In an interlocutory matter, the NSW Supreme Court has refused the NSW Commissioner of State Revenue’s application for leave to serve a subpoena to produce documents on a company (Noble Group) in Hong Kong.
Broadly, the underlying tax matter concerned an acquisition by the taxpayer of all the shares in another company (Donaldson Coal, a NSW based coal producer and a “private landholder”) and the Commissioner’s refusal to grant a full or partial exemption under s 163H of the Duties Act 1997 (NSW). Essentially, the taxpayer argued the transaction was a “restructure of Noble’s interest in Donaldson Coal” and that because Noble Group at all times held a majority voting interest in Donaldson Coal and in Gloucester Coal (which wholly owns the taxpayer), it would not be just or reasonable for the landholder provisions to apply to the acquisition by the taxpayer of the shares in Donaldson Coal. Noble Group is registered in Hong Kong.
The Commissioner pursuant to r 11.5 of the Uniform Civil Procedure Rules 2005 sought leave to issue a subpoena to Noble Group in Hong Kong to essentially test the taxpayer’s claim that the transaction was merely a restructure within the Noble Group. The reason the Court refused leave to serve the subpoena on Noble Group in Hong Kong was “because to do so would be to exercise the judicial power of New South Wales in a foreign State, contrary to the principles of international comity”.
The Court indicated it would be willing to sign a Letter of Request for the purposes of the procedure specified in the Hague Evidence Convention (to which China is a party) “because to do so would be consistent with principles of comity”. However, among other things, the Court noted it would need to assess whether it had jurisdiction to issue such a letter (and only if an application was made by the Commissioner for such a letter). However, after the proceedings were stood over to enable the Commissioner to draft a Letter of Request, the Commissioner informed the Court that he did not propose to pursue the Letter at this stage pending inspection of documents to be obtained pursuant to subpoenas issued to other companies in Australia.
(Gloucester (Sub-Holdings 1) Pty Ltd v Chief Comr of State Revenue [2013] NSWSC 1419, NSW Supreme Court, White J, 26 September 2013.)
[LTN 192, 3/10/13]