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}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Plaintiff Vergnet SA (Vergnet) seeks the following relief: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 1.}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 A Declaration that payments made to Vergne t by the Fiji Electricity Authority (FEA) under a contract between Vergnet and FEA dated 8 July 2005 (Contract) are not subject to: \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\s15 \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (a)\tab}}\pard\plain \s15\ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin1440\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 non-resident miscellaneous withholding tax (NRMWT) under section 8A of the Income Tax Act, or \par }\pard \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\s15 \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (b)\tab}}\pard \s15\ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls1\adjustright\rin0\lin1440\itap0\pararsid10906454 { \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 royalty withholding tax (RWT) under section 10A of the Income Tax Act. \par }\pard \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard\plain \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 2.}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 A Declaration that the action taken by the Commissioner: \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\s15 \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (a)\tab}}\pard\plain \s15\ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin1440\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 in assessing Vergnet to NRMWT of $874,496.41 and \par }\pard \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\s15 \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (b)\tab}}\pard \s15\ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin1440\itap0\pararsid10906454 { \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 requiring the payment of the above sum by FEA before issuing a tax clearance certificate to FEA to remit the proceeds of payment under the Contract were: \par }\pard\plain \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\s15 \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (c)\tab}}\pard\plain \s15\ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin1440\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 in breach of section 8A and 10A of the Income Tax Act and unlawful and/or \par }\pard\plain \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\s15 \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (d)\tab}}\pard\plain \s15\ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls2\adjustright\rin0\lin1440\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 not otherwise in accordance with the Income Tax Act \par }\pard\plain \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 3.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 An Order that all sums paid to the Defendant as NRMWT by or on behalf of the Plaintiff be refunded to it, with interest (particulars of which will be supplied at hearing).}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In support of its claim the Plaintiff filed an affidavit sworn by Lisa Jane Apted on 14 July 2008. \par \par The Defendant filed an answering affidavit opposing the relief claimed in the Originating Summons.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 T he affidavit was sworn by Sailosi Ledua, Principal Auditor and filed on 28 August 2008. \par \par The matter came on for hearing on 17 November 2008.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Counsel presented oral submissions and also relied upon filed written submissions.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 A decision had not been handed down by April 2009.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 As a result it was necessary to relist the matter for a fresh hearing before me.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 This took place on 3 and 4 June 2010. \par \par Vergnet SA is a foreign company, having been incorporated in France, that was registered on 8 March 2007 under section 367 of the Companies Act Cap 247.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Registration was required as it had established a place of business within Fiji. \par \par Vergnet entered into an agreement with FEA on 8 July 2005 to design, manufacture, construct, install, commission, test, operate and complete a wind farm at Butoni, Sigatoka.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The wind farm was to consist of 37 wind turbine generators (WTG). \par \par The }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Contractual Terms of Agreement}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 document described the agreement as a }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Turnkey Contract}{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 .}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 I was informed from the Bar Table by Counsel for the Plaintiff that this expression refers to an agreement where the purchaser contracts to have delivered the end product that requires the purchaser simply }{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 to turn a key}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 and start using the product.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It was suggested that the purchase of a new motor vehicle was a good example.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 However Counsel for the Defendant did not agree with this explanation nor the comparison. \par \par Apart from the Turnkey Contract document itself there were a number of documents, all of which were listed in the Turnkey Contract, that together constituted }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 the Contract}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 between the parties.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Some of the documents contain clauses that are relevant to the present dispute and to which I shall briefly refer later in this judgment. \par \par The contract price was Euro (\'80)11,542,030 or FJD$25,091,370.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The contract was successfully performed and concluded with the opening of the wind farm on 26 October 2007. \par \par On the issue of jurisdiction, it was accepted by the parties that these proceedings were properly commenced in the High Court.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In this case there was no assessment made by the Defendant in respect of any tax liability on the part of the Plaintiff.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The amount in dispute was paid by way of an interim arrangement and was paid by FEA out of the contract price to the Defendant. \par \par One of the documents included in the Contract was the Memorandum of Understanding.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 4 of that document dealt with }{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Intellectual Property Rights}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 .}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 4.1 stated: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Unless otherwise expressly agreed between the Parties, the co-operation envisaged by this Memorandum of Understanding does not intend to change the underlying fact that each party is responsible for and shall retain the rights of its own respective products, and services.