Begbie v Ballarat District Nursing Society Inc
[2001] VSC 340
•12 September 2001
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
PRACTICE COURT
No. 7429 of 2001
| PETER JAMES BEGBIE | Appellant |
| v. | |
| BALLARAT DISTRICT NURSING SOCIETY INC. | Respondent |
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JUDGE: | BEACH, J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 10 SEPTEMBER 2001 | |
DATE OF JUDGMENT: | 12 SEPTEMBER 2001 | |
CASE MAY BE CITED AS: | BEGBIE v. BALLARAT DISTRICT NURSING SOCIETY | |
MEDIUM NEUTRAL CITATION: | [2001] VSC 340 | |
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CATCHWORDS: Practice and Procedure – Leave to appeal from decision of Master of County Court – Decision plainly wrong causing injustice to appellant – Bad faith of respondent.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr. G. Hardy | Lamb Cassidy |
| For the Respondent | Mr. M. Stirling | Rigby Cooke |
HIS HONOUR:
This is an application by the appellant Peter James Begbie for leave to appeal from the order of a Master of the County Court made on 29 August 2001 in proceeding No. 1549 of 2001 in that Court granting to the defendant Ballarat District Nursing Society Inc. unconditional leave to defend that proceeding.
The background to the matter may be summarised as follows.
On about 1 July 1991 the appellant entered the employ of the respondent as its Centre Manager. Whilst in the employ of the respondent he incorporated a company, P.J.B. Computer Services Australia Pty. Ltd. (P.J.B.)
On 22 September 2000 the respondent terminated the appellant's services.
Disputes arose between the parties and in due course the respondent instituted proceeding No. 6147 of 2000 in the County Court at Melbourne against the appellant, the appellant's wife and P.J.B.
On 24 November 2000 the parties settled that proceeding. The terms of settlement executed that day contain the following provisions:
"13.The Company [P.J.B.] and/or its nominee will pay to the Plaintiff on or before 24 December 2000 the sum of EIGHTY THOUSAND DOLLARS ($80,000.00) ('the price') and upon receipt of the price, the Plaintiff will –
(a)forthwith transfer to the Company and/or its nominee, Winnebago van registered No. PZV 978 in the condition it is in as at 24 December 2000.
(b)pay all sales and other taxes and duties and all other expenses and costs payable in respect of such transfers;
(c)forthwith after payment of the monies referred to in sub-paragraphs (a) and (b) inclusive above, distribute the remainder of the price –
(i) 70% to Begbie; and
(ii) retain the balance for its own use;
and in the meantime continue to permit the Company, its servants and agents to retain possession of and use of the said vehicle without charge. Save to the extent that the same shall not have already been paid by the Plaintiff prior to the date hereof, the Company shall be responsible for all maintenance, registration, repairs, running costs and the like including insurance costs both third party, compulsory and comprehensive property and shall provide to the Plaintiff evidence of such comprehensive insurance of the vehicle with an insurer with whom the Plaintiff has already effected such insurance or such other insurer as shall be acceptable to the Plaintiff. In the event that the Company defaults in making the payment of the price, then this clause will be of no effect and the vehicle shall be immediately delivered up to the Plaintiff in good working order within seven (7) days.
…
15.Begbie shall forthwith withdraw and discontinue the proceedings issued by him in the Australian Industrial Relations Commission concerning the termination of his employment, and each party shall bear their own costs thereof.
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22.The Plaintiff accepts the benefits hereby conferred upon it in full settlement and satisfaction of all or any rights, entitlements and interest which the Plaintiff may have against the Defendants in the proceedings, and agrees to forthwith discontinue the proceedings and the Plaintiff and the Defendants agree that they will not seek any costs consequent upon such discontinuance."
P.J.B. and/or its nominee paid the sum of $80,000 to the respondent on or before 24 December 2000. However, the respondent has not paid to the appellant or his nominee 70% of the balance of the sum of $80,000 or any part thereof and until Friday last 7 September 2001 it had not filed the Notice of Discontinuance referred to in clause 22.
The expenses of the transfer of the vehicle excluding sales tax and any other possible taxation liability total $2,025.00.
On 1 March 2001 the appellant filed proceeding No. 1549 of 2001 in the County Court. By his statement of claim he seeks:
1.An order that the respondent pay to him or his nominee the sum of $54,582.50 being the balance he alleges is due to him pursuant to clause 13 of the agreement.
2.A mandatory injunction that the respondent forthwith discontinue County Court proceeding No. 6147 of 2000.
On 9 May 2001 the respondent filed a defence and counterclaim in the proceeding.
By paragraph 4(b) of the defence it pleads:
"4. To the allegations in paragraph 4 it says:
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(b)further or alternatively, it says that pursuant to paragraph 13(b) of the Agreement the Defendant is to ascertain and pay the amount of any sales tax, other taxes, duties and other expenses and costs payable in respect of the transfer provided for in paragraph 13(a) before distribution of the monies referred to in paragraph 13(c) of the Agreement. The amount of sales tax has not been ascertained and paid. A ruling has been sought from the Commissioner of Taxation as to the amount of sales tax required to be paid."
By its counterclaim the respondent alleges breach by the appellant of aspects of the agreement relating to certain software.
During the course of the hearing before me counsel for the respondent conceded that the matters raised by the counterclaim were no basis for denying the appellant final judgment on the claim if he was otherwise entitled to it and the counterclaim can be disregarded therefore, for present purposes.
