Commissioner of Taxation v Macquarie Health Corp

[1998] FCA 1134

IN THE FEDERAL COURT OF AUSTRALIA	NG 118 of 1996
NEW SOUTH WALES DISTRICT REGISTRY	NG 445 of 1995

BETWEEN:

COMMISSIONER OF TAXATION
Applicant

AND:

MACQUARIE HEALTH CORPORATION LIMITED
First Respondent

BUSINESS AND PROFESSIONAL LEASING PTY LTD
Second Respondent

RYNDALE PTY LTD
Third Respondent

SARZANA HOLDINGS PTY LTD
Fourth Respondent

RICHARD WALTER PTY LIMITED (IN LIQUIDATION)
Fifth Respondent

AT HOLDINGS PTY LTD
Sixth Respondent

MORLEA PROFESSIONAL SERVICES PTY LTD
Seventh Respondent

JUDGE:	EMMETT J
DATE:	13 AUGUST 1998
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR:  When this matter was called on for hearing on 10 August 1998, the Commissioner indicated that he wished to amend his defence to the second cross-claim.  On 11 August 1998, a notice of motion was filed seeking leave to do so.  That motion was supported by an affidavit of Mr David William Morris annexing a copy of the proposed amended defence to the second cross-claim.  In the course of argument concerning the amendment, it became apparent that there was some misapprehension on the part of the drafter of the draft defence, as a result of which a further amendment was promulgated on behalf of the Commissioner. 

The amendments relate to transactions said to have occurred in 1989, following the sale of the business which had previously been conducted by the Morlea Partnership.  The sale of the assets of the Morlea Partnership in 1984 included the sale of what was recorded in the books of the various entities as debts due by the Taxpayer to the Morlea Partnership.  The price payable was left outstanding.

In relation to those transactions, the Commissioner wishes to assert that by various assignments both the debt due by the Taxpayer to the Molea Partnership and the debt due by the purchaser of the partnership business were assigned to April Street Investments BV (“April Street”).  The consideration for those assignments was said to be a payment of the amounts of the debts left outstanding.  There was then an agreement entered into on 16 June 1989 whereby part of the consideration payable for the assignment of the debt due by the Taxpayer was set off against the debt due by the purchaser of the business which had been assigned to April Street. 

The assertion in the amended defence was that as a result of those matters each of the beneficiaries of the Aborda Trust and the Aurelius Unit Trust has already received full value in respect of any interest it may once have had in the payments made to the Taxpayer and that it would be inequitable for AT Holdings or the Morlea Partnership to be accorded any interest, whether by way of constructive trust or otherwise, in respect of the payments made to the Taxpayer or the proceeds of them.  Senior counsel for AT opposed the amendment.  However, after having had some time to consider the ramifications of the amendment and to consider the documentation in question, which was in any event in the evidence intended to be before me, he was unable to point to any particular prejudice raised by the amendment. 

The Australian Government Solicitor had been asked shortly before the proceedings began what the relevance of the material was.  The response did not give any indication of the matter which is now intended to be raised.  However, as I understand the position, senior counsel for AT and those instructing him have now had ample opportunity to consider the matters.  As a result, as I have said, they have reached the conclusion that there is no prejudice which can pointed to by the amendment at this stage.  It may well be that further evidence will be required but, as I understand the position, there will be no difficulty in that evidence being produced during the course of the hearing.  Accordingly, I consider it appropriate to give leave to the Commissioner to amend the defence to the second cross-claim in the form of the amended defence which was produced on 11 August 1998.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett

Associate:

Dated:             13 August 1998

Counsel for the Applicant:	G.A.A. Nettle QC with M. Gordon
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondents:	D.J. Hammerschlag with M. Green
Solicitor for the First to Fourth Respondents:	Teece Hodson & Ward
Counsel for the Fifth Respondent:	P.L. Dodson
Solicitor for the Fifth Respondent:	Blake Dawson Waldron
Counsel for the Seventh Respondent:	R.B.S. Macfarlan QC with D.L. Williams
Solicitor for the Seventh Respondent:	Alan Jessup
Date of Hearing:	13 August 1998
Date of Judgment:	13 August 1998