FEDERAL COURT OF AUSTRALIA Hua Wang Bank Berhad v Commissioner of Taxation (No 11) [2013] FCA 1055 Citation: Hua Wang Bank Berhad v Commissioner of Taxation (No 11) [2013] FCA 1055 Parties: HUA WANG BANK BERHAD v COMMISSIONER OF TAXATION BYWATER INVESTMENTS LIMITED v COMMISSIONER OF TAXATION CHEMICAL TRUSTEE LIMITED v COMMISSIONER OF TAXATION SOUTHGATE INVESTMENT FUNDS LIMITED v COMMISSIONER OF TAXATION DERRIN BROTHERS PROPERTIES LIMITED v COMMISSIONER OF TAXATION DEPUTY COMMISSIONER OF TAXATION v HUA WANG BANK BERHAD DEPUTY COMMISSIONER OF TAXATION v CHEMICAL TRUSTEE LIMITED, DERRIN BROTHERS PROPERTIES LIMITED, BYWATER INVESTMENTS LIMITED File numbers: NSD 653 of 2011 NSD 652 of 2011 NSD 654 of 2011 NSD 655 of 2011 NSD 656 of 2011 VID 672 of 2010 VID 887 of 2010 Judge: PERRAM J Date of judgment: 16 October 2013 Catchwords: PRACTICE AND PROCEDURE – Application for a short adjournment of the proceedings – Whether order necessary for the administration of justice Date of hearing: 16 October 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 12 Counsel for the Taxpayers: Ms R L Seiden SC, Mr J Hyde Page, Mr G Antipas Solicitor for the Taxpayers: Henry Davis York Counsel for the Commissioner of Taxation & Deputy Commissioner of Taxation: Mr D J Fagan SC, Ms J E Jaques, Ms J Gatland Solicitor for the Commissioner of Taxation & Deputy Commissioner of Taxation: Australian Government Solicitor Counsel for the Applicant in the Application: Mr H K Dhanji SC Solicitor for the Applicant in the Application: Kreston Dormers 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: 16 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The taxpayers' application to adjourn the proceedings be dismissed. 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: 16 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The taxpayers' application to adjourn the proceedings be dismissed. 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: 16 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The taxpayers' application to adjourn the proceedings be dismissed. 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: 16 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The taxpayers' application to adjourn the proceedings be dismissed. 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: 16 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The taxpayers' application to adjourn the proceedings be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION VID 672 of 2010 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: HUA WANG BANK BERHAD Respondent JUDGE: PERRAM J DATE OF ORDER: 16 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The taxpayers' application to adjourn the proceedings be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION VID 887 of 2010 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: CHEMICAL TRUSTEE LIMITED First Respondent DERRIN BROTHERS PROPERTIES LIMITED Second Respondent BYWATER INVESTMENTS LIMITED Third Respondent JUDGE: PERRAM J DATE OF ORDER: 16 OCTOBER 2013 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The taxpayers' application to adjourn the proceedings be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 653 of 2011 BETWEEN: HUA WANG BANK BERHAD Applicant AND: COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 652 of 2011 BETWEEN: BYWATER INVESTMENTS LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 654 of 2011 BETWEEN: CHEMICAL TRUSTEE LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 655 of 2011 BETWEEN: SOUTHGATE INVESTMENT FUNDS LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 656 of 2011 BETWEEN: DERRIN BROTHERS PROPERTIES LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION VID 672 of 2010 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: HUA WANG BANK BERHAD Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION VID 887 of 2010 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: CHEMICAL TRUSTEE LIMITED First Respondent DERRIN BROTHERS PROPERTIES LIMITED Second Respondent BYWATER INVESTMENTS LIMITED Third Respondent JUDGE: PERRAM J DATE: 16 OCTOBER 2013 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The taxpayers apply for a short adjournment of these proceedings. The proceedings were listed today, 16 October 2013, for what was expected to be the last day of evidence. On the agenda was to be the calling by the Commissioner under a subpoena to give evidence at a Mr Tod McGrouther and a number of ancillary evidential steps. The point that the trial had reached at the close of yesterday, 15 October 2013, was that all of the principal witnesses had given their evidence. Amongst the principal witnesses were included a Mr John Leaver and a Mr Peter Borgas, Mr Borgas having concluded his evidence yesterday. 2 I was informed from the bar table this morning that last night Mr Leaver, Mr Gould and Mr Borgas were arrested. 