Re Murray and Commissioner of Taxation
[2011] AATA 837
•25 November 2011
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2011] AATA 837
ADMINISTRATIVE APPEALS TRIBUNAL )
) No 2009/4786;
TAXATION APPEALS DIVISION ) 2009/5888-5894 Re HAROLD MURRAY Applicant
And
COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal Deputy President P E Hack SC Date25 November 2011
PlaceBrisbane
Decision The request for the applicant to give evidence by video conference is refused. ...............[Sgd]..........................
Deputy President
CATCHWORDS
PRACTICE & PROCEDURE – evidence – applicant resident overseas - application for video conference evidence – credibility of applicant – belief of detention – no reasonable or rational basis for belief – depravation of right to contest liability - application refused
Administrative Appeals Tribunal Act 1975 (Cth) s 35A
Freedom of Information Act 1982 (Cth) s 37
Campaign Master (UK) Ltd v Forty Two International Pty Ltd [2009] FCA 1306; (2009) 181 FCR 152
Polanski v Condé Nast Publications Ltd [2004] 1 WLR 387
Polanski v Condé Nast Publications Ltd [2005] UKHL 10; [2005] 1 All ER 945
REASONS FOR DECISION
Deputy President P E Hack SC 1.The applicant, Mr Harold Murray[1], is an Australian citizen. He lived for many years in Hong Kong but is presently a resident of Singapore.
[1] A pseudonym has been used to comply with s 14ZZJ of the Taxation Administration Act 1953 (Cth).
2.In 2006 the respondent, the Commissioner of Taxation, was provided with information and documents concerning Australian customers of the LGT Bank, a financial institution based in Liechtenstein[2]. Some of the documents appeared to concern the affairs of Mr Murray. In particular, the material obtained by the Commissioner suggested that an entity described as the “San Simeon Foundation” had been set up in October 1995 for the benefit of Mr Murray and that it had an account with the LGT Bank that held funds in the order of US$3.7m as at 31 December 1999 and US$5.9m as at 31 December 2001. Photocopies of extracts from the passports of Mr Murray and his wife were included in the material. Mr Murray had not disclosed the existence of the account or any interest in it in his income tax returns from that time.
[2] The circumstances under which the documents and information were provided is explored in some detail in the judgment of Logan J in Denlay v Commissioner of Taxation [2010] FCA 1434 and on appeal [2011] FCAFC 63.
3.The Commissioner took the view that the increase in the balance of the San Simeon Foundation account represented income of Mr Murray which ought to have, but had not, been disclosed, in his tax returns. The Commissioner made assessments and amended assessments for the income years 1999 to 2006 on the basis that Mr Murray had received income in each of those years but had failed to disclose that income in his returns. The assessments imposed income tax in excess of $10m and administrative penalties in excess of a further $10.9m. Mr Murray objected to the assessments however his objections were largely disallowed. In December 2009 Mr Murray sought a review of the Commissioner’s objection decision.
4.I am presently concerned with an application by Mr Murray that he be allowed to give his evidence by video conference from Singapore rather than be required to give evidence in person. The Commissioner opposes that course.
5.Section 35A of the Administrative Appeals Tribunal Act 1975 (Cth) provides:
“(1)A person holding a directions hearing and the Tribunal in the hearing of a proceeding may allow a person to participate by:
(a) telephone; or
(b) closed‑circuit television; or
(c) any other means of communication.”
It is common ground that the section gives a broad discretionary power to allow the giving of evidence in the manner proposed by Mr Murray.
6.Mr Andrew Smith, counsel for Mr Murray, submits that Mr Murray’s evidence is critical to the case; without it the onus of proving that the assessments are excessive would not be discharged. As will appear, I am not persuaded that that is so. Cost is not an issue as Mr Murray is prepared to meet any costs associated with the video conference. The application is not prompted by any concern about the cost of travelling to Brisbane. There is no impediment to Mr Murray travelling to Australia. The application is made because Mr Murray,
“…has formed a belief that if [he] returns to Australia to give evidence he will be detained by either the [Commissioner] or another Australian government department or agency acting at the request of or in aid of the [Commissioner].”[3]
[3] Exhibit 1, paragraph 31.
This belief, it is said, is based on a recent notorious example[4] of the Commissioner’s use of the power to make a departure prohibition order[5] together with a view expressed by one of the Commissioner’s officers that Mr Murray was a “flight risk”. The Commissioner, when asked by Mr Murray’s solicitors to undertake not to issue a departure prohibition order, declined to do so.
