Davan Developments Pty Ltd v HLB Mann Judd (SE Qld) Pty Ltd - [2016] QCA 90

SUPREME COURT OF QUEENSLAND

CITATION:

Davan Developments Pty Ltd v HLB Mann Judd (SE Qld) Pty Ltd [2016] QCA 90

PARTIES:

DAVAN DEVELOPMENTS PTY LTD
ACN 102 189 864
(appellant)
v
HLB MANN JUDD (SE QLD) PTY LTD
ACN 114 097 648
(respondent)

FILE NO/S:

Appeal No 5920 of 2015
DC No 4338 of 2013

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

District Court at Brisbane – [2015] QDC 121

DELIVERED ON:

12 April 2016

DELIVERED AT:

Brisbane

HEARING DATE:

22 February 2016

JUDGES:

Gotterson, Morrison and Philip McMurdo JJA
Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

1. Appeal dismissed.

2. Parties given leave to make submissions as to costs in accordance with Court of Appeal Practice Direction.

CATCHWORDS:

PROFESSIONS AND TRADES – ACCOUNTANTS AND AUDITORS – ACCOUNTANTS – DUTIES AND LIABILITIES – NEGLIGENCE – where the appellant company retained the services of the respondent to prepare and lodge the appellant’s tax statements and returns – where the appellant acquired two adjoining lots in East Brisbane in 2005 with an intention to amalgamate and subdivide the property into three lots – where three investors of the appellant were the intended transferees of the subdivided lots – where the investors verbally agreed to contribute equally to development costs and held a right of first refusal over each lot – where in August and November 2007 the appellant sold two of the lots and, based on tax returns prepared by the respondent, the appellant paid GST on those sales – where the appellant claimed it was not liable to pay any tax on the transactions because the appellant held the land on trust and the respondent was aware or ought to have been aware of that arrangement – where the appellant alternatively claimed that the sales were not taxable supplies for GST purposes – whether the respondent was negligent in discharging its professional services

A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 7-1, s 9-5, s 9-20, s 75-13
Income Tax Assessment Act 1936 (Cth), s 318
Income Tax Assessment Act 1997 (Cth), s 104-10, s 116-30

Bahr v Nicolay [No 2] (1988) 164 CLR 604; [1988] HCA 16, cited
Davan Developments Pty Ltd v HLB Mann Judd (SE Qld) Pty Ltd [2015] QDC 121, approved
Kauter v Hilton (1953) 90 CLR 86; [1953] HCA 95, cited
Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; (2015) 89 ALJR 340; [2015] HCA 6, cited

COUNSEL:

R J Anderson QC for the appellant
R M Derrington QC, with M Ballans, for the respondent

SOLICITORS:

Thomson Geer for the appellant
Carter Newell Lawyers for the respondent

GOTTERSON JA: I agree with the orders proposed by Philip McMurdo JA and with the reasons given by his Honour.
MORRISON JA: I have read the reasons of Philip McMurdo JA and agree with those reasons and the orders his…

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.

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Details

Case: [2016] QCA 90
Decision Date: 12 April 2016

CaseChat Overview and Summary

Davan Developments Pty Ltd sought damages against HLB Mann Judd (SE Qld) Pty Ltd for alleged negligence in the preparation of tax returns. The appellant, Davan Developments, retained the respondent, HLB Mann Judd, to prepare and lodge its tax statements and returns. The appellant acquired two adjoining lots in East Brisbane in 2005, intending to amalgamate and subdivide the property into three lots. The intended transferees of the subdivided lots were three investors who verbally agreed to contribute equally to development costs and held a right of first refusal over each lot. In August and November 2007, the appellant sold two of the lots, paying GST on those sales based on tax returns prepared by the respondent. The appellant claimed it was not liable to pay any tax on the transactions because it held the land on trust and that the respondent was aware or ought to have been aware of that arrangement. Alternatively, the appellant claimed that the sales were not taxable supplies for GST purposes.

The central legal issues in the case were whether the respondent was negligent in discharging its professional services and whether the appellant's claims regarding the trust arrangement and the nature of the sales were valid. The court had to determine if the respondent's preparation of the tax returns was negligent and if the appellant's arguments regarding the trust arrangement and the taxable nature of the sales were legally sound. The court considered the evidence provided by both parties and the applicable tax laws and professional standards governing accountants.

The Court of Appeal dismissed the appeal, finding that the respondent was not negligent in its professional services. The court held that the respondent's preparation of the tax returns was not negligent, and the appellant's claims regarding the trust arrangement and the taxable nature of the sales were not substantiated. The court found that the appellant's assertion that it held the land on trust was not supported by the evidence and that the sales were indeed taxable supplies for GST purposes. Consequently, the appeal was dismissed, and the parties were given leave to make submissions as to costs in accordance with the Court of Appeal Practice Direction.

Orders

Orders of the court

1. Appeal dismissed.

2. Parties given leave to make submissions as to costs in accordance with Court of Appeal Practice Direction.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	Davan Developments Pty Ltd v HLB Mann Judd (SE Qld) Pty Ltd [2016] QCA 90
PARTIES:	DAVAN DEVELOPMENTS PTY LTD ACN 102 189 864 (appellant) v HLB MANN JUDD (SE QLD) PTY LTD ACN 114 097 648 (respondent)
FILE NO/S:	Appeal No 5920 of 2015 DC No 4338 of 2013
DIVISION:	Court of Appeal
PROCEEDING:	General Civil Appeal
ORIGINATING COURT:	District Court at Brisbane – [2015] QDC 121
DELIVERED ON:	12 April 2016
DELIVERED AT:	Brisbane
HEARING DATE:	22 February 2016
JUDGES:	Gotterson, Morrison and Philip McMurdo JJA Separate reasons for judgment of each member of the Court, each concurring as to the orders made
ORDERS:	1. Appeal dismissed. 2. Parties given leave to make submissions as to costs in accordance with Court of Appeal Practice Direction.
CATCHWORDS:	PROFESSIONS AND TRADES – ACCOUNTANTS AND AUDITORS – ACCOUNTANTS – DUTIES AND LIABILITIES – NEGLIGENCE – where the appellant company retained the services of the respondent to prepare and lodge the appellant’s tax statements and returns – where the appellant acquired two adjoining lots in East Brisbane in 2005 with an intention to amalgamate and subdivide the property into three lots – where three investors of the appellant were the intended transferees of the subdivided lots – where the investors verbally agreed to contribute equally to development costs and held a right of first refusal over each lot – where in August and November 2007 the appellant sold two of the lots and, based on tax returns prepared by the respondent, the appellant paid GST on those sales – where the appellant claimed it was not liable to pay any tax on the transactions because the appellant held the land on trust and the respondent was aware or ought to have been aware of that arrangement – where the appellant alternatively claimed that the sales were not taxable supplies for GST purposes – whether the respondent was negligent in discharging its professional services A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 7-1, s 9-5, s 9-20, s 75-13 Income Tax Assessment Act 1936 (Cth), s 318 Income Tax Assessment Act 1997 (Cth), s 104-10, s 116-30 Bahr v Nicolay [No 2] (1988) 164 CLR 604; [1988] HCA 16, cited Davan Developments Pty Ltd v HLB Mann Judd (SE Qld) Pty Ltd [2015] QDC 121, approved Kauter v Hilton (1953) 90 CLR 86; [1953] HCA 95, cited Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; (2015) 89 ALJR 340; [2015] HCA 6, cited
COUNSEL:	R J Anderson QC for the appellant R M Derrington QC, with M Ballans, for the respondent
SOLICITORS:	Thomson Geer for the appellant Carter Newell Lawyers for the respondent