Seymour and Commissioner of Taxation (Taxation)
[2016] AATA 397
•16 June 2016
Seymour and Commissioner of Taxation (Taxation) [2016] AATA 397 (16 June 2016)
Division
TAXATION & COMMERCIAL DIVISION
File Number(s)
2013/0287-0296;
2014/1853-1859
Re
John Seymour
FIRST APPLICANT
File Number(s)
2013/4168-4177
Re
Jeanette Seymour
SECOND APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President S E Frost
Date 16 June 2016 Place Sydney The Applicants’ application for orders that their evidence in these proceedings be taken outside Australia is granted, subject to the limitations and requirements specified below.
The Tribunal directs:
1. Pursuant to s 40(4) of the Administrative Appeals Tribunal Act 1975, the evidence given by the Applicants in these proceedings will be taken outside Australia in Singapore, during a period of five days on dates to be fixed by the Tribunal.
2. Direction 1 is subject to the following:
a. Within one month of the making of Direction 1 the Applicants must pay the sum of Twenty-five Thousand Dollars ($25,000) into a bank account specified by the Tribunal, to be held on account of the Tribunal’s expenses associated with the evidentiary hearing in Singapore.
b. Upon the making of Direction 1 the Applicants undertake to pay any further reasonable expenses incurred by the Tribunal associated with the evidentiary hearing in Singapore.
c. Within one month of the making of Direction 1 the Applicants must pay Forty-five Thousand Dollars ($45,000) into a bank account specified by the Respondent, to be held on account of the Respondent’s expenses associated with the evidentiary hearing in Singapore.
d. Upon the making of Direction 1 the Applicants undertake to pay any further reasonable expenses incurred by the Respondent associated with the evidentiary hearing in Singapore; however, the Applicants do not undertake to pay for more than five persons to attend the evidentiary hearing on behalf of the Respondent.
..........................[sgd]..............................................
Deputy President S E Frost
CATCHWORDS
PRACTICE AND PROCEDURE – application for Applicants’ evidence to be taken in Singapore – whether Tribunal should exercise evidence power outside Australia – application to exercise discretion made conditional upon payment of Tribunal’s expenses by Applicants – disruption to Tribunal manageable in context of application – whether exercise of evidence power should be subject to any limitations or restrictions – whether Applicants should meet reasonable expenses of Commissioner – expenses characterised as disbursements – whether Applicants should be required to pay, or provide security for, the primary tax – proper administration of justice – application granted subject to conditions
LEGISLATION
Administrative Appeals Tribunal Act 1975 ss 2(1), 2A, 33, 39 , 40, 40(4)
Taxation Administration Act 1953 ss 14S, 14ZZK, 14ZZM, Sch 1 s 255-5
Income Tax Assessment Act 1997 ss 1-7, 3-5, 4-1, 5-5,
CASES
Re Overseas Applicants and Commissioner of Taxation (2014) 145 ALD 447; [2014] AATA 788
Commissioner of Taxation v Seymour [2015] FCA 320
Seymour v Commissioner of Taxation [2016] FCAFC 18
Minister for Aboriginal Affairs v Peko Wallsend (1986) 162 CLR 24
Re Murray and Commissioner of Taxation (No 2) [2012] AATA 450
Sullivan v Department of Transport (1978) 20 ALR 323Joyce v Sunland Waterfront (BVI) Ltd (2011) 195 FCR 213
REASONS FOR DECISION
Deputy President S E Frost
16 June 2016
INTRODUCTION
The Applicants are a married couple who lived in Australia for many years but now live in Mauritius.
They have applications in the Tribunal for review of the Commissioner’s objection decisions in relation to assessments and amended assessments of income tax for the years 2001 to 2010.
In early 2014, in connection with their review applications, they applied to the Tribunal for an order that they be allowed to give their oral evidence by video link or telephone or, alternatively, for their oral evidence to be taken overseas. Senior Member Lazanas dealt with the application, granting both applicants leave to give oral evidence by video link. Having reached that conclusion, SM Lazanas did not need to deal with the alternative application for their evidence to be taken overseas: Re Overseas Applicants and Commissioner of Taxation (2014) 145 ALD 447; [2014] AATA 788.
The Commissioner sought judicial review of SM Lazanas’ decision and succeeded in having it quashed by the Federal Court (Buchanan J): Commissioner of Taxation v Seymour [2015] FCA 320. The Applicants appealed from that decision to the Full Court but the appeal was dismissed by majority: Seymour v Commissioner of Taxation [2016] FCAFC 18. The Applicants have since applied to the High Court for special leave to appeal from the judgment of the Full Court.
Independently of the special leave application, the Applicants have now revived their application for leave to give oral evidence outside Australia. They have suggested Singapore as a suitable location for them to give their oral evidence. The Commissioner opposes the application unless certain conditions are imposed (which the Applicants find unpalatable). However, in correspondence with the Applicants’ legal representatives, the Australian Government Solicitor (AGS) has indicated that if the Tribunal were minded to grant the application:
… the overseas location would also need to be free of security concerns and to have suitable facilities for the taking of evidence. In that regard, your suggested locations of Singapore or Hong Kong are acceptable to the Commissioner.[1]
[1] Exhibit A1, Tab 6, AGS letter dated 11 March 2016
I have decided to grant the Applicants’ application, subject to specified conditions. My reasons follow.
THE INTERLOCUTORY APPLICATIONS
The Applicants’ position is that the Tribunal should allow them to give oral evidence overseas, subject to only one condition – that the Applicants cover the Tribunal’s expenses of conducting that part of the hearing outside Australia. The Commissioner’s position is that he will agree to having the Applicants’ evidence heard outside Australia only if the Applicants also (a) provide adequate security for their taxation liabilities, and (b) meet all resulting travel, accommodation and incidental expenses incurred by the Commissioner’s legal representatives (comprising two counsel, one solicitor from the AGS’s office and two instructing officers from the Australian Taxation Office (ATO)).
Those competing positions have led to the Applicants formulating proposed orders for the Tribunal to take the Applicants’ evidence in Singapore, on three different bases, so as to ensure that all areas of contention between the parties are addressed by the Tribunal:
·One, provided the Applicants pay a sufficient amount to cover the Tribunal’s expenses (the First Proposed Order);
·Two, provided the Applicants cover not only the Tribunal’s expenses, but also the Commissioner’s expenses (up to five persons for the Commissioner) (the Second Proposed Order);
·Three, provided the Applicants cover both the Tribunal’s and the Commissioner’s expenses, as above, but also that the Applicants pay, or provide adequate security for, the Applicants’ primary tax liability of almost $3.7 million (the Third Proposed Order).
The First Proposed Order is the Applicants’ preferred order; the Commissioner considers both the First and the Second Proposed Orders less than satisfactory.
