Hua Wang Bank Berhad v Commissioner of Taxation

REASONS FOR JUDGMENT 1 The present applicants have brought an appeal against a judgment of Perram J given on 31 August 2012 (Hua Wang Bank Berhad v Commissioner of Taxation (No 2) [2012] FCA 938) and subsequent orders made by his Honour on 17 September 2012 in proceedings identified as NSD 785/2012. The application with which this judgment deals is for interlocutory orders pending the hearing and determination of that appeal. 2 Relevantly for present purposes, Perram J dismissed an application for judicial review of a decision of the respondent to issue a request under a double taxation treaty between the United Kingdom and Australia. That request was reflected in a letter sent by Her Majesty's Revenue and Customs ("HMRC") to Lubbock Fine LLP, a firm of chartered accountants in the United Kingdom, on 16 May 2012. The letter to Lubbock Fine informed Lubbock Fine that a formal request had been made by the Australian Taxation Office for information. The letter attached a detailed schedule of what was requested. The material requested concerned documents relating to services provided by Lubbock Fine to or in respect of a number of named entities. 3 There were 28 entities named in respect of whom documents or information were sought. Many were UK entities; some were entities in other jurisdictions such as the Bahamas and Samoa. The present applicants are five of those named entities. The argument which was advanced to Perram J was that the respondent had no power to make the request to HMRC because either: the sole or the dominant purpose was to use the proceeds of the request for the purpose of proceedings under Part IVC of the Taxation Administration Act 1953 (Cth); or the making of the request had the effect of securing an advantage in the Part IVC proceedings. Those contentions were rejected by his Honour. It is the rejection of those contentions which is the subject of the appeal which has been filed. 4 The interlocutory application now before the Court sought orders requiring the respondent either to communicate with HMRC stating that the information request is suspended, or alternatively, communicate to HMRC that the respondent will not consider or look at any documents or information gathered pursuant to the information request, until further order of the Court. A further alternative was that those restraints should be applied with respect at least to the five entities which were parties to the proceedings before Perram J. In the course of proceedings today, an alternative formulation was advanced - namely, that the respondent be enjoined from considering or looking at documents or information gathered by HMRC pursuant to the information request in respect of any of the five entities for any of the income years in dispute in the Part IVC proceedings. 5 In the course of correspondence between the parties, the respondent has declined to give any undertaking that the information request would be withdrawn pending the outcome of the appeal, or any undertaking not to consider or look at any information gathered pursuant to the information request, pending the appeal. However, the respondent did offer, and Mr Wigney has today repeated formally, the following undertaking, namely: …that until the hearing of the appeal [the respondent] will not use or deploy in litigation against the Applicants any documents provided to him pursuant to the request to Lubbock Fine by HMRC. 6 The interlocutory application must be considered using the conventional tests of whether there appears to be sufficient prospects of success on the appeal to justify an interlocutory restraint and upon consideration of where the balance of convenience lies in relation to the prospect of any such restraint. In light of the conclusion which I have reached about the second issue, it is not necessary to attempt any evaluation of the prospects of success of the appeal, and I will assume that the appeal is sufficiently arguable to pass that threshold test. 7 In his submissions today, Mr Hyde Page relied, as a convenient distillation of the legal principles which he sought to invoke, upon two particular authorities, one in this Court and one in the Supreme Court of New South Wales. 8 In Commissioner of Taxation v De Vonk (1995) 61 FCR 564 at 585, Hill and Lindgren JJ in their joint judgment observed that: Unless Parliament has acted to authorise an investigation in contempt of court (an authorisation not lightly to be inferred), it must be conceded that the coercive power of investigation conferred by s 264 [of the Income Tax Assessment Act 1936 (Cth)] could, in a particular case, be exercised in a way which would constitute a contempt. The question would, however, not ordinarily be likely to arise. If the power to interrogate under s 264 were exercised for a purpose of interfering with the administration of justice in a court, then no doubt the exercise of the power would be in contempt of that court. But so to use the power would be an abuse of the power which could be set aside. To conduct an investigation for a purpose of interfering with the administration of justice would not be a bona fide exercise of the power under s 264 at all. Nevertheless, circumstances could arise where, the power not being intended to be exercised for the purpose of interfering with the administration of justice, the asking of questions might nevertheless bring about a substantial risk of serious injustice. [I have emphasised the passage upon which reliance was placed.] 9 In Australian Securities and Investments Commission v Elm Financial Services Pty Ltd (2004) 186 FLR 295, Austin J posed at [44] two questions for consideration in relation to a power available to the Australian Securities and Investments Commission. The second question was posed in these terms: [whether] if ASIC has the power to proceed with the notices, it should be restrained from doing so because its purpose is to use its powers to obtain information for use in a proceeding to which it is a party, in a manner that will give it an advantage beyond what is permitted to a litigant by the rules of court, and therefore in contempt of court, or there is a real risk that the continuing use [of] its powers will have that affect [sic]. [Again, I have emphasised the passage relied upon.] 10 I am content to adopt the tests referred to in those two cases for the purpose of considering the present application, but it is important that the passages relied upon be considered in the full context in which they appeared. 11 The evidence which would support the suggestion that the request made by the respondent might unintentionally interfere with the administration of justice was slight; evidence that the request was made with an intention which would interfere with the administration of justice was nonexistent. 12 The request made to Lubbock Fine pursuant to the request made by the respondent, on its face, extended well beyond matters which are the subject of the Part IVC proceedings before Perram J. The evidence before me is insufficient to raise any inference that the request made by the respondent might unintentionally have the effect of interfering with the Part IVC appeals. In any event, in my view, the undertaking which the respondent has offered affords sufficient protection to the applicants to dispel any such concern so far as it concerns the present application. In those circumstances, I am not satisfied that the balance of convenience favours the grant of any form of restraint against the respondent pending the hearing and determination of the appeal. 13 A request made by the appellants for expedition of the appeal appeared to arise in order to answer any suggestion that the respondent might be disadvantaged by delay in the appeal processes being finalised. That concern will not arise in view of the fact that I propose to dismiss the application for any form of restraint. I see no other foundation upon which to conclude that the appeal raises a matter which merits it being expedited or given priority over other matters in the Court's lists. For that reason, I do not propose to order that the hearing of the appeal be expedited. 14 The orders, which I will make are these: