Shu Uan Eao v Commissioner of Taxation of the Commonwealth of Australia [2009] FCA 992 | Case summary

REASONS FOR JUDGMENT 1 One of the principal determinative issues in these appeals is whether the Administrative Appeals Tribunal ('the Tribunal') breached s 39 of the Administrative Appeals Tribunal Act 1975 (Cth) ('AAT Act'). 2 Section 39 of the AAT Act requires that the Tribunal apply notions of procedural fairness: see Kioa v West (1985) 159 CLR 550 per Mason J; O'Sullivan v Repatriation Commission (2003) 128 FCR 590 at [45]; and Repatriation Commission v Farley-Smith (2007) 45 AAR 474 at [54]. Obviously, the requirements of procedural fairness will depend upon the particular circumstances of each case. More specifically, s 39 provides that the Tribunal must ensure that every party before it is given a reasonable opportunity to present his or her case. If such a statutory duty is not complied with there is an error of law. 3 Other issues in these appeals have been raised, but it is apparent that if the Tribunal had breached s 39 of the AAT Act, each matter would need to be remitted to the Tribunal for re-hearing. 4 In each amended notice of appeal the primary relief sought by the applicant is that the matter be remitted to the Tribunal to be re-heard, or alternatively, in lieu of that direction, the applicant's objection to the respondent's assessments for the years ended 30 June 2000, 2001 and 2002 be allowed. 5 In each amended notice of appeal it is stated: FINDINGS OF FACT (if any) that the Court is asked to make [if an order for remittal is not made] are:- 1. The Applicant's mother was the beneficial owner of the property and beneficially entitled to the Rent. 2. The Applicant was not beneficially entitled to the rent for the purposes of s.6-5 of the [Income Tax Assessment Act 1997 (Cth)]. 6 After considering the written submissions, the evidence before the Court, and the final oral submissions I came to the view that the appeals should be allowed and the matter remitted to the Tribunal on the basis there was a breach by the Tribunal of s 39 of the AAT Act. At the conclusion of oral submissions, on 25 August 2009, I announced this view to the parties, indicating I would make orders reflecting this view upon the publication of my reasons. 7 As is apparent, each amended notice of appeal proceeds on the basis that the Court should make findings of fact in the event a remittal is not ordered. This eventuality has not occurred, as I propose to remit the matter to the Tribunal. 8 However, I should indicate that on no view could this Court make the findings of fact referred to in the amended notices of appeal even if the questions of law raised by the applicant were properly to be characterised as questions of law for the purposes of s 44 of the AAT. This is for the reason that, as was pressed by the applicant in the submissions on s 39 of the AAT Act, there is a requirement to consider all the evidence as a whole, and then 'on balance' come to a decision. Even if I was persuaded that an error of law as argued by the applicant had occurred, I would have remitted the matter to the Tribunal to be reheard. The Tribunal itself did not explicitly come to conclusions as to the credit of or the objective probability of versions of events given by any particular witness. It would be inappropriate for this Court to embark upon this task where, in my view, the applicant has not been given the opportunity to present an important witness's evidence, and where factual findings will undoubtedly influence the ultimate decision as to the applicant's objection to the respondent's assessment. 9 I turn then to the principal issue for determination, the operation of s 39 of the AAT Act. The question of whether s 39 has been breached arises out of the process of the Tribunal in using a particular interpreter for one of the important and material witnesses of the applicant. It was submitted by the applicant that the interpreter was not properly qualified to perform the role, that there were inherent problems in the process that involved an interpreter who was not present in the hearing room, and who admitted that she could only 'sort of' speak Hokkien, the language required for the task of interpretation. 10 It was submitted that the process was made further unfair because the applicant (as known by the Tribunal) was not present at the time the translation was taking place, and so could not detect the faulty interpretation taking place. 11 The objective facts do not seem to be in contention: · the applicant sought in the presentation of her case to the Tribunal to rely upon evidence from her mother, Ms Yu-Lin; · the applicant was not present when the evidence from her mother was given to the Tribunal; · the evidence of the applicant's mother, Ms Yu Lin, was of importance in the proceedings; · Ms Yu Lin spoke Hokkien, which was different and distinct from Mandarin Chinese; · an interpreter skilled in Mandarin language was originally sought; · an interpreter skilled in the Hokkein language was subsequently sought but could not be secured for the hearing; · a person with sufficient understanding of Hokkein to be understood was identified, but that person did not speak the correct dialect; · another, non NAATI accredited person, fluent in the required dialect, was potentially able to be located; · given the lack of accreditation the applicant's solicitor proposed that the applicant's mother's evidence in the written statement be accepted at face value; · the Tribunal rejected that proposal and indicated that if a non accredited person was to be used then 'so be it'; · a non accredited interpreter who was available 'but only on the telephone' was to be used and this was acknowledged by the Tribunal as 'less than satisfactory'; · when asked if she spoke Hokkien, the non-accredited interpreter hesitated, and said 'yes, sort of'; and · the Tribunal was aware of each of the above matters, at the time of receiving Ms Yin-Lu's evidence. 