CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

The pleading of the representations that SKAT says were made to it by each of the tax refund claims submitted to it was complex. Care was needed to bear in mind not only the primary pleading, alleging the representations, but also both a preparatory plea in the Particulars of Claim and important Further Information provided by SKAT pursuant to a Request for Further Information served by the DWF Ds after the Validity Trial.

The preparatory plea, paragraph 17(c) of the Particulars of Claim, was that each CAN, so SKAT alleged, “purported to record that:”

Reading together paragraph 19 of the Particulars of Claim and the Further Information clarifying and confining SKAT’s case, the plea by SKAT was that, given certain of the content of the tax reclaim documents submitted to it and the fact that they were being submitted so as to make a tax refund claim in respect of Danish dividend tax, the Tax Agent, by submitting the claim, represented to SKAT that:

The dividend entitlement representation and dividend payment representation are set out above as separate representations. There is some convenience in that when considering whether the pleaded representations were made. However, they were pleaded as a single, composite representation, viz. (in the basic plea, before building in the Further Information) that “[the named client] had received the dividend, and in due course payments representing the dividends, net of tax, described in the Credit Advice Note (on the “payment date” recorded therein)”. The Further Information clarified that the pleaded case was of a representation of entitlement as a matter of Danish tax law and the receipt of a payment in respect of that entitlement. Therefore, the allegation of the dividend payment representation was not freestanding and it falls away if the dividend entitlement representation, as alleged, was not made.

Each of those core representations is detailed and specific. Nothing like any of them was stated expressly in any of the documents submitted to SKAT, as SKAT recognised by its plea that the representations were not made expressly, but “partly expressly and partly impliedly”, the sense of which I considered in paragraph 435 above and have sought to capture in the opening words of paragraph 457 above.

For closing argument, SKAT sought to recast the pleaded representations by a “Restatement of Alleged Representations” which drew a distinction, for each, between the representation pleaded and what was said to be the representation “in substance” alleged. I did not find that helpful. If the suggested ‘substance’ differed materially from the pleading, the ‘Restatement’, if pressed, would have been an objectionable attempt to amend beyond the eleventh hour; if it did not differ materially from the pleading, it would have been unobjectionable, in the final analysis, but an unwelcome, unnecessary distraction nonetheless. In fact, the Restatement did articulate a ‘substance’, in my view, that differed materially from the pleading.

After closing argument, there was no real dispute but that an understanding of the material essence of a representation suffices where the tort of deceit requires awareness or understanding that the representation was being or had been made. It therefore does not matter if an individual whose awareness or understanding falls to be considered might not have articulated their thinking in terms that match precisely those in which the court chooses to articulate the representation, or those in which it may have been pleaded. Moreover, the variety and flexibility of language mean that in any given case, there may be room for articulations that look quite different on the page but convey, in truth, essentially the same message. When applying that principle, however, what matters is the essence of the pleaded representation, not therefore, in this case, the materially different ‘substance’ in SKAT’s Restatement document. This judgment determines the claims pleaded by SKAT, and I consider that paragraph 457 above sets out accurately the core representations pleaded.

In oral closing argument, Mr Graham KC accepted the force of concerns expressed about the Restatement document, and rested SKAT’s case on the core representations as pleaded, so long as the ‘material essence’ principle applied, as in my judgment it did. He also provided an articulation of the material essence of those pleaded representations, as SKAT would have it for the purpose of applying that principle. I consider those articulations when dealing with each of the pleaded representations in turn, below.

Returning to the formulation of the core representations in paragraph 457 above, there was an issue as to whether the tax ownership representation, as pleaded, was, even more specifically, an alleged representation that in respect of the shares described in the CAN, the Tax Agent’s named client was either (a) a dividend date shareholder who was not to be treated by Danish tax law as having disposed of those shares prior to the dividend declaration, or (b) a party, when the dividend was declared, to whom a dividend date shareholding was to be treated by Danish tax law as having been disposed and by whom that shareholding was not to be treated by Danish tax law as having been disposed, those being the categories of legal person that the Validity Trial determined to be shareholders when a dividend was declared, in the eyes of Danish tax law, subject therefore to Danish dividend tax liability on the declared dividend.

