: … 5) On purchase of the Equities, USPF will obtain unconditional ownership to the Equities and will have full ownership rights over the Equities on Dividend Approval Date including the right to receive the dividend declared on that date; 6) The Equities will be held by USPF through a custodian. USPF’s ownership to the Equities will be recorded with the custodian and, depending upon the custodian’s and sub-custodian’s other long and short positions, the Danish Securities Centre; 7) The custodian’s records will show that USPF is the legal and beneficial owner of the Equities on Dividend Approval Date and that the Danish Dividend represents a real dividend on the Equities which is passed on to USPF by the custodian.”
“USPF will be recorded as the owner of the Equities with [VPS]”. (ii) There was discussion on the telephone between Rajen Shah, Mr Horn and Ms Becker-Christensen, about which Messrs Shah and Horn gave evidence. Given what followed (see below), it must have involved at least confirmation, although it is surprising that Ms Becker-Christensen should have needed it, that the USPF would not be identified as a shareholder at VPS. I am prepared to accept Rajen Shah and Mr Horn’s evidence that Ms Becker-Christensen was also told that share trades would be settled in the books of a custodian by netting opposite positions. On the basis, again, of what followed (see below), I do not accept their evidence that she was told anything that disclosed to her that there would never be any shares at all. (iii) As a result of that discussion, in the next draft on20 June 2012 , Ms Becker-Christensen amended Assumption 6) to read as follows: “The Equities will be held by USPF through a custodian. USPF’s ownership to the Equities will be recorded with the custodian who will be recorded as the custodian holder with [VPS]”
“The Equities will be held by USPF through a custodian. USPF’s ownership to the Equities will be recorded with the custodian. who will be recorded as the custodian holder with [VPS].” (v) This confused Ms Becker-Christensen, who replied on the same day that Hannes Snellman assumed “that the custodian, or a sub-custodian, would be registered as the holder of the Equities with [VPS]”
“As a general rule, dividends distributed by a Danish company are subject to Danish tax in the hands of the owner of the shares, i.e. the person who has legal ownership to the shares on the date where the dividend is declared … . The taxable event is the declaration of dividend and not the receipt of the dividend. Therefore, the Danish dividend tax is not cancelled if the dividend for some reason is never received by the owner of the shares. With respect to dividends on Danish shares which are subject to a stock loan arrangement, … the dividends according to Danish practice are taxed in the hand of the lender and not the borrower if the borrower has an obligation to pay a manufactured dividend to the lender.”
“1) The custodian services which may be carried out by [SCP] in relation to the Equities (a) does [sic.] not entail that [SCP] has established a permanent establishment in Denmark for Danish tax purposes and (b) should not trigger any adverse Danish tax consequences for [SCP]; and 2) In the event that USPF’s reclaim of Danish withholding tax withheld by the Danish tax authority is rejected, no economic penalties should be imposed on USPF or [SCP].”
“Alternatively, the Equities may be refinanced under a sale and repurchase agreement (i.e. a repo) documented under a Global Master Repurchase Agreement … entered into on or after dividend record date (with settlement of the stock loan [sic.] occurring on the same day) but always after Dividend Approval Date and the buyer [viz., the repo buyer, not the USPF] would not receive any dividend …”
“Documentation that the Danish Equity was purchased pursuant to an unconditional and legally binding agreement entered into prior to the ex-dividend date and that the Danish Equity according to such agreement was purchased on a cum dividend basis. Further, USPP must be able to document that the Danish Equity has subsequently been delivered, ideally only a few days dividend record date [sic., after that date].”
“GSS Platform and legal advice – there is no evidence that the GSS platform as a whole has been reviewed by a single law firm to provide senior management with external comfort that it is fit for purpose. CMS Cameron McKenna opined on the client money/TTCA side (and concluded that we could just about justify it) and they opined on the Custody agreement, but this appears to have been in isolation and they did not see all the other agreements needed to make this work. JB [Mr Bains] and GH [Mr Horn] did agree to having a lawyer look at this, then backtracked. I raised the issue again only for SS [Sanjay Shah] to say no in writing. At present senior management is exposed if the model is wrong – and GP [Mr Pitts] has advised this. In my opinion the firm urgently needs to have a lawyer look at all the docs and have a full description of how the process works so they can confirm whether JB’s work and the assorted advice from different advisers works together.”
