Deputy Commissioner of Taxation v Har

[2018] NSWDC 340

District Court

New South Wales

Medium Neutral Citation:	Deputy Commissioner of Taxation v Har [2018] NSWDC 340
Hearing dates:	15 November 2018
Date of orders:	15 November 2018
Decision date:	15 November 2018
Jurisdiction:	Civil
Before:	Dicker SC DCJ
Decision:	(1) Judgment for the plaintiff against the defendant in the sum of $101,311.34; (2) Exhibit to be retained for 28 days; (3) Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the defendant is to pay at the expiry of 28 days the plaintiff's costs of the proceedings, assessed on a specified gross sum basis in the sum of $8,500; (4) Liberty to the defendant to apply to vary the costs order in (3) above within 28 days on giving three business days' notice to the plaintiff; (5) Direct the Registrar and the plaintiff to notify the defendant of these orders within seven days.
Catchwords:	Tax – running account balance deficit debt – whether evidence sufficient to establish alleged debt of defendant
Legislation Cited:	Taxation Administration Act 1953 (Cth) Civil Procedure Act 2005 (NSW)
Category:	Principal judgment
Parties:	Deputy Commissioner of Taxation (Plaintiff) Nancy Mee Ying Har (Defendant)
Representation:	Counsel: M Gauci (Solicitor)   Solicitors: Hunt & Hunt (Plaintiff) No appearance (Defendant)
File Number(s):	2017/00191851

Judgment

1. By Statement of Claim filed 27 June 2017, the plaintiff, the Deputy Commissioner of Taxation, seeks judgment against the defendant, Ms Nancy Mee Ying Har ("Ms Har"), for certain amounts relating to taxes alleged to be unpaid and owing to the plaintiff.

2. It appears from written submissions on behalf of the plaintiff dated 2 October 2018 and, later, 15 November 2018, that the amounts allegedly payable by the defendant in respect of income tax (see paragraphs 2-7 of the Statement of Claim), are no longer owing by the defendant: paragraph 6 of the 2 October 2018 written submissions and paragraphs 4-6 of the 15 November 2018 written submissions.

3. That leaves for determination by the Court the amount said to be owing by the defendant pursuant to the running balance account deficit debt: see paragraphs 8-14 of the Statement of Claim. The sum sought as at 27 June 2017 was pleaded to be $114,594.60. The amount now sought by the plaintiff is $101,311.34.

4. The defendant by her Defence filed 22 August 2017 has denied her liability to the plaintiff for the amount claimed: Defence paragraph 3. It is unclear that this is still her position. She did not appear at the hearing. Her affidavit affirmed 15 November 2018 suggests it may no longer be her position: see paragraphs 18-20.

5. Orders have previously been made for the defendant to serve and/or file and serve her substantive evidence in the proceedings on:

1. 24 October 2017 by 13 January 2018;

2. 21 February 2018 by 12 March 2018;

3. 13 April 2018 by 4 May 2018; and

4. 10 July 2018 by 7 August 2018.

6. Today an affidavit affirmed 15 November 2018 from the defendant Ms Har was left by the defendant with the Court. A copy was also provided to the legal representative for the plaintiff. Subject to certain objections which have been ruled upon, the affidavit was taken as read and has been taken into account by me in giving these reasons for decision.

7. The plaintiff has read the affidavits of:

1. Batoul Ali affirmed 19 January 2018;

2. Anita Tiku affirmed 2 October 2018; and

3. Anita Tiku affirmed 15 November 2018.

8. The plaintiff has the benefit of certain evidentiary provisions under various taxation legislation and relies on these provisions:

1. The statements and averments about a matter in the plaintiff's Statement of Claim are prima facie evidence of the matter: s 255-50(1) Schedule 1 of the Taxation Administration Act 1953 (Cth) ("TAA");

2. The evidentiary certificates being:

1. Annexure C to the affidavit of Anita Tiku dated 2 October 2018 shows that as at 2 October 2018 the defendant has a running balance account deficit debt to the plaintiff totalling $128,788.93;

2. Annexure C to the affidavit of Anita Tiku dated 15 November 2018 shows that as at 15 November 2018 the defendant has a running balance account deficit debt to the plaintiff totalling $101,311.34.

The evidentiary certificates are on their face produced pursuant to s 8AAZJ of the TAA. This section provides that in proceedings for recovery of a running balance account (“RBA”) deficit debt, a Commissioner's certificate stating that a specified amount was the RBA deficit debt on the date of the certificate is prima facie evidence of that matter: s 8AAZJ(1)(d);

3. The production of an RBA statement is prima facie evidence that the RBA was duly kept and the amount and particulars in the statement are correct. See:

1. Annexure B to the affidavit of Anita Tiku affirmed 2 October 2018 as at 2 October 2018;

2. Annexure B to the affidavit of Anita Tiku affirmed 15 November 2018 as at 15 November 2018; and

3. Section 8AAZI(1) of the TAA.

9. I have reviewed the affidavits relied on by the plaintiff and have taken them into account. Based on the affidavit evidence, taking into account the written submissions made and also taking into account the evidentiary certificates and statements, I find:

1. The plaintiff established a running balance account for the defendant pursuant to s 8AAZC of the TAA in respect of primary tax debts due by the defendant: see also the definition of "RBA" in s 8AAZA of the TAA;

