Hua Wang Bank Berhad v Commissioner of Taxation (No 10)

[2013] FCA 1024

FEDERAL COURT OF AUSTRALIA

Hua Wang Bank Berhad v Commissioner of Taxation (No 10) [2013] FCA 1024

Citation:

Hua Wang Bank Berhad v Commissioner of Taxation (No 10) [2013] FCA 1024

Parties:

HUA WANG BANK BERHAD v COMMISSIONER OF TAXATION

BYWATER INVESTMENTS LIMITED v COMMISSIONER OF TAXATION

CHEMICAL TRUSTEE LIMITED v COMMISSIONER OF TAXATION

SOUTHGATE INVESTMENT FUNDS LIMITED v COMMISSIONER OF TAXATION

DERRIN BROTHERS PROPERTIES LIMITED v COMMISSIONER OF TAXATION

DEPUTY COMMISSIONER OF TAXATION v HUA WANG BANK BERHAD

DEPUTY COMMISSIONER OF TAXATION v CHEMICAL TRUSTEE LIMITED, DERRIN BROTHERS PROPERTIES LIMITED, BYWATER INVESTMENTS LIMITED

File numbers:

NSD 653 of 2011
NSD 652 of 2011
NSD 654 of 2011
NSD 655 of 2011
NSD 656 of 2011
VID 672 of 2010
VID 887 of 2010

Judge:

PERRAM J

Date of judgment:

10 October 2013

Catchwords:

EVIDENCE – Application for suppression order – Proceedings before the Australian Crime Commission – Whether order necessary for the administration of justice

Legislation:

Australian Crime Commission Act2002 (Cth) s 25A(9)
Federal Court of Australia Act 1976 (Cth) ss 37AE, 37AF, 37AG, 37AI
Taxation Administration Act 1953 (Cth) Pt IVC

Cases cited:

Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 cited
Hogan v Australian Crime Commission (2010) 240 CLR 651 cited
Esquire Nominees Ltd v Commissioner of Taxation (Cth) (1973) 129 CLR 177 cited
Nicholas v The Queen (1998) 193 CLR 173 cited

Date of hearing:

1 October 2013

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

27

Counsel for the Taxpayers:

Ms R L Seiden SC, Mr J Hyde Page, Mr K Lord

Solicitor for the Taxpayers:

Henry Davis York

Counsel for the Commissioner of Taxation & Deputy Commissioner of Taxation:

Mr D J Fagan SC, Ms J E Jaques, Ms J Gatland

Solicitor for the Commissioner of Taxation & Deputy Commissioner of Taxation:

Australian Government Solicitor

Counsel for the Applicant in the Application:

Ms A E Munro

Solicitor for the Applicant in the Application:

King & Wood Mallesons

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 653 of 2011

BETWEEN: HUA WANG BANK BERHAD
Applicant

AND: COMMISSIONER OF TAXATION
Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	10 OCTOBER 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The interim suppression orders made on 27 September 2013 and extended on 30 September 2013 be extended to 5.00pm on 8 November 2013 unless they are renewed.

2.The parties are to provide to Justice Perram’s Chambers the necessary redactions to the transcript in this matter by 22 November 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 652 of 2011

BETWEEN:	BYWATER INVESTMENTS LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	10 OCTOBER 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The interim suppression orders made on 27 September 2013 and extended on 30 September 2013 be extended to 5.00pm on 8 November 2013 unless they are renewed.

2.The parties are to provide to Justice Perram’s Chambers the necessary redactions to the transcript in this matter by 22 November 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 654 of 2011

BETWEEN:	CHEMICAL TRUSTEE LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	10 OCTOBER 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The interim suppression orders made on 27 September 2013 and extended on 30 September 2013 be extended to 5.00pm on 8 November 2013 unless they are renewed.

