How a court case in the Cayman Islands exposed the fragile foundations of global tax cooperation
On a September morning in 2013, Justice Quin settled into his chambers at the Grand Court of the Cayman Islands to deliver a decision that would reverberate through the increasingly interconnected world of international taxation. The case before him involved two accountants, Vanda Russell Gould and John Scott Leaver, whose names had become entangled in a web of corporate structures spanning from Australia to the Caribbean. What Quin was about to rule on wasn’t simply a matter of tax compliance—it was a fundamental question about whether the new architecture of global tax cooperation could override the very legal principles it purported to protect.
The story begins, as many such stories do, with money moving across borders in ways that tax authorities found troubling. The Australian Taxation Office had spent years investigating a structure that looked, on paper, elegantly simple: two Cayman Islands companies, M.H. Investments and J.A. Investments, held shares in four Australian subsidiaries. Those subsidiaries generated profits from share transactions—perfectly legal profits—which they dutifully transferred to their Cayman parents. Australia suspected that Gould and Leaver, two accountants with a talent for financial architecture, were the true beneficiaries behind this arrangement. The ATO wanted documents. They wanted details. They wanted, in the parlance of tax investigators, to see how the money really flowed.
This wasn’t an unreasonable request in the emerging world of international tax cooperation. Under pressure from the Organization for Economic Co-operation and Development, jurisdictions once celebrated for their discretion—places like the Cayman Islands, Bermuda, and the British Virgin Islands—had begun signing Tax Information Exchange Agreements, or TIEAs. These agreements represented a new social contract: wealthy individuals and corporations could still structure their affairs across borders, but tax authorities would no longer be entirely blind to those arrangements. The TIEA between Australia and the Cayman Islands had been signed on March 30, 2010, and entered into force on February 14, 2011. In February 2011, shortly after the agreement became operative, the ATO made its first formal request for information about the two companies.
There was just one problem—actually, several problems. The companies’ lawyers raised fundamental objections: under the Tax Information Authority Law, specifically Section 17(1), when companies are the subjects of information requests, they must be served with notices of those requests. This is not merely a technical formality—it provides the companies an opportunity to challenge the requests before their confidential information is disclosed. None of this had happened. The Authority had instead served notices only on FCM Limited, the companies’ registered agent, requiring FCM to produce the information. The companies themselves—JA and MH—were never notified, never given an opportunity to object, never afforded the procedural protections that Caymanian law guaranteed them.
On 18 September 2012, more than a year after the information had been collected and forwarded to Australia, JA and MH applied to the Grand Court for judicial review of the Authority’s decisions. By this point, the ATO had already obtained consent to use the documents in proceedings before the Australian Federal Court and to share them with HMRC in the United Kingdom.
Justice Quin’s decision was unequivocal. The decisions to comply with the ATO’s requests were unlawful because the Authority had failed to serve the required Section 17(1) notices on JA and MH. The Authority had acted ultra vires—beyond its legal powers. Quin issued an order of certiorari, quashing the Authority’s decisions. The tax information exchange agreement, he made clear, did not authorize the Authority to bypass the procedural protections established by Caymanian law.
The Authority appealed, challenging the finding that JA and MH should have been served with notices under Section 17(1). The case reached the Cayman Islands Court of Appeal, which heard arguments in 2014 and delivered its judgment on July 31, 2015. The Court of Appeal held that JA and MH were indeed “the subjects of the requests” and on that basis was bound to find that the decisions to execute the requests without having served the Section 17(1) notices were necessarily ultra vires. The Appeal was dismissed. The Court further held that the decisions to serve notices on FCM Limited requiring it to provide information were made without taking into account material which the Law required the Authority to consider. Justice Quin’s original conclusion—that those decisions should be set aside—was correct.
The Australians, meanwhile, proceeded with their case. The ATO took the position that whatever violations might have occurred under Caymanian law, the information could still be used for its intended purpose on Australian soil. Gould and Leaver were indicted. The case moved forward in Australian courts. When the Cayman Islands Court of Appeal upheld Justice Quin’s ruling in July 2015, it seemed to underscore a paradox at the heart of international tax cooperation: how can you build a global system when sovereignty remains stubbornly local?
A decade later, the world that produced the Gould-Leaver case looks almost quaint. The bilateral, request-based system of TIEAs has been largely superseded by something far more ambitious: Automatic Exchange of Tax Information AEOI. As of March 2024, over 120 jurisdictions have committed to the Common Reporting Standard, establishing more than 5,400 bilateral exchange relationships. Financial institutions now routinely report their foreign account holders to local tax authorities, who automatically forward this information to the account holder’s country of residence. No requests necessary. No specific investigations required. The system runs, largely, on autopilot.
The transformation has been breathtaking in scope. The CRS, as it’s known, represents a paradigm shift from reactive to proactive tax cooperation. Rather than waiting for a tax authority to develop suspicions about a particular taxpayer and then requesting information, the system presumes that all information should flow freely, subject only to standardized reporting requirements. In August 2022, the OECD adopted amendments known as CRS 2.0, expanding the regime to include electronic money products, central bank digital currencies, and indirect crypto-asset investments through derivatives and investment vehicles. These amendments are being phased in now, with full implementation expected by 2027.