“18A. To the extent (if at all) that it involves expertise to identify, what trading structures and/or series of transactions were (purportedly) constituted or provided for by the Sample Trades? 18B. To what extent were the Sample Trades consistent with any standard market practice? 19. With respect to each of the Sample Trades, did the Custodians hold any Danish shares in their custody accounts, in the custody accounts of any sub-custodians, or with VP Securities (for themselves or on behalf of any of the participants in the transactions purportedly carried out under the relevant models)? 20. With respect to each of the Sample Trades, did the Custodians receive any payments in the amount of dividends declared by Danish companies?”
“On the most important points considered by the market experts [for the Validity Trial], they were in any event agreed. For example, they agreed that [(i)] market participants would understand a dividend (or ‘real dividend’) to be a distribution from a share issuer to its shareholders, and [(ii)] to be different from a ‘manufactured dividend’, [(iii)] viz. a contractual payment representing a dividend but arising under a contract for the sale or other transfer of securities as compensation for a dividend forgone; they agreed that [(iv)] depending on the context the word ‘dividend’ on its own might be used in the market so as to encompass manufactured dividends as well as real dividends; and they agreed that [(v)] in any event what ‘dividend’ might mean for Danish tax law, and what were the requirements for there to be dividend tax liability or dividend tax refund entitlement under Danish law, [(v)(a)] would be understood to be a matter of Danish tax law on which [(v)(b)] a market participant, if interested, would take specialist advice.”
“[(i)] market participants would understand a dividend (or ‘real dividend’) to be a distribution from a share issuer to its shareholders, and [(ii)] to be different from a contractual payment representing a dividend but arising under a contract for the sale or other transfer of securities as compensation for a dividend forgone, [(iii)] to which in this judgment I refer as a ‘manufactured dividend’, although that was not a fixed market usage; … [(iv)] depending on the context the word ‘dividend’ on its own might be used in the market so as to encompass manufactured dividends as well as real dividends; and … [(v)] in any event what ‘dividend’ might mean for Danish tax law, and what were the requirements for there to be dividend tax liability or dividend tax refund entitlement under Danish law, [(v)(a)] would be understood to be a matter of Danish tax law on which [(v)(b)] a market participant, if interested, would take specialist advice.”
“17-36 … a claimant … must show that he 176 acted (or in a suitable case refrained from acting) in reliance on the defendant’s misrepresentation. If he would have done the same thing even in the absence of it, he will fail. What is relevant here is what the claimant would have done had no representation at all been made. In particular, if the making of the representation in fact influenced the claimant, it is not open to the defendant to argue that the claimant might have acted in the same way had the representation been true.181 … 176 Or a machine, such as a computer, under his control: see Renault UK Ltd v Fleetpro Technical Services[2007] EWHC 2541 (QB) … at [122] (defendants causing to be inserted into computer orders for cars with a fleet discount to which they knew they were not entitled). 181 See Downs v Chappell [1997] 1 W.L.R. 426 at 433; Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi VE Pazarlama AS[2009] EWHC 1276 (Ch) … at [1005]; OMV Petrom SA v Glencore International AG[2016] EWCA Civ 778 … (Romanian state oil buyer deceived on an industrial scale with regard to what oil it was buying: nothing to the point, even if true, that it was so desperate for oil it would have bought in any case) (discussed in A. Summers, “Deceit, difference in value and date of assessment” (2017) 133 L.Q.R. 41). Note, however, that the point was left studiedly open by Males J in Leni Gas & Oil Investments Ltd v Malta Oil Pty Ltd[2014] EWHC 893 (Comm) at [20]. 17-37 There is some issue whether a person can be said to have acted in reliance on an implicit misrepresentation about an issue that was never present to his mind at the time. In Leeds City Council v Barclays Bank Plc,185 Cockerill J gave a negative answer to the question, thus discounting a plea by a local authority that it had entered into a swaps contract with a bank on the basis of an implied representation that the bank had not engaged in dishonest interest rate manipulation. At the time the prospect of such manipulation had not been in the authority’s contemplation at all; it therefore could not say that it had known about, let alone relied on, any representations about it. With respect, however, this must be open to some doubt. Such a holding seems inconsistent with the jurisprudence on half-truths and misrepresentation by deliberate concealment;186 furthermore, there seems nothing incoherent in the idea of a party holding, and acting upon, an implicit if subconscious belief that there is nothing