Deputy Commissioner of Taxation v Mingos

[2018] VCC 757

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION – GENERAL CASES LIST

Revised
Not Restricted
 Suitable for Publication

Case No. CI-16-04272

DEPUTY COMMISSIONER OF TAXATION	Plaintiff
v
JOHN MINGOS	Defendant

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JUDGE:	LEWITAN
WHERE HELD:	Melbourne
DATE OF HEARING:	30 May 2018
DATE OF RULING:	30 May 2018
CASE MAY BE CITED AS:	Deputy Commissioner of Taxation v Mingos
MEDIUM NEUTRAL CITATION:	[2018] VCC 757

REASONS FOR RULING
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Subject:  Application for adjournment, Summary Judgment application

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Ure	Australian Taxation Office
For the Defendant	Dr B Orow	George Liberogiannis

HER HONOUR:

1       By summons dated 8 March 2018 the plaintiff applied for summary judgment against the defendant John Mingos (Mr Mingos).  The defendant has applied for an adjournment of the hearing of the summary judgment proceeding.  The plaintiff opposes the defendant’s application for an adjournment.

2       The defendant relied on the affidavit of George Liberogiannis made 29 May 2018 (Liberogannis’ affidavit) in support of its application.  Mr Liberogiannis acts for the defendant.

Penalty Interest

3       The first matter referred to by Mr Liberogiannis was that the plaintiff issued the Writ and Statement of Claim on 23 September 2016 but did not serve it on the defendant expeditiously, thereby allowing penalty interest to accrue unreasonably for over one year to the detriment of the defendant.

4       I do not accept the defendant’s submission.  It took a year for the plaintiff to serve process.  It was necessary for the plaintiff to obtain an order for substituted service.  The circumstances giving rise to the application for substituted service are set out in an affidavit by Karen Martin made 3 October 2017.  In paragraph 4 Ms Martin referred to the numerous attempts to serve the defendant at five addresses.  One of those addresses is Level 1, 265A Springvale Road, Glen Waverley.  Paragraph 3 of Liberogiannis’ affidavit states that Mr Mingos has conducted his legal practice at that address for 10 years.

5       In any event the Notices of Assessment issued by the plaintiff were forwarded to Mr Mingos at his address at Post Office Box No 1309 Glen Waverley Victoria which is the second address referred to in paragraph 3 of Liberogiannis affidavit as an address from which Mr Mingos has conducted his legal practice since 1990.  The Notices of Assessment put the defendant on notice that general interest was accruing.    

The defendant’s claim that further time is required to prepare and serve material to permit the parties to articulate their respective positions

6        Counsel for Mr Mingos, Dr Orow, submitted that a mediation between the parties and their legal representatives was conducted on 24 May 2018, which failed to settle the matter.  Mr Liberogiannis stated that at the conclusion of the mediation, the defendant’s legal representatives put the plaintiff’s legal representatives on notice that a short adjournment of the hearing on 30 May 2018 would be sought to prepare file and serve answering material and to permit the parties to articulate their respective legal cases.

7       An affidavit in opposition to the defendant’s application for an adjournment of the hearing for summary judgment in this proceeding was made by Stephanie Wang on 29 May 2018 (Wang’s affidavit).  She referred to the chronology in this matter and exhibited a bundle of correspondence passing between the plaintiff and Mr Liberogiannis.  By email dated 13 March 2018 Ms Wang advised Mr  Liberogiannis that the summary judgment application was listed for hearing on 9 April 2018.    On 15 March 2018 Mr Liberogiannis requested an adjournment of 5 weeks to “prepare file and serve answering materials including affidavits and submissions to your summary judgment application.”  On 28 March 2018 Ms Wang consented to the adjournment of the hearing of the summary judgment application for 5 weeks.  The hearing of the application for summary judgment was adjourned to 14 May 2018.

8       On 7 May 2018 Mr Liberogiannis requested a further adjournment of the hearing to a date in mid to late June 2018. The plaintiff did not consent to the defendant’s request to a further adjournment to mid to late June 2018.  The plaintiff consented to an adjournment for 2 weeks until 28 May 2018 on the basis that the parties meet prior to 28 May 2018 to discuss whether a resolution of the disputes could be achieved.  The hearing of the summary judgment proceedings was adjourned by consent to 30 May 2018.

9       I accept the plaintiff’s submission that the  defendant has had sufficient time to enable him to prepare affidavits and submissions in opposition to the summary judgment application.  Since at least 15 March 2018 the defendant has had ample time to prepare file and serve answering materials.