Complementing the expanded CRS is the Crypto-Asset Reporting Framework, introduced by the OECD in October 2024, which establishes separate tracking mechanisms for crypto-asset transactions while the CRS tracks holdings. For large multinational enterprises, there’s also country-by-country reporting, which requires detailed disclosures about where profits are earned and taxes paid across every jurisdiction in which they operate. Over 120 jurisdictions have implemented this requirement, creating more than 4,900 bilateral exchange relationships for corporate tax data alone. And then there’s Pillar Two—the global minimum tax regime that ensures multinational corporations pay at least a 15% effective tax rate wherever they operate.
What has emerged is nothing less than a comprehensive global tax information ecosystem, one that would have been unimaginable when Vanda Gould and John Scott Leaver first structured their Cayman Islands companies. The information now flows constantly, automatically, across borders that once represented impenetrable barriers to tax enforcement. And yet, the tension that Justice Henderson identified—between tax transparency and fundamental rights—has not disappeared. It has merely evolved.
In 2024, a British taxpayer named J. Webster challenged HMRC’s use of information obtained through FATCA and CRS mechanisms, arguing that the automatic exchange violated data protection principles enshrined in the General Data Protection Regulation. The case raised an uncomfortable question: could tax transparency obligations override privacy rights that European law considers fundamental? The same year, a court in Jersey found that the island’s competent authority had failed to establish whether information requested by Swedish tax authorities was “foreseeably relevant” to legitimate tax inquiries—the international standard that’s supposed to prevent “fishing expeditions.” The exchange notices were set aside. Jersey, the court observed, was “out of step” with OECD standards, prompting hasty legislative amendments.
These cases suggest that the principle articulated in the Cayman Islands in 2013 remains alive, if embattled. Tax information exchange must operate within established legal frameworks. It cannot simply override constitutional protections or ignore procedural safeguards. The challenge, as the volume of automatic exchanges grows exponentially, is ensuring that taxpayers retain meaningful recourse when those protections are violated.
Some see technology as a potential solution to this tension. The OECD-sponsored FCInet system incorporates “ma3tch” technology—a privacy-enhancing tool designed to facilitate international cooperation while maintaining respect for data protection obligations. The idea is that information can be matched and verified without being broadly disclosed, preserving both transparency and privacy. Whether such technologies can deliver on their promise remains to be seen.
For Poland, the evolution of tax information exchange has followed the broader European trajectory. The country implemented the DAC7 directive in July 2024, imposing new obligations on digital platform operators. Further amendments to mandatory disclosure rules are expected in the second quarter of 2025. Poland’s approach has been notably expansive, extending beyond the EU minimum to incorporate domestic transactions and value-added tax reporting. This reflects a broader shift in Polish tax policy toward comprehensive information gathering—a shift that has made the country’s tax authorities significantly more sophisticated in their use of international data than they were a decade ago.
The question is whether the system has become too efficient for its own good. When Justice Quin ordered the quashing of the Authority’s decisions, he was asserting a principle that has deep roots in common law: government power must be exercised lawfully, even when pursuing legitimate ends. The companies that were the subjects of information requests had a statutory right to notice and an opportunity to challenge those requests before their confidential information was disclosed. The expansion of automatic exchange, for all its administrative elegance, creates new risks of precisely the kind of procedural violations that Quin identified. Information flows so freely now that it becomes easy to forget that taxpayers are entitled to notice, to challenge requests, to invoke procedural protections.
The November 2025 update to the OECD Model Tax Convention attempted to address some of these concerns, clarifying that information obtained through administrative assistance may be used for tax matters concerning persons other than those in respect of which it was initially received—but only subject to agreement between states and with safeguards against unauthorized disclosure. It’s a delicate balancing act, one that acknowledges both the legitimate needs of tax administration and the persistent claims of individual rights.
Twelve years after Justice Quin’s decision, Vanda Russell Gould and John Scott Leaver are long gone from the headlines. Whether they were tax evaders or simply sophisticated planners caught in a moment of transition between two eras of international taxation is, perhaps, beside the point. What their case revealed—and what the Court of Appeal’s 2015 confirmation established—is that the construction of a global tax system remains an incomplete project, one that must constantly negotiate between the demands of fiscal sovereignty and the protections of domestic law.
The system works, mostly. Information flows. Tax authorities cooperate. Evasion becomes harder. But Justice Quin’s principle, upheld by the Court of Appeal, endures: tax authorities cannot bypass the procedural protections established by law, even when executing information exchange agreements. They must conform to the law, even as they seek to enforce it. In a world where data moves at the speed of light across jurisdictional boundaries that remain stubbornly fixed, that principle may be the only thing preventing the entire architecture from collapsing under the weight of its own ambition.