THE LEGISLATION
The substantive applications for review are made under Part IVC of the Taxation Administration Act 1953 (the TAA). Division 4 of Part IVC deals with the review by the Tribunal of objection decisions. Section 14ZZK provides that in each case the Applicants bear the burden of proving that the assessment is excessive.
Section 2A of the Administrative Appeals Tribunal Act 1975 (the AAT Act) provides:
In carrying out its functions, the Tribunal must pursue the objective of providing a mechanism of review that:
(a)is accessible; and
(b)is fair, just, economical, informal and quick; and
(c)is proportionate to the importance and complexity of the matter; and
(d)promotes public trust and confidence in the decision making of the Tribunal.
Section 33 of the AAT Act deals with the procedure of the Tribunal. It provides relevantly as follows:
(1)In a proceeding before the Tribunal:
(a)the procedure of the Tribunal is, subject to this Act and the regulations and to any other enactment, within the discretion of the Tribunal;
(b)the proceeding shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit; and
(c)the Tribunal is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks appropriate.
Decision maker must assist Tribunal
(1AA)In a proceeding before the Tribunal for a review of a decision, the person who made the decision must use his or her best endeavours to assist the Tribunal to make its decision in relation to the proceeding.
Parties etc. must assist Tribunal
(1AB)A party to a proceeding before the Tribunal, and any person representing such a party, must use his or her best endeavours to assist the Tribunal to fulfil the objective in section 2A.
Division 5 in Part IV of the AAT Act deals with the procedural powers of the Tribunal. Within that Division, s 40 provides relevantly as follows:
(1)For the purpose of reviewing a decision, the Tribunal may:
(a)take evidence on oath or affirmation;
(b)proceed in the absence of a party who has had reasonable notice of the proceeding; and
(c)adjourn the proceeding from time to time.
Oath or affirmation
(2)The member who presides at the hearing of a proceeding before the Tribunal:
(a)may require a person appearing before the Tribunal at that hearing to give evidence either to take an oath or to make an affirmation; and
(b)may administer an oath or affirmation to a person so appearing before the Tribunal.
Power to take evidence
(3)The power (the evidence power) of the Tribunal under paragraph (1)(a) to take evidence on oath or affirmation in a particular proceeding may be exercised on behalf of the Tribunal by:
(a)the presiding member in relation to the review; or
(b)another person (whether or not a member) authorised in writing by that member.
(4)The evidence power may be exercised:
(a)inside or outside Australia; and
(b)subject to any limitations or requirements specified by the Tribunal.
The final legislative provision that I consider relevant to this interlocutory application is s 14S of the TAA, which deals with the Commissioner’s power to issue a Departure Prohibition Order (DPO). Subsection (1) provides as follows:
Where:
(a)a person is subject to a tax liability; and
(b)the Commissioner believes on reasonable grounds that it is desirable to do so for the purpose of ensuring that the person does not depart from Australia for a foreign country without:
(i) wholly discharging the tax liability; or
(ii) making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged;
the Commissioner may, by order in accordance with the prescribed form, prohibit the departure of the person from Australia for a foreign country.
THE BACKGROUND
In support of their interlocutory application, the Applicants rely on affidavits sworn by each of them on 7 February 2014 and 29 March 2016, and which are not challenged by the Commissioner. Subject to some minor clarifications, in the later affidavits each Applicant adopts the content of the earlier ones (which were filed in support of the earlier interlocutory application dealt with by SM Lazanas), and provides some further detail about the circumstances of the Applicants’ departure from Australia.
Mr Seymour is 74 years old. Both he and his wife retired from full-time work in 2010.
In about 2009 Mr Seymour became aware that the Commissioner was auditing his tax affairs. The audit ultimately led to the making of amended assessments in relation to each of Mr and Mrs Seymour in about May 2012, and then further amended assessments in relation to Mr Seymour in about September 2013. The total combined amount payable as a result of those assessments, once interest and penalties are taken into account, is around $12.5 million.
By the time the Applicants received notice of the first set of amended assessments, in about May 2012, they had departed Australia and were living overseas. They describe themselves as having ‘migrated from Australia in mid-2010’[2]. It seems that they first relocated to New Zealand, and then in early 2013 to Mauritius.
[2] Exhibit A1, Tab 3 [9]; Tab 4 [1] (page 2)
There is a suggestion in the judgment of Siopis J in the Full Court (for example, at [28]), that it was the Commissioner’s audit of Mr Seymour’s tax affairs that motivated the Applicants’ departure from Australia, but they both deny this. Mr Seymour says in his second affidavit[3]:
It has always been my intention to live outside Australia in my retirement, either in New Zealand or in Mauritius. …
…
The ATO’s audit of my personal taxation affairs did not play a significant (or even a minor) role in my decision to migrate from Australia.
Jeanette and I had discussions about retiring overseas over many years prior to the commencement of the ATO audit in 2009, and from as long ago as the mid-1990s.
[3] Exhibit A1, Tab 3 [8], [10] and [11]
Mrs Seymour’s evidence is to the same effect, and she adds[4]:
My family were originally from Mauritius although I was born in South Africa. It has always been my hope that John and I would live outside Australia in retirement and Mauritius was always a possible choice because of my background. John and I had discussions about retiring overseas over many years prior to the commencement of the ATO audit. I also informed members of my family that this was my intention.
[4] Exhibit A1, Tab 4 [3] (page 2)
Ross MacLennan is a businessman who has known Mr Seymour since about 1978. He has provided a witness statement, which is not challenged, in which he confirms that Mr Seymour had indicated to him during the early 2000s that he and his wife wanted to leave Australia and live overseas when they retired, either in New Zealand or Mauritius, or possibly Europe[5].
[5] Exhibit A1, Tab 16 [6]
Mrs Seymour’s mother, Merle Veronica Cafun, has also provided a witness statement[6], which is not challenged, in which she says that Mrs Seymour had told her at least five years prior to the Seymours’ move to New Zealand that they were thinking about living in either New Zealand or Mauritius once Mr Seymour retired.
[6] Exhibit A1, Tab 17
In his earlier affidavit Mr Seymour made clear his reluctance – which for practical purposes amounts to outright refusal – to give oral evidence in Australia in these proceedings. Because of the significant amount of tax assessed to him, and the content of some of the allegations the Commissioner makes against him, Mr Seymour fears that if he returns to Australia, he may be arrested or prevented from leaving the country. He says that he is ‘not prepared to come to Australia for the purposes of being cross-examined or giving oral evidence in these proceedings, or for any other reason’[7].