2.The parties are to provide to Justice Perram’s Chambers the necessary redactions to the transcript in this matter by 22 November 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 655 of 2011

BETWEEN:	SOUTHGATE INVESTMENT FUNDS LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	10 OCTOBER 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The interim suppression orders made on 27 September 2013 and extended on 30 September 2013 be extended to 5.00pm on 8 November 2013 unless they are renewed.

2.The parties are to provide to Justice Perram’s Chambers the necessary redactions to the transcript in this matter by 22 November 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 656 of 2011

BETWEEN:	DERRIN BROTHERS PROPERTIES LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	10 OCTOBER 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The interim suppression orders made on 27 September 2013 and extended on 30 September 2013 be extended to 5.00pm on 8 November 2013 unless they are renewed.

2.The parties are to provide to Justice Perram’s Chambers the necessary redactions to the transcript in this matter by 22 November 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	VID 672 of 2010

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Applicant
AND:	HUA WANG BANK BERHAD Respondent

JUDGE:	PERRAM J
DATE OF ORDER:	10 OCTOBER 2013
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The interim suppression orders made on 27 September 2013 and extended on 30 September 2013 be extended to 5.00pm on 8 November 2013 unless they are renewed.

2.The parties are to provide to Justice Perram’s Chambers the necessary redactions to the transcript in this matter by 22 November 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	VID 887 of 2010

BETWEEN:

DEPUTY COMMISSIONER OF TAXATION
Applicant

AND:

CHEMICAL TRUSTEE LIMITED
First Respondent

DERRIN BROTHERS PROPERTIES LIMITED
Second Respondent

BYWATER INVESTMENTS LIMITED
Third Respondent

JUDGE:

PERRAM J

DATE OF ORDER:

10 OCTOBER 2013

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The interim suppression orders made on 27 September 2013 and extended on 30 September 2013 be extended to 5.00pm on 8 November 2013 unless they are renewed.

2.The parties are to provide to Justice Perram’s Chambers the necessary redactions to the transcript in this matter by 22 November 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 653 of 2011

BETWEEN: HUA WANG BANK BERHAD
Applicant

AND: COMMISSIONER OF TAXATION
Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 652 of 2011

BETWEEN:	BYWATER INVESTMENTS LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 654 of 2011

BETWEEN:	CHEMICAL TRUSTEE LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 655 of 2011

BETWEEN:	SOUTHGATE INVESTMENT FUNDS LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 656 of 2011

BETWEEN:	DERRIN BROTHERS PROPERTIES LIMITED Applicant
AND:	COMMISSIONER OF TAXATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	VID 672 of 2010

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Applicant
AND:	HUA WANG BANK BERHAD Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	VID 887 of 2010

BETWEEN:

DEPUTY COMMISSIONER OF TAXATION
Applicant

AND:

CHEMICAL TRUSTEE LIMITED
First Respondent

DERRIN BROTHERS PROPERTIES LIMITED
Second Respondent

BYWATER INVESTMENTS LIMITED
Third Respondent

JUDGE:	PERRAM J
DATE:	10 OCTOBER 2013
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. These reasons concern an application for a suppression order whose effect will be, if made, to prohibit disclosure either of the fact that a person mentioned in these proceedings gave evidence at an earlier time under compulsory examination to the Australian Crime Commission (‘the ACC’) the contents of that evidence, or any information that might enable the witness to be identified.  For the reasons which follow orders of that kind should be made although they should expire under their own terms at 5.00pm on Friday 8 November 2013.

2. One of the many issues in this case concerns where the Hua Wang Bank Berhad (‘the Hua Wang Bank’) has its place of central management and control.  The Commissioner of Taxation (‘the Commissioner’) submits that it was operated from Sydney by Mr Vanda Gould and hence was an Australian resident for tax purposes.