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Furthermore, each party shall retain its proprietary rights and title and its patents and other intellectual property and know-how that are in that party}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s possession from time to time.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 3 of that document deals with the }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Scope of the Co-operation}{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 .}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 3.1 deals with Vergnet}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s obligations which include in clause 3.1 (ii) an obligation }{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 to forward to the Authority (FEA) all necessary reports and technical descriptions that may further the Authority}{ \lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s efforts to progress the project.}{\lang2057\langfe1033\langnp2057\insrsid10906454 " }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 3.1 (vi) requires Vergnet to liaise with all of the Authority}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s staff, consultants or representatives regarding regulatory, statutory or technical compliance of the project.}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par \par The parties also signed a Deed relating to Confidential Information.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 This document also formed part of the Contract between the parties.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 2 sets out the obligations of each party in relation to the use and disclosure of confidential information.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 2.1 states that the parties agree to use the confidential information only for the Business Purposes.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 2.2 states that neither party will, without the prior written consent of the other, disclose confidential information to any third party for any reason whatsoever.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 2.3(a) states that neither party will, without the prior written consent of the other, develop, employ, exploit or in manner whatsoever use the confidential information of the other party other than for the Business Purposes. \par \par Clause 4.1 made arrangements for the return by each party of confidential information.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It stated: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Either party (the Disclosing Party) may give notice in writing at any time to the other party (the Receiving Party) requiring that any part of the Confidential Information belonging to the Disclosing Party disclosed pursuant to the MOU or t his Deed to the Receiving Party and any copies thereof be either returned or destroyed.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Such return or destruction is to be combined with a notice to the Disclosing Party to the effect that upon such return or destruction the Receiving Party has not knowingly retained in its possession or under it s control, either directly or indirectly, any Confidential Information or copies thereof.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Clause 6.1 provides that all Confidential Information belonging to the Disclosing Party is acknowledged by the Receiving Party to be the property of the Disclosing Party and disclosure does not confer any rights in the Confidential Information to the Receiving Party. \par \par Clause 6.2 states: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 No licence is granted or implied by either party disclosing Confidential Information to the other party under any trade secrets, patents or copyright.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par Confidential Information is defined in the Deed as meaning: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Any and all information (whether written, oral, in the form of plans, diagrams and drawings, or in any other form) given by Vergnet and (FEA) to each other in connection with the Business Purposes.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par The expression Business Purposes is defined in paragraph C of the Introduction to the Deed as: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 To support the Authority}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s (FEA) efforts to exploit major energy sources to produce electricity in this instance through renewabl e energy at the least costs method.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 FEA welcomes proponents like Vergnet to develop and construct at the proposed project site Butoni, Sigatoka, a wind turbine generating facility composed of 37 GEV MP (32M, 275 kW) and to be known as the 10 MW Butoni Wind Farm Project.}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par Another document forming part of the Contract was Schedule 5.12 Mechanical, Electrical Drawings, Designs and Building Designs.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Schedule stated that:}{\lang2057\langfe1033\langnp2057\insrsid10906454 \par }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 All design, engineering and investigation work (including but not limited to software, systems and processes) developed by the Contractor (Vergnet) prior to the Project will remain the copyright and Intellectual Property of the Contractor.}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Each party will allow use and access of the information and/or IP belonging to that party from the Project provided a request is received from the other party, consent of which cannot be unreasonably withheld.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par Schedule 5.15 of the Contract documents deals with the Training Program.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Under the agreement training for FEA work teams and designated staff was assumed by Vergnet throughout the commissioning period and by Vergnet Pacific or agent for the first two years of operation.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 More importantly, the Schedule provides that training will focus on the following topics: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Principles and operating characteristics of the GEV MP; \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Review and analyses of the mechanical and electrical components of the GEV MP wind turbine. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Review of the automatic functions}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 :}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 installation and operations of the software, interaction with the turbine, identification, analysis and resolution of shortcomings and other troubleshooting matters; \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Identification of electrical and hydraulic malfunctions, replacement of parts and components; \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Turbine manoeuvres including connections, erecting and tilt-down operations and security functions.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par Schedule 5.5 of the Contract documents deals with manufacturers and places of manufacture of components required to the project.