[7] Exhibit A1, Tab 1 [21]
He notes[8] that at least some of the assessments are supported by the Commissioner’s opinion that there has been ‘fraud or evasion’ on Mr Seymour’s part. He is concerned that he may be open to criminal prosecution. He notes that his accountant, Vanda Gould, had been arrested and charged with defrauding the Commonwealth. Mr Seymour says that he ‘placed significant trust in Vanda Gould over a ten year period in connection with [his] tax affairs, and [he] cannot be certain of the steps [Mr Gould] may have purported to take on [Mr Seymour’s] behalf’. Mr Seymour is aware of the Commissioner’s power to issue a DPO when a taxpayer has an outstanding tax liability and he is concerned that if he returns to Australia to give oral evidence in these proceedings the Commissioner may issue a DPO and thus prevent him from returning to Mauritius.
[8] Exhibit A1, Tab 1 [22]
Despite the apparently unqualified position taken by Mr Seymour, as summarised in [23] above, he continues in his 2014 affidavit[9]:
[9] Exhibit A1, Tab 1 [41]-[48]
For the reasons I outline above I am not prepared to physically come to Australia for any reason, unless at least one of several different conditions is satisfied.
I would be prepared to come to Australia if the ATO substantially abandons its claims about the taxes and penalties I owe for the 2000-2010 income years, or if these liabilities are overturned by a court or tribunal.
I would come to Australia if I was given a written assurance or agreement that I will not be prevented from leaving Australia by the government, or arrested for alleged tax crimes while in Australia. I would also need to receive independent legal advice that any such assurance or agreement is legally binding on all relevant government agencies and bodies.
I would be prepared to come to Australia if I was given legal advice that it was not possible for me to be prosecuted for a crime that carries a possible custodial sentence.
I do not personally have any expectation about what the impact on my AAT appeal would be, if I refuse to come to Australia for the purposes of cross-examination. My view about remaining outside Australia is sufficiently strong that I would not come to Australia even if assured it was a certainty that my AAT appeal would be unsuccessful due to my absence.
I do not believe I have done anything wrong, or criminal, in connection with my tax matters or in any other respect. However I do not regard ultimate vindication by the courts or AAT as a sufficient reason to come to Australia if this means I could be submitting myself to a costly struggle, away from my home, that would potentially last for years.
I do not want to expose myself to any possibility of a criminal offence charge at this late stage of life.
Alternative arrangements for giving evidence
For the purposes of giving evidence, either by video-link or at a physical location outside Australia, I would be prepared to personally incur the expense of travelling to any other country other than Australia. However I would need to seek advice about what my legal position would be, depending on which country it was proposed I give evidence in.
Mrs Seymour’s attitude to giving evidence in Australia is ‘broadly the same’[10] as her husband’s.
[10] Exhibit A1, Tab 2 [3]
The evidence relied on by the Commissioner in relation to the interlocutory application comprises a single, unchallenged affidavit sworn on 13 April 2016 by Aris Zafiriou, an Executive Level Officer of the ATO who occupies the position of Director, Significant Debt Management. Mr Zafiriou gives evidence about the ATO’s Integrated Core Processing (ICP) system – a computer system that records liabilities, payments and credits for each taxpayer in the country, including the Applicants. The ICP system records Mr and Mrs Seymour as owing the Commissioner approximately $11.1 million and $1.3 million respectively at the date of Mr Zafiriou’s affidavit. Those amounts are made up of income tax (the primary amounts) of $3,285,770.43 for Mr Seymour, and $380,779.26 for Mrs Seymour plus, for each of them, shortfall interest charge, shortfall penalties and general interest charge.
Mr Zafiriou says[11]:
[11] Exhibit R1
[12] In my role as the Director of Significant Debt Management at the ATO, I am the main decision-maker as to whether the Respondent would seek a DPO in relation to either of the Applicants if they were to enter Australia.
[13] I am prepared to undertake on behalf of the Respondent not to serve a DPO on either of the Applicants on the condition that they first:
13.1.pay the primary amounts referred to above[12] to the Respondent; or
13.2.pay the equivalent sum into a controlled monies account set up and controlled by the Australian Government Solicitor; or
13.3.provide to the Respondent an unconditional bank guarantee from an Australian Bank for the primary amounts.
[14] In light of the fact that the Applicants also fear detainment due to criminal charges, I understand that the Applicants will not come to Australia even if they receive an undertaking not to serve DPOs.
[15] The Respondent will consent to a direction that the Applicants may give evidence on commission from outside Australia on the condition that the Respondent is in no worse a position than he would be if the Applicants came to Australia on the terms specified in paragraph 13 above.
[12] At [22] of these reasons
The material before me in relation to the current interlocutory application indicates that the facts have changed to some extent since the earlier video link application was dealt with, namely:
·Mr Seymour’s health is ‘slightly worse’ and his ties to Australia are ‘weaker’[13];
·It has now been clarified that the Applicants were not motivated by the ATO’s audit activity to migrate from Australia;
·The total amount owing to the Commissioner by the Applicants has increased from ‘between approximately $10 million and $11 million’[14] in September 2014 to around $12.5 million in April 2016; and
·Mr Zafiriou, the Director of Significant Debt Management at the ATO, is now ‘prepared to undertake’ on behalf of the Commissioner not to serve a DPO on either of the Applicants if they return to Australia, provided they pay, or make suitable provision for the payment of, the ‘primary amounts’ of almost $3.7 million.
FEDERAL COURT GUIDANCE IN THE CONTEXT OF THE EARLIER APPLICATION FOR EVIDENCE TO BE GIVEN BY VIDEO LINK
[13] Exhibit A1, Tab 3 [4]
[14] Re Overseas Applicants and Commissioner of Taxation (2014) 145 ALD 447 at 448 [9]
The earlier application concerned the exercise of the Tribunal’s discretion under the then s 35A (now 33A) of the AAT Act. The current application is based around a different discretionary provision, s 40, but the earlier litigation provides helpful guidance on how a discretion like this, which like s 33A is in its terms unfettered, might be exercised.
Buchanan J at first instance in the Federal Court noted that the consideration of the Tribunal’s exercise of discretion was informed by the provisions of s 33(1) (quoted above, at [12]), and bearing in mind the requirements of s 39(1) (under which the Tribunal ‘shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case’)[15].
[15] Commissioner of Taxation v Seymour [2015] FCA 320 at [18]
His Honour characterised the Applicants’ position at the time, based on their February 2014 affidavits, as amounting to ‘an ultimatum that the taxpayers would not come to Australia, whatever the consequence for the proceedings they had initiated before the AAT, unless at least two stipulations were satisfied: a binding assurance of no restraint on departure and a binding assurance of no arrest’[16].
[16] Commissioner of Taxation v Seymour [2015] FCA 320 at [26]
His Honour held that, in deciding to allow the Applicants to give their evidence by video link, the Tribunal had fallen into jurisdictional error in two particular respects.
