Commissioner of Taxation v Rawson Finances Pty Ltd (No 4)
[2016] FCA 1436
•30 November 2016
FEDERAL COURT OF AUSTRALIA
Commissioner of Taxation v Rawson Finances Pty Ltd (No 4) [2016] FCA 1436
File number: NSD 1329 of 2014 Judge: PERRY J Date of judgment: 30 November 2016 Catchwords: EVIDENCE – applications for letters of request to be sent to judicial authorities of Israel – where persons unwilling or unable to come to Australia to give evidence – where persons able to give evidence material to issues to be tried – where interests of justice are served by granting the order Legislation: Evidence Act 1995 (Cth) s 79
Foreign Evidence Act 1994 (Cth) ss 7, 8
Cases cited: Areffco v Commissioner of Taxation (2011) 84 ATR 924
BCI Finances Pty Limited v Commissioner of Taxation [2012] FCA 855
Commissioner of Taxation v Rawson Finances Pty Ltd (No 2) [2016] FCA 402
Commissioner of Taxation v Rawson Finances Pty Ltd (No 3) [2016] FCA 1243
Director of Public Prosecutions v Alexander (1993) 33 NSWLR 482
Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (1987) 14 FCR 461
Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307
Rawson Finances Pty Ltd v Commissioner of Taxation [2016] FCAFC 95
Date of hearing: 24 October 2016 Date of last submissions: 25 October 2016 Registry: New South Wales Division: General Division National Practice Area: Taxation Category: Catchwords Number of paragraphs: 71 Counsel for the Applicant: Mr M Richmond SC and Ms M Hirschhorn Solicitor for the Applicant: MinterEllison Counsel for the Respondent: The Respondent did not appear ORDERS
NSD 1329 of 2014 BETWEEN: COMMISSIONER OF TAXATION
Applicant
AND: RAWSON FINANCES PTY LTD
Respondent
JUDGE:
PERRY J
DATE OF ORDER:
30 NOVEMBER 2016
THE COURT ORDERS THAT:
1.A letter of request be sent to the judicial authorities of Israel to take or cause to be taken the evidence of:
(a)Mr Israel Zamir, formerly the Foreign Exchange Department Manager at the Tel Aviv Branch of Mercantile Discount Bank. A draft of the proposed letter of the request (excluding the documents to be annexed to the letter of request) is annexed to these orders and marked “Annexure 1”.
(b)Mr Elie Septon, formerly the General Manager Assistant (also known as the Deputy General Manager) at the Tel Aviv Branch of Mercantile Discount Bank in Israel. A draft of the proposed letter of request (excluding the documents to be annexed to the letter of request) is annexed to these orders and marked “Annexure 2”.
(c)Mr Shaul Antebi, Manager, at the Tel Aviv Branch of Mercantile Discount Bank in Israel. A draft of the proposed letter of request (excluding the documents to be annexed to the letter of request) is annexed to these orders and marked “Annexure 3”.
2.Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the basis that it necessary to prevent prejudice to the proper administration of justice (s 37AG(1)(a)), the addresses referred to at paragraph 10 in the draft Letters of Request for the examination of Messrs Zamir and Septon respectively, are suppressed from publication.
3.Costs are reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Annexure 1 to the Orders of 30 November 2016
DRAFT LETTER OF REQUEST
Request for international judicial assistance pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters.
1. Sender
Secretary, Commonwealth Attorney General’s Department
3-5 National Circuit
Barton ACT 2600
Australia
2. Central Authority of the Requested State
The Director of Courts, The Directorate of Courts
Legal Assistance to Foreign Countries
22 Kanfei Nesharim
POB 34142
Jerusalem 95464
Israel
3. Person to whom executed request is to be returned
Federal Court of Australia, through the Secretary, Commonwealth Attorney General’s Department
4. In conformity with article 3 of the Hague Convention of 18 March 1970 on the taking of evidence abroad in civil and commercial matters, the undersigned applicant has the honour to submit the following request:
5. Requesting judicial authority (article 3, a)
Federal Court of Australia
NSW Registry
Level 17 Law Courts Building
Queens Square
Sydney NSW
Australia
6. To the competent authority of (article 3, a)
Israel
7. Names and addresses of the parties and their representatives (article 3, b)
a Applicant
Commissioner of Taxation
C/- MinterEllison
Level 40,
1 Farrer Place, Governor Macquarie Tower
Sydney NSW 2000
Australia
b Respondent
Rawson Finances Pty Limited
C/- BWS Lawyers
Level 6, 179 Elizabeth St, Sydney NSW 2000
Australia
8. Nature and purpose of the proceedings and summary of the facts (article 3, c)
See attachment 'A'
9. Evidence to be obtained or other judicial act to be performed (article 3, d)
See attachment 'B'
10. Identity and address of any person to be examined (article 3, f)
Mr Israel Zamir, XXXXX XXXX XXXXX , XXX XXX, Israel
11. Questions to be put to the persons to be examined or statement of the subject-matter about which they are to be examined (article 3, f)
See attachment 'C'
12. Any requirement that the evidence be given on oath or affirmation and any special form to be used (article 3, h)
It is requested that the evidence from the examinee be taken on oath or affirmation or otherwise in accordance with the judicial procedures of the requested State.
13. Special methods or procedure to be followed (articles 3, i and 9)
It is requested that the examination be recorded and reduced to writing. All books, documents and things produced and referred to during the examination should be duly marked for identification. The examination, including all books, documents and things marked for identification should be authenticated by the seal of the court or tribunal before which the examination takes place, or signed by the judicial officer before whom the examination takes place, or in such other say as is in accordance with the rules and procedures of the requested State.
14. Request for notification of the time and place for the execution of the Request and identity and address of any person to be notified (article 7)
Federal Court of Australia, through the Registry Addresses as above.
15. Request for attendance or participation of judicial personnel of the requesting authority at the execution of the Letter of Request
Not applicable.
16. Specification of privilege or duty to refuse to give evidence under the law of the State of origin (article 11, b)
Nil.
17. The fees and costs incurred which are reimbursable under the second paragraph of article 14 or under article 26 of the Convention will be borne by
The Applicant, the Commissioner of Taxation. A note of the fees and expenses payable in respect of the execution of the request should be made and returned to the requesting authority.
18. Date of request
Signature and seal of the requesting authority
Attachment 'A' to the letter of request
Nature and purpose of the proceedings and summary of the facts
(Article 3, c))
(1)The Applicant in these civil proceedings before the Federal Court of Australia is the Commissioner of Taxation (the Commissioner) and the Respondent is Rawson Finances Pty Limited (Rawson Finances), an Australian resident company.
(2)The history of the dispute is as follows.
(3)After an audit that commenced in 2006, the Commissioner issued various assessments to Rawson Finances which had the effect of disallowing claimed interest deductions on asserted loans and increasing Rawson Finances' assessable income and tax liability. Rawson Finances objected and the relevant objections were disallowed.
(4)Rawson Finances applied for review to the Administrative Appeals Tribunal (the Tribunal). In the proceedings before the Tribunal, witnesses called on behalf of Rawson Finances gave evidence to the effect that:
(a)Rawson Finances' directors had a family history of setting up special purpose vehicles which took out asserted loans from Israeli Banks;
(b)Israeli Banks operated differently to Australian banks in that Israeli Banks were willing to lend on the basis of personal guarantees and relationships with the borrowers;
(c)the directors of Rawson Finances and family members of the directors had direct involvement with Israeli Banks through entities known as BCI Finances Pty Limited (BCI Finances), Advance Finances Pty Limited (Advance Finances) and Civic Finances Pty Limited (Civic Finances) all of which received significant loans from Israeli Banks that were not supported by cash deposits and which were not back to back loans;
(d)the details of the principal lent referred to in (c) above were asserted by the witnesses who gave evidence on behalf of Rawson to be:
(i)on 14 May 1993, Bank Hapoalim B.M lent CHF 12,000,000 to BCI;
(ii)on 9 July 1997, Mercantile Discount Bank lent AUD 4,000,000 to Advance Finances;
(iii)on 16 June 1999, Israel Discount Bank lent AUD 5,000,000 to Civic Finances;
(iv)in 2004, Mercantile Discount Bank lent a further AUD 2,500,000 to Advance Finances;
(v)on 27 May 2004, Israel Discount Bank lent a further AUD 3,690,000 to Advance Finances; and
(vi)on 1 March 2005, Bank Hapoalim B.M lent a further AUD 6,177,288 to BCI Finances.
(e)the Rawson Finances loans were not supported by any deposit or back-to-back arrangement and Mercantile Discount Bank was willing to make the loan on the strength of a personal guarantee from a former director of Rawson Finances.
(5)At the hearing of Areffco and Commissioner of Taxation [2011] AATA 628, Rawson Finances relied upon the following documents:
(a)Statutory Declaration of Mr Israel Zamir dated 10 December 2009
(b)Statutory Declaration of Mr Israel Zamir dated 15 February 2010; and
(c)Statutory Declaration of Mr Israel Zamir dated 10 August 2010
(d)Statutory Declaration of Mr Israel Zamir dated 14 February 2011.
(6)The Tribunal accepted the case advanced by Rawson Finances, accepting significant aspects of Rawson Finances’ evidence. The Tribunal upheld Rawson Finances' objections to the assessments (and therefore the increased tax liability).
(7)The Commissioner successfully appealed this decision in Commissioner of Taxation v Rawson Finances [2012] FCA 753. However, the Full Court of the Federal Court of Australia allowed Rawson's appeal in Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26.
(8)In 2015, the Commissioner obtained documents which demonstrated that the loans made to BCI Finances, Advance Finances and Civic Finances were secured with cash deposits and were known as back-to-back loans. In these proceedings, the Commissioner has applied to the Federal Court to have the Tribunal's decision Areffco and Commissioner of Taxation [2011] AATA 628 (and/or the Full Court decision) overturned on the basis it was obtained by fraud.
Attachment 'B' to the letter of request
Evidence to be obtained or other judicial act to be performed
(Article 3, d)
(1)The evidence to be obtained is the evidence of Mr Israel Zamir, formerly the Foreign Exchange Department Manager at the Tel Aviv Branch of Mercantile Discount Bank.
(2)The general nature and subject matter of the examination of Mr Israel Zamir and the nature of the questions to be put during the examination are detailed in attachment 'C' to the letter of request.
(2A)Before he gives evidence, Mr Israel Zamir should be informed that he should take legal advice on whether the answers he gives to questions to be put during the examination referred to in the previous paragraph may incriminate him.
(3)It is also requested that, in aid of and ancillary to the examination, a subpoena duces tecum, summons or equivalent order which requires the Proper Officer of Mercantile Discount Bank to produce documents that fall within the categories of documents described in the schedule immediately below (except to the extent that those documents have already been produced in response to an order made by the judicial authorities in Israel pursuant to another letter of request issued in the proceedings referred to in Attachment ‘A').
Schedule to Attachment B
Rawson Finances
(4)In relation to any advances of money by Mercantile Discount Bank to Rawson Finances during the period 1 January 1996 to 30 December 2013 (collectively referred to hereafter as “the advances”), for the purposes of answering the questions in each of the paragraphs referred to below including those relating to any documents outlined in those paragraphs, all documents recording or evidencing:
(a)For the purposes of answering the questions at [14], [26], [29(c) and (d)], and [30(c)] including those relating to the documents outlined in those paragraphs. any security, deposit, asset or arrangement:
(i)related or connected in any way to the advances; or
(ii)accepted or treated as 'security' or 'collateral' for the advance of funds or the advances.
(b)For the purposes of answering the questions at [29(a), (c) and (f)] and [30(a) to (r)] including those relating to the documents outlined in those paragraphs, the terms on which the advances or asserted loans were made and manner in which any party performed any agreement relevant to the asserted loans, including but not limited to:
(i)the term of the loan;
(ii)the dates on which the principal was to be repaid (and the amount of principal to be repaid on each date);
(iii)the dates on which the principal was actually repaid (and the amount of principal repaid on each date)
(iv)the dates on which interest was due to be paid (and the amount of interest paid on each date); and
(v)the dates on which the interest was actually paid (and the amount of principal paid on each date);
(vi)how principal and interest was paid or credited in any account related to the advances or loans.
(5)In relation to the advances by Mercantile Discount Bank to Rawson Finances during the period 1 January 1996 to 30 December 2013, for the purposes of answering the questions at [14], [26], [29(c) and (d)], and [30(c)] including those relating to the documents outlined in those paragraphs, any documents that contain one or more references to a back-to-back loan or other arrangement or to any security, deposit or asset related in any way to the advances or loans.