3. The taxpayers submit that the Hua Wang Bank had its place of central management and control in Apia, the capital of Samoa.  One of the forensic endeavours which the Hua Wang Bank has undertaken in this trial is the demonstration through former employees of an entity called Asiaciti Trust (‘Asiaciti’) of the manner in which, and the methods by which, the Hua Wang Bank was administered.  To date, that evidence has tended to suggest that Asiaciti provided the Hua Wang Bank with directors who held meetings in Samoa and transacted its business in a formal sense. Ultimately, a significant issue in the trial will be focussed on just how much attention the staff of Asiaciti gave to the affairs of the Hua Wang Bank.  For the Hua Wang Bank it will be said that the directors provided by Asiaciti were sufficiently engaged in the performance of their duties to satisfy the requirements referred to in Esquire Nominees Ltd v Commissioner of Taxation (Cth) (1973) 129 CLR 177.  For the Commissioner it will be said that the directors of Asiaciti were puppets who did as they were directed by Mr Gould, or at least did not meet the requisite level of control and independent action required to meet the threshold in Esquire Nominees Ltd.

4. A person having some knowledge of the affairs of the Hua Wang Bank was examined by the ACC and a transcript of that evidence was taken.  The Commissioner seeks to tender that transcript.

5. The activities of the ACC are subject to substantial secrecy requirements by the terms of the Australian Crime Commission Act 2002 (Cth) (‘the ACC Act’). These include s 25A(9) which authorises a person conducting an examination under that Act (‘the examiner’) to direct that any evidence given before her not be published at all or published only in such manner as she might direct. The same provision requires the examiner to make such a direction if satisfied that ‘the failure to do so might prejudice the safety or reputation of a person’. In the examination the subject of the present application the examiner, relevantly, made the following direction pursuant to s 25A(9):

   … I direct that the evidence given by you, [redacted], the contents of documents produced to the Commission during this Examination, any evidence that might enable you to be identified and the fact that you’ve given evidence at this Examination shall not be published except to the Chief Executive Officer, Examiners and members of staff at the Australian Crime Commission and members of law enforcement agencies and, in particular, the Australian Federal Police and the Australian Taxation Office.

   (redaction added)

6. Subsequently, on 15 October 2012 this order was varied.  Paragraph 1 of the variation order identified the evidence in question.  Paragraphs 2 and 3 then provided (relevantly):

   Authorised Publication

   2.Subject to paragraph 3, the information set out in paragraph 1 above may only be published:-

   (a)to the Chief Executive Officer, Examiners and specified members of the staff of the ACC;

   (b)to the AFP (and staff and lawyers engaged) for confidential intelligence use;

   (c)to the Australian Taxation Office (ATO) and staff and lawyers engaged for:-

   (i)confidential intelligence use within the ATO; and

   (ii)use in connection with the assessment of taxation liability of the witness or any associated or connected entities including the HUA WANG BANK BERHAD (the tax assessment);’

   (d)to any member of the Federal Court and any other court (and staff of those bodies) and the parties and their legal representatives in proceedings involving the ATO and HUA WANG BANK BERHAD in connection with the tax assessment and any connected proceedings (the tax assessment proceedings) for confidential use in connection with the tax assessment proceedings provided that an application be made by the ATO to the court for a non-publication or pseudonym order:

   (i)preventing the witness from being identified as having been a witness at an Australian Crime Commission examination; and

   (ii)preventing the witness being identified as having been the source of  evidence given and things produced to the ACC examiner; and

   (e)by the witness and representatives to any of the persons listed in sub-paragraphs 2(a)-(d) above in connection with the tax assessment proceedings; and

   …

   3.        Publication of the information is subject to the following:

   (a)the restrictions on use in sub-section 30(5) of the ACC Act;

   (b)it shall not be published to the prosecutor of any criminal proceedings against the witness, or to any witness in such proceedings;

   (c)it may not be publicly released;

   (d)it may not be considered as part of any proposed adverse administrative action against any person (other than the tax assessment proceedings) without prior approval of the ACC.

