Commissioner of State Revenue v Aidlaw Pty Ltd (No 2)
[2010] VSC 405
•9 September 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
LIST F
No. 8583 of 2005
| THE COMMISSIONER OF STATE REVENUE (IN HIS CAPACITY AS THE COMPTROLLER OF STAMPS) | Plaintiff |
| v | |
| AIDLAW PTY LTD (ACN 055 407 899) (RECEIVERS AND MANAGERS APPOINTED) (FORMERLY KNOWN AS AID & ABET PTY LTD) AND ORS (according to the schedule attached) | Defendants |
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JUDGE: | Davies J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 August 2010 | |
DATE OF JUDGMENT: | 9 September 2010 | |
CASE MAY BE CITED AS: | The Commissioner of State Revenue v Aidlaw Pty Ltd (No. 2) | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 405 | |
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TAXATION – Show cause procedure – Recovery of debt –- Stamps Act ss 40(1), 40(2) and 40(3)
PRACTICE & PROCEDURE – Abuse of process – Inherent jurisdiction of the Court – Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N. Lucarelli QC with Mr J. Paterson | The Solicitor for the Commissioner of State Revenue |
| For the Fourth Defendant | Mr P.H. Solomon | Christopher Bunnett Solicitor |
HER HONOUR:
In 2005 the plaintiff (“the SRO”) applied by originating motion for orders against the defendants under ss 40(2) and (3) of the Stamps Act 1958 (Vic) (the “Stamps Act”). The SRO sought to utilize the “show cause” procedure under s 40(2) of the Stamps Act to obtain an account on oath from the defendants of all the sums of money that they received as and for stamp duty and why the SRO should not be paid immediately and to obtain an order for payment of the un-remitted duty enforced by attachment under s 40(3) of the Stamps Act. The SRO supported the application with an affidavit containing the evidence that it relied on to establish why a show cause order should be made. In November 2007, Mandie J (as His Honour then was) concluded that the SRO had made out a prima facie case for a show cause order against the fourth defendant (“Mr Bulzomi”).[1] His Honour did not make the order, however. His Honour accepted the submission for Mr Bulzomi that the show cause procedure ceased to be available to the SRO on the repeal of the Stamps Act by the Duties Act 2000 (Vic), which had occurred after the relevant events but prior to the institution of the proceeding. The SRO appealed that decision.
[1]The other defendants had not put in appearances to the originating motion and no order was then sought against them. Commissioner of State Revenue v Aidlaw Pty Ltd [2007] VSC 475 (Unreported, Mandie J, 23 November 2007).
Before the appeal came on for hearing, the SRO, on 10 April 2008, sought leave from Mandie J to file and serve a statement of claim in the same proceeding, raising claims for debts due by the defendants to the SRO pursuant to s 40(1) of the Stamps Act, breach of contract, knowing receipt of trust moneys or knowing participation in a breach of trust and aiding and abetting a breach of the Trade Practices Act 1974 (Cth) (“the other claims”).
The transcript of the application for leave recorded that senior counsel for the SRO submitted proposed orders to Mandie J, which Mr Bulzomi’s counsel did not oppose. The proposed orders included an order that Mr Bulzomi was not required to file a defence until further order of the Court or pursuant to agreement between him and the SRO. Senior counsel for the SRO explained to Mandie J that the SRO preferred to use the show cause procedure, if the appeal was successful and accordingly, that there was sense in awaiting the outcome of the appeal to avoid unnecessary costs to the parties in the event that the other claims were not pursued. Mandie J made the orders sought.
In May 2009, the Court of Appeal allowed the appeal,[2] holding that ss 40(2) and (3) of the Stamps Act were preserved pursuant to s 14(2)(g) of the Interpretation of Legislation Act 1984 (Vic) in relation to the relevant events on which the show cause procedure was based.
[2]The Commissioner of State Revenue v Bulzomi [2009] VSCA 99.
On the remittance of the matter, the SRO sought a show cause order against Mr Bulzomi and an order that the other claims be stayed until further order of the Court. Counsel for Mr Bulzomi submitted that there should be a permanent stay of the other claims in view of the fact that the SRO now wanted to proceed with the show cause procedure. Counsel submitted that the SRO must irrevocably elect whether to use the show cause procedure or whether to prosecute its other claims but that it could not do both. The argument was put in two ways.
First it was submitted that as the result of the choice of the SRO to use the show cause procedure, Mr Bulzomi must file an affidavit under compulsion in the proceeding in order to show cause why the relief that the SRO seeks under s 40(3) of the Stamps Act should not be granted. It was argued that the right of Mr Bulzomi to have the SRO prove its case on the other claims will necessarily be lost in the consequence. In response to this submission, the SRO proffered to give an undertaking not to use or rely, without the leave of the Court, on the show cause affidavit if the SRO later pursues the other claims. Counsel for Mr Bulzomi informed the Court that he considered that this undertaking was adequate to protect the interests of Mr Bulzomi.
