Resource Capital Fund IV L.P. v Commissioner of Taxation

JUDGE: EDMONDS J DATE: 15 AUGUST 2013 PLACE: SYDNEY

Introduction 1 The applicants invoke the jurisdiction of this Court under s 39B of the Judiciary Act 1903 (Cth) in applying, pursuant to s 39B(1A), for declarations that - (1) The notice pursuant to s 255 of the Income Tax Assessment Act 1936 (Cth) ("1936 Act") issued to the second respondent ("Talison") and dated 13 May 2013 in respect of the first applicant ("RCF IV"); and (2) the notice pursuant to s 255 of the 1936 Act issued to Talison and dated 13 May March 2013 in respect of the second applicant ("RCF V") do not, in respect of any amount of Canadian currency ("Talison Canadian currency") which Talison is liable to pay the applicants (or either of them), or which belongs to the applicants (or either of them) and is in the receipt control or disposal of Talison - (3) impose on Talison any obligation to retain or to pay to the first respondent ("Commissioner") any part of the Talison Canadian currency or (4) impose on Talison any obligation to convert any part of the Talison Canadian currency into Australian currency and retain or pay to the Commissioner any amount of Australian currency.

The Issue 2 The issue between the parties is whether, as the applicants contend, the expression "money" in s 255(1) of the 1936 Act is confined to Australian currency or whether it includes, as the Commissioner contends, foreign currency although, on the view I take of the terms of the notices, as to which see [9] to [12] below, the applicants are entitled to the relief sought irrespective of how the issue is resolved.

Factual Context 3 The factual context in which the issue is to be determined is uncontroversial and, indeed, the subject of common ground. 4 RCF IV and RCF V are two limited partnerships formed in the Cayman Islands. 5 RCF IV and RCF V were the owners of shares in Talison, an Australian incorporated company. Under a scheme of arrangement RCF IV and RCF V disposed of their shares in Talison to a purchaser ("Windfield"). The amounts in consequence payable to RCF IV and RCF V under the scheme are denominated in Canadian currency and are payable out of a Canadian bank account maintained by Talison. 6 On 26 March 2013, the first respondent ("Commissioner') issued an assessment of income tax to each of RCF IV and RCF V, assessing a tax liability in an amount denominated in Australian currency and nominating as the due date for payment 2 December 2013. 7 On the same date, the Commissioner issued to Talison notices under s 255 of the 1936 Act requiring Talison, as "a person having the receipt control or disposal of money belonging to" each of RCF IV and RCF V, to pay to the Commissioner "by 2 December 2013" the amounts assessed to each of RCF IV and RCF V. 8 On 13 May 2013 (the day of the hearing), the Commissioner issued to Talison replacement notices for those issued on 26 March 2013. The Commissioner did this because the terms of the notices issued on 26 March 2013 contained requirements of Talison not authorised by the terms of the section, as well as assertions which were conceded to be false. These defects were curable by the issue of fresh notices. In consequence of the issue of the replacement notices, I granted the applicants leave to rely on an amended originating application in respect of the replacement notices seeking relief in the terms set out in [1] above.

