McKewins Hairdressing v Deputy Com of Taxation

[2000] HCATrans 183

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S123 of 1999

B e t w e e n -

McKEWINS HAIRDRESSING AND BEAUTY SUPPLIES PTY LTD

Applicant

and

DEPUTY COMMISSIONER OF TAXATION

Respondent

Notices of motion by respondent

GUMMOW J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON TUESDAY, 2 MAY 2000, AT 9.31 AM

Copyright in the High Court of Australia

MR R.G. ORR, QC:   If the Court pleases, I appear with my learned friend, DR G.L. EBBECK, for the Deputy Commissioner of Taxation.  (instructed by the Australian Government Solicitor)

MR D.C. FITZGIBBON:   I appear in this matter for Mr Wayne Levick, who is the second applicant.  (instructed by Wayne Levick & Associates)

HIS HONOUR:   The second applicant on what?  On the application for removal?

MR FITZGIBBON:   Yes.  No, I state that wrongly, your Honour.  Your Honour, the position is that that has been taken out and that there is an application to seek costs against Mr Levick.

HIS HONOUR:   Yes.  So you appear in response to that motion by Mr Orr's client seeking to join your client and make him responsible for the costs consequent upon the notice of discontinuance, is that right?

MR FITZGIBBON:   Yes, and there is an application, of course, as well to join Mr and Mrs McKewin.  I would like to be heard on that.

HIS HONOUR:   Do you appear for them?

MR FITZGIBBON:   No.

HIS HONOUR:   Do you press that?

MR ORR:   Yes, your Honour.  We have a notice of motion for costs in the alternative against Mr McKewin as director of the company.  Your Honour, perhaps I might just set out ‑ ‑ ‑

HIS HONOUR:   No, let me find the relevant documents first.  Just sit down for a minute, gentlemen.  I see.  So your motion, Mr Orr, is your motion dated 2 February and filed on that day, seeking to join Mr Levick as indicated, for whom Mr Fitzgibbon appears, and also seeking to join Mr McKewin and, in each case, seeking an order for costs against them, is that right?

MR ORR:   That is right.

HIS HONOUR:   You, Mr Fitzgibbon, appear for Mr Levick but not for Mr McKewin?

MR FITZGIBBON:   Not for Mr McKewin.

HIS HONOUR:   All right.  Can you prove service on Mr McKewin?

MR ORR:   Yes, your Honour.  Your Honour, I have an affidavit of Roger Quinn, dated 2 May 2000.

HIS HONOUR:   Has that been filed?

MR ORR:   No.  It has just been sworn, your Honour.

HIS HONOUR:   There are two copies here.  Mr Fitzgibbon had better have one.

MR FITZGIBBON:   I have just had a copy served on me, thank you, your Honour.

HIS HONOUR:   Thank you.  Have you or your solicitor had any conversations with Mr McKewin about this?

MR FITZGIBBON:   Yes, your Honour.  That is the difficulty I have.  If your Honour looks at the last appendaged document, K - and I have only just received this a matter of minutes ago - at quarter to 9 this morning there was a phone call, according to my solicitor's instructions, from Mr McKewin and, according to him, they had notice of this matter at 5 o'clock yesterday afternoon and hence I believe this fax that is attachment K.  Now, the difficulty is twofold, your Honour.  The first is that my solicitor has never taken his instructions from Mr McKewin and ‑ ‑ ‑

HIS HONOUR:   Has he taken them from other directors or ‑ ‑ ‑

MR FITZGIBBON:   He has in fact taken instructions from ITR in Melbourne and he refers to that in the affidavit that he filed yesterday.

HIS HONOUR:   What is the nature of this other concern, ITR?

MR FITZGIBBON:   The concern I would have at this stage ‑ ‑ ‑

HIS HONOUR:   What is it?  How is it involved in McKewins Hairdressing?

MR FITZGIBBON:   McKewins Hairdressing, Mr McKewin was the director of it.  Now, in effect, according to my solicitor, the phone call that was received at quarter to 9 this morning, and it is borne out, indeed, by that exhibit K:

We have today 1st May received your notice that we were listed for hearing.....

We have at no time instructed Wayne Levick to -

appear and he has not ever at any time received instructions from McKewins.  So they are a party to it, as I see it.

HIS HONOUR:   Yes, I am trying to work out from whom he has been receiving instructions.

MR FITZGIBBON:   Well, it is borne out, your Honour, in the affidavit filed yesterday on 1 May at paragraph 11.

HIS HONOUR:   I see.  Paragraph 11 reads:

To the best of my knowledge McKewins Hairdressing and Beauty Supplies Pty Limited did not approach me because of any material that did appear or subsequent to my receiving instructions in that matter -

and I think the reference is to the website.

McKewins Hairdressing and Beauty Supplies Pty Limited was referred to me by the Institute of Taxation Research.

MR FITZGIBBON:   Yes, that is a Melbourne group.

HIS HONOUR:   Yes, I see.

MR FITZGIBBON:   That is the difficulty that I believe I was right to draw to the Court's attention.

HIS HONOUR:   Yes, thank you for that, Mr Fitzgibbon.  What do you say about that, Mr Orr, namely as to proceeding with your motion in so far as it is brought against Mr McKewin personally?

MR ORR:   Your Honour, we say that these are proceedings brought in the name of the company.

HIS HONOUR:   Yes, I know that, but he says he does not know anything about it.

MR ORR:   That is not true, your Honour.  If your Honour just goes to the documents ‑ ‑ ‑

HIS HONOUR:   And in any event he says he has only found out things very recently.

MR ORR:   With respect, your Honour, it is just clearly not true.  First of all there is an affidavit signed by Mr McKewin which is dated 28 July 1999
which ‑ ‑ ‑

HIS HONOUR:   Just a minute.  Yes.

MR ORR:   This was the affidavit which went with the notice of motion seeking removal of these matters from the Supreme Court of New South Wales where this company was sought to be being wound up by the Deputy Commissioner of Taxation into this Court.  That is the proceedings with which we are concerned today.  In that matter, the supporting affidavit is indeed signed by Keith McKewin, saying that he is a director of the company, he attests to various facts and he says there is a genuine dispute and he sets out the basis of that dispute.  In addition, there is a notice at the same time issued under section 78B of the Judiciary Act, a notice of a constitutional matter, which is not itself dated but seems to have been issued also in July 1999.  That is also - the notice commences, "I, KEITH McKEWIN, of" and address, had moved the applicant ‑ ‑ ‑

HIS HONOUR:   It is not signed by him, though.

MR ORR:   That is true, your Honour, but it is signed by Mr Levick though, your Honour.

HIS HONOUR:   Yes.

MR ORR:   So, in our submission, these proceedings - that is the removal proceedings - were clearly commenced by Mr McKewin on behalf of the company, instructing Mr Levick, and that in so far as our application for costs is concerned, that application was served on Mr McKewin, the affidavit attests, on several occasions and at several addresses.

HIS HONOUR:   Yes.

MR ORR:   Perhaps I just foreshadow, your Honour, that if this is correct, that is that Mr Levick has not in fact been acting for the company or a director of the company, then it strengthens our application against him personally for costs.

HIS HONOUR:   I am just looking for the notice of discontinuance at the moment.

MR ORR:   The notice of discontinuance is also in somewhat strange form.  It is dated 1 May 2000.  It says, "The Applicant Wayne Levick discontinues".  As we understand it, Mr Levick is the solicitor for either the

company itself in liquidation or the director, Mr McKewin, and is not a party to these proceedings.

