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

The evidence allowed me to find that, and in truth left me in no real doubt but that, “(i) Mr Nielsen processed the WHT Applications as a straightforward clerical matter without regard to the matters alleged to form the content of the Core Representations; and (ii) no-one within SKAT instructed or understood him (or … the documents submitted to SKAT) to be collecting information confirming the content of the alleged Core Representations”, which is how the DWF Ds put it in their written closing submissions.

The examination of SKAT’s claim process afforded by the Main Trial in my judgment demonstrated that SKAT’s approval and payment of the tax refund claims at issue in these proceedings was not influenced in any way by any of the representations that SKAT alleged. That is so even if the presumption of inducement here is the strong presumption, not easily rebutted, that fraudulent misrepresentations are likely to hit their mark, i.e. have an influential impact as intended. I had that presumption well in mind when considering the matters summarised above. I recall it now, separately, as the foundation of SKAT’s primary case, as opened at trial (see paragraph 545 above). The strength of the evidence overcomes by a clear margin the very strong inherent likelihood, other things being equal, that an intended fraud will have had some operative impact.

Mr Jones KC submitted that it was not open to SKAT to fall back on the presumption, having pleaded and particularised as its positive case that the alleged representations were relied on by Mr Nielsen, in the sense that he was consciously aware of them as communicated by the tax reclaim documents and they influenced his decision in each case to process the reclaim so that it would be paid by SKAT. Whether or not an argument of that kind might work in a given case, I do not accept it in this case. SKAT did not admit in its pleadings any requirement in law for there to have been contemporaneous conscious awareness; and it could be coherent for a claimant to fail to establish that some identified individual(s) relied, as alleged by way of primary case or at any rate particularised positive factual case, without the plausible inherent likelihood of reliance being decisively negatived.

On the evidence concerning SKAT’s approach to and understanding of the tax refund claim system it was operating, in practice through the clerical processing efforts of Mr Nielsen, however, the notion that there was reliance on (anything like) the representations alleged by SKAT was, in my judgment, decisively negatived.

I was referred to judicial dicta critical of lawyer-led constructs concerning what it might be said had been represented, for example in Farol Holdings, supra, per Zacaroli J at [409]-[410]:

“Although, chronologically, the pleading comes before witness statements, it is an essential prerequisite of a claim in implied representation … that it is based on the evidence of the relevant representees that they understood the implied representations to have been made to them. … Legal ingenuity might establish that all sorts of other statements are to be implied from the words and conduct of the representor, but unless the representee was led to the same conclusions at the time, a claim in misrepresentation cannot be made out” (Farol Holdings, supra, per Zacaroli J at [409]-[410]).

I do not mean now to open the issue I have not needed to resolve of whether or when there must be contemporaneous conscious awareness that a representation has been or is being made. The presently pertinent sting of observations such as Zacaroli J’s is that a litigation claim that harmful action (or a harmful failure to act) was induced by misrepresentation should be driven by an understanding, and realistic assessment, of why in fact the harmful action was taken (or why action was not taken, such that harm resulted from the failure to act). SKAT’s case indeed had the opposite appearance, as defendants submitted, of a lawyer-led case as to what representations, objectively, it might be said were made, in the absence of anything simple like a representation of entitlement to a refund or a representation that tax liability had been incurred, onto which the fitting of a case as to inducement then had to be attempted.

Mr Nielsen’s witness statement, if accepted uncritically, might have seemed up to that task; but in substance he failed to come up to proof, in the modern fashion that cross-examination showed he should not have given that seemingly supportive evidence by adopting his witness statement as his evidence in chief, rather than in the stricter or old-fashioned sense of a witness failing to say in chief what they had been billed as able to say. I am satisfied that if simply asked to give an account of how he did his job, and why (to the extent he can remember and articulate) he processed all these tax refund claims for payment by SKAT, and if there were no implicit pressure to be helpful to SKAT by his answers, Mr Nielsen could not honestly have given an answer that might have led to a plea that he relied on the representations alleged by SKAT, or anything like them. An absence of reliance by Mr Nielsen would not in itself make the pleaded claims impossible, because in principle there might have been a provable case of systemic reliance, or the presumption of inducement might have done enough for SKAT. In the event, however, as I have said, the facts revealed by the trial process demonstrated the contrary.

That conclusion may have the consequence that SKAT’s dividend tax refund control was, at the time, so flimsy as to be wide open to what might be seen as exploitation, and that, at all events when claim volumes and values were ramped up in 2014, the Solo and Maple Point Models in particular exploited it ruthlessly (especially the fully automated Solo Model in 2015). In fact that is what, in my judgment, Sanjay Shah, for one, thought he was doing at the time. I think his 2021 television soundbite was candid and revealing (paragraph 2 above): “If there’s a big sign on the street saying, “please help yourself”, then me or somebody else would go and help themselves.” I consider that Mr Bains saw it that way too. He accurately assessed it to be Sanjay Shah’s thinking, when he said in December 2014, in his email to a personal counsellor to which I referred in paragraph 227 above, that in his view the reason Sanjay Shah had made him a substantial offer to re-join Solo, an offer that Mr Bains had refused, was that “he [Sanjay] only ever wanted to keep me out of the market so he could bleed dry an innocent Nordic country next year [2015]”.

In my judgment, however, even bearing that also well in mind, it remains the case that on the evidence, there was no need for any of the representations alleged by SKAT to be made for SKAT to pay out on tax refund claims submitted under the Form Scheme, through the flimsy system it had put in place (and as it happens, my conclusion, in substance, is that they were not made, given the irrelevance in practice of the Tax Agents’ cover letters). The evidence made it very clear to me that SKAT knew that representations of that sort were not being made to it, and that it was paying claims anyway. SKAT was not induced to act, at all, by the representations it alleged in these proceedings.

For completeness only in the present context, I would add in relation to the remarks quoted in paragraph 607 above that I do not judge them to evidence a view at the time that SKAT was being deceived into paying Solo Model tax refund claims, i.e. tricked into paying by falsehoods told to it. Neither Mr Shah nor Mr Bains thought that at the time, I conclude, although they both had come to realise that Solo had hit upon a way to take advantage of what had to be a very slack process at SKAT that would be enormously lucrative so long as it continued. Mr Shah was comfortable to play that advantage as long as it lasted; Mr Bains was more conflicted, initially making a play to profit substantially from it at Arunvill, but rendered uncomfortable when Arunvill’s reaction was to think it must amount in some way to fraud, and then feeling that because of the scale to which Mr Shah was taking things at Solo, SKAT should be tipped off to look into what was happening.