International Professional Services v Tritone Nominees Pty Ltd
[2011] QCATA 332
•8 December 2011
| CITATION: | International Professional Services v Tritone Nominees Pty Ltd [2011] QCATA 332 |
| PARTIES: | International Professional Services (Applicant/Appellant) |
| v | |
| Tritone Nominees Pty Ltd (Respondent) |
| APPLICATION NUMBER: | APL125-11 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Richard Oliver, Senior Member |
| DELIVERED ON: | 8 December 2011 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | Leave to appeal refused. |
| CATCHWORDS: | Minor Civil Dispute – where respondent sought to recover of costs correcting tax returns as a result of the applicant’s negligent preparation of the tax returns – where applicant contends retainer terminated and there was no authority to respond to the Australian Tax Office queries about trust distributions – where failure to inform the respondent of the query – where respondent subjected to a tax audit and incurred additional accountancy costs and penalty interest – whether findings of the Tribunal open on the evidence – whether costs claimed reasonable Queensland Civil and Administrative Tribunal Act2009, ss 142(2), 143(2) QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41 Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of Queensland Civil and Administrative Tribunal Act2009 (QCAT Act).
REASONS FOR DECISION
The International Professional Services is a firm of Chartered Accountants. Mr Russo is a director of Tritone Nominees Pty Ltd. Tritone engaged IPS to prepare tax returns for the 2006-2007 financial year.
The tax returns were lodged with the Australian Taxation Office in June 2008. As a result of an error in the taxation returns the ATO wrote a letter to IPS on 22 September 2008 seeking clarification about an understated trust distribution of $36,744.00.
There was no response to that query and the ATO undertook an audit. The audit and penalty interest cost Tritone $3,931.81. Tritone then commenced a proceeding in the minor civil disputes jurisdiction of the Tribunal to recover that amount from IPS. The claim as formulated in the minor civil dispute application is for “accounting errors, professional negligence, fail to produce the accounting professionalism he promised”. The particulars of the claim for damages as a direct consequence of IPS’s negligence and/or breach of contract is the interest paid to the ATO of $1,959.81 and the accounting costs from his then Accountant, Noel Box Services Pty Ltd of $1,980.00.
The claim made is framed in both negligence and breach of contract. Although not set out in a formal way, it is clear that Tritone is saying that IPS, as its Accountant, owed it a duty of care to ensure that the tax returns were completed accurately. It then contends that in breach of that duty, Tritone suffered loss and damage in the amount claimed. The claim can also be similarly described as a breach of contract in that it was a term of the contract, if not expressed then implied, that IPS would complete the tax returns accurately.
IPS rejected any notion that it was negligent or that it breached any contract with Tritone and as a consequence the application came on for hearing before a Tribunal Member on 19 October 2010. A decision with reasons was delivered on 7 December 2010.
Somewhat belatedly, IPS filed an application for leave to appeal or appeal on 14 April 2011. The application indicates that the decision was made on 7 December 2010 and IPS received the decision on 21 January 2011.[1] No application for an extension of time has been sought by the applicant[2] and despite that, the matter has proceeded with the parties filing submissions. If the Appeal Tribunal had to consider an application for an extension of time, it would be refused as the appeal lacks merit. Because this is an appeal from a decision in the minor civil dispute jurisdiction leave of the Tribunal is necessary.[3]
[1] Application – part B.
[2] QCAT Act, s 143(4).
[3] QCAT Act, s 142(3).
The question whether or not leave to appeal should be granted is usually addressed according to established principles: Is there a reasonably arguable case of error in the primary decision?[4] Is there a reasonable prospect that the applicant will obtain substantive relief?[5] Is leave necessary to correct a substantial injustice to the applicant caused by some error?[6] Is there a question of general importance upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?[7]
[4] QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.
[5] Cachia v Grech [2009] NSWCA 232 at 2.
[6] QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.
[7]Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388 at 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577 at 578, 580.
The grounds of appeal set out in the application challenges the finding of facts made by the learned Member or alternatively that she gave insufficient weight to the facts as found. It is well settled that leave to appeal will not be granted on disputed questions of fact alone if the findings of fact were reasonably open on the evidence before the initial decision maker. It is not the task of the Appeal Tribunal to decide where the truth lay between the competing versions given by the parties rather it is to determine whether there is an error in the primary decision.
The uncontested facts are that the ATO sent a letter to IPS on 22 September 2008 querying the content of the tax returns. IPS contend that they never received the letter and in dealing with that issue, the learned Member made a comment, as she was entitled to do, that IPS provided no explanation as to why it emphatically denied receiving the letter. Evidence was lead as to the internal processes of dealing with correspondence within IPS but this was not sufficient to satisfy her that the letter was not received. One can infer from her reasoning in paragraph 19 of the reasons that in the absence of any explanation she was entitled to proceed on the assumption that the letter was received by IPS and not forwarded on to Tritone.
[10] But the reasons go beyond just the receipt of the letter and the obligation of IPS to forward it. The learned Member dealt with the substantive issue in the application, that is whether or not IPS was negligent in completing the tax returns or whether it breached its contract with Tritone. In paragraph 18 she clearly identifies that the cost incurred by Tritone was as a result of the error, accepted by IPS, in completing the tax returns.
[11] IPS attempt to justify this error by blaming the software it uses in completing the tax returns. It seems that IPS were content to rely on the fact that there was a system error in the software that wasn’t distributing capital gain from the trust to the beneficiaries, rather than taking professional responsibility for their action in ensuring that, by reference to the records of the trust, distributions recorded in the tax returns were accurate.[8]
[8] Transcript page 20 line 50.
[12] The learned Member did not accept that IPS could simply wipe its hands of any responsibility on the basis that its retainer with Tritone had been terminated after the tax returns had been filed. It is their work that was the subject of the inquiry from the ATO and in accordance with their professional responsibility and duty of care, IPS had a responsibility to firstly respond to the query, or alternatively immediately pass it to Tritone so it could address the issues raised and minimise penalties. Also to ensure that Tritone did not incur expenses in rectifying IPS’s mistake.
[13] Tritone’s complaint is that the costs incurred by Tritone were unreasonable and unnecessary. The difficulty with this argument is that once the ATO issued the query, steps had to be taken to address the query which resulted in a substantial tax payment by Tritone and/or Mr Russo as a consequence of IPS’ error. Quite obviously additional tax would have been paid had the error not occurred but penalty interest would have been avoided as would the necessity, it seems, of an audit by Mr Russo’s new accountant, Mr Box.
[14] The learned Member was entitled to form the view that IPS tried to distance itself from Tritone and Mr Russo once the tax returns had been filed.
[15] The complaint about the hourly rate charged by Mr Box was not supported by any independent evidence other than the evidence of Mr Illingworth who suggested that the rate of $450 per hour was excessive. It was open to the learned Member to accept the rate charged by Mr Box.
[16] Despite the lengthy submissions filed by IPS’ solicitors, they have not pointed to any error of law on the part of the learned Member in so far as it seeks to challenge the findings of fact. Each of the facts found by the learned Member in coming to the conclusion that she did, was open on the evidence before her. It is not for this Appeal Tribunal to reconsider all of the evidence that was before the learned Member and come to its own conclusion, the task, in the consideration of leave to appeal is to look at the evidence that was before her, consider her reasons and make a determination as to whether her conclusions were open on that evidence.
[17] As IPS has been unable to identify any error on the part of the learned Member, nor is any apparent therefore leave to appeal must be refused.
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