[4] Involving Mr Paul Hogan.
[5] Pursuant to s 14S of the Taxation Administration Act 1953 (Cth).
7.Mr Murray says that he has instructed his solicitors that he will not return to Australia under any circumstances whilst the taxation assessment stands. In a statement in support of this application he says[6],
“I will not return to Australia as:
a. I am concerned the Respondent will issue a departure prohibition order against me;
b. I fear I may be detained or arrested upon arrival by the respondent or another authority;
c. I reside in Singapore with my family; and
d. I will be away from my medical treatment providers.”
[6] Exhibit 8, paragraph 13.
As the oral submissions made clear, the reference to Mr Murray’s family is reference to his spouse, not any wider group. I should also say that I place no weight on Mr Murray’s concerns about being away from medical treatment. The medical problems of which Mr Murray complains have afflicted him for some time. They appear not to have prevented him from undertaking considerable travel to and from Australia up until 2007. Moreover it is notable that whilst the prospect of Mr Murray giving evidence by video conference has been discussed in directions hearings for many months, the concerns about absence from medical treatment providers was first raised in a statement lodged during the course of the argument and then only after it was pointed out that there was no material directly from Mr Murray explaining the basis of his application. To that point the evidence was solely that of Mr Murray’s solicitor, on information and belief.
8.But the result of his belief, Mr Murray submits, is that to refuse his application would be to deprive him of the right to contest the taxation liability. A parallel was sought to be drawn with the position of the plaintiff in Polanski v Condé Nast Publications Ltd[7]. In that case the plaintiff was a fugitive from justice in the United States having fled the country after pleading guilty to, but before sentence on, a charge of unlawful sexual intercourse with a girl aged 13 years. Mr Polanski claimed to have been libelled by a magazine publisher and sought an order that he be permitted to give evidence by video conference from France (where he was not liable to be extradited) to avoid going to England where he was likely to be arrested and extradited to the United States. The direction of the primary judge that he be allowed to give evidence by video conference was set aside by the Court of Appeal on the footing that the general policy of the courts should be to discourage litigants from escaping the normal processes of the law rather than to facilitate it.[8] The House allowed an appeal. Lord Nicholls, with whom Lord Hope and Baroness Hale agreed, said[9],
“[31] … But overall the matter which weighs most with me is this. Despite his fugitive status, a fugitive from justice is entitled to invoke the assistance of the court and its procedures in protection of his civil rights. He can bring or defend proceedings even though he is, and remains, a fugitive. If the administration of justice is not brought into disrepute by a fugitive’s ability to have recourse to the court to protect his civil rights even though he is and remains a fugitive, it is difficult to see why the administration of justice should be regarded as brought into disrepute by permitting the fugitive to have recourse to one of the court’s current procedures which will enable him in a particular case to pursue his proceedings while remaining a fugitive. To regard the one as acceptable and the other as not smacks of inconsistency. If a fugitive is entitled to bring his proceedings in this country there can be little rhyme or reason in withholding from him a procedural facility flowing from a modern technological development which is now readily available to all litigants. For obvious reasons, it is not a facility claimants normally seek to use, but it is available to them. To withhold this facility from a fugitive would be to penalise him because of his status.
[7] [2005] UKHL 10; [2005] 1 All ER 945.
[8] [2004] 1 WLR 387, 400 at [47].
[9] [2005] UKHL 10; [2005] 1 All ER 945.
[32] That would lack coherence. It would be to give with one hand and take away with the other: a fugitive may bring proceedings here, but his position as a fugitive will tell against him when the court is exercising its discretionary powers. It would also be arbitrary in its practical effect today. A fugitive may bring proceedings here but not if it should chance that his own oral evidence is needed. Then, despite the current availability of VCF, he cannot use that facility and a civil wrong suffered by him will pass unremedied.”
9.For his part the Commissioner submits that Mr Murray’s concern that lawful action might be taken to arrest or otherwise detain him cannot be a relevant consideration in exercising the discretion in s 35A of the Administrative Appeals Tribunal Act. And in any event, there is no real (as opposed to fanciful), basis for Mr Murray’s claimed belief. No reason is shown to depart from the ordinary practice of requiring crucial witnesses to give evidence in person. Dr Mellifont SC, who led Mr Looney of counsel for the Commissioner, submitted, by reference to recent observations by Buchanan J in Campaign Master (UK) Ltd v Forty Two International Pty Ltd[10] (Campaign Masters) that “a persuasive case” had not been made out for the giving of evidence by video conference.
[10] [2009] FCA 1306; (2009) 181 FCR 152. See also Blackrock Asset Management Australia Services Ltd v Waken (No 2) [2011] FCA 479 at [44] – [46].
10.In Campaign Masters Buchanan J surveyed the many authorities that now exist and said this[11],
[11] [2009] FCA 1306; (2009) 181 FCR 152 at 171.
“77… Despite the undoubted efficiencies available in an appropriate case, the trend of authority seems to me to emphasise the need for a persuasive case to be made out to use a video link to take evidence, particularly to impose it on an unwilling cross-examining party, rather than the reverse.
78I share the concerns expressed by Spender J in World Netscape and by Stone J in Dorajay about the limitation on the effectiveness of video link arrangements as a means of taking oral evidence. I am particularly troubled by the prospect (or possibility) that the cross-examination of an important witness might be rendered less effective by the limitations of video link technology or the absence of the witness from the courtroom. Although the days are gone when witnesses are expected to feel any sense of intimidation as an aid to telling the truth, there is no doubt in my mind that the requirement to give evidence on oath or affirmation in the (generally) solemn atmosphere of a courtroom in the presence of a judge, and to answer questions in cross-examination in the presence also of cross-examining counsel, has at least three potential benefits. It enhances the prospect that the witness will remain conscious of the nature and solemnity of the occasion and of his or her obligations. It affords the cross-examiner some reassurance that the gravity and immediacy of the moment, and of the supervising presence of the judge, are not lost on the witness and the cross-examination is not thereby rendered any less effective, to the possible prejudice of the cross-examining party. It provides the Court with a more satisfactory environment in which to assess the nature, quality and reliability of responses by a witness, both to questions and to the overall situation presented by the necessity to give evidence in court. To my mind there remains, even in the modern context, a certain ‘chemistry’ in oral interchanges in a courtroom, whether between a judge and counsel (or other representative) or between cross-examiner and witness. I would not wish too lightly to deprive a cross-examiner of that traditional forensic element in the exchange although, as the cases universally make clear, the Court must now, if asked to do so, balance the interests of a cross‑examining party against claimed inconvenience both in individual cases and with respect to individual witnesses. Notwithstanding the increased availability and use of video link technology, in my view, a case must be made out for the use of video link evidence if it is opposed by an affected party. I do not share the view expressed by Katz J. My own view and, I think, the weight of authority, is to the contrary.”
11.I have similar concerns and am equally concerned that the giving of evidence by video conference will render cross-examination less effective. With respect, I entirely agree with his Honour’s observations. The giving of evidence in person by witnesses of fact is the norm in hearings in the Tribunal, a fortiori when credit is in issue. Here, Mr Murray is the pivotal witness in the case and his credit is very much in issue. He says, in terms, that he does not recall seeing the documents relied on by the Commissioner (other than the copies of pages from his, and his wife’s, passports) prior to being shown the documents in the course of the Commissioner’s investigations. The evidence of Mr Murray, particularly cross-examination of him, will be of the utmost importance. In those circumstances, and where the other party opposes the giving of leave I consider that it is for Mr Murray to demonstrate a persuasive case. And, in my view, he has not done so.
12.Mr Murray’s case is founded entirely on his claimed fear that the executive branch of the government might take lawful action to arrest him or to prevent him from departing the country as and when he chose to do so. I have considerable doubt whether that fear may properly be regarded as a relevant consideration however I do not propose to decide that question. I will assume, favourably to Mr Murray, that his fear may be taken into account. Having done so, I remain unpersuaded that it is appropriate to exercise the discretion favourably to Mr Murray.
13.There are two reasons why I take that course. The first is that I consider that his belief is not soundly based. There is no evidence directly from Mr Murray of the basis of the belief. He simply asserts the fact of his belief in the terms already noted. His solicitor, Mr Rhett Kipps, swears to a conversation with Mr Murray in the following terms[12]:
[12] Exhibit 4, paragraphs 19 – 22.
“[Kipps]: Why are you concerned that if you return to Australia that you would be detained?