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 All the components listed in paragraph 5.5.1 are shown as manufactured by suppliers located in France but for two that are to come from suppliers in Italy. \par \par The schedule also deals with inspections and clause 5.5.2 states: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The contractor (Vergnet) shall make available for inspection by the Principal (FEA), or the Principal}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s repre sentative, all of the major components of the Wind Turbine Generator (WTG) during its manufacture including but not necessarily limited to all of the items in the table (in para 5.5.1).}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 When (FEA) is satisfied that a representative sample (approximately 10% of the total number of WTG s) of the components of the WTG have been satisfactorily inspected, (Vergnet) may issue a Factory Test Certificate (FTC) for that WTG.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The contractor will make any changes to the WTG arising out of the inspection process if th e component does not meet the specifications provided and will provide a FTC for each subsequent WTG upon its completion.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par Schedule 5.7 of the Contract documents deals with the work scope matrix.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The table outlines the involvement of the parties in the t asks listed, but not the responsibilities or custody in the role.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It is interesting to note that the Wind Turbine Generator (WTG) assembly on site involves both Vergnet and FEA.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Furthermore checking conformity of the works with the contract is also a joint task. \par \par During the course of construction a dispute arose between the parties in relation to the taxes payable in Fiji.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Part of the dispute related to payment of NRMWT on the transaction under the Contract. \par \par Between 11 May and 9 July 2007 correspondence on the issue passed between the Defendant and the firm KPMG which was acting for the Plaintiff as tax adviser at the time.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Two of those letters are significant in the sense that they reveal the Plaintiff}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s initial position in the dispute. \par \par First, a letter dated 20 June 2007 from KPMG addressed to the Defendant.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 T he issue of an objection to NRMWT was addressed on a without prejudice basis.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Usually the marking }{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 without prejudice}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 would ensure that the letter was not adduced as evidence in these proceedings without the consent of both parties.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Since the document was voluntarily exhibited by the Plaintiff in its supporting affidavit and as no objection was raised by the Defendant, I have taken the view that the correspondence has been adduced as evidence with the consent of both parties.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It is not necessary for me to determine whether it constituted a genuine attempt to settle the dispute. \par \par In that letter under the heading }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Withholding tax}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 , the following appeared: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 We concur with the general principle that withholding tax is applicable at the rate of 15 percent on the supply of services by Vergnet SA of France. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 However, we object to your calculations that the total amount of Euro 8,313,935-71 (FJD 18,073,773-27 @ 0.46) in respect of Stages 1 to 4 wholly relate to the supply of services (with nil value appropriated towards the cost of turbine inclusive in the contract amount) and enclose Form 2 detailing the same.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par Secondly, in a subsequent letter dated 9 July 2007 from KPMG to the Defendant the position in respect of NRMWT calculations is clarified.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 This letter is also marked }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 without prejudice}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 .}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 For the reasons set out above it is assumed that the correspondence wa s adduced as evidence by consent.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 This letter sets out the view of the Plaintiff}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s tax advisers and so far as is relevant states: \par }{\lang2057\langfe1033\langnp2057\insrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 We advise that we act as tax advisers in respect of our above named client. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Further to our discussions, we provide the following information in respect of our client for which we seek your confirmation of withholding tax treatment. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 We advise that a contract was entered into between our client}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s parent company \endash Vergnet SA of France and the Fiji Electricity Authority for the supply and installation of thirty seven turbines for the discounted contract sum of Euro 11,542,030. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 We further clarify that the discounted contract sum is made up of the following components: \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin1440\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Imported goods (turbines) \endash subject \par }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 to import duty and VAT as applicable}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 \tab }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'8010,452,720 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin1440\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Services supplied by Vergnet SA \par }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 of France}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 \tab \tab \tab \tab \tab }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'80}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 308,490 \par \u9679\'3f}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Services supplied locally by \par }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Vergnet Fiji branch}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 \tab \tab \tab \tab }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'80}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 780,820 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li5760\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin5760\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 ---------------- \par }\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin1440\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Total contract price}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 \tab \tab \tab \tab }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'8011,542,030}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 \par }\pard \ql \fi720\li5040\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin5040\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 ---------------- \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'85. