Bristrol Custodians Ltd v Chief Commissioner of State Revenue (No 2)

[2013] NSWADT 128

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	Bristrol Custodians Ltd v Chief Commissioner of State Revenue (No 2) [2013] NSWADT 128
Hearing dates:	30 May 2013
Decision date:	06 June 2013
Jurisdiction:	Revenue Division
Before:	Professor G.D. Walker, Judicial Member
Decision:	Dismissal application adjourned to 22 July 2013.
Catchwords:	Dismissal application - want of prosecution - frivolous or vexatious
Legislation Cited:	Administrative Decisions Tribunal Act 1997 Duties
Cases Cited:	Beard v Telstra Corporation Ltd (1999) 57 ALD 376; Re Christ Circle Oriona Community and DCT (1995) 31 ATR 1001; EP v Commissioner for Children and Young People [2003] NSWADT 227; General Steel Industries Inc. v Commissioner of Railways (NSW) (1964) 112 CLR 125; Guse v Comcare (1997) 49 ALD 288; State Electricity Commission of Victoria v Rabel [1998] 1 VR 102; Re Williams and Australian Electoral Commission (1995) 38 ALD 366.
Category:	Interlocutory applications
Parties:	Bristrol Custodians Ltd (Applicant) Chief Commissioner of State Revenue (Respondent)
Representation:	Counsel B Nolan (Applicant) A Rider (Respondent) Coopers Corporate Lawyers Pty Ltd (Applicant) State Crown Solicitor (Respondent)
File Number(s):	116094

reasons for decision

Background

1. The present matter concerns an application by the respondent for dismissal of substantive application 116094 under s 73(5)(g)(ii) and (iv) of the Administrative Decisions Tribunal Act 1997 (ADT Act) on the ground that the matter is frivolous or vexatious or otherwise misconceived or lacking in substance, or that there has been a want of prosecution of the proceedings.

1. The dismissal application was initiated at a prior hearing on 19 April 2013 at which I adjourned it to 22 June 2013, with liberty reserved to both parties to restore the matter to the list. A timetable was also established, which directed the applicant to file submissions and evidence in the substantive matter by 20 May 2013.

1. The applicant failed to comply with that direction and the respondent had the dismissal application relisted for 30 May. At the start of the hearing the respondent's counsel said that no documents had been filed and that the respondent had heard nothing from the applicant. Consequently he pressed the dismissal application, relying on his written submissions of 28 March 2013 and on the affidavit of Paul Rankins (exhibit R1).

1. At 10:10 a.m. the applicant's counsel arrived with documentary evidence and written submissions in the substantive matter, which were duly filed.

1. The prior procedural history of the substantive application is set out in exhibit R1 and in the respondent's written submissions. The application arises from the Chief Commissioner's reassessment to stamp duty of transfers of land at Yennora and Bankstown, New South Wales. Bristrol , pursuant to s 96 of the Taxation Administration Act 1996 (TA Act) applied to the tribunal for a review of the decision to reassess. Originally, when the land was transferred, the Chief Commissioner accepted that the transfer was dutiable at the nominal rate as a transfer from an outgoing trustee to a new trustee, under s 54 of the Duties Act 1997. Subsequently, the new trustee went into liquidation and the liquidator passed on to the Chief Commissioner certain information which led him to reassess the transaction. The Chief Commissioner issued a reassessment on 23 March 2011 requiring payment of duty at ad valorem rates and imposing penalty and interest. Bristrol objected and the Chief Commissioner disallowed the objection by a notice issued on 21 November 2011.

1. The transaction concerned a trust known as the LSW Group Property Trust which was established by a trust deed settled on 30 October 2000. The original trustee was LSW Group Pty Ltd. Following certain counterchangings and commutations of legal entities, trusts and powers, there emerged a separate trust, the LSW Group Property Trust as the product of what the applicant called splitting, mirroring or "cloning" of the original LSW Property Trust. The existing trust fund was split to create the LSW Group Property Trust as a splinter from the LSW Property Trust. The applicant maintains that it did not extinguish the original trust or bring about a resettlement.

1. On the retirement of the former trustee LSW Group Pty Ltd from the splinter trust, a new trustee, Bristrol, was appointed to the splinter trust, with LSW Group Pty Ltd remaining as trustee for the remainder of the LSW Property Trust. LSW Group Pty Ltd held the remaining trust property, namely the books and records of the trust and the interest in the original trust fund. The applicant's position is that the transfer of the split trust property to the new trustee was the transfer of property from one part of a pre-existing trust to another part of the same trust, such that s 54(3) of the Duties Act would apply so as to make the transfer liable only to nominal duty.

