Decision impact statement

Hua Wang Bank Berhad v Commissioner of Taxation

Venue: Federal Court of Australia
Venue Reference No: NSD 1383 of 2012
Judge Name: Logan, Jagot and Robertson JJ
Judgment date: 13 March 2013
Appeals on foot: No
Decision Outcome: Favourable

Impacted Advice

Relevant Rulings/Determinations:

• None

Subject References:
Application for relief from notice to produce
Compliance with notice to produce
Commission of an offence under the law of a foreign nation
Discretion to refuse relief from notice to produce
Application to intervene or be heard as amicus curiae

Précis

Outlines the ATO's response to the taxpayer's appeal to the Full Federal Court from a refusal to grant relief from a notice to produce where compliance with the notice may involve the commission of an offence under the law of a foreign nation.

Brief summary of facts

The taxpayer appealed from the decision of the Federal Court (Perram J), refusing to grant relief from a notice to produce in circumstances where compliance with the notice may involve the commission of a crime under the laws of Samoa. The taxpayer is incorporated in Samoa. The Commissioner served the notice to produce on the taxpayer seeking documents held in the place of incorporation. The request was central to the issue in dispute in the Part IVC appeal, being the question of control of the taxpayer.

The Independent State of Samoa sought to intervene or be heard as amicus curiae in the taxpayer's application for leave to appeal and, if leave were granted, in the appeal.

The Full Court dismissed the taxpayer's appeal. The Full Court found that none of the taxpayer's grounds of appeal had substance and that the primary judge paid due regard to the principle of comity which requires that a cautionary approach be adopted in circumstances where there is enforcement in Australia of laws which infringe the legislative policies of other countries.

The Full Court also refused the application made by the Independent State of Samoa to intervene or be heard as amicus curiae.

Issues decided by the court

The taxpayer's grounds of appeal were that:

(1)

the Court misconceived the nature of the discretion, which is a discretion that should only be exercised in circumstances that are 'exceptional';

(2)

the Court erred in principle by holding that Samoa had no 'compelling sovereign interest' in the enforcement of its laws;

(3)

the Court took into account an irrelevant consideration, being the absence of evidence that the relevant Samoan criminal law is enforced; and

(4)

the Court failed to take account of numerous mandatory considerations.

The most significant ground of appeal was the first ground in which the taxpayer submitted the primary judge ought to have applied the 'exceptional circumstances' test. The Full Court held that the principle of 'exceptional circumstances' (assuming there is such a principle in terms) was not engaged on the facts of the present case. The Full Court held that the question was no more than whether the primary judge paid due regard to the important principle of comity which requires a cautionary approach to be adopted when it is sought to enforce Australian laws in circumstances which infringe the legislative policies of other countries.

The Full Court found that the cases relied upon by the taxpayer involved the requirement for production by a foreigner or a person who disputed the jurisdiction of the court in respect of conduct outside the jurisdiction and, therefore, were not analogous to the present case. By contrast, in the present case the taxpayer had invoked the court's jurisdiction and the foundational conduct to which the proceedings related were within the jurisdiction.

The Full Court held that the primary judge did apply the principled approach of caution and, therefore, did pay due regard to the principle of comity. The Full Court also held that the remaining three grounds of appeal had no substance. Accordingly, the Full Court concluded that the primary judge's decision was reasonably open and not attended by any error of principle.

The Full Court was not persuaded that the intervention of the Independent State of Samoa would be useful or materially different from the taxpayer's contribution nor was the Full Court persuaded that there was any want of legal representation by the parties. For these reasons, the application for leave to intervene and the amicus application were not granted.

ATO view of Decision

The ATO's respectful view of the decision is that the Full Court has correctly determined that there was no error of principle in the exercise of discretion by the primary judge in refusing to set aside or vary the notice to produce.

In addition, the ATO's respectful view is that the Full Court correctly refused the application made by the Independent State of Samoa to intervene or be heard as amicus curiae in this particular case.

Administrative Treatment

Implications for ATO precedential documents (Public Rulings & Determinations etc)

Not Applicable

Implications on Law Administration Practice Statements

Not Applicable

Court citation:
[2013] FCAFC 28
296 ALR 479
(2013) 92 ATR 809

Legislative References:
Taxation Administration Act 1953 (Cth)
Pt IVC

Federal Court Rules 2011
r 1.34
r 9.12
r 30.28
r 36.32

International Banking Act 2005 (Samoa)
s 11
s 26
s 38
s 39

Case References:
Arhill Pty Ltd v General Terminal Company Pty Ltd
(1990) 23 NSWLR 545

Australian Securities Commissioner v Bank Leumi Le-Israel
(1996) 69 FCR 531

Bank of Valletta v National Crime Authority
(1999) 164 ALR 45
[1999] FCA 791

Commissioner of Taxation v De Vonk
[1995] FCA 994
61 FCR 564
31 ATR 481
95 ATC 4820

Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International NV
[2007] FCAFC 43
(2007) 157 FCR 558

Gao v Zhu
[2002] VSC 64

House v The King
(1936) 55 CLR 499

Mackinnon v Donaldson, Lufkin and Jenrette Securities Corporation
[1986] Ch 482

Norbis v Norbis
(1986) 161 CLR 513

Oshlack v Richmond River Council
(1998) 193 CLR 72

Roadshow Films Pty Ltd v iiNet Ltd
[2011] HCA 54
(2011) 284 ALR 222

Sharman Networks Ltd v Universal Music Australia Pty Ltd
[2006] FCAFC 178
155 FCR 291

Societe Eram Shipping Co Ltd v Compagnie Internationale de Navigation
[2004] 1 AC 260

Stemcor (Australasia) Pty Ltd v Oceanware Line SA
[2004] FCA 391

Suzlon Energy Ltd v Bongad
[2011] FCA 1152
(2011) 198 FCR 1

Waller v Freehills
[2009] FCAFC 89
177 FCR 507