Commissioner of Taxation v Edgewater Estates Limited (No 2) - [2009] FCA 811

FEDERAL COURT OF AUSTRALIA
Commissioner of Taxation v Edgewater Estates Limited (No 2) [2009] FCA 811
COSTS – discontinuance of proceedings – whether costs should be ordered – no orders as to costs
Federal Court of Australia Act 1976 (Cth) s 43
Commissioner of Taxation v Edgewater Estates Limited [2009] FCA 611
Re The Minister of Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1977) 187 CLR 622
COMMISSIONER OF TAXATION v EDGEWATER ESTATES LIMITED, AVERON HOLDINGS LIMITED, MARBLE HILL INVESTMENTS LIMITED, MERDOLINO LIMITED, SEYDOR LIMITED, MARKBY HOLDINGS LIMITED, ROCK SECURITIES LIMITED and PARAMOUNT ADVISORS LIMITED
WAD 91 of 2009
BARKER J
31 JULY 2009
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 91 of 2009

BETWEEN:
COMMISSIONER OF TAXATION
Applicant

AND:
EDGEWATER ESTATES LIMITED
First Respondent

AVERON HOLDINGS LIMITED
Second Respondent

MARBLE HILL INVESTMENTS LIMITED
Third Respondent

MERDOLINO LIMITED
Fourth Respondent

SEYDOR LIMITED
Fifth Respondent

MARKBY HOLDINGS LIMITED
Sixth Respondent

ROCK SECURITIES LIMITED
Seventh Respondent

PARAMOUNT ADVISORS LIMITED
Eighth Respondent

JUDGE:

BARKER J

DATE OF ORDER:

31 JULY 2009

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
Following submissions on costs, on 23 July 2009 the Court made the following orders:
1.The proceeding is discontinued.
2.There are no orders as to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 91 of 2009

BETWEEN:
COMMISSIONER OF TAXATION
Applicant

AND:
EDGEWATER ESTATES LIMITED
First Respondent

AVERON HOLDINGS LIMITED
Second Respondent

MARBLE HILL INVESTMENTS LIMITED
Third Respondent

MERDOLINO LIMITED
Fourth Respondent

SEYDOR LIMITED
Fifth Respondent

MARKBY HOLDINGS LIMITED
Sixth Respondent

ROCK SECURITIES LIMITED
Seventh Respondent

PARAMOUNT ADVISORS LIMITED
Eighth Respondent

JUDGE:

BARKER J

DATE:

31 JULY 2009

PLACE:

PERTH

REASONS FOR JUDGMENT
ISSUE

The issue the subject of this decision is whether there should be any order for costs in favour of the respondents against the applicant Commissioner of Taxation in circumstances where the substantive proceeding is now discontinued.
FACTS
On 4 June 2009, on the ex parte application of the Commissioner, I made freezing orders against certain assets in Australia of the respondents in circumstances where the Commissioner had recently issued assessments of taxation against each respondent: see Commissioner of Taxation v Edgewater Estates Limited [2009] FCA 611.
Since that order was made, the respondents have been represented by solicitors on the record in the proceedings.
On 10 June 2009, I made orders, including an order extending the freezing orders to 26 June 2009.
On 30 June 2009, the Court was advised that the various respondents had paid assessments of taxation levied by the Commissioner and that there were no outstanding amounts in respect of the respondents.
On 14 July 2009, effectively by the consent of the parties, the freezing orders earlier made were ordered to cease to have effect and the Commissioner's undertaking…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Commissioner of Taxation v Edgewater Estates Limited (No 2)

Details

AGLC: Commissioner of Taxation v Edgewater Estates Limited (No 2) [2009] FCA 811
Case: [2009] FCA 811
Decision Date: 31 July 2009

CaseChat Overview and Summary

In the case of Commissioner of Taxation v Edgewater Estates Limited (No 2), the court considered whether there should be any order for costs in favour of the respondents against the Commissioner of Taxation. The substantive proceeding had been discontinued after the respondents paid outstanding taxes. The primary issue before the court was whether the respondents were entitled to an order for costs against the Commissioner.

