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Voth V. Manildra Notes

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This is an extract of our Voth V. Manildra document, which we sell as part of our Conflict of Laws BCL Notes collection written by the top tier of Oxford students.

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FACTS The two respondents (plaintiffs) are companies incorporated and resident in New
South Wales. The appellant (defendant) is an accountant who is and was at all
material times a citizen and resident of the United States of America, practising in the
State of Missouri. He is a member of a partnership named Deloitte Haskins and Sells. The respondents are members of a group of companies, known as the "Manildra
Group", which carry on business related to the manufacture and sale of starches and
starch products and are controlled by members of the Honan family. The activities of
the Group extend beyond Australia. At all material times the first respondent was the
principal operating company in the Group. Neither respondent, according to the evidence, carries on business in the United
States. The Group's operating company there was Manildra Milling Corporation
("MMC"), a corporation established under the laws of the State of Kansas. MMC is a
wholly­owned subsidiary of the second respondent and it was to MMC that the
appellant, in the ordinary course of his professional practice, provided accounting,
auditing and related services. Between 1976 and 1983 members of the Manildra Group sold starches and starch
products to MMC which resold them in the United States. As a result, MMC became
indebted to the first respondent and became obliged to pay it, or credit it with, interest Internal Revenue Code of the United States imposed upon the first respondent liability
to income tax in respect of the interest income derived by it from MMC and also
imposed an obligation upon MMC to deduct and withhold the tax upon interest paid
by it to the first respondent. This again was common ground. MMC was described in
the amended statement of claim as being in this respect a "withholding agent". Failure
to account to the Inland Revenue Service ("the IRS") for withholding tax exposed the
"agent" to an obligation to pay interest on the tax, being interest in the nature of a
penalty, until payment. The respondents claim that, under the Australian revenue laws,
had MMC accounted to the IRS for withholding tax under the Internal Revenue Code,
the interest which MMC paid to the first respondent would have constituted exempt
income in the hands of that respondent. As it happened, MMC did not make the required deductions and payments of
withholding tax between 1976 and 1983. The respondents assert that this omission
was the fault of the appellant or those for whom he was responsible….. The first
respondent's case is that the appellant, or those for whose conduct he is responsible,
acted without due care in failing to draw the attention of MMC, and of the other
companies in the Manildra Group, to the requirement to pay withholding tax on
MMC's interest payments to the first respondent. ISSUE The appellant's case in this Court is that Oceanic Sun should be reconsidered, that
the approach accepted in Spiliada should be adopted on the stay application and

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