Karreman v Commissioner of Taxation

[2006] HCATrans 201

[2006] HCATrans 201

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S45 of 2006

B e t w e e n -

DIRK KARREMAN

Plaintiff

and

COMMISSIONER OF TAXATION

Defendant

Summonses

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 26 APRIL 2006, AT 9.34 AM

Copyright in the High Court of Australia

MR D.H. BLOOM, QC:   May it please your Honour, I appear with MR A. ROBERTSON, SC and MR T.M. THAWLEY for the plaintiff.  (instructed by Mallesons Stephen Jaques)

MR G.T. PAGONE, QC:   Your Honour, I appear with MS K.L. WALKER for the defendant.  (instructed by Australian Government Solicitor)

HIS HONOUR:   Yes, Mr Bloom.

MR BLOOM:   Your Honour, there is before the Court a summons for directions filed on behalf of the plaintiff.

HIS HONOUR:   Yes, I have that – filed on 13 April?

MR BLOOM:   Yes, your Honour.  The first order sought is in fact an order that leave be granted to file and serve the summons out of time.

HIS HONOUR:   Wait a minute.  That is not right.  13 April is Mr Pagone’s counter assault on you.

MR BLOOM:   21 March is the one I rely upon, your Honour.

HIS HONOUR:   Thank you.  So there are two summons then?

MR BLOOM:   Yes.

HIS HONOUR:   There is the plaintiff’s summons filed 21 March and the defendant’s summons filed 13 April.

MR BLOOM:   Yes, your Honour.  In our summons the first order sought is that leave be granted to allow the plaintiff to file and serve the summons out of time, and we move for that order upon an affidavit of Mr Clough sworn 21 March.  He there explains that the delay in filing the summons for directions was due to awaiting responses to correspondence with the Australian Government Solicitor.

HIS HONOUR:   Was there any objection to that short step?

MR PAGONE:   None, your Honour.

HIS HONOUR:   You have that leave, Mr Bloom.  Just explain to me what is the rationale of this action?

MR BLOOM:   The rationale?

HIS HONOUR:   Yes.  There are pending proceedings under Part IVC, are there not, of the Administration Act in the Federal Court?

MR BLOOM:   Yes, your Honour.  We are seeking orders that are not obtainable in those proceedings as we would see it, your Honour.  One of those is an order that the assessment is not a valid assessment.

HIS HONOUR:   So what?  What relief can you end up with in this action that you cannot end up with by pursuing your Federal Court case?

MR BLOOM:   An order that the assessment is invalid.  That is the first one.  The second is ‑ ‑ ‑

HIS HONOUR:   I know that, but in practical terms of money in someone’s pocket, what does it all mean?

MR BLOOM:   The relief sought in the form of the injunction, if your Honour pleases, restraining the Commissioner from seeking to recover pending determination of this action.  That again is not available in Part IVC proceedings because of 14ZZR of the Administration Act which provides effectively that tax can be recovered, notwithstanding that proceedings are pending pursuant to Part IVC.  That is the essential relief.  This is a matter where on the facts as alleged, this was a company that had very little by way of profits.  The Commissioner, we say, knowing that that was the case, nonetheless purported to form an opinion that there was $57 million worth of profits there, distributed then as a dividend to the plaintiff, and assessed the plaintiff accordingly and seeks to recover that amount.  That in a nutshell is the answer to your Honour’s question.  The reason that we began in this Court ‑ ‑ ‑

HIS HONOUR:   In any event, why should this not be remitted to the Federal Court?

MR BLOOM:   Why should it?

HIS HONOUR:   Yes, including the strike-out application.

MR BLOOM:   It should, your Honour.

HIS HONOUR:   Very well.

MR BLOOM:   If your Honour pleases.

HIS HONOUR:   What do you say, Mr Pagone, on your summons?  I know you want to entice me to embark on these waters of the interrelation between the Administration Act and this jurisdiction that is invoked here.

MR PAGONE:   Your Honour, I think I only want to put it as simply as this, that if the matter is so plain that it must fail, then it should not be remitted to the Federal Court because the Federal Court should not have remitted to it matters that are plainly wrong.  But in order to prove to your Honour that it is plainly wrong one has to embark upon detailed analysis, and I can understand that your Honour might want to do that.

HIS HONOUR:   What I do have in mind is that it is invidious in a sense for me to get launched on the matter because the Federal Court is already seized, is it not, of what one might call a routine proceeding?

MR PAGONE:   Yes, your Honour, it is and our learned friend ‑ ‑ ‑

HIS HONOUR:   The same judge can deal with this in his or her docket, I would have thought.

MR PAGONE:   Your Honour, I cannot say that the judge could not deal with it in the same docket.  Indeed, it would take whatever time it would take before your Honour to dispose of it.  I cannot put it any more highly than that.  But if the matter is so hopeless ‑ ‑ ‑

HIS HONOUR:   I am not for a moment disparaging what your submissions say but I just do not want to use the Court’s time in that fashion.