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Hence we understand that 15 percent withholding tax shall apply only in respect of payments of services to Vergnet SA of France. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 We respectfully seek your confirmation of our understanding with regards to the calculations of withholding tax.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Further correspondence then passed between the Solicitors for the Plaintiff and the Defendant between 27 September and 12 October 2007. Most of this correspondence was also exhibited to the affidavit in support filed by the Plaintiff. \par \par To enable the project to be officially opened on the scheduled date, the parties reached a without prejudice compromise concerning the payment of NRMWT.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 This was based on the assumption that the Contract contained a goods and a services component.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 For the purposes of the interim compromise, the Defendant assessed the contract value to be apportioned as 70% for goods and 30% for services.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In Fiji dollars the total contract price was $25,091,370.00.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Accepting the Defendant}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s assessment for the present purposes, $17,563,959.00 was the value of the goods component and $7,527,411.00 was the value of the services component.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The assessed break-up of the services component was $1, 697,435.00 for locally provided services (and therefore subject to Fiji income tax) and off-shore services were valued at $5,829,976.00.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 NRMWT was assessed on this amount at 15% and as a result the amount in dispute is $874,496.41.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 This was done on the basis that the payment for off-shore services constituted a payment for know-how or a royalty payment. \par \par The principal issue for determination is whether the payment for the overseas provided services component attracted a liability in respect of NRMWT as a know-how payment.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The calculated apportionment between goods and services and the assessed apportionment between off-shore and locally provided services were not matters that were argued before me.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The only question for determination was whether the Contract attracted a tax liability in the form of NRMWT.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Plaintiff claims that no distinction should be made in this case between the supply of goods and any services component under the Contract. \par \par The tax in question was levied pursuant to section 8A of the Income Tax Act which states: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (1)}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Notwithstanding anything to the contrary in the other provisions of this Act, there shall be paid a tax, to be known as }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 non-resident miscellaneous withholding tax}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (NRMWT) in respect of the payments specified in subsection (2) at the rate of 15% of the gross amount payable. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (2)}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Such tax shall be payable in respect of: \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (a)\tab}}\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls3\adjustright\rin0\lin1440\itap0\pararsid10906454 { \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'85. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (b)\tab}}\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls3\adjustright\rin0\lin1440\itap0\pararsid10906454 { \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 subject to sub-section 4, a know-how payment and any sum paid or credited for the management of or supervision in connection with the carrying on of a business \par }\pard\plain \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (c)\tab}}\pard\plain \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls3\adjustright\rin0\lin1440\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'85. \par }\pard\plain \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard\plain \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 if the person in whose favour or to whom any such sums have been paid or credited is a non-resident. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (3)}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \'85. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (4)}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 If a payment or credit referred to in subsection (2) (b) is made p artly for any purpose other than those mentioned in that subsection, the Commissioner may, for the purpose of this subsection, determine to what extent the sum so paid or credited is for such other purpose. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (5)}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (g) \'85.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par It was not in dispute that the Plaintiff was a non-resident for the purposes of section 8A. \par \par It was pursuant to section 8A (4) that the Defendant determined that the overseas provided services component under the Contract constituted a know-how payment. The Court must determine whether the off shore services included a }{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 know-how}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 payment or any payment for the management of or supervision in connection with the carrying on of a business.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In my opinion, if the answer to either question is yes, then the Plaintiff must fail in these proceedings.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 If the answer is no, then the outcome depends upon whether there is a royalty payment.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The matter was argued on the basis that the only issue was whether the payment included a know-how payment or a royalty payment. \par \par The starting point is the statutory definition of }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 know-how}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 payment in section 2 (1) of the Act: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 know- how payment means payment for any scientific, technical, commercial or industrial information, techniques, knowledge or assistance likely to assist in the carrying on of a business \'85.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par The Plaintiff}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s submission is clear.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It claims that under the Contract FEA did not acquire any }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 scientific, technical, commercial or industrial information, techniques, knowledge or assistance likely to assist in the carrying on of a business}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 from the Plaintiff.