ARW v Comptroller of Income Tax and another and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 30 November 2018
• Neutral Citation: [2018] SGCA 85
• Citation: [2018] SGCA 85
• Defendant Counsel: Kwek Mean Luck SC, Khoo Boo Jin, Ng Shi Zheng Louis and Sivakumar s/o Ramasamy (Attorney-General's Chambers),Toby Landau QC and Colin Liew (Essex Court Chambers Duxton (Singapore Group Practice), instructed), Tan Xeauwei and Mak Sushan, Melissa (Allen & Gledhill LLP)
• Published date: 06 December 2018
• Hearing Date: 20 August 2018
• Plaintiff Counsel: Davinder Singh s/o Amar Singh SC, Fong Cheng Yee, David, Shirleen Low and Srruthi Ilankathir (Drew & Napier LLC)
• Date: 30 November 2018
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeals Nos 191 and 192 of 2017
• Subject Matter: Further evidence,Civil Procedure,Further arguments,Joinder,Parties

Chao Hick Tin SJ (delivering the judgment of the court): Introduction

Civil Appeals Nos 191 and 192 of 2017 (“CA 191” and “CA 192” respectively) are appeals brought by the appellant, [ARW] (“the Appellant”), against the decision of the High Court judge (“the Judge”) in Comptroller of Income Tax v ARW and another (Attorney-General, intervener) [2017] SGHC 180 (“the Judgment”). In CA 191, the Appellant appeals against the Judge’s decision 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”) on public interest privilege and official secrecy in respect of the Appellant’s specific discovery application (“the Discovery Application”); and (b) leave to admit further evidence (“the Further Evidence Application”) in so far as it relates to the Comptroller’s further arguments. The Comptroller is the first respondent and the Attorney-General (“the AG”) is the second respondent in CA 191. In CA 192, the Appellant is appealing against the Judge’s decision to grant leave for the AG to intervene in the dispute to state his position on the issue of public interest privilege. The AG is the sole respondent in CA 192.

On 20 August 2018, we heard oral arguments of parties and reserved judgment for both appeals. We would also add that in the course of oral submissions, and having regard to what was the object of the Discovery Application as well as the obstacle in the way of that application, we indicated to parties that a practical solution might well be to redact those documents in respect of which discovery is sought. Up to this point, the parties have not been able to agree on that.

Background The genesis of the dispute

We first set out the background facts which led to the dispute and the consequent applications. In 2003, the Appellant’s group of companies underwent a “Corporate Restructuring and Financing Arrangement” under which a $225m loan was obtained from a bank. This entire sum was returned to the bank on the same day through a series of transactions. From 2004 to 2006, the Appellant filed tax returns, showing that it had incurred interest expenses for the $225m loan, and accordingly claimed certain tax refunds. Based on these claims, the Comptroller awarded the Appellant tax refunds amounting in total to approximately $9.6m (“the Tax Refunds”).

Around July 2007, the Comptroller reviewed cases in which significant amounts of tax refunds were paid out. As part of this review, an audit was conducted on the Appellant to determine the basis on which the Tax Refunds were made to the Appellant and whether these claims were made under a tax avoidance arrangement. Following the completion of the audit in April 2008, the Comptroller came to the conclusion that the Appellant had indeed used a tax avoidance arrangement, and wrongly claimed the Tax Refunds. The Comptroller then invoked s 33 of the Income Tax Act (Cap 134, 2008 Rev Ed) and purported to issue notices of additional assessment. This was challenged by the Appellant before the Income Tax Board of Review. Eventually, following an appeal, this court agreed with the lower court’s decision that although the Appellant had claimed the Tax Refunds under a tax avoidance arrangement, the Comptroller was not entitled to recover the Tax Refunds by way of additional assessment (see Comptroller of Income Tax v AQQ and another appeal [2014] 2 SLR 847 (“AQQ”)). However, this court expressly left open the possibility of a common law action by the Comptroller in unjust enrichment to recover the Tax Refunds as moneys paid under a mistake (see AQQ at [162]). On 1 April 2014, the Comptroller accordingly commenced Suit No 350 of 2014 (“Suit 350”) against the Appellant for the recovery of the Tax Refunds.

