Hua Wang Bank Berhad v Commissioner of Taxation (No 18)

[2015] FCA 189

FEDERAL COURT OF AUSTRALIA

Hua Wang Bank Berhad v Commissioner of Taxation (No 18) [2015] FCA 189

Citation:

Hua Wang Bank Berhad v Commissioner of Taxation (No 18) [2015] FCA 189

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 and 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 March 2015

Cases cited:

Hua Wang Bank Berhad v Commissioner of Taxation [2014] FCA 1392 cited

Date of hearing:

20 February 2015

Place:

Sydney

Division:

GENERAL DIVISION

Category:

No Catchwords

Number of paragraphs:

9

Counsel for the Applicants in NSD 652-656 of 2011 and the Respondents in VID 672 of 2010 and VID 887 of 2010:

Mr J Hyde Page

Solicitor for the Applicants in NSD 652-656 of 2011 and the Respondents in VID 672 of 2010 and VID 887 of 2010:

Henry Davis York Lawyers

Counsel for the Respondent in NSD 652-656 of 2011 and the Applicant in VID 672 of 2010 and VID 887 of 2010:

Mr D J Fagan SC

Solicitor for the Respondent in NSD 652-656 of 2011 and the Applicant in VID 672 of 2010 and VID 887 of 2010:

Australian Government Solicitor

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 MARCH 2015
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The order of 12 February 2015 preventing the taking out of the orders made on 12 January 2015 be discharged.

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 MARCH 2015
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The order of 12 February 2015 preventing the taking out of the orders made on 12 January 2015 be discharged.

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 MARCH 2015
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The order of 12 February 2015 preventing the taking out of the orders made on 12 January 2015 be discharged.

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 MARCH 2015
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The order of 12 February 2015 preventing the taking out of the orders made on 12 January 2015 be discharged.

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 MARCH 2015
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The order of 12 February 2015 preventing the taking out of the orders made on 12 January 2015 be discharged.

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

PERRAM J:	PERRAM J
DATE:	10 MARCH 2015
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. On 19 December 2014 I delivered judgment on the taxpayers’ appeals and on two related enforcement proceedings brought by the Deputy Commissioner:  Hua Wang Bank Berhad v Commissioner of Taxation [2014] FCA 1392. One of the facts in issue in the case was whether a Cayman Islands’ entity, JA Investments, was owned by Mr Borgas, as the taxpayers contended, or by Mr Gould, as the Commissioner contended. I determined this issue adversely to the taxpayers at [110] of the judgment.

2. During the course of the trial an issue arose as to where the solicitors for the taxpayers were obtaining their instructions. This was a question which came into view on a number of occasions.  It would have been open to the Commissioner to subpoena these solicitors or to make a submission about the failure of the taxpayers to call them.  This would have carried with it, however, the risk that they would have become material witnesses in the case, the further risk that they might have had to have ceased to act as a result and with that the prospect that the trial might have had to have been adjourned in order to allow them to obtain fresh representation.  Ultimately, the Commissioner decided neither to call the solicitors nor to suggest that an inference should be drawn against the taxpayers for their failure to call them.

3. At various junctures during the trial I expressed curiosity about where the taxpayers’ solicitors were obtaining their instructions. Eventually, I indicated that I would not draw an inference against the taxpayers for failing to call those solicitors.

4. At [116] of the primary judgment I said this:

   ‘116It is more than passing strange that Mr Gould should be looking after Mr Borgas’ travel arrangements.  The inference I draw is that the litigation was being conducted by Mr Gould for Mr Gould and Mr Borgas’ role was to turn up when requested.  Although Mr Borgas claimed that he was the ultimate source of instructions for the taxpayer there is no prospect that this could be true.  An attempt by me to elicit from the taxpayers’ representatives during closing submissions where their instructions were coming from was politely declined.  I infer that evidence from the taxpayers’ solicitors about the source of their instructions would not have assisted their case on the role of Mr Borgas.’

5. The last two sentences were procedurally unfair to the taxpayers since they involved the drawing of the very inference I had informed them during the trial I would not draw.

6. This involved an error on my part. The orders have not been entered and I retain, therefore, a power to recall them. I consider I should revise my reasons to withdraw the drawing of the inference which appears in [116].

7. The question then is what effect does this have on the conclusions I have otherwise reached.  In my view it has none.  The other material before me, at least to my mind, overwhelmingly showed that Mr Borgas was lying when he claimed to own JA Investments.  This material included:

   ·the Cayman Islands documents which revealed Mr Gould’s role as the appointor;

   ·Mr Borgas’ inability to explain the corporate structure and his ignorance of the events which had occurred in the case prior to his arrival to give evidence; and

   ·the falsity of his evidence about Chemical Trustee, a matter which was established by a very substantial body of documentation (see [190]).

8. This is not intended to be an exhaustive statement of my reasons for concluding Mr Borgas was lying, which were very extensive and are set out in the primary judgment.  In those circumstances, the removal of the inference I draw at [116] from my reasons does not alter either my conclusion that Mr Borgas was lying or, indeed, any other finding.  It is a single tile in a large mosaic whose overall depiction of Mr Borgas’ dishonesty is in no way diminished by the removal of the tile.

9. For those reasons I propose to amend the reasons of 19 December 2014 by removing the last two sentences of [116]. A corrigendum to that effect will therefore be published. I discharge my order of 12 February 2015 preventing the taking out by any party of the orders made on 12 January 2015 in matters NSD652-656 of 2011.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Associate:

Dated:        10 March 2015