Bifalgorithm post · Fuscalite · Nuvei v. Arrap - NSW Supreme Court finds that a post-closing voluntary disclosure by the target so as to deplete escrowed funds did not violate a duty to cooperate with the vendor
Implied Obligation
Implied Obligation (Fuscalite · Nuvei v. Arrap - NSW Supreme Court finds that a post-closing voluntary disclosure by the target so as to deplete escrowed funds…
Ideas in this flowchart
- Hmelnitsky J's findings on the withholding tax dispute and escrowed funds
- The correct withholding tax rate was 15%
- The Australian tax regulation permitted the rate to be determined by the recipient's address
- There was no requirement to ascertain whether a recipient with a US address was entitled to treaty benefits
- Nuvei did not breach its implied obligation to cooperate with Arrap
- The Company was entitled to the escrowed funds to reimburse itself for the payment made to the ATO
- Nuvei's conduct had to be judged in the context of the advice it actually received
- Eminent and highly experienced practitioners advised, wrongly in Hmelnitsky J's view, that withholding should have been 30% unless treaty benefits were substantiated
- Nuvei did not breach an implied duty by failing to present the correct interpretation to the ATO
- No one had suggested the correct interpretation until after completion of the 18-month escrow period
- Nuvei's failure to provide Arrap an opportunity to comment on the wording of the voluntary disclosure was not a breach
- Arrap was not denied an opportunity to point out the correct construction of the withholding tax regulation