ISTP Nominees Pty Ltd v Chief Commissioner of State Revenue

[2003] NSWSC 34

CITATION:	ISTP Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 34
HEARING DATE(S):	07/03/02, 08/03/02, 07/02/03
JUDGMENT DATE:	7 February 2003
JURISDICTION:	Equity
JUDGMENT OF:	Barrett J
DECISION:	Directions made for determination of further question
CATCHWORDS:	PROCEDURE - question raised by judge after judgment reserved and before judgment delivered - whether question should be entertained
LEGISLATION CITED:	Taxation Administration Act 1996
PARTIES :	ISPT Nominees Pty Limited - Plaintiff Chief Commissioner of State Revenue - Defendant
FILE NUMBER(S):	SC 1976/01
COUNSEL:	Mr J.T. Gleeson SC/Mr M.Richmond - Plaintiff Mr L.G. Foster SC/Dr H.G. Sorensen - Defendant
SOLICITORS:	Freehills - Plaintiff Mr I.V. Knight, Crown Solicitor - Defendant

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

FRIDAY 7 FEBRUARY 2003

1076/01 - ISPT NOMINEES PTY LTD v CHIEF COMMISSIONER OF STATE REVENUE

JUDGMENT - On notice of motion

1 In these proceedings, the plaintiff contests its liability to pay a substantial amount assessed by the defendant as ad valorem duty under the stamp duties legislation. After I had heard the evidence and submissions and reserved my decision in March last year, and upon considering the relevant legislation, it occurred to me there emerged from that legislation one matter that had been mentioned only fleetingly in the course of the hearing, but which seemed to me to be of significance to the proper determination of the issues between the parties. The matter goes to the meaning of "nominal consideration" and whether an instrument in which the consideration is shown as “nil” is one made for “nominal consideration”.

2 Through my Associate, I wrote to the parties on 16 April 2002 asking three questions, the first two being about this “nominal consideration” point and the last being whether the substantive questions on the “nominal consideration” point were questions to which the court was entitled to have regard at this point. After some correspondence between the parties' solicitors and my associate, the plaintiff foreshadowed on 3 July 2002 the filing of a notice of motion seeking a declaration that the issues to be determined in the proceedings be limited to those raised by the pre-trial correspondence, written submissions filed at the conclusion of the hearing on 8 March 2002 and oral submissions put to the court in the course of the hearing on 7 and 8 March 2002. In the alternative, the plaintiff sought certain directions regarding consideration by the court of the matter raised.

3 There was some ongoing difficulty in finding a date convenient to all concerned to deal with the foreshadowed notice of motion, but it has been filed in court today and I have now heard it. Mr Gleeson SC read two affidavits of his instructing solicitor in support of the motion.

4 Mr Gleeson's principal contention that the issue raised in my Associate's letter should not be entertained has, I think, two essential bases. First, it is said the defendant, in maintaining its claim for stamp duty, never took the nominal consideration point and, furthermore, in correspondence in which the plaintiff sought, by way of request for particulars of disallowance of the plaintiff's objections to the relevant tax assessment or demand to know whether the “nominal consideration point” would be taken, the answer was that the point was not considered relevant because the instrument was outside the particular charging provision on other grounds. Also, the matter was not taken up by the defendant at any stage before or during the hearing. The defendant, it is submitted must be confined accordingly, as must the issues to be determined by the court.

5 The second basis is that the plaintiff would suffer prejudice if the court were to entertain the “nominal consideration” question. On the view the plaintiff takes of matters, upholding of the defendant's assessment to ad valorem duty depends upon his having acted in conformity with s.9 of the Taxation Administration Act 1996 which requires that any re-assessment of tax be made in accordance with interpretations and practices generally applied by the defendant at the time the tax liability arose. That being so, the plaintiff says, there will be a question whether a consideration expressed as “nil” was, according to interpretations and practices at the relevant time, “nominal consideration”. That question, according to the plaintiff, will exist side by side with the question of law as to whether, as a matter of interpretation, “nil” is “nominal consideration”. There will, accordingly, be a need, as the plaintiff sees it, for evidence in order to address the question of fact as to the interpretations and practices of the defendant at the relevant time. There being before the court, at this stage, no evidence on this, the plaintiff will suffer prejudice if the “nominal consideration” issue is pursued. I shall consider these two bases of objection of the plaintiff in turn.

6 First, as to the proposition that the defendant should be confined to the issues foreshadowed, raised and argued already, I must say that I am conscious of the fact that we are dealing here with the correct interpretation and application of a statute by a public official. I do not regard any principle or rule as to the desirability of finality of litigation as applying. Judgment has not yet been given. It was the court itself, having reserved its decision and embarked upon a consideration of the legislation, that saw fit to raise the matter as one which appeared to be relevant to a full and just determination of the issues between the taxing official and the taxpayer.

