Jivan vs Seychelles International Businees Authority (MC 15/2013) [2016] SCSC 108 (17 February 2016);


IN THE SUPREME COURT OF SEYCHELLES
Civil Side: MC15/2013

       [2016] SCSC 108


DEEPA JIVAN

 

versus

SEYCHELLES INTERNATIONAL BUSINESS AUTHORITY

 

Heard:            28 January 2015
Counsel:        Mr. K. Shah  for Petitioner
           
            Mr. B. Hoareau for Respondent
           
Delivered:        17th February 2016

RULING


D. Karunakaran, J

[1]  This is a petition for Judicial Review of an administrative decision of the respondent, the Seychelles International Business Authority (SIBA) -a public authority - which registers, monitors and regulates offshore companies, and issues licenses for International Corporate Service Providers in the Republic of Seychelles. The petitioner in this matter, is a chartered accountant and auditor by profession. She has petitioned this Court for a writ of certiorari to quash the decision of the respondent - SIBA- dated 31st December 2012, whereby the respondent deprived the petitioner of her privilege by revoking the petitioner’s status as a fit and proper person to hold the position of directorship in  companies. This privileged status had previously been accorded to her by the respondent under the provisions of the International Corporate Service Providers Act 2003.The petitioner has now invoked the supervisory jurisdiction of this Court over subordinate courts, tribunals, and adjudicating authority conferred by Article 125(1) (c) of the Constitution in order to restore and maintain her status as a fit and proper person to hold the said position in companies registered in Seychelles.
[2] The facts of the case, which transpired from the evidence on record including the exchange of emails and other correspondence between the parties, reveal the following:
At all material times the Petitioner was and is a professionally qualified Chartered Accountant with long experience in matters of tax consultancy and auditing of company accounts. She has been serving as auditor for many companies with a good track record. In view of her good standing in her profession, she was appointed as one of the two director of the company “Zen Offshore Services Limited” (Zen), a licensed International Corporate Service Provider, whereas the other director was a foreign national by name Mr. Dimitro Cheryavskyy. The petitioner was also the main shareholder of Zen and was the Director managing its business since its incorporation. The business was well managed by her until she sold the business to another entity in 2011. Following the sale, the new owners of Zen requested the petitioner to continue stay as a non-executive director on the board of directors until the new owner completely takes over the company’s management and control. The petitioner acceded to their request. Following the change of ownership, the operational management of Zen was transferred to its General Manager one Ms. Lynne Esparon. However, the petitioner continued to remain on record as director of Zen as had been the case since the incorporation of Zen and thus been enjoining the “fit and proper person status” accorded by SIBA for her position as one of the two the director of Zen.
[3] Since the time the new owners took over the management of Zen, the petitioner noticed that the company affairs and management was not up to the required standard in compliance and to her satisfaction. Hence, the petitioner at one point in time put in her resignation from her position as director of Zen. The Board of Directors of the Company also accepted her resignation by a written resolution dated 7th November 2012 and the Board replaced the petitioner’s position with one Mr. Nicky Antat.
[4] Zen accordingly informed the respondent about the resignation of the petitioner and the replacement with Mr. Antat. However, the respondent did not approve the replacement stating that Mr. Nicky Antat is not accorded the “fit and proper status” to hold the position as director of Zen.
[5] In the meantime, when the issue of replacement was pending and negotiations were still taking place between Zen and SIBA, on 8th November 2012, an undesirable episode took place. The news television channel, owned by the Al Jazeera Media Network, publicly published and internationally aired a documentary, which appeared to tarnish the image of Seychelles’ Offshore Sector in the eye of the international community. This broadcast involved a sting operation by undercover journalists of Al Jazeera, who used a false passport, brought a lot of cash of unknown origin with the only aim to depict Seychelles is a haven for money launderers. Following this episode, SIBA by a letter dated 11th December 2012 notified Zen and Ms. Jivan, the petitioner of its intention to remove her fit and proper status for reasons of failure to demonstrate the required:
1.    Probity, competence and soundness of judgment for fulfilling the responsibilities of the relevant position; and
2.    Knowledge and understanding of the legal and professional obligations to be assumed or undertaken.

