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

As SKAT rightly submitted, a representation of fact may carry with it an implied representation that the representor honestly believes the fact to be true. In other cases, it may be that what is claimed to have been a representation of fact is held not to have been, because the representee would not reasonably be expected to take the representor to be speaking to the truth of the matter (see paragraph 432 above for the basic concept of a representation, which was not contentious in this case). In such cases, there might nonetheless be (instead) an implied representation that the representor honestly believed the fact stated to be true, or (perhaps) had no reason to think it not true.

SKAT submitted that the honest custodian representation was implied here on that basis, and that the ‘helpful test’ in Geest v Fyffes was met (paragraph 449 above). According to that argument, “a reasonable representee [in SKAT’s position] would have naturally assumed that the true state of facts did not exist (i.e. that the Custodians did not honestly believe the statements made in the relevant documents) and that if that were the true position they would have been informed of it or the DCAs would not have been issued in the first place.”

That argument, however, misunderstands and misapplies Colman J’s idea. The key point here, in each instance, is that the tax refund claim was being made by the Tax Agent, expressly acting on behalf of its named client, and not by or on behalf of the custodian that had issued the CAN. Any representation to SKAT was a representation by the Tax Agent, acting in that capacity. Any implied representation as to the belief of the representor would be a representation about the Tax Agent’s belief, or (perhaps) about its named client’s belief, not a representation about the custodian’s belief. Applied to the present case, Colman J’s dictum would invite consideration of whether SKAT naturally would assume that if the custodian did not believe the core representations (if they were made by the CAN), SKAT would have been told as much by the Tax Agent.

The short answer, in my judgment, is no. There might be room for saying that it would naturally be taken as implicit that, so far as the Tax Agent (perhaps also its client) was aware, the custodian was acting honestly in issuing the CAN, or that the Tax Agent (again, perhaps also its client) had no reason to suppose the custodian was not acting honestly. There might also, or instead, be room for the view that a representation of some kind was implicit that the CAN was genuine, i.e. had been issued by the custodian to the client in respect of an account held by the client with the custodian. However, SKAT would have no reason to suppose and could not reasonably expect or naturally assume that the Tax Agent (or its client) would know, if this were the case, that the custodian was not acting honestly. The Tax Agent’s conduct in submitting the tax refund claim could not reasonably be thought to convey, as a statement of fact made to SKAT, that the custodian was acting honestly.

I find therefore that the honest custodian representation alleged by SKAT was not made.