The Notices 9 Apart from the sum required to be retained and the amount required to be paid (AUD 35,050,519.80 in the case of RCF IV and AUD 18,473,336.10 in the case of RCF V), the replacement notices are in the same terms. The notice issued to Talison in respect of RCF IV provides as follows: TALISON LITHIUM LIMITED LEVEL 4 37 ST GEORGES TERRACE PERTH WA 6000 NOTICE PURSUANT TO SECTION 255 OF THE INCOME TAX ASSESSMENT ACT 1936 WHEREAS: A. RESOURCE CAPITAL FUND IV LP (the Taxpayer) is a non-resident who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder in a company deriving income, or profits or gains of a capital nature from a source in Australia. B. TALISON LITHIUM LIMITED (the Company) is a person having the receipt, control or disposal of money belonging to the Taxpayer. TAKE NOTE THAT The Company shall, when required by the Commissioner, pay the tax due and payable by the Taxpayer and is, accordingly, authorised and required pursuant to section 255 of the Income Tax Assessment Act 1936 (ITAA 1936) to retain the aggregate sum of $35,050,519.80, being the amount of tax that is due by the Taxpayer for the year ended 30 June 2013 and will become payable on 2 December 2013, from the amount the Company has receipt, control or disposal of belonging to the Taxpayer. The Company is required to pay on 2 December 2013 the amount of $35,050,519.80 being the tax which will become payable by the Taxpayer on 2 December 2013. NOTE By section 255 of the ITAA 1936 the company is made personally liable for the tax payable by the Taxpayer to the extent of any amount that the Company has retained or should have retained from the money which comes to the Company on behalf of the Taxpayer. The Company is indemnified for all payments which the Company makes in pursuance of section 255 or of any requirement of the Commissioner. DATED THIS 13TH DAY OF MAY 2013 (Signed: R Ravanello) Robert Ravanello DEPUTY COMMISSIONER OF TAXATION AND DELEGATE OF THE COMMISSIONER OF TAXATION Per Aris Zafiriou (Signed: A Zafiriou) 10 Even though Talison's obligations to RCF IV and RCF V are denominated in Canadian currency and are payable out of a Canadian bank account (see [5] above); and even though Talison has no obligation to pay RCF IV and RCF V in Australian currency, the terms of the notices require amounts of Australian currency to be retained from the amount Talison has receipt, control or disposal of belonging to RCF IV or RCF V ("the Talison Canadian currency"), and require amounts of Australian currency to be paid to the Commissioner in payment of the tax payable by RCF IV or RCF V, as the case may be, on the relevant date. 11 However, as a matter of fact, Talison does not have the receipt, control or disposal of any Australian currency belonging to RCF IV or RCF V from which to retain sufficient Australian currency to pay the tax payable by RCF IV or RCF V; nor does s 255, or any other provision of the Income Tax Assessment Acts, authorise the conversion of the whole or part of the Talison Canadian currency into Australian currency by way of sale or otherwise. It follows, in my view, that irrespective of the outcome of the issue as articulated in [2] above, the terms of the notices themselves, as distinct from the provisions of s 255(1), do not impose obligations on Talison of the kind referred to in [1(3) and (4)] above, and the applicants are therefore entitled to the declarations sought. 12 It would be otherwise if the notices had relevantly provided - …to retain an aggregate sum, sufficient to pay the amount of tax ($35,050,519.80/$18,473,336.10) that is due by the Taxpayer for the year ended 30 June 2013 and will become payable on 2 December 2013, from the amount the Company… and the expression "money" in s 255(1) includes foreign currency. But the terms of such a notice exemplify the uncertainty created for the recipient of the notice as to how much foreign currency to retain and when to convert it into Australian currency.

Legislative Context 13 The provision invoked by the notices to Talison is s 255 of the 1936 Act: 255 Person in receipt or control of money from non-resident (1) With respect to every person having the receipt control or disposal of money belonging to a non-resident, who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder, debenture holder, or depositor in a company deriving income, or profits or gains of a capital nature, from a source in Australia, the following provisions shall, subject to this Act, apply: (a) the person shall when required by the Commissioner pay the tax due and payable by the non-resident; (b) the person is hereby authorized and required to retain from time to time out of any money which comes to the person on behalf of the non‑resident so much as is sufficient to pay the tax which is or will become due by the non‑resident; (c) the person is hereby made personally liable for the tax payable by the person on behalf of the non‑resident to the extent of any amount that the person has retained, or should have retained, under paragraph (b); but the person shall not be otherwise personally liable for the tax; (d) the person is hereby indemnified for all payments which the person makes in pursuance of this Act or of any requirement of the Commissioner. (2) Every person who is liable to pay money to a non-resident shall be deemed to be a person having the control of money belonging to the non‑resident, and, subject to subsection (2A), all money due by the person to the non-resident shall be deemed to be money which comes to the person on behalf of the non-resident. (Emphasis added.)

