Heran v Commissioner of Taxation

[2006] FCA 110

FEDERAL COURT OF AUSTRALIA

Heran v Commissioner of Taxation [2006] FCA 110

COSTS – motion to strike out allegations – motion successful – whether costs should be taxed and paid on an indemnity basis

STEPHEN SIDNEY HERAN v COMMISSIONER OF TAXATION
Q125 of 2002

MAGGSIDE PTY LTD AS TRUSTEE FOR THE BRIAN HERAN DISCRETIONARY TRUST v COMMISSIONER OF TAXATION

Q126 of 2002

BRIAN JOSEPH HERAN v COMMISSIONER OF TAXATION
Q127 of 2002

BRIAN JOSEPH HERAN, STEPHEN SIDNEY HERAN, MAGGSIDE PTY LTD AS TRUSTEE FOR THE BRIAN HERAN DISCRETIONARY TRUST, HERAN DEVELOPMENTS PTY LTD AS TRUSTEE FOR THE HERAN DEVELOPMENT TRUST, NORTHBANK HOMES PTY LTD AS TRUSTEE FOR THE NORTHBANK TRUST v COMMISSIONER OF TAXATION

Q157 of 2002

KIEFEL J

17 FEBRUARY 2006

BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q125 OF 2002

BETWEEN:	STEPHEN SIDNEY HERAN APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	KIEFEL J
DATE OF ORDER:	17 FEBRUARY 2006
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.        The respondent pay the applicant’s costs of the proceedings.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q126 OF 2002

BETWEEN:	MAGGSIDE PTY LTD AS TRUSTEE FOR THE BRIAN HERAN DISCRETIONARY TRUST APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	KIEFEL J
DATE OF ORDER:	17 FEBRUARY 2006
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.        The respondent pay the applicant’s costs of the proceedings.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q127 OF 2002

BETWEEN:	BRIAN JOSEPH HERAN APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	KIEFEL J
DATE OF ORDER:	17 FEBRUARY 2006
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.        The respondent pay the applicant’s costs of the proceedings.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q157 OF 2002

BETWEEN:	BRIAN JOSEPH HERAN FIRST APPLICANT
STEPHEN SIDNEY HERAN SECOND APPLICANT
MAGGSIDE PTY LTD AS TRUSTEE FOR THE BRIAN HERAN DISCRETIONARY TRUST THIRD APPLICANT
HERAN DEVELOPMENTS PTY LTD AS TRUSTEE FOR THE HERAN DEVELOPMENT TRUST FOURTH APPLICANT
NORTHBANK HOMES PTY LTD AS TRUSTEE FOR THE NORTHBANK TRUST FIFTH APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	KIEFEL J
DATE OF ORDER:	17 FEBRUARY 2006
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.        The respondent pay the applicants’ costs of the proceedings.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q125 OF 2002

BETWEEN:	STEPHEN SIDNEY HERAN APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT

AND

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q126 OF 2002

BETWEEN:	MAGGSIDE PTY LTD AS TRUSTEE FOR THE BRIAN HERAN DISCRETIONARY TRUST APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT

AND

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q127 OF 2002

BETWEEN:	BRIAN JOSEPH HERAN APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT

AND

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q157 OF 2002

BETWEEN:	BRIAN JOSEPH HERAN FIRST APPLICANT
STEPHEN SIDNEY HERAN SECOND APPLICANT
MAGGSIDE PTY LTD AS TRUSTEE FOR THE BRIAN HERAN DISCRETIONARY TRUST THIRD APPLICANT
HERAN DEVELOPMENTS PTY LTD AS TRUSTEE FOR THE HERAN DEVELOPMENT TRUST FOURTH APPLICANT
NORTHBANK HOMES PTY LTD AS TRUSTEE FOR THE NORTHBANK TRUST FIFTH APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT

JUDGE:	KIEFEL J
DATE:	17 FEBRUARY 2006
PLACE:	BRISBANE

REASONS FOR JUDGMENT

(COSTS)

1. These proceedings were dismissed on the first day of hearing on the Commissioner’s concession.  This followed a motion by the applicants in each case to strike out certain allegations in the Commissioner’s Amended Statement of Facts, Issues and Contentions as irrelevant.

2. The applicants are entitled to their costs of the proceedings.  They submit that these costs should be taxed and paid on an indemnity basis.  They submit that the Commissioner has not acted as a model litigant in pursuing these actions.  Issues raised by the Commissioner in them were not part of the objection decisions and are inconsistent with the income in question, being that of Raftland Pty Ltd, the applicant in Q173 of 202, the case which the Commissioner pursued.  They allege that the Commissioner has not acted with propriety and that this is shown by the lateness of the concession.

3. I do not consider there is any evidence of impropriety.  It is regrettable that costs were incurred on unnecessary issues and that they were not conceded at an earlier point.  On the other hand if the actions were plainly not maintainable one would have expected the applicants to apply to strike them out at an early point.  Litigation is often conducted on alternative bases and upon issues which cannot all be successful.  A successful party may sometimes be deprived of costs on unmeritorious issues.  I do not however think that it is suggested that, in every case where alternative claims are made, that an order for indemnity costs should follow.  In the present case there are no matters in the Commissioner’s conduct of the litigation which suggest that that course is appropriate.

4. There will be orders in each proceeding that the Commissioner pay the applicants’ costs of the proceedings.

I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.

Associate:

Dated:            17 February 2006

IN THE MATTER OF Q125 OF 2002
IN THE MATTER OF Q126 OF 2002
IN THE MATTER OF Q127 OF 2002
IN THE MATTER OF Q157 OF 2002

Counsel for the Applicant:	Mr D G Russell QC with Mr H Alexander
Solicitor for the Applicant:	Tobin King Lateef
Counsel for the Respondent:	Mr P E Hack SC with Mr P A Looney
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	19 October 2005
Date of Judgment:	17 February 2006