In July 2001 the appellant's solicitors received a letter from the respondent's solicitors to the effect that there was no sales tax payable on the transfer of the vehicle described in clause 13(a) of the Deed of Settlement.
However, it then claimed that there may be withholding tax payable on the ground that the transfer of the vehicle may constitute an eligible termination payment.
The letter reads:
"4 July 2001
Lamb Cassidy
Lawyers
DX 22057
GEELONGDear Sirs,
Ballarat District Nursing Society Inc. v. Begbie
We have been advised by the Taxation Office that no sales tax is payable on the transfer of the vehicle described in clause 13(a) of the Deed of Settlement. However, what is now evident is that our client may be liable to withhold tax on the payment due to your client as the transfer may constitute an eligible termination payment under the provisions of the Income Tax Assessment Act. We are presently investigating that issue and will advise you of the outcome.
Yours faithfully
Sean Millard
Associate."
In support of his application for final judgment the appellant relied (inter alia) upon an affidavit of his accountant Ronald William Jennings concerning the sales tax which may have been payable on the vehicle and the possible eligible termination payment deductions which may have to be paid by the respondent.
If both sales tax and eligible termination payment deductions apply the appellant is presently entitled to $33,986.44. If only eligible termination payment deductions apply the appellant is presently entitled to $46,158.49.
That evidence has not been challenged by the respondent.
In the events that have occurred the appellant maintains that at the least the Master should have entered judgment in his favour for $46,158.49 and ordered that the respondent pay into court the sum necessary to cover the possible eligible termination payment deductions namely $8,424.01 pending clarification of the matter and that the respondent file a Notice of Discontinuance in proceeding No. 6147 of 2000.
The respondent disputes the appellant's claim to be presently entitled to either $54,582.50 or $46,158.49 on the ground that any eligible termination payment deductions are taxes payable in respect of the transfer of the vehicle and that as that matter has not yet been clarified by the Taxation Office it is not presently liable to make any payment to the appellant.
Having considered this matter it is my opinion that at this stage of the proceeding there should be judgment for the appellant in respect of the sum of $54,582.50 less the sum of $8,424.01 which may, and I stress the word may, be required to cover any eligible termination payment deductions. As to the latter sum I consider that the appropriate order to make is an order that the sum be paid into the Court pending determination of the eligible termination payments to be made, if any.
It may be said, and correctly so, that orders to the effect I propose will fly in the face of the opening words in sub-clause 13(c) namely "forthwith after payment of the moneys referred to in sub-paragraphs (a) and (b)."
But in my opinion it is necessary to make the orders because to fail to do so would cause injustice to the appellant contrary to the original purpose and expectation of the parties.
The agreement between the parties in the present case required the respondent to pay all sales and other taxes etc. in respect of the transfer of the vehicle and forthwith after such payments pay the appropriate sum of money to the plaintiff. (The emphasis is mine).
In my opinion the respondent could not delay ascertaining the appropriate payments for as long as it liked thereby unreasonably delaying payment to the appellant. It was clearly within the expectation of the parties that the respondent would ascertain and pay the appropriate duties and taxes within a reasonable time. In my opinion it has simply failed to do so and in so doing has acted with bad faith. See Service Station Association Ltd. v. Berg Bennett & Associates Pty. Ltd.[1]
[1]117 A.L.R. 393
P.J.B. and/or its nominee paid the sum of $80,000 either on or prior to 24 December 2000. Yet the appellant was required to wait until 4 July 2001 before the respondent ascertained that there was no sales tax payable on the transfer.
The respondent then decided for the first time to raise the question of withholding tax on the ground that the transfer may constitute an eligible termination payment. One asks – why did the respondent leave it till then to raise that as an issue? If it is a genuine issue it should have been raised and determined months ago.
It is for that reason that I consider that the appellant is now entitled at least to judgment in the sum of $46,158.49.
Little was said to me during the course of debate concerning the question as to whether any withholding tax which may be involved is covered by the words of sub-clause 13(b) or was intended to be covered by them.
My own view is that it is doubtful that it is. However, as a matter of caution that aspect of the matter can be held in abeyance pending the decision of the Tax Office.
Finally as to the Notice of Discontinuance, contrary to the contention of counsel for the appellant, the respondent has now complied with its obligation in that regard and no order is required concerning that aspect.
The following are the orders of the Court.
1.Leave to appeal is granted to the appellant from the order of a Master of the Court made on 29 August 2001 in proceeding No. 1549 of 2001 in that Court.
2.The appeal is heard instanter and allowed. The orders of the Master of 29 August 2001 are set aside.
3.There is judgment for the appellant on his claim in County Court proceeding No. 1549 of 2001 in the sum of $46,158.49. I order that the respondent have leave to defend proceeding No. 1549 of 2001 as to the sum of $8,424.01.
5.I order that within 14 days of service of a copy of this order upon the solicitors for the respondent, the respondent pay the sum of $8,424.01 into court in County Court proceeding No. 1549 of 2001 to await the hearing and determination of that proceeding or further order.
6.I order the respondent pay the costs of the appellant of County Court proceeding No. 1549 of 2001 insofar as those costs relate to the appellant's claim those costs to include the costs of the summons for final judgment which was before the Master.
7.I order that the respondent pay the appellant's costs of the application for leave to appeal and the appeal.
8.I grant to the respondent the appropriate certificate pursuant to the Appeal Costs Act in respect of its costs of the application for leave to appeal and the appeal and the costs it is required to pay the appellant in respect of the application for leave to appeal and the appeal.
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