3 The last-named gentleman was arrested apparently at Sydney airport following the completion of his evidence and on route back home to Switzerland. Mr Gould had been expected to be a witness in this case but a decision was made during the course of the trial that he would not be called. Of course, the taxpayers' case is that the person who is ultimately in control of the taxpayer entities is Mr Borgas, whereas, the Commissioner's case is that the person who fulfils that role is Mr Gould. Unquestionably the arrest of Mr Gould, Mr Leaver and Mr Borgas may properly be regarded as a significant development in the litigation. 4 It was for that reason that Ms Seiden, of senior counsel, applied this morning for a short adjournment. The ostensible basis for this application was that given the magnitude of that development the taxpayers were in a position where they simply, to paraphrase Donald Rumsfeld, did not know that they did not know. This might reasonably be expected to impact upon the process of getting instructions from Mr Borgas, not only in relation perhaps to the cross-examination of Mr McGrouther but perhaps more substantially to where the future of these proceedings lay in light of the gentlemen's arrests. 5 The immediate issue which is on the agenda this morning is the Commissioner's desire to call Mr McGrouther as his own witness. There had been foreshadowed some objections to the subpoena which the Commissioner has issued and, indeed, Mr McGrouther has appeared this morning through Mr Dhanji of senior counsel to signal that an application will be made in the first instance to set that subpoena aside. 6 So far as the taxpayers are concerned, forensically I do not see that they are in a different position instructionally to that which they would have been in even if Mr Borgas, Mr Gould and Mr Leaver had not been arrested. 7 Mr Leaver is, so far as the present topic is concerned, irrelevant because no one suggests that he is the source of instructions in relation to the daily conduct of these proceedings. On the same basis, at least from the taxpayers' perspective, the arrest of Mr Gould may be placed into the same category. This is because the taxpayers contend that Mr Gould is not the source of their instructions. It is true that Mr Borgas has been arrested and, being in custody, that there might be expected to be difficulties – or at least obstacles – in obtaining instructions from him this morning in relation to the cross-examination of Mr McGrouther nevertheless things are, I think, perhaps a little more subtle than they first appeared. 8 Mr Borgas concluded his evidence yesterday and I was told from the bar table that it was at the airport on route to Switzerland that he was arrested. The taxpayer's own position must have been that this morning when the question of whether Mr McGrouther was to be cross-examined and, if so, on what terms, would have transpired at a time when Mr Borgas would necessarily have been in an aeroplane on his way to Switzerland and just as uncontactable as, in the events which have transpired, he has ultimately proved to be. I do not accept therefore that there is a difficulty which would not otherwise have existed in relation to Mr McGrouther arising from Mr Borgas' arrest. 9 Of course, that is not the whole of Ms Seiden's argument. She advanced the submission, as I have already noted, that the taxpayers were in a position where, in light of the events which occurred, they simply could not know what their attitude to the present proceedings are and she should be given some opportunity to investigate or at least deal with that matter, however, I do not think that really impacts upon the events which are occurring today. Assuming Mr McGrouther is called and gives evidence, or alternatively, that the application in relation to his subpoena is otherwise dealt with, the matter will then go over for the preparation of written closing submissions and the matter will be dealt with by way of oral closing submissions commencing on 30 October 2013. 10 Insofar as the taxpayers and Mr Borgas need to consider what their attitude to this litigation is, that is something which the following fortnight leading up to those oral submissions will more than adequately afford them. This is not a case where the critical witnesses are yet to go in the witness box. In such a case, had criminal proceedings been unexpectedly commenced, nice questions may have arisen as to what the operation of their right not to give evidence which incriminates them. This is a case instead where all of those matters are concluded so that arguments of that kind, seem to me, not to be available. 11 Taking into account all of those matters it seems to me that the proper administration of justice requires that the present application be refused. 12 After I refused this application Ms Seiden made a further submission in which it was indicated that Mr Gould had been the source of instructions as the agent for Mr Borgas. I note that submission. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate: Dated: 17 October 2013