The first error was to take into account irrelevant considerations. Part of that error stemmed from what his Honour characterised as the Tribunal's failure to acknowledge the two quite distinct stipulations that needed to be satisfied before the Applicants would come to Australia (see [32] above), and the Tribunal’s identification, instead, of a single point of resistance from the Applicants (that they would not return unless the Commissioner undertook not to issue a DPO), coupled with an ‘inflexible position’ by the Commissioner in declining to make such an undertaking. Approaching the application on that basis, the Tribunal took into account an irrelevant consideration – namely, the refusal of the Applicants to come to Australia if they did not receive an assurance that the Commissioner would not issue DPOs – because on the Applicants’ stated position they would not have come to Australia anyway.
Furthermore, his Honour held that the Applicants’ fear that they might be prevented from leaving Australia, or perhaps even arrested, was not a relevant consideration to be taken into account in deciding whether or not they should be permitted to give evidence by video link, and thus ‘out of reach of Australian authorities, unless some particular additional personal factor was invoked …’[17]. His Honour explained at [99]-[101]:
Different considerations might arise if a party needed to obtain the evidence of an overseas witness who would not come to Australia – possibly. But where a party to proceedings in the AAT puts a request to give video evidence on the basis that the party wishes to avoid any possibility of legitimate action by taxation, regulatory or prosecuting authorities in Australia, I do not see how such a matter (which remains the declared position of the taxpayers regardless of the position of the Commissioner about DPOs) could normally be relied upon as relevant, much less decisive, by the AAT.
So far as the particular possibility of a DPO is concerned, there is another factor which is relevant. If the taxpayers came to Australia, and if a DPO was issued, there is a right of review in a court, including this Court. If on such a review a DPO was not lifted it can scarcely be suggested that it was not legitimate or permissible. The effect of the approach taken by the AAT was to pre-empt any possibility of a DPO, regardless of whether justified or not.
… As I said earlier, different considerations might arise in the case of a non-compellable witness whose evidence was important to the case of a party, but parties themselves are in a different position. They cannot, in my view, expect assistance to avoid the operation of Australian law, at least where adequate recourse to the courts is available.
[17] Commissioner of Taxation v Seymour [2015] FCA 320 at [98]
The second error the Tribunal made, on Buchanan J’s analysis, was to deny the Commissioner a reasonable opportunity to present his case, by removing the opportunity for effective cross-examination. That amounted to a denial of procedural fairness in a general sense and also represented a failure to conduct the proceedings in accordance with s 39 of the AAT Act[18].
[18] Commissioner of Taxation v Seymour [2015] FCA 320 at [74]
The members of the Full Court gave separate judgments.
Siopis J thought it was open to the Tribunal to take into account the fact that the Commissioner had declined to give an assurance not to issue a DPO, and concluded that the Tribunal had not fallen into jurisdictional error in doing so. However, his Honour agreed with Buchanan J that the Tribunal had erred in the ‘public policy’ aspect of the case, although preferring to describe the error as ‘the failure by the Tribunal to have regard to the public interest in the proper administration of the Taxation Administration Act 1953 (Cth), in particular, and to the administration of justice, in general’[19]. Siopis J noted that there is a public interest in allowing a taxpayer who wishes to challenge a tax liability a reasonable opportunity to present their case, but referred also to the public interest ‘in the Commissioner being able effectively to recover tax liabilities from taxpayers’[20] – reflected by, for example, the enactment of s 14S of the TAA, dealing with DPOs. His Honour said at [29]-[30]:
… the making of orders permitting the appellants to give evidence from abroad has a tendency to undermine the operation of the Taxation Administration Act.
This is a consideration which, in my view, the Tribunal ought to have taken into account. In failing to take into account the effect of the orders on the administration of the Taxation Administration Act and the wider public interest, the Tribunal failed to have regard to a relevant consideration and fell into jurisdictional error. The Tribunal did not, therefore, consider whether leave should be refused on public policy grounds, or whether the competing elements of public interest comprising the appellants’ right to challenge their tax liability, and the proper administration of the Taxation Administration Act, could be accommodated by fashioning any leave to give evidence from abroad in a manner which better reflected the competing interests. Thus, for example, in this latter respect, had the Tribunal directed its mind to this consideration, the Tribunal may have considered whether to impose, as a condition of the leave to adduce evidence by video link from abroad, that the appellants provide security within Australia for the payment of the tax liability.
[19] Seymour v Commissioner of Taxation [2016] FCAFC 18 at [23]
[20] Seymour v Commissioner of Taxation [2016] FCAFC 18 at [25]
Griffiths J was not satisfied that Mr and Mrs Seymour, on appeal, had established any appealable error on the part of Buchanan J, either on the question of the Tribunal’s having taken into account an irrelevant consideration[21], or on the question of denying the Commissioner procedural fairness and not conducting the proceedings in accordance with s 39 of the AAT Act[22].
[21] Seymour v Commissioner of Taxation [2016] FCAFC 18 at [55]
[22] Seymour v Commissioner of Taxation [2016] FCAFC 18 at [77]
Pagone J dissented. His Honour characterised the Tribunal’s decision as:
… an evaluative judgment reached by the Tribunal by balancing the competing considerations to determine what the Tribunal considered to be fair and just to the parties in the context of the submissions which had been made.[23]
[23] Seymour v Commissioner of Taxation [2016] FCAFC 18 at [103]
At [106] his Honour summarised Mr and Mrs Seymour’s circumstances and then said:
In those circumstances it was relevant for the Tribunal to take into account both the fact that they were unwilling to return to Australia to give evidence and also the reason for that fact. Wishing to avoid the possibility of legitimate action by taxation, regulatory or prosecuting authorities in Australia is a relevant consideration for the Tribunal albeit that it may not always result in a favourable outcome for those wishing to avoid the possibility of legitimate action.
His Honour then referred at [107] to Polanski v Condé Nast Publications Ltd [2005] 1 All ER 945, in which the House of Lords held by majority that a ‘fugitive’ from US justice, who had brought defamation proceedings in England but wished to give evidence by video link in France (in circumstances where the USA had an extradition treaty with the United Kingdom but apparently not with France), should be permitted to do so. His Honour noted that Polanski was considered by the High Court of New Zealand in Erceg v Erceg [2014] NZHC 2601, where Venning J said that the effect of refusing the order would not be to assist the normal processes of the law, but to deny the plaintiff’s right to access to justice. Pagone J then said[24]:
There is no reason to adopt a different approach in relation to the Tribunal considering the exercise of its power to receive evidence by video link under s 35A of the [AAT Act]. Each case must, of course, be decided on its own facts, and in some cases a wish to avoid action by regulatory authorities may militate against an application by the fugitive to pursue a case by giving evidence by video rather than by attendance in person, but permitting the giving of evidence by video in general furthers the proper administration of justice. There is nothing in the [AAT Act] which requires a rule to the contrary.