Liability to Income Tax and Discharge thereof 14 It was common ground on the hearing that liability to tax under the Income Tax Assessment Acts is measured in units of Australian currency and can only be discharged by payment in Australian currency: Deputy Commissioner of Taxation v Conley (1998) 88 FCR 98 at 104, 105 per Emmett J; followed in Cusack v Federal Commissioner of Taxation 2002 ATC 4676 at 4680 (RHC) per Cooper J. The money of account and the money of payment, in the sense referred to by Gummow J (as a judge of this Court) in Commissioner of Taxation v Energy Resources of Australia Ltd (1994) 54 FCR 25 at 49, are one and the same. The liability cannot be discharged in foreign currency. This is so whether the taxpayer is a resident or a non-resident.

The Respective Positions 15 In support of their position, that the expression "money" in s 255(1) of the 1936 Act is confined to Australian currency, the applicants relied on the reasons of the members of a Full Court of this Court in Conley for concluding that the expression "money" in a different provision of the 1936 Act, namely, s 218, should not be interpreted to mean foreign currency (at 102A per Tamberlin J); and that foreign currency was not intended to be the subject of a notice under s 218 (at 109F per Emmett J). Wilcox J at 99B agreed with the reasons of both Tamberlin and Emmett JJ. In short, the applicants contended that the considerations which led the Full Court to hold that "money" in s 218 did not refer to amounts in foreign currency are equally applicable to s 255. 16 In support of his position that the expression "money" in s 255(1) includes currency of any country, the Commissioner pointed to the following: (1) In Conley, it was accepted that a reference to "money" was literally capable of including foreign currency, depending on its context: Wilcox J at 99C; Tamberlin J at 100E-F. (2) In Conley, the considerations that led the Court to reject that usual conception of "money" were peculiar to s 218; they either do not exist or have a different complexion in the context of s 255. (3) The High Court's recitation of the differences between the operation of the two sections in Bluebottle UK Limited v Deputy Commissioner of Taxation (2007) 232 CLR 598 at [93] is, as the High Court there said, sufficient "to distinguish between the two provisions and give each a separate operation in the 1936 Act". For these reasons, the Commissioner contended, s 255 must not be approached on the footing that it applies in the same manner as s 218. 17 Before undertaking a comparative consideration and analysis of the respective positions, I need to consider the processes of reasoning employed in Conley, as well as the High Court's analysis in Bluebottle of the construction and operation of s 255 in the context of its legislative antecedents and the significance of s 218.

Deputy Commissioner of Taxation v Conley (1998) 88 FCR 98 18 The provision at issue in Conley was s 218 of the 1936 Act, which materially was in the following terms: 218 Commissioner may collect tax from person owing money to taxpayer (1) The Commissioner may at any time, or from time to time, by notice in writing (a copy of which shall be forwarded to the taxpayer at his last place of address known to the Commissioner), require: (a) any person by whom any money is due or accruing or may become due to a taxpayer; (b) any person who holds or may subsequently hold money for or on account of a taxpayer; (c) any person who holds or may subsequently hold money on account of some other person for payment to a taxpayer; or (d) any person having authority from some other person to pay money to a taxpayer; to pay to the Commissioner, either forthwith upon the money becoming due or being held, or at or within a time specified in the notice (not being a time before the money becomes due or is held): (e) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of tax or, if the amount of the money is equal to or less than the amount due by the taxpayer in respect of tax, the amount of the money; or (f) such amount as is specified in the notice out of each payment that the person so notified becomes liable from time to time to make to the taxpayer until the amount due by the taxpayer in respect of tax is satisfied; and may at any time, or from time to time, amend or revoke any such notice, or extend the time for making any payment in pursuance of the notice. (2) Any person who refuses or fails to comply with any notice under this section is guilty of an offence. (Emphasis added.) 19 While the language deployed and the occasions on which the Commissioner may impose a "requirement" differ, the provisions are materially to the same effect and purpose: (1) They operate upon a person "by whom any money is due or accruing or may become due to a taxpayer," who "hold[s] money for or on account of a taxpayer" or has authority "to pay money to a taxpayer" (s 218), or who has "receipt control or disposal of money belonging to a non‐resident" or is "liable to pay money to a non‐resident" (s 255), and (2) they impose on that person an obligation, on pain of personal liability (s 218(3) and s 255(1)(c) - s 218(2) additionally imposes penal liability for non-compliance), to pay to the Commissioner "so much of the money as is sufficient to pay the amount due by the taxpayer in respect of tax" or "such amount as is specified in the notice … in respect of tax" (s 218) or "the tax due and payable by the non‐resident," "so much as is sufficient to pay the tax … due by the non‐resident" or "the tax payable by the person on behalf of the non‐resident" (s 255). 