MR PAGONE:   In a sense that is our point, that the parties ought not to be bringing applications to the Court which are plainly hopeless in the process then of having it remitted to the Federal Court.  Our learned friends in their statement of claim say they want to challenge the opinions under 177E and they say that they cannot challenge that opinion in Part IVC proceedings.  We have written to them saying that is just not so.  They have then sent us back a letter saying there is an ambiguity.  I do not know how to deal with the ambiguity.  I am happy for my learned friend to utter whatever words he likes about the provision and me to adopt them because, unlike whatever happened in Syngenta and unlike whatever happened in Sleight’s Case, the opinion in 177E is different. 

My learned friend’s client may ultimately not be happy with that submission by our learned friends because it may make their case harder but, be that as it may, that is what they want to run and we say yes, they are perfectly happy to run it.  Your Honour, it is as simple as that.  I cannot put it any more highly than that.  The reason why it ought not to be referred to

the Federal Court is because it is going to waste a court’s time and that the processes ought not to be commenced in this Court.

HIS HONOUR:   Given the steam that this plaintiff seems to have built up, they are unlikely to stop with any decision I have made on the point too, which is another factor.

MR PAGONE:   I cannot speak for what our learned friends are going to do hereafter.

HIS HONOUR:   I know you cannot.

MR PAGONE:   But, your Honour, that might be thought to be reason to stop them rather than to encourage them.  As your Honour pleases.

HIS HONOUR:   Mr Bloom, anything you want to say?

MR BLOOM:   Only this, your Honour, that my learned friend concedes that it will take ‑ ‑ ‑

HIS HONOUR:   What is the difference about this opinion point?

MR BLOOM:   The difference is this, that in Sleight’s Case a Full Court of the Federal Court ‑ ‑ ‑

HIS HONOUR:   What is the citation to get it on the transcript?

MR BLOOM:   Sleight’s Case is I think 136 FCR 211. The relevant passage is in the judgment of Justice Hill at 237 and 238. The court there held that the result of Richard Walter was that the discretion to make a determination under section 177F was not reviewable in Part IVC proceedings.  In Syngenta and American Express 61 ATR 186 the Commissioner argued, in the context of the transfer pricing provisions that were dependent upon a satisfaction, then an opinion, then a determination, that Sleight’s Case applied to all of those things, the opinion, the satisfaction and the determination.  So really the position is at the moment that in the Federal Court it is argued on behalf of the Commissioner, and to an extent successfully, that opinion, satisfactions and determinations cannot be reviewed on Avon Downs grounds even in Part IVC proceedings.

HIS HONOUR:   I see.  That point, if I can put it that way, the translation of the Avon Downs reasoning, or the non-translation of the Avon Downs reasoning here, is best first sorted out in the Full Court of the Federal Court, I would have thought.

MR BLOOM:   Yes, your Honour.

HIS HONOUR:   All right, I should transfer it to the Federal Court of Australia, New South Wales District Registry.

MR BLOOM:   There are further orders sought in the summons for directions, if your Honour pleases.

HIS HONOUR:   Yes.  That would include order 2.  If you want to go and get a stay, you can try your luck in the Federal Court.

MR BLOOM:   Certainly, your Honour.

HIS HONOUR:   What I will be transferring is the action, including the balance of both summonses.

MR BLOOM:   That is order 3 that we were seeking in addition ‑ ‑ ‑

HIS HONOUR:   Say that again, Mr Bloom.

MR BLOOM:   Order 3 in the summons.

HIS HONOUR:   In your summons?

MR BLOOM:   In our summons for directions, yes, your Honour.  Order 3 is that:

The summons to proceed in the Federal Court as if the steps taken in this Court have been taken in the Federal Court.

HIS HONOUR:   Yes, that is right.  I will order upon the plaintiff’s summons filed 21 March 2006:

1.The proceedings S45 of 2006, including the balance of the summons filed 21 March and also the defendant’s summons filed on 13 April, be remitted to the Federal Court of Australia, New South Wales District Registry, pursuant to section 44 of the Judiciary Act 1903 (Cth).

2.The proceedings as described in order 1 continue in the Federal Court as if the steps taken in this Court have been taken in the Federal Court.

3.The Registrar of this Court to forward to the proper officer of the Federal Court copies of all documents filed in this Court.

4.Costs of the steps taken in this Court be reserved to the Federal Court. 

So, in other words, as they dispose of the summons, and as they dispose of the action, likewise.

5.Costs of the proceedings in this Court from the date of commencement to the date of remittal are to be according to the scale applicable to proceedings in this Court and thereafter according to the scale applicable in the Federal Court and in the discretion of the Federal Court.

I think that is all that is necessary.

MR BLOOM:   Thank you, your Honour.

HIS HONOUR:   Thank you, gentlemen.

AT 9.49 AM THE MATTER WAS CONCLUDED