HIS HONOUR:   Yes. Now, it seems to be clear enough that on 19 September 1999 an order was made in the Supreme Court of New South Wales that McKewins Hairdressing and Beauty Supplies Pty Limited be wound up and this was on the application of the Deputy Commissioner. The Court has been furnished with a certificate by the Deputy Registrar stating that Mr W. Pantzer, the liquidator, has notified her that whilst he is aware of the listing this morning, he does not intend to appear. So the position then would be that section 471A of the Corporations Law as it applies as a law of New South Wales would bar the exercise by any person of these activities on behalf of the company without the approval of the liquidator or the approval of the Supreme Court of New South Wales.  That has not been given.  Therefore, the application for removal into this Court under section 40 of the Judiciary Act, on the footing that there was a constitutional question pending in the Supreme Court of New South Wales in the winding up, that application for removal under section 40 of the Judiciary Act to extract part of the cause said to be pending in the Supreme Court, brought by motion filed 29 July 1999 in the name of McKewins Hairdressing and Beauty Supplied Pty Limited and signed by Mr Levick, said to be on behalf of that party, would be incompetent and liable to be struck out.  It is in that context that one approaches the motion that is now before the Court brought by the Deputy Commissioner, who is named as the respondent to the motion, respecting costs - and I refer again to the notice of motion filed 2 February this year.

So you should perhaps proceed with your application, I think, Mr Orr.  Now, is there anything you want to say in contradiction of what I have just said is my provisional position?

MR FITZGIBBON:   Yes, your Honour, there is one matter.  If your Honour looks at the affidavit of my client's solicitor, it was as a result of an approach by the liquidator that, in fact, an application was made, and belatedly certainly yesterday ‑ ‑ ‑

HIS HONOUR:   Where does that appear?

MR FITZGIBBON:   That appears, your Honour, in the affidavit of Mr Levick dated 1 May.

HIS HONOUR:   Yes.  Paragraph?

MR FITZGIBBON:   It was - I am sorry, your Honour, I do wish to be precise on this.  Your Honour, there is a notice of motion also filed yesterday.

HIS HONOUR:   How can that be filed?  A notice of motion in what matter?

MR FITZGIBBON:   In this matter.

HIS HONOUR:   What matter?

MR FITZGIBBON:   In the matter by the ATO?

HIS HONOUR:   What, in an application for removal which, as I have just indicated to you, at the moment at any rate, seems liable to be struck out?

MR FITZGIBBON:   Yes.

HIS HONOUR:   There is an affidavit of Mr Levick sworn 1 May of two paragraphs, is that - I should make it clear, I am not embarking on the hearing of that notice of motion which I regard as improper.  But if you want to rely on the affidavit for the other purpose, do so.

MR FITZGIBBON:   Your Honour, my instructions are - and I have a letter to this effect from the liquidator - seeking from Mr Levick that he in fact withdraw the notice of motion.  Now, that is not before the Court formally, but it certainly is my instructions in the matter.

HIS HONOUR:   All I am saying to you is that section 471A means, amongst other things, that without the liquidator's written approval the removal application was something that was ineffective.

MR FITZGIBBON:   Can I, with respect, without losing my head on the matter, remind your Honour that your Honour took a different approach in the Mystic Crystal Case.  Your Honour would be very very clearly aware of that and I do have copies of that.

HIS HONOUR:   Yes. 

MR FITZGIBBON:   There is also ‑ ‑ ‑

HIS HONOUR:   That was a special leave application, was it not?

MR FITZGIBBON:   Yes, that was a special leave application and then ‑ ‑ ‑

HIS HONOUR:   This is a cause pending in the Supreme Court of New South Wales.  It is a different matter, is it not?  What we do is lift something out of the Supreme Court of New South Wales and it comes up here.  Special leave assumes that the State court or the Federal Court has finished its work.

MR FITZGIBBON:   That is right.  And in effect there must be something to lift, of course, and hence the reason for the request to my client's solicitor to do what he ‑ ‑ ‑

HIS HONOUR:   You have another problem, too, which is that - is there a cause pending after these liquidation orders have been made?  Was there not an appeal made?

MR FITZGIBBON:   The instructions were withdrawn from my solicitor in regard to anything further that occurred after the liquidator was appointed.  So I really cannot answer that.

HIS HONOUR:   All I am tring to ascertain is, amongst other things, was Mr Levick, on your case, in receit of instructions from the liquidator to launch the application for removal which has now been discontinued?  And if he says yes, and Mr Orr wants to cross-examine him, he shall have leave to do so.

MR FITZGIBBON:   No, it is quite the contrary, in fact.  The liquidator sought from Mr Levick that he, on the next occasion, withdraw the matter.  That is the letter which, of course, is not before the Court, but ‑ ‑ ‑

HIS HONOUR:   Against that background, and I will have to hear what Mr Orr says, but against that background prima facie the Deputy Commissioner is left without a corporate party from whom any costs could be recovered and, prima facie, why should not Mr Levick be joined and made liable for costs when he has launched a matter without instructions of the relevant corporate party through the liquidator?  I mean, stripped of constitutional embellishments, this is the sort of thing that happens in the companies list from time to time.

MR FITZGIBBON:   Yes, stripped of the constitutional right which may or may not - Guss v Johnstone of course is also in front of the Court.  I believe your Honour may have ‑ ‑ ‑

HIS HONOUR:   No, I did not sit on that.

MR FITZGIBBON:   All right, thank you.  But at least, subject to those arguments, the answer would be that he, according to my instructions, has not gone beyond what he was instructed to do.  So it is a matter, really, of ‑ ‑ ‑

HIS HONOUR:   Well, you say that, but if you want to assert that he filed the notice of motion for removal under section 40 on instructions, and with the consent of the liquidator, on behalf of McKewins Hairdressing who is named as the applicant, if you want to assert that to me in submissions, you will have to prove it.  You can prove it by putting your client in the box.

MR FITZGIBBON:   No, I cannot tell your Honour that he was acting on the instructions of the liquidator.  I cannot take that position.  It would be incorrect.

HIS HONOUR:   All right.  I will hear what Mr Orr says on his motion.  Yes, Mr Orr.

MR ORR:   Your Honour, we agree with the summary that your Honour made.  Perhaps I could just refer to the documents that we rely on which relate to costs.  As your Honour has mentioned, there is a notice of motion dated 2 February 2000 in which we seek costs.  In support of that there is an affidavit of Roger Quinn, dated 20 December 1999 which has been filed and served.

HIS HONOUR:   Yes.

MR ORR:   That is an affidavit simply going to the fact that Mr Quinn put on notice both Mr Levick and the director that the Deputy Commissioner of Taxation would be pursuing costs.

HIS HONOUR:   Is that the first affidavit you read?

MR ORR:   Yes, your Honour.

HIS HONOUR:   What is the second one?

MR ORR:   The second one is an affidavit of Kah Gwan Khoo, dated 26 April this year.  That affidavit simply annexes some material which is on the website of Mr Levick.

HIS HONOUR:   Yes.

MR ORR:   I read that affidavit.  Your Honour, there is a third affidavit of Roger Quinn dated 27 April 2000.

HIS HONOUR:   A second affidavit?

MR ORR:   Yes, your Honour, second affidavit of Mr Quinn.  I read that affidavit.  That affidavit goes to the matters with regard to the substantive proceedings in this case, that is it provides evidence of the Supreme Court's order that the company be wound up on 19 September 1999.

HIS HONOUR:   And the appointment of Mr Pantzer.

MR ORR:   Yes, your Honour.  Then that a notice of motion to appeal was dismissed on 22 November 1999.

HIS HONOUR:   It has a letter from Mr Pantzer of 19 November protesting as to steps being taken without his consent.

MR ORR:   Yes, your Honour.

MR FITZGIBBON:   That was the letter, your Honour, I was in fact relying on.

HIS HONOUR:   Yes.

MR ORR:   Your Honour, I have already tendered the affidavit of Mr Quinn dated 2 May 2000 which goes to service of various matters on the director, Mr McKewin.  I handed that up this morning.

HIS HONOUR:   That can be filed in Court.  There is no personal service of Mr McKewin, is there?

MR ORR:   No, your Honour.

HIS HONOUR:   Anyhow, I read that affidavit.  What else?

MR ORR:   One more matter which is probably unnecessary, but I do have a letter from the liquidator to my instructing solicitor, Mr Quinn, just stating that he did never - at no time consented to these proceedings. 

HIS HONOUR:   Do you want to tender that?