unusual or untoward about a given transaction.187 185[2021] EWHC 363 (Comm) ; [2021] Q.B. 1027. See too Marme Inversiones 2007 SL v Natwest Markets Plc[2019] EWHC 366 (Comm) at [286], where Picken J had said, obiter, that a showing of reliance required proof that the representee had “given some contemporaneous conscious thought to the fact that some representations were being impliedly made”; Groen v Heath[2024] EWHC 1654 (Ch) at [37]. Note also ACL Netherlands BV v Hewlett-Packard The Hague BV[2022] EWHC 1178 (Ch) at [505]-[506] and Allianz Funds Multi-Strategy Trust v Barclays Plc[2024] EWHC 2710 (Ch) (cases under theFinancial Services and Markets Act 2000, s.90A and Sch.10A Pt 2, respectively; same rule applied). On the other hand, for the rule in the Barclays case to apply the statement must be implied; an express statement that nothing is wrong, if brought to the attention of the representee or his agent, will potentially engage liability. See Patarkatsishvili v Woodward-Fisher[2025] EWHC 265 (Ch) at [86]-[103]. 186 See cases such as Schneider v Heath (1813) 3 Camp. 506 and Gordon v Selico Ltd (1986) 18 H.L.R. 219, where liability in deceit arose from acts intended precisely to hide the fact that any issue arose on which a representation could be made. This point was adverted to by Waksman J in the later Crossley v Volkswagen AG[2021] EWHC 3444 (QB) at [76] … . 187 See Crossley … at [46]-[97]. There, in a claim arising out of the alleged concealment of untoward emission test results on cars, Waksman J declined despite the Leeds case to strike out a claim in deceit by purchasers claiming to have been duped; and this even though the purchasers presumably had never dreamt that anything might be wrong on the emissions front.”
“We say that a reasonable Danish Tax Authority would expect that if a named client did not own any Danish shares and had not received any dividends from a Danish company and had not suffered any withholding of any dividend tax, then they would not be submitting a DCA in the form they did as part of an application for a refund of withheld dividend tax. … On any view, … against the background of that conduct [the submission of a claim] and those words [the content of a DCA] a reasonable tax authority would expect to be told if there were no shares, no dividend and no withholding of tax.”
“The Danish company had withheld the tax described in the [CAN] from that payment”
“… the representee must in fact have been induced to take action … in reliance on the representation. The misrepresentation need not be the only reason for the representee’s decision to [act as it did], but the representee will have no cause of action if it would have [acted as it did] even if the representation had not been made. If it is proved that a false statement is made which was material – in the sense that it was likely to induce [the action said to have been induced] – then there is an evidential presumption (of fact, not law) that the representee was so induced. The presumption is stronger if the representation was made fraudulently.”
“It is SKAT’s case that Mr Sven Nielsen was actively aware of the representations at the material times.”
“What I see here is that the amount has been distributed as dividends to Grace Bay and that 27% has been withheld in tax.”
“Q: You didn’t understand this one to be making any statement to you about the deduction of tax from this particular credit? A: That appears from the numbers. Q: But again you don’t understand this to be making any statement about the Danish company withholding the tax described in this particular advice? A: It doesn’t appear that tax has been withheld, but at some point in time the custodian has received dividends and has -- has received the net dividends. Q: You are not suggesting – sorry, you did not understand at the time that this credit advice showed the receipt of a dividend from the company itself? A: We know which company distributed dividends but of course they did not distribute dividends directly to DWM Pension Plan [the client named in the CAN he was being shown]. Q: … to clarify … an answer you gave earlier … when we [were] looking at [an SCP CAN] …: “Question: So you did not understand this dividend credit advice to be making statements to SKAT about the withholding of tax or the payment of dividend, did you?”
“Answer: He received it from his custodian and tax had been withheld.” … It is right, isn’t it, that you didn’t understand the [SCP] credit advice to be making statements about the withholding of tax from the credit identified in the statement? A: If it appears from the CAN the tax has been withheld, we had to trust that. Q: You didn’t understand the [SCP] credit advice to be talking about the payment or receipt of the dividend, did you? A: As I remember it, it shows the distributing company and what has been withheld in taxes.” “Question: So you did not understand this dividend credit advice to be making statements to SKAT about the withholding of tax or the payment of dividend, did you?”
“Answer: He received it from his custodian and tax had been withheld.”
“If there’s a big sign on the street saying, “please help yourself”, then me or somebody else would go and help themselves.”