Secondly, it was submitted that the SRO seeks identical relief on identical facts in the statement of claim to the relief sought through the show cause procedure and that there was no proper reason for the SRO to seek to reserve the right to vex Mr Bulzomi twice on the same subject matter.
A. Applicable principles
The Court has an inherent power to prevent misuse of its procedures.[3] Whilst there are no hard and fast rules governing when that power should be exercised, the circumstances in which the power is exercised are generally exceptional. As the Court of Appeal stated in Australian Securities and Investments Commission v Lindberg (No 2)[4] it is a drastic step for a court to prevent a litigant from prosecuting a particular claim and the grant of permanent stay is therefore a most exceptional course.[5]
[3]Walton v Gardiner (1993) 177 CLR 378, 392-393.
[4](2010) 265 ALR 517.
[5]Ibid 534 [89].
The question for consideration is whether the Court processes are being used in such a way that the litigation of the other claims would involve unacceptable injustice to Mr Bulzomi or, to put it another way, whether it would be an abuse of process for the SRO to litigate the other claims in light of its decision to pursue the show cause. Recently in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd[6] the High Court, in the plurality judgment, said that it was clear that:
… abuse of process extends to proceedings that are "seriously and unfairly burdensome, prejudicial or damaging" or "productive of serious and unjustified trouble and harassment".[7] (reference omitted)
However the plurality reaffirmed that abuse of process is not made out merely by showing that the conduct of a party in a proceeding is in some way or sense unfair to another party.[8] Thus, generally, something more than unfairness to a litigant must be shown in order for the Court to be satisfied that a proceeding should be stayed permanently.
[6](2009) 239 CLR 75.
[7]Ibid 94.
[8]Ibid 93 - 94.
The authorities demonstrate that it can be appropriate for the Court to exercise its power to stay a proceeding permanently where the plaintiff has brought two separate proceedings against the same defendant, whether in the same or a different court, in which the relief claimed is the same, where there is no reasonable justification for the two proceedings. [9] In my view this is not such an occasion.
[9]Moore v Inglis (1976) 9 ALR 509; Thirteenth Corporation Pty Ltd v State & Others (2006) 232 ALR 491; Lidden v Composite Buyers Ltd (1996) 67 FCR 560; Branir Pty Ltd v Wallco Pastoral Company Pty Ltd (2006) 203 FLR 115.
B. Decision
Section 40 of the Stamps Act before its repeal was in the following terms:
40. Failure to appropriate moneys received as duty
(1)Every person who having received any sum of money as or for the duty upon or in respect of any instrument neglects or omits to appropriate such money to the due payment of such duty or otherwise improperly withholds or detains the same shall be accountable for the amount of such duty, and the same shall be a debt due from him to Her Majesty and recoverable as such accordingly.
(2)The Supreme Court may upon application, made for that purpose on behalf of the Comptroller of Stamps upon such affidavit as appears sufficient, grant an order requiring any such person as aforesaid or the officer of any court or the executor or administrator of such person or officer to show cause–
(a)why he should not deliver to the Comptroller of Stamps an account upon oath of all duties and sums of money received by such person or officer; and
(b)why the same should not be forthwith paid to the Comptroller of Stamps or to such other person as the Comptroller of Stamps appoints to receive the same.
(3)The Court may make absolute any such order and enforce by attachment or otherwise the payment of any such duties or sums of money as on such proceedings appear to be due together with the costs of the proceedings.
Section 40(1) created the substantive right in the SRO to recover, as a debt, any sum of money received by a person in respect of duty where that person did not remit the duty.[10] Section 40(2) provided a process for the SRO to recover the debt[11] and s 40(3) provided for the remedies, enforcement and costs of the debt proceedings.[12] The evident policy and design of s 40(2) was to enable the SRO to sue for recovery of duty received by that person in circumstances where the SRO did not know how much was recoverable under s 40(1).
[10]The Commissioner of State Revenue v Bulzomi [2009] VSCA 99 [94].
[11]Ibid.
[12]Ibid.