(6)For the purposes of answering the questions at [26], [29 (c) and (d)], and [30(b), (c), (e), (g), (i)] including those relating to the documents outlined in those paragraphs, all documents recording or evidencing any communication between Mercantile Discount Bank (or any of its officers, employees, representatives or agents) and Rawson Finances (including agents, representatives, solicitors or any person acting for, in relation to or on behalf of Rawson Finances) constituting or relating to or in connection with:
(a)any security, deposit, collateral, asset or arrangement accepted or treated as 'security' or 'collateral' for the advance of funds by Mercantile Discount Bank to Rawson Finances during the period 1 January 1996 to 31 December 2013; and
(b)any request for or on behalf of Rawson Finances to Mercantile Discount Bank for the provision of the documents or information relevant to the advances of funds and any response by Mercantile Discount Bank to same.
Attachment 'C' to the letter of request
Questions to be put to the person to be examined or statement of the subject-matter about which they are to be examined
(Article 3, f))
(1)For the purposes of understanding the questions set out further below, the background to the relevant entities, being Rawson Finances and Advance Finances is first set out below with the questions following immediately after.
Rawson Finances
(2)On 21 April 1997, Rawson Finances was incorporated. Its only asset was AUD 2 of issued capital.
(3)For the purposes of the questions below, we note that Rawson Finances asserts that it had a financial arrangement (which it called a loan) with Mercantile Discount Bank that included the features set out below (together with other relevant circumstances):
Transfers of funds
(a)Between June 1997 and December 1997, Mercantile Discount Bank lent AUD 4,500,000 to Rawson Finances on the following terms:
(i)5 June 1997: AUD 3,000,000, 5 year term, interest rate 8.298%;
(ii)4 July 1997: AUD 1,000,000, 5 year term, interest rate 8.298%; and
(iii)4 December 1997: AUD 750,000, 5 year term, interest rate 8.298%.
(b)The 5 June 1997 loan was repaid in full on 18 September 1998.
(c)The loan period for the remaining loans was extended in December 2002.
(d)Before March 2004 there was a suspension of interest payments.
(e)The loan period was again extended in January 2005.
(f)The July 1997 and December 1997 loans were repaid in the following manner:
(i)on 18 September 1998: AUD 200,000 of the July 1997 loan was repaid;
(ii)on 20 July 2009: the balance of the July 1997 loan was repaid; and
(iii)on 8 October 2009 and 11 December 2009: the December 1997 loan was repaid
(g)There were 2 substantial periods of non-payment of interest by Rawson Finances, namely February 2001 to January 2005 and January 2006 to July 2009.
Loan terms – security
(h)The loans were either unsupported by any security or supported solely by guarantees from Mr Erwin Binetter, a director of Rawson Finances. Neither Rawson Finances, nor any of its directors had any assets in Israel.
(i)The borrowed funds were on-lent by Rawson Finances to associated businesses in Australia on the same terms as the loan from Mercantile Discount Bank.
Loan terms – principal and interest
(j)The loans were bullet loans, that is, there was no requirement for periodic repayments of principal during the loan term, although early repayment without penalty was permitted.
(k)The loans were denominated in Australian Dollars.
(l)The interest rate on the loans was fixed at 8.298%, calculated on simple interest basis with a penalty of 1% should the repayments not be made in time.
(m)The loans were extended in 2002 and 2005.
Advance Finances
(4)On 21 April 1997, Advance Finances was incorporated. Its only asset was AUD 2 of issued capital.
(5)For the purposes of the questions below, we note that Rawson Finances asserted that Advance Finances had a financial arrangement (which it called a loan) with Mercantile Discount Bank that included the features set out below (together with other relevant circumstances):
Transfers of funds
(a)On 9 July 1997, Mercantile Discount Bank lent AUD 4,000,000 to Advance Finances on a 5 year term at an interest rate of 8.298%.
(b)In June 2000, an amount of AUD 3,000,000 of the principal was repaid.
(c)On 27 May 2004, Mercantile Discount Bank lent a further AUD 2,500,000 to Advance Finances at an interest rate of 6.5%.
(d)The loans were repaid in full in June 2005.
Loan terms – security
(e)The loans were either unsupported by any security or supported solely by guarantees from Mr Emil Binetter, a director of Advance Finances. Neither Advance Finances, nor any of its directors had any assets in Israel.
(f)The borrowed funds were on-lent by Advance Finances to associated businesses in Australia on the same terms as the loan from Mercantile Discount Bank.
Loan terms – principal and interest
(g)The loans were bullet loans, that is, there was no requirement for periodic repayments of principal during the loan term, although early repayment with a penalty of only AUD 500 was permitted.
(h)The loans were denominated in Australian Dollars.
(i)The interest rate on the loans was predominantly fixed at 8.298% (but was occasionally 7.2% or 6.5%) calculated on simple interest basis with a penalty of 1% should the repayments not be made in time.
(j)The loan was extended in June 2002 and December 2002.
General Subject Matter of the Examination
(6)The general subject-matter of the examination is:
(a)the nature of the arrangements between Rawson Finances and Mercantile Discount Bank between 1997 and 2009;
(b)the meaning, significance, description, nature and provenance of the documents that have been:
(i)filed by the Commissioner in the Federal Court proceedings as described at Schedule A to Attachment C below in relation to Rawson Finances and which were annexed by Mr Zamir to his statutory declaration dated 15 February 2010;
(ii)filed by the Commissioner in the Federal Court proceedings as described at Schedule B to Attachment C below in relation to Advance Finances, certain of which were annexed by Mr Zamir to his statutory declaration affirmed 10 August 2010;
and whether those documents are a complete record of all transactions and arrangements relevant to the asserted loans; and
(c)the requests that were made for or on behalf of Rawson Finances to Mr Zamir in his capacity as Foreign Exchange Department Manager of Mercantile Discount Bank for documents or information relevant to the asserted loans and the response of Mr Zamir and Mercantile Discount Bank to those requests.
(7)The general nature of the questions to be put to the examinee are detailed in Schedule A below, though allowance is to be made for the judicial rules, procedures and practices of the requested State.
Schedule A to Attachment C
(8)What is your full name and what positions did you hold at Mercantile Discount Bank between 1996 and 2013.
(9)What were your duties and responsibilities in your work positions?
Rawson Finances
(10)What was the nature of all the arrangements between Mercantile Discount Bank and Rawson Finances or any other person or entity for on behalf of Rawson Finances in relation to the transmission of funds between Mercantile Discount Bank and Rawson Finances in the period 1 January 1996 to 2013?
(11)Who had responsibility within Mercantile Discount Bank for the negotiation and supervision of the asserted loans?
(12)Who was the representative of Rawson Finances that negotiated the original asserted loans and any changes in the terms of those loans including to the payment of interest or the extension of the loans?
(13)What was the substance of those negotiations?
(14)At or around the time the funds were advanced, was there a deposit or other collateral or security connected in any way with the alleged loans to Rawson Finances and if so what was the arrangement, including:
(a)what were the terms of the arrangement and did:
(i)it include the use of an arrangement known as a 'back-to-back loan'?
(ii)the arrangement involve Mercantile Discount Bank holding fiduciary (or other) deposits for, or on behalf of, Rawson Finances?
(iii)the arrangement involve the use of a 'non resident deposit account'
(iv)a person or entity provide a deposit, collateral, security or other asset to which Mercantile Discount Bank would have recourse if the borrower defaulted on the loan term and if so, who was that person or entity?
(b)if there was a deposit, or other asset, where was it held, who made the deposit, in whose name was the deposit held and what interest was paid on it or on respect of it?
(c)if there was a deposit, what was the margin of interest rate between the deposit and the loan?
(d)if there was a deposit or other asset, what instructions did Mercantile Discount Bank receive and what actions did Mercantile Discount Bank take in relation to that deposit or asset once the loan principal and interest was repaid and from which person or entity and when were those instructions received?
(e)who was authorised to give relevant instructions to Mercantile Discount Bank in respect of the deposit or asset?
(f)did Mercantile Discount Bank receive an application to effect banking operations as per phone instructions or by facsimile and if so who made the application and when and who was authorised to provide phone instructions to Mercantile Discount Bank?
(g)did Mercantile Discount Bank receive a power of attorney relating to all or any accounts and transactions and if so, when and who were the authorised representatives under that power of attorney?
(h) In the period 1997 to 2009 were back to back loans or loans secured by some form of cash deposit available to Mercantile Discount Bank customers? If so:
(i)what documents were created and or entered into to give effect to the arrangement?
(ii)what was the general nature of the arrangement?
(iii)what was the general structure of the arrangement, including where the deposit was held?
(iv)who in Mercantile Discount Bank had the responsibility for negotiating such loans?
(v)were such loans subject to credit committee (or other internal committee) supervision, assessment or approval?
(15)During the period of the time the asserted loans did Mercantile Discount Bank advise Rawson Finances of the amount of its interest payments? If so, when and how was that communicated to Rawson Finances and to who specifically?
(16)Did Mercantile Discount Bank permit Rawson Finances to calculate the quantum of its interest payments? If so, on what basis did the Bank permit Rawson Finances to calculate its interest obligations and when and how were those calculations communicated to, or received by, Mercantile Discount Bank?
(17)When and how was the interest received? Was the interest paid by way of funds transfer from Rawson Finances or was the interest paid from a deposit or other source such as an account (and if so identify the account) held for or on behalf of Rawson Finances in relation to the loan?
(18)Was there a non-payment of interest in the period of the loan, (including the period described at [3(g)] of Attachment C above)?
(19)What written or oral communications did Mercantile Discount Bank have with Rawson Finances in relation to the non-payment of interest? Please identify the time and nature of these communications.
(20)If there was a non-payment of interest what steps did Mercantile Discount Bank take to compel payment of the interest? Did Mercantile Discount Bank agree to capitalise interest? Please identify the time and nature of any communications in this respect.
(21)In relation to the interest payable in relation to the loans referred to at [3(a)] above:
(a)How was the interest rate calculated and was it calculated by reference to a deposit held for or on behalf of Rawson Finances?
(b)What was the amount of principal on which the interest was calculated?
(c)What were the dates on which each payment of interest was to be made?
(d)How much interest was to be paid on each of the dates referred to at (c) above?
(e)In relation to any payment of interest made by Rawson Finances:
(i)How was each payment of interest effected by Rawson Finances?
(ii)On what dates did Rawson Finances make payments of interest?
(iii)How much interest was paid by Rawson Finances on each of the dates referred to at (ii) above?
(22)Did, and if so why did Mercantile Discount Bank agree to extend the loans in 2002 and 2005?
(23)If the loans were supported by deposit, asset or arrangement other than a personal guarantee did Mercantile Discount Bank have any communications, whether written or oral, with Rawson Finances, or any agent of representative on its behalf, in relation to that deposit, asset or arrangement and if so in relation to each communication:
(a)When was the communication made;
(b)Who was the communication between;
(c)What was the substance of the communication.
(24)Questions will be asked concerning the evidence given by Mr Israel Zamir in the following documents which were relied upon in Areffco and Commissioner of Taxation [2011] AATA 628:
(a)Statutory Declaration of Mr Israel Zamir dated 15 February 2010; and
(b)Statutory Declaration of Mr Israel Zamir dated 14 February 2011.
(25)Who had such authority to grant back to back loans and did Mr Zamir have such authority?
(26)What were the 'sufficient securities' referred to in the statutory declaration dated 15 February 2010.
(27)Were decisions to grant back to back loans subject to supervision by a credit committee?
(28)Was Mr Zamir authorised by Mercantile Discount Bank to give the statutory declarations referred to at [24] above?
(29)In relation to the following documents:
(a)letter from Rawson Finances to Mr E
llie Septon dated 4 July 1997;(b)letter from Rawson Finances to Mr E
llie Septon dated 4 December 1997;(c)letter from Rawson Finances to Mr E
llie Septon dated 9 December 1997;(d)letter from Rawson Finances to Mr E
llie Septon dated 18 September 1998;(e)deposit / withdrawal in Standard Currency Form dated 23 September 1998;
(f)two Loan Application in Foreign Currency for a Foreign Resident forms dated 23 December 2002;
(g)two Amortisation schedules dated 30 December 2003;
(h)six Mercantile Discount Bank payment forms generated on 11 December 2009;
(i)a Mercantile Discount Bank Amortisation Schedule dated 3 January 2005; and
(j)44 Mercantile Discount Bank statement form letters dated 24 January 2008
It is proposed to ask the witness general questions:
(a)as to whether the bank has copies of these documents, whether they are included in the same form or whether the bank’s copy of the documents are different;
(b)as to the authenticity, nature and provenance of those documents;
(c)as to whether those documents are a complete record of the transactions relevant to the asserted loans;
(d)as to whether those documents indicate or establish that there was a deposit or some other security or collateral relevant to the asserted loan;
(e)as to whether the effect of the arrangement was that Rawson Finances could decide the interest rate on the asserted loan; and
(f)in relation to each of the documents described above, does the document, or did the document at any time form part of the records belonging to or kept by Mercantile Discount Bank.
