Deputy Commissioner of Taxation v Frangieh
[2016] NSWSC 151
•29 February 2016
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Deputy Commissioner of Taxation v Frangieh [2016] NSWSC 151 Hearing dates: 29 February 2016 Date of orders: 29 February 2016 Decision date: 29 February 2016 Jurisdiction: Common Law Before: Harrison AsJ Decision: The Court orders:
(1) The hearing is adjourned to Monday, 7 March 2016 at 10.00 am for three weeks.
(2) The defendant/cross claimant is to pay the plaintiff/cross defendant’s costs thrown away by the adjournment.Catchwords: PROCEDURE – civil – application to vacate hearing – counsel returned brief week prior to hearing – opportunity to find and brief alternative counsel – adjournment for one week Legislation Cited: Civil Procedure Act 2005 (NSW)
Income Tax Assessment Act 1936 (Cth)
Income Tax Regulations 1936 (Cth)
Taxation Administration Act 1953 (Cth)
Uniform Civil Procedure Rules 2005 (NSW)Cases Cited: ANZ v Mio Amico Pty Ltd [2013] NSWSC 716
Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Dawson (t/as Goodvibes Yachts) v Deputy Commissioner of Taxation (1984) 56 ALR 367
Hamod v State of New South Wales [2011] NSWCA 375
Squire v Rogers (1979) 27 ALR 330Category: Procedural and other rulings Parties: Deputy Commissioner of Taxation (Plaintiff/Cross Defendant)
Jo Frangieh also known as Joseph Frangieh (Defendant/Cross Claimant)Representation: Counsel:
Solicitors:
RJ Weber SC with SAC Patterson (Plaintiff/Cross Defendant)
Ashurst Australia (Plaintiff/Cross Defendant)
Small Myers Hughes Lawyers (Defendant/Cross Claimant)
File Number(s): 2012/355840 Publication restriction: Nil
Judgment
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HER HONOUR: On 14 October 2015, this matter was fixed for hearing with an estimate of 10 to 15 days. This morning the defendant/cross claimant’s solicitor filed a notice of motion seeking that the hearing dates commencing on 29 February 2016 with an estimate of two to three weeks be vacated and that the hearing be adjourned to a date to be fixed. The plaintiff/cross defendant objects to the vacation of the hearing date, or as an alternative position submits that an adjournment of one week be granted so that the defendant/cross claimant can brief new counsel this week.
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The plaintiff/cross defendant is the Deputy Commissioner of Taxation. The defendant/cross claimant is Joe Frangieh also known as Joseph Frangieh. The plaintiff/cross defendant relied on the affidavit of Wen-Ts’Ai Lim sworn 29 February 2016. The defendant relies upon the affidavit of his solicitor Konrad Wojtasik dated 25 February 2016.
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Mr Wojtasik deposes that on 25 February 2016, counsel for the cross claimant returned his brief and as such the defendant/cross claimant does not have adequate legal representation and is not ready to proceed today. An alternative counsel is being briefed and it is expected that the cross claimant will be ready to proceed to hearing in four weeks given the complexity of the matter. He was cross examined in court. His evidence is that a dispute with counsel over fees was only part of the reason why counsel returned his brief. He has approached a number of barristers to read the brief. Mr Wojtasik has been acting for Mr Frangieh since 2012 and is familiar with the evidence.
Factual background
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On 1 October 2012, an amended notice of assessment in respect of the year of income ended 30 June 2007 was served on Mr Frangieh, in accordance with the Income Tax Assessment Act 1936 (Cth) and the Income Tax Regulations 1936 (Cth). The notice specified that the amount of income tax due as at 25 October 2007 was $1,700,017.85. Mr Frangieh has failed to pay the amount set out in the notice of amended assessment.
The relevant pleadings
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By further amended statement of claim filed 29 July 2013, the Deputy Commissioner of Taxation claimed a total of $3,331,770.82 from Mr Frangieh which included liabilities under the amended notice of assessment in relation to the income tax, the notice of assessment and liability to pay penalty and subsequent shortfall and general interest charges, as well as monies arising from Mr Frangieh’s failure to pay running balance account deficits. Since that time, that amount has been reduced as a consequence of credits arising from the objection decision and from payments received pursuant to a garnishee notice under s 260-5 of Schedule I of the Taxation Administration Act 1953 (Cth).
