This was a split decision between the three justices (Siopis, Griffiths and Pagone JJ), which will make an appeal to the High Court of Australia both tempting and likely (given the fact it has come this far - one would assume money is not an issue for the taxpayer - especially since no tax has yet been paid).
The Tribunal
The Administrative Appeals Tribunal (AAT) is waiting to hear a case into the suspected fraud and evasion of taxation by Mr and Mrs Seymour. They submitted to the tribunal that traveling to Australia in order to commence litigation against the ATO was out of the question, because they feared the Commissioner would invoke his power under s 14S of the TAA 1953 to levy a 'departure prohibition order' (DPO), removing their right to leave Australia until all tax debts are paid, or are dismissed by a court. The Tribunal granted this application, which has been appealed and is subject to the current case. The AAT cannot commence Part IVA proceedings until the question of whether or not video link services are available to the taxpayers has been answered by the Federal Court (or higher court) on appeal by the Commissioner.
The Federal Court
The Federal Court quashed the AATs decision allowing the Seymours to give evidence from Mauritius on two grounds:
(1) The AATs decision took into account irrelevant considerations.
(2) The AATs decision denied the Commissioner procedural fairness.
"[W]here 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 taken 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." 1
The Full Federal Court
The Full Federal Court upheld the decision of the Federal Court by a majority of 2-1. Siopis and Griffiths JJ upheld the decision, albeit for different reasons in relation to ground (1). Pagone J dissented and would have allowed the appeal in full, holding a view that the AAT exercised its discretion on this matter without making any errors.
Ground (1)
Justice Siopis found:
"The primary judge characterised the Tribunal's error as taking into account an irrelevant consideration...I would, however, prefer to characterise the Tribunal's error slightly differently, namely, as the failure by the tribunal to have regard to the public interest and proper administration of the Taxation Administration Act 1953, in particular, and to the administration of justice in general." 2
"Whilst it is the case, as the appellants contend, that in making the impugned orders, the Tribunal did not “assist” the appellants to avoid the operation of Australian law – this was achieved by the appellants’ own conduct in fleeing Australia; nevertheless, in my view, the making of orders permitting the appellants to give evidence from abroad has a tendency to undermine the operation of the Taxation Administration Act." 3 (emphasis added)
Justice Griffiths found:
"In my respectful view, the appellants have not established any appealable error in respect of the primary judge’s reasons and finding that the AAT fell into jurisdictional error in taking into account in the particular circumstances of this case the appellants’ refusal to come to Australia if they did not receive an assurance from the Commissioner that they would not be issued with a DPO. The appellants’ own stated and clear position was that they would not return to Australia in any event unless additional conditions were also met to address their concerns that they would be arrested and detained in Australia for tax offences." 4
Justice Pagone found:
"The House of Lords in Polanski v Condé Nast Publications Ltd held that, in general, in respect of proceedings which are properly brought in a domestic court, a claimant’s unwillingness to be present in court because he was “a fugitive from justice” was a valid reason, and could be a sufficient reason, for making a video conference order...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 Tribunal 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 Tribunal Act which requires a rule to the contrary." 5
Justice Griffiths responded:
"With respect, I consider that there is considerable force in the dissenting views in Polanski. More significantly, however, Polanski necessarily reflects its own particular facts. The Seymours are in a different position, having chosen to leave Australia lawfully before initiating Pt IVC proceedings and then indicating that they will not return to Australia to give evidence in that proceeding unless all the elements of their letter of demand are met. Ultimately, therefore, it is unnecessary to state whether the majority view in Polanski is correct because the facts are distinguishable." 6
All three judges appear to agree that the 'proper administration of justice' is a central concern to this case. The two competing views can be neatly summed up by the following two quotes from Polanski, the case referred to in the judgement of Justice Pagone:
"A fugitive from justice is not as such precluded from enforcing his rights through the courts of this country. This is so whether the fugitive is claimant or defendant. Mr Polanski’s status as a fugitive offender does not deprive him of any rights he would otherwise possess in respect of the subject matter of this action. His flight from California in 1978, and the steps he has taken ever since to remain beyond the reach of the Californian court, do not preclude him from bringing proceedings in England in respect of damage to his reputation flowing from publication of defamatory material in this country." - Lord Nicholls 7
"The task of the Court here is one of balancing different policy considerations and not merely deciding case management. Where a person convicted on his own admission flees the jurisdiction, it seems to me that in the absence of special factors compelling a different result, a video link conference may and should here be refused where the sole reason for asking for it is that he wishes to escape conviction or sentence in the country where he has commenced proceedings or to avoid extradition to another country for the same reason. The mere fact that the person cannot pursue proceedings here does not necessarily mean that a video link must or should be granted. The policy requirement of satisfying the criminal sentence is by no means less important than the desirability of his suing in libel for an allegation which is serious but no more serious than the criminal offence of which he has been convicted. The possibility of suing in France is a further contraindication to any obligation to grant such a video link." - Lord Slynn 7
Ground 2
Although it was then unnecessary to consider the second ground of quashing the AATs decision, Griffiths J, with whom Siopis J agreed, ruled that the Seymours once more had failed to establish any appealable error in relation to the findings of the Federal Court. 8
Pagone J dissented in ruling that:
"The Tribunal took into account a number of factors in reaching that conclusion which were open and appropriate for it to take into account." 9
"That conclusion was reached in the context of the Tribunal’s evaluation of the issues and materials from which the Tribunal concluded that the evidence of Mr and Mrs Seymour was unlikely to be determinative notwithstanding that their credit may be in issue. The Tribunal specifically considered that cross-examination by the Commissioner of Mr and Mrs Seymour would not be impeded if they gave evidence by video link. That was a conclusion that was open to the Tribunal." 10
"His Honour’s conclusion that the decision by the Tribunal “was a denial of procedural fairness” was not a conclusion which was open to his Honour on the material before the Tribunal. There was no material before his Honour about the live issues in the Tribunal proceedings." 11
"The decision made by the Tribunal to permit evidence by video link may not be the paradigm for a system of justice steeped in the common law tradition. There is, however, no rule of law or of practice that a party is entitled to insist on the physical presence of another party for cross-examination." 12
Appeal to the High Court
Although this case has little to do with taxation, it has implications on AAT proceedings involving overseas taxpayers. Some sense of finality to this genuine dispute with regard to the balance of the public interest and the administration of justice in society would appear appropriate to resolve, and would save more arguments on this point in the future. My gut feeling is that the taxpayer is in no rush to see an end to this dispute, and may well appeal if resources provide. Otherwise, given how much technology has taken over the lives of human beings, I doubt this split decision is going to provide a solid precedent moving forward, so in any case we may well see the issue raised in Polanski appear in Australian courts again in the future.
Footnotes
http://www.austlii.edu.au/au/cases/cth/FCAFC/2016/18.html
http://www.bailii.org/uk/cases/UKHL/2005/10.html
1. p 19
2. p 23
3. p 29
4. p 55
5. p 107
6. p 72
7. [2005] UKHL 10
8. p 77
9. p 108
10. p 110
11. p 109
12. p110
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