Ambridge Investments Pty Ltd v Baker & Ors

[2008] VSC 523

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 2015 of 2005

AMBRIDGE INVESTMENTS PTY LTD (ACN 077 299 051)	Plaintiff
v
THEODORE BAKER and ORS	Defendants

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JUDGE:	BYRNE J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 October 2008
DATE OF JUDGMENT:	31 October 2008
CASE MAY BE CITED AS:	Ambridge Investments Pty Ltd v Baker & Ors
MEDIUM NEUTRAL CITATION:	[2008] VSC 523

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Practice and Procedure – mandatory order that party request Australian Tax Office for information and copy of documents – whether circumstances require making of order – application refused

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D G Collins S.C.	Tress Cox Lawyers
For the Defendant	Mr J W S Peters S.C.	Rigby cook Lawyers

HIS HONOUR:

1           This proceeding arises out of the development a property at 176 Wellington Parade, East Melbourne by the sixth named defendant, Break Fast Investments Pty Ltd whom I shall refer to as Break Fast. 

2           The substantial issue between the parties is whether Break Fast carried out the development on its own behalf, as the defendants contend, or whether it did so as a vehicle for a joint venture of which the plaintiff, Ambridge Investments Pty Ltd, Ambridge, as to 25 percent,  the third named defendant, Career Path Australia Pty Ltd as to 40 percent, the fourth named defendant, IMF Pty Ltd as to 10 percent and the fifth named defendant, C&O Voukidis Pty Ltd as to 25 percent were the venturers.

3           The case of Ambridge is that the joint venture came into existence in the year ending 30 June 2000 and that it continued to the year ending 2003. 

4           The application before me concerns first, tax returns and associated documents and correspondence of Break Fast; second, it concerns tax returns of C&O Voukidis and other companies and entities associated with the second‑named defendant, Christos Voukidis for the years ending 2000, 2001, 2002 and 2003. 

5           In each case Ambridge seeks from me a mandatory order directing the party to make a request of the Australian Tax Office.  In the case of Break Fast it is to request copies of the documents referred to; in the case of C&O Voukidis it is to seek a statement from the Australian Tax Office as to whether a tax return has been lodged by each of the companies and entities in each of the years and if so, that it provide copies of the documents referred to with respect to each.

6           It was accepted before me that I have power to make the orders sought.  The question for my determination is whether the circumstances are appropriate for the making of such an order.

7           In a case such as the present, the ordinary discovery processes will, in the normal case, bring the parties’ copies of these documents to light.  To that extent the orders sought are exceptional and should be made only where, for some reason, the ordinary discovery processes, including non-party discovery, do not make important documents available for inspection or where the ordinary subpoena processes do not do so. 

8           An example of this is provided by Palmdale Insurance v Grollo[1] where the discovery process disclosed that income tax and payroll tax returns of the Grollo organisation had been destroyed. 

[1]Palmdale Insurance Ltd (In Liquidation) v L Grollo & Co Pty Ltd [1987] VR 113

9           In the present case, the ordinary process of third party discovery and subpoena is not available against the Australian Tax Office.  The sought relief is discretionary and other considerations will come into play if the court is satisfied that these preconditions exist.

The Break Fast 2000 Return

10          The evidence before me shows that in or about October 2001, a tax return of the year 2000 was prepared by the Break Fast accountants on a partnership tax return form showing a negative taxable income of $178,099.  This loss was distributed among four companies including Ambridge, Career Path and C&O Voukidis.  This return, Exhibit PAJ6 to the affidavit sworn by Philip Anthony Jones on 12 September 2008, appears to have been lodged with the Australian Tax Office some time after 25 October 2001, perhaps on 5 November 2001, as appears from a handwritten note on an exhibit.

11          According to the witness statement of the accountant, Nello Trafficanti, the document was in fact lodged.

12          The tax file number issued by the Australian Tax Office for the joint venture is 779 972 181. 

13          The matter is a little complicated inasmuch as there is also a copy of a company tax return of Break Fast for the same year showing a negative taxable income of $146,201 which is Exhibit MN2 to Maria Nemeth’s affidavit dated 29 October 2008.  This document too has been discovered.  This tax return and the company tax returns for the years 2001, 2002 and 2003 were prepared, it seems, in 2004 in response to a tax office requirement which asserts that no return had been lodged for the years 2000, 2001, 2002 and 2003. 

14          The tax file number shown on the 2003 return is 32 440 663. 

15          The preparation and lodgement of the partnership tax return is evidently a matter which Ambridge wishes to rely upon in support of its contention that the joint venture exists. 

16          While it is true that the solicitors for the defendants have previously denied that the partnership return was lodged, I was told that this was due to confusion between the partnership return, for which there is evidence that it was lodged in late 2001, and the company return for the same tax year which was lodged in 2004.  How this confusion led to the denial of lodgement is a matter of obscurity. 

17          The question as to whether either or both of the 2000 returns was lodged, if indeed it be an issue, is a matter which will doubtless be explored at trial.  Any correspondence and accountant's working papers would be discoverable and if no longer with the party, this would be explained in the affidavit of documents as part of the ordinary discovery process. 

18          It is not, in my view, a matter which reasonably requires the assistance of the order now sought.

C & O Voukidis Returns

19          The complaint here is that C&O Voukidis did not discover any tax returns for the years 2000, 2001, 2002, and 2003.  When required to produce a copy of these returns, counsel for C&O Voukidis produced before Master Kings in June 2006, a bundle of copy tax returns.  These, it seems, were not the correct returns.  They were the returns of the Voukidis family trust, ABN 52 075 367 496, for the four years in question.

20          There were irregularities in these documents which cast some doubt upon their authenticity. 

21          In response to queries about these matters, Mr Voukidis has sworn an July 2006 and again in September 2006, that C&O Voukidis has not lodged any returns for the four years in its capacity as trustee of the Voukidis family trust or in its own right.  How this statement is to be reconciled with the copy returns produced is a matter for trial. 

22          More recently, counsel for the defendants told Master Kings in May 2008, that no tax returns had been lodged so that further discovery would be of no value.

23          In her affidavit sworn in opposition to the present application, Maria Nemith, the solicitor for the defendants, repeats that these are her instructions.  She produced an ATO portal search which confirms this, at least insofar as C&O Voukidis in its corporate capacity is concerned.

24          Counsel for Ambridge has presented argument and material which, they say, casts doubt upon this.  It is not appropriate that I attempt to form any view upon this issue in an application of this kind.  The material before me is not such that I will go behind the assurances and affidavits to which I have referred.  Again on this matter, the discovery processes have failed to disclose any copy return lodged with the tax office. 

25          In the circumstances I will not order C&O Voukidis to make a request of the ATO that it provide a statement which will go essentially to the credit of Mr Voukidis and other witnesses on this topic.  The applications therefore will be dismissed. 

Submissions on Costs

26          On the question of costs I will order that the costs of this application, including reserved costs, be paid by the plaintiff and if the same be not paid within 28 days after the same are agreed or fixed by the Taxing Master, the fifth and sixth defendants be at liberty to apply for an order for costs against the receiver. 

27          There will be liberty to apply.

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