Bonaccorso v Deputy Commissioner of Taxation
[2013] FCCA 2008
•18 November 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BONACCORSO v DEPUTY COMMISSIONER OF TAXATION | [2013] FCCA 2008 |
| Catchwords: PRACTICE AND PROCEDURE – Review of decision of Registrar not to issue subpoena – where applicant and company subject of tax liability investigations – where assessments made – where company paid its assessment – where applicant claims document sought goes to whether or not company’s assessment is an alternative to his own assessment – whether clause in deed between parties conclusive as to extent of alternative assessments – whether to allow production of requested document. |
| Commissioner of Taxation v Grimaldi (No. 5) [2009] FCA 765 |
| Applicant: | GARRY BONACCORSO |
| Respondent: | DEPUTY COMMISSIONER OF TAXATION |
| File Number: | SYG 2135 of 2013 |
| Judgment of: | Judge Raphael |
| Hearing date: | 18 November 2013 |
| Date of Last Submission: | 18 November 2013 |
| Delivered at: | Sydney |
| Delivered on: | 18 November 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr G D McDonald |
| Solicitors for the Applicant: | Hemsley Lawyers |
| Counsel for the Respondent: | Mr A J O’Brien |
| Solicitors for the Respondent: | Craddock Murray Neumann |
ORDERS
In respect of the Application for Review filed 16 October 2013, the Court orders;
The Applicant is given leave to issues a Subpoena in the form annexed to this Order.
The Applicant is not entitled to access the documents, if any, produced under the Subpoena.
Notwithstanding order 2, the legal representatives of the Applicant may inspect, copy and access the documents, if any, produced under the Subpoena and only as far as they apply to the Applicant’s case, may discuss and (with the consent of the Respondents) show the contents of those documents to the Applicant.
Costs reserved.
In respect of the substantive proceedings;
The proceedings be adjourned to 11 December 2013 at 9.30am for directions.
Pursuant to section 41(6A) of the Bankruptcy Act 1966, the time for compliance by the Applicant with the requirements of Bankruptcy Notice No.BN 158223 issued 23 February 2013 is extended up to and including 11 December 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2135 of 2013
| GARRY BONACCORSO |
Applicant
And
| DEPUTY COMMISSIONER OF TAXATION |
Respondent
REASONS FOR JUDGMENT
There comes before me for hearing an application for review of a decision of the Registrar to decline to issue a subpoena sought by the applicant, Gary Bonaccorso, against the respondent, the Deputy Commissioner of Taxation. The subpoena itself contains in its schedule some eight classes of documents but as things transpired at the hearing today, there is really only one document which the court believes could possibly be relevant to the proceedings between the parties. That document is a reasons for decision paper that it is believed was issued to IFTC Broking Services Pty Ltd, a company incorporated in Vanuatu.
The history of this matter is lengthy and complex and in the short time available to me I have only been able to be apprised of part of it. As I understand the position, the taxation affairs of Mr Bonaccorso and others, including IFTC, were the subject of an investigation by the Commissioner within the Project Wickenby investigations. At some time in about 2009, or possibly slightly earlier, freezing orders were obtained by the Commissioner in both Australia and New Zealand against certain assets of a number of parties in Vanuatu and Mr Bonaccorso. Those freezing orders were the subject of proceedings in the Federal Court of Australia and also in the High Court of New Zealand.
At the same time, investigations were going on into the taxation liabilities of those parties and notices of assessment had been issued. On 8 October 2010 the Commissioner and what I will call the debtor parties entered into a deed. The deed did not deal with the parties’ various taxation liabilities but it did deal with the way in which the monies the subject of the freezing order would be dealt with and tangentially made reference to certain concerns of the debtor parties as to their indebtedness. It appears that it was being thought that the taxation liabilities of the debtor parties might not be individual but that there might be some general liability or overlapping liabilities as well.
What was clear from the deed was that although a release was granted by the debtors, they did not release their rights under Part IVC to challenge the assessments. In the event Mr Bonaccorso did challenge his assessment in the Administrative Appeals Tribunal. He commenced those proceedings in 2010, but in November 2011 they were struck out for want of prosecution. He did not appeal that decision. And so to the extent that he may wish to come to this court and argue that he should not be the subject of a sequestration order because of events surrounding his taxation liability, he is very much restricted.
He does, however, come to this court with that plea but put only in the following way. He says that, in his belief, the notices of assessment that were issued by the Commissioner against himself and IFTC were alternative assessments, and that to the extent that any payment has been made by IFTC he is relieved from payment to the Commissioner. He says, and I accept, that he was unable to make that argument as part of the AAT proceedings because it is now settled law that alternative assessments may be issued and that would not be a ground for arguing the issue of the assessment to him in that tribunal: see Commissioner of Taxation v Grimaldi (No. 5) [2009] FCA 765. There were other grounds he could have advanced but he did not do so. Mr Bonaccorso says he could not make the same argument in a defence to the proceedings in the Federal Court for judgment upon the assessments because at that time, no money had been paid by IFTC and he was still liable whether or not the assessments were alternative or individual.
Mr Bonaccorso argues that the situation is different now. I was told today by Mr O’Brien, appearing on behalf of the Commissioner, that “IFTC has paid its assessment”. Mr Bonaccorso argues that that assessment is, he believes, at least in part and possibly in whole, the alternative assessment. He points to the fact that the assessment made against him is for $3.5 million approximately and the assessment made against IFTC is $3.6 million approximately.