(30)It is also proposed to ask the witness specific questions in relation to some of the documents identified at [29] above:
Letter from Rawson Finances to Mr E
llie Septon dated 4 July 1997(a)Was it in accordance with generally accepted banking practice for a borrower to write to a bank setting out the terms of the loan and if so, to what kind of loans did the practice apply?
(b)Was any response made by Mercantile Discount Bank to Rawson Finances and if so what was that response to Rawson Finances or its advisors and when and to whom was it made?
(c)Should, or do, the following documents exist and is there any explanation for the following documents not existing in relation to the loan agreement entered into on or about 4 June 1997:
(i)agreement for opening an account or accounts and the terms and conditions of those accounts;
(ii)corporate resolutions for the account covering general banking powers;
(iii)certification of the officers of the borrower;
(iv)a loan agreement that sets out the terms of the loan; and
(v)agreements as to the type of security to be provided.
Letter from Rawson Finances to Mr Ellie Septon (sic) dated 4 December 1997
(d)Was it in accordance with generally accepted banking practice for a borrower to write to a bank setting out the terms of the loan and if so, to what kind of loans did the practice apply?
(e)Was any response made by Mercantile Discount Bank to Rawson Finances and if so what was that response to Rawson Finances or its advisors and when and to whom was it made?
Letter from Rawson Finances to Mr E
llie Septon dated 9 December 1997(f)Was it in accordance with generally accepted banking practice for a borrower to write to a bank setting out the terms of the loan and if so, to what kind of loans did the practice apply?
(g)Was any response made by Mercantile Discount Bank to Rawson Finances and if so what was that response to Rawson Finances or its advisors and when and to whom was it made?
Letter from Rawson Finances to Mr Ellie Septon (sic) dated 18 September 1998
(h)Was it in accordance with generally accepted banking practice for a borrower to write to a bank setting out the terms of an agreement struck by telephone the previous day?
(i)Was any response made by Mercantile Discount Bank to Rawson Finances and if so what was that response to Rawson Finances or its advisors and when was it made?
Two Loan Application in Foreign Currency for a Foreign Resident forms dated 23 December 2002
(j)Should or do the original loan applications exist and is there any explanation for why the loan extension documents exist produced but not the original loan applications?
(k)At this time did Mercantile Discount Bank have a standard form for a loan extension or did it amend loan application forms?
(l)In relation to the left hand column, was it in accordance with Mercantile Discount Bank's procedures not to record the date the loan was granted on?
Two Amortisation schedules dated 30 December 2003
(m)How were the amounts of interest in the schedule calculated and in particular, was interest calculated on the basis that the period of calculation was 260 days?
Six Mercantile Discount Bank payment forms generated on 11 December 2009
(n)Why are these forms addressed to 'E Pty Ltd'? What information is known by Mercantile Discount Bank in relation to 'E Pty Ltd'?
44 Mercantile Discount Bank statement form letters dated 24 January 2008
(o)Was it in accordance with Mercantile Discount Bank's procedures for correspondence to be sent to a customer with the signature of only one officer of the Bank?
(p)Was it in accordance with Mercantile Discount Bank's practice for correspondence of this nature to be sent?
(q)Why were the details of the actual amounts of interest paid and / or details from the accounts recording the calculation of interest payments and the receipt of same not included in this correspondence?
(r)Why was a printout of the account statement not provided? Would such an account show that interest was paid from another account, such as a non resident deposit account held in relation to the loan?
Schedule B to Attachment C
Advance Finances
(31)What was the nature of the arrangements between Mercantile Discount Bank and Advance Finances or any other person or entity for or on behalf of Advance Finances in relation to the transmission of funds between Mercantile Discount Bank and Advance Finances in the period 1 January 1996 to 31 December 2005?
(32)Was the nature of the arrangements identified in [31] above accurately and fully described at the hearing of Areffco and Commissioner of Taxation [2011] AATA 628 through the following documents:
(a)The statutory declarations of Mr Israel Zamir (see paragraph [33] below);
(b)The affidavit of Mr Emil Binetter affirmed on 6 October 2010, which stated
(i)in 1997, Mr Emil Binetter met with Mr Elie Septon, a manager of Mercantile Discount Bank, who agreed to loan Advance Finance AUD 4,000,000 and the security for the loan comprised a personal guarantee from Mr Emil Binetter, along with a list of his assets;
(ii)Mr Binetter calculated the interest on the loans; and
(iii)In 2004, Mr Emil Binetter and Mr Gary Binetter met with Mr Septon who agreed to loan a further AUD 2,500,000.
(c)Exhibit 14A, being the 'Emil Binetter Group' summary assets and liabilities' which at row 14 stated that '… please note that Advance Finances took out a $4 million loan from Mercantile Discount Bank in the 1998 Financial Year'
(33)Questions will be asked concerning the accuracy and completeness of the evidence given by Mr Israel Zamir in the following affidavits which were relied upon at the hearing of Areffco and Commissioner of Taxation [2011] AATA 628:
(a)Statutory Declaration of Mr Israel Zamir dated 10 December 2009; and
(b)Statutory Declaration of Mr Israel Zamir dated 10 August 2010.
(34)Questions will be asked in relation to the documents identified at:
(a)(c) to (t) below, which were tendered on behalf of Rawson Finances and at the hearing of Areffco and Commissioner of Taxation [2011] AATA 628; and
(b)(u) to (ii) below, which were obtained from Mercantile Discount Bank by the liquidator for Advance Finances (and were not produced on behalf of Rawson Finances and at the hearing of Areffco and Commissioner of Taxation [2011] AATA 628).
Documents tendered at the hearing of Areffco and Commissioner of Taxation
(c)Loan application in foreign currency for a foreign resident dated 9 July 1997
(d)Letter from Advance Finances to Mr El
lie Septon dated 24 June 1997(e)Deposit / Withdrawal in Standard Currency Form dated 9 July 1997
(f)Facsimile from Advance Finances to Mercantile Discount Bank dated 24 June 2001
(g)One Loan Application Extension in Foreign Currency for a Foreign Resident form dated 28 June 2002 and two Loan Application Extension in Foreign Currency for a Foreign Resident forms dated 23 December 2002
(h)Mercantile Discount Bank form in Hebrew
(i)One page of handwritten notes
(j)One Amortisation schedule dated 30 December 2003
(k)Mercantile Discount Bank form in relation to changes of rates of interest dated 7 January 2004
(l)Mercantile Discount Bank form in Hebrew dated 2 January 2005
(m)Letter from Advance Finances to Mercantile Discount Bank dated 21 February 2005
(n)One Mercantile Discount Bank payment form generated on 3 January 2005
(o)A Mercantile Discount Bank Amortisation Schedule dated 3 January 2005
(p)Mercantile Discount Bank form in Hebrew dated 7 January 2005
(q)[deliberately left blank](r)Mercantile Discount Bank form in Hebrew dated 30 January 2005
(s)Letter from Advance Finances to Mercantile Discount Bank dated 25 May 2005
(t)19 Mercantile Discount Bank statement form letters dated 24 January 2008
Documents obtained by the liquidator for Advance Finances
(u)Letter from David Belan to E
llie Septon of Mercantile Discount Bank dated 8 July 1997(v)Letter from Emil Binetter to E
llie Septon of Mercantile Discount Bank dated 24 February 2000(w)Draft letter from Mercantile Discount Bank to Advance Finances dated 23 March 2004
(x)Guarantors' Signatures Account Holders Mercantile Discount Bank form in Hebrew dated 12 June 1997 signed by Gary Binetter
(y)Guarantors' Signatures Account Holders Mercantile Discount Bank form in Hebrew dated 12 June 1997 signed by J Belan
(z)Mercantile Discount Bank form in Hebrew described as company accounts list for Advance Finances ?
(aa)Continuing All Debts' Guarantee unlimited in amount
(bb)Advance Finances application form to open a non interest earning current account and an interest earning deposit account
(cc)Application to effect banking operations as per telephone instructions
(dd)Application for the execution of banking acts by means of facsimile dated 1 June 1997
(ee)Power of Attorney applying to all accounts and transactions
(ff)Corporate Resolutions for the Account of Advance Finances Covering General Banking Powers
(gg)Letter from Michael Binetter to Mercantile Discount Bank dated 3 June 1997
(hh)Mercantile Discount Bank non resident current account information print outs for the period 31 August 1997 to 6 July 2005
It is proposed to ask the witness general questions:
(a)as to whether the bank has copies of these documents, whether they are included in the same form or whether the bank’s copy of the document are different;
(b)as to the authenticity, nature and provenance of those documents.
(c)as to whether those documents are a complete record of the transactions relevant to the asserted loans;
(d)as to whether those documents indicate or establish that there was a deposit or some other security or collateral relevant to the asserted loan; and
(e)whether the effect of the arrangement was that the customer could choose the interest rate on the asserted loan
(f)in relation to each of the documents described at (c) to (t) above, does the document, or did the document at any time form part of the records belonging to or kept by Mercantile Discount Bank?
(g)In relation to each of the documents described at [u] to [ii] above (being the documents provided to the liquidator), why were these documents not produced by Mercantile Discount Bank to Advance Finances along with the documents referred to at [c] to [t] above, being the documents said to constitute the Advance file at the hearing of Areffco v Commissioner of Taxation?
(35)In your statutory declarations affirmed on 10 December 2009 and 10 August 2010, you produced the following documents the only documents:
Documents tendered at the hearing of Areffco and Commissioner of Taxation
(a)Loan application in foreign currency for a foreign resident dated 9 July 1997
(b)Letter from Advance Finances to Mr Ellie Septon dated 24 June 1997
(c)Deposit / Withdrawal in Standard Currency Form dated 9 July 1997
(d)Facsimile from Advance Finances to Mercantile Discount Bank dated 24 June 2001
(e)One Loan Application Extension in Foreign Currency for a Foreign Resident form dated 28 June 2002 and two Loan Application Extension in Foreign Currency for a Foreign Resident forms dated 23 December 2002
(f)Mercantile Discount Bank form in Hebrew
(g)One page of handwritten notes
(h)One Amortisation schedule dated 30 December 2003
(i)Mercantile Discount Bank form in relation to changes of rates of interest dated 7 January 2004
(j)Mercantile Discount Bank form in Hebrew dated 2 January 2005
(k)Letter from Advance Finances to Mercantile Discount Bank dated 21 February 2005
(l)One Mercantile Discount Bank payment form generated on 3 January 2005
(m)A Mercantile Discount Bank Amortisation Schedule dated 3 January 2005
(n)Mercantile Discount Bank form in Hebrew dated 7 January 2005
(o)Letter from Advance Finances to Mercantile Discount Bank dated 21 February 2005
(p)Mercantile Discount Bank form in Hebrew dated 30 January 2005
(q)Letter from Advance Finances to Mercantile Discount Bank dated 25 May 2005
(r)19 Mercantile Discount Bank statement form letters dated 24 January 2008
Why were the documents described at [34(u) to (ii)] not included to your statutory declarations affirmed 10 December 2009?
(36)It is also proposed to ask the witness specific questions in relation to the documents provided by the liquidator referred to at [34(u)] to [34(ii)] above:
Letter from David Belan to E
llie Septon of Mercantile Discount Bank dated 8 July 1997(a)Who is David Belan and what relationship does he have to Advance Finances and on what basis was he authorised to give instruction with respect to the account?
(b)On what basis was Mr Belan able to instruct Mercantile Discount Bank that 'the remaining AUD 30,000 (thirty thousand Australian dollars) is to be placed on the money market on three monthly roll-over'?
(c)Is it correct that this instruction could only be made on the basis that Advance Finances had money on deposit with Mercantile Discount Bank and if so would this deposit be part of the security against which the loans were made?
Letter from Emil Binetter to El
lie Septon of Mercantile Discount Bank dated 24 February 2000(d)On what basis was Mr Belan able to instruct Mercantile Discount Bank to request that 'any fiduciary deposits you hold on behalf of Advance Finances should not be put on term deposits past 31 May 2000…'?
(e)What were the fiduciary deposits?
(f)What was the total amount of fiduciary deposits held on behalf of Advance Finances and in relation to each deposit:
(i)When was the deposit placed?
