Hua Wang Bank Berhad v Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Federal Court of Australia (NSD 1383 of 2012)
Judgment date: 13 March 2013
Date published: 24 June 2013

Summary of decision:
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.

Overview 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. | (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.

Issues decided:
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. (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

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
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