MLC Investments Ltd v Commissioner of Taxation (No 2)
[2003] FCA 1590
•19 DECEMBER 2003
FEDERAL COURT OF AUSTRALIA
MLC Investments Ltd v Commissioner of Taxation (No 2)
[2003] FCA 1590MLC INVESTMENTS LTD (ABN 30 002 641 661) v
COMMISSIONER OF TAXATIONN 571 of 2002
LINDGREN J
19 DECEMBER 2003
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 571 OF 2002
BETWEEN:
MLC INVESTMENTS LTD (ABN 30 002 641 661)
APPLICANTAND:
COMMISSIONER OF TAXATION
RESPONDENTJUDGE:
LINDGREN J
DATE OF ORDER:
19 DECEMBER 2003
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The respondent pay the applicant’s costs of the proceeding with the exception of one-half of the costs associated with the preparation, swearing and filing of the affidavit of Louise Suffield sworn 14 February 2003.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 571 OF 2002
BETWEEN:
MLC INVESTMENTS LTD (ABN 30 002 641 661)
APPLICANTAND:
COMMISSIONER OF TAXATION
RESPONDENT
JUDGE:
LINDGREN J
DATE:
19 DECEMBER 2003
PLACE:
SYDNEY
REASONS FOR JUDGMENT (No 2)
(Costs)
I delivered reasons for judgment and made orders, save as to costs, on 15 December 2003.
I will take those reasons as read. They form part of my reasons on the issue of costs, which is the concern of these present reasons. I will use here the same abbreviated forms of reference as in the earlier reasons.
At [130] of the earlier reasons for judgment I indicated that I would invite the parties to make submissions as to the appropriate order as to costs in the light of the result (according to which MLC succeeded) and of those reasons, including my non-reliance on the affidavit of Ms Suffield and the two volumes of documents exhibited to it.
Both parties have provided submissions as to costs and I have found those of both parties of considerable assistance. In particular, I acknowledge the helpful detail of Mr Wigney’s submissions. Notwithstanding this, I have not found the question of costs altogether straightforward.
MLC succeeded on two grounds. One was the ground of ‘improper exercise of power – exercise of discretionary power in accordance with rule or policy and without regard to merits of particular case’ (see [22]–[82] of the earlier reasons). The other was the ground of ‘improper exercise of power – irrelevant consideration – competitive advantage’ (see [98]–[112] of the earlier reasons). MLC relied on eight grounds of which the two just mentioned were numbered 1 and 3 in the earlier reasons for judgment. MLC failed on the remaining six grounds.
The affidavit of Ms Suffield was directed to ground number 2: ‘no evidence – particular fact that did not exist – flexibility in computer system’ (see [83]—[97] of the earlier reasons).
MLC failed on that ground, firstly because the proposition that there was no evidence or other material to justify the making of the decision was insupportable, and, secondly, because Mr Thaler did not base the Decision on the existence of a particular fact as submitted by MLC, namely, that MLC’s existing computer program had sufficient flexibility to cope if the new MUTs were required to operate on accounting periods ending on 30 June. It was therefore not necessary for me to address the question whether that ‘particular fact’ existed, yet a substantial part of Ms Suffield’s affidavit was addressed to establishing that it did not exist.
The general rule is that a successful litigant should have its costs. Accordingly, I commence with the proposition that the Commissioner should be ordered to pay MLC’s costs. But the Court has a discretion under s 43 of the Federal Court of Australia Act 1976 (Cth), though one which must be exercised judicially. It does not follow that because MLC failed on six out of eight issues that it should be denied some part of its costs. One must not require that a litigant foresee, and not press, the grounds on which he or she will fail.
As events have turned out, the two grounds on which MLC has succeeded were able to be determined in its favour by reference to the Statement of Reasons alone.
I have read Ms Suffield’s affidavit again and it is not true that the whole of it is addressed to establishing the non-existence of the particular fact mentioned. For example, a part of it establishes background facts as to the MUTs and the previous approvals of SAPs.
The part of the affidavit which I have found troublesome on the question of costs is the part relating to the consequences of the Decision in terms of cost and inconvenience to MLC of having the four new MUTs use 30 June accounting periods and the existing MUTs use 31 May accounting periods.
I have found this troublesome, not simply because MLC failed on the issue, but because the issue was hardly arguable. By this, I mean that, as stated at [94] of the earlier reasons, it could scarcely be suggested, and indeed was not submitted by MLC, that there was no evidence or other material to justify the making of the Decision.
To put the matter differently, the two bases on which I held that MLC failed on that ground (at [89]–[95]) were quite clear. In these circumstances, why should the Commissioner have to pay for that (substantial) part of Ms Suffield’s affidavit which was directed to establishing the third element, that is, the non-existence of the particular fact?
I do not know why much of the material contained in Ms Suffield's affidavit was not put to the Commissioner originally. As noted at [15] of the earlier reasons, on 26 April 2002 Ms Oner asked for more time to obtain instructions from MLC. However, nothing was forthcoming from G&F down to 21 May 2002, when the letter of refusal was issued.
In sum, a very substantial part of Ms Suffield’s affidavit supported an untenable ground, and comprised information which should have been put to the Commissioner directly, prior to the making of the Decision.
For these reasons a fair result is that the Commissioner should be relieved of the obligation to pay one half of MLC’s costs of Ms Suffield’s affidavit. I do not, however, think it appropriate to make any special order in relation to directions hearings on 30 October 2003 and 8 November 2003, or the first day of the final hearing, as sought in the written submissions of counsel for MLC.
I certify that the preceding sixteen (16) paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren. Associate:
Dated: 6 January 2004
Counsel for the applicant: Mr A H Slater QC and Mr P M Fraser Solicitor for the applicant: Freehills Counsel for the respondent: Mr M Wigney Solicitor for the respondent: Australian Government Solicitor Date of Hearing: 15 September 2003, 29 October 2003 Date of receipt of last submission: 18 December 2003 Date of judgment: 19 December 2003
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