“Q. … because the contractual payment involves the debit of the short and the crediting of the long, there is no tax that has been withheld from that payment, is there? A. The debit of the short comes from cash flow 1, which is the summation of all the cash flows. That cash flow the market is assuming is 73% of the gross dividend, therefore there is tax -- no one has taken -- the market has turned round and said: this is what we are pricing. Q. Is it your evidence to this court that with the contractual payment involving the accounting entries debit short, credit long, that tax has been withheld from that payment; is that your evidence? A. Tax has not been withheld -- well, actually, all dividends, if you go back to dividends, tax is withheld at source. Has that payment -- payment reflects tax has been held at source, but I don’t think it says that the payment has been taken off there and given to SKAT. Q. I will ask one more time. If you could answer the question, I would be grateful. A. If I could understand it, it would help. Q. Is it your evidence to this court that with the contractual payment involving debit short, credit long, that tax has been withheld from that payment? Is that your evidence? A. Okay, withheld by who? Q. Anyone, Mr Hogarth. A. Okay, in that case, it is the market telling me that that cash flow is 73% of the gross dividend. MR JUSTICE ANDREW BAKER: That tells me that the amount that is to be treated as a payment to be made to somebody is to be calculated in that way, but does that mean that anybody has withheld tax from anything? Or do you not see – A. Yes, I am just trying to clear it in my head. If the market is saying that this is the price of the equity and inside of that is just the 73% cash flows and we know that the tax is withheld at source~... I’m having difficulty with the link. I think in my mind the market is saying it has been taken off here, because it has been taken off at source, therefore I’m pricing this set of cash flows at 73% of the gross dividend. MR JUSTICE ANDREW BAKER: I think I understand that. I may be introducing an unnecessarily homely example that later on somebody may say is completely incomparable, but if you imagine for a moment that I have an employee and I pay that employee after deducting PAYE, so what they see in their pay packet is, whatever, 80% of their gross income entitlement, I think most of us would say one would recognise that they have had 20% tax taken off their pay when they receive that, whatever amount it is that they actually get into their bank account. If Mr Graham entered into some contract with Mr Head where there is a cash flow item that happens to be calculated by reference to the PAYE net entitlement of my employee, and therefore Mr Graham pays Mr Head an amount of money that happens to equal the net pay receipt of my employee, would one say that when Mr Graham makes that payment to Mr Head anybody has taken tax off it? I think that’s the sort of example that Mr Graham may -- or that may underlie a way of thinking that Mr Graham is inviting you to think about in pressing you as to whether you would say that tax has been withheld, and there may be a separate question as to whether you thought about it in that way at the time? A. If I was one of your employees, my Lord, I would certainly think someone has taken 20% tax off me. But if that tax went into your firm, you might not pay that off because something could be happening tax-wise inside your firm which meant you didn’t have to pay to HMRC every amount. So is Mr Graham asking me, saying that it has to be directly traceable back to SKAT or is he just saying that -- I don’t know what he is saying. I apologise, Mr Graham. I am just not getting this.”
‘I was following instructions’ or ‘I trusted my husband and his staff’.” In my judgment, those were not ‘refrains’ and Mrs Shah was not ‘seeking refuge’
“The representor who says something it occurs to him to say [I add, for clarity, intending by doing so to induce the representee to act on what is said], which in fact conveys that which the representor knows full well to be untrue, and whose only defence to a charge that he knowingly spoke an untruth is to say he did not because he did not care what his words might be taken by the representee to mean deserves no better treatment under the law, it might be thought, than the representor who understands that his words will convey what in fact they convey and does not care whether, in that meaning, they are words of truth.”