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The cross claim seeks damages against the Deputy Commissioner of Taxation for misfeasance in public office, abuse of process and breach of duty to act in good faith. There are three misfeasance in public office claims, two abuse of process claims and one claim of breach of duty to act in good faith. The causes of action against the Deputy Commissioner of Taxation are in relation to:
(a) The conduct of its employees associated with the audit of Mr Frangieh (the audit taken for the 2007 tax year);
(b) Their involvement in the issuing of the amended notice of assessment; and
(c) Their involvement in commencing and continuing these Supreme Court debt recovery proceedings in the knowledge of their conduct constituting misfeasance in public office relating to (a) and (b).
The legal principles in relation to adjournments
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The parties agree that the case is otherwise ready for hearing.
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Sections 56, 57, 58 and 66 of the Civil Procedure Act2005 (NSW) relevantly read:
“56 Overriding purpose
(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.
(3) A party to civil proceedings is under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.
(3A) (Repealed)
(4) Each of the following persons must not, by their conduct, cause a party to civil proceedings to be put in breach of a duty identified in subsection (3):
(a) any solicitor or barrister representing the party in the proceedings,
(b) any person with a relevant interest in the proceedings commenced by the party.
(5) The court may take into account any failure to comply with subsection (3) or (4) in exercising a discretion with respect to costs.
…
57 Objects of case management
(1) For the purpose of furthering the overriding purpose referred to in section 56 (1), proceedings in any court are to be managed having regard to the following objects:
(a) the just determination of the proceedings,
(b) the efficient disposal of the business of the court,
(c) the efficient use of available judicial and administrative resources,
(d) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.
(2) This Act and any rules of court are to be so construed and applied, and the practice and procedure of the courts are to be so regulated, as best to ensure the attainment of the objects referred to in subsection (1).
58 Court to follow dictates of justice
(1) In deciding:
(a) whether to make any order or direction for the management of proceedings, including:
(i) any order for the amendment of a document, and
(ii) any order granting an adjournment or stay of proceedings, and
(iii) any other order of a procedural nature, and
(iv) any direction under Division 2, and
(b) the terms in which any such order or direction is to be made, the court must seek to act in accordance with the dictates of justice.
(2) For the purpose of determining what are the dictates of justice in a particular case, the court:
(a) must have regard to the provisions of sections 56 and 57, and
(b) may have regard to the following matters to the extent to which it considers them relevant:
(i) the degree of difficulty or complexity to which the issues in the proceedings give rise,
(ii) the degree of expedition with which the respective parties have approached the proceedings, including the degree to which they have been timely in their interlocutory activities,
(iii) the degree to which any lack of expedition in approaching the proceedings has arisen from circumstances beyond the control of the respective parties,
(iv) the degree to which the respective parties have fulfilled their duties under section 56 (3),
(v) the use that any party has made, or could Have made, of any opportunity that has been available to the party in the course of the proceedings, whether under rules of court, the practice of the court or any direction of a procedural nature given in the proceedings,
(vi) the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction,
(vii) such other matters as the court considers relevant in the circumstances of the case.
66 Adjournment of proceedings
(1) Subject to rules of court, the court may at any time and from time to time, by order, adjourn to a specified day any proceedings before it or any aspect of any such proceedings.
(2) If a judicial officer is not available at the time appointed for the hearing of any proceedings, a registrar may adjourn, to a later time on the same day or to a later specified day, any matters listed for hearing by the judicial officer at the appointed time.”