The respondents argued for an order for costs, submitting an affidavit and attachments to support their claim. They contended that the Commissioner's actions in issuing assessments and freezing orders were unwarranted, as they believed the respondents had no tax liability in Australia due to the absence of residency and a place of business. The Commissioner, on the other hand, argued that the proceedings were justified and that discontinuance of the substantive proceeding negated any entitlement to costs.

The court, after considering the submissions, concluded that there should be no order as to costs in favour of the respondents. The reasoning behind this decision was that the discontinuance of the substantive proceeding by the Commissioner meant there was no prevailing party entitled to costs. Additionally, the court found that the actions taken by the Commissioner were justified under the circumstances, and therefore, the respondents' claim for costs was unwarranted.

Following the court's decision, the following orders were made on 23 July 2009: the proceeding was discontinued, and there were no orders as to costs. This outcome effectively brought an end to the matter, with neither party being granted costs as a result of the discontinuance.

Orders

Orders of the court

Following submissions on costs, on 23 July 2009 the Court made the following orders:

1. The proceeding is discontinued.

2. There are no orders as to costs.

Note:

Background

Background to the litigation

The issue the subject of this decision is whether there should be any order for costs in favour of the respondents against the applicant Commissioner of Taxation in circumstances where the substantive proceeding is now discontinued.FACTS On 4 June 2009, on the ex parte application of the Commissioner, I made freezing orders against certain assets in Australia of the respondents in circumstances where the Commissioner had recently issued assessments of taxation against each respondent: see Commissioner of Taxation v Edgewater Estates Limited [2009] FCA 611. Since that order was made, the respondents have been represented by solicitors on the record in the proceedings. On 10 June 2009, I made orders, including an order extending the freezing orders to 26 June 2009. On 30 June 2009, the Court was advised that the various respondents had paid assessments of taxation levied by the Commissioner and that there were no outstanding amounts in respect of the respondents. On 14 July 2009, effectively by the consent of the parties, the freezing orders earlier made were ordered to cease to have effect and the Commissioner's undertaking as to damages given on 4 June 2009 was discharged. On that date, however, counsel for the respondents indicated that the respondents wished to seek an order for costs in these circumstances against the Commissioner. The application for costs was adjourned for hearing to 23 July 2009. On 23 July 2009, I dismissed the respondents' application for costs, ordered that the substantive proceedings now be discontinued and that there be no order as to costs. I gave short reasons for the decision as to costs at the time of making these orders. These reasons constitute a more detailed set of reasons for the order.WHETHER COSTS SHOULD BE ORDERED IN FAVOUR OF THE RESPONDENTS In support of their application for costs, the respondents put on an affidavit of Linda Dowding, sworn in Guernsey on 21 July 2009, which contained some ten attachments. Ms Dowding is an employee of Weighbridge Trust Limited of Guernsey and a director of Marble Hill Investments Limited, the third respondent in the proceedings, having been appointed a director of that company on 12 March 2007. As the affidavit indicated, she also at material times was instructed to do things on behalf of the other respondents. Ms Dowding explained that on 1 June 2009, she received a notice of General Interest Charge issued by the Australian Taxation Office (ATO) dated 28 May 2009 addressed to the third respondent. There were similar notices also received in relation to the other respondents. That General Interest Charge was accompanied by a letter, dated 21 May 2009, but stamped 28 May 2009, thanking the third respondent "for lodging your 2007 income tax return" and advising that the information on which the return was based indicates that the taxpayer was now required to make Pay As You Go (PAYG) instalments against an expected income tax liability for 2009. Ms Dowding says that to her knowledge the third respondent had not lodged an income tax return for 2007 in Australia and it was her view the company had no tax liability in Australia because it was not resident and had no place of business in Australia.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

BARKER J

In these circumstances the appropriate order is, following discontinuance of the main application by the Commissioner that there be no order as to costs of the proceeding.CONCLUSION AND ORDERS Following submissions on costs, on 23 July 2009 the Court made the following orders:1.The proceeding is discontinued.2.There are no orders as to costs.

Ratio Decidendi

Legal Principle Established

Established by: BARKER J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	WAD 91 of 2009

JUDGE:	BARKER J
DATE OF ORDER:	31 JULY 2009
WHERE MADE:	PERTH

JUDGE:	BARKER J
DATE:	31 JULY 2009
PLACE:	PERTH