(ii)How much was the deposit?
(iii)Who placed the deposit?
(iv)Who was authorised to give instructions in relation to the deposit?
(g)Is it correct that this instruction could only be made on the basis that Advance Finances had money on deposit with Mercantile Discount Bank and if so was this deposit the security, or part of the security, against which the loans were made?
Draft letter from Mercantile Discount Bank to Advance Finances dated 23 March 2004
(h)Is it ordinary commercial practice for the Bank to accept draft letters from borrowers and then issue the draft letter back to the borrower on Bank letterhead?
(i)Did the Bank issue a copy of the letter to Advance Finances and if not, why not? If the Bank did issue the correspondence in accordance with the request, why did the Bank decide to issue a copy of the letter?
(j)The draft letter is in similar terms to a letter issued by the Bank to Advance Finances on 7 June 2000? Did the Bank also receive instructions from Advance Finances to issue the 7 June 2000 letter?
(k)What is the reason for the handwritten comment in Hebrew that 'this is a back to back loan with a margin of 0.6 between the deposit and the loan'? And:
(i)What was the deposit or security held by Mercantile Discount Bank that led to this loan being termed a back to back loan?
(ii)Who placed the deposit or security with Mercantile Discount Bank and when?
(iii)Who was authorised to be given information by Mercantile Discount Bank or give instructions to Mercantile Discount Bank in relation to the deposit or security?
(l)Is it correct that this instruction could only be made on the basis that Advance Finances had money on deposit with Mercantile Discount Bank and if so would this deposit be part of the security against which the loans were made?
Guarantors' Signatures Account Holders Mercantile Discount Bank form in Hebrew dated 12 June 1997 signed by Gary Binetter
(m)Was an equivalent or similar application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
(n)What were the assets provided to Mercantile Discount Bank that secured the loans referred to in the application?
Guarantors' Signatures Account Holders Mercantile Discount Bank form in Hebrew dated 12 June 1997 signed by J Belan
(o)Was an equivalent application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
(p)What were the assets provided to Mercantile Discount Bank that secured the loans referred to in the application?
(q)Who is 'John Belan' and what is his relationship to Advance Finances?
Mercantile Discount Bank form in Hebrew company accounts list for Advance Finances ?
(r)What is a 'non resident deposit account'?
(s)Is it correct that this instruction could only be made on the basis that Advance Finances had money on deposit with Mercantile Discount Bank and if so would this deposit be the security, or part of the security, against which the loans were made?
Continuing All Debts' Guarantee unlimited in amount
(t)Was an equivalent application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
(u)What were the assets provided to Mercantile Discount Bank that secured the loans referred to in the application?
Advance Finances application form to open a non interest earning current account and an interest earning deposit account
(v)Was an equivalent application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011??
(w)What amounts were placed on deposit for or on behalf of Advance Finances in relation to these accounts?
Application to effect banking operations as per telephone instructions
(x)Was an equivalent application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
Application for the execution of banking acts by means of facsimile dated 1 June 1997
(y)Was an equivalent application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
Power of Attorney applying to all accounts and transactions
(z)Was an equivalent application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
Corporate Resolutions for the Account of Advance Finances Covering General Banking Powers
(aa)Was an equivalent application completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
Letter from Michael Binetter to Mercantile Discount Bank dated 3 June 1997
(bb)Was an equivalent letter completed in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
Mercantile Discount Bank non resident current account information print outs for the period 31 August 1997 to 6 July 2005
(cc)Were equivalent banking records available in relation to the Rawson Finances account with Mercantile Discount Bank? If so, why was this application not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
(dd)What is the purpose of this account and how is it related to the loan account?
(ee)What transactions are recorded in this account?
(ff)Do these accounts indicate cash held on deposit for Advance Finances?
Schedule C to Attachment C
(37)Is Rawson Finances, as a former customer of Mercantile Discount Bank, able to request that it be provided with documents or information relevant to the loan and any security for the loan?
(38)If yes, what are the categories and types of documents that Mercantile Discount Bank would provide to Rawson on request? In particular:
(a)whether the documents described at [29] in Schedule A above are the only types of documents that Mercantile Discount Bank would provide to Rawson Finances on request;
(b)whether documents of the type described at [34(u)] to [34(ii)] in Schedule B above would be provided by Mercantile Discount Bank to Rawson Finances on request;
(c)and if so, why did Mercantile Discount Bank not produce such further documents to Rawson Finances in light of requests assertedly made by or on behalf of Rawson Finances to Mercantile Discount Bank for:
(i)'…copies of the bank's documents to show the loan was taken out, security, amount of loan, anything you have really…'
(ii)'…copies of the banks records for interest payments due from Rawson to Mercantile'
(iii)'any more documents that you have not given me for the Rawson loan? Also I am specifically looking for originals from the Bank's file?'
(iv)'access to the Bank file'
(39)If Rawson Finances, as a former customer of Mercantile Discount Bank were to request the documents of the type referred to at [34(u)] to [34(ii)] in Schedule B above, would Mercantile Discount Bank produce documents to Rawson Finances:
(a)if the answer to the above is no, why would Mercantile Discount Bank not provide the documents to Rawson Finances; and
(b)If the answer to sub-paragraph (a) above is no, why were the documents provided to the liquidator of Advance Finances.
(40)What was the form and content of any request made by, or on behalf of Rawson Finances , to Mercantile Discount Bank for documents and information in relation to the loans for the period 1 July 2006 to present. Was the form of any request in writing or oral and who made the request?
(41)In relation to the evidence given by you on behalf of Rawson Finances at the hearing of Areffco v Commissioner of Taxation:
(a)If a former customer of Mercantile Discount Bank requested copies of the bank's documents, including documents relating to the security, would Mercantile Discount Bank keep a record of such a request? If so, does any such record exist in relation to the Rawson loan file?
(b)Were computerised records relating to of the loan kept?
(c)Was a computerised record of the collateral against which the loans were offered maintained in accordance with Banking Regulation 318? If so, why were details of the collateral not annexed to your statutory declarations affirmed on 15 February 2010 and 14 February 2011?
(d)Do the documents described at [29] in Schedule A above comprise the Rawson Finances' loan file that would be made available to Rawson Finances' on request? If not, are your statutory declarations affirmed on 15 February 2010 and 14 February 2011 incorrect or incomplete in stating that 'annexed to this affidavit at marked 'B' are copies of the Rawson loan file held by the Bank'.
(e)Why did you produce letters in relation to the payment of interest rather than print details of the accounts showing the actual interest accrued and paid? Would the bank records have shown that interest was paid from a deposit held at Mercantile Discount Bank for on behalf of Rawson Finances?
(f)If there was a deposit or other security supporting the Rawson Finances' loan was this communicated by you, or as far as you are aware by any other officer of Mercantile Discount Bank to Mr Andrew Binetter (or any other person acting for on behalf of Rawson Finance) or discussed with him (or them) at any time?
(g)Did the Bank refuse to give Rawson Finances access to the complete Mercantile Discount Bank file? If so, was that refusal oral or in writing. If oral, who was the refusal made by? If in writing, what were the terms of the refusal, when was it communicated and to whom was it communicated?
(h)If the Rawson Finances' loans were supported by deposits or other arrangements, was this communicated to Mr Andrew Binetter when he requested information relating to the existence of any deposits? If not, why not?
(i)Did Mercantile Discount Bank receive any written correspondence from Rawson Finances (or persons acting on their behalf) in relation to the production of the Rawson Finances' loan file? If so, when?
(j)Did Rawson Finances (or persons acting on their behalf) have communications with you Mr Mintz or any other Mercantile Discount Bank officer in relation to obtaining information in relation to the Rawson Finances' loan file? If not, what did it provide and when?
(k)Did Mercantile Discount Bank refuse to provide Rawson Finances with the entirety of the loan file? If Mercantile Discount Bank did assist, what was that assistance?
(l)Did Mercantile Discount Bank require the provision of a power of attorney before providing Rawson Finances with a copy of the loan file?
(m)Did Mr Andrew Binetter instruct Mercantile Discount Bank to provide details of the business records in relation to the loan? If so, did Mercantile Discount Bank you not provide details of the business records in relation to the loan, in particular the security? If not, what not?
(n)Are there any records held by Mercantile Discount Bank of any officer of Mercantile Discount Bank communicating with Mr Andrew Binetter? If so, which bank officer or officers and when did the communications occur?
(o)Is it the case that the Rawson Finances and Advance Finances loan files were not computerised and instead only kept in hard copy such that the files could be misplaced or lost?
(p)What were the practices or rules of Mercantile Discount Bank with respect to the decisions as to whether to provide a loan file to a former customer.
***
INDEX OF DOCUMENTS ANNEXED TO LETTER OF REQUEST
Tab
Letter of Request Reference Description
Date
1 Schedule A to Attachment C [24(a)] (page 15) Statutory declaration of Israel Zamir with respect to Rawson, dated 15 February 2010 15 February 2010 2 Schedule A to Attachment C [24(b)] (page 15) Statutory declaration of Israel Zamir in relation to Rawson (including annexures), dated 14 February 2011 14 February 2011 3 Schedule A to Attachment C [29(a)] (page 16) Letter from Rawson Finances to Mr Elie Septon dated 4 July 1997 4 July 1997 4 Schedule A to Attachment C [29(b)] (page 16) Letter from Rawson Finances to Mr Elie Septon dated 4 December 1997 4 December 1997 5 Schedule A to Attachment C [29(c)] (page 16) Letter from Rawson Finances to Mr Elie Septon dated 9 December 1997 9 December 1997 6 Schedule A to Attachment C [29d)] (page 16) Letter from Rawson Finances to Mr Elie Septon dated 18 September 1998 18 December 1998 7 Schedule A to Attachment C [29(e)] (page 16) Deposit / withdrawal in Standard Currency Form dated 23 September 1998 23 September 2008 8 Schedule A to Attachment C [29(f)] (page 16) Two Loan Application in Foreign Currency for a Foreign Resident forms dated 23 December 2002 23 December 2002 9 Schedule A to Attachment C [29(g)] (page 16) Two Amortisation schedules dated 30 December 2003 30 December 2003 10 Schedule A to Attachment C [29(h)] (page 16) Six Mercantile Discount Bank payment forms generated on 11 December 2009 11 December 2009 11 Schedule A to Attachment C [29(i)] (page 16) Mercantile Discount Bank Amortisation Schedule dated 3 January 2005 3 January 2005 12 Schedule A to Attachment C [29(j)] (page 16) 44 Mercantile Discount Bank statement form letters dated 24 January 2008 24 January 2008 13 Schedule B to Attachment C [32(b)] (page 19) Affidavit of Mr Emil Binetter affirmed on 6 October 2010 6 October 2010 14 Schedule B to Attachment C [32(c)] (page 19) 'Emil Binetter Group' Summary of Assets and Liabilities Undated 15 Schedule B to Attachment C [33(a)] (page 20) Statutory Declaration of Mr Zamir in relation to Advance (with annexures) dated 10 December 2009 10 December 2009 16 Schedule B to Attachment C [33(b) (page 20) Statutory Declaration of Mr Zamir in relation to Advance dated 10 August 2010 10 August 2010 17 Schedule B to Attachment C [34(c)] (page 20) Loan application in foreign currency for a foreign resident dated 9 July 1997 9 July 1997 18 Schedule B to Attachment C [34(d)] (page 20) Letter from Advance Finances to Mr Elie Septon dated 24 June 1997 24 June 1997 19 Schedule B to Attachment C [34(e)] (page 20) Deposit / Withdrawal in Standard Currency Form dated 9 July 1997 9 July 1997 20 Schedule B to Attachment C [34(f)] (page 20) Facsimile from Advance Finances to Mercantile Discount Bank dated 24 June 2001 24 June 2001 21 Schedule B to Attachment C [34(g)] (page 20) One Loan Application Extension in Foreign Currency for a Foreign Resident form dated 28 June 2002 and two Loan Application Extension in Foreign Currency for a Foreign Resident forms dated 23 December 2002 28 June 2002 – 23 December 2002 22 Schedule B to Attachment C [34(h)] (page 20) Mercantile Discount Bank form in Hebrew Undated 23 Schedule B to Attachment C [34(i)] (page 20) One page of handwritten notes Undated 24 Schedule B to Attachment C [34(j)] (page 20) One Amortisation schedule dated 30 December 2003 30 December 2003 25 Schedule B to Attachment C [34(k)] (page 20) Mercantile Discount Bank form in relation to changes of rates of interest dated 7 January 2004 7 January 2004 26 Schedule B to Attachment C [34(l)] (page 20) Mercantile Discount Bank form in Hebrew dated 1 February 2005 1 February 2005 27 Schedule B to Attachment C [34(m)] (page 20) Letter from Advance Finances to Mercantile Discount Bank dated 21 February 2005 21 February 2005 28 Schedule B to Attachment C [34(n)] (page 20) One Mercantile Discount Bank payment form generated on 3 January 2005 3 January 2005 29 Schedule B to Attachment C [34(o)] (page 20) A Mercantile Discount Bank Amortisation Schedule dated 3 January 2005
3 January 2005 30 Schedule B to Attachment C [34(p)] (page 20) Mercantile Discount Bank form in Hebrew dated 7 January 2005
7 January 2005
31 Schedule B to Attachment C [34(r)] (page 21) Mercantile Discount Bank form in Hebrew dated 30 January 2005 30 January 2005 32 Schedule B to Attachment C [34(s)] (page 21) Letter from Advance Finances to Mercantile Discount Bank dated 25 May 2005 25 May 2005 33 Schedule B to Attachment C [34(t)] (page 21) 19 Mercantile Discount Bank statement form letters dated 24 January 2008 24 January 2008 34 Schedule B to Attachment C [34(u)] (page 21) Letter from David Belan to Elie Septon of Mercantile Discount Bank dated 8 July 1997 8 July 1997 35 Schedule B to Attachment C [34(v)] (page 21) Letter from Emil Binetter to Elie Septon of Mercantile Discount Bank dated 24 February 2000 24 February 2000 36 Schedule B to Attachment C [34(w)] (page 21) Draft letter from Mercantile Discount Bank to Advance Finances dated 23 March 2004 23 March 2004 37 Schedule B to Attachment C [34(x)] (page 21) Guarantors' Signatures Account Holders Mercantile Discount Bank form in Hebrew dated 12 June 1997 signed by Gary Binetter 12 June 1997 38 Schedule B to Attachment C [34(y)] (page 21) Guarantors' Signatures Account Holders Mercantile Discount Bank form in Hebrew dated 12 June 1997 signed by J Belan 12 June 1997 39 Schedule B to Attachment C [34(z)] (page 21) Mercantile Discount Bank form in Hebrew described as company accounts list for Advance Finances Undated 40 Schedule B to Attachment C [34(aa)] (page 21) Continuing All Debts' Guarantee unlimited in amount Undated 41 Schedule B to Attachment C [34(bb)] (page 21) Advance Finances application form to open a non interest earning current account and an interest earning deposit account Undated 42
Schedule B to Attachment C [34(cc)] (page 21) Application to effect banking operations as per telephone instructions Undated 43 Schedule B to Attachment C [34(dd)] (page 21) Application for the execution of banking acts by means of facsimile dated 1 June 1997 1 June 1997 44 Schedule B to Attachment C [34(ee)] (page 21) Power of Attorney applying to all accounts and transactions Undated 45 Schedule B to Attachment C [34(ff)] (page 21) Corporate Resolutions for the Account of Advance Finances Covering General Banking Powers Undated 46 Schedule B to Attachment C [34(gg)] (page 21) Letter from Michael Binetter to Mercantile Discount Bank dated 3 June 1997 3 June 1997 47 Schedule B to Attachment C [34(hh)] (page 22) Mercantile Discount Bank non resident current account information print outs for the period 31 August 1997 to 6 July 2005 31 August 1997 - 6 July 2005
Annexure 2 to the Orders of 30 November 2016
DRAFT LETTER OF REQUEST
Request for international judicial assistance pursuant to the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters.
