Halgido Pty Ltd v DG Capital Company Ltd [1996] FCA 1123

CATCHWORDS TAXATION - application to recover from lender moneys paid to Commissioner for Taxation in relation to withholding tax on interest paid under a loan agreement - Income Tax Assessment Act (1936) 1936 (Cth) s 221YQ(2) - loan agreement provided that liability for withholding tax be borne by borrower - whether various securities provided by borrower fall within meaning of "mortgages" within meaning of s 261(5) - lender liable to pay withholding tax under s 128B(5) - whether s 261 renders clause directing borrower to be liable for withholding tax void - meaning of "collateral" or "supplementary agreement" within s 261 - primacy not necessary - whether money recoverable under s 221YQ(2) - borrower entitled to recover amount equal to amount paid as withholding tax under s 221YQ(2). MISTAKE - whether there was a mistake of law - notice of possible invalidity - no mistaken belief on facts. RESTITUTION - whether borrower entitled to recoupment under principles of restitution - recoupment made out. CONFLICT OF LAW - controlling law clause - intention of parties to exclude Australian income tax law - not effective to make Australian income tax legislation inapplicable - public policy. Income Tax Assessment Act 1936 (Cth) ss 221YQ, 261(5), 128B(5), 221YL, 261 Income Tax (Dividends, Interest and Royalties Withholding Tax) Act 1974 (Cth) s 7

Torrens Aloha Pty Limited v Citibank NA (1996) 32 ATR 450, applied David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353, applied Moule v Garrett (1872) LR 7 Ex 101, cited Brook's Wharf & Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534, cited Commissioner of State Revenue (Victoria) v Royal Insurance Australia Ltd (1994) 182 CLR 51, considered Bilbie v Lumley (1802) 2 East 469, cited Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581, considered Kay's Leasing Corporation Pty Ltd v Fletcher (1964) 116 CLR 124, considered BHP Petroleum Pty Ltd v Oil Basins Ltd [1985] VR 725, cited Golden Acres Ltd v Queensland Estates Pty Ltd [1969] QdR 378, cited HALGIDO PTY LIMITED v DG CAPITAL COMPANY LIMITED No NG 441 OF 1995 Tamberlin J Sydney 20 December 1996