20 In Conley, the Full Court, in dismissing the Commissioner's appeal against the decision of Davies J (1998) 81 FCR 24, held that "the money" identified in the passages extracted in [18] above must be money of the currency in which the "tax" liability was imposed. 21 Emmett J, delivering the principal judgment, said (at 103E, 105B, 105F-G, 106B, 107A, 107C-D, 109E-F): The question which arises on the appeal is whether the term "money" when used in paras (a) and (e) refers only to Australian currency or whether it refers to money as a medium of exchange, irrespective of the currency involved. The Taxpayer contends for the former construction and the Commissioner contends for the latter. … The Assessment Act recognises the necessity for money to be expressed in terms of a unit of account. The unit of account for the Assessment Act is Australian currency and an assessment made under the Assessment Act will be expressed in Australian currency. … Even if the Commissioner's contention is correct, the Commissioner could not, by service of a notice under s 218, acquire any greater right as against the recipient of the notice than the relevant taxpayer had. Where the obligation of the recipient to the taxpayer is denoted in a foreign currency, the Commissioner could only be entitled, as against the recipient, to payment in the currency in which the money is payable. … [A] comparison must be made between an amount of money in a foreign currency on the one hand and an amount of tax due in Australian currency on the other hand. A recipient of a notice would not know how much foreign currency was to be paid to the Commissioner until a calculation is made, based on some rate of exchange. However, the question would then arise as to the time at which that calculation is to be made. … Where there is a significant lapse of time between the time of service of a notice and the time when money becomes payable, there could be significant fluctuations in the relevant exchange rate. … The recipient would have no way of predicting fluctuations in the exchange rate, yet he would be faced with penal sanctions if he failed to comply with the requirements. The Parliament could not have intended that such uncertainty should be visited upon a third party who need have no connection with the relevant taxpayer. On the other hand, the anomalies which can result if conversion is to be made at the date of receipt of a notice indicate that such a requirement was unlikely to have been intended by the Parliament. Those considerations indicate that the Commissioner's construction of s 218 should be rejected. The difficulties as to the time at which a conversion calculation is to be made in order to determine how much of foreign currency is attached by a notice under s 218 indicates, in my opinion, that foreign currency is not intended to be the subject of such a notice. The absence of any indication in s 218 itself that it was intended to apply to foreign currency and the absence of any mechanism for conversion such as is contained in s 20 reinforces the conclusion that foreign currency is not intended to be the subject of a notice under s 218. 22 Tamberlin J, concurring, said (at 101B-F, 102A): Given the wide‐ranging circumstances in which the s 218 notice can be issued, a substantial period of time may, in some circumstances, elapse between the date when the notice is served and the time when the money becomes due by the recipient to the taxpayer. In that period exchange rates may well fluctuate substantially. Accordingly, the foreign currency equivalent of the Australian tax at the time of service of the notice may be significantly higher or lower than the amount of tax calculated in the foreign currency as at the time the money becomes payable to the taxpayer. Consequently, the amount of foreign currency which is affected by the notice and to which the charge will attach will not be known with any certainty until the time arrives for payment of money to the taxpayer. … [N]either the recipient nor the taxpayer can know the amount of foreign currency which will be required to be paid to the Commissioner when the [time comes for payment to be made]. The notice calls, in such circumstances, for a prediction or speculation as at the date of service of the notice, with respect to the extent of currency fluctuations over the ensuing [interval] in those two currencies. This is an important consequence because failure to comply with the notice exposes the recipient to conviction for an offence under the Act with a penalty of $1000. This consequence will not arise if the expression "money" is read to mean Australian currency because there is no fluctuation in the Australian dollar amount of the tax. Having regard to the above, it seems to me that if the legislature had intended to include foreign currency it would have made specific provision to spell out, in some detail, the way in which the section was intended to operate. No such mechanism is provided for in s 218. … For these reasons, in my view, the expression "money" in s 218 should not be interpreted to mean foreign currency. 23 Wilcox J concurred with both judgments. 24 The High Court refused an application for special leave on the ground that "[t]he Court is not persuaded that there are sufficient prospects of obtaining a reversal of those decisions in this Court to warrant the grant of special leave": (The Deputy Commissioner of Taxation v Conley [1999] HCA Trans 57).