MR ORR:   Yes, I tender that.

HIS HONOUR:   Show it to Mr Fitzgibbon.  This is a letter of 27 April from Mr Pantzer to Mr Roger Quinn of the Australian Government Solicitor.  That will be exhibit A on your motion.

EXHIBIT:               Exhibit A....  Letter from Mr Pantzer to Mr Quinn dated
  27 April

HIS HONOUR:   Yes, anything else?

MR ORR:   I will take your Honour to our summary of argument document which has also been filed, which deals with costs matters as well as substantive matters.  Perhaps before I do that also I should just mention that there is a further notice of motion filed by us with regard to the discontinuance which has been filed in these proceedings.  That is a notice of motion ‑ ‑ ‑

HIS HONOUR:   Well, you see ‑ ‑ ‑

MR ORR:   I know, your Honour, it is somewhat odd, but we were given some forewarning that a notice of discontinuance might be filed so, in order to ensure that the matter could wholly be heard today and not to waste the Court's time with another day, we filed our own notice of motion saying that any notice of discontinuance should be set aside in order to enable our costs notice of motion to be heard.

HIS HONOUR:   Yes, and that motion is ‑ ‑ ‑

MR ORR:   It was dated 27 April.

HIS HONOUR:   Yes, I have that.  I should deal with that motion as well, then, as your motion of 2 February.

MR ORR:   With that motion there is also an outline of submissions, your Honour, which have been filed and served.  Your Honour, that is the material that we rely on.

HIS HONOUR:   Is the outline of submissions - what date is it?  What date is it filed?

MR ORR:   It was filed on 27 April as well, your Honour.  That is the outline of submissions in relation to the notice of discontinuance issue.

HIS HONOUR:   Yes, I have it.

MR ORR:   Your Honour, that is the material.  Perhaps I might begin with the discontinuance issue and our notice of motion on that subject.  Our first argument is that this notice of motion is unnecessary in that the notice of discontinuance does not appear to be in the appropriate form.  Order 27 of the High Court Rules provides that, “A party to an action….may, by notice in writing, wholly discontinue…..his action".  And as I ‑ ‑ ‑

HIS HONOUR:   “Action or proceeding”, it says.

MR ORR:   Yes, “action or proceeding…..withdraw part or parts of his claim" ‑ ‑ ‑

HIS HONOUR:   Cause, it includes a cause.

MR ORR:   Yes, your Honour.  And as I drew your Honour's attention earlier, the notice of discontinuance is in the name of Mr Levick who is the solicitor for, whoever it is - on the face of the documents, the company or the director or ITR, and therefore it is not a notice of discontinuance by a party.

HIS HONOUR:   Yes, I see.  Part of the problem, in a way, is that - no, that is right.  The actual section 40 application is the document of 28 July 1999, is it not, filed on that day?

MR ORR:   Yes, your Honour.

HIS HONOUR:   Yes, I see the point.

MR ORR:   That is the notice of motion seeking removal which has at the heading McKewins Hairdressing.

HIS HONOUR:   Yes.  Anyhow, Mr Levick, as a solicitor, would have no relevant interest to apply himself personally.

MR ORR:   No, your Honour.  So that is our principal submission, our first submission on that.  If that submission fails, then we say that the Court is able to set aside the notice of discontinuance in order to enable our notice of motion in relation to costs to be heard.  The argument in that respect is set out in our summary of the submission on this issue.

HIS HONOUR:   Yes, well it is pretty obvious.

MR ORR:   Yes.  We rely on the decision of the House of Lords in Castanho.

HIS HONOUR:   There will be no need to worry about the House of Lords.

MR ORR:   If the notice of discontinuance was to have effect, it would deprive us of any significant costs order, so those submissions are set out there.

HIS HONOUR:   Yes.

MR ORR:   As to the submissions on costs itself, your Honour, they are summarised in Part 3 of our substantive outline of arguments, beginning at page 8.  That argument is that the High Court does have power to award costs against third parties and that includes costs against solicitors.  We say that the principle is that where a solicitor unreasonably institutes or maintains proceedings on behalf of a client which has no prospects of success, this can be a serious dereliction of duty and abuse of process warranting an order for costs against the solicitor.  In addition, in this case, it has become clear that there were no instructions given by the company under the management of its liquidator, indeed it appears from what my friend said, there were no instructions from the directors of the company either.

HIS HONOUR:   That is right.  Which is a serious matter.

MR ORR:   Indeed, your Honour, and I will come to that.  So they are the two points:  the fact that the proceedings were commenced without, it appears, any instructions from any relevant person but, in addition to that, the proceedings were maintained and commenced unreasonably without any prospects of success.

There are a number of cases which are set out in our submissions which we say support that contention.  It might shorten proceedings if I just took your Honour to the decision in White Industries ‑ ‑ ‑

HIS HONOUR:   I do not need to be taken to all these cases, it is a practice matter.

MR ORR:    ‑ ‑ ‑where Justice Goldberg summarises all these matters and reaches the view, clearly, that ‑ ‑ ‑

HIS HONOUR:   There are judges sitting in corporations lists all over the country doing what I am doing this morning.

MR ORR:   Yes, your Honour.

HIS HONOUR:   Perhaps not precisely what I am doing.  I do not have to be taken to all these cases.

MR ORR:   Certainly, your Honour.

HIS HONOUR:   If a solicitor institutes a matter on behalf of a company which is in liquidation, with no instructions from the liquidator and, indeed, no instructions from the directors who are disputing the liquidation, that seems to lead obviously to some conclusions as to costs.

MR ORR:   Yes, your Honour.  In addition to those matters, we say that in this case the arguments put forward by the person seeking special leave have been instituted and maintained in the face of clear High Court and lower court authority rejecting these submissions.  I do not need to take your Honour to them, but I simply refer to the notice of motion – the notice of constitutional ‑ ‑ ‑

HIS HONOUR:   But would that really matter?

MR ORR:   No, it does not, your Honour, but it is an alternative argument on our part, that the arguments being put are without any merit whatsoever and that, therefore, the Deputy Commissioner should have a costs order against the solicitor.

HIS HONOUR:   It is not being put by a competent party.

MR ORR:   That is true, your Honour.  And, in addition, the arguments which are being put are without merit.  We refer in this ‑ ‑ ‑

HIS HONOUR:   I have read Justice Hill's judgment in Deputy Commissioner of Taxation v Levick of 1 December 1999 and, unless persuaded to the contrary, everything his Honour said on this constitutional question seems to me to be accurate.

MR ORR:   Yes, your Honour, and your Honour will note that ‑ ‑ ‑

HIS HONOUR:   Including what his Honour said about Sue v Hill.

MR ORR:   Yes.  Except the issue with regard to Sue v Hill is it is unclear how at all it is relevant to the arguments that are being put.

HIS HONOUR:   I agree.  That is what his Honour said.

MR ORR:   Yes, your Honour.  Your Honour will note that much of the notice of constitutional matter and the applicant's summary of arguments in these proceedings are identical to the ones which were dealt with by Justice Hill in the Levick matter.

HIS HONOUR:   Yes, I have taken that to be so, unless Mr Fitzgibbon persuades me that there is some lack of identity.

MR ORR:   I could take your Honour to them, if I needed to, but many of the paragraphs are identical.  In addition, many of these arguments were considered by Justice Hayne of the High Court in Joose and in Helljay and we have given the citations for those in our submissions.

HIS HONOUR:   Yes, that is in 159 ALR 260. I have read that also.

MR ORR:   Yes.  There is Helljay and there is Joose, which was an earlier case much to the same effect.  Although the arguments were phrased slightly differently, they were essentially the same argument, and McClure was an earlier decision of Justice Hayne, all dealing with generally the same area of territory.  We adopt those comments with regard to the fact that, in our view, the arguments ‑ ‑ ‑

HIS HONOUR:   The only point, Mr Orr, is it is not entirely satisfactory to express any views in a judgment on those questions when the matter comes up in this rather convoluted way on a motion to disallow a notice of discontinuance.