Mr Bonaccorso seeks the document that I have referred to because he believes that it will indicate to him whether or not the basis of the assessment against IFTC is the same as the basis of the assessment against him. It might have been possible and would have been more satisfactory from the court’s point of view if the document had been obtained from IFTC itself and utilised by Mr Bonaccorso. But for reasons which have not been explained, that is not what occurred and Mr Bonaccorso seeks the document from the ATO.
The Commissioner responds by referring me to the deed of 8 October 2010 and, in particular, clause 6 thereof and clause 9.1. These are:
“6.1 The Commissioner considers that the amount of AUD27.2711 represents the amount of tax and penalties that were alternatively assessed to both IFTC Broking and Bonaccorso. To the extent that an amount of tax and penalties is to be recovered, the Commissioner considers that it is more appropriately to be recovered from Bonaccorso.
6.2 The Commissioner of Taxation agrees that the amount of AUD27,711 referred to in clause 6.1 of this Deed, which is to be allocated to the Commissioner’s Bonaccorso Account, is an amount which the Commissioner will not seek to recover from the IFTC Parties in respect of the IFTC Broking Assessment.
6.3 The Commissioner agrees to credit IFTC Broking’s Running Balance Account with the amount of AUD27,711 referred to in clause 6.1 of this deed, which amount the Commissioner now forbears from recovering from IFTC Broking under the IFTC Broking Assessments.
…
9.1 Release of the Commissioner by IFTC Parties, Mr Bonaccorso, RLB and FRG
Subject to clause 9.8, and subject to the Commissioner complying with his obligations under this Deed, the IFTC Parties, Mr Bonaccorso, RLB and FRG do and each of the does irrevocably and unconditionally release and forever discharge the Commissioner and its Officers, employees, legal practitioners and other agents from all or any Claims which any of the IFTC Parties, Mr Bonaccorso, RLB and FRG may have or but for the execution of this Deed may have had against the Commissioner in relation to the Dispute.”
The Commissioner argues that these clauses effectively bar Mr Bonaccorso from making any claim about alternative assessments save for the $27,711.00 which he agreed would be credited to IFTC. But a close reading of the document does not, to my mind, go quite as far as that. Clause 6.1 indicates what the Commissioner’s view of the matter is. It does not indicate that Mr Bonaccorso agrees with anything other than that this was what the Commissioner thought. Clause 6.2 makes reference to the Commissioner of Taxation agreeing. As a party cannot agree with himself, one assumes that the agreement was made with the other parties to the deed. But the agreement is only that the money will be recoverable only from Mr Bonaccorso. Clause 6.3 is the mirror image of clause 6.2. I am unable to say that I can be satisfied at this stage that these clauses completely conclude any issue between the Commissioner and Mr Bonaccorso as to the extent of the alternative assessments.
The Commissioner argues that the release given by Mr Bonaccorso in clause 9.1 is also effective to prevent an argument being raised about the alternative assessments. I have difficulty with this, firstly, because I cannot be totally satisfied that the phrase “any claims which any of the IFTC parties, Mr Bonaccorso, RLB and FRT but for the execution of this deed may have had against the Commissioner in relation to the dispute” really covers the question of alternative assessments. If one looks at the definition of dispute in the document, it is:
“Dispute” means the matters referred to in paragraphs A to F of the Background and also each of the following matters –
1 Any proceedings which have been or may be commenced relating to the Shares and/or the Restrained Funds (including but not limited to the Supreme Court Proceedings and the Federal Court Proceedings and any undertaking as to damages given by or on behalf of the applicant in the Federal Court Proceedings); and
2 any dealings or proposed dealings, and/or any inability to engage in dealings or proposed dealings, in respect of the Shares and/or the Restrained Funds; and
3 any other matter or thing arising out of in any way connected with the Shares and/or the Restrained Funds.”
It is my understanding that the proceedings in the Federal Court were not proceedings as to the assessment but as to the right of the Commissioner to obtain freezing orders.
I would also be concerned that it is being argued that a deed of release in a deed in 2010 is being used in 2013 in order to prevent a debtor from arguing that his debt has already been paid. The Commissioner, as a model litigant, would be the first to agree that he should not recover twice the same tax liability. And so, if indeed he has recovered already from IFTC, there is no reason why he should attempt to recover again from Mr Bonaccorso. In those circumstances, I am prepared to allow the production of the document entitled “Reasons for decision paper” explaining the Tax Office position with regard to IFTC that I understand would have been issued around the same time as the document in respect to Mr Bonaccorso that is with the court papers and was issued on 5 May 2009.
Because I understand that this document is subject to privacy qualifications, I believe that an appropriate order is that the document be produced to the legal advisors for Mr Bonaccorso and only be utilised, seen and dealt with by them and not by Mr Bonaccorso.
This application in relation to the subpoena was an interim application. There is a final application to set aside a bankruptcy notice. I understand that it is possible the Commissioner will wish to seek to appeal my decision in relation to the document and, in those circumstances, I believe that the most appropriate step to take is to adjourn the matter for further mention at 9.30 am on 11 December 2013 by which time any requirement to seek leave to appeal will have expired and if an appeal has been made, then the matter will remain in abeyance. Time for compliance with the bankruptcy notice is extended until 11 December 2013 or further order.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Raphael
Associate:
Date: 27 November 2013
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