The Construction and Operation of Section 255 coming out of Bluebottle 25 In Bluebottle, "[t]he central proposition about which the Commissioner's submissions about the construction of s 255 ultimately hinged was … that the section deals separately and differently with the obligation to pay [s 255(1)(a)] and the obligation to retain [s 255(1)(b)]", and that in consequence the obligation to retain in para (b) extended to tax liabilities of the non-resident which had not yet been assessed ("an inchoate liability for tax") and indeed was imposed before any notice was given to the person having control, etc., of the money of the non-resident (at [74] - [77]). It was further argued that if s 255 was not so widely read, it would have "little or no work to do different from the work done by s 218" (at [92]). 26 Those arguments were rejected by the High Court. Both paragraphs were held to refer only to tax which had been assessed (at [80]) and in particular, the Court said, "it would be wrong to approach the construction of s 255 piecemeal" or to treat para (a) as distinct and separate from para (b): they should be recognised as having "intersecting operation" (at [96]), the "point of their intersection [being] the specification of the tax which under para (a) is to be paid when required by the Commissioner, and which under para (b) is … the amount that must be retained" (at [82]). So construed, s 255 has a field of operation extending beyond that of s 218: it imposes, albeit only in relation to non-residents, a direct personal obligation on the recipient of the notice to pay money controlled (etc.) by the recipient to the Commissioner, rather than (as did s 218) imposing a penal sanction for non-compliance (at [93]). 27 The Court held (at [72]) the operation of s 255 to be: (a) to oblige persons of the kind described in the chapeau to s 255(1) to pay the tax assessed as due and payable by a non-resident who meets the relevant characteristics identified in that chapeau (s 255(1)(a)); (b) to permit the person paying the tax to recoup the tax paid or to be paid by retaining sufficient out of the money of the non-resident coming into the payer's hands and to oblige the person to retain sufficient of the non-resident's money to do so (s 255(1)(b)); (c) to extend the notion of money of the non-resident in the hands of the payer to include amounts which the payer is liable to pay the non-resident (s 255(2)) but subject to the presently irrelevant qualification made by s 255(2A); (d) to limit the liability of the payer to the amount that comes into the hands of the payer (s 255(1)(c)); (e) to give the payer indemnity for all payments made in pursuance of the Act (s 255(1)(d)); and (f) to make like provision with respect to the Commonwealth, a State or an authority of the Commonwealth or a state (s 255(3)). 28 In response to the Commissioner's arguments in Bluebottle as to the proper construction of s 255, the High Court thought it necessary to consider the statutory setting in which s 255 takes its place by reference to two aspects: "the history of the section and other provisions of the 1936 Act that relate to the collection of tax from persons other than the taxpayer": at [82]. It therefore considered its legislative antecedents (at [83]-[90]) and the operation of s 218 of the 1936 Act (at [92], [93]). The High Court found the legislative history of s 255 as providing only limited assistance to the resolution of the questions about the application of s 255 that arose in the case before them (at [91]), and differentiated the operation of s 255 from the operation of s 218 in only two respects: s 255 concerns only tax which is or will become due from a non-resident; s 218 is not so limited; and s 255 makes the controller of moneys liable for the tax payable by the non-resident (to the extent of the amount that was, or should have been, retained); s 218 is a penal provision and does not permit the Commissioner to recover any of the tax due from the person to whom the notice is given (at [93]). This latter observation needs to be understood subject to the provisions of s 218(3) which permit a court, on conviction of a person who refuses or fails to comply with a s 218 notice, to make an order that the convicted person pay to the Commissioner an amount not exceeding the amount he refused or failed to pay. 29 For my part, two things come through from the High Court's review of the legislative history of s 255. First, in my view it is strongly arguable, although I hasten to add that it was not argued before me, that s 255 only applies where the person having the receipt, control or disposal of money belonging to a non-resident, has the receipt, control or disposal of that money in Australia. In other words, the section does not have, because it was not intended to have, an