MR ORR:   Yes, your Honour, and then the order for costs.  But the order for costs is based on several grounds.  One of the grounds is that these arguments were just wholly untenable, that they had absolutely no prospects of success and therefore they fall within the ‑ ‑ ‑

HIS HONOUR:   Yes, I understand.  A real point, in a way, may be why this stance was still being pursued after Mr Justice Hill's judgment.

MR ORR:   Exactly.

HIS HONOUR:   Until some other court says something about it, disagrees with it, it is the judge made law of the country.

MR ORR:   Yes, your Honour.  And the earlier decisions - I mean Justice Hill's decision was after these proceedings were commenced so, in a sense, there is an issue there, but there were earlier decisions of Joose and Helljay and the Helljay matter, Mr Levick acted as solicitor for the party in that case, as he did in the Levick matter, of course.  So, in our submission, it is relevant that the solicitors knew about these arguments being wholly untenable, self-defeating and a nonsense, in the words of Justice Hill, and that therefore their bringing of these proceedings was an unreasonable maintenance of an action.  As Justice Hill said in Levick, these are arguments - clearly arguments of the lawyers and not of the party in these proceedings, whoever that may be ‑ ‑ ‑

HIS HONOUR:   Your evidence seems to suggest they are promoted by electronic means.

MR ORR:   I take your Honour to that issue simply because Justice Hill mentions in Levick that it would be a further argument in favour for costs

against the solicitor if the solicitor were, himself, promoting these arguments.  Now, in the affidavit of Kah Gwan Khoo of 26 April 2000 ‑ ‑ ‑

HIS HONOUR:   Yes, you took me to that.

MR ORR:    ‑ ‑ ‑you will see that that affidavit annexes material from Mr Levick's website.  Perhaps I could just briefly take your Honour to that.

MR FITZGIBBON:   Your Honour, I am not a party to sledging, but I do have this objection to that particular affidavit, namely that if they were going to quote the website, they should have quoted the whole of the website as contained in my client's affidavit filed with the motion yesterday.

HIS HONOUR:   I should ask you, do you have any other objection to these affidavits that have been read?

MR FITZGIBBON:   No, your Honour, thank you.

HIS HONOUR:   Which is the version from which you would not dissent, Mr Fitzgibbon?

MR FITZGIBBON:   I am sorry, your Honour, it is dated 1 May.  It is an affidavit of three pages and it includes all of my client's web page on the matter.

HIS HONOUR:   Yes.  It is an annexure, is it?

MR FITZGIBBON:   Yes.

HIS HONOUR:   It is annexure A, in fact.

MR FITZGIBBON:   Yes.

HIS HONOUR:   And it goes for quite a few pages, does it?

MR FITZGIBBON:   Yes.  There is a total of 83 pages, your Honour.

HIS HONOUR:   I see. 

MR FITZGIBBON:   In other words, if my friend is going to quote that, at least he might quote the whole.

HIS HONOUR:   Yes.  Well, there is no reason why Mr Orr cannot read paragraph 12 of Mr Levick's affidavit in his case, and put in all this material if he wishes to do so.

MR FITZGIBBON:   Yes, I wish to tender it, thank you.

HIS HONOUR:   No, no, the question is Mr Orr wants to tender it as an admission against you.  Now, do you want to do that.

MR ORR:   I was not going to, your Honour.

HIS HONOUR:   Whatever you want.  Otherwise ‑ ‑ ‑

MR ORR:   No, I will.

HIS HONOUR:   Otherwise Mr Fitzgibbon has a point about incomplete disclosure in your affidavit of what is on the website.

MR ORR:   We would not regard it as incomplete, your Honour, but to save argument on the point, I will read ‑ ‑ ‑

HIS HONOUR:   Paragraph 12 of Mr Levick's affidavit of 1 May?

MR ORR:   Yes, your Honour.

HIS HONOUR:   And the pages that follow as are described as - 84 pages in all comprising annexure A.  They certainly seem to disclose promotion of these arguments.

MR ORR:   Yes, your Honour.

HIS HONOUR:   Yes, anything else?

MR ORR:   I just note, not only did they seem to disclose promotion of the arguments but they also, in the document headed “Legal Realities - An Introduction to the Institute of Taxation Research” suggest people can avoid payment of tax.  They include statements such as:

Having spent years investigating the flaws in the political legal systems the I.T.R. has developed methods of using elements of the existing de facto legal system against the ATO by using the overriding authority of the superior courts to paralyse the bureaucratic maneuvers of taxation officials.

And it goes on to say:

In any case, while the current taxation system remains in place payment of income tax, company tax or any other Commonwealth or state imposed tax can be made optional by the application of the correct legal procedures.

So, in our submission, those references, in proceedings such as these proceedings, your Honour, which are being brought to assist in some way, or to try and prevent in some way companies having to meet their tax obligations.

HIS HONOUR:   Yes.

MR ORR:   I also refer, though I do not need to take your Honour, to the affidavit of Roger Quinn of 7 December 1999, where the solicitor for the Deputy Commissioner advised and put on notice both Mr Levick and the director that costs on an indemnity basis would be sought against them.  I also note, your Honour, and agree – and our submissions deal with this – that this was a matter at any rate wholly inappropriate for removal if removal could have taken place.

HIS HONOUR:   There is no reason why the Supreme Court cannot deal with these arguments.  It has the adequate federal jurisdiction to do it.

MR ORR:   Exactly, yes, your Honour, it did, and we see no basis upon which removal could take place.

HIS HONOUR:   Any solicitor who thinks only this Court could decide constitutional questions is seriously deficient in his knowledge.

MR ORR:   Yes, your Honour.  I have made the point about the costs of the liquidator – made the point about the consent of the liquidator.  The liquidator clearly has not consented to these proceedings.

HIS HONOUR:   It is not suggested he has.

MR ORR:   Yes, your Honour.  If the ordinary order for costs were made on a notice of discontinuance, this would leave, on the documents as they stand, your Honour, the Deputy Commissioner to seek his costs against the company which is in liquidation.  The Commissioner is already a creditor of that company and, with respect, in these circumstances, we submit it is wholly inappropriate ‑ ‑ ‑

HIS HONOUR:   I do not see how you could seek any order against the company.  It has not done anything.  That is your problem.

MR ORR:   Exactly, your Honour.  As the order would operate, it would operate as an order against the party ‑ ‑ ‑

HIS HONOUR:   How could you be a creditor of the company in respect of your costs incurred here.

MR ORR:   On the face of the documents, that is who brought the proceedings.

HIS HONOUR:   They did not, though.  We know the contrary.

MR ORR:   Yes, your Honour.  That simply highlights the problem which the Deputy Commissioner has, either an insolvent company or it is unclear who should pay these costs.  Given the matters which I have mentioned, that is the proceedings were commenced without authority, they were wholly inappropriate for removal and the arguments put in the removal application were untenable, self-defeating and, indeed, a nonsense.  Based on clear existing authority of this Court and other courts, we submit that the costs should be paid by Mr Levick on an indemnity basis.  In the alternative, we seek costs on a party and party basis against Mr Levick; in the alternative we seek costs against the director, Mr McKewin, on an indemnity basis; in the alternative, against Mr McKewin on a party and party basis. 

HIS HONOUR:   Yes.  The trouble with Mr McKewin is you have not served him personally.

MR ORR:   Yes, your Honour, we admit that, but we have served him at three different addresses on several occasions.  We have served him at the current principal place of business of the company, we have served him at his private address as provided in the companies search, and if I could just take your Honour ‑ ‑ ‑

HIS HONOUR:   I understand all that, but the fact is you have not served him personally.

MR ORR:   That is true, your Honour.

HIS HONOUR:   And it may be that his involvement in all of this is really someone who is hooked in by these materials that are appearing on this website.

MR ORR:   Yes, your Honour, or other websites.  Yes, your Honour, that may be.  My point is simply he swore the affidavit which commenced the proceedings.  He put his name to the section 78B notice.  He has been served with the documents with regard to costs on several occasions at three addresses.