[Murray]: Because I am aware of the Commissioner’s power to detain someone in Australia. Didn’t you see what they did to Paul Hogan? He was there for his mother’s funeral. I don’t trust them not to try and detain me in the country if I come back to Australia for these proceedings.
[Kipps]: Just because they did it to Paul Hogan does not meant [sic] that they will do it to you Harold.
[Murray]: You have seen all the unfounded allegations they have made about me, including that I fled Australia to avoid my taxation liabilities. You know and have seen the material and records which show that I actually returned to Australia to attend an interview on 2 August 2007 with Gary Wicks and someone else from the tax office. I cannot remember where, but I saw a document that referred to me as a flight risk and mentioned the use of a DPO.”
14.The document to which reference was made is an email sent by a legal officer in the Serious Non-compliance Section of the Australian Taxation Office. I infer that that officer had undertaken a review of some type of the reports prepared following the audit of Mr Murray’s affairs. The email, sent to the officer who had undertaken the audit, included the following[13],
[13] Exhibit 4, page 16.
“In relation to this case you mention the taxpayer may be a flight risk, accordingly you propose to issue the assessments without notice. You may also wish to consider a DPO and talking to the Debt people with respect to securing any Australian assets as soon as the assessments are raised.”
There is no direct response in the material to that suggestion although I note that it is not suggested by Mr Murray that any overt action has been taken by the Commissioner against any assets in Australia.
15.The submissions made on behalf of Mr Murray rely, as well, on two further pieces of information. The first is that the Commissioner, when asked, declined to provide an undertaking not to issue a departure prohibition order. The second is that, in response to a request to access pursuant to the Freedom of Information Act 1982 (Cth) for, inter alia, “requests to Customs for alerts as to [Mr Harold Murray’s] arrival in Australia” and “requests to Customs for alerts as to [Mr Harold Murray’s] departure from Australia”, access was refused by Customs to the document on the basis of s 37(2)(b) of that Act. That paragraph makes exempt a document if its disclosure would, or could reasonably be expected to:
“(b)disclose lawful methods or procedures for preventing, detecting, investigating, or dealing with matters arising out of, breaches or evasions of the law the disclosure of which would, or would be reasonably likely to, prejudice the effectiveness of those methods or procedures.”
16.There is no evidence that Mr Murray is aware of either of these pieces of information. But beyond that, the only inference that I consider open from the first piece of information is that the Commissioner is not prepared to fetter in advance a statutory discretion. I would not regard the Commissioner’s refusal to provide the undertaking sought as providing any sounder basis for Mr Murray’s claimed belief even if it had been demonstrated that he had been aware of that refusal. The same is true of the second piece of information; it provides no basis for any belief about the prospect (or otherwise) of Mr Murray being the subject of lawful action to arrest or otherwise detain him.
17.However the matter be viewed, that is, on the basis of the matters said by Mr Murray to found his belief or on the basis of the matters relied on in his submissions to found his belief, I am unable to regard his claimed belief as having any reasonable or rational basis. It certainly does not satisfy me that the Commissioner ought be put at risk of less effective cross-examination in a case where it is accepted that everything will turn upon the cross-examination of Mr Murray.
18.The second basis is that I reject entirely the notion that to refuse Mr Murray’s request would be to deprive him of the right to contest his taxation liability. If Mr Murray chooses to refuse to return to this country to give evidence the consequence may well be that the proceedings will be dismissed for his failure to proceed with the application. But if that were to happen it would be the consequence of Mr Murray’s own act, not the consequence of any act of the Tribunal. Moreover I remain unpersuaded that the case must fail without the evidence of Mr Murray. In the statement of evidence intended to be given at the substantive hearing Mr Murray says that his wife “would manage the family’s financial and personal affairs” during the period in question in the proceedings. An extract from her passport was amongst the material from the Liechtenstein source. There is an inference that she would be able to give relevant and direct evidence of the factual matters in issue in the proceedings.
19.The result is that I refuse to make the direction sought to permit Mr Murray to give evidence by video conference. The matter will be listed for a directions hearing to determine the further steps to be taken in the proceedings.
I certify that the 19 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC
Signed: .....................[Sgd]..........................................
AssociateDate/s of Hearing 14 November 2011
Date of Decision 25 November 2011
Counsel for the applicant Mr A Smith
Solicitors for the applicant Irish Bentley Lawyers
Counsel for the respondent Dr KA Mellifont SC and Mr PA Looney
Solicitor for the respondent Australian Government Solicitor
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