The proposed defences

10      Dr Orow referred to Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd.[1]  In that case Warren CJ and Nettle JA stated that “the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process.”

[1] (2013) 42 VR 27. [35].

11      Dr Orow submitted that the defendant has a defence because it has filed an objection to the assessment issued by the plaintiff for the year ended 30 June 2014 and has a reasonably arguable case in the Part IVC proceedings brought under the Taxation Administration Act 1953 (Cth). Dr Orow referred to the orders made by Davies J in proceedings issued by Mr Mingos in the Federal Court of Australia pursuant to Part IVC of the Taxation Administration Act 1953. Pursuant to those orders Mr Mingos was ordered to file and serve any affidavits and expert reports upon which he proposed to rely on or before 8 June 2018.  Dr Orow submitted that the hearing of the summary judgment application should be adjourned until after the defendant has filed the relevant affidavits in the Federal Court proceedings.  

12 The plaintiff referred to s63 of the Civil Procedure Act 2010 which provides:

(1)          Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, defence or a counterclaim or part of the claim, a defence or counterclaim, as the case requires, has no real prospect of success.

13 Mr Ure referred to s14ZZR of Taxation Administration Act 1953 and the judgment of Derham AsJ in Deputy Commissioner of Taxation v Murray (Murray)[2] and submitted that the proposed defence has no real prospect of success.

[2] [2017] VSC 785.

14      I accept the plaintiff’s submission.Section 14ZZR of the Taxation Administration Act 1953 provides:

Pending appeal not to affect implementation of taxation decisions

The fact that an appeal is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no appeal were pending. 

15 Dr Orow also referred to a proposed constitutional challenge to the provisions of s175 of the Income Tax Assessment Act 1936 and the table to s350(10)(2) of Schedule 1 to the Taxation Administration Act 1953. Dr Orow submitted that the assessment by the plaintiff in 2014 was made without power.

16      In support of the defendant’s application for an adjournment Dr Orow relied on a passage in the judgment of Kirby J in Commissioner of Taxation of the Commonwealth of Australia v Futuris Corporation Limited (Futuris).[3]  In paragraph 122 Kirby J stated:

The constitutional validity issue: Whether, to the extent the Commissioner needed to rely upon them, ss175 and 177(1) of the Act are invalid under the Constitution.  This potential issue might arise on the basis that the provisions attempt to render unexaminable by the courts an administrative decision by a federal official imposing a tax, or to render such a decision examinable only under conditions that are inconsistent with the proper application of s75(v) of the Constitution (and its counterpart, s39B(1) of the Judiciary Act).

[3] (2008) 237 CLR 146.

17      The possibility of a constitutional challenge was not foreshadowed nor raised on the pleadings.  The comments made by Kirby J were made by way of obiter. Kirby J’s views are contrary to the views expressed by the plurality in Futuris (Gummow, Hayne, Heydon and Crennan JJ) who stated:[4]

Section 175 must be read with s175A and s177(1).[5] If that be done, the result is that the validity of an assessment is not affected by failure to comply with any provision of the Act, but a dissatisfied taxpayer may object to the assessment in the manner set out in Pt IVC of the Administration Act; in review or appeal proceedings under Pt IVC the amount and all the particulars of the assessment may be challenged by the taxpayer but with the burden of proof provided in ss14ZZK and 14ZZO of the Administration Act. Where s175 applies, errors in the process of assessment do not go to jurisdiction and so do not attract the remedy of a constitutional writ under s 75(v) of the Constitution or under s 39B of the Judiciary Act.

[4] (2008) 237 CCL 146, [24].

[5] Now contained in the table to s350(10)(2) of Schedule 1 to the Taxation Administration Act 1953.

18      As stated by Derham AsJ in Murray:[6]

It is no answer to the claims that they might be wrong.  Moreover, the challenge to the validity of the assessments that Counsel for the defendants raises can only be pursued in judicial review proceedings under s 39B of the  Judiciary Act, or perhaps in appeal to the Federal Court under Part IVC of the TAA, and not in this Court in these proceedings.    

[6] [217] VSC 785, 25.

19      I accept the plaintiff’s submission that an adjournment should not be allowed to permit exploration of this point. 

20      Mr Liberogiannis also referred to the mental illness suffered by Mr Mingos.  However the medical certificates exhibited to Liberogiannis affidavit are dated 2 November 2010 and 15 February 2013.  I am not satisfied that Mr Mingos should be granted an adjournment because he suffered a mental illness at that time.

21      For these reasons I refuse the defendant’s application to adjourn the plaintiff’s application for summary judgment.