Judicial review under Section 469A of the Code of Organization and Civil Procedure, Chapter 12 of the Laws of Malta (the “Code”), is a basic judicial remedy which grants natural and legal persons the opportunity to request Maltese courts of civil jurisdiction to “investigate the validity of any administrative act or declare such act void, invalid or of no effect”. This legal provision is often invoked by natural or legal persons who consider themselves unjustly wronged by an administrative act carried out by a public authority under Maltese jurisdiction. As indicated in paragraph (1) (b) of Article 469A, the injured party seeking this judicial remedy is required to prove that the impugned administrative act was either carried out in violation of the Constitution of Malta or that the public authority was acting beyond its authority and legal powers, or ultra vires, for one of the reasons listed therein.
The remedy provided under this Section 469A formed the basis of the legal action brought by TCV Management and Trust Services Ltd (hereinafter referred to as the “Plaintiff”) against the EOI Sanctions Committee and the Commissioner for income (hereinafter collectively referred to as the “Plaintiff” Defendants ”) on August 12, 2020.
For your information, the applicant is an entity which is locally authorized to act as a trustee in a number of trusts established in Malta, one of which is referred to as the “Dama Trust”. On March 11, 2020, the defendants sent a formal notice to Dama Trust, fining it € 5,900 for submitting a report that trusts are required to submit under Article 41 of the Cooperation Regulations. with other tax jurisdictions (the “Regulation”), 34 days beyond the time limit imposed by said regulation.
The plaintiff contested the fine, arguing that, as trustee, he did everything in his power to compile, assess and submit the report within a timeframe that respects the time limit provided for by the regulations. In fact, the Claimant asserted that the late submission of the report was solely due to his complete reliance on the Settlor, Protector and Beneficiaries of Dama Trust to provide them with ancillary documents which were to be appended to said report. In this regard, the Plaintiff requested the Revenue Commissioner to remit the penalty imposed on Dama Trust, as the late submission was not due to negligence or a misdemeanor committed by the indicted entity. On July 22, 2020, the tax commissioner sent a notice of formal notice to the claimant, informing him that his appeal was dismissed and that the fine was still due. This, in turn, led the plaintiff to resort to section 469A of the Code to initiate legal action against the defendants.
As a result of the foregoing, a court order entitled “TCV Management and Trust Services Ltd v EOI Penalties Committee Et” was issued on September 16, 2021 by the Civil Court of First Instance (the “Court”), chaired by the judge Dr. Toni Abela. This court order was issued in response to a preliminary plea raised by the defendants in the aforementioned lawsuit.
In response to the plaintiff’s legal action, the defendants asserted that the plaintiff was legally precluded from resorting to section 469A of the Code because he had not first exhausted all the ordinary remedies available to him before. to use section 469A, as required under paragraph (4) of said section. The defendants clarified that, upon notification by the plaintiff of the notice of formal notice issued by the revenue commissioner, which he said was July 24, 2020, the plaintiff had fifteen (15) days to contest the notice of formal notice before a court of law, and that, taking into account the fact that the Plaintiff did not contest this opinion within the time limit set, the Defendants now have an executive title on the € 5,900 withdrawn from them in accordance with in Section 40 of the Income Tax Administration Act, Chapter 372 of the Laws of Malta.
In the above-mentioned court order, the Court first considered the rationale for section 469A and its subsidiary nature. She explained that the intention of the legislator with article 469A was to create a last resort remedy on which people who felt aggrieved by an administrative act and were not able to find a mode of dispute against this act. , could be supported to ensure that they have access to an effective remedy. The Court, while referring to the judgment of the First Halls civil court in “Garden of Eden Garage Limited vs. Transport Authority ”, emphasized that the mode of challenge that the injured party must exhaust before resorting to section 469A must not only exist and be available, but must also provide an effective and efficient remedy that is reasonably accessible to those who ask for the call.
In fact, the intentions of the legislator when drafting paragraph (4) were to ensure that this judicial remedy does not become an option which legal or natural persons abuse by resorting immediately without seeking to identify whether it exists. alternative remedies available for their specific circumstances. . In light of the foregoing, the Court next considered the sanction imposed and the mode of appeal which the defendants argued was available to the plaintiff and willfully refrained from using.
The Court first noted that the Tax Commissioner, when issuing the formal notice on March 11, 2020, invoked Rule 44 (1) (d) of the Rules. This article states that; ‘Where a Maltese reporting financial institution fails to report the information required to be reported under Regulation 41 within the time limit stipulated in the guidelines published on the website of the Revenue Commissioner under the provisions of Article 96 (2) of Income tax Act, to a penalty of:
two thousand five hundred euros (€ 2,500); and
one hundred euros (100 €) for each day during which the defect existed, provided that this penalty does not exceed in total twenty thousand euros (20,000 €) ”
In light of Article 96 (2) of the Income Tax Law referred to in the aforementioned article, which states that “Any directive, explanation or instruction relating to the Income Tax Law… contained in a publication or circular published by or under the authority of the Commissioner of Revenue and distributed or made available to taxpayers in general, must be read and interpreted as being one with these rules and must have the same effect as the rules… ”, the Court has endeavored to consider every set of guidelines, explanations and instructions that emanate from this sub-article. Once the Court had completed its review of what it called a “legal maze”, it held that, as far as trusts were concerned, it could not find any form of guidance, and that it could not find any guidance. It was therefore not possible to understand the statutory limits imposed to successfully challenge a notice of default or claim.
In fact, the only time limit to which the Court could refer was a period of 10 days indicated on the notice of default sent by the Revenue Commissioner to the plaintiff on March 11, 2020, which was indicated in light of Article 35 ( 1) of the Regulation, which stipulates that “when a person falls within the scope of the sanctions provided for in this Regulation, the commissioner shall notify this person by means of a written notice of the sanction he intends to impose , the reason for its imposition and the time limit within which this penalty must be paid. In this regard, the Court went on to refer to Article 35 (3) of the Rules, which states that “when the penalty is not paid within the time specified in the notice referred to in sub-regulation (1) , the Commissioner shall inform the person referred to in subsection (1) and serve him with a notice of formal notice advising that, unless the latter notice is challenged in court within thirty days of the date on which it is served, it constitutes an executive title under section 40 (1) (d) of the Income Tax Administration Act. “
Considering the aforementioned sub-article, the court established that the Defendants were not correct in asserting that the Plaintiff had fifteen (15) days to contest the notice of formal notice, since it is clear that the law provides a period of thirty (30) days for the accused to contest said notice. Contrary to the assertions of the defendants and as evidenced by the depositions of the witnesses gathered for this case, the Court further established that the plaintiff was informed of the formal notice on July 28, 2020 and not on July 24, 2020. In view of everything the above, the Court asserted that, even if the applicable time limit provided by law was fifteen (15) days as claimed by the defendants, the plaintiff would still have filed his appeal on time, given that his Legal action was filed on August 12, 2020.
In view of the foregoing, the Court found that the defendants’ preliminary plea was both legally and factually unfounded and ordered that the plaintiff’s legal action under section 469A proceed as planned.
Matthias Grech is a lawyer at Ganado Advocates.