   (emphasis in original, footnotes omitted)

7. Paragraph 2(d) contemplated the distribution to, and use by, the Commissioner of the transcript in these proceedings provided he applied for an order that would prevent the identity of the person from being identified as a witness at an ACC examination and preventing the same person from being identified as the source of that evidence.

8. The Commissioner applied for such an order when he sought to tender the transcript.

9. When the matter was substantially argued the ACC communicated to the Commissioner that its construction of the direction which had been made was that, in the event that the Commissioner applied for, but failed in obtaining, the required confidentiality order, the ACC regarded its direction as thereafter preventing the use – including the tender – of the transcript.  Upon the receipt of that information the Commissioner, understandably, indicated that if he were unsuccessful in obtaining the order he would not tender the transcript.  Subsequently, the ACC indicated that this was not what its direction required and that it only bound the Commissioner to apply for a suppression order.  It would not be a breach of the direction if the Commissioner, having applied for a suppression order and having failed to obtain it, then tendered the transcript.

10. This understanding by all concerned about the meaning of the direction makes it unnecessary to consider whether a direction under s 25A(9) of the ACC Act that a person not tender a document in curial proceedings would be a contempt of this Court or, if s 25A(9) authorises such a contempt, whether it is beyond the legislative competence of the Commonwealth: see Nicholas v The Queen (1998) 193 CLR 173 at 226 [126]; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at 359 [56].

11. On the present application, the ACC did not seek to be heard although it did indicate its willingness to assist if the Court required it.  On the hearing of the Commissioner’s application the Commissioner did not seek to advance submissions.  However, the person examined in the transcript sought leave to appear through counsel to make submissions in support of the Commissioner’s application.  Ms Munro, of counsel, appeared on the person’s behalf.

12. The power to make a suppression order is conferred on this Court by s 37AF of the Federal Court of Australia Act 1976 (Cth) (‘the FCA Act’) and may be exercised on the grounds set out in s 37AG(1):

    37AG  Grounds for making an order

    1.The Court may make a suppression order or non‑publication order on one or more of the following grounds:

    (a)the order is necessary to prevent prejudice to the proper administration of justice;

    (b)the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security;

    (c)the order is necessary to protect the safety of any person;

    (d)the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in a criminal proceeding involving an offence of a sexual nature (including an act of indecency).

    2.A suppression order or non‑publication order must specify the ground or grounds on which the order is made.

13. Ms Munro, very properly, did not suggest that subparagraphs (b)-(d) were enlivened in this case.  She did, however, submit that the order was necessary to prevent prejudice to the interests of justice.  This was because of an amalgam of concerns.  The person involved had had no choice as to whether he or she was examined and was required to answer questions even if they incriminated him or her.  The statute under which the person was examined correspondingly contained strong protection for the maintenance of confidentiality about his or her involvement in the ACC’s inquiries.  Further, there was a reputational risk inherent in the release of the material for the person.

14. In that particular regard Ms Munro acknowledged that mere embarrassment would not suffice to engage the strictures of s 37AG. On the other hand, there was a difference between the position of the person here, a third party to this litigation, and that of Mr Hogan in Hogan v Australian Crime Commission (2010) 240 CLR 651. Not only had Mr Hogan been a party to those proceedings but he himself had been the direct source of some of the material.

15. I have examined the transcript of the person’s examination.  By itself, I would not regard it as necessarily having a great impact on the person’s reputation although one can certainly see that it will make things more complex.  Accepting, however, that it may impact on the person’s reputation it is still the case that this would not justify the making of a suppression order for reputational harm does not, by itself, suffice.

16. The situation is complicated, however, by the secrecy provisions in the ACC Act. The ACC is a potent body which can examine a person against his or her will and, unless that person is awaiting trial, interrogate such a person without regard to his or her right not to incriminate himself. There is a public interest in encouraging persons being examined by the ACC to tell the truth. Although the secrecy provisions in the ACC Act serve multifarious objects, one such object is to encourage witnesses to speak the truth freely by guaranteeing that what they say will remain a closely guarded secret.