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In Hamod v State of New South Wales [2011] NSWCA 375, the Court of Appeal reviewed the principles to be considered in deciding whether an adjournment should be granted. The trial judge had refused an adjournment by a self-represented litigant part way through the hearing. The Court of Appeal referred to Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 and stated (at [139] - [145]):
“139 The considerations relevant to the determination of interlocutory applications were recently considered by the High Court in Aon Risk Services Australia Ltd v Australian National University. In Aon Risk Services Australia Ltd, the Court was dealing with the rules of court of the Supreme Court of the ACT. Those rules are relevantly similar to the [New South Wales] Civil Procedure Act, s 56 ff. Although the application in question in that case was an application to amend pleadings, the High Court addressed the concerns of case management more generally, noting the impact that substantial delay and wasted costs has on parties, the court and other litigants. Relevant to the application in this case are the comments of French CJ, at [5]:
“[T]here is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system.”
140 His Honour further stated, at [30]:
“Also to be considered is the potential for loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification, whether they be for adjournment, for amendments giving rise to adjournment, or for vacation of fixed trial dates resulting in the resetting of interlocutory processes.”
141 A just resolution of proceedings remains the paramount purpose of the case management objectives articulated in the relevant procedural provisions of the civil procedure legislation: in particular see the Civil Procedure Act, s 56. What constitutes a “just resolution” is to be understood in light of the purposes and objectives stated in the statutory provisions. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. However, these terms are relative and parties should be given an appropriate opportunity to plead and argue their case. Nonetheless, there are limits to the extent that a party will be accommodated in the conduct of the litigation. In Aon Risk Services Australia Ltd, Gummow, Hayne, Crennan, Kiefel and Bell JJ, at [98], stated:
“The Rule’s reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.”
142 In his submissions to this Court, Mr Hamod made specific reference to these provisions, as well as to s 66. He submitted that his Honour was obliged to apply s 66, subject to s 56, and to then make his determination according to the dictates of justice as required by ss 57-58. Section 66 provides, relevantly, that the court may at any time, by order, adjourn proceedings.
143 There is nothing new in this provision. It merely confers upon the court a discretion to grant an adjournment. The court has always had that power, both in the exercise of its inherent jurisdiction and pursuant to the Supreme Court Act 1970. Nor is s 56 a new concept. Rather, it is the statutory embodiment of jurisprudence that had already gained prominence in the case law. Issues of delay, costs and inefficiency have led to active case management in the courts as a recognised feature of the administration of justice for at least the last two decades.
144 Mr Hamod also relied upon ss 57 and 58. Section 57 provides that in furthering the overriding purpose of a just, quick and cheap resolution of case, the court is required to manage cases having regard, inter alia, to " the just determination of the proceedings”: s 57(a). Section 58 provides that in making any order or direction the court is to “seek to act” in accordance with the dictates of justice, including having regard to the “degree of injustice that would be suffered by the respective parties as a consequence of any order or direction.”
145 These provisions have been the subject of frequent judicial comment: Tripple Take Pty Ltd v Clark Rubber Franchising Pty Ltd [2005] NSWSC 1169; Baulderstone HornibrookEngineering Pty Ltd v Gordian Runoff Ltd [2005] NSWSC 1339; Dennis v Australian Broadcasting Corporation [2008] NSWCA 37; Hans Pet Constructions Pty Ltd v Cassar [2009] NSWCA 230; Bi v Mourad [2010] NSWCA 17 at [47]; Richards v Cornford (No 3) [2010] NSWCA 134; McMahon v John Fairfax Publications Pty Ltd [2010] NSWCA 308. In McMahon v John Fairfax Publications Allsop P, at [26], referred to the case management provisions ss 56-60 as follows:
“The operation of the Civil Procedure Act, ss 56-60 has brought about important changes to the conduct of civil litigation in this State. To a significant degree those provisions enshrined many of the developments in case management and the approach to litigation over the previous 20-30 years in this country. They now have statutory form. They are, however, a clear statutory watershed. That statutory form comprises the over-riding purpose: s 56, the fulfilment of which binds the Court (s 56(2)), the parties (s 56(3)) and legal advisers (s 56(4)). That over-riding purpose is the 'just, quick and cheap resolution of the real issues in the proceedings’.””