7 I accept the submission of Mr Foster SC for the defendant that the real issue here is prejudice: the reasons why the defendant, in making the relevant demand for duty and in later correspondence, did not raise the nominal consideration point is essentially unimportant. If the matter needs to be addressed to enable the controversy between the parties to be properly settled by the court, then it should be, subject to questions of prejudice. I must say that that is the view I take. The court has raised the matter. The defendant now wishes to see it agitated. The fact that the defendant was not previously of that disposition is not enough to prevent the point being agitated.

8 On the subject of prejudice, Mr Gleeson for the plaintiff points to the need for him to introduce evidence of practices and interpretations of the Chief Commissioner at the relevant time. He has an affidavit of Mr Brogan which he believes deals with that to a large extent, but he did not read it earlier because there was no need to do so. He would want to read that affidavit if the matter progressed and he may also wish to have discovery and to administer interrogatories to obtain further factual material about the Chief Commissioner's practices and interpretations at the relevant time. That, it seems is to me, is something that can and should be accommodated in an appropriate way. Indeed, to the extent that either party would see a need to put on further evidence to deal with that factual issue (and I note that the defendant has foreshadowed a relevance objection to the affidavit of Mr Brogan) then the opportunity to do so can and should be given. So too should there be an opportunity for such discovery and interrogatories as are needed.

9 I should record that Mr Foster has indicated that grounds of possible objection to Mr Brogan's affidavit based on s.81 of the Taxation Administration Act will not be pursued by the defendant.

10 The proper course here is to allow what I have called the “nominal consideration” point to be fully agitated. To the extent that it involves a question of statutory interpretation or a question of law, then the parties can make their respective submissions. Indeed, written submissions have already been forwarded to my Associate. To the extent that there needs to be further evidence to cater for anything arising under s.9 of the Taxation Administration Act, if it applies, each party should have an opportunity to adduce evidence. At this stage, Mr Gleeson has indicated that he will wish to read Mr Brogan's affidavit and Mr Foster has foreshadowed a relevance objection as I have said, which can be dealt with in due course. I am prepared to make whatever directions are sensible to ensure that neither party suffers prejudice by way of inability to adduce further evidence going to this matter.

11 I should also record my understanding that apart from the question of further evidence to which I have referred, the plaintiff did not point to anything that had happened in the course of the hearing to date as a source of prejudice should the “nominal consideration” point be argued.

12 I decline to make the declaration in paragraph 2 of the plaintiff's notice of motion filed in court today, that is, the declaration that the issues to be determined be determined confined in the way I have described. I will receive submissions on what I call the “nominal consideration” point (or “additional issue”), that is, the question raised in paragraphs 1 and 2 of my Associate's letter of 16 April 2002. New evidence will be received as necessary.

[Counsel addressed on the question of directions]

13 I make the following directions:

1. The court notes that the affidavit of Mr Brogan is read by the plaintiff and constitutes the further evidence on which the plaintiff currently intends to rely in relation to the additional issue.
2. The defendant is to file and serve any affidavits on the additional issue within 14 days.
3. By the same date, the defendant is to provide discovery of all documents bearing upon the issue of legal interpretations and assessment practices generally applied by the Chief Commissioner in relation to the matter whether the transfers in question would satisfy the requirements of s.73(2A) insofar as that section uses the expression "nominal consideration", being interpretations and practices in force in 1995 (whether such documents were created in 1995 or at some other time), including but not limited to technical training manuals and technical procedure instructions.
4. The plaintiff may, if so advised, within 7 days after receiving the defendant's affidavit or affidavits and discovery, administer one or more interrogatories not exceeding 30 in number relevant to the additional issue, with liberty to the defendant to apply on 48 hours notice.
5. Such interrogatories, if any, are to be answered within 7 days thereafter.
6. The plaintiff is to file any evidence in reply on the additional issue within seven days after completion of the above steps.
7. Each party is to notify the other of, and provide copies of, documents to be relied upon at the further hearing.
8. The parties are at liberty to approach my Associate for a further date to conclude the hearing.

14 There remains the issue of the fine for late payment of duty which, regardless altogether of the substantive outcome, the defendant now concedes should not have been imposed and should be refunded with interest. I deal with that as follows:

1. Pursuant to Pt 31 r 2, order that the question in paragraph 4 of the summons filed on 29 March 2001 be determined separately from any other question in the proceedings, insofar as the question in paragraph 4 raises the issue of refund of a fine imposed by the defendant.
2. By consent, order that the defendant refund the amount of $630,367 paid by the plaintiff by way of fine pursuant to s.104 of the Taxation Administration Act 1996, together with interest pursuant to s.105 of the Taxation Administration Act 1996.

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Last Modified: 02/12/2003