HIS HONOUR:   Yes, that is true.  Thank you.  Yes, Mr Fitzgibbon.

MR FITZGIBBON:   Yes, thank you, your Honour.  The course of what occurred, your Honour, as I understand it, was this, that there was a telephone call between my solicitor and ‑ ‑ ‑

HIS HONOUR:   You cannot give evidence from the Bar table.

MR FITZGIBBON:   All right.

HIS HONOUR:   If you want to get some oral evidence, do so.

MR FITZGIBBON:   Thank you.  Your Honour, might I seek leave – I accept it is somewhat unusual, but in the circumstances of this case, I would seek to call Mr Levick.

HIS HONOUR:   Yes, to prove what?

MR FITZGIBBON:   Certainly to prove the affidavit that was filed yesterday and the parts of it as to how he became ensconced with instructions, if I can put it that way.

HIS HONOUR:   Where does the affidavit deal with that?

MR FITZGIBBON:   Only the matter, clause 11, which your Honour has already read.  I think also, your Honour, to the extent ‑ ‑ ‑

HIS HONOUR:   At the moment there is no objection to paragraph 11.

MR FITZGIBBON:   No.  To the extent that there needs to be clarification of the course of events that occurred, that led to even yesterday a very belated notice of discontinuance being filed.

HIS HONOUR:   You read Mr Levick’s affidavit of 1 May?

MR FITZGIBBON:   I do, thank you, your Honour.

HIS HONOUR:   What other affidavits?

MR FITZGIBBON:   As your Honour has pointed out, the matter of the Hughes decision which is pending in the Court.

HIS HONOUR:   Yes.

MR FITZGIBBON:   To the extent that it affects the submission by Mr Orr as to the validity or otherwise of the issues raised, it goes in part to that.

HIS HONOUR:   I do not think Hughes has anything to do with this case.

MR FITZGIBBON:   No, except that – no, I am aware, and I have read all the transcripts with great care, Mr Richter’s submissions to the Court, but to the issue – to that sole issue raised in there as to the head of power for States to pass laws.  It is that issue.

HIS HONOUR:   What issue?  This is a New South Wales incorporated company, is it not?

MR FITZGIBBON:   That is correct.

HIS HONOUR:   It is wound up by the Supreme Court of New South Wales under New South Wales law on the application of a creditor.

MR FITZGIBBON:   Yes, and the argument is that in relation to the States corporations power ‑ ‑ ‑

HIS HONOUR:   They do not have a States corporation power. They just have a power to make law for the peace, order and good government of New South Wales, subject to what is extracted from them by the Constitution.

MR FITZGIBBON:   Yes, that is true.  But one of the issues raised in the notice of appeal was the extent of that power for the taxation authorities to use this power, first of all in winding up, and then in the appointment of a liquidator or whatsoever.

HIS HONOUR:   I do not understand that.

MR FITZGIBBON:   Now, that is an issue that has never been raised in any of these other matters.

HIS HONOUR:   You will have to find another vehicle to do that, I think, Mr Fitzgibbon.

MR FITZGIBBON:   I hear what your Honour says, but I am bound to point that out, that that was ‑ ‑ ‑

HIS HONOUR:   I do not understand what the point is.

MR FITZGIBBON:   Well, the point is ‑ ‑ ‑

HIS HONOUR:   Are you saying that the Commissioner of Taxation cannot be authorised by a Commonwealth law to collect a debt in tax?

MR FITZGIBBON:   No, it is the use of the ‑ ‑ ‑

HIS HONOUR:   By coming in as an applicant in the Supreme Court?

MR FITZGIBBON:   No.  Your Honour, may I take you back just a little bit in history and your Honour was a part of the majority in the Wakim McNally ex parte decision.

HIS HONOUR:   It has just got nothing to do with this case.

MR FITZGIBBON:   It has, your Honour, to this extent.

HIS HONOUR:   Well, you tell me how.

MR FITZGIBBON:   All right.  What happened was this:  when the States and Commonwealth got together in 87/88 part of that power was the power expressly put in the Corporations Law to make a demand for taxation.  Your Honour, I do not have a ‑ ‑ ‑

HIS HONOUR:   Obviously, it is a debt owed to the Commonwealth.  The Tax Act says so.

MR FITZGIBBON:   That is right, yes, I have no doubt on that.  But then what occurred, your Honour, was two things.  One was the decision in Wakim which clearly delineated what could be done and what could not be done.  Now, the ‑ ‑ ‑

HIS HONOUR:   What do you mean “what could be done and what could not be done”?

MR FITZGIBBON:   To this extent, your Honour.  The argument is that in fact the incorporation into the State Corporations Act of a power to make a demand for unpaid tax due to the Commonwealth was outside the head of power that a State in fact could legislate upon.  And also arising from that is the second argument that Mr Richter put – I doubt I have pronounced that correctly.

HIS HONOUR:   Richter.

MR FITZGIBBON:   Thank you.  In the Hughes Case, which goes further than the argument in Wakim – now it is on those two argument in broad principle ‑ ‑ ‑

HIS HONOUR:   What do you understand the second argument to be?

MR FITZGIBBON:   I have a whole transcript but ‑ ‑ ‑

HIS HONOUR:   I know that.

MR FITZGIBBON:   But, in effect, it would mean that, as far as the power to take an action like as has been taken here, it would depend on the validity of 459E and 459G of the Corporations Act.  That is an argument, despite what my friend says, has never been raised in any proceedings ‑ ‑ ‑

HIS HONOUR:   It will not be dealt with here, I can tell you that.

MR FITZGIBBON:   I accept that, but I simply raise that to the issue, because it is not correct to say that all these matters have been dealt with in the past.

HIS HONOUR:   I see.  So this is an argument not dealt with by Justice Hill, is that what you are saying?

MR FITZGIBBON:   No.  I appeared in front of Justice Hill and whatever differences we may have over English constitutional history, it is a matter I note your Honour ‑ ‑ ‑

HIS HONOUR:   It is Australian constitutional history that matters, really.

MR FITZGIBBON:   I would have to differ from your Honour at least ‑ ‑ ‑

HIS HONOUR:   You may, but you will not differ with any effect because ultimately you are invoking the jurisdiction of this Court which draws its authority from the Australian Constitution and nowhere else.

MR FITZGIBBON:   Undoubted, and I do not ‑ ‑ ‑

HIS HONOUR:   And if you do not agree with that, that is fine.  But you cannot invoke this Court’s jurisdiction.

MR FITZGIBBON:   I do not take issue on that.

HIS HONOUR:   You are either on board or you are not on board.

MR FITZGIBBON:   No, what I am arguing, of course, is the historical background ‑ ‑ ‑

HIS HONOUR:   If you want to go to the High Court of Justice in England and raise some of these questions, do so.  You will not get very far, though.  I know what they say.

MR FITZGIBBON:   No, no, well ultimately, so be it.  Your Honour, can I just then deal with ‑ ‑ ‑

HIS HONOUR:   But I am asking you what affidavits you read other than Mr Levick’s of 1 May.  Then I must ask Mr Orr whether he wishes to object to any paragraphs other than paragraph 12 which he, himself, has already tendered.  Now, are there any other affidavits, apart from Mr Levick of 1 May?

MR FITZGIBBON:   No, your Honour, thank you.

HIS HONOUR:   Now, is there anything you want to get from Mr Levick in oral evidence?

MR FITZGIBBON:   Yes, thank you, your Honour.

HIS HONOUR:   What will that go to?

MR FITZGIBBON:   That will go to the course of the history of this matter and also as to what instructions he received and from whom.

HIS HONOUR:   Yes, very well.  Do you object to that course, Mr Orr?

MR ORR:   No, your Honour.

HIS HONOUR:   Mr Levick, come in the box, if you will.

WAYNE RONALD LEVICK, sworn:

MR FITZGIBBON:   Would you state your full name for the record, Mr Levick?---Wayne Ronald Levick.

You have been in practice for just a little bit over 12 years?---Yes.