extraterritorial operation so as to authorise and require a person having, outside Australia, the receipt, control or disposal of money belonging to a non-resident, to do the things in paras (a) and (b) of s 255(1): see Universal Film Manufacturing Co (Australasia) Ltd v New South Wales (1927) 40 CLR 333 at 344, 345 per Isaacs ACJ, albeit in relation to s 18A of the Income Tax (Management) Act 1912 (NSW); Barcelo v Electrolytic Zinc Company of Australasia Ltd (1932) 48 CLR 391 at 424 per Dixon J; Wanganui-Rangitikei Electric Power Board v Australia Mutual Provident Society (1934) 50 CLR 581 at 601 per Dixon J. Of course, if the application of the presumption against the extraterritorial effect of legislation would defeat the purpose of the legislation, it can be assumed that the intention was to override the presumption: see Kumagai Gumi Co Ltd v Federal Commissioner of Taxation (1999) 90 FCR 274 at 283 per Hill J. But that is not this case; there is still a wide field for the operation of s 255 if it is confined to where a person, in Australia, has the receipt, control or disposal of money belonging to a non-resident. 30 In the present case, Talison does not have, in Australia, the receipt, control or disposal of money belonging to RCF IV or RCF V; the Talison Canadian currency is in a bank account of Talison in Canada. Without deciding this issue, the absence of any control by Talison in Australia of money belonging to RCF IV or RCF V may provide the applicants with a stand-alone basis for the declarations they seek. 31 The second thing that comes through the High Court's review of the legislative history of s 255 is that it, and its legislative antecedents, were "born" (as creatures of statute) at a time when Australia had a highly regulated monetary and exchange control system. Dealings in foreign currency were prohibited, at least without the approval of the Reserve Bank of Australia and, depending on prevailing policy, such approval could be denied without reason or right of review. The need to provide for collection mechanisms, such as ss 255 or 218, where a person had the receipt, control or disposal of foreign currency belonging to a non-resident, would have been low and supports, and I put this particular consideration no higher, the observation of Tamberlin J in Conley at 101F: [T]hat if the legislature had intended to include foreign currency it would have made specific provision to spell out, in some detail, the way in which the section was intended to operate. No such mechanism is provided for in s 218. Nor, I would add, in s 255.

Consideration and Analysis 32 Having regard to the intersecting operation of paras (a) and (b) of s 255(1) referred to by the High Court in Bluebottle at [96] and recognising that content can be given to the obligation to retain imposed by s 255(1)(b) only if an assessment has issued (at [97]), the operation of the section as a whole as described at [72] of the Court's reasons (see [27] above) can be seen as one where the primary obligation is to make payment to the Commissioner of the tax assessed to the non-resident. The obligation to "retain" is ancillary to and facultative of the obligation to pay, not an independent objective of the statute. 33 As the primary obligation to pay can only be discharged in Australian currency; and as the ancillary or facultative obligation to retain is expressed as "so much (of any money which comes to him on behalf of the non-resident) as is sufficient to pay the tax which is or will become due by the non-resident", the reference to "money" in para (b) clearly refers to the currency of the tax obligation, not to foreign currency nor, in the absence of authorisation or requirement to convert, the proceeds of its sale. Moreover, there is no reason to give the word "money" in the chapeau to s 255(1) any different construction. 34 Contrary to the submission of the Commissioner that the considerations that led the Full Court in Conley to reject the usual conception of "money" were peculiar to s 218 and do not exist or have a different complexion, in the context of s 255, the construction and operation of s 255(1) adopted by the High Court in Bluebottle leads me to the conclusion that those same considerations are equally applicable to s 255. 