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It is submitted that the Plaintiff supplied a completed or installed product in the form of a wind farm package that comprised goods (wind turbine generators and other equipment) and services (e.g. design, packing, installation).}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Plaintiff submitted that none of whatever services were supplied included the acquisition of know-how.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Hence there was no know-how payment made by FEA under the contract. \par \par The Plaintiff relied upon a number of authorities to illustrate the manner in which the Courts have explained the concept of }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 know-how}{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 .}{\lang2057\langfe1033\langnp2057\insrsid10906454 \par }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par Counsel for the Plaintiff referred me with considerable enthusiasm to two English Authorities.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 They were }{ \b\i\ul\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Moriarty (Inspector of Taxes) \endash v- Evans Medical Supplies Ltd}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 [1957] 3 All E.R. 718 and }{ \b\i\ul\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Rolls-Royce Ltd v. Jeffrey (Inspector of Taxes)}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 [1962 1 All E.R. 801.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 They were both decisions of the House of Lords and indicated the increasing prominence of know-how in taxation law.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 However they were both decided before the introduction of legislation in the form of the Finance Act 1968 (UK) which provided a definition of know-how.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 A subsequent definition of know-how was introduced by the Income and Corporation Taxes Act 1970 which stated that know-how was any industrial information and techniques likely to assist in the manufacture or processing of goods or materials.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It is clear that the definition in the Fiji legislation is wider in terms than the definition in the 1970 English legislation.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The authorities that were decided before the introduction of a statutory definition of know-how can be of only extremely limited assistance.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Prior to the introduction of statutory definitions, the expression }{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 know-how}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 almost defied definition. \par \par The Plaintiff submitted that in any event know-how does not include incidental knowledge acquired or gained to get the wind farm started.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It was submitted that the passing of know-how was not the principal component of the Contract and that any }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 dribs and drabs}{ \lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 of knowledge should not alter the nature of the contract.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It submitted that whatever services were supplied by Vergnet SA did not constitute know-how. \par \par It was accepted by the parties that the Defendant}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s position was set out in its letter dated 12 October 2007 addressed to the Plaintiff}{ \lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s Solicitors. \par \par The Defendant}{\lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s submission is that it wa s entitled and in fact bound, in construing the taxation consequences of agreements entered into by tax payers, to rely upon the documents that formed part of the agreement to which the taxpayer was a party.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Defendant claims that the contractual material shows that the payments to be made by FEA included payments that relate to components or elements of the definition of }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 know how}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 .}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Defendant points out that the Contract provided for design and supervision services by Vergnet.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Contract also provided for the supply of confidential information, drawings, data, reports, calculations and test certificates.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Contract also provided for training by the Plaintiff for the benefit of FEA staff.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Defendant asserts that payment was f or far more than simply the supply and installation of turbines. \par \par The Defendant relies on the decision in }{\b\i\ul\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Ricketts v Commissioner of Inland Revenue}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (1988) 10 NZTC 5,00 and submits that this case is authority for the proposition that to qualify as know-how payments, it is only necessary to establish that such payments were made in response to the provision of services requiring special skills and expertise. \par \par The principles governing the interpretation of a tax provision were conveniently summarised by Gibbs J in }{\b\i\ul\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Western Australian Trustee Executor and Agency Company Limited v Commissioner of State Taxation of the State of Western Australia}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (1980) 147 C.L.R 119 at page 26: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The principles of construction applicable to an Act which imposes a tax or duty are set out in }{\b\i\ul\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Anderson v Commissioner of Taxes (Vict)}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (1937) 57 C.L.R 233 at page 243.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The established rule that no tax can be imposed on a subject by an Act of Parliament without words which clearly show an intention to lay the burden upon him does not mean t hat the court will strive to find loopholes where none are apparent; the words of the Act must be given a fair and reasonable construction, without leaning one way or the other.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 However, although, if the terms of the Act plainly impose the tax they should be given effect, equally if they do not reveal a clear intention to do so the liability should not be inferred from ambiguous words.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par The words in section 8A clearly convey the intention that a withholding tax is imposed on a non-resident in respect of a know-how payment.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Under the section liability for the tax is imposed on the person to whom the payment is to be made.