You are the principal in your own firm and you have in your affidavit dated yesterday set out the basis of your beliefs in this matter and that is your web page which is attached?---That is correct.

Can you assist the Court as to how you first became involved in the matter of McKewins Hairdressing?---I received a phone call from an organisation in Victoria that goes by the name of the Institute of Taxation Research.  If memory serves me correctly, I was advised to come to the Supreme Court in Sydney to meet Mr McKewin to witness him – to have him swear some documents, to witness that and to file those documents.  After my meeting with Mr McKewin I may have received telephone calls from both he and his wife.  Certainly, any of the telephone calls that I received from either Mr or Mrs McKewin did not tell me to desist with this action.  However, my instructions with regard to the action were coming from the Institute of Taxation Research.  After the company was liquidated, I then received a telephone call from Mrs McKewin advising that neither she or her husband wished this matter to continue.  Then I received no further communication from either of those parties until this morning when I spoke to Mrs McKewin.

HIS HONOUR:   Can you remember, Mr Levick, the approximate date of that call from Mrs McKewin?---No, not from ‑ ‑ ‑

Can you fix it by reference to some event?---It would have been some time after the liquidation order was made by the Registrar.

That was on 19 September 1999, the Registrar’s orders, I think.  It is some time after that, is it?---Yes.

MR FITZGIBBON:   Can you assist us at all – the Court has referred you to the date of that order.  In regard to the section 40 application, can you help us at all as to how that came about?---I received instructions to file a section 40 from the Institute of Taxation Research.

The preparation of the documents and other matters like that?---Apart from usually going over them and fixing any minor mistakes, usually of a typographical nature, the documents were forwarded to me pretty well complete from ITR.

Thank you.  Now, just as to – you confirm that in fact you did receive what is an – I have it as annexure D, your Honour – the Lawler Davidson letter.

HIS HONOUR:   Annexure D to?

MR FITZGIBBON:   To the motion by the Commissioner dated 27 April.

HIS HONOUR:   It will be annexed to an affidavit, will it not?  Is it annexed to Mr Khoo’s affidavit of 26 April, is that the one, filed on the 27th?

MR FITZGIBBON:   No, I am in error, your Honour.  It is annexed to the affidavit of Mr Roger Quinn dated 27 April.

HIS HONOUR:   Yes, and it is paragraph – annexure D.  Yes, I have it.

MR FITZGIBBON (to witness):   If I can just show you a copy of ‑ ‑ ‑

HIS HONOUR:   No, I will show my copy to the witness.

MR FITZGIBBON:   You see that letter, and on the second page Ms Pantzer is the Official Liquidator?---Yes.

You received that letter?---Yes.

Was that after the section 40 had obviously been filed in this Court?---In order to answer that I would have to have a look at the section 40 to know what date that it was filed.

HIS HONOUR:   The section 40 was filed on 29 July 1999?---Then I would have received this letter after 29 July.

MR FITZGIBBON:   Now, can you help us at all:  when did you become aware of the present application by the Crown?

HIS HONOUR:   It is by the Commissioner of Taxation.

MR FITZGIBBON:   Yes, I am sorry, by the Commissioner of Taxation?

HIS HONOUR:   And you had better make clear what you mean by “present application” too, because there are two motions.

MR FITZGIBBON:   Yes, there is two applications?---It was - - -

HIS HONOUR:   Just a minute, Mr Levick.  Mr Fitzgibbon will ask you another question first.

MR FITZGIBBON:   Yes, thank you.  Perhaps I will withdraw that question in that form, your Honour.  (To witness):  Were you served with a motion together with affidavits?---In this matter?

Yes?---Yes, yes.

And at that point in time had you actually filed a notice of discontinuance?‑‑‑No.

All right.  And then further documentation was supplied to you in regard to this matter dated 27 April, am I correct?---I assume so.  I would have to look at the documentation but I did get documentation over time.

HIS HONOUR:   Have you finished asking the witness about that annexure?

MR FITZGIBBON:   Yes, thank you, your Honour, yes.

HIS HONOUR:   That can be retrieved.

MR FITZGIBBON:   It wasn’t until yesterday that in fact you filed a notice of discontinuance?---That is correct.

And that was also accompanied by the affidavit which is presently in evidence before the Court?---Yes.

Just one other matter.  The matter which was also a matter of Quinn in front of Justice Hill, that in fact was – the decision of that was handed down on 1 December of last year?---That’s correct.

And that is the matter, do you tell the Court, is the subject of an appeal to the Full Federal Court?---That is correct.

HIS HONOUR:   Has that been set down for hearing?

MR FITZGIBBON:   I can clarify that, your Honour.  (To witness):  Are the appeal books in preparation at the moment?---Yes, it’s been set down for hearing on Thursday, the 11th of this month.

And senior counsel have been instructed to appear in that matter?---Yes.

Thank you.  I do not think there is anything else. 

HIS HONOUR:   Mr Orr.

MR ORR:   Just a couple of questions, your Honour.  I do not want to delay - - -

HIS HONOUR:   You can take as long as you wish – as the case requires.

CROSS-EXAMINED BY MR ORR:

MR ORR:   Mr Levick, there is a notice of motion which commenced this removal application which was dated 29 July 1999.  You are familiar with that document?---No, I would have to have a look at that document.

Well, I am happy to show it to you.

HIS HONOUR:   Take my copy from the Court file.

MR ORR:   And I put it to you this is the notice of motion which commenced the removal application from the Supreme Court of New South Wales to this Court?---Yes, that would be correct.

You told us that you did that on instructions from the ITR, is that correct?‑‑‑Yes.

If I just show you the end of that document, the bottom of it.  It says that is prepared on behalf of the applicant, and if you look at the top the applicant is McKewins Hairdressing and Beauty Supplies Pty Limited, by you?‑‑‑Yes.

So, that is incorrect?---I can’t answer that as a yes or no.  The document was prepared, as I said, from ITR in Melbourne.  It would have been forwarded to me and if any amendments were necessary I would have done that.  So, in a sense, I may have, in part, prepared this document.  However, it is not as if I took any action against the wishes of either of the directors of this company when this document was filed.

Yes.  That does not answer the question.  You have told us you were acting on instructions from the ITR in preparing and serving this document?---Yes.

So, that would mean that this statement is incorrect, is it not?  It is not prepared on behalf of the applicant at all, it is prepared on behalf of ITR?‑‑‑No.  They weren’t a party to this.  It was prepared on behalf of the applicant but it was prepared by ITR.

So, on whose instructions was the document prepared?---On the instructions of ITR.

Yes, and who paid your fees for preparing the document?---If anybody paid my fees, it would have been ITR.

So, who in fact did pay your fees?---I’ve got no idea.

HIS HONOUR:   Have you rendered any bills in relation to the section 40 removal?---I’m involved in a number of these matters.  They have a tendency at times to blend together.  If I had rendered any bill, and I am not sure that I did, but if I rendered any bill it would not have been to either of the directors of McKewins Hairdressing and Beauty Supplies.

You are looking for your fees to ITR, that is what it comes to?---Yes.

Yes.  Well, that is fair enough, Mr Orr.

MR ORR:   If I can just also, your Honour, just complete my - - -
(To witness):  There is also a notice of constitutional matter, a section 78B notice?---Yes.

Which was issued in these proceedings?---Yes.

Your evidence earlier was you prepared this on instructions of ITR?---Yes.

This document says it is prepared on behalf - - -

HIS HONOUR:   Well, perhaps the witness should be shown that as well and the other one can be retrieved.

MR ORR:   This document says it is prepared on behalf of the applicant.  That is incorrect, is it not?---Is prepared for the benefit of the applicant.  It is not prepared for me.  It is not prepared for ITR.  It is prepared for McKewins Hairdressing and Beauty Supplies Pty Limited.  The fact that I get instructions and assistance in preparing this document from ITR - - -

Well, in terms of the instructions to prepare that document, they were given to you by ITR?---That is correct.

In terms of either the content of the document, that was provided to you by ITR and you made only typographical changes to the document?---That would be correct, yes.