The SRO has used the show cause procedure to find out the amount, if any, recoverable from Mr Bulzomi and the other defendants under s 40(1). The SRO has also pleaded a debt claim directly based on s 40(1). In the Statement of Claim, the debt claim is for recovery of an ascertained and identified amount under s 40(1). To that extent the claims plainly overlap in subject matter and relief. However, the SRO has additionally pleaded other causes of action against the defendants in the Statement of Claim concerning the same subject matter, the nature of which are not based on a debt claim under s 40(1) but, rather, involve distinct and separate allegations with different bases for relief against the defendants than s 40 of the Stamps Act and different types of remedy available, if the SRO is successful on any of those other causes of action. None of those other causes of action are capable of being raised in the show cause procedure under s 40 of the Stamps Act.
I am not persuaded that the existence or pendency of those other claims involves unacceptable injustice to Mr Bulzomi or an abuse of process by the SRO in the circumstances.
It is tolerably clear that the SRO raised these other claims to guard against the contingency that the show cause procedure was not available or that the SRO was unsuccessful in obtaining an order against any particular defendant under s 40(3) of the Stamps Act. In assessing whether the litigation of the other claims would constitute an abuse of process, I consider it relevant that the SRO is a public authority acting in the public interest.[13] It is not unreasonable, in my view, for the SRO to reserve its right to pursue the other claims, depending upon the outcome of the show cause procedure. The public has an interest in the SRO relying on all causes of action against the defendants that are reasonably open to it on the facts as perceived by the SRO. There is reasonable justification for the SRO maintaining the other claims in the circumstance where the show cause procedure is necessarily confined to establishing the liability on any particular defendant to pay an amount to the SRO as a debt due from that defendant to the Crown in relation to moneys received by that defendant as or for duty. In so far as there is a duplication of issue in relation to the s 40 debt claim, the debt action, as with the additional and other causes of action raised in the statement of claim, are presently stayed and Mr Bulzomi is not required to file any defence. Furthermore, it may become unnecessary for the SRO to pursue the additional claims or it may be that the SRO might be met with a claim based on estoppel if the SRO pursues them after the Court’s determination under s 40(2). However, there is no abuse of process in keeping the other claims on foot.
[13]Australian Securities and Investments Commission (ASIC) v Lindberg (No 2) (2010) 265 ALR 517, 534 [69]-[70].
I also do not consider that there is any substance in the argument that the SRO must elect whether to pursue the s 40 show cause procedure or the claims pleaded in the statement of claim. The show cause process is only available because the SRO has already satisfied the Court, on affidavit, that there is warrant for the Court to make an order under s 40(2). In other words, the SRO has already put evidence before the Court in support of its claim that Mr Bulzomi has a liability to the SRO under s 40(1), which the Court has accepted as showing a prima facie case that Mr Bulzomi must now answer. In so far as the other claims are concerned, it may be thought by Mr Bulzomi that there is some unfairness that his affidavit may be used by the SRO in proving its other claims but the SRO still bears the onus of proof on those claims. I would not regard it as abuse of process for the SRO to rely on that affidavit for that purpose nor do I consider that there would be unacceptable injustice to Mr Bulzomi for that to occur.
In concluding that there is no abuse of process, I attach no weight to the undertaking that the SRO proffered. Apart from considerations about whether the s 40(2) affidavit could be disregarded once it has been placed into evidence in this proceeding, there must also be some doubt about whether such an undertaking could properly be given by the SRO. The SRO has the statutory function to recover unpaid duty on behalf of the Crown and the whole purpose of the show cause procedure is to assist the SRO in the exercise of that statutory function. I regard the proffered undertaking as irrelevant to my conclusion that the continued existence and pendency of the pleaded claims is not an abuse of process and does not give rise to unacceptable injustice to Mr Bulzomi.
The application is dismissed.
SCHEDULE OF PARTIES
| No. 8583 of 2005 | |
| BETWEEN: | |
| THE COMMISSIONER OF STATE REVENUE (IN HIS CAPACITY AS THE COMPTROLLER OF STAMPS) | Plaintiff |
| - and - | |
| AIDLAW PTY LTD (ACN 055 407 899) (RECEIVERS AND MANAGERS APPOINTED) (FORMERLY KNOWN AS AID & ABET PTY LTD) | Firstnamed Defendant |
| SPIROS KALOTIHOS | Secondnamed Defendant |
| ANNE MAREE KALOTIHOS | Thirdnamed Defendant |
| ANTONIO BULZOMI (ALSO KNOWN AS TONY BULZOMI) | Fourthnamed Defendant |
| MONOCOTE PTY LTD (ACN 094 166 024) | Fifthnamed Defendant |
| KC MANAGEMENT SERVICES PTY LTD (ACN 006 185 888) | Sixthnamed Defendant |
| AID & ABET CLUBHOUSE RESTAURANT PTY LTD (094 945 945) (FORMERLY MI’MUM’S BAR & GRILL PTY LTD) | Seventhnamed Defendant |
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