“70. It is the decision to make the payment that would be revoked (as a public law, administrative act). I should note that a Danish court does not in any sense effect the revocation as a judicial act. The revocation would be an administrative law decision made by SKAT itself (although as a public law act, revocation may be challenged before the Danish courts). 71. The reversal of the payments would be achieved by SKAT bringing a private law claim for the restitution (i.e. reversal) of the payment made pursuant to the decision. The private law claim would typically be a monetary restitution claim or a claim seeking compensation for unjust enrichment. 72. The principal effect as a matter of Danish law of SKAT’s purported revocation of its earlier payment decisions would be that SKAT could more easily bring a private law claim for the restitution of the payment. If SKAT had revoked its earlier payment decision, then SKAT would need only to point to that revocation as justifying its claim to be entitled to restitution of the payment – unless, of course, the recipient challenged the validity of the revocation in the … same proceedings. Once SKAT had revoked its earlier payment decisions, those earlier payment decisions could no longer be relied on by the defendants as a valid basis for the recipients of the supposed refund payments to retain them [emphasis added]. (I note here that payment decisions do not themselves give rise to obligations, without more. Thus an unexecuted payment decision would not in itself entitle the intended beneficiary of that decision to payment. It may, however, serve as evidence that SKAT was under an obligation to make the payment in question.) 73. However, it would also be open to SKAT to bring a private law claim for the restitution of the payments without first taking the public law step of revoking them. It could do so by proving to the court that the original payment decision had been procured by fraud or made by mistake or was otherwise invalid and that the circumstances justified the court ordering restitution of the payment. 74. It is important to note that, even without a decision to revoke the payment decision, SKAT always retains the option to file a private law claim in all cases. This means SKAT could always present an argument to the court that the recipient had no valid claim to be paid and that the money should, therefore, be repaid. In this scenario, there would not be a public law or administrative act in the form of a revocation decision revoking the initial (incorrect) payment decision upon which SKAT could and would centre its claim. 75. If SKAT chose to proceed without revoking its earlier payment decision, it might find that the situation was more complicated than it needed to be, for instance, when trying to prove to a judge that SKAT had a valid claim for restitution. It is generally easier to refer to a validly revoked decision (which necessarily means there was no valid basis for payment) than to ask the judge to determine the validity of the payment in the private law action. However, if there is sufficient evidence that there was no basis for the original payment (because the original payment decision was invalid), and thus that SKAT is indeed entitled to a refund, there would be no need for the administrative law step of a decision to revoke. The court would determine on the available evidence that the payment had been procured by fraud or made by mistake or that the recipient for some other reason had no right to retain it, with the result that SKAT was entitled to the restitution of the payment made and would rule accordingly.”
“Well, yes, a share was a -- I suppose I would call it an abstract asset. It is dematerialised and it can only be represented in the books and records of a custodian. It is the custodian’s obligation to make sure their own books and records balance. So for every positive account holding there has to be a negative account holding somewhere, and that is where the short seller’s position comes in.”
“Q. … You say they in inverted commas somehow “approved” this by paying. How do you say SKAT would have known or knew that these were cum-ex trades, Mr Shah? … A. They wouldn’t have known that they were cum-ex trades, but they would have known that the DCAs were genuine. Q. They would have known -- they would certainly have thought that the DCAs were genuine, Mr Shah. A. Thought, yes. But my belief was that they knew the DCAs were genuine.”
“Q. What do you say the reference to “withholding tax deducted” actually refers to, then, Mr Shah? A. The only way I can explain that is that’s 27% of the gross dividend which is the difference between the net and the gross, and that amount represents the amount that the pension plan or the applicant is entitled to receive from SKAT. Q. So that is simply a reference to a calculation which has been made to produce the net dividend amount figure? A. Yes, that’s my understanding. [In fact, Mr Shah’s first answer said rather more than that. It said that the 27% was deducted, and labelled (in this instance) “withholding tax deducted” because the client was entitled to be paid that proportion of the gross entitlement by SKAT.] Q. Do you accept, Mr Shah, that this conveys to the reader and was intended to convey to the reader that there has in fact been withholding tax deducted? A. I would say that it depends on the reader, it depends on who the reader is. Q. Would you accept that a tax authority, whose job it was to give ‘refunds’ in respect of withheld tax, would have understood and intended and been intended to understand this to be a reference to there in fact having been withholding tax deducted? A. I’m not that familiar with the processes but my understanding is that this would convey to SKAT that this is the amount that the applicant is entitled to reclaim. [This confirmed that Mr Shah did intend his first answer in the way I understood it – see above.] Q. Mr Shah, how would a reader of this know or understand that no tax has actually ever been deducted? A. You mean deducted by the issuing company? Q. Actually deducted, as opposed to as part of some calculation simply intended to achieve another figure? A. Well, if the question is how would I explain that, I would explain by saying that this arises due to the loophole. Q. The question is how would a reader of this know or understand that no tax has actually ever been deducted? A. I don’t know the answer to that.”