In terms of fees for preparing the document, you would render a bill to ITR and you would not render a bill to anybody else?---If I rendered a bill, it would have been to ITR.

Yes, thank you.  Can I just show you one last document, Mr Levick, and that is the applicant’s summary of argument.

HIS HONOUR:   Applicant’s summary of argument?

MR ORR:   Yes, your Honour. 

HIS HONOUR:   This is filed 12 November 1999?

MR ORR:   Yes, your Honour.

HIS HONOUR:   That document can be shown to the witness from the Court file.

MR ORR:   That is a document headed “Applicant’s Summary of Argument” and the stamp shows it was filed on 12 November 1999?---Yes.

Perhaps I could ask the same question.  This document was prepared on instructions from ITR?---Yes.

It was provided to you by ITR with only minor typographical changes made by you?---Yes.

If you were to render a bill in relation to this document, you would render it to ITR?---That is correct. 

The statement at the end of the document that it was prepared on behalf of the applicant, that is, McKewins Hairdressing and Beauty Supplies Pty Limited, is incorrect?---No.  If I could put it this way:  often times when a document has to be prepared for a client, it is counsel who drafts – prepares the document but it is filed on behalf of the client.

Yes.  Did you receive any instructions from McKewins Hairdressing and Beauty Supplies Pty Limited either by the liquidator or by the directors to file this document?---No.

This document was filed on 12 November 1999?---The stamp says so, yes.

Earlier in your evidence you said to us that you received a phone call from Mr and Mrs McKewin at some time after the liquidation?---Yes.

Which took place in September, and the appeal in November, that they did not wish to continue with anything.  So, I put it to you that this document was filed in the face of their advice to you that the matter was not to continue?---That, I cannot say because, as I say, I do a lot of these matters and, honestly, I am not aware of what date it was that I received a phone call from Mrs McKewin.

With regard to the contents of this document, did you - - -

HIS HONOUR:   Which document?

MR ORR:   Sorry, the document you have before you, the applicant’s summary of argument?---Yes, yes.

This was a document that was prepared by ITR, is that correct?---Yes.

And you made only minor typographical changes, if any, to that document?‑‑‑Yes, that is correct.

Yes, thank you.

HIS HONOUR:   What is this ITR body?---It is short for Institute of Taxation Research.

So far as you know, is it a company?---I’ve got no idea. I’ve met a number but not all of the directors. They are engaged in, as I understand it, research into the Constitution with particular regard to taxation. They have also, or members of that group have also prepared and, I believe, filed a two volume application relating to these issues with a number of United Nations bodies and that was filed, I am told and verily believe, on 1 September last year.

Thank you.  Mr Fitzgibbon, anything arising out of that or anything in reply?

MR FITZGIBBON:   No, thank you, your Honour.  That is the evidence I propose to call.

HIS HONOUR:   Anything arising out of what I put to the witness?  No?  Yes, thank you, Mr Levick.

(THE WITNESS WITHDREW)

HIS HONOUR:   Anything else?

MR FITZGIBBON:   No, thank you, your Honour. 

HIS HONOUR:   I should hear what you say in resistance to Mr Orr’s application, his two motions.  It might be of assistance if I take a short adjournment before you do that.

MR FITZGIBBON:   Yes, thank you.

AT 10.54 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.00 AM:

HIS HONOUR:   Yes, Mr Fitzgibbon.

MR FITZGIBBON:   Your Honour, can I commence by dealing with the matter in terms of a time line.  It is a matter of record, in my submission, that when the matter was dealt with and the order was made ‑ ‑ ‑

HIS HONOUR:   The winding‑up order?

MR FITZGIBBON:   Yes, the winding‑up order, I want to suggest – and perhaps even with tongue in cheek – that there still was a doubt as to the residual powers vesting in directors.  Now, I accept that what happened – and indeed, if I read the High Court page correctly, there is still Guss v Johnstone and the matter that your Honour – the special leave matter – and both are about Ebert’s Case, may I with respect remind the Court.  So it is not entirely a matter that is – well, Ebert’s Case is settled law, but it could be that the Court may well wish to look again at the principle as such.  I put it no higher than that.

HIS HONOUR:   Yes.

MR FITZGIBBON:   That is issue one.  Now, the evidence of Mr Levick is – and I do not believe it is seriously contested by either party – is the fact that he acted on the instructions of the Institute of Taxation Research in Melbourne and, indeed, under careful cross-examination by Mr Orr, his answers are consistent on the two heads, the first head being preparation of documents, content and other than bills – in other words, he looked to ITR for fees if, in fact, an individual bill was rendered for this matter.  Now, he told your Honour ‑ ‑ ‑

HIS HONOUR:   There seems to be there are other matters and it may be that he lumps them together when he comes ‑ ‑ ‑

MR FITZGIBBON:   There are a lot of other matters in the same category raised right round Australia by ITR, and I have had one or two of them to deal with.  Indeed, Mr Orr and Dr Ebbeck and I were opposed in Helljay, so it is not a matter – it is almost common knowledge between us.  So what we really have there is that after the matter was – where the company, in fact, an order winding up was made, then on receipt of documents from Melbourne, Mr Levick went ahead and did what he told your Honour and, I thought, very carefully set out ‑ ‑ ‑

HIS HONOUR:   It seems to be that this body is placed in Melbourne?

MR FITZGIBBON:   Yes, that it is.  It is at – they have changed addresses, but it is down on the Mornington Peninsular.

HIS HONOUR:   You do not need to give me some evidence about that.

MR FITZGIBBON:   I have no doubt at all that the Commissioner knows the address.  The position therefore is this, that at that point in time, as I say, there is uncertainty on the Ebert issue.  I have raised for your Honour in a very imprecise way an argument that arises out of Wakim, and it is also dealt with partly, I say, in the Hughes Case which is pending in the High Court.  Hence, that was a reason behind the application to adjourn the matter until the Court delivered a decision in that matter.  So, at least to that extent, there are matters which are as yet unresolved.  And there is this matter, your Honour, too.  The Levick matter was a matter that ‑ ‑ ‑

HIS HONOUR:   That is the Federal Court one?

MR FITZGIBBON:   That is the Federal Court one, where Justice Hill and I disagreed very strongly about ‑ ‑ ‑

HIS HONOUR:   No 7261 of 1999.

MR FITZGIBBON:   Yes.  I was counsel in that matter.

HIS HONOUR:   Yes, I see that.

MR FITZGIBBON:   And, indeed, Mr Levick was my instructing solicitor and certain actions were taken in that and then the argument that was put to the Court was by the same parties who are in front of the Court today.  Now, I say it is not ‑ ‑ ‑

HIS HONOUR:   But do you say that the Wakim and Hughes arguments were not put to Justice Hill, is that right?

MR FITZGIBBON:   Oh no, no, definitely not.  They were not part of it because Quinn, the person that a sequestration order was made against, was an individual, not a company.

HIS HONOUR:   Yes.

MR FITZGIBBON:   And that decision, of course, was not handed down until 1 December.  Now, whatever view Justice Hill and I take of English constitutional law – and I hear your Honour on that and I do not mean any impertinence on that – that is a matter that is to be heard, senior counsel and junior counsel other than myself are involved, I am told ‑ ‑ ‑

HIS HONOUR:   That is set down for the 11th, I think you said.  I think Mr Levick said the 11th.

MR FITZGIBBON:   The 11th of this month.  Now, so they are matters that are still as yet unresolved.  It was only – and I tell the Court quite openly – when I came to the matter yesterday that I indicated to Mr Levick that I thought he ought to place a notice of discontinuance on the file because, in fact, there never had been one to that date.  So it is on my – and I take that fully on my shoulders, but of course I also sought the placing of other material, part of which is in front of the Court.  So they are matters, your Honour, that have to be taken into account when one looks at what has occurred here.  They are matters that must be weighed. 