The Discovery Application and the Discovery Judgment

In Suit 350, the Appellant took out the Discovery Application on 31 March 2015 by way of Summons No 1465 of 2015, seeking specific discovery of certain categories of internal documents (“the Internal Documents”) belonging to the Inland Revenue Authority of Singapore (“IRAS”). The Comptroller resisted the Discovery 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 both relevant and necessary, and not protected by any legal professional privilege: see Comptroller of Income Tax v ARW and another [2017] SGHC 16 (“the Discovery Judgment”) at [19]. Pertinently, the Judge made an obiter observation in the Discovery Judgment that public interest privilege under s 126 of the Evidence Act (Cap 97, 1997 Rev Ed) (“the EA”) could not be invoked by the Comptroller as follows (at [52]):

The [Comptroller’s] claim to privilege is fairly broad in ambit, and invokes protection for activities which do not fit readily into the usual mould of legal professional privilege. What the [Comptroller] wants to protect are the fruits of the audit, review and related internal discussions. Such a claim of privilege is in respect of general communications and discussions within an organisation. The involvement of lawyers is really secondary to the ambit of the claim of privilege. But that type of situation is only conferred protection within the EA through public interest immunity and official communications privilege, under ss 125 and 126 of the EA respectively. Neither, it would seem, could be invoked by the [Comptroller] here, and neither is relied upon. [emphasis added in italics and bold italics]

The Judge also stated that detailed directions as to the orders sought in the Discovery Application would be given separately (at [53]).

The consequent applications

Following the release of the Discovery Judgment, the Comptroller filed for leave to appeal against that judgment on 9 February 2017 by way of Summons No 661 of 2017 (“the Leave to Appeal Application”). On 27 February 2017, the Comptroller filed a Notice of Change of Solicitor, from WongPartnership LLP (“WongP”) to Allen & Gledhill LLP (“A&G”). It was subsequently clarified that A&G would take over conduct of only the Discovery Application and all related applications and appeals, and that the substantive matter would remain in the conduct of WongP.

On 1 March 2017, the Comptroller filed the EOT Application and the Further Evidence Application by way of Summons No 940 of 2017, in which he sought 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 the Discovery Application and the Leave to Appeal Application (“the Two Affidavits”). The further arguments sought to be made related to: (a) public interest privilege under s 126(2) of the EA (“s 126(2) EA”); (b) official secrecy under s 6(3) of the Income Tax Act (Cap 134, 2014 Rev Ed) (“the ITA” and “s 6(3) ITA”); and (c) legal professional privilege. The Two Affidavits were from: (a) Mr Tan Tee How, who was, at the time, the Commissioner of Inland Revenue, the Chief Executive Officer of IRAS and the Comptroller, deposing to the injury and prejudice that would be caused to the public interest if disclosure of the Internal Documents were to be ordered, and (b) Ms Christina Ng Sor Hua (“Ms Ng”), an IRAS officer, providing the background facts relating to the internal audits previously conducted by IRAS in relation to the Appellant’s tax avoidance arrangements.

On 3 March 2017, the AG filed the Intervention Application by way of Summons No 987 of 2017 for leave to intervene in the Discovery Application, the Leave to Appeal Application, the EOT Application, the Further Evidence Application, and in any application or appeal with regard to the same (collectively referred to as the “Relevant Applications”). The main thrust of his 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 argue his position on the issue of public interest privilege.

The Judge’s decision

The Judge allowed the Intervention Application, reasoning that the AG could be joined to the proceedings under either O 15 r 6(2)(b)(i), O 15 r 6(2)(b)(ii) or O 92 r 4 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the ROC”): see the Judgment at [52], [63] and [68].

The Judge also allowed the EOT Application and the Further Evidence Application. The latter was only allowed in so far as the new evidence related to the further arguments on public interest privilege under s 126(2) EA and official secrecy under s 6(3) ITA (see the Judgment at [116]). In other words, the Judge rejected the Comptroller’s application to adduce further evidence in respect of the legal professional privilege argument – the Comptroller has not appealed against this part of the Judgment. The more specific findings of the Judge will be canvassed at the appropriate junctures below.

The issues for determination

There are three main issues for determination in the appeals before us: whether the AG was rightly joined to the Relevant Applications (“the Intervention Issue”); 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 whether the Judge erred in admitting the Two Affidavits into evidence (“the Further Evidence Issue”), having regard to the following sub-issues: whether new evidence can be admitted in support of further arguments; and, if so, whether the test to govern the admission of new evidence in such a situation was satisfied.

The Intervention Issue The AG’s standing to intervene The AG as the guardian of the public interest

Beginning first with the Intervention Issue,...