Arguments on the dismissal application

1. In pressing the application, Mr Rider relied on his earlier written submissions and further contended that para. 20 of the applicant's written submissions amounted to an application for an adjournment. As the applicant had previously sought repeated stays or adjournments, this amounted to perpetuating what he characterized as the applicant's want of prosecution. Section 73(5)(g) was a prescriptive provision that created a code for the tribunal that was separate from common law principles and conferred a power to dismiss at any stage for want of prosecution. The applicant was using the Supreme Court proceedings to stay the matter in the tribunal and its allegation of abuse of process by the respondent suggested that those proceedings would not go forward in a timely manner. That the applicant had initiated the Supreme Court proceedings after the tribunal proceedings had commenced and in its pursuit of rectification prima facie showed that it could not satisfy s 54(3) of the Duties Act. In para. 23 of its written submissions it sought costs against the respondent without any submissions or evidence. The applicant's position showed that the proceedings were frivolous or vexatious or lacking in substance.

1. The applicant submitted that the respondent was free to make submissions on the question of costs. Para. 20 of the Bristrol submissions did not amount to an adjournment application. At the 19 April hearing the applicant had pointed out that the Supreme Court proceedings were the only matter outstanding. Bristrol sought rectification on the basis of factual error. The respondent's making 126 requests for particulars in the nature of interrogatories constituted an abuse of process, which would be a matter for the Supreme Court.

1. The original Supreme Court proceeding had sought to rectify the trust deed to make it clear that the trustees could not be beneficiaries. As an application for judicial advice under s 63 of the Trustee Act it was found to be misconceived. The second rectification application was filed on 18 April 2013 in equity on the basis of common factual mistake. The respondent had not yet put on a defence but had sought answers to 126 questions by way of particulars. There was no want of prosecution, for although the applicant had been late with its evidence and submissions they had now been filed. The applicant was not seeking an adjournment but would be able to dispose of the tribunal's requirement for satisfaction under s 54 on the basis of the trust deed not permitting a trustee to be a beneficiary. The deed was defective at present but could be rectified. In the meantime, the tribunal could not make a decision while the Supreme Court proceedings were pending. The situation was analogous to a case in which a constitutional point arose and had to be dealt with by the High Court before the substantive matter could proceed. The present dismissal application, Ms Nolan submitted, should therefore be dismissed.

1. The respondent replied that particulars had been sought in the Supreme Court because the respondent was in the dark as to why it had been joined as a defendant and why relief was sought against it. It had never intended to use the particulars in the tribunal case. The situation envisaged by the applicant involved the tribunal determining the issue in para. 21 of the applicant's submissions. That presented problems if the tribunal did not accept the applicant's contention that the language of the deed satisfied s 54(3)(b) but the Supreme Court had by then not determined the rectification question. The applicant had not fully explained whether in that event an adjournment would be sought. Nor was it clear what might happen on 22 July, as the respondent has until the end of June to put on its defence in the Supreme Court, and given the likelihood of a dispute over particulars, it was unlikely that the rectification question would have been heard and decided before the tribunal hearing commencing 22 July. The applicant had not adequately explained how it would proceed in those circumstances and a further adjournment application seemed likely.

1. The applicant had already sought adjournments on five occasions, and in addition its failure to file its submissions and evidence by 20 May was the sixth time the applicant had not complied with a tribunal direction.

Consideration of the dismissal issue

1. Turning first to the ground based on s 73(5)(g)(ii), judicial exegesis has established a high threshhold for the operation of such provisions, not least in General Steel Industries Inc v Commissioner of Railways (New South Wales)(1964) 112 CLR 125, at 129 - 30, in which Barwick C. J. indicated that something close to self-evident futility was needed to make continuance of an action frivolous or vexatious. Relevant examples of facts justifying dismissal on this ground include failure to comply with directions (EP v Commissioner for Children and Young People [2003] NSWADT 227, [11]) and proceedings based on a misunderstanding of legal principle or an untenable proposition of law or fact: State Electricity Commission of Victoria v Rabel [1998] 1 VR 102.

1. The applicant has failed to comply with tribunal directions on six occasions. The significance of that is discussed below.

1. The respondent submits that s 54(3) can only be satisfied by changes of trustees of the same trust, not transfers of property to a new "cloned" trust, even if the new trust has identical terms and beneficiaries to the original. That is a reasonable argument, but the respondent cites no authority in support of it and it could not be regarded as self-evidently beyond dispute.

