Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2)

[2011] NSWCA 197

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

Chief Commissioner of State Revenue v Platinum Investments Management Ltd (No 2) [2011] NSWCA 197

Hearing dates:

On the papers

Decision date:

21 July 2011

Before:

Campbell JA
Macfarlan JA
Handley AJA

Decision:

1. Order 2 made by this Court on 10 March 2010 varied to read: "Judgment of Gzell J of 2 February 2010 set aside".

2. Notice of motion of 10 March 2011 otherwise dismissed.

3. Applicant to pay the respondent's costs of the motion.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

COSTS - Calderbank offer - refusal - no reference to other proceedings between same parties - refusal not unreasonable - indemnity costs refused.

Legislation Cited:

State Revenue Legislation Amendment Act 2010
Uniform Civil Procedure Rules

Cases Cited:

Brymount Pty Ltd v Cummins [2005] NSWCA 69
Challenger Listed Investments Ltd v Commissioner of State Revenue [2010] VSC 464
Evans Shire Council v Richardson [2006] NSWCA 61
FCT v Indooroopilly Children's Services (Qld) Pty Limited [2007] FCAFC 16, 158 FCR 325
Jones v Bradley (No 2) [2003] NSWCA 258
New Brunswick Railway Company v British & French Trust Corporation Ltd [1939] AC 1
Urban Consolidation & Development Pty Ltd v Commissioner of State Revenue [2010] VSC 49

Texts Cited:

Spencer Bower & Handley Res Judicata 4th ed (2009)

Category:

Costs

Parties:

Chief Commissioner of State Revenue (A)
Platinum Investment (ACN 063 595 006) (R)

File Number(s):

08/277081

 Decision under appeal 

Citation:

[2010] NSWSC 1

Date of Decision:

2010-02-02 00:00:00

Before:

Gzell J

File Number(s):

SC 1140/08

Judgment

1. THE COURT : On 10 March 2011, this Court, by majority, allowed the Commissioner's appeal from orders of Gzell J and restored the assessment of $1,163,818.80 on a declaration of trust dated 4 April 2007. The court made orders for costs on the usual basis. However, on 22 March, within the 14 day time limit in UCPR Pt 36 r36.16(3A), the Commissioner filed a notice of motion seeking an order for indemnity costs and an order amending a date in Order 2 made by this Court on 10 March. The second order was not opposed. The Court has had the benefit of the written submissions of the parties and can dispose of the application on the papers.

1. Gzell J delivered judgment on 2 February 2010 and set aside the Commissioner's assessment. On 22 February the Commissioner filed a notice of appeal. His written submissions were filed on 3 June 2010. On 18 August 2010, the Crown Solicitor sent a Calderbank letter to the solicitors for the taxpayer offering to discontinue the appeal if each party would bear its own costs of the proceedings in the Supreme Court and the Court of Appeal. The offer was expressed to be open until 15 September.

1. In the interval between the filing of the notice of appeal and the Calderbank offer Parliament acted. The State Revenue Legislation Amendment Act 2010 closed the gap revealed by the judgment of Gzell J. The amendment was not retrospective and the Commissioner's interest in the appeal was now limited to old transactions.

1. The solicitors for the taxpayer replied on 15 September rejecting the offer for a number of reasons. Only one is now relevant. It appears that on 5 April 2007 the taxpayer executed 21 other deeds in the same terms which declare trusts in respect of other shares allotted for the benefit of other vendors. On 27 June 2008, the Commissioner assessed the taxpayer to duty of $2,610,943 on these deeds.

1. The Calderbank offer did not refer to this assessment. On 12 May and 10 June 2010 the Commissioner had agreed that, pending the outcome of the appeal to the Supreme Court from the first assessment, he would not apply fines, penalties or interest and the time for lodging objections to the assessment would be extended.

1. The solicitors for the taxpayer wrote in their letter:

"3. There is also uncertainty with respect to the stamp duty implications arising from this settlement with regard to the transactions entered into on 5 April 2007 (the "2 nd tranche"). Although an agreement had been reached that the Commissioner would hold the assessments raised in respect of the 2 nd tranche in abeyance pending the outcome of the proceedings dealing with the transactions entered into on 4 April 2007 (ie the 1 st tranche), it is not certain that the Commissioner will be bound by the decision of his Honour Justice Gzell in respect of the 2 nd tranche".

1. The point taken has substance. The judgment of Gzell J may not have been res judicata in relation to the later assessment. It is arguable that the liability to duty of different trust deeds, relating to different property, with different beneficiaries is not the same question as the liability to duty of the deed considered by Gzell J and this Court. If that is the true position there will be no issue estoppel: Spencer Bower & Handley Res Judicata 4 th ed (2009) pp 192-3. Moreover, in New Brunswick Railway Company v British & French Trust Corporation Ltd [1939] AC 1 the House of Lords held that the construction of one bond in a series in the same terms did not create an issue estoppel for the construction of the others.

1. If the appeal was settled on the terms proposed the Commissioner was not likely to relitigate the issues in relation to the other deeds. However, a lot of duty was at stake and the taxpayer's solicitor was entitled to have the question clarified. The point was not taken until the last day for acceptance of the offer and then only as a reason for rejecting it. However the offer was never clarified.

1. The rejection of a Calderbank offer where the final result is less favourable to the offeree enlivens the court's power to make an order for indemnity costs, but does not create a prima facie right to such an order. The question is whether the rejection of the offer was unreasonable: Jones v Bradley (No 2) [2003] NSWCA 258 at [8]; Brymount Pty Ltd v Cummins [2005] NSWCA 69 at [14]; and Evans Shire Council v Richardson [2006] NSWCA 61 at [20] - [21].

1. The Commissioner argued that if the appeal from the judgment of Gzell J had been discontinued, he would have been bound to assess the other deeds in accordance with the law as declared in that judgment and could not have challenged it on a second appeal. This is not an argument the Commissioner would normally be expected to adopt but support for it was sought in a dictum of Allsop J in FCT v Indooroopilly Children's Services (Qld) Pty Limited [2007] FCAFC 16, 158 FCR 325, 327.

1. While the Commissioner is bound by the law he is entitled to challenge its existing interpretation in a higher court as Allsop J recognised. For this reason, Pagone J has twice distinguished the dicta of Allsop J: Urban Consolidation & Development Pty Ltd v Commissioner of State Revenue [2010] VSC 49 at [8]; and Challenger Listed Investments Ltd v Commissioner of State Revenue [2010] VSC 464 at [2]. In our respectful opinion these decisions are clearly correct on the present question.

1. In our judgment it was not unreasonable for the taxpayer to reject the Commissioner's offer which did not deal with the other assessment, and was not clarified after the taxpayer's solicitors took the point. We therefore make the following orders:

1. Order 2 made by this Court on 10 March 2010 varied to read: "Judgment of Gzell J of 2 February 2010 set aside".

2. Notice of motion of 10 March 2011 otherwise dismissed.

3. Applicant to pay the respondent's costs of the motion.

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Decision last updated: 21 July 2011