1. The criterion upon which s 37AG(1)(a) of the FCA Act operates is the ‘proper administration of justice’. That concept extends beyond the maintenance of the integrity of proceedings before the Court. The Court will not permit its proceedings, for example, to disrupt the orderly processes of commerce. Thus in an action to keep confidential a trade secret a court will not compel a plaintiff to make the secret publicly known in the course of its proceedings. The categories of such exceptions are not closed but s 37AG(1) of the FCA Act gives the flavour of what they are likely to encompass: national or international security, the safety of persons or embarrassment caused to persons involved in offences of a sexual nature. To that one could add cases of blackmail and the protection of informants and security operatives.

2. In this case it is significant that the person in question has actively indicated he or she desires an order to be made and that the ACC supports this.  There is, in my opinion, a strong public interest in the ACC being able to give effect to the promise of secrecy which its enabling legislation indicates exists.  Generally to permit the public use of the material gathered from ACC examinees against their will and on an understanding of the strictest confidentiality would undermine that important aspect of its functioning.

3. When the examinee does not object to publication there may be no particular difficulty (though this will not always be so) but where, as here, he or she does object the Court needs to proceed carefully.

4. I remind myself that when considering what is ‘necessary’ for the purposes of s 37AG(1) of the FCA Act I am not engaged in a balancing exercise. Where the aspect of the administration of justice under consideration, however, is the resolution of a conflict between the obvious desirability of this Court’s proceedings being conducted in public and the desirability of the ACC being able to deliver on the expectation that the evidence of those it examines will remain secret, one might ask how the issue can be resolved without some form of weighing those conflicting interests against each other. That, however, is forbidden me and I must ask myself only what is ‘necessary’ within the meaning of s 37AG(1).

5. That requires an examination of the significance of the transcript.  It contains material bearing on the central issues in the Hua Wang Bank Pt IVC appeal under the Taxation Administration Act 1953 (Cth). I can say no more than that.

6. It is not yet clear how this material will be used. 

7. I would accept that the administration of justice would not be served if any part of this Court’s reasons for judgment included material which needed to be suppressed. But it is not yet clear to me that the transcript of the examination will form part of the reasons for judgment. Unless and until I know how the Commissioner proposes to use the transcript and whether that use will be material to the Court’s decision-making processes, to permit the publication of this secretly obtained information at this stage would disrupt the proper administration of justice. In reaching that conclusion I do not disregards s 37AE of the FCA Act which states:

   37AE  Safeguarding public interest in open justice

   In deciding whether to make a suppression order or non‑publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

8. I take account of this important primary objective and I acknowledge the powerful consideration constituted by the need for justice to be conducted in public.  At this stage – and I emphasise those words – the proper administration of justice does necessitate that there be a suppression order.  At the end of the trial it will be clearer whether this needs to continue or whether there can be limited publication with a view to putting as much in the public domain as is possible without undermining the significant other interests to which I have referred.

9. I will therefore continue the interim orders I made on 27 September 2013 and extended on 30 September 2013. These orders will now expire at 5.00 pm on Friday 8 November 2013 unless they are renewed. 

10. Several parts of the transcript of this trial when this issue was first raised will now need to be redacted and, to the extent necessary, returned.

11. In addition to the redaction and destruction of portions of the transcript of this hearing I made an interim order on 27 September 2013 that the transcript of this hearing not be provided to anyone but the parties, their legal representatives the person examined in the ACC transcript, their legal representatives and the ACC. That order remains in effect until further order.  On 4 October 2013 I made an additional order, on advice from the solicitors for the taxpayers that it had not already occurred, that the transcript of this hearing not be provided to Mr Gould.  That order was made on the same basis as the other orders discussed in these reasons, namely, to prevent the disclosure of the identity or any other information about the person examined in the ACC transcript.  That order is also to expire at 5.00pm on 8 November 2013.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate: 

Dated:       10 October 2013