12 It is also apparent from undisputed evidence before the Court that there were a number of problems with the translation of Ms Yu-Lin's evidence - a mixing of Hokkien and Mandarin, failures to actually interpret, and certain omissions and distortions. Whilst it may not matter whether certain specific concepts (such as the difference between a mortgage and loan) were properly translated, I find on the undisputed evidence the translator was not competent to undertake and did not undertake the task required in relation to a material witness sought to be relied upon by the applicant. 13 In my view, the evidence of Ms Yu-Lin was effectively precluded from being properly presented because of the inadequacy of the translator. I am satisfied that the interpretation was so inadequate that it prevented the applicant from putting before the Tribunal the evidence she desired to rely upon, and that the evidence was significant to the applicant's case: see, eg Tobasi v Minister for Immigration and Multicultural Affairs (2002) 122 FCR 322; Perera v Minister for Immigration and Multicultural Affairs (1999) 92 FCR 6; and SZGWN v Minister for Immigration and Citizenship [2008] FCA 238 per Gilmour J. 14 Whilst I accept that perfect interpretation is never possible, there must be translation which provides an effective communication between the parties: see, Gaio v The Queen (1960) 104 CLR 419 at 433 and WACO v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 131 FCR 511 at [66]. This did not occur in this case. 15 The Tribunal did know of the matters set out in [11] above. However, the Tribunal could not possibly know the extent of the inadequacies of any translation. Further, whether or not the evidence of Ms Yu-Lin corresponded with the proposed witness statement or failed to contradict other evidence from other witnesses is not to the point. The process undertaken by the Tribunal was to receive the oral evidence through the translator. It was this evidence that was important or significant, as was potentially the way in which such evidence was given by Ms Yu-Lin. 16 I appreciate that a solicitor represented the applicant at the Tribunal. This in itself does not absolve the Tribunal from carrying out the mandate set forth in s 39 of the AAT Act: see, eg, Kuswardana v Minister for Immigration and Ethnic Affairs (1981) 54 FLR 334, 342-43 per Bowen CJ and Sullivan v Department of Transport (1978) 20 ALR 323, at 326 per Smithers J, and at 342 per Deane J. For instance, a failure of a tribunal to adjourn a matter could constitute a failure to allow a party to present his or her case even if an adjournment was not requested: see Deane J at 342 and Priddle v Fisher & Sons (1968) 1 WLR 1478. On the other hand, I accept that in circumstances where a party is represented there is some onus upon a party to be proactive: see, eg, Schiffer v Pattison [2001] FCA 1094 and Farley-Smith 45 AAR 474 at [54]. However, the solicitor representing the applicant in the circumstances of this case could hardly have been expected to know of the extent of the inadequacy of the translator when the applicant herself was not present to advise him. In an important respect, namely the inadequacy of the translation itself, the solicitor had no basis upon which to be proactive. 17 As the respondent properly submitted, the Tribunal is not obliged to undertake the 'impossible task' of ensuring that a party takes best advantage of the opportunity to which he or she is entitled: see Sullivan 20 ALR 323 at 343 per Deane J. However, this is not the task suggested here - there is nothing impossible in the Tribunal giving the applicant a reasonable opportunity to present the evidence by the employment of an adequate interpreter. The reasonable opportunity is the opportunity to obtain an adequate interpreter, which did not occur here. 18 The respondent submitted that to the extent that the Tribunal's decision depended on the assessment of the evidence of the applicant's witnesses, there is no evidence to suggest that the Tribunal was unable to make a proper assessment of that evidence, including the sincerity and reliability of the witnesses (NAIS v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 228 CLR 470 at 475). For the reasons indicated above, I reject that submission even if it raises a relevant consideration for my current determination. In light of the inadequacy of the translation, the Tribunal simply could not properly assess the evidence of Ms Yu-Lin and undertake the weighing exercise it was required to engage in. 19 I wish to make one further observation as to the evidence before the Tribunal and the approach taken by the Tribunal. The Tribunal relevantly decided that: 7. On 25 November 2006 an enduring power of attorney was executed by the mother of Ms Eao, Ms Pao Yu Yu-Lin (Ms Yu-Lin), appointing Ms Eao as her attorney. On 15 March 2007 Ms Eao executed a Deed of Acknowledgment of Trust both as trustee and as attorney for the beneficiary, Ms Yu-Lin, reciting that the property had been purchased on 6 June 1996 as trustee for the beneficiary. On 5 April 2007, the property was transferred into the name of Ms Yu-Lin alleging her entitlements pursuant to that trust. The transfer of land was executed by Ms Eao as attorney for Ms Yu-Lin. Ms Eao acknowledged that, prior to March 2007, no document existed which recorded her as holding the property in trust, whereas a document such as the option agreement warranted that she was the sole owner with no other person having any interest or rights in the property. She said that she had relied on professional advice from those who were aware that the legal owner was her mother. … 9. Ms Yu-Lin provided evidence confirming