[6] The respondent thus relied and acted allegedly, in accordance with paragraphs 3(a) and (e) of the Code of Practice of Licensees under the International Corporate Service Providers Act 2003, as amended.
[7] In response to the said notice, the petitioner by a letter dated 17thDecember 2012, gave an elaborate account of the events and the reasons, why she had to put in her resignation from Zen. According to the petitioner, the respondent was wrong in law in revoking her fit and proper status as a director and the respondent's decision was unreasonable and irrational. It is the case of the petitioner that as a non-executive director she had no overall charge or supervision of Zen's business during the relevant period after the transfer of ownership. This was undertaken by the director Dimitry Cheryavskyy. All the staff took their instructions from him and reported to him. During her tenure as non-executive director she drew the attention of the board to the requirements to be fulfilled like payment of taxes, pension, obtaining work permit for non-Seychellois workers, and compliance issues. As regards the allegation of the respondent that the petitioner did not provide sufficient cause as to why her fit and proper status should not be removed, the petitioner contented that these allegations are totally inaccurate as SIBA did not consider the points, which she had raised in her letter dated 11th December 2012 and supporting documents attached to it.
[8] In fact, the contention of the petitioner as shown in her affidavit is worth quoting, which runs thus(in verbatim):
“I would like to comment on SIBA's letter which state - << As a matter of fact, the letter to Ms. Jivan indicated several times where Ms. Jivan did not discharge her duties as Director of Zen and as such there were lapses on her part, causing the company to fail to comply with the relevant laws under which it is regulated >>. The Company's failure to comply was brought to the attention of the board as well as the owner by me. Is this what SIBA call a < lapse on her part causing the company to fail to comply? > Does SIBA suggest that by reminding the company to pay taxes, that I caused the company not to pay taxes? As a director, I can only raise the issues to the board, then it is up to the board and the shareholder (Dimitry) to decide. I cannot force the company to pay taxes or force them not to employ someone incompetent. I also cannot force the owners to address the compliance issues or force the owners to send more funds to settle outstanding debts. I can only bring my concerns to his attention and make recommendations. If the company does not comply, then the only option is to resign. And when I did resign, SIBA objected to my resignation. Does SIBA suggest I stay as a director in anon-compliant company just for SIBA to hold me accountable for its non-compliance? SIBA also ignored the fact that my role was only as a non-executive director. I believed that the managing director and owner Dimitry has failed in his fiduciary duties. The fact that he did not comply is also evidenced in the fact that the staff also raised concerns to him, which were ignored.”
[9] Further SIBA has stated as follows:< Failure to demonstrate the probity, competence, soundness of judgment for fulfilling the responsibilities of the relevant position and knowledge and understanding of the legal and professional obligations to be assumed or undertaken>>. The very fact that I raised concerns to the board and the shareholder demonstrates my knowledge and understanding of the legal and professional obligations.
[10] I aver that SIBA was wrong in law and on the facts to revoke my fit and proper status. Its decision is unreasonable and irrational. In printing out to the company what it should do with regard to Seychelles Laws, appointing compliance officers, it showed my probity, competence and soundness of judgment, knowledge and understanding of legal and professional I obligations.
[11] In the circumstances, the petitioner contents in essence that the decision of the respondent dated 31stDecember 2012 revoking the Petitioner's fit and proper status to be a director of an International Corporate Service Provider, is illegal and unreasonable and hence seeks this Court for a writ of certiorari to quash the said decision of the respondent.
[12] On the other side, the respondent contented that that there was no procedural impropriety in the manner the Respondent took the decision and that the principles of natural justice were respected and applied by the Respondent in reaching its decision in that:
(i) The Respondent by a letter dated the 11thof December 2012,gave opportunity to the Petitioner to give reasons why her fit and proper status should not be revoked.  
(ii) The petitioner accordingly gave her reasons by a letter dated the 17th of December 2012. However, the respondent after examining the reasons, found them unsatisfactory and finally decided to revoke her status.
[13] According to the respondent, the impugned  decision is neither wrong in law nor ultra-virus for the following reasons:
In terms of section 6(3) of the International Corporate Service Providers Act 2003 the Respondent has the right to object to a resignation of a person as a Director of a licensee under the Act, upon being notified of the intention of a Director to resign. On that basis the Respondent objected to the resignation of the Petitioner as a Director of Zen and such objection was not challenged. Besides, Company Act of 1972 does not make provision for non-executive" Directors. Under the said Act, all Directors have the powers and fiduciary duties in respect of a Company. Moreover, the organogram, which was presented to the respondent and on which basis the license of Zen was maintained, clearly indicated by the petitioner was to be one of the two Directors of Zen. Hence, the Petitioner was to be an integral element in the management of the affairs of Zen. Therefore, the decision of the Respondent was not wrong in law and the Respondent took into account all relevant matters which the Respondent was legally entitled to. Hence it is the submission of the respondent that the decision of the Respondent cannot be held to be unreasonable or irrational that no reasonable tribunal would have reached it.
[14] Also, the respondent, in its final submission, has raised a point of law contending that the petition has been filed out of time. It has not been filed within three months from the date of the decision which is being canvassed in the Petition. This is in breach of Rule 4 of the Supreme Court (Supervisory Jurisdiction over Subordinate Courts, Tribunals and Adjudication Authority) Rules, 1995.  For these reasons, the respondent requests the Court to dismiss the Petition.