1. Sender
Secretary, Commonwealth Attorney General’s Department
3-5 National Circuit
Barton ACT 2600
Australia
2. Central Authority of the Requested State
The Director of Courts, The Directorate of Courts
Legal Assistance to Foreign Countries
22 Kanfei Nesharim
POB 34142
Jerusalem 95464
Israel
3. Person to whom executed request is to be returned
Federal Court of Australia, through the Secretary, Commonwealth Attorney General’s Department
4. In conformity with article 3 of the Hague Convention of 18 March 1970 on the taking of evidence abroad in civil and commercial matters, the undersigned applicant has the honour to submit the following request:
5. Requesting judicial authority (article 3, a)
Federal Court of Australia
NSW Registry
Level 17 Law Courts Building
Queens Square
Sydney NSW
Australia
6. To the competent authority of (article 3, a)
Israel
7. Names and addresses of the parties and their representatives (article 3, b)
a Applicant
Commissioner of Taxation
C/- MinterEllison
Level 40,
1 Farrer Place, Governor Macquarie Tower
Sydney NSW 2000
Australia
b Respondent
Rawson Finances Pty Limited
C/- BWS Lawyers
Level 6, 179 Elizabeth St, Sydney NSW 2000
Australia
8. Nature and purpose of the proceedings and summary of the facts (article 3, c)
See attachment 'A'
9. Evidence to be obtained or other judicial act to be performed (article 3, d)
See attachment 'B'
10. Identity and address of any person to be examined (article 3, f)
Mr Elie Septon, XXXXX X XXXXX XXX XXX XX XXXX, Israel
11. Questions to be put to the persons to be examined or statement of the subject-matter about which they are to be examined (article 3, f)
See attachment 'C'
12. Any requirement that the evidence be given on oath or affirmation and any special form to be used (article 3, h)
It is requested that the evidence from the examinee be taken on oath or affirmation or otherwise in accordance with the judicial procedures of the requested State.
13. Special methods or procedure to be followed (articles 3, i and 9)
It is requested that the examination be recorded and reduced to writing. All books, documents and things produced and referred to during the examination should be duly marked for identification. The examination, including all books, documents and things marked for identification should be authenticated by the seal of the court or tribunal before which the examination takes place, or signed by the judicial officer before whom the examination takes place, or in such other say as is in accordance with the rules and procedures of the requested State.
14. Request for notification of the time and place for the execution of the Request and identity and address of any person to be notified (article 7)
Federal Court of Australia, through the Registry Addresses as above.
15. Request for attendance or participation of judicial personnel of the requesting authority at the execution of the Letter of Request
Not applicable.
16. Specification of privilege or duty to refuse to give evidence under the law of the State of origin (article 11, b)
Nil.
17. The fees and costs incurred which are reimbursable under the second paragraph of article 14 or under article 26 of the Convention will be borne by
The Applicant, the Commissioner of Taxation. A note of the fees and expenses payable in respect of the execution of the request should be made and returned to the requesting authority.
18. Date of request
Signature and seal of the requesting authority
Attachment 'A' to the letter of request
Nature and purpose of the proceedings and summary of the facts
(Article 3, c))
(1)The Applicant in these civil proceedings before the Federal Court of Australia is the Commissioner of Taxation (the Commissioner) and the Respondent is Rawson Finances Pty Limited (Rawson Finances), an Australian resident company.
(2)The history of the dispute is as follows.
(3)After an audit that commenced in 2006, the Commissioner issued various assessments to Rawson Finances which had the effect of disallowing claimed interest deductions on asserted loans and increasing Rawson Finances' assessable income and tax liability. Rawson Finances objected and the relevant objections were disallowed.
(4)Rawson Finances applied for review to the Administrative Appeals Tribunal (the Tribunal). In the proceedings before the Tribunal, witnesses called on behalf of Rawson Finances gave evidence to the effect that:
(a)Rawson Finances' directors had a family history of setting up special purpose vehicles which took out asserted loans from Israeli Banks;
(b)Israeli Banks operated differently to Australian banks in that Israeli Banks were willing to lend on the basis of personal guarantees and relationships with the borrowers;
(c)the directors of Rawson Finances and family members of the directors had direct involvement with Israeli Banks through other entities known as BCI Finances Pty Limited (BCI Finances) , Advance Finances Pty Limited (Advance Finances) and Civic Finances Pty Limited (Civic Finances) all of which received significant loans from Israeli Banks that were not supported by cash deposits and which were not back to back loans;
(d)the details of the principal lent referred to in (c) above were asserted by the witnesses who gave evidence on behalf of Rawson to be:
(i)on 14 May 1993, Bank Hapoalim B.M lent CHF 12,000,000 to BCI Finances;
(ii)on 9 July 1997, Mercantile Discount Bank lent AUD 4,000,000 to Advance Finances;
(iii)on 16 June 1999, Israel Discount Bank lent AUD 5,000,000 to Civic Finances;
(iv)in 2004, Mercantile Discount Bank lent a further AUD 2,500,000 to Advance Finances;
(v)on 27 May 2004, Israel Discount Bank lent a further AUD 3,690,000 to Advance Finances; and
(vi)on 1 March 2005, Bank Hapoalim B.M lent a further AUD 6,177,288 to BCI Finances.
(e)the Rawson Finances loans were not supported by any deposit or back-to-back arrangement and Mercantile Discount Bank was willing to make the loan on the strength of a personal guarantee from a former director of Rawson Finances.
(5)At the hearing of Areffco and Commissioner of Taxation [2011] AATA 628, Rawson Finances relied upon the following documents:
(a)Statutory Declaration of Mr Israel Zamir dated 10 December 2009
(b)Statutory Declaration of Mr Israel Zamir dated 15 February 2010; and
(c)Statutory Declaration of Mr Israel Zamir dated 10 August 2010
(d)Statutory Declaration of Mr Israel Zamir dated 14 February 2011.
(6)The Tribunal accepted the case advanced by Rawson Finances, accepting significant aspects of Rawson Finances’ evidence. The Tribunal upheld Rawson Finances' objections to the assessments (and therefore the increased tax liability).
(7)The Commissioner successfully appealed this decision in Commissioner of Taxation v Rawson Finances [2012] FCA 753. However, the Full Court of the Federal Court of Australia allowed Rawson's appeal in Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26.
(8)In 2015, the Commissioner obtained documents which demonstrated that the loans made to BCI Finances, Advance Finances and Civic Finances were secured with cash deposits and were known as back-to-back loans. In these proceedings, the Commissioner has applied to the Federal Court to have the Tribunal's decision Areffco and Commissioner of Taxation [2011] AATA 628 (and/or the Full Court decision) overturned on the basis it was obtained by fraud.
Attachment 'B' to the letter of request
Evidence to be obtained or other judicial act to be performed
(Article 3, d)
(1)The evidence to be obtained is the evidence of Mr Elie Septon, formerly the Deputy General Manager (and prior to that, Senior Manager) at the Tel Aviv Branch of Mercantile Discount Bank in Israel.
(2)The general nature and subject matter of the examination of Mr Elie Septon and the nature of the questions to be put during the examination are detailed in attachment 'C' to the letter of request.
(3)It is also requested that, in aid of and ancillary to the examination, a subpoena duces tecum, summons or equivalent order which requires the Proper Officer of Mercantile Discount Bank to produce documents that fall within the categories of documents described in the schedule immediately below (except to the extent that those documents have already been produced in response to an order made by the judicial authorities in Israel pursuant to another letter of request issued in the proceedings referred to in Attachment ‘A').
Schedule to Attachment B
Rawson Finances
(4)In relation to any advances of money by Mercantile Discount Bank to Rawson Finances during the period 1 January 1996 to 30 December 2013 (collectively referred to hereafter as “the advances”), for the purposes of answering the questions in each of the paragraphs referred to below including those relating to any documents outlined in those paragraphs, all documents recording or evidencing:
(a)For the purposes of answering the questions at [14], [26], [29(c) and (d)], and [30(c)(u)] including those relating to the documents outlined in those paragraphs. any security, deposit, asset or arrangement:
(i)related or connected in any way to the advances; or
(ii)accepted or treated as 'security' or 'collateral' for the advance of funds or the advances.
(b)For the purposes of answering the questions at [29(a), (c) and (f)] and [30(a) to (w)] including those relating to the documents outlined in those paragraphs, the terms on which the advances or asserted loans were made and manner in which any party performed any agreement relevant to the asserted loans, including but not limited to:
(i)the term of the loan;
(ii)the dates on which the principal was to be repaid (and the amount of principal to be repaid on each date);
(iii)the dates on which the principal was actually repaid (and the amount of principal repaid on each date)
(iv)the dates on which interest was due to be paid (and the amount of interest paid on each date); and
(v)the dates on which the interest was actually paid (and the amount of principal paid on each date);
(vi)how principal and interest was paid or credited in any account related to the advances or loans.
(5)In relation to the advances by Mercantile Discount Bank to Rawson Finances during the period 1 January 1996 to 30 December 2013, for the purposes of answering the questions at [14], [26], [29(c) and (d)], and [30(c)(u)] including those relating to the documents outlined in those paragraphs, any documents that contain one or more references to a back-to-back loan or other arrangement or to any security, deposit or asset related in any way to the advances or loans.