35 The Commissioner submitted that the fact that a recipient of a s 255 notice who controls foreign currency must make judgments about how much currency to retain, how long to retain it and when to convert it does not give rise to any uncertainty as to the ability of a recipient to discharge his or her liability upon receipt of a notice. According to the Commissioner: That is because the recipient of a notice may discharge his or her liability entirely upon receipt of the notice by converting an amount sufficient to pay the nominated Australian dollar amount and by simply paying that amount to the Commissioner. In such a case, the recipient of the notice will have retained the amount that should have been retained and any risk that the value of the currency may have in the time between issue of the notice and the time at which the assessment was otherwise due to be paid will instead be borne by the taxpayer. That, however, is a risk that the taxpayer bears in any event. Insofar as the relationship between the recipient and the taxpayer is concerned, the recipient of the notice is fully indemnified in respect of all payments made to the Commissioner: s 255(1)(d). (Emphasis added.) 36 The difficulty with the Commissioner's solution and why it is a totally inadequate answer - indeed, far from being an exercise in judgment, it is for the recipient a predicament of uncertainty and gamble - is exemplified by the facts of this case. The replacement notices were issued on 13 May 2013 requiring retention of amounts in excess of $35 million (RCF IV) and $18 million (RCF V). But Talison is not required to pay those amounts until 2 December 2013. If it were to convert the foreign currency amounts it controls, in whole or in part, immediately on receipt of the notices and pay the Australian dollar proceeds to the Commissioner immediately upon conversion, while it would be indemnified in respect of those payments, it would be liable to RCF IV and RCF V for loss of interest on the underlying amounts between the date of payment to the Commissioner and 2 December 2013, as well as any exchange loss incurred by RCF IV and RCF V by reason of early conversion. Talison would not be indemnified for either of those losses and having regard to the magnitude of the underlying amounts, the movement in the Australian dollar exchange rate against all foreign currencies since May of this year, those losses themselves are potentially so significant that the Commissioner's solution can hardly be characterised as an exercise in judgment; the outcome is so uncertain as to justify its description as a gamble. 37 The Commissioner's submissions go on to suggest alternative courses of conduct for Talison to undertake with equally uncertain outcomes. For example: (1) The recipient is however not necessarily required to convert the moneys retained into Australian dollars upon receipt of the notice. The recipient may decide to retain an amount of foreign currency and hold it until a later date in the expectation that it will be sufficient to meet his or her liability on the due date. This sounds like gambling to me, but the Commissioner says: Provided such a decision is made in good faith, it is difficult to see any basis upon which a court would conclude that the recipient has failed to retain the amount that should have been retained. I can say no more than reproduce the applicants' response: The "good faith" criterion is not to be found in the statutory language, nor can its content be divined from the statute or from any other source. (2) A recipient may alternatively decide to make the foreign currency payment to the non-resident taxpayer on condition that the non-resident place Australian dollars in the recipient's control sufficient to discharge the recipient's Australian dollar liability. To my mind, this suggested alternative says more about why the reference to "money" in s 255(1) is to be confined to Australian currency than it does as to why it includes foreign currency. (3) The recipient is likewise free to form other views as to the amount retained [at] the time of conversion. The risk in such a case is that he or she will be found not to have retained the amount that should have been retained. But these are risks that the legislation requires the recipient of the notice to bear. To which I would say, not if the Full Court's reasoning in Conley and the High Court's reasoning in Bluebottle has any relevance. 38 The Commissioner's argument in Conley was that the US currency held by the Bank was "money" within the ordinary meaning of the term, as a "medium of exchange", and that the Bank could readily convert the US currency to Australian currency for the purpose of paying the taxpayer's tax debt: before Davies J, (1998) 81 FCR 24, 31B; in the Full Court, (1998) 88 FCR 98, 103E. Both those arguments were rejected, principally on the ground that no point was identified at which the conversion should be made, so that the obligations of the recipient of the notice were uncertain: (1998) 31 FCR 24, 31D, 33D, 33E-G; (1998) 88 FCR 98, 100A-B, 100F-101F, 106B-D, 107A-D. 39 In the context of s 255, the same concern was expressed by the High Court in Bluebottle, the Court there emphasising (at [78]-[79]) that the provisions should be so construed that the persons affected could know with certainty what obligation was imposed on them: When s 