[15] I meticulously perused the records received from SIBA in this matter. I gave careful thought to the arguments advanced by both counsel touching on points of law as well as facts. Although both counsel argued at length on the peripheral issues, it all boils down to only two fundamental questions that arise for determination in this case. They are:
(i)    Is the decision of SIBA in revoking the petitioner’s “fit and proper person status” in the instant case, unlawful or illegal? and
(ii)    Did SIBA act unreasonably or irrationally in its decision when it revoked the said status of the petitioner, having regard to all the circumstances of the case?
[16] Before one proceeds to find answers to the above questions, it is important to understand the background facts of the case, which may be gathered from the exchange of the communications between the parties as evinced on record.
[17] Upon a diligent examination of the entire records maintained by SIBA in respect of Zen and in relation to the issues on hand, it is abundantly clear that SIBA revoked the status of the petitioner since the Company Zen did not comply with the legal requirements and the Guidelines. Aftermeticulously examining the records, considering the timing and the manner in which SIBA rushed to deprive the petitioner of her “fit and proper person status”, it seems to me that SIBA has overreacted to the sting operation of the undercover journalists of Al Jazeera, which attempted to tarnish the image of Seychelles Offshore Sector using the pitfalls found in the mismanagement of Zen. In any event, the truth of the matter is that it was not the petitioner, who failed to comply with any legal requirements and the Guidelines of any sort but it was the new management of the company Zen, which has failed to do so. To my mind, it was not the petitioner, who as a professional or director (whether non-executive or not) failed to satisfy the criteria for “fit and proper person” in respect of the directorship of the petitioner-company. Indeed, after the petitioner had sold the company to another person, the operational management of Zen was taken over by its General Manager and the role of the petitioner was only salutary since she had already brought certain irregularities, noncompliance and impropriety to the attention of the Board of Directors and the management of Zen and had rightly put in her resignation from directorship. Obviously, she had no control over the managerial operations of Zen during the relevant period.
[18] It is truism that under Section 3 (4) of the International Corporate Service Providers Act, 2003, SIBA is under a statutory obligation to ascertain inter alia, that the applicant-company is a fit and proper person and each director and manager of the applicant is fit and proper, before granting a license. Also I note SCHEDULE 2 (Section 8(3)) – CODE OF PRACTICE OF LICENSEES under ICSP Act states thus:
 All directors and members of the managerial staff of a licensee shall be and remain fit and proper persons as determined by the Authority.
In determining whether a person is a fit and proper person for the purpose of this Act, regard shall be had to —
(a)     (a)    the person’s probity, competence, experience and soundness of judgment for fulfilling the responsibilities of the relevant position;
(b)     the diligence with which the person is fulfilling or likely to fulfil those responsibilities;
(c)     whether the interests of clients of the licensee are likely to be threatened by the person’s holding of that position;
(d)     the person’s educational and professional qualifications, and membership of professional or other relevant bodies;
(e)     the person’s knowledge and understanding of the legal and professional obligations to be assumed or undertaken;
(f)     the person’s procedures for vetting of clients; and
(g)    any evidence that the person has —
      (i) committed any offence involving dishonesty or violence;
(ii) contravened any law designed to protect members of the public arising from dishonesty, incompetence, malpractice, or conduct of discharged or undischarged bankrupts or otherwise insolvent persons.
(h)         (i) the completed questionnaire approved by the authority for the assessment of fit and proper status; and
      (ii) any further documents or information required by the Authority
Admittedly, the respondent has revoked the status of the petitioner relying on paragraph (a) and (e) above. However, there is no plausible reason on record to conclude unequivocally
(i) that the petitioner was lacking probity, competence, experience and soundness of judgment for fulfilling the responsibilities of the relevant position or
(ii) that the petitioner was lacking knowledge and understanding of the legal and professional obligations to be assumed or undertaken.