[24] Seymour v Commissioner of Taxation [2016] FCAFC 18 at [107]
THE APPLICANTS’ SUBMISSIONS
The Applicants submit that:
(a)it is common ground between the parties that an overseas hearing would provide procedural fairness to both the Applicants and the Commissioner;
(b)to receive the Applicants’ evidence and have it tested through cross-examination will enhance the quality of the Tribunal’s review of the objection decisions, and is preferable to either of the alternatives, namely (i) not receiving the Applicants’ witness statements at all; or (ii) receiving them, but perhaps giving them little weight;
(c)an overseas hearing would be proportionate to what is at stake in the proceedings – thus satisfying s 2A(c) of the AAT Act;
(d)the proceedings are complex, and the Tribunal will be assisted in resolving the issues if the Applicants give oral evidence overseas.
The Applicants acknowledge that it could be argued that it is ‘fair’ (s 2A(b) of the AAT Act) that the Commissioner should not be worse off than would be the case if the hearings were conducted entirely in Australia. (I took that acknowledgment to be directed towards the Commissioner’s financial, rather than emotional, well-being.) Nevertheless, the Applicants emphasise that the Tribunal is a no-costs jurisdiction – which is true, at least in the context of reviews under Part IVC of the TAA – and as a result the Tribunal should not impose a condition that the Applicants meet the Commissioner’s expenses of a hearing in Singapore.
The Applicants’ written submissions deal extensively with the question whether any overseas hearing should be conditional on payment of the tax liability. They note that the Commissioner’s contention that security should be given originates in the judgment of Siopis J in the Full Court, but point out that his Honour did not suggest that a condition of that kind should, or even could, be made, but only that it may have been considered as a condition of granting leave to give evidence by video link.
In any event, the Applicants submit that to impose such a condition would not be a sound exercise of the Tribunal’s discretion to manage its proceedings. They say that the Tribunal’s case management power cannot be used to advance policy interests that have no foundation in the AAT Act, notwithstanding that there may be a public interest in collecting tax revenue. The submission is based on the following:
(a)First, the use of the statutory power to pursue an objective that is not contemplated by the statute will be vitiated for improper purpose and taking an irrelevant consideration into account;
(b)Second, the Tribunal cannot assume that the primary tax is properly assessed. It would not be appropriate for the Tribunal to make the Applicants’ rights contingent on the discharge of a tax liability the correctness of which has not been established. For the Tribunal to make an order on the assumption that the tax has been correctly assessed would give rise to ‘very considerable apprehended bias’;
(c)Third, the proposed order goes beyond what would ever be required by the courts in a similar situation. Courts never require, as a condition of exercising their jurisdiction, the payment of money into the jurisdiction in a way that will put one of the litigants in the position of a secured creditor;
(d)Fourth, s 40(4)(b), properly construed, does not authorise the imposition of a condition that the Applicants pay the outstanding tax liability;
(e)Fifth, if the Tribunal were to take the step urged by the Commissioner, it would undermine the Tribunal’s pursuit of one of its express objectives, specified in s 2A(a) of the AAT Act, to make itself ‘accessible’;
(f)Sixth, the proposed order is inconsistent with s 64 of the Judiciary Act 1903, which says that in civil proceedings the Commonwealth has the same rights as a private sector litigant, except where the contrary intention appears.
THE COMMISSIONER’S SUBMISSIONS
The Commissioner commences by observing that the Applicants are seeking to challenge the Commissioner’s objection decisions relating to income tax assessments which have ‘long since become due and payable, thus giving rise to substantial unpaid debts due to the Commonwealth and payable to the Commissioner’: s 255-5 in Schedule 1 to the TAA. Furthermore, s 14ZZM of the TAA provides that the tax and any further amounts payable may be recovered as if no review were pending in the Tribunal. Those legislative provisions, and the burden of proof provision in s 14ZZK, are critical to the consideration of the interlocutory application.
In light of those provisions, the Commissioner says the Applicants’ assertions that the tax assessed might be ultimately found not to be payable is beside the point.
Furthermore, any suggestion that either the Commissioner or the Tribunal is impeding the Applicants is wrong. The key impediment to the Applicants’ case being put as fully as they may wish is ‘their refusal to prosecute their case personally in Australia’.
The Commissioner explains that his request for the imposition of a condition requiring the payment of, or lodgement of security for, the primary amounts is consistent with the judgment of Siopis J in the Full Court, as summarised in [38] of these reasons. Notwithstanding the Applicants’ evidence that they did not leave Australia to avoid action by officers of the ATO and possibly other government agencies, the fact is, as stated by Siopis J, that their departure from Australia ‘pre-empted the operation of s 14S’ and their application to give evidence by video link was an attempt to ‘entrench their peremptory action’ even though they had not made satisfactory arrangements to meet their liability.
The Commissioner says this case is no different:
By not being in Australia, the Applicants are not in a position to have the Commissioner exercise his power to issue a DPO, which is a power that would potentially be available to him were they in the country, as they have a taxation liability which has not been discharged, and in relation to which satisfactory arrangements have not been made to meet it.
The Commissioner’s request for the provision of adequate security, as a condition of the Commissioner’s consenting to having the Applicants give oral evidence outside Australia, is thus entirely consistent with Part IVA [of the TAA] and in particular ss 14S, 14T and 14U [of the TAA], and follows from the reasons of Siopis J in Seymour.
The Commissioner submits that it is clear that the Tribunal must give consideration to the proper administration of the TAA, which includes the right of the Commissioner to seek to ensure that the Applicants meet their liability, as a mandatory relevant consideration in the sense referred to by Mason J in Minister for Aboriginal Affairs v Peko Wallsend (1986) 162 CLR 24 at 40. In that context, the Commissioner provides the following explanation:
[W]hat is sought by way of security in relation to [the Applicants’] giving their evidence overseas is entirely analogous with what would be the position were they to be in Australia: that is, they would avoid the imposition of a DPO by making available a similar amount (the primary tax liability) by way of security.
Next is the issue of the payment of the Commissioner’s expenses, as contemplated in the Second and Third Proposed Orders. The Commissioner takes issue with the Applicants’ characterisation of this proposed condition as one requiring the payment of the Commissioner’s ‘costs’, and the attendant complaint that since in performing its taxation review function the Tribunal is a no-costs jurisdiction, it would be inappropriate to make an order for one party to pay the other party’s costs. To that, the Commissioner responds that this is not an application for the payment of the Commissioner’s professional costs, but one for the payment of the Commissioner’s reasonable out-of-pocket expenses and disbursements that would not have been incurred if the Applicants had been in Australia.
