Bywater Investments Limited and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered an application by foreign companies, the applicants, to stay proceedings concerning penalties assessed under the Taxation Administration Act 1953 (Cth). The dispute arose from the Commissioner of Taxation's assessments treating the applicants' gains from selling Australian shares as assessable income, and the subsequent imposition of penalties for alleged failure to provide necessary documents. The applicants had previously challenged the primary liability in Federal Court proceedings, which were unsuccessful on the issue of central management and control but successful on the entitlement to make trading stock elections.

The Tribunal was required to determine whether to grant a stay of the penalty proceedings pending the conclusion of criminal proceedings involving a key witness, Mr Gould. Central to this was the question of whether issue estoppel applied to prevent the applicants from adducing certain evidence, and the potential prejudice to Mr Gould if he were compelled to give evidence in the Tribunal proceedings before his criminal trial. The Tribunal also had to consider the relevance of a witness's state of mind to the penalty assessment and its inability to issue a certificate under section 128 of the Evidence Act 1995 (Cth).

In its reasoning, the Tribunal applied the test from *Blair v Curran* (1939) 62 CLR 464 regarding issue estoppel, concluding that it did not apply to all issues in the case. The Tribunal then engaged in a balancing exercise, weighing the uncertainty regarding the relevance of a reasonably held but incorrect belief to penalty assessments, the partial inapplicability of issue estoppel, the potential overlap of evidence with the criminal trial, and the unpredictable nature of criminal proceedings. Crucially, the Tribunal noted its inability to issue a section 128 certificate, which would have provided protection against self-incrimination, and acknowledged the respondent's concession that the prejudice from an adjournment would primarily be delay and increased costs.

Ultimately, the Tribunal ordered that the proceedings before it be stayed until after the conclusion of Mr Gould's criminal trial. The applicants were directed to notify the Tribunal of the outcome of that trial and any subsequent appeals within 30 days of its conclusion. The Tribunal also ordered that its decision not be published until further order, due to difficulties in anonymising the parties.