“Q. And so this is -- you understood and intended this document to be stating that Acorn was the owner of 5.95 million shares in TDC, correct? A. Yes, those were held in Acorn’s custody account. They were recorded in Acorn’s custody account. That was the number of shares it had in the custody account. Q. And that records the position as at the date of dividend declaration, correct? A. No, that is actually -- this doesn’t. I think it would be the date, the case of dividend declaration -- this actually just records the position on the payment date. Q. But … if a dividend is declared in respect of shares owned by Acorn, would it not be saying by implication that that ownership had been acquired on or before the ex-date -1? A. I think these are not jurisdiction-specific. … The DCA is a generic thing that was produced for every market. It does not vary in format. I don’t think you could read in a holding on a particular date from the DCA. Q. So is the DCA then saying Acorn has a settled position of 5.9 million shares as at the date on which the dividend was paid to it? A. No, it definitely does not say that. It doesn’t say anything about -- it is saying that there are shares of 5.95 million recorded in Acorn’s custody account. It is not saying anything about settled positions or anything. Q. But it must be saying, must it not, that the shares are in its custody account at the relevant time for the jurisdiction in question to make Acorn entitled to the dividend? A. No, it doesn’t say that, because it is just a generic document that is produced for every single jurisdiction without varying its format. It does not provide specific tax advice in relation to any jurisdiction, so it cannot be said to do that, no. Q. But if it is giving information about the dividend, it is presumably saying that Acorn, the addressee of the dividend credit advice, is entitled to the dividend, because – A. It is saying -- what it is saying is that the custodian has credited on this date the client with an amount which the custodian has treated as a dividend, but it is not saying anything about the tax treatment in any jurisdiction.”
“That the representations in the Lindisfarne DCA[s] were being made by Lindisfarne was clear on the face of the documents, which were on Lindisfarne headed paper and included Lindisfarne’s registration in the footer.”
“… the necessary relationship between the maker of a statement or giver of advice (“the adviser”) and the recipient who acts in reliance upon it (“the advisee”) may typically be held to exist where (1) the advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially, to the adviser at the time when the advice is given; (2) the adviser knows, either actually or inferentially, that his advice will be communicated to the advisee, either specifically or as a member of an ascertainable class, in order that it should be used by the advisee for that purpose; (3) it is known either actually or inferentially, that the advice so communicated is likely to be acted upon by the advisee for that purpose without independent inquiry, and (4) it is so acted upon by the advisee to his detriment.”
“A reasonable man, knowing that he was being trusted or that his skill and judgment were being relied on, would, I think, have three courses open to him. He could keep silent or decline to give the information or advice sought: or he could give an answer with a clear qualification that he accepted no responsibility for it or that it was given without that reflection or inquiry which a careful answer would require: or he could simply answer without any such qualification. If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require.”
“apart from cases where there is some direct dealing there may be cases where one person issues a document which should be the result of an exercise of the skill and judgment required by him in his calling and where he knows and intends that its accuracy will be relied upon by another”
“(i) the purpose of the task or service and whether it is for the benefit of the claimant; (ii) the defendant’s knowledge and whether it is or ought to be known that the claimant will be relying on the defendant’s performance of the task or service with reasonable care; and (iii) the reasonableness of the claimant’s reliance on the performance of the task or service by the defendant with reasonable care.”
“a. without the Monthly Reports; b. without appropriate context from the clients/agents in the WHT Applications; c. without making further enquiries to satisfy itself of any entitlement for a refund; and d. in relation to matters on which the DCAs did not purport to express any view, such as tax matters (the DCAs [being], quite obviously, not tax vouchers).”
“Q. You … knew at the time that these credit advices were submitted that SKAT would … understand from the credit advices that the custodian issuing the credit advice itself honestly believed that the facts stated in the credit advice were true, correct? A. Correct.”
“From his knowledge of the [CANs], Mr Patterson was … aware of the substance of the Core Representations made to SKAT, which is sufficient for the purposes of a claim in deceit.”
“I. a full Power of Attorney … which gives Acupay the authority to make the claim on behalf of the Client, and receive the funds on its behalf; and II. a Certificate of Residence issued by the relevant government agency in the Client’s jurisdiction. The Client accepts that each jurisdiction to which Acupay is applying for refund will have different information and document requirements and agrees to provide to Acupay any further information or documentation which is required by the presiding tax authority, as requested by Acupay.”
“Whilst I have learnt much about it in recent years, at the time I did not understand that the trades were ‘settled to zero’ or that there were possible concerns with representations made nor did I have any realistic way to have discovered this. Again, this was not ‘turning a blind eye’. The strategy appeared to be running smoothly and successfully and I did not feel there was any reason to be monitoring closely. I was simply leaving those who had the expertise to do their job.”