CONSIDERATION
It is appropriate to address at the outset two of the Applicants’ arguments in favour of granting the interlocutory application.
The first revolves around the requirement in s 2A of the AAT Act that the Tribunal make itself ‘accessible’ to its users. I think the Tribunal could hardly make itself more so. It has registries in each of the state capital cities and in Canberra. It conducts thousands of hearings every year in those locations, either in person, by video link or by telephone. On occasions the Tribunal will travel to regional centres to cater to the needs of applicants who have difficulty travelling. The Applicants in this case are really saying they would like the Tribunal to be accessible on their terms – and those terms include a refusal to attend at any of the many locations in Australia where the Tribunal routinely makes itself available to its users.
The second argument concerns what the Applicants characterise as the desirability for the Tribunal to have a satisfactory evidentiary basis on which to base its ultimate decision – in other words, with the benefit of the Applicants’ oral evidence, appropriately tested by the Commissioner’s cross-examination. I accept that general proposition; it is always desirable to have as full a picture as possible of the facts giving rise to a dispute between parties. But again, it is unhelpful for the proposition to be put in those terms, in these circumstances. An option for the Applicants, and the option exercised by virtually every party that applies to the Tribunal for review of a reviewable decision, is to attend in Australia to give evidence. But the Applicants’ rejection of that option, and the risk they take as a consequence, cannot count in their favour when the Tribunal comes to consider whether to exercise its discretion on this interlocutory application.
I turn now to the first of the central questions on this application – whether the Tribunal should exercise its ‘evidence power’ outside Australia. I do not have to consider it in unconditional terms since even the First Proposed Order is conditional upon the Tribunal’s expenses being met by the Applicants. (I should say that, at least in the circumstances of this case, I would not exercise the discretion in favour of the Applicants if they were not prepared to agree to that condition.) And so the question becomes whether the Tribunal should allow part of the hearing to be conducted overseas, provided the Tribunal’s expenses are met by the Applicants.
In considering that question, I take into account the disruption that the Tribunal will inevitably suffer from having to relocate two people, a Tribunal member and an associate, as well as the extensive documentation relating to the substantive application, to an overseas location such as Singapore for five days to conduct part of the hearing. The people and the papers would then return to Australia for the resumption of the hearing, which is expected to run for a further five days.
In Re Murray and Commissioner of Taxation (No 2) [2012] AATA 450 the taxpayer made a very late application for evidence to be given by video link or overseas. Unpersuaded by the case in support of the video link application, Deputy President Hack SC moved on to consider the alternative application. The Deputy President concluded at [14] that to allow evidence to be taken overseas would be ‘unnecessarily disruptive to the Tribunal, its staff and the representatives of the other party and, moreover, will undoubtedly disrupt the conduct of the hearing’. There would also be some disruption here as well, although a significant difference with the current case is that hearing dates have not yet been allocated and so this application is not coming at the last minute. But even so, having to arrange for a hearing in Singapore will itself be disruptive for the Tribunal. There are travel and accommodation arrangements that would need to be made, as well as arrangements for a suitable venue for the taking of evidence, in an appropriate environment, and for the provision of suitable recording and transcription services. It is possible that some of the administrative burden could be placed upon the Applicants. But that is not all that needs to be considered. The Tribunal’s preparation for the hearing would be disrupted because of the unavailability of the documentation, for some period at least, while it is packed for transport or delivery to the overseas destination. No doubt, too, there will be other administrative tasks that the Tribunal’s staff would need to undertake in preparation for the relocation, in addition to those that occupy them on an everyday basis. Both the Tribunal member and the associate would be unable to attend to other Tribunal work while overseas, or travelling to and from Singapore, and that may cause delays for some of the many other users of the Tribunal. Ultimately, though, in my view the disruption would be manageable, even if inconvenient.
There are similar disruptions for the Commissioner’s officers and representatives, but they too are manageable, if inconvenient.
I should emphasise that I make those assessments in the context of this particular application – which, as far as I know, is one of only a handful of its kind made in the 40 years of the Tribunal’s life. Indeed, other than the Murray case, I am not aware of any published decision of the Tribunal dealing with an application for leave to give evidence outside Australia. However, if this type of application were to be made more frequently, then the Tribunal may need to consider future applications against an elevated baseline of disruption. Changed circumstances of that kind may well weigh more heavily against granting such applications.
Returning to this case, the ‘procedural fairness’ and s 39 factors that were relevant in the video link application take on a different complexion in the current application to give evidence overseas. For example, the Commissioner quite properly no longer complains that his cross-examination would be hampered, but there is still the s 39 question of ‘reasonable opportunity’ from the perspective of the Applicants. Of course it may be said that a ‘reasonable opportunity’ is being extended to the Applicants through the availability of multiple hearing locations in Australia. And it must be remembered that the Tribunal’s duty is to ensure that every party is given a reasonable opportunity to present his or her case; the duty does not extend to ensuring that a party ‘takes the best advantage of the opportunity to which he [or she] is entitled’: Sullivan v Department of Transport (1978) 20 ALR 323 at 343, per Deane J. Nevertheless, the Applicants’ desire to give evidence overseas can be accommodated with little overall detriment to the Tribunal or the Commissioner.
A further issue is one raised in the video link proceeding by Siopis J in the Full Court at [34]. This is the question of whether the perjury laws of Australia would apply to a person giving evidence in the Tribunal, but not in Australia. His Honour’s ‘preliminary research’ on the question suggested that s 35 of the Crimes Act 1914 (Cth) may well apply extraterritorially. If that is the case then the Tribunal can be satisfied that the Applicants are likely to give truthful answers to questions put to them, just as would be the case if they were giving evidence in Australia.
Finally there is the question of whether the Applicants will be compellable witnesses if they are outside Australia. Buchanan J at first instance in the video link proceeding, at [68], stated that ‘a witness, even a party, giving evidence from outside Australia is in no way compellable in any practical sense’. His Honour referred to the judgment of the Full Court in Joyce v Sunland Waterfront (BVI) Ltd (2011) 195 FCR 213, where it was said at 231-232 [65]:
Finally, the receipt of evidence by video link from a witness in another country depends upon the witness’s willingness to give such evidence. Obviously, he or she can withdraw from the process at any time. It is unlikely that a party would do so. Where the witness is a party, the Court might well draw adverse inferences from any such withdrawal. At least in practice, the Court will not be able to compel a witness to answer.
The Applicants bear the burden of proof in the substantive proceedings. Failing to answer questions, if they are directed to do so, is likely to make that burden more difficult to discharge.