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Senior counsel for the plaintiff/cross defendant relied upon ANZ v Mio Amico Pty Ltd [2013] NSWSC 716, Squire v Rogers (1979) 27 ALR 330 and Dawson (t/as Goodvibes Yachts) v Deputy Commissioner of Taxation (1984) 56 ALR 367. In ANZ v Mio Amico, Davies J referred to the principles set out in Hamod above. At [58] to [60] and [62], his Honour stated:
“58 Principles discussed in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 should be applied analogously to applications for adjournment. In that regard it is not only the interests of the parties to the instant proceedings which ought to be considered. An adjournment necessitating a further appointment of a hearing date will inevitably delay other parties from obtaining a hearing. It is partly to that end that s 57 is directed.
59 Further, the notion that amendments and adjournments can simply be met by an appropriate costs order is no longer an acceptable approach: Aon at [99] - [101]. In any event, there is reasonably compelling evidence in the present case that the Defendants would not be able to meet any costs order made against them on the basis that an adjournment was granted.
60 The general rule is that when a case is brought on for trial by the proper process the Plaintiff is entitled to have it heard and determined: Short v Short [1960] 1 WLR 833 at 849; Watson v Watson (1968) 70 SR (NSW) 203 at 206.
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62 An adjournment will not normally be granted simply because there has been a late withdrawal of legal representatives, especially where the withdrawal relates to a fee dispute: Squire v Rogers (1979) 27 ALR 330 at 333, 337-338; or where there is a late retaining of legal representatives even for the reason of an inability to pay for them earlier: Dawson v Deputy Commissioner of Taxation (1984) 56 ALR 367 at 368-370; Kingsway Group at [11].”
Consideration
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At [20] to [34] of Mr Lim’s affidavit he sets out the affidavits and expert evidence that will be relied upon at trial and availability of DCT’s witnesses. I rely on those paragraphs. At [37] Mr Lim concludes:
“37 Based on my review of the pleadings, evidence served by each party and the Tender Bundle, and in my experience conducting litigation for 26 years, it would not take counsel 4 weeks to prepare for this matter. In my experience, counsel briefed in this matter would only need one week to be ready for final hearing.”
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Both parties refer to the stress that the witnesses and defendant/cross claimant have hanging over their heads while they await the hearing of these proceedings. The solicitor for the cross claimant/defendant submitted that in his view, new counsel will not be able to properly prepare for the hearing in one week. He also submitted that his client also wants these proceedings heard and he does not seek to delay this hearing. If this hearing date is vacated, the next available hearing date is in September 2016.
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It would be unfair for the solicitor representing the defendant/cross claimant to have to conduct the trial commencing today. I accept that the causes of action are not straightforward.
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Counsel that was acting for the defendant/cross claimant withdrew a few days before the hearing today and the reason is only in part due to a dispute over his fees. I do not know whether the defendant/cross claimant is in a position to pay counsel’s fees. The solicitor for the defendant/cross claimant has been instructed since 2012 and is familiar with the defendant/cross claimant’s case and can assist new counsel when one is briefed. To date a considerable amount of legal fees have been incurred by both parties in preparation for this trial. They agree it is otherwise ready to proceed. There is a delay of six months before these proceedings can be relisted for trial. There will be inconvenience to witnesses and the court caused by the adjournment.
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Taking these factors into account and ss 56, 57 and 58 of the Civil Procedure Act, it is my view that the dictates of justice favour an adjournment being granted for one week to allow new counsel to be briefed for the hearing to recommence on 7 March 2016 for three weeks.
Costs
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Rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) reads:
“42.1 General rule that costs follow the event
Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.”
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The plaintiff seeks the costs thrown away by the adjournment. The defendant/cross claimant’s solicitor submitted that, as with the interlocutory decisions made, they should be reserved to the end of the hearing.
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Costs are discretionary. Costs normally follow the event. In my view the defendant/cross claimant should pay the plaintiff/cross defendant’s costs thrown away by the adjournment.
The Court orders:
(1) The hearing is adjourned to Monday, 7 March 2016 at 10.00 am for three weeks.
(2) The defendant/cross claimant is to pay the plaintiff/cross defendant’s costs thrown away by the adjournment.
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Amendments
01 March 2016 - Reformatted quotes
Decision last updated: 01 March 2016
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