her daughter's evidence that the property had been purchased in the daughter's name but that she was the true owner. Ms Yu-Lin said that the $505,000 was not a loan but funds for the purchase of the property. She maintained that she was happy to invest in Australia but would not want to benefit one daughter to the detriment of her two other children. She said that she trusted her daughter and was aware of the mortgage as security for loans to other companies, the failure to pay full rent as a result of financial difficulties and the option to sell to Messrs Hughes and Doolan. She said that she had borrowed a part of the $505,000 remitted to Australia. … 17. The primary issue before the Tribunal is whether the rental income derived from the property in the three years ended 30 June 2002 represented assessable income of Ms Eao or Ms Yu-Lin. The only evidence of the property being beneficially owned during this period was the oral evidence of the mother, the daughter, the son, the daughter's de facto partner and his business partner. The only documentary contemporaneous evidence was a telegraphic transfer order, transferring $505,000 from Ms Yu-Lin to the account of Ms Eao. The evidence pointing to beneficial ownership by Ms Eao or evidence indicating concern of acceptance of the above oral evidence included: (a) Notwithstanding that the ownership arrangements were made with legal advice, no documentary evidence existed prior to 2007 of any trust relationship. All prior documentation was to the contrary. (b) $96,373 of the purchase costs was borrowed directly in Australia by Ms Eao for no apparent consideration by Ms Yu-Lin. (c) Ms Yu-Lin was prevented from acquiring land in Australia in 1996. (d) An apparent informal acceptance of non-payment of rent. (e) The use of the property to provide security for borrowings of two other companies associated with Mr Hughes for no apparent consideration. (f) Payment of, at least, some rent into the same bank account of Ms Eao. While the majority of the rent was paid into an account in the name of Ms Yu-Lin, Ms Eao was the signatory on this account and there is no evidence of the subsequent disposition of the funds credited to that account. (g) Ms Eao was employed by Superior Hide and was the person primarily responsible for recording payments and receipts of that business. (h) The statement attributed to Mr Hughes at the interview with the ATO auditor in October 2003 that the property was owned by Ms Eao. (i) The evidence of Ms Yu-Lin that: I would never want to benefit my daughter at the expense of my other two children. I would only ever invest any money if it would be for the benefit of my children jointly and then only after my passing. This is at odds with the acceptance of non-payment of rent and allowing the property to be used as security for personal guarantees. (j) The letter from Walker & Company in July 2004 indicating the rent payments were interest on a loan from Ms Yu-Lin. (Emphasis added.) 18. On balance, I am satisfied that the applicant has not discharged the required onus of proof that she was not the beneficial owner of the property during the relevant period and that the amended assessments were excessive. It is unnecessary for the Tribunal to make a finding as to whether the $505,000 was a loan or gift to Ms Eao. It is appropriate to note that the actual source of the funds was not clearly demonstrated. It is accepted that it is possible the funds were by way of loan with the rental payments in lieu of interest and the subsequent transfer of the property to Ms Yu-Lin in 2007 being consideration for repayment of the principal. However, the full circumstances are something known only to the family. (Emphasis added.) 20 As I have alluded to previously, it is apparent from the above extracts that the Tribunal did not explain its process of balancing the evidence set out by the Tribunal in sub-paragraphs 17(a)-(j). The Court cannot ascertain to what extent the important evidence of Ms Yu-Lin as translated had any impact on the balancing process, one way or another. In view of the failures of the translation process, the Tribunal could not make any proper assessment of the evidence, even allowing for the fact that the Tribunal was aware of the flaws in the process it had adopted. 21 I mention one final matter. It was suggested that Mr Athanasiou, the solicitor representing the applicant before the Tribunal, should have been called before me on behalf of the applicant to give evidence as to the denial of the reasonable opportunity to present the applicant's case. Whilst I do not accept that the failure to call Mr Athanasiou would have been a matter which I would have taken into account in supporting the respondent's position, the evidence before me indicates a justifiable reason and sufficient explanation for the applicant not seeking to adduce evidence from Mr Athanasiou. In any event, on the material before me I have come to the clear view that the applicant was not given a reasonable opportunity to present her case in view of the inadequacies of the translation and the circumstances surrounding the giving of evidence of Ms Yu-Lin. 22 In light of the above reasons, I propose to order in each of the following proceedings VID 838 of 2008, VID 839 of 2008 and VID 840 of 2008:

The appeal be allowed.
The decision of the Administrative Appeals Tribunal of Australia, Taxation Appeals Division, constituted by Senior Member Mr B.H. Pascoe given on 10 September 2008 be set aside.
The matter be remitted to a differently constituted Administrative Appeals Tribunal of Australia, Taxation Appeals Division, for determination according to law. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.

Shu Uan Eao v Commissioner of Taxation of the Commonwealth of Australia

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