Having considered the first central question by reference to the factors I have mentioned, I decide that the Tribunal’s ‘evidence power’ may be exercised outside Australia in this case, for the purpose of taking the oral evidence of the Applicants and to give the Commissioner the opportunity to cross-examine them. That decision is subject to the proviso that the Tribunal’s expenses are met by the Applicants.
The second central question is whether the exercise of that power should be ‘subject to any limitations or requirements specified by the Tribunal’: s 40(4)(b) of the AAT Act.
I have already imposed the requirement, offered by the Applicants, that they meet the expenses of the Tribunal. I now need to consider whether any other limitations or requirements should be specified.
First I will consider the requirement, sought by the Commissioner, that the Applicants meet the reasonable expenses of the Commissioner.
I note that the Commissioner is a very frequent litigator in this Tribunal. I am personally aware of circumstances where the Tribunal has conducted hearings and alternative dispute resolution processes, involving the Commissioner as a party, in regional locations including Port Kembla, Wollongong and Orange when the particular taxpayer has preferred, for one reason or another, not to travel to Sydney. In my experience, the Commissioner’s representatives have always been willing to accommodate requests of that kind. Regional travel in those circumstances has no doubt been seen by the Commissioner as an opportunity to engage with taxpayers ‘on their own turf’, so to speak, in a way that minimises the inconvenience and stress that would be involved in travelling long distances for a Tribunal hearing.
This is not such a case. It falls outside the normal bounds of the regional travel requests to which the Commissioner’s representatives are sometimes asked to agree. The relatively modest expenses incurred in a trip from Sydney to Wollongong or even to Orange, for example, for one or two of the Commissioner’s in-house legal officers, do not remotely approach the expenses that the Commonwealth, through the Commissioner’s office, is being asked to incur here. The Commissioner’s choice to instruct the Australian Government Solicitor and to brief senior and junior counsel is perfectly appropriate for a case such as this. There is no sound reason why, having made that choice, the Commissioner’s office should be expected to bear the significant travel and accommodation expenses involved in a journey to Singapore when the Commissioner would be just as content for the hearing to be conducted in Sydney, as would ordinarily be the case. It is reasonable – ‘fair’, in the language of s 2A of the AAT Act – for the Commissioner’s expenses to be met by the Applicants. I agree with the Commissioner, for the reasons expressed both in the written submissions and orally, that to require the Applicants to meet the specified expenses of the Commissioner’s representatives does not amount to the making of a costs order against the Applicants.
Accordingly, I will specify, as a further requirement of the conduct of part of the hearing in Singapore, that the Applicants meet the reasonable travel, accommodation and incidental expenses of the Commissioner’s representatives (up to five individuals). The parties have reached tentative agreement that an appropriate amount to cover those expenses is $45,000. I will stipulate that the amount of $45,000 be paid into a bank account specified by the Commissioner for that purpose, and that any reasonable expenses incurred in excess of that figure also be met by the Applicants.
That brings me to what is undoubtedly the most contentious of the issues between the parties – whether the Applicants should be required to pay, or provide security for, the primary tax amounts of almost $3.7 million.
The Commissioner’s position is based largely on the observations of Siopis J in the Full Court in the video link proceeding, and in particular:
(a)‘[the Tribunal failed] to have regard to the public interest in the proper administration of the Taxation Administration Act 1953 (Cth), in particular, and the administration of justice, in general’ – at [23];
(b)‘there is also a public interest in the Commissioner being able effectively to recover tax liabilities from taxpayers. One of the various means whereby the Parliament has reflected that public interest is by the enactment of s 14S …’ – at [25];
(c)‘the making of orders permitting the [Applicants] to give evidence from abroad has a tendency to undermine the operation of the Taxation Administration Act’ – at [29]; and
(d)‘the Tribunal may have considered whether to impose, as a condition of the leave to adduce evidence by video link from abroad, that the [Applicants] provide security within Australia for the payment of the tax liability’ – at [30].
Nevertheless, and despite those observations, the Commissioner’s request for this particular condition to be imposed has an unusual ring to it. I accept that, from one perspective, it is a request to have the Commissioner placed in ‘no worse a position’ than he would be in if the Applicants came to Australia. But viewed through a different lens, it looks like an attempt to force the payment of some millions of dollars just to allow the Applicants to continue with their review application in the Tribunal – and that is a much more favourable position for the Commissioner than he is able to secure in relation to the more common scenario in which taxpayers are willing to prosecute their case in Australia. I will explain why.
The provisions of the TAA that deal with applications to the Tribunal for review of objection decisions (Part IVC) stand quite separately from the provisions that deal with the Commissioner’s power to recover tax that has been assessed (Part 4-15 in Schedule 1). That separation means that it is not uncommon for taxpayers to initiate an application to the Tribunal for review of an objection decision without taking the slightest step towards paying the tax that has been assessed. True, there is nothing to stop the Commissioner from recovering the tax assessed even if a review in the Tribunal is pending – s 14ZZM makes that clear – but it is not standard practice for the Commissioner to proceed to debt recovery when a matter is before the Tribunal (although there are exceptions). But even if the Commissioner did proceed to recover the tax debt, it would not be the case that the payment of the tax would be a precondition to the continuation of the Tribunal proceeding, precisely because there is no nexus between the two concepts. And yet it seems, at least on the face of it, that the Commissioner is trying to draw that nexus here.
Siopis J will have been aware of the discrete nature of these two sets of provisions, and yet suggested that it may be appropriate (in the context of an application to give evidence by video link) to impose a condition that the taxpayers provide security for the payment of the tax liability. It is likely, therefore, that his Honour did not see the provision of security, if such a condition were imposed, as a precondition to the continuation of the Tribunal proceeding as such, but rather as a precondition to the continuation of the Tribunal proceeding on the terms that the taxpayers were seeking to specify – which of course were the terms that they thought were most favourable to them. With respect, there is no surprise in his Honour’s conclusion, particularly when it can be discerned that the Applicants had placed themselves, whether by chance or by design, in an advantageous position when compared with the hypothetical taxpayer who remained in Australia until after the notices of assessment were issued. That is why his Honour thought a decision-maker must consider, in the public interest, whether steps might be taken to neutralise the advantageous position the Applicants had created for themselves.
Even in light of Siopis J’s considered views on this particular question, the Applicants argue[25] that the Tribunal’s case management power ‘cannot be used to advance policy interests that have no foundation in the AAT Act’. If it is suggested that the Tribunal must look no further than the AAT Act itself to identify relevant considerations then I must reject the suggestion, on the ground that Siopis J concluded that ‘the public interest in the proper administration of [the TAA], in particular, and […] the administration of justice, in general’, was a mandatory relevant consideration, at least in the circumstances that presented themselves in that case, which involved an application by these same Applicants to give evidence by video link from overseas. I do not see how it would not be so here as well.