255(1)(b) refers to "the tax which is or will become due by the non-resident" it must be read as referring to an ascertained sum. If the paragraph is not read in that way, the obligation to retain money which is imposed on the controller is an obligation of undefined content. It is undefined because all that may be retained (the controller "is hereby authorised … to retain") out of any money which comes to him on behalf of the non-resident" is sufficient to pay the tax which is or will become due. And it is that amount (and only that amount) which the controller is obliged to retain. … The prediction that tax may be due (and any prediction of its likely amount) may be able to be made with more or less certainty by a person who is armed with a deal of information, but there is no reason to suppose that the controller of a non-resident's money would ordinarily, let alone invariably, have that information and be in a position to make any useful prediction about the taxation affairs of the non-resident whose money the controller receives. 40 In my view, what Emmett J said in Conley (at [107D]) as to why s 218 of the 1936 Act did not apply to foreign currency is equally applicable to s 255 of that Act, namely, that: Parliament could not have intended that such uncertainty should be visited upon a third party who need have no connection with the relevant taxpayer. The recipient of a s 255 notice will ordinarily be, as Talison is in this case, an innocent bystander with no stake in the tax dispute between the real taxpayer and the Commissioner. Emmett J was plainly correct in relation to s 218, and his observation is equally correct in relation to s 255. 41 Finally, having quoted at length from the Commissioner's submissions, I can do no better than quote from the applicants' submissions in reply in support of my conclusion that the declaratory relief sought should be granted: The Commissioner repeatedly advances the remarkable proposition that it is the legislative intent that the recipient controlling foreign currency of the non-resident should bear the exchange and other risks attendant upon the uncertainties identified in Conley, notwithstanding that the recipient may and ordinarily will have no interest in the dispute between the non-resident and the Commissioner. It is said that this intent can be divined from the supposed circumstance that by exercise of sufficient "judgment" and making appropriate choices the recipient can mitigate the risk, which is therefore one "the legislation requires the recipient to bear", a striking non sequitur. The asserted Parliamentary intent is also rationalized on the basis that "s 255 imposes a tax liability", that the "tax liability" is imposed on the recipient of the notice and that this justifies subjecting the recipient to uncertainty and risk in relation to compliance with the notice. Characterisation of the obligations imposed by s 255 as a "tax liability" - a term properly applied to the liabilities of a taxpayer, which the recipient is not (and certainly is not in relation to the amount specified in the notice) - is misleading. The liability is related to the tax liability of the nominated non-resident, but it is not a tax liability of the recipient. Finally, the Commissioner submits the Applicant's construction would enable non- residents to escape recovery efforts by arranging its resident debtors to meet obligations in a foreign currency. A submission to the same effect was rejected in Conley because a taxpayer could always escape the reach of s 218 by converting money into other assets. The submission should be rejected for the same reasons here. The Commissioner's submissions advance no coherent ground for distinguishing the reasoning in Conley that a notice requiring a third party to pay to the Commissioner the amount of tax payable by a taxpayer can only be given where the obligation of the third party is to pay to or for the benefit of the taxpayer an amount denominated in the same currency as the tax liability, that is, in Australian currency. The Court's conclusion that for the purposes of s 218 and its successors "money due" to or belonging to a taxpayer must be in Australian currency before the obligations under that section can be imposed on the third party is equally applicable to s 255. The Commissioner's submissions should be rejected.

Conclusion 42 For the foregoing reasons, I am of the view that the word "money" in s 255(1) of the 1936 Act is confined to Australian currency and does not include foreign currency. For that reason, the declaratory relief sought should be granted. Even if I were not of that view, the declaratory relief sought should be granted for the reasons traversed in [10] and [11] above. The Commissioner must pay the applicants' costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.