(6)For the purposes of answering the questions at [26], [29 (c) and (d)], and [30(b), (c), (e), (g), (i)] including those relating to the documents outlined in those paragraphs, all documents recording or evidencing any communication between Mercantile Discount Bank (or any of its officers, employees, representatives or agents) and Rawson Finances (including agents, representatives, solicitors or any person acting for, in relation to or on behalf of Rawson Finances) constituting or relating to or in connection with:
(a)any security, deposit, collateral, asset or arrangement accepted or treated as 'security' or 'collateral' for the advance of funds by Mercantile Discount Bank to Rawson Finances during the period 1 January 1996 to 31 December 2013; and
(b)any request for or on behalf of Rawson Finances to Mercantile Discount Bank for the provision of the documents or information relevant to the advances of funds and any response by Mercantile Discount Bank to same.
Attachment 'C' to the letter of request
Questions to be put to the person to be examined or statement of the subject-matter about which they are to be examined
(Article 3, f))
(1)For the purposes of understanding the questions set out further below, the background to the relevant entities, being Rawson Finances and Advance Finances is first set out below with the questions following immediately after.
Rawson Finances
(2)On 21 April 1997, Rawson Finances was incorporated. Its only asset was AUD 2 of issued capital.
(3)For the purposes of the questions below, we note that Rawson Finances asserted that it had a financial arrangement (which it called a loan) with Mercantile Discount Bank that included the features set out below (together with other relevant circumstances):
Transfers of funds
(a)Between June 1997 and December 1997, Mercantile Discount Bank lent AUD 4,500,000 to Rawson Finances on the following terms:
(i)5 June 1997: AUD 3,000,000, 5 year term, interest rate 8.298%;
(ii)4 July 1997: AUD 1,000,000, 5 year term, interest rate 8.298%; and
(iii)4 December 1997: AUD 750,000, 5 year term, interest rate 8.298%.
(b)The 5 June 1997 loan was repaid in full on 18 September 1998.
(c)The loan period for the remaining loans was extended in December 2002.
(d)Before March 2004 there was a suspension of interest payments.
(e)The loan period was again extended in January 2005.
(f)The July 1997 and December 1997 loans were repaid in the following manner:
(i)on 18 September 1998: AUD 200,000 of the July 1997 loan was repaid;
(ii)on 20 July 2009: the balance of the July 1997 loan was repaid; and
(iii)on 8 October 2009 and 11 December 2009: the December 1997 loan was repaid
(g)There were 2 substantial periods of non-payment of interest by Rawson Finances, namely February 2001 to January 2005 and January 2006 to July 2009.
Loan terms – security
(h)The loans were either unsupported by any security or supported solely by guarantees from Mr Erwin Binetter, a director of Rawson Finances. Neither Rawson Finances, nor any of its directors had any assets in Israel.
(i)The borrowed funds were on-lent by Rawson Finances to associated businesses in Australia on the same terms as the loan from Mercantile Discount Bank.
Loan terms – principal and interest
(j)The loans were bullet loans, that is, there was no requirement for periodic repayments of principal during the loan term, although early repayment without penalty was permitted.
(k)The loans were denominated in Australian Dollars.
(l)The interest rate on the loans was fixed at 8.298%, calculated on simple interest basis with a penalty of 1% should the repayments not be made in time.
(m)The loans were extended in 2002 and 2005.
Advance Finances
(4)On 21 April 1997, Advance Finances was incorporated. Its only asset was AUD 2 of issued capital.
(5)For the purposes of the questions below, we note that Rawson Finances asserted that Advance Finances had a financial arrangement (which it called a loan) with Mercantile Discount Bank that included the features set out below (together with other relevant circumstances):
Transfers of funds
(a)On 9 July 1997, Mercantile Discount Bank lent AUD 4,000,000 to Advance Finances on a 5 year term at an interest rate of 8.298%.
(b)In June 2000, an amount of AUD 3,000,000 of the principal was repaid.
(c)On 27 May 2004, Mercantile Discount Bank lent a further AUD 2,500,000 to Advance Finances at an interest rate of 6.5%.
(d)The loans were repaid in full in June 2005.
Loan terms – security
(e)The loans were either unsupported by any security or supported solely by guarantees from Mr Emil Binetter, a director of Advance Finances. Neither Advance Finances, nor any of its directors had any assets in Israel.
(f)The borrowed funds were on-lent by Advance Finances to associated businesses in Australia on the same terms as the loan from Mercantile Discount Bank.
Loan terms – principal and interest
(g)The loans were bullet loans, that is, there was no requirement for periodic repayments of principal during the loan term, although early repayment with a penalty of only AUD 500 was permitted.
(h)The loans were denominated in Australian Dollars.
(i)The interest rate on the loans was predominantly fixed at 8.298% (but was occasionally 7.2% or 6.5%) calculated on simple interest basis with a penalty of 1% should the repayments not be made in time.
(j)The loan was extended in June 2002 and December 2002.
General Subject Matter of the Examination
(6)The general subject-matter of the examination is:
(a)the nature of the arrangements between Rawson Finances and Mercantile Discount Bank between 1997 and 2009 (or up until Mr Septon’s retirement where it occurred before the end of 2009);
(b)whether the statutory declarations affirmed by Mr Zamir in relation to Rawson Finances dated 15 February 2010 and 14 February 2011 and the statutory declarations affirmed by Mr Zamir in relation to Advance Finances dated 10 December 2009 and 10 August 2010 set out a complete record of all transactions and arrangements relevant to the asserted loans in the above period, and in particular whether the loans were supported by a deposit or arrangement other than a personal guarantee (based on Mr Septon’s knowledge of the asserted loans); and
(c)the documents or information requests that were made for or on behalf of Rawson Finances to Mr Septon and the response of Mr Septon to those requests, the documents or information that Mercantile Discount Bank would typically provide to Rawson Finances in relation to the loans on request from Rawson Finances, and in particular whether Mercantile Discount Bank would typically disclose to Rawson Finances the manner in which the loans were secured.
(7)The general nature of the questions to be put to the examinee are detailed in Schedule A below, though allowance is to be made for the judicial rules, procedures and practices of the requested State.
Schedule A to Attachment C
(8)What is your full name and what positions did you hold at Mercantile Discount Bank between 1996 until the time of your retirement?
(9)What were your duties and responsibilities in your work positions?
Rawson Finances
(10)What was the nature of all the arrangements between Mercantile Discount Bank and Rawson Finances or any other person or entity for on behalf of Rawson Finances in relation to the transmission of funds between Mercantile Discount Bank and Rawson Finances in the period 1 January 1996 until the time of your retirement?
(11)Who had responsibility within Mercantile Discount Bank for the negotiation and supervision of the asserted loans?
(12)Who was the representative of Rawson Finances that negotiated the original asserted loans and any changes in the terms of those loans including to the payment of interest or the extension of the loans?
(13)What was the substance of those negotiations?
(14)At or around the time the funds were advanced (see paragraph 3 of Attachment C), was there a deposit or other collateral or security connected in any way with the alleged loans to Rawson Finances and if so what was the arrangement, including:
(a)what were the terms of the arrangement and did:
(i)it include the use of an arrangement known as a 'back-to-back loan'?
Given its findings at [58], the Full Court considered whether an order should be made for the issue of the draft letter of request. In this regard, the Full Court held that it “…would be prepared to infer, on the same basis as the primary judge, that Ms Asher-Topilsky is not willing to come to Australia to give evidence in the proceeding”: Rawson (Letter of Request) Appeal at [62]. Nonetheless, the Full Court determined the making of such orders was not in the interests of justice given the other considerations to which I have referred (ibid at [59], [65] and [66]).
5. CONSIDERATION
5.1 Whether the proposed witnesses are willing or able to come to Australia to give evidence in the proceeding (s 7(2)(a), Foreign Evidence Act)
5.1.1Mr Zamir
The evidence relied upon by the Commissioner establishes that Mr Zamir is not willing or able to come to Australia to give evidence.
First, in the AAT proceeding Rawson itself relied upon evidence as to its unsuccessful requests of MBD and Mr Zamir to come to Australia to give evidence. In this regard, I found in Rawson (Letter of Request) (FCA) that Rawson’s evidence in the AAT proceeding suggests that no officer of MDB would be willing to come to Australia to give evidence in these proceedings. In reaching this view, I took into account the evidence summarised at [43]-[44] as follows:
43.… In this regard, it was not in issue before the AAT that the Tribunal lacked power to compel an overseas witness to give evidence. In its submissions in opening in the AAT, Rawson relied as circumstances relevant to weighing the evidence (or lack thereof) upon the fact that the MDB “is out of Rawson’s control and its officers are not compellable to attend to give evidence in the AAT” and that:
Andrew Binetter, the director of Rawson, and his solicitors have made extensive attempts to:
(i)persuade the Bank’s officers (Zamir or other officers) and former bank officers (Elie Septon) and other lay witnesses (Perry, Loewbeer) to give evidence and be available at the hearing…
44.... The evidence relied upon by Rawson [in support of its submission that it endeavoured unsuccessfully to procure the attendance of Mr Israel Zamir or another suitable witness] in this regard included a conversation on 4 April 2011 between Mr Douglass, Rawson’s legal representative, and Mr Mintz, a legal officer of MDB, seeking Mr Zamir to give evidence and requesting assistance with accessing the MDB documents in relation to Rawson. In the course of that conversation Mr Mintz advised that MDB would not give him access to the Rawson file “because we need a Power of Attorney from the client. It does not matter that the client was at our meeting on 31 March 2011; we still need a Power of Attorney.” Mr Douglass also deposed that he was told that, even if a Power of Attorney was provided, access would not be given to him to access the bank files and, when Mr Mintz was asked if he had spoken to Mr Zamir and his bank manager about being available to give evidence, Mr Mintz replied that “[t]he bank will not be giving any more evidence”. In cross examination in the AAT on the question of whether he had put to the bank that they had documents which had not yet been produced to him, Mr Douglass responded “I’m sure they’ve got documents that they haven’t produced.”
The evidence summarised in the passages quoted above from Rawson (Letter of Request) (FCA) was unchallenged on the first letter of request application which was actively opposed by Rawson. Furthermore, while Rawson challenged on appeal the sufficiency of the evidence, including that summarised above, to base the finding relevantly that Ms Asher-Topilsky was unwilling or unable to come to Australia give evidence, Rawson did not challenge the veracity of the underlying evidence and its challenge to the relevant finding was dismissed. Rather, the Full Court held on this issue at [62] that “[w]e would be prepared to infer, on the same basis as the primary judge, that Ms Asher-Topilsky is not willing to come to Australia to give evidence in the proceeding.”
The evidence which formed the basis of those findings is contained in the annexures to the Arnold affidavit affirmed on 23 September 2016 upon which the Commissioner relies in support of the present applications and I adopt my summary of that evidence at [43]-[44] in Rawson (Letter of Request) (FCA) here.
The Commissioner also relied upon Mr Andrew Binetter’s evidence before the AAT that he met with Mr Zamir and obtained documents and a statutory declaration, but that Mr Zamir declined to travel to Australia to give evidence or to give evidence by videoconference. Similarly, in cross-examination in the AAT on the question of Mr Zamir’s willingness to travel to Australia to give evidence, Mr Andrew Binetter said that Mr Zamir had stated “that he wasn’t willing to travel and wasn’t willing to do any more than give a statutory declaration”. Mr Douglass (then a solicitor representing Rawson) said he also spoke to Mr Zamir in Israel and obtained a second statutory declaration and that Mr Zamir again declined to travel to Australia to give evidence. Mr Douglass also stated in cross-examination that part of the reason for visiting Mr Zamir personally had been to seek to garner Mr Zamir’s personal cooperation. Mr Gary Binetter also gave evidence that he saw Mr Douglass and Mr Zamir having a conversation in which Mr Zamir declined to travel to Australia to give evidence.
Secondly, on instructions from the solicitors for the Commissioner, a lawyer from an Israeli law firm, Heskia-Hacmun, spoke with Mr Zamir on 20 September 2016 by telephone inquiring as to whether he would be willing to give testimony in the present proceedings. Mr Zamir is said to have responded that he could not come to Australia because of his age and health status. He also apparently refused to give evidence by videoconference, stating that because of confidentiality and banking secrecy he is prohibited from providing any information without the permission of the legal department of MDB or a local Court order.