2. The plaintiff allocated to that running account balance from time to time primary tax debts as defined in s 8AAZA of the TAA due by the defendant to the plaintiff;

3. Liabilities for tax were allocated by the plaintiff to the running balance account as primary tax debts pursuant to s 8AAZD of the TAA;

4. A general interest charge as defined in s 8AAZD(2) and s 8AAZF(1) of the TAA accrues on the unpaid portion of any running balance account. This is then part of the running balance account: s 8AAZF(1);

5. The evidentiary certificates and statements are prima facie evidence that the running balance account relating to the defendant was duly kept and the amount and particulars are correct and that therefore the defendant has an RBA deficit debt totalling $101,311.34 as at 15 November 2018: ss 8AAZJ and 8AAZI of the TAA;

6. There is no evidence from the defendant or in the affidavits read by the plaintiff sufficient to rebut the prima facie position. The affidavit of the defendant affirmed 15 November 2018, which was left with the Court and which, as I have indicated, I take into account, does not provide any negating evidence to the prima facie position as established by the plaintiff:

1. Paragraphs 2-6 relate to the income tax debt which is no longer outstanding;

2. Paragraphs 7-8 relate to an affidavit of Mr Ali which was not read by the plaintiff;

3. Paragraph 9 relates to an alleged discrepancy in figures. However, Mr Ali's 12 April 2018 affidavit referred to was not read;

4. Paragraphs 10-11 relate to the general interest charge on the amounts which have been paid or remitted;

5. Paragraph 12 is irrelevant as it relates to Ms Har's legal fees;

6. Paragraphs 18-19 seem to accept that the tax liability to the plaintiff alleged is not contested.

10. Accordingly, based on the evidence, I am satisfied to the requisite standard that the amount of $101,311.34 has been established by the plaintiff as being owed to him by the defendant.

11. An application was made by the plaintiff for a gross sum costs order in the sum of $8,500 pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW). I understand that no notice of this application was given to the defendant. However, the defendant was previously a legal practitioner and in my view should be regarded as being taken to be aware that if a party is successful in legal proceedings in this Court, costs consequences may generally follow.

12. The usual order is that a successful party is awarded costs as agreed or assessed. There is no application for an indemnity costs order. The amount sought of $8,500 (see Exhibit A) is a reasonably modest amount having regard to the fact that this is the fourth time that the matter has been listed for final hearing and that there have been vacations of hearing dates on three prior occasions. The file also shows a number of affidavits previously relied upon by Ms Har in support of the vacations which would have been reviewed by the plaintiff’s legal representatives.

13. It is clear, as I indicated, under s 98(4)(c) of the Civil Procedure Act that the Court may make an order for a specified gross costs sum at any time before costs are referred for assessment. The general principles applicable are that an order for a specified gross costs sum is particularly appropriate where the costs have been incurred in lengthy or complex cases and it is desirable to avoid the expense, delay and aggravation or futility likely to be involved in contested or extensive costs assessment.

14. However, it is clear that it is not limited to lengthy or complex cases. A wide discretion is given to the Court and the matters to be taken into account as established on the authorities include:

1. The complexity of proceedings in relation to their costs;

2. The degree of any disproportion between the issues litigated and the costs claim;

3. The relative responsibility of the parties for the costs incurred;

4. The capacity of the unsuccessful party to satisfy any costs liability; and

5. The costs and the delay in having the costs assessed having regard to the issues involved.

15. In assessing a gross fixed sum amount, the Court will take into account the amount and the reasonableness of the hourly rates charged and consider an appropriate discount to the amount sought having regard to the fact that it is usual that not all of a party's costs would be recoverable upon an assessment.

16. In the present case:

1. The issues in relation to the amount sought to be recovered by the plaintiff in the proceedings appear to be fairly straightforward;

2. The defendant has not put on any evidence disputing the amount sought in the proceedings ;

3. The gross amount sought shown in Exhibit A of $13,290 does not appear to be disproportionate to the amount in issue;

4. The rates for the legal practitioners as disclosed by Mr Gauci in his oral evidence appear to be reasonable in all the circumstances;

5. The items referred to in Exhibit A under the heading “Narrative” appear to be relevant;

6. There has been a substantial discount in Exhibit A in the amount sought from $13,290 to $8,500.

17. Taking into account the discretion which I have as to costs, in my view it is appropriate to make a specified gross sum costs order in favour of the plaintiff against the defendant in the sum sought of $8,500. However, having regard to the fact that there may be an argument that the defendant would wish to seek a contrary order, in my view the enforcement of that costs order should be delayed for 28 days and the defendant should be given an opportunity to relist the matter if she wishes to make contrary submissions.

18. I therefore make the following orders in the proceedings:

1. Judgment for the plaintiff against the defendant in the sum of $101,311.34;

2. Exhibit to be retained for 28 days;

3. Pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW), the defendant is to pay at the expiry of 28 days the plaintiff's costs of the proceedings, assessed on a specified gross sum basis in the sum of $8,500;

4. Liberty to the defendant to apply to vary the costs order in (3) above within 28 days on giving three business days' notice to the plaintiff;

5. Direct the Registrar and the plaintiff to notify the defendant of these orders within seven days.

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Decision last updated: 22 November 2018