[19] In fact, since 2007 she has been accepted as a fit and proper person to hold the position as director in Zen.
[20]       Having said that, I would like to restate herein what I have stated in Cousine Island Company Ltd Vs Mr. William Herminie, Minister for Employment and Social Affairs and Others - Civil Side No. 248 of 2000. Whatever the issue factual or legal that may arise for determination following the arguments advanced by counsel, the fact remains that in matters of Judicial Review, the Court is not sitting on appeal to examine the facts and merits of the case heard by the administrative or adjudicating authority. Indeed, the system of judicial review is radically different from the system of appeals. When hearing an appeal the Court is concerned with the merits of the case under appeal. However, when subjecting some administrative decision or act or order to judicial review, the Court is concerned only with the “legality”, “rationality” (reasonableness) and “propriety” of the decision in question vide the landmark dictum of Lord Diplock in Council of Civil Service Union Vs Minister for the Civil Service (1985) AC 374. On an appeal the question is “right or wrong”? - Whereas on a judicial review the question is “lawful or unlawful?” – Legal or Illegal? “Reasonable” or “Unreasonable”? - Rational or Irrational?
[21]  On the issue of legality, I note, the entity of law is always defined, certain, identifiable and directly applicable to the facts of the case under adjudication. Therefore, the court may without much ado determine the issue of “legality” of any administrative decision, which indeed, includes the issue whether the decision-maker had acted in accordance with law, by applying the litmus test, based on an objective assessment of the facts involved in the case. On the contrary, the entity of “reasonableness” cannot be defined, ascertained and brought within the parameters of law; there is no litmus test to apply, for it requires a subjective assessment of the entire facts and circumstances of the case under consideration and such assessment ought to be made applying the yardstick of human reasoning and rationale.  
[22]      Having said that, for the reasons stated hereinbefore, I hold that the decision of SIBA in revoking the fit and proper person status of the petitioner is illegal as the respondent has acted having no regard to paragraph (a) and (e) of the Code of Practice quoted supra. Thus, I find answer to the first fundamental question in the affirmative and hold that the decision of SIBA in revoking the petitioner’s “fit and proper person status” in the instant case, is illegal.
[23]  I will now, turn to the second issue as to “reasonableness” of the decision in question. What is the test the Court should apply in determining the reasonableness of the impugned decision in matters of judicial review?
[24] First of all, it is pertinent to note that in determining the reasonableness of a decision one has to invariably go into its merits, as formulated in Associated Provincial Picture Houses V Wednessbury Corporation [1948] 1 KB 223. Where judicial review is sought on the ground of unreasonableness, the Court is required to make value judgments about the quality of the decision under review. The merits and legality of the decision in such cases are intertwined. Unreasonableness is a stringent test, which leaves the ultimate discretion with the judge hearing the review application. To be unreasonable, an act must be of such a nature that no reasonable person would entertain such a thing; it is one outside the limit of reason (Michael Molan, Administrative Law, 3 Edition, 2001). Applying this test, as I see it, the court has to examine whether the decision of SIBA in revoking the petitioner’s status is unreasonable having regard to all the circumstances of the case.
[25] At the same time, one should be cautious in that, the “Judicial review is concerned not with the merits of a decision but with the manner in which the decision was made. Thus, the judicial review is made effective by the court quashing an administrative decision without substituting its own decision and is to be contrasted with an appeal where the appellate tribunal substitutes its own decision on the merits for that of the administrative officer.” Per Lord Fraser Re Amin. [1983] ZAC 818 at 829, [1983] 2 All E R864 at 868, HL.
[26] In determining the issue of reasonableness of the decision in the present case, the court has to make a subjective assessment of the entire facts and circumstances of the case and consider whether the decision of SIBA to revoke the petitioner’s status is reasonable or not. In considering reasonableness, the duty of the decision-maker is to take into account all relevant circumstances as they exist at the date of the hearing that he must do, in what I venture to call, a broad commonsense way as a man of the world, and come to his conclusion giving such weight, as he thinks right to the various factors in the situation. Some factors may have little or no weight; others may be decisive but it is quite wrong for him to exclude from his consideration matters, which he ought to take into account per Lord Green in Cumming Vs. Jansen (1942) 2 All ELR at p656.
