Case Summaries

ARW v Comptroller of Income Tax and another and another appeal [2018] SGCA 85

SUPREME COURT OF SINGAPORE

30 November 2018

Case summary

ARW v Comptroller of Income Tax and another and another appeal [2018] SGCA 85
Civil Appeals Nos 191 and 192 of 2017

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Decision of the Court of Appeal (delivered by Justice Chao Hick Tin):

Outcome: CoA dismisses taxpayer’s appeals, allowing the AG to intervene on public interest privilege, granting extension of time for the Comptroller of Income Tax to request further arguments before the High Court and admit further evidence in connection with the further arguments.  

Pertinent and significant points of the judgment

  • The Attorney-General’s standing to intervene and raise the issue of public interest privilege in his own right arises by virtue of his position as the guardian of the public interest, a role which is vested in him under the common law: at [18], and [23].
  • In determining whether extension of time should be granted to request for further arguments, the factors to be considered are: (a) the length of the delay; (b) the reason for the delay; (c) the merits of the further arguments; and (d) the prejudice to the respondent if the extension of time were to be granted: at [67].
  • A litigant may be permitted to adduce further evidence for further arguments if it is in support of new arguments but would not be allowed to admit further evidence where the evidence is sought to support or strengthen previously raised arguments: at [87].
  • The factors guiding the court’s exercise of discretion in admitting further evidence in further arguments are: (a) the relevance of the evidence; (b) the reliability of the evidence; (c) the likelihood of further delay to the proceedings as a result of such admission; and (d) the prejudice that may be caused to the respondent. None of these factors are to be applied strictly and the final analysis must depend on the justice of the case: at [93], and [105].

 

Background

1          There were two appeals before the Court of Appeal (“the Court”). In Civil Appeal No 191 of 2017 (“CA 191”), the taxpayer (“the Appellant”) appealed against the decision of the High Court judge (“the Judge”) to grant the applications brought by the Comptroller of Income Tax (“the Comptroller”) seeking: (a) an extension of time to file a request for further arguments (“the EOT Application”) in respect of the Appellant’s specific discovery application (“the Discovery Application”); and (b) leave to admit further evidence in connection with the further arguments (“the Further Evidence Application”). In Civil Appeal No 192 of 2017 (“CA 192”), the Appellant appealed against the Judge’s decision to grant leave for the Attorney-General (“the AG”) to intervene to state his position on the issue of public interest privilege.

The material facts

2          In 2003, the Appellant’s group of companies underwent a “Corporate Restructuring and Financing Arrangement” under which it obtained a $225m loan. This entire sum was however returned on the same day through a series of transactions. Thereafter, the Appellant filed tax returns, showing that it had incurred interest expenses for the loan. The Comptroller accordingly awarded approximately $9.6m in tax refunds to the Appellant (“the Tax Refunds”).

3          In July 2007, pursuant to an internal review, an audit was conducted on the Appellant. In April 2008, the audit findings revealed that the Appellant had used a tax avoidance arrangement, and that the Tax Refunds were wrongly paid. After the Comptroller’s attempt to issue notices of additional assessment against the Appellant was disallowed by the Court of Appeal in 2014, the Comptroller commenced Suit No 350 of 2014 (“Suit 350”) against the Appellant for the recovery of the Tax Refunds.

4          In Suit 350, the Appellant brought the Discovery Application on 31 March 2015, seeking specific discovery of certain categories of internal documents (“the Internal Documents”) belonging to the Inland Revenue Authority of Singapore. The Comptroller resisted the application on grounds of irrelevance, lack of necessity, litigation privilege and legal advice privilege. On 31 January 2017, the Judge granted the Discovery Application, finding the Internal Documents to be relevant and necessary, and not protected by any legal professional privilege. The Comptroller then applied for leave to appeal against that judgment on 9 February 2017 (“the Leave to Appeal Application”).

5          On 1 March 2017, the Comptroller filed the EOT Application and the Further Evidence Application, seeking leave to file his request for further arguments in the Discovery Application out of time under s 28B(1) of the Supreme Court of Judicature Act (Cap 322, 2014 Rev Ed) (“the SCJA”), and to adduce two affidavits in support of these further arguments (“the Two Affidavits”). The further arguments related to: (a) public interest privilege under s 126(2) of the Evidence Act (Cap 97, 1997 Rev Ed) (“the EA”); (b) official secrecy under s 6(3) of the Income Tax Act (Cap 134, 2014 Rev Ed); and (c) legal professional privilege.