Now, Mr Levick has sworn on oath and in his affidavit that he has a full web page.  He has not sought to hide anything or hide anything that – and that, of course, could be said to be to his detriment.  But, on the other hand, he is quite adamant as to what he in fact – what part he played as far as the McKewins were concerned.  And the part of it that I think is important is he swore before your Honour on oath and, indeed, he was not challenged on that, that he never at any time deliberately, if I can use those words, your Honour, “deliberately”, went against any instruction by Mr McKewin as the company director.

HIS HONOUR:   That is not really the point.

MR FITZGIBBON:   No, but I think it does go, your Honour, to the background of what happened here.

HIS HONOUR:   It also, of course, involves Mrs McKewin’s telephone conversation as well.

MR FITZGIBBON:   Yes.  And he gave evidence of that and I indicated that, of course, as soon as I became aware of it this morning.  I told your Honour that there had been that call.

HIS HONOUR:   Some time ago.

MR FITZGIBBON:   No, quarter to 9 this morning.

HIS HONOUR:   No, no, no, telephone call of Mrs McKewin some time ago.

MR FITZGIBBON:   Oh yes.  The timing of that is uncertain but his evidence is that he has never at any time gone against the express instructions of the McKewins and I believe your Honour could accept that.  To that extent, your Honour, as I say, the ‑ ‑ ‑

HIS HONOUR:   It is not as simple as that.  I mean, in so far as he believed he was acting on instruction of the directors who were aggrieved by the winding‑up order, and that their grievance against the winding‑up order could spill over into launching the section 40 application, he was disabused of that months ago but nothing was done.

MR FITZGIBBON:   No, I do not believe, your Honour, that ‑ ‑ ‑

HIS HONOUR:   And nothing was done, sensibly enough, from Mr Levick’s view because he was looking for his fees to the ITR people.

MR FITZGIBBON:   That is correct, but in the aspect of what occurred, that section 40 was ‑ ‑ ‑

HIS HONOUR:   So whether he is or is not doing something inconsistent with what the directors want is irrelevant; he does what his client wants, like any solicitor.

MR FITZGIBBON:   Yes, but in this case the client, of course, is ITR, he says ‑ ‑ ‑

HIS HONOUR:   Exactly.

MR FITZGIBBON:   And that is the important part of it, in my submission.  Now, whether he should have gone behind that is another question.  But, in fact, as I say, it ‑ ‑ ‑

HIS HONOUR:   That could be a question between him, ITR and the McKewins.

MR FITZGIBBON:   That is right.

HIS HONOUR:   At the moment, I am dealing with this narrow issue.

MR FITZGIBBON:   We are dealing with the sworn evidence on oath of that in fact.  I think two things arise out of that.  They did not come to him because of his website is his belief, only having met the director once, and the other matter is that he says that, in fact, he never at any time went expressly against what he was told by the directors – the director, in fact.

The only other matter I think I can raise for your Honour at this point in time is the fact that, having received that letter of the liquidator, he really has taken no active steps.  I think I would be correct in that.  The one

thing I am sure of is I do not have a copy of the submissions filed and the date of those, but I do not think I contradict myself on that issue.

HIS HONOUR:   Let us be clear about it.  The liquidator’s letter is 19 November 1999.

MR FITZGIBBON:   Yes.

HIS HONOUR:   The summary of argument was filed on the 12th.

MR FITZGIBBON:   So, in my submission, it is of importance that he did nothing beyond that and, indeed, as I say, it was only yesterday at my insistence that a notice of discontinuance was placed on the Court file.

I do not believe, unless there is anything else your Honour wishes me to direct myself to.

HIS HONOUR:   Thank you, Mr Fitzgibbon.  Yes, Mr Orr.

MR ORR:   Your Honour, I just confirm our earlier submissions in relation to this matter and simply add that this is clearly a case where these proceedings were taken and continued as an abuse of process in relation to this Court, which is one of the traditional grounds on which costs can be awarded on an indemnity basis against the solicitor.

HIS HONOUR:   Yes.  Now, the Knight Case says that that is best done by making the relevant legal practitioner a party.

MR ORR:   That is true, your Honour.

HIS HONOUR:   That is the basis of your motion.

MR ORR:   Yes, your Honour, and that is also a course that Justice Hill took in the Levick matter.

HIS HONOUR:   Yes.

MR ORR:   I do not think he was convinced he had to, but he thought he should follow Knight in regard to that.  Just with regard to that abuse of process matter, the evidence now shows from Mr Levick that he took instructions from a person who had no interest in these proceedings whatsoever, that he not only took instructions from them but was paid by them, and indeed that the documents in these proceedings were provided to him by them.

HIS HONOUR:   The contract on which he will render fees is a contract with ITR.

MR ORR:   Yes, your Honour, he was either paid by, or will, or the arrangement was that he should be paid by them.  So, indeed, it is a situation far stronger for our case, we submit, than earlier was made.  Not only is Mr Levick not acting for the company, either from instructions of the company before it was liquidated or after liquidation on instructions from the liquidator of the company, with whom he had no contact except to be told that he should not bring the proceedings.  He was not acting on instructions from the directors of the company, either before or afterwards although, as he said, he was acting in their interests, which I take simply to be a general comment that he was doing something which may benefit them, but it is clear that the instructors upon which he was acting was ITR, which is a body wholly unrelated to these proceedings, a body having no interest in these proceedings, and a body for whom it was clearly an abuse of process to act on instructions for in these proceedings.

I also confirm our earlier submissions in addition, as we said, that the costs order should also be made because of the untenable, self‑defeating and nonsense which the submissions contain; the inappropriateness of removal; the fact that removal was undertaken in the name of the company without the liquidator’s consent and, indeed, without instructions from the company, the liquidator or the directors.  Indeed, it would put the Deputy Commissioner of Taxation in a wholly unwarranted position if it was left without any party upon which to seek costs for these proceedings.

HIS HONOUR:   Just pardon me a minute, Mr Orr.  What do you say about this motion that comes from the other side which I have not yet determined to deal with?  Should I be dealing with it and what should I be doing with it?

MR ORR:   As I understand, it has not been – whilst the notice has been given, the motion has not been moved.

HIS HONOUR:   I will just check.  That is so, is it not, Mr Fitzgibbon?

MR FITZGIBBON:   That is because of your Honour’s comments that it was wholly inappropriate to bring it.  For that reason, I desisted and I believe in the face of the Court I would be foolish to do otherwise.  But that was the reason.  In fact, I believe it is a matter of substance which is outside, as I have indicated before ‑ ‑ ‑

HIS HONOUR:   But what are the grounds for the motion?

MR FITZGIBBON:   The motion, your Honour, as I understand it, is that

until the Court delivers its judgment in Hughes’ Case, then that part of the argument which I have tried to delineate out of Wakim, and particularly out of Wakim but also, I say, arising out of Hughes, then that issue really lies as unresolved and your Honour is right, it may be in another case that ‑ ‑ ‑

HIS HONOUR:   I think so.

MR FITZGIBBON:   Yes, but that really is the gravamen of what is being said.

HIS HONOUR:   Yes.  I do not think this present motion should be held up by anything in this cross‑motion.

MR FITZGIBBON:   Yes, thank you.

HIS HONOUR:   So I propose to dismiss the cross-motion.  In that case we can deal with the motions that are before the Court, the first two motions being motions by the Deputy Commissioner.

MR ORR:   Yes, your Honour.  Can I perhaps just finally say, with regard to Wakim and Hughes which my friend keeps mentioning, in the documents which I have referred to which outline his arguments in this case and the removal application, there does not appear to be any reference to Wakim or Hughes.

HIS HONOUR:   There is now.

MR ORR:   He has mentioned it for the first time today.  So I just note that point.  It has not been mentioned until today.  As to what the point is, we do not understand what the point is so it is hard to respond to it.

HIS HONOUR:   Thank you.  Is there anything else, gentlemen?

MR FITZGIBBON:   No, thank you.

MR ORR:   No, your Honour.

HIS HONOUR:   I will consider my decision on these two motions by the Deputy Commissioner and the Court will now adjourn.

AT 11.20 AM THE MATTER WAS ADJOURNED