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The tax is payable by the person who makes the payment. \par \par Section 8A (4) uses clear and unambiguous words that enable the Defendant to determine whether a payment payable to a non resident includes a payment for}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 purposes other than know-how and if so to what extent is the payment for those other purposes. \par \par It is clearly accepted by both parties that the payment due to the Plaintiff by the FEA under the contract is not solely a payment in respect of goods.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Plaintiff submits that the principal purpose of the contract is to make a payment for the supply of a finished product in the form of an installed wind farm.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It submits that any information or knowledge acquired is only incidental and that as such does not alter the principal purpose which in reality is the only purpose of the contract.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 There was, it says, no payment for know-how. \par \par On the other hand, the Defendant says that the payment made by FEA included payment for the acquisition of information and knowledge of a technical nature which falls within the definition of a }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 know-how}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 payment.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 As a result there are payments made for services and pursuant to section 8A (4) it is entitled to make a determination as to what extent the payment relates to know-how. \par \par I have no hesitation in concluding that section 8A (4) does allow the Defendant to make such a determination.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 He has calculated that the payment for the purpose of supplying goods represents 70% of the total payment.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 He has therefore determined that for the purposes of the tax liability of the 30% services component of the payment, approximately 70% was a know-how payment to the non-resident. \par \par The question is then whether the Defendant correctly concluded that any information or knowledge that was acquired by FEA under the contract can be classified as know-how.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In other words, has any knowledge or information passed to FEA under the Contract which falls within the definition of know-how in section 2 of the Act. \par \par The Plaintiff submits that any information or knowledge that has passed to FEA is not know-how but is general information that is no different from the information that the purchaser of a new car receives by way of an owner}{ \lang2057\langfe1033\langnp2057\insrsid10906454 '}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s manual. \par \par The Defendant submits that the knowledge and information which under the various documents that constitute the Contract passes to FEA represents know-how and is caught by the definition. \par \par After carefully considering the contents of the var ious documents, the relevant sections of some of which I have made reference to, and the definition, I have concluded that the Defendant was correct when he determined that the payment made by FEA included a payment for knowledge and information of sufficient technical nature to constitute a payment for know-how.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It was considerably less than the payment for goods , but there was nevertheless sufficient information and knowledge acquired by FEA under the contractual documents for the Defendant to conclude that the payment included a payment for know-how. \par \par I accept that this was not a contract where the Plaintiff agreed to supply the necessary know-how for constructing and installing a wind farm.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 I also accept that the information and knowledge acquired under the Contract may not have been sufficient to enable FEA to construct another wind farm.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 However, there was nevertheless information and knowledge of a technical nature that was acquired by FEA pursuant to the contract documents that would assist it in the carrying on of its business. \par \par It is obvious that a mechanical device such as a wind turbine generator could reveal its workings to any qualified technician employed by FEA once delivered and during installation.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Such information could be derived by studying the technical information provided by the Plaintiff and by physical examination during assembly and installation.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 What might also be detectable by such a person from these same sources was the process of manufacture of its component parts.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In both cases, know-how has been acquired by FEA. \par \par In the Deed relating to confidential information dated 9 March 2005 and signed by the Plaintiff and FEA, it is stated in paragraph A of the Introduction that: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Vergnet is leading in the world market for the development and manufacture of equipment and power generation and water supply in rural and isolated sites.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It also operates in medium power wind energy with a range of wind turbines from 5 to 270kw.}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par In paragraph D of the Introduction it is clearly stated that for the purposes of developing and constructing a wind turbine generating facility at Butoni (Sigatoka), the parties will be divulging information secret to their business to each other.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Deed goes on to set out the obligations of the parties in respect of that information. \par \par The Contract documents, when read together, in my view involve the acquisition by FEA of some knowledge and information of a technical nature that had been developed by Vergnet.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The documents also indicate that the information and knowledge thus acquired was able to be used by FEA for its business purposes.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The fact that the Contract provides that property in and ownership of that information or knowledge remains with Vergnet does not alter the fact that the Contract included a payment for know-how. \par \par Further, the Plaintiff was obliged under the contract documents to train FEA staff in relation to topics that must of necessity have included both confidential and non-confidential information of a technical nature. \par \par These clauses are designed to set out the arrangements for the acquisition by FEA of technical information and knowledge that may not be protected as intellectual property but which will assist it in carrying on its business. \par \par I am satisfied that the knowledge and information that has been acquired by FEA in accordance with the various contract documents, whether incidentally, confidentially or by way of training, does constitute know-how.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The intangible nature of know-how, which distinguishes it from physical plans and drawings, re-enforces this conclusion.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 I am satisfied that what FEA ultimately acquired from the Plaintiff was more than simply the physical assets that made up the wind farm and more than just the knowledge necessary to press a button to start up the wind farm.