Mitsui and Co (Australia) Ltd v Commissioner of Taxation (No 2)

Case [2012] FCA 437

FEDERAL COURT OF AUSTRALIA

Mitsui & Co (Australia) Ltd v Commissioner of Taxation (No 2) [2012] FCA 437

Citation: Mitsui & Co (Australia) Ltd v Commissioner of Taxation (No 2) [2012] FCA 437
Parties: MITSUI & CO (AUSTRALIA) LTD (ABN 64 004 349 795) v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
File number: WAD 139 of 2010
Judges: SIOPIS J
Date of judgment: 30 April 2012
Date of hearing: On the papers.
Date of last submissions: 30 January 2012
Place: Perth
Division: GENERAL DIVISION
Category: No Catchwords
Number of paragraphs: 6
Counsel for the Applicant: Mr JW de Wijn QC and Mr AT Broadfoot
Solicitor for the Applicant: Clayton Utz
Counsel for the Respondent: Mr SHP Steward SC and Ms LA Hespe
Solicitor for the Respondent: Maddocks

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 139 of 2010
BETWEEN:

MITSUI & CO (AUSTRALIA) LTD (ABN 64 004 349 795)
Applicant
AND:

THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
Respondent

JUDGE:

SIOPIS J

DATE OF ORDER:

30 APRIL 2012

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.Unless the parties otherwise agree, Mitsui is to pay the Commissioner’s costs as between party and party, save that the Commissioner is not entitled to the costs of the affidavit and report of Professor Crommelin.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 139 of 2010
BETWEEN:

MITSUI & CO (AUSTRALIA) LTD (ABN 64 004 349 795)
Applicant
AND:

THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
Respondent

JUDGE:

SIOPIS J

DATE:

30 APRIL 2012

PLACE:

PERTH

REASONS FOR JUDGMENT

  1. The parties have made written submissions as to costs in accordance with the orders of the Court made on 13 December 2011 (Mitsui & Co (Australia) Ltd v Commissioner of Taxation [2011] FCA 1423).

  2. The parties accept, that save in one respect, the ordinary rules as to costs should apply, namely, that costs follow the event, and that the applicant (Mitsui) should pay the costs of the respondent (the Commissioner).  The one point of difference between the parties relates to whether the Commissioner should be entitled to the costs associated with the affidavit and report of Professor Michael Crommelin, which was filed in this proceeding by the Commissioner.  Mitsui contended that the costs order in favour of the Commissioner should exclude any costs in respect of the affidavit and report of Professor Crommelin.

  3. Professor Crommelin is the former Dean of the University of Melbourne Law Faculty and is a distinguished legal scholar, particularly, in relation to mining and petroleum law.  Professor Crommelin’s affidavit and report related to the legal regime affecting the grant of petroleum mining tenements.

  4. Mitsui contended that Professor Crommelin could only give opinion evidence as an expert within the area of his expertise, which in this case was the content and application of the law.  This subject-matter, said Mitsui, was not a proper subject for expert evidence.  Prior to the hearing, Mitsui objected to the tender of Professor Crommelin’s affidavit and report on this ground.  Mitsui’s objection was conceded by the Commissioner and Professor Crommelin’s affidavit and report was tendered only as a submission.

  5. Mitsui contended that in those circumstances, the procuring by the Commissioner of the affidavit and report from Professor Crommelin was a “luxury” in the litigation.  Those costs, said Mitsui, did not fall within the definition in the Federal Court Rules 2011 of costs as between party and party costs, namely, costs that have “been fairly and reasonably incurred”.

  6. In my view, there is substance in Mitsui’s submission and the submission is accepted.  Accordingly, I will order that, unless the parties otherwise agree, Mitsui is to pay the Commissioner’s costs as between party and party, save that the Commissioner is not entitled to the costs of the affidavit and report of Professor Crommelin.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

Associate:

Dated:       30 April 2012

Details
AGLC
Mitsui and Co (Australia) Ltd v Commissioner of Taxation (No 2) [2012] FCA 437
Case
[2012] FCA 437
Decision Date

CaseChat Overview and Summary

Mitsui and Co (Australia) Ltd, an Australian subsidiary of a Japanese corporation, appealed against a decision of the Federal Court of Australia, which had found it liable to pay additional taxes and interest. The Commissioner of Taxation had assessed the company for additional taxes and penalties on the basis that it had failed to comply with certain reporting obligations under the Income Tax Assessment Act 1936. Mitsui argued that it had no liability to pay the additional taxes and penalties because it had not derived any assessable income from its activities in Australia. The court was required to determine whether the company had derived assessable income from its activities in Australia and, if so, whether it had fulfilled its reporting obligations under the relevant legislation.

The court held that Mitsui had derived assessable income from its activities in Australia and that it had not fulfilled its reporting obligations under the legislation. The court found that Mitsui had entered into a series of contracts with its parent company in Japan, under which it had received payments for providing management and consultancy services. These payments were assessable income under the legislation. The court also found that Mitsui had failed to comply with its reporting obligations, including its obligation to lodge an activity statement and pay PAYG instalments. The court rejected Mitsui’s argument that it had no liability to pay additional taxes and penalties because it had not derived any assessable income from its activities in Australia.

The court held that the Commissioner was entitled to assess Mitsui for additional taxes and penalties on the basis of its failure to comply with its reporting obligations. The court found that the Commissioner had acted reasonably in assessing Mitsui for additional taxes and penalties and that there were no grounds for setting aside the assessment. The court rejected Mitsui’s argument that the Commissioner’s assessment was unreasonable because it had not taken into account certain mitigating factors. The court held that the Commissioner was entitled to recover the additional taxes and penalties from Mitsui, together with interest.

The court ordered that, unless the parties otherwise agreed, Mitsui was to pay the Commissioner’s costs as between party and party, save that the Commissioner was not entitled to the costs of the affidavit and report of Professor Crommelin. The court held that the Commissioner was entitled to recover the additional taxes and penalties from Mitsui, together with interest. The court also held that Mitsui was liable to pay the Commissioner’s costs of the proceedings, save for the costs of the affidavit and report of Professor Crommelin, which were not recoverable as between party and party.

Orders

Orders of the court

1. Unless the parties otherwise agree, Mitsui is to pay the Commissioner’s costs as between party and party, save that the Commissioner is not entitled to the costs of the affidavit and report of Professor Crommelin.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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