That issue arose because in the Further Information that I have said needs to be taken into account, as regards the tax ownership representation SKAT:-

That continuation also said (in line with paragraph 17(c)(i) of the Particulars of Claim (see paragraph 456 above)) that, so SKAT alleged, each CAN recorded that on the date of the CAN there was a settled positive balance of shares in the referenced Danish company held by the custodian for the Tax Agent’s named client, from which the Shah Ds derived a submission that the tax ownership representation, as pleaded, was also defined, and confined, by that.

In my judgment, the sense of the relevant RFI Response was not that SKAT was alleging a representation quite as specific and detailed as those submissions would have it. SKAT’s reference to the requirements for Danish tax law share ownership as determined by SKAT (Validity Issues) was not part of the pleaded representation. It was a plea making clear what SKAT said it would take for the pleaded representation to have been true, viz. that those requirements would need to have been satisfied. It is like an allegation that a job applicant represented by their c.v. that they had achieved a particular award (say, a Gold Duke of Edinburgh’s Award). If that were followed by a plea stating, as alleged by the claimant, the requirements for achieving that award, one would not naturally interpret that as alleging, as such, a representation or set of representations that the applicant had satisfied each of those requirements. The supplemental plea would be likely to be taken to identify the criteria by reference to which, according to the claimant, the truth or falsity of the pleaded representation that the applicant had a Gold DofE Award fell to be judged.

The plea in the Further Information harking back to the preparatory plea about the contents of CANs was a reiteration of one of the alleged planks upon which SKAT claimed that the tax ownership representation fell to be constructed. That involved an unhelpful jumbling of pleaded points; but it is not a sensible reading of the pleaded case as a whole, I think, to say that SKAT was confining itself to a representation of tax ownership on the dividend declaration date, in respect of a settled balance of shares on the date of the CAN. A CAN reported a payment, and was therefore issued on or after a payment date. On any view, it did not say or imply anything about the existence of a settled balance of shares on the date of the CAN.

There was also a question, raised by Mr Jones KC for the Shah Ds, over the formulation of the dividend entitlement representation, as pleaded, in paragraph 457(ii) above. Was the representation, as alleged by SKAT, that the client had been (as I have it there) the shareholder for tax purposes on the dividend declaration date, or that it had been the dividend date shareholder (as I defined that term in SKAT (Validity Issues) at [166])?

That arose because in the same Further Information, SKAT clarified that the pleaded representation that the Tax Agent’s client “had received the dividend” was a representation, as alleged by SKAT, of “receipt [by that client] of a dividend for tax law purposes by the owner of the shares on the dividend declaration date (as explained at paragraph 179 of the Validity Issues Judgment)”. SKAT (Validity Issues) at [179] completed and summarised my “conclusions as to the accrual and transferability of the right to dividends under Danish company law” (ibid at [183]) and did not concern Danish tax law. The cross-reference to [179] in SKAT’s Further Information was potentially confusing, therefore, although if there was any confusion the root cause may have been that in framing the relevant RFI Request, the DWF Ds said that [179] set out a conclusion of Danish tax law. Be that as it may, the only way to make sense of SKAT’s Response is if the cross-reference to [179] relates to and qualifies only the words “dividend declaration date”. That is to say, the Further Information clarified that the dividend entitlement representation, as pleaded, was defined as and confined to a representation that the Tax Agent’s client had received a dividend entitlement by being the relevant owner, i.e. the shareholder in the eyes of Danish tax law, at the relevant time, i.e. at market close on the dividend declaration date.

Finally as to the articulation of the alleged representations in paragraph 457 above, Mr Head KC queried in oral closing argument whether, as pleaded, the tax representation referred to (payment in respect of) the dividend declared by the referenced company, rather than the referenced dividend (as I have it in paragraph 457(iv) above). I was during argument and remain unable to discern any meaningful difference between the two.