6          On 3 March 2017, the AG filed the Intervention Application for leave to intervene in the Discovery Application, the EOT Application, the Leave to Appeal Application, the Further Evidence Application, and in any application or appeal with regard to the same (collectively, the “Relevant Applications”). The main thrust of the application was that the AG, as the guardian of the public interest, is obliged and entitled to protect the public interest by intervening in the Relevant Applications to state his position on public interest privilege.

7          The Judge granted both the Intervention Application and the EOT Application. The Further Evidence Application was only allowed in so far as the further evidence related to the arguments on public interest privilege and official secrecy.

The Court’s decision

8          The Court dismissed both CA 191 and CA 192. Three main issues were decided by the Court:

  1. whether the AG was rightly joined to the Relevant Applications (“the Intervention Issue”);
  2. whether the Judge erred in granting the Comptroller an extension of time to request for further arguments pursuant to s 28B(1) of the SCJA (“the EOT Issue”); and
  3. whether the Judge erred in admitting the Two Affidavits into evidence (“the Further Evidence Issue”), having regard to the following sub-issues:
    1. whether new evidence can be admitted in support of further arguments; and, if so,
    2. whether the test to govern the admission of new evidence in such a situation was satisfied.

9          On the Intervention Issue, the Court held that the AG’s standing to intervene in the Relevant Applications and raise the issue of public interest privilege in his own right arises by virtue of his position as the guardian of the public interest, a role which is vested in him under the common law. Section 126 of the EA did not modify or curtail the AG’s role in this regard. The AG was therefore rightly joined to the Relevant Applications under either of the limbs in O 15 r 6(2)(b) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed): at [18], [23]–[24], and [50].

10        On the EOT Issue, the Court first recognised the High Court’s jurisdiction to extend time under s 28B(1) of the SCJA for a party to request further arguments by virtue of s 18(2) of the SCJA read with para 7 of the First Schedule to the SCJA. In determining whether an extension of time should be granted to request for further arguments, the factors to be considered are: (a) the length of the delay; (b) the reason for the delay; (c) the merits of the further arguments; and (d) the prejudice to the respondent if the extension of time were to be granted. On the facts of the case, there was no basis to disturb the Judge’s exercise of discretion in granting the extension of time sought: at [56]–[57], [67], and [71]–[84].

11        The Court made the observation that, since the Comptroller was cognisant of the 14-day timeline to request for further arguments and was also made aware of the argument on public interest privilege before the expiry of that timeline, the Comptroller ought to have, if he needed more time to make the request for further arguments, sought an extension of time to do so before the expiry of the prescribed period. However, out of fairness to the Comptroller, nothing turned on this observation as it was not a point argued by the Appellant: at [74]–[75].

12        On the Further Evidence Issue, the Court held that further evidence may be admitted in further arguments if it is sought to be adduced in support of new arguments. However, where the further evidence is sought to support or strengthen previously raised arguments, that would not be permitted for it would be an abuse of process. Subject to this qualification, the factors guiding the court’s exercise of discretion in admitting further evidence in further arguments are: (a) the relevance of the evidence; (b) the reliability of the evidence; (c) the likelihood of further delay as a result of such admission; and (d) the prejudice that may be caused to the respondent. Applying this framework, the Two Affidavits were rightly admitted in connection with the further arguments on public interest privilege and official secrecy: at [87], [93], [105], and [107]–[109].

13        By way of a postscript, the Court noted that a more expedient, sensible and practical course available to parties in relation to this matter was to suitably redact the Internal Documents sought to be disclosed. With appropriate redactions, it is likely that the objectives of both parties of (1) allowing the Appellant to obtain the information that it seeks and (2) ensuring that official secrets are not divulged in the process, could be achieved. If the option of redaction had been adopted, this series of satellite litigation could have been avoided. Even with this judgment, when the matter comes before the Judge again, redacted disclosure still remains the most expedient and just option: at [111]–[112].

 

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.

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