1. The respondent then maintains that the applicant's actions in seeking rectification of the trust deed are prima facie evidence that the transfer cannot satisfy the requirements of s 54(3)(b) of the Duties Act and constitutes a "scheme" within the meaning of the specific anti-avoidance provision in s 54 (3)(c) and the general anti-avoidance machinery in chapter 11A of the Duties Act. Again, that is a respectable argument but it is not so self-evident as to make it manifestly futile to continue the application.

1. In this connection, however, it should be noted that the applicant has offered no explanation as to what commercial objective or other legitimate purpose is intended to be served by these elaborate arrangements. Nor has any such objective or purpose so far appeared from the material before the tribunal. Unless further evidence or insights emerge, that could constitute a lacuna that might be relevant to any consideration of the possible application of the anti-avoidance provisions.

1. The proper approach to be taken in this case is to be guided by the proposition that an applicant who genuinely believes he or she has a basis to bring an application is entitled to a "day in court". The fact that a person's case appears weak is no basis for declining to hear it: Re Williams and Australian Electoral Commission (1995) 38 ALD 366; Re Christ Circle Oriona Community Inc and DCT (1995) 31 ATR 1001. Consequently I do not think it would be appropriate at this stage to dismiss the application on that ground.

1. Secondly, the respondent seeks to have the substantive application dismissed on the ground of want of prosecution within the meaning of s 73(5)(g)(iv) of the ADT Act. Mr Rider pointed out that the applicant had applied for an adjournment or a stay of proceedings (until it was agreed between the parties that the tribunal lacks the power to stay its own proceedings) on five occasions. At the 28 September 2012 hearing, the applicant had sought an adjournment of an interlocutory appeal hearing on the ground that the Supreme Court liquidator proceedings had been settled. As the liquidator matter had continued well after that date, the correctness of the ground for seeking the adjournment was in question. The applicant was now effectively foreshadowing a further adjournment application should the rectification proceedings not be concluded by 22 July. The applicant was now seeking what amounted to a stay of proceedings. The applicant had also failed to comply with tribunal directions on six occasions.

1. As to the most recent of these, the failure to file evidence and submissions in the substantive matter by 20 May, the applicant did comply with the direction on 30 May after the dismissal proceedings had resumed. The applicant's counsel explained that she had been incapacitated by severe influenza for 10 days, that she was expecting and her children were sick. Those circumstances explained the 10 days of lateness after 20 May, although they might not necessarily have precluded arranging for a third party such as an instructing solicitor to explain the position to the respondent and perhaps thereby obviate the need for the 20 May hearing. More importantly, they do not account for the lack of action in the preceding month, from the issuance of the direction on 19 April to the due date on 20 May. Directions are meant to be complied with before the deadline, not after it.

1. At the 19 April hearing Ms Nolan submitted that the earlier delays and defaults should not be sheeted home to the client because they were the fault of the previous legal advisers. Be that as it may, the history of this case has included adjournment or stay applications, non-compliance with directions, repeated changes of legal representatives and last-minute improvisations.

1. As against that, the cases have declared the dismissal power to be one of last resort (Guse v Comcare (1997) 49 ALD 288) and not to be exercised without advance warning (Re Greening and Repatriation Commission (1998) 52 ALD 110). The applicant was, however, warned by DP Seiden on 13 February 2013 of the risk of a dismissal application, and the present dismissal proceedings have been on foot since 19 April.

1. A further possible limitation on the power to dismiss for failure to proceed with an application was created by Beard v Telstra Corporation Ltd (1999) 57 ALD 376, in which the court said it was necessary to show that the applicant was not prepared to proceed. In that case the applicant had not been put to the test, as a hearing date had not been set. That case has been taken to mean that mere dilatoriness in pursuing an application may not be sufficient .The holding has been criticised as being excessively broad and inflexible. Beard arose in federal jurisdiction and it involved the construction of a differently worded provision of the Administrative Appeals Tribunal Act 1975 (Cth), but it must be regarded as highly persuasive authority.

1. In the present case a hearing date has been set. The applicant declares that it is ready to proceed once the Supreme Court rectification proceedings, which are the only contingent matter still outstanding, have been determined. The respondent argues that the Supreme Court matter is unlikely to be determined before 22 July and that the applicant has thus effectively foreshadowed yet another adjournment application, in effect seeking an indefinite stay of proceedings, an order which the tribunal has no power to make under s 73(5)(f).

1. Given that it is a power of last resort, however, it is preferable that an order for dismissal not rely substantially on predictions as to how litigation may develop in the future. But equally, the record of this case is such that the dismissal application should not at this stage itself be dismissed.

1. A new timetable having been established, the dismissal and costs applications are adjourned to 22 July 2013 at 10 a.m.

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Decision last updated: 06 June 2013