5.1.2Mr Septon
I also find that the evidence establishes that Mr Septon is unable or unwilling to come to Australia to give evidence. In so finding, I have relied first upon the evidence that Mr Septon was unwilling to give evidence in the AAT proceeding. In addition to the evidence summarised at [24] above, Mr Gary Binetter also gave evidence in the AAT proceeding that he met with Mr Septon on 1 December 2009 and asked if he would assist by giving a statement to prove that the loans were genuine. However, Mr Gary Binetter said that Mr Septon said:
You will need to go to [MDB] and they can give you papers to prove the loans were genuine… You should contact Meir Samra who is now the General Manager of the bank which is the position I used to have and he can help you. He is a current employee of the bank. I am retired and no longer work for the bank so it is better that you talk to Mr Samra… I am sorry I cannot help you. I am retired. Leave me in peace. It’s better you get the bank to help you.
In cross-examination in the AAT proceeding, Mr Gary Binetter also gave evidence that Mr Septon had told him that he was not allowed to disclose any information about his time at the bank.
Secondly, on instructions from the Commissioner’s solicitors, a lawyer from Heskia-Hacmun spoke with Mr Septon on 20 September 2016 by telephone inquiring as to whether he would be willing to give testimony in the present proceedings. Mr Septon refused to give evidence and responded that any correspondence should be directed to the legal department of MDB.
5.1.3Mr Antebi
I am also satisfied on the evidence that Mr Antebi is not willing or able to come to Australia to give evidence in this proceeding.
First, it was evident from the evidence relied upon by Rawson in the AAT as to conversations between Mr Douglass and Mr Mintz (then a lawyer with legal department of MDB) that the bank would not be giving any more evidence; nor that anyone from the Bank would give evidence: see above at [24].
Secondly in cross-examination on the willingness of a representative of MDB to travel to Australia to give evidence, Mr Douglass gave evidence in the AAT proceeding that “I was on the ground in Israel seeking to meet with bank officers who were not keen to assistance [sic], and to garner their assistance…” and that “there’s more than one attempt here to try and garner this assistance. It was out of some frustration on the last visit that we had made arrangements to meet with these gentlemen, given how important we believed it was to gain their assistance, only to be met with further frustration.”
Given these matters, coupled with the fact that even when Rawson was legally represented on the first letter of request application it was not in issue that no representative of MDB is compellable to give evidence and no evidence was led by Rawson to suggest that any representative of MDB was willing to give evidence, the inference can properly be drawn that Mr Antebi is not willing or able to come to Australia to give evidence: see by analogy Rawson (Letter of Request) Appeal at [62]; Rawson (Letter of Request) (FCA) at [42]-[46].
5.2 Whether the proposed witnesses will be able to give evidence material to any issue to be tried in the proceeding (s 7(2)(b), Foreign Evidence Act)
5.2.1Relevance of the evidence sought
Before addressing the specific capacity of each of Messrs Zamir, Septon and Antebi to give evidence material to any issue to be tried, it is convenient first to consider the relevance of the evidence sought, having regard to the subject-matter of the questions asked.
I accept, in this regard, that the questions set out in the draft Letters of Request and documents sought are relevant to the substantive allegations on the basis of which the Commissioner seeks relief, namely, to provide direct evidence that false or materially misleading material was relied upon by Rawson in the AAT to achieve a favourable decision: see [28] and [29], Further Amended Statement of Claim (quoted above at [17]).
Specifically, as the Commissioner submits, the evidence sought to be taken by way of examination by Messrs Zamir, Septon and Antebi and the documents sought in aid of or ancillary to their respective examinations, relate to transactions which are central to the ultimate issue in the proceeding, being the transfer of funds between MDB and Rawson. They also relate in part to transactions between MDB and Advance on which Rawson relied in the AAT as evidencing similar practices to those allegedly adopted by MDB in transferring funds from MDB to Rawson, namely, that the transfer of funds was secured only by a personal guarantee. In essence, as earlier explained Rawson’s case in the AAT was that the loans to entities such as BCI and Advance by Israeli banks were not linked to deposits, as was also the case with the Rawson loans. However, the subsequent liquidator documents, which were not disclosed in the evidence led by Rawson about the Advance transactions with MDB before the AAT, indicate that the Advance loan was supported by a cash deposit and was described as a “back to back” loan. As Mr Arnold deposed at [45] of his affidavit affirmed 23 September 2016:
45.The relevance of the Advance documents relied on by Rawson in the Rawson Tribunal proceedings and the subsequent liquidator documents to the present proceedings is stated in the Commissioner’s Further Amended Statement of Claim filed on 25 November 2015 including as follows:
(a)certain evidence was led in the Rawson Tribunal proceedings that Messrs Emil and Irwin Binetter had an invariable business practice of taking out loans with Israeli Banks supported by only personal guarantees, for example the loan between Advance and MDB, and so it ought to be inferred that the arrangement between Rawson and MDB was also supported by a personal guarantee:…
(b)Rawson relied on the statutory declarations of Mr Zamir in relation to Advance:…
(c)The asserted loan to Advance from MDB was supported by an arrangement other than a personal guarantee and this was not disclosed by Rawson in the Rawson Tribunal proceedings….
(cross-references to the pleadings omitted.)
Finally, in the context of these issues, the draft questions posed as to the authenticity, nature and provenance of, for example, correspondence between Rawson and Mr Septon concerning the loan arrangements between MDB and Rawson (for example, questions 29(c) and (d), Schedule A to Attachment C, Zamir and Septon draft Letters of Request) are material to the issues to be tried in the proceeding: see Rawson (Letter of Request) Appeal at [58] (quoted above at [20]).
5.2.2Mr Zamir
I am also satisfied that the evidence establishes that Mr Zamir is able to give evidence material to issues to be tried in the proceeding as reflected in the general subject-matter of the questions and specific questions proposed to be asked of Mr Zamir set out in Schedule A to Attachment C to the Zamir Draft Letter of Request.
In this regard, paragraph 6 of Attachment C to the Zamir Draft Letter of Request identifies the subject matter about which Mr Zamir is proposed to be examined and reads:
6. The general subject-matter of the examination is:
(a)the nature of the arrangements between Rawson Finances and Mercantile Discount Bank between 1997 and 2009;
(b)the meaning, significance, description, nature and provenance of the documents that have been:
(i)filed by the Commissioner in the Federal Court proceedings as described at Schedule A to Attachment C below in relation to Rawson Finances and which were annexed by Mr Zamir to his statutory declaration dated 15 February 2010;
(ii)filed by the Commissioner in the Federal Court proceedings as described at Schedule B to Attachment C below in relation to Advance Finances, certain of which were annexed by Mr Zamir to his statutory declaration affirmed 10 August 2010;
and whether those documents are a complete record of all transactions and arrangements relevant to the asserted loans; and
(c)the requests that were made for or on behalf of Rawson Finances to Mr Zamir in his capacity as Foreign Exchange Department Manager of Mercantile Discount Bank for documents or information relevant to the asserted loans and the response of Mr Zamir and Mercantile Discount Bank to those requests.
By way of further elaboration, Rawson relied in the AAT proceeding on two statutory declarations from Mr Zamir concerning the Rawson transactions dated 15 February 2010 and 14 February 2011, Mr Zamir being employed at that time by MDB as the Foreign Exchange Department Manager at the main branch in Tel Aviv of MDB. Mr Zamir testified that he was “authorised by the Bank to make” the declarations and that his signature appeared on letters associated with the Rawson transactions annexed to the statutory declarations. He also gave evidence in the AAT as to the Advance transactions with MDB in statutory declarations dated 10 December 2009 and 10 August 2010 on which Rawson also relied in the AAT, with correspondence between Advance and Mr Zamir dated 2004 and 2005 being annexed to the 10 August 2010 declaration. Objections by the Commissioner to the receipt of Mr Zamir’s evidence by the AAT on the basis that Mr Zamir was not available for cross-examination and that his evidence should be afforded no weight were not upheld: Rawson (AAT Decision) at [133] and [135].
It follows that I accept the Commissioner’s submissions that the evidence establishes that Mr Zamir is likely to be able to give probative evidence on the subject-matter of the proposed questions which are material to the issues in the proceedings, being in particular:
(1)the nature of the arrangements between MDB and Rawson between 1997 and 2009 (see Zamir Draft Letter of Request, Attachment C, paragraph 6(a) and Attachment C, Schedule A, paragraphs 8 to 28; and Arnold affidavit at [35]-[38]);
(2)the nature and provenance of certain documents annexed to Mr Zamir’s statutory declarations in the AAT dated 15 February 2010 (and filed in these proceedings), and whether those documents were a complete record of all transactions and arrangements relevant to the asserted loans (see Zamir Draft Letter of Request, Attachment C, paragraph 6(b)(i); and Arnold affidavit at [39]-[41]);
(3)the nature and provenance of documents concerning Advance annexed to Mr Zamir’s statutory declarations in the AAT dated 10 December 2009 and 10 August 2010 (and filed in these proceedings), and whether those documents were a complete record of all transactions and arrangements relevant to the asserted loans, together with specific questions concerning the subsequent liquidator documents obtained by the Commissioner (see Zamir Draft Letter of Request, Attachment C, paragraph 6(b)(ii); and Arnold affidavit at [42]-[45]); and
(4)the nature and extent of any request made for or on behalf of Rawson to Mr Zamir for documents or information concerning the asserted loans between MDB and Rawson and his responses (see Zamir Draft Letter of Request, Attachment C, paragraph 6(c); and Arnold affidavit at [46]-[47]).
Finally, the documents already in the Commissioner’s possession such as the subsequent liquidator documents about which questions are proposed to be asked, are annexed to the Zamir Draft Letter of Request, as is also the case with respect to the Septon and Antebi draft Letters of Request: cf Rawson (Letter of Request) Appeal at [56].
5.2.3Mr Septon
I am satisfied on the evidence that Mr Septon is able to give evidence material to issues to be tried in the proceeding including in answer to the specific questions proposed to be asked of him described in Schedule A to Attachment C to the Septon Draft Letter of Request.
Paragraph 6 of Attachment C to the Septon Draft Letter of Request identifies the general subject matter about which Mr Septon is proposed to be examined and reads:
The general subject-matter of the examination is:
(a)the nature of the arrangements between Rawson Finances and Mercantile Discount Bank between 1997 and 2009 (or up until Mr Septon’s retirement where it occurred before the end of 2009);
(b)whether the statutory declarations affirmed by Mr Zamir in relation to Rawson Finances dated 15 February 2010 and 14 February 2011 and the statutory declarations affirmed by Mr Zamir in relation to Advance Finances dated 10 December 2009 and 10 August 2010 set out a complete record of all transactions and arrangements relevant to the asserted loans in the above period, and in particular whether the loans were supported by a deposit or arrangement other than a personal guarantee (based on Mr Septon’s knowledge of the asserted loans); and
(c)the documents or information requests that were made for or on behalf of Rawson Finances to Mr Septon and the response of Mr Septon to those requests, the documents or information that Mercantile Discount Bank would typically provide to Rawson Finances in relation to the loans on request from Rawson Finances, and in particular whether Mercantile Discount Bank would typically disclose to Rawson Finances the manner in which the loans were secured.
In the first place, documents attached to Mr Zamir’s statutory declaration dated 15 February 2010 filed in the AAT proceeding included correspondence from Rawson to Mr Septon (then Senior Manager of the Tel Aviv Branch of MDB in Israel) in 1997 and 1998 relating to loan arrangements between Rawson and MDB. Secondly, Mr Zamir’s statutory declarations of 10 December 2009 and 10 August 2010 included certain correspondence dated 1997, 2000, 2001 and 2005 between Advance and Mr Septon in relation to loan arrangements between MDB and Advance, attested to Mr Septon’s signature on one of the bank documents, and identified him as “the former General Manager Assistant (that is to say, the Deputy General Manager), Mr Elie Septon, now retired.” Thirdly, Rawson nominated Mr Septon in the AAT proceeding as a person who may be able to give relevant evidence in relation to the Rawson transactions but led evidence from Mr Gary Binetter that he had been unable to persuade Mr Septon to give evidence.
Based upon this evidence, I accept the Commissioner’s submissions that the evidence establishes that Mr Septon is likely to be able to give probative evidence on material issues, being in particular:
(1)The nature of the arrangements between MDB and Rawson between 1997 to 2009 (or until the date of Mr Septon’s retirement) including the negotiation and supervision of the asserted loans, whether there was a deposit or other collateral or security connected in any way with the asserted loans, interest arrangements and extension arrangements (see the Septon Draft Letter of Request, Attachment C, paragraph 6(a); questions contained in paragraphs 10 to 23, Attachment C, Schedule A; and the Arnold affidavit at [50]-[54]).