}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 I am satisfied that it also acquired technical info rmation, knowledge and assistance of value that assisted it further in the carrying on of its business purposes as defined in the Contract. \par \par This leaves the question of whether the payment is caught by the Royalty Withholding Tax (RWT) under section 10A of the Income Tax Act. \par \par As the Defendant correctly pointed out in the letter dated 12 October 2007, section 8A (i) commences with the expression }{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 notwithstanding anything to the contrary in the other provisions of the Act}{\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 .}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 As a result section 8A will prevail over section 10A.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 This means that section 10A will not apply in the event that a NRMWT under section 8A is to be imposed, applying the presumption against double taxation.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 However if for any reason section 8A has no application then section 10A may apply. \par \par Although I have concluded that part of the payment under the Contract is for the purpose of know-how under sub section 2 of section 8A, I shall consider the applicability of section 10A in th e event that I am mistaken concerning the applicability of section 8A. \par \par Section 10A states: \par \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (1)}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 Notwithstanding section 11, there shall be paid a tax to be known as a }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 royalty withholding tax}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 equal to 15% of any royalty. \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin720\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (1A)}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In this section }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 royalties}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 means payments of any kind to the extent to which they are made as consideration for: \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin1440\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (a)-(b) \'85; \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin1440\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 (c)}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 }{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 the supply of scientific, technical, industrial or commercial knowledge or information; or \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 (d)\tab}}\pard \ql \li1440\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls3\adjustright\rin0\lin1440\itap0\pararsid10906454 { \b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 the supply of any assistance which is given as a means of enabling the application or enjoyment of ... any such knowledge or information as mentioned in paragraph (c).}{ \b\i\lang2057\langfe1033\langnp2057\insrsid10906454 "}{\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The definition of know-how payment in section 2 of the Act can be distinguished from the transaction that is caught by section 10A (1A)(c).}{ \lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 In the context of this case a know-how payment catches payment for the acquisition of technical knowledge or information which may not have been patented or otherwise protected as intellectual property.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 It is wider in meaning and casts a wider net than the royalty described in sub paragraph (c) of section 10A (1A).}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par \par In my opinion section 10A (1A) (c) is intended to catch payments made in respect of a contract which includes the supply of scientific, technical, industrial or commercial knowledge or information that is formally protected as intellectual property and does have as a result a narrower application.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 An example may be a licensing agreement permitting the use of knowledge or information by the licensee.}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par \par For the reasons already stated, I have concluded that the know-how component of the payment made under the Contract is not a royalty payment for the purposes of section 10A (1A) (c).}{\lang2057\langfe1033\langnp2057\insrsid10906454 }{ \lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 As a result it is apparent that subsection (1A) (d) also has no application. \par \par The Plaintiff has not succeeded and as a result the following orders are made in respect of the relief claimed by the Plaintiff: \par \par {\listtext\pard\plain\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 1.\tab}}\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls4\adjustright\rin0\lin720\itap0\pararsid10906454 { \i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Declaration sought in paragraph 1(a) is refused; \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 2.\tab}}\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls4\adjustright\rin0\lin720\itap0\pararsid10906454 { \i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Declaration sought in paragraph 1(b) is granted; \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 3.\tab}}\pard \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls4\adjustright\rin0\lin720\itap0\pararsid10906454 { \i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Declaration sought by paragraphs 2(a) (b) and (c) is refused in respect of section 8A and granted in respect of section 10A of the Income Tax Act; \par }\pard\plain \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 4.\tab}}\pard\plain \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls4\adjustright\rin0\lin720\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Declaration sought by paragraphs 2 (a) (b) and (d) is refused. \par }\pard\plain \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 5.\tab}}\pard\plain \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls4\adjustright\rin0\lin720\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Order sought in paragraph 3 is refused. \par }\pard\plain \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par {\listtext\pard\plain\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \hich\af0\dbch\af0\loch\f0 6.\tab}}\pard\plain \ql \li720\ri0\nowidctlpar\aspalpha\aspnum\faauto\ls4\adjustright\rin0\lin720\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 The Plaintiff is to pay the Defendant}{\i\lang2057\langfe1033\langnp2057\insrsid10906454 '}{ \i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 s costs on a party party basis to be agreed and if no agreement to be taxed. \par }\pard\plain \s15\ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\i\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }\pard\plain \qc \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 W D Calanchini \par }{\b\ul\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 JUDGE \par }\pard \ql \li0\ri0\nowidctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid10906454 {\b\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 \par }{\b\lang2057\langfe1033\langnp2057\insrsid10906454\charrsid10906454 16 July 2010 \par }}