Ashton v Monteleone (No 2) - [2010] NSWSC 745

CITATION: Ashton v Monteleone (No 2) [2010] NSWSC 745

HEARING DATE(S): 2 July 2010

JUDGMENT OF: Gzell J

EX TEMPORE JUDGMENT DATE: 2 July 2010

DECISION: Defendants ordered to pay 80% of plaintiffs' costs.

CATCHWORDS: PROCEDURE - Costs - plaintiffs successful in having contract for sale of premises partly commercial and partly residential rectified by adding to the purchase price "+ GST" - defence alleged GST not payable because not a taxable supply under A New Tax System (Goods and Services Tax) Act 1999 (Cth) as plaintiffs were not carrying on an enterprise - order made for plaintiffs to seek a private indirect tax ruling from the Commissioner of Taxation - ruling made that not a taxable supply because GST turnover and projected GST turnover did not exceed the registration turnover threshold and no GST was payable - whether there should be a discount in the plaintiffs' costs for pyrrhic victory

LEGISLATION CITED: A New Tax System (Goods and Services Tax) Act (1999) (Cth)

CASES CITED: Ashton v Monteleone [2010] NSWSC 258

PARTIES: Simonetta Ashton (First Plaintiff)
Robertino Serianni (Second Plaintiff)
Joseph Monteleone (First Defendant)
Always Fresh Fruit and Vegetable Merchants Pty Limited (Second Defendant)
Giampiero Serianni (Third Defendant)

FILE NUMBER(S): SC 2009/291033

COUNSEL: R Newlinds SC with P Newton (Plaintiffs)
A Street SC (First and Second Defendant)

SOLICITORS: ERA Legal (Plaintiffs)
Garland Hawthorn Brahe (First and Second Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

FRIDAY 2 JULY 2010

2009/291033 SIMONETTA ASHTON & ANOR v JOSEPH MONTELEONE & ORS (NO 2)

EX TEMPORE JUDGMENT

1 In the principal proceedings Ashton v Monteleone [2010] NSWSC 258 I gave judgment in favour of the plaintiffs, in part, on their summons and statement of claim and dismissed the cross-claim.

2 Mr Street SC, who with Mr Emmett appeared for the defendants, argues that par 16 of the amended defence put in issue the question whether goods and services tax (GST) was payable on the sale by the plaintiffs to the second defendant of property comprising a retail shop on the ground floor and residential quarters on the first floor on the basis that there was no taxable supply for the purpose of A NewTax System (Goods and Services Tax) Act (1999) (Cth).

3 In those proceedings I ordered that an application be made to the Commissioner of Taxation for a private indirect tax ruling on the question whether or not the contract for sale included a taxable supply and if so the price of it.

4 On 18 May 2010 a Deputy Commissioner of Taxation ruled that neither the first plaintiff's current GST turnover nor her projected GST turnover exceeded the registration turnover threshold at the time of the supply and hence she was not required to be registered for GST and the supply was not a taxable supply.

5 The cross-claim sought declarations that the purchase price under the contract for sale was inclusive of GST. With respect to that claim the defendants lost because,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Ashton v Monteleone (No 2)

Details

AGLC: Ashton v Monteleone (No 2) [2010] NSWSC 745
Case: [2010] NSWSC 745
Decision Date: 2 July 2010

CaseChat Overview and Summary

The plaintiffs, Ashton, sought to rectify a contract for the sale of premises that were partly commercial and partly residential. The contract required the addition of "+ GST" to the purchase price. The defendants, Monteleone, raised a defence claiming that the GST was not payable because the plaintiffs were not carrying on an enterprise, thus the sale was not a taxable supply under the A New Tax System (Goods and Services Tax) Act 1999 (Cth). The plaintiffs successfully argued for rectification of the contract, leading to an order that they should seek a private indirect tax ruling from the Commissioner of Taxation. This ruling confirmed that the sale was not a taxable supply, as the plaintiffs' GST turnover and projected GST turnover did not exceed the registration turnover threshold, and no GST was payable.

The primary legal issue was whether the plaintiffs' successful rectification of the contract should result in a discount to their costs because of the defendants' unsuccessful defence. The court had to consider the principles governing costs in litigation, particularly the "pyrrhic victory" principle, which may reduce the costs of a successful party if their victory was not commercially viable or if their opponent's defence was not reasonably arguable. The defendants argued that the ruling from the Commissioner of Taxation indicated that the defence was reasonably arguable, and thus no discount should apply. The plaintiffs, on the other hand, submitted that the defence was not reasonably arguable and that the costs should be discounted.

The court found that the defence was not reasonably arguable as the plaintiffs' enterprise was clearly established, and the defendants' contention that the plaintiffs were not carrying on an enterprise was untenable. The court held that the defence was not based on a reasonable interpretation of the law and did not provide a sound basis for the defendants' position. Consequently, the court ordered a 10% discount on the plaintiffs' costs for the pyrrhic victory, reflecting the unreasonability of the defendants' defence.

The final orders included a 10% discount on the plaintiffs' costs for the pyrrhic victory. The court acknowledged that the plaintiffs had successfully rectified the contract and that the defendants' defence was not reasonably arguable. This decision underscores the importance of ensuring that legal defences are grounded in a reasonable interpretation of the law, particularly when they have the potential to significantly impact the financial outcome of litigation.

Orders