(2)Whether the statutory declarations of Mr Zamir in the AAT proceeding contain a complete record of all transactions and arrangements relevant to the asserted loans between MDB and Rawson and/or MDB and Advance based upon Mr Septon’s own knowledge and involvement in relation to the asserted loans, and including specific questions about correspondence between himself and Rawson, and concerning the subsequent liquidators’ documents including those referring to Mr Septon (see the Septon Draft Letter of Request, Attachment C, paragraph 6(b); questions contained in paragraphs 28 to 30, Attachment C, Schedule A and paragraphs 33-36, Attachment C, Schedule B; and the Arnold affidavit at [55]-[58]).
(3)The documents and information that Rawson, as a customer of MDB, would typically have been able to obtain from MDB upon request based upon his knowledge and experience as a former officer of MDB until the time of his retirement and including questions about any requests for documents or information made to him by anyone for or on behalf of Rawson (see the Septon Draft Letter of Request, Attachment C, paragraph 6(c); questions contained in paragraphs 37 to 40, Attachment C, Schedule C; and the Arnold affidavit at [59]-[60]).
5.2.4Mr Antebi
Mr Antebi is the current Manager at the Tel Aviv Branch of the MDB where the Rawson accounts were held.
The Commissioner relied upon the expert report from Mr Amos Hacmun in support of the submission that Mr Antebi is a person able to give evidence material to the issues to be tried. Mr Hacmun’s opinion was sought to identify the name and positions of the employees or officers of MDB who would best be able to provide responses to the questions set out in the draft Letter of Request to be issued to an employee or officer of MDB. Mr Hacmun is an Israeli lawyer and founding partner of Heskia-Hacmun Law Firm and head of the Banking and Finance Practice of that Firm. By way of further elaboration, Mr Hacmun explained that:
Since 1998 I have been advising numerous foreign Banks on matters involving Israeli law as well as advising clients on their interactions with banks. The subject matters of my advice typically included regulatory matters, legal compliance, anti-money laundering, large credit facilities and securitization of collateral. I have further gained practical banking experience during my service as a member of the board of directors with the Israeli Continental Bank during which I have been exposed to the various aspects of operating a bank in Israel and were [sic] I have gained firsthand experience in credit extension, risk management, compliance and more.
His experience includes forming part of the audit committee which supervised the proper implementation of the applicable rules and regulations of the Bank of Israel.
I accept that Mr Hacmun has specialised knowledge based upon his training, study and experience on the subject matter on which he opines, and that his evidence is relevant and admissible under s 79 of the Evidence Act 1995 (Cth). In giving weight to his report, I have also taken into account Mr Hacmun’s evidence that in preparing his report, he had read, understood and complied with the (then) guidelines in Practice Note CM 7, Expert Witnesses in Proceedings in the Federal Court of Australia and gave a declaration as required by the Practice Note.
Mr Hacmun expressed the opinion that Mr Antebi:
…should have knowledge of all accounts held with the branch and should have access to the data and physical files relating to the accounts. Specifically, given the size of the credits and the circumstances, it can be assumed that Mr. Shaul Antebi as the branch manager should be familiar with the accounts and in any way has access to the relevant files and information within MDB due to his position as branch manager…
In reaching his opinion that it can be expected that Mr Antebi would have knowledge of the accounts, Mr Hacmun noted that these accounts seemed to have attracted attention inside MDB as the legal proceedings in Australia were mentioned in the recent financial statements of the Bank and that there had been wide media coverage in relation to the previous interlocutory application for a Letter of Request in these proceedings. Mr Hacmun concluded that Mr Antebi would be the most suitable person out of three current employees which he identified from the main branch at Tel Aviv where the Rawson and Advance accounts were held and who could respond to the questions in Schedule A, B and C of Attachment C to the Antebi Draft Letter of Request. I accept that evidence.
The general subject matter of the proposed examination of Mr Antebi is set out in paragraph 6 of Attachment C to the Antebi Draft Letter of Request, namely:
(a)the nature of the arrangements between Rawson Finances and Mercantile Discount Bank between 1997 and 2009;
(b)the meaning, significance, description, nature and provenance of the documents that have been:
(i)filed by the Commissioner in the Federal Court proceedings and referred to in Schedule A to Attachment C below in relation to Rawson Finances and which were annexed by Mr Zamir to his statutory declaration dated 15 February 2010;
(ii)filed by the Commissioner in the Federal Court proceedings and referred to in Schedule B to Attachment C below in relation to Advance Finances, certain of which were annexed by Mr Zamir to his statutory declaration affirmed 10 August 2010; and
(iii)produced in response to any subpoena ducus [sic] tecum, summons or equivalent order as described in Attachment B
and whether those documents are a complete record of all transactions and arrangements relevant to the asserted loans; and
(c)the requests that were made for or on behalf of Rawson Finances to Mercantile Discount Bank for documents or information relevant to the asserted loans and the response of Mr Zamir and/or Mercantile Discount Bank to those requests as referred to in Schedule C to Attachment C below .
I am satisfied that questions addressed to these subject-matters are material to the issues to be tried in the proceedings, that the questions proposed to be asked of Mr Antebi are properly directed to these subject-matters, and that Mr Antebi is likely to be able to provide evidence addressing those issues.
In so finding, in addition to the expert evidence of Mr Hacmun, I have taken into account the evidence of Mr Gary Binetter in the AAT proceeding. Specifically, it was his evidence that, in the course of his inquiries in 2011 as to whether Mr Septon would be willing to come to Australia to give evidence in those proceedings, Mr Septon said that “You should contact Meir Samra who is now the General Manager of the bank which is the position I used to have and he can help you.” That position, General Manager of the Tel Aviv Branch of MDB, is now occupied by Mr Antebi.
5.2.5Documents in aid of, or ancillary to, the proposed examinations
I am also satisfied that the draft Letters of Request properly seek documents in aid of and ancillary to the examinations of Messrs Zamir, Septon and Antebi.
First, as the Commissioner submits, given the nature of the subsequent liquidator documents relating to Advance, it is reasonable to expect, if not likely, that MDB holds documents relevant to the specific questions to be asked of Messrs Zamir, Septon and Antebi in Attachment C to the respective draft Letters of Request concerning the Rawson transactions.
Secondly, the documents are sought to be produced by the proper officer of MDB only to the extent to there are documents relevant to a specific question which has been asked of Messrs Zamir, Septon and Antebi (as listed in Attachment B to the respective draft Letters of Request) which questions, as I have already held, properly seek evidence on matters material to the issues in the substantive proceeding. For example, Attachment B to the Zamir Draft Letter of Request seeks production of documents falling within the categories described in the Schedule to Attachment B (except to the extent that they have already been produced in response to another letter of request issued in the proceedings referred to in Attachment A), including:
4.In relation to any advances of money by Mercantile Discount Bank to Rawson Finances during the period 1 January 1996 to 30 December 2013 (collectively referred to hereafter as “the advances”), for the purposes of answering the questions in each of the paragraphs referred to below including those relating to any documents outlined in those paragraphs, all documents recording or evidencing:
(a)for the purposes of answering the questions at [14], [26], [29(c) and (d)], and [30(c)] including those relating to the documents outlined in those paragraphs, any security, deposit, asset or arrangement:
(i)related or connected in any [way] to the advances; or
(i)accepted or treated as ‘security’ or ‘collateral’ for the advance of funds or the advances.
The questions referred to in turn seek answers on substantive issues relating to material issues in the proceedings, such as what were the terms of any arrangement with respect to a deposit or other security connected with the alleged loans to Rawson and whether they included the use of a “back-to-back loan” (question 14(a)(i), Schedule A to Attachment C, Zamir Draft Letter of Request).
It follows that the draft Letters of Request now proposed by the Commissioner do not suffer from the vice found by the Full Court in Rawson (Letter of Request) Appeal where the questions were held to be ancillary to the production of the documents, instead of the documents being ancillary to the examination: see above at [19(3)].
5.3 Where the interests of justice best lie (s 7(2)(c), Foreign Evidence Act)
I accept that the interests of justice are best served by the issue of the three Letters of Request sought in the interlocutory applications.
First, it was not in dispute in Rawson (Letter of Request) (FCA) that no representative of MDB was compellable to give evidence in these proceedings otherwise than by the letter of request process (at [42]). Nor did the evidence suggest otherwise on the present letter of request applications.
Secondly, in so far as Rawson’s interests are concerned, Rawson itself sought to procure evidence from Mr Zamir and Mr Septon and a relevant officer of MDB during the course of the AAT proceeding apparently without success. As the Commissioner points out, Rawson did not “‘fear’ to call those witnesses for examination in the Tribunal proceedings but positively maintained that it had attempted to procure their co-operation, but without success.” Furthermore, as the Commissioner also submits, the evidence in the AAT showed that members of the Binetter family and their legal representatives had been prepared to travel, and in fact did travel, to Israel on a number of occasions in order to procure (albeit unsuccessfully) evidence from MDB and other Israeli Banks. So understood, the Commissioner rightly submits that the present applications effectively seek to utilise an available procedure under the Foreign Evidence Act to compulsorily examine witnesses who can give relevant evidence about the complete nature of the Rawson transactions, being an objective that Rawson itself contended that it wished to achieve in the AAT proceeding.
Thirdly, the nature of the allegations made by the Commissioner, namely the procurement of a judgment by fraud, based upon the “fresh evidence” obtained by the Commissioner in respect of the Advance transactions from MDB (as well as the BCI transactions from Bank Hapoalim), lend significant weight to the proposition that the interests of justice favour the issue of the Letters of Request so as to enable the complete nature of the Rawson transactions to be explained and any direct evidence of the alleged fraud brought to light. In this regard, there has been no suggestion that Rawson as a customer of MDB intends to obtain documents directly from MDB concerning its transactions, as is apparent from Rawson’s lack of consent to the present interlocutory applications; nor has any explanation been given by Rawson as to why it apparently no longer wishes to obtain that evidence.
Fourthly, I have had regard to the public interest in ensuring that a judgment is overturned where the procurement of a judgment by fraud can be established in accordance with the strict proof required to establish such a charge by evidence later discovered.
In the fifth place, as I have earlier found, the draft Letters of Request contain specific questions to be put to each proposed witness as set out in Attachment C to each Letter of Request. Those questions, in turn, have been tailored to the likely knowledge of the specific individual to be examined. Furthermore, as I have also found, the request for orders for production of documents are referenced to specific questions to be asked of Messrs Zamir, Septon and Antebi and are demonstrably ancillary to the examination of each proposed witness: Rawson (Letter of Request) Appeal at [52] (the Court); Director of Public Prosecutions v Alexander (1993) 33 NSWLR 482 at 499 (Hunt CJ at CL).
Finally, I accept the need for the three draft Letters of Request to be issued as explained by the Commissioner including (as mentioned) the need to have regard to the particular knowledge of each witness, namely:
a.Both Mr Zamir and Mr Septon were nominated by the respondent as being appropriate persons to give evidence in relation to the Rawson transactions however both have now been retired for several years (… for example, in December 2009, Mr Septon was already retired and he also appears to have been first dealing with the Rawson transactions in 1997). Due to the passage of time and the likely advanced years of these witnesses, their memories as to the complete nature of the Rawson transactions may differ together with the recollection of the relevant documentation in relation to the same.
b.A number of the questions have been tailored as necessary to the particular individual to be examined. By way of examples (i) the Mr Zamir Letter of Request asks a number of specific questions concerning the statutory declarations that Mr Zamir completed in relation to the Rawson and Advance transactions as well as questions about requests made directly to him by Rawson for information and documents at the time of the Tribunal proceedings (ii) the Mr Septon Letter of Request asks a series of specific questions concerning documents bearing Mr Septon’s own name in relation to both the Rawson and Advance transactions (iii) the Mr Antebi Letter of Request asks specific questions concerning the approaches made by Rawson to MDB to obtain documents and information concerning the Rawson transactions.
Finally, in response to a concern raised by me at the hearing of the interlocutory application that some of the questions may ask Mr Zamir to give answers to questions which may incriminate him, the proposed letter of request was amended so as to include a caution specifically drawing this to Mr Zamir’s attention in the following terms:
Before he gives evidence, Mr Israel Zamir should be informed that he should take legal advice on whether the answers he gives to questions to be put during the examination referred to in the previous paragraph may incriminate him.
6. CONCLUSION
For the reasons given above, I consider that it is appropriate to make the orders sought on the interlocutory applications for the issue of Letters of Request be sent to the judicial authorities of Israel to take or cause to be taken the evidence of Messrs Zamir, Septon and Antebi and for the production of documents in aid of, or ancillary to, those examinations.
I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perry. Associate:
Dated: 30 November 2016
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