Deputy Commissioner of Taxation - v - Archbold

[2013] VCC 964

Not restricted

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL LIST

Revised from transcript of oral reasons

GENERAL CASES DIVISION

Case No. CI-12-04837

DEPUTY COMMISSIONER OF TAXATION	Plaintiff
v
KEVIN ARCHBOLD	Defendant

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JUDGE:	HER HONOUR JUDGE KENNEDY
WHERE HELD:	Melbourne
DATE OF HEARING:	5 August 2013
DATE OF RULING:	5 August 2013
CASE MAY BE CITED AS:	Deputy Commissioner of Taxation – v – Archbold
MEDIUM NEUTRAL CITATION:	[2013] VCC 964

REASONS FOR RULING

Catchwords: Practice and Procedure – application for summary judgment in context of application to file a Third Party Notice – whether there is “some other reason” that a trial should occur under order 22.06(1)(b) of the County Court Civil Procedure Rules 2008 (Vic) – alternatively whether matter should not be disposed of summarily because it is “not in the interests of justice” to do so pursuant to s64 Civil Procedure Act 2010 (Vic) – summary judgment allowed – leave to file Third Party Notice refused but rights reserved to commence separate proceeding.

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S. Linden	Peter Cahill
For the Accused	Mr A. Freadman	Australian Taxation Office

HER HONOUR:

1       This is the return of a summons dated 6 March 2013 wherein orders are sought by the plaintiff for summary judgment.

2       This is also the return of a summons dated 19 July 2013, by which the defendant seeks to be granted leave to file a Third Party Notice. 

3 The defendant has not sought to suggest that there is any “prospect of success” in defending judgment, however has submitted that by reason of order 22.06(1)(b) of the County Court Civil Procedure Rules 2008 (Vic) there is “some other reason” that a trial should occur, namely to give the defendant an opportunity to file and serve the third party Notice. The defendant has also relied on s 64 of the Civil Procedure Act 2010 (Vic), submitting that “it is not in the interests of justice” for the plaintiff to be given summary judgment.

4       The plaintiff is seeking recovery of liabilities of the defendant as co-trustee of the Statewide Unit Trust. The claim arises from BAS forms lodged on behalf of the trust which disclosed that the trustees were liable for amounts withheld under the Pay as You Go withholding provisions as well as liabilities for GST.  

5       The defendant seeks to bring a third party claim against his former co-trustee, the former co-trustee’s wife, and also an accountant, in relation to his claim that the former trustee has misappropriated monies properly belonging to the trust.

6       The matter has a somewhat protracted history. Although the summons was issued on 6 March this year, there have been four previous adjournments of the application for summary judgment. These occurred on 16 May, 30 May, 20 June and 26 July. 

7       A draft Third Party Notice is contained in Exhibit “PWC5” to an affidavit of Peter Wakley Cahill, dated 19 July 2013. The document lacks precision.  Moreover, although various matters are alleged against the first third party co-trustee (for conversion and breach of trustee’s duty), this proposed defendant is in fact bankrupt. Further, although there appears to be a negligence/breach of contract action against the third third party (accountant), no clear cause of action is identified at all against the second third party.

8       The defendant submitted that the court should exercise its powers (identified already) to refuse summary judgment for the following reasons:

·     so as to give the defendant an opportunity to further formulate and investigate his proposed third party claim;

·      to avoid overlap in terms of the treatment of the transactions the subject of the Commissioner’s summary judgment application;

·     to ensure the defendant obtained relevant  documents from the tax office; and

·      to give the defendant an opportunity to pay the amount due on the tax claim.

9       In terms of the first matter, it is not clear that any further investigation will be productive. The claim as presently pleaded appears speculative and, as indicated already, is not precisely formulated. In any event, the defendant has had considerable opportunity already to formulate a claim and appears to have known about the alleged conversion since at least April 2012.[1]

[1]See Affidavit of Peter Wakley Cahill sworn 19 July 2013, exhibit PWC2.

10      Secondly, even if there is to be a properly formulated claim, the defendant was unable to identify any issues of overlap between the claims of the Deputy Commissioner and any claim the defendant might make against the third parties. In such circumstances, there is nothing to suggest that there could be inconsistent findings such as to make a separate trial of the matters the subject of the third party proceeding undesirable.

11 The defendant was also unable to demonstrate how any claims would be sustainable against the former trustee given his status as a bankrupt. Even if the funds allegedly misappropriated would not be classified as “property of the bankrupt” for the purposes of s58(3) of the Bankruptcy Act 1966 (Cth), it appears unlikely that the bankrupt would have retained funds which might still be recovered.

12      In terms of documents, the plaintiff has already filed an affidavit of 1 August of Jayanthy Sivayoganathan which annexes the records of the plaintiff relative to the trust. There is nothing to suggest that there are other documents in the possession of the plaintiff which might assist the defendant.

13      Finally, on the material filed, I am unable to be satisfied that the defendant is likely to be successful in his third party action such that it will enable him to satisfy the plaintiff’s claim. In any event, the plaintiff is entitled to payment and has already been significantly delayed in obtaining judgment. 

14 In all the circumstances, then, I am not prepared to refuse the plaintiff’s application pursuant to O 22.06(1)(b) and/or s64. Instead, the plaintiff is entitled to judgment.

15      Given the state of the Third Party Notice, I am not satisfied that the defendant should have leave to file and serve the current Third Party Notice. Instead, the defendant’s summons should be dismissed. However, I will specifically reserve the rights of the defendant to bring a separate proceeding based on the matters the subject of the draft Third Party Notice.

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