[25] See [46] of these reasons
I therefore weigh in the balance the public interest in the proper administration of the TAA and the administration of justice, together with the Applicants’ private interest in prosecuting their applications in their preferred manner – which, as it happens, allows them to ‘remain beyond the reach of Australian authorities, and free from any possibility of criminal prosecution’, as Buchanan J described it at first instance in the video link proceeding, at [92]. Even when the Applicants’ position is expressed in that way, it is not an easy weighing exercise, but ultimately I think the balance tips in favour of the Applicants.
A significant factor is that the Applicants left the country not because of the Commissioner’s audit but because of a long-held desire to retire overseas. In that circumstance it is not proper to require them to pay a $3.7 million flag-fall to progress their applications in the Tribunal. I am firmly of the view that the ‘administration of justice’ factor needs to be considered not only from the perspective of the Commissioner but also from that of the Applicants. In that context it undoubtedly assists the proper administration of justice to allow taxpayers to contest tax assessments without imposing an excessive financial burden on them.
If the desired outcome is to place not only the Commissioner, but also the Applicants, in ‘no worse a position’ than would be the case if the Applicants were in Australia, then, all things being equal, that position would not require the Applicants to pay $3.7 million to progress their applications in the Tribunal: each of them would have only had to pay an $861 application fee. Once that is acknowledged, it becomes clear that the Commissioner is asking to be placed in the position that he would have been in if the Applicants were in Australia and expressing a desire to leave – whether they had an application in the Tribunal or not. Put simply, he missed the opportunity to detain the Applicants or to secure a significant payment from them. The question is whether that warrants the Tribunal’s intervention in the way sought. I am not persuaded, in the circumstances of this case, that it does.
Accordingly I decline to impose a condition that the Applicants pay, or provide security for, the primary tax amounts assessed by the Commissioner.
Finally, and although it is strictly unnecessary, I should deal with the Applicants’ submissions, summarised in [46](b) of these reasons, that:
(a)it would not be appropriate for the Tribunal to require the Applicants to pay, or provide security for, a purported tax liability ‘the correctness of which has not been established’; and
(b)if the Tribunal did make an order on the assumption that the tax has been correctly assessed, then that would give rise to ‘very considerable apprehended bias’ on the part of the Tribunal.
I consider both propositions to be without merit.
In context, the expression ‘tax liability’ in the Applicants’ submissions is a reference to that same expression in s 14S of the TAA. The expression as it appears in s 14S is defined in s 2(1) of the TAA to mean ‘a liability to the Commonwealth arising under, or by virtue of, a taxation law’. The expression ‘taxation law’ is defined, also in s 2(1), to have the meaning given by the Income Tax Assessment Act 1997 (the 1997 Act).
In the 1997 Act, ‘taxation law’ is defined to mean, relevantly, any Act of which the Commissioner has the general administration. The 1997 Act itself is such an Act: s 1-7 of that Act. So are the Income Tax Assessment Act 1936 (the 1936 Act) (s 8 of that Act) and the TAA (s 3A of that Act).
Income tax is imposed by the Income Tax Act 1986 (the Imposition Act), and at the rates declared by the Income Tax Rates Act 1986 (the Rates Act).
Section 3-5(1) of the 1997 Act provides that income tax is payable for each year, and both that provision and s 4-1 provide, relevantly, that it is payable by each individual. Section 5-5 ‘tells you when income tax you must pay for a financial year is due and payable’: subsection (1). For individuals, such as the Applicants, the income tax is due and payable 21 days after the due date for lodgement of the tax return, or 21 days after a notice of assessment issues, depending on the circumstances: subsections (5) and (6). If the Commissioner has made an amended assessment, as here, any extra income tax resulting from the amendment is due and payable 21 days after the notice of amended assessment issues: subsection (7). Section 255-5(1) in Schedule 1 to the TAA then provides that an amount of a ‘tax-related liability’ (a different expression from the one used in s 14S, but nevertheless including income tax as a ‘pecuniary liability to the Commonwealth arising directly under a taxation law’, and listed at item 37 in the table in s 250-10(2)) that is due and payable is a debt due to the Commonwealth and is payable to the Commissioner.
Those provisions taken together provide that, for the purposes of s 14S of the TAA, the Applicants are undoubtedly ‘subject to a tax liability’. Indeed, a similar reasoning process is likely to confirm that the Applicants’ ‘tax liability’ includes the penalty and interest components that have now accrued and which, together with the primary tax amounts, total in excess of $12 million. It would therefore be appropriate, if the remaining provisions of the section were engaged, for the Commissioner to insist on the Applicants ‘making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged’ or, in default of that, to issue a DPO. Mr Zafiriou’s indication that the requirement for security to the extent of the primary tax of around $3.7 million is well within the limits of the ‘arrangements’ to which the Commissioner may have wished to bind the Applicants if they had been in Australia and wanting to depart. The fact that the correctness of the tax liability (which the Applicants describe as ‘purported’ but is in fact an actual, extant tax liability) has not been established as a consequence of the Part IVC proceedings does not undermine the reasonableness of the Commissioner’s position, as described in Mr Zafiriou’s affidavit, and it does not undermine the reasonableness of the Tribunal’s imposition of a condition in similar terms, if it were minded to do so.
The second proposition, alleging ‘very considerable apprehended bias’ on the part of the Tribunal if that position were taken, is rejected. It cannot seriously be asserted that the imposition of a condition of that kind, and for those reasons, says anything at all as to the Tribunal’s view of the correctness or otherwise of the assessments. The quantum of those assessments is yet to be tested in the Part IVC proceedings – indeed, that is the only way the quantum can be tested. But unless and until the Part IVC proceedings lead to a different outcome, the liability as notified in the notices of assessment stands. There is nothing unorthodox or objectionable about that state of affairs. It is a natural consequence of the legislative scheme. To suggest, as the allegation of apprehended bias does, that the Tribunal would have somehow prejudged the Part IVC outcome, or might be perceived to have done so, is just plain wrong.
CONCLUSION
The Applicants may give oral evidence in Singapore, subject to the conditions I have specified in these reasons. To give effect to this conclusion, I will make a direction broadly consistent with the ‘Further Alternative’ set out in the Applicants’ revised interlocutory application filed with the Tribunal on 30 March 2016.
The matters will be listed for directions at the earliest opportunity to explore the need for any further consequential orders.
I certify that the preceding 92 (ninety -two) paragraphs are a true copy of the reasons for the decision herein of Deputy President S E Frost ..............................[sgd]..........................................
Associate
Dated 16 June 2016
Date(s) of hearing 3 May 2016 Counsel for the Applicants Mr J Hyde Page Counsel for the Respondent Mr D McGovern SC with Ms R Graycar Solicitors for the Respondent Australian Government Solicitor
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