[27] In my considered view, SIBA has failed to take into consideration all relevant factors including non-compliance of the Guidelines by the other director and the General Manager of Zen rather than going after the petitioner, who was then a functus officio being a non-executive and nominal director. - See, the Guidelines for Fit and Proper Applicants issued by SIBA, in accordance with section 13 of the International Corporate Service Providers Act, 2003 - which factor the respondent should have taken into account in taking the impugned decision and has arbitrarily revoked the petitioner’s status for no valid reasons. No reasonable tribunal would have acted so in identical circumstances.
[28] Thus, I find answer to the second fundamental question also in the affirmative and hold that the respondent SIBA has acted unreasonably or irrationally in its decision when it revoked the said status of the petitioner, having regard to all the circumstances of the case.
[29] Incidentally, before I conclude, it is pertinent to note that the respondent, in its final submission, has raised a point of law contending that the petition has been filed out of time. It has not been filed within three months from the date of the decision which is being canvassed in the Petition. This is in breach of Rule 4 of the Supreme Court (Supervisory Jurisdiction over Subordinate Courts, Tribunals and Adjudication Authority) Rules, 1995.
[30] On the issue time-limit, I would like to observe that the Respondent sought to rely on Rule 4 of the Supreme Court (Supervisory Jurisdiction over Subordinate Courts, Tribunals and Adjudicating Authorities) Rules 1995, which states:
“A petition under rule 2 shall be made promptly and in any event within 3months from the date of the order or decision sought to be canvassed in the petition unless the Supreme Court considers that there is a good reason for extending the period within the petition shall be made”
[31] Undisputedly, the time contested in this case is an alleged delay of 3 days. The decision of the Respondent is dated on the 31stDecember 2012 but according to the petitioner that was not in fact the date it was received by the Petitioner. The Petitioner, whom I believe, had received the letter containing the decision on the 4thJanuary2013 as she has stated in her Petition and Affidavit. This Court also takes judicial notice of the fact that the 31st December normally falls on festive season and New Year's celebration. The following days namely, the 1st and 2nd January also fall on public holidays. In view of the public holidays at the beginning of January 2013 namely, the 1stand 2nd January 2013, I find that the Petition has been filed within the time-limit.
[32] Besides, as was held by this Court in the matter of Public Utilities Corporation v. Elisa (2011) SLR 100 that “the trend to-day is that so long as there is substantial compliance… adherence precisely to the time element should not be fatal to the claim," No prejudice would have been suffered by the respondent if the dispute of the appellant was heard and determined on merits."

[33] In any event, I find that, the time should start running from the date the Petitioner received notice and knowledge of the decision otherwise this can mean as submitted by the petitioner’s counsel that decisions are made by the public authorities and kept in their drawers  and served on the interested party some weeks later depriving the interested party the ability to bring a case of judicial review within the 3 months’ period from the date of the decision. Having said that, no prejudice would have been suffered by the Respondent if the dispute of the Petitioner is heard and determined on merits. Therefore, I dismiss the plea limine raised by the respondent based on time-limit.  
      
[34] In the final analysis, for the reasons stated hereinbefore, I conclude that that the decision of SIBA in revoking the petitioner’s fit and proper status in this matter is illegal and unreasonable. Therefore, I issue a writ of certiorari to quash the decision of the respondent - SIBA - dated 31st December 2012, whereby the respondent deprived the petitioner of her privilege by revoking the petitioner’s status as a fit and proper person to hold the position of directorship in International Corporate Service Provider Companies. The petition is therefore, allowed accordingly. I make no orders as to costs.

 

Signed, dated and delivered at Ile du Port on 17 February 2016

D Karunakaran

Judge of the Supreme Court

 

 

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