Money Tree MGNT SVS P/L v DEP Comm of Taxation (No 5) No. Scgrg-99-837

[2000] SASC 314

MONEY TREE MANAGEMENT SERVICES PTY LTD & INSTITUTE OF TAXATION RESEARCH v DEPUTY COMMISSIONER OF TAXATION (No 5)
[2000] SASC 314

Civil

1................ DEBELLE J...... The application of Mr Kerin to set aside three of the orders made on 10 August turned on the fact that he had consulted three legal practitioners, Mr Alderman, Ms Layton QC and Mr Hackett-Jones QC.

1. In my reasons this morning, I pointed out that the consultations with Mr Alderman did not justify the conduct of Mr Kerin. Furthermore, the evidence given today demonstrates quite convincingly that Mr Alderman was not correctly informed by Mr Kerin concerning the advice that he, Mr Kerin, had received either from Ms Layton QC or Mr Hackett-Jones QC. In his affidavit, Mr Alderman said that Mr Kerin had told him that both Ms Layton QC and Mr Hackett-Jones QC had considered that the grounds of appeal had merit and were not spurious. The evidence given by both Ms Layton QC and Mr Hackett-Jones QC demonstrates that that is entirely incorrect.

2. Mr Kerin suggested that Mr Alderman had not stated the position accurately. I do not accept that evidence. In my view, the evidence given by Mr Kerin on this topic was of a self-serving nature and I do not accept it. There are some discrepancies between the affidavit of Mr Alderman and that of Mr Kerin. Where they exist, I prefer the evidence of Mr Alderman.

3. In his affidavit, Mr Kerin said that Ms Layton QC had told him that “there may well be an arguable case” in relation to what has been called “the Seals argument”. Ms Layton QC’s evidence was that she had said nothing to that effect at all. Indeed, the tenor of the evidence given by Ms Layton QC was that she was not an expert in constitutional law and that it would be desirable for Mr Kerin to seek advice from someone who was an expert. She said that Mr Kerin informed her that he might consult Mr Hackett-Jones QC and that she had told Mr Kerin that she considered that Mr Hackett-Jones would be an appropriate person to consult. It is also her evidence that she did not give any specific advice as to the prospects of success of the arguments put before her by Mr Kerin.

4. I unhesitatingly accept the evidence of Ms Layton QC and reject the evidence of Mr Kerin as to the nature of the advice that he received on the Seals argument from her. The only matter which appears to be correct in respect of the advice which Mr Kerin says he received from Ms Layton QC is that he should await the outcome of the decision in R v Hughes (2000) 74 ALJR 802 in relation to the Corporations Law argument.

5. Mr Kerin deposed that he received advice from Mr Hackett-Jones QC to the effect that it was “credibly arguable that the office of the Governor of the State of the South Australia had been incorrectly created in 1986”. Mr Kerin goes on to say:

   “Mr Hackett-Jones agreed with me that the seals argument was a somewhat radical ground of appeal and he was uncertain as to what the likely outcome may be if the argument was successful. Mr Hackett-Jones agreed that such an issue would ultimately need to be determined by the High Court and not by the South Australian Supreme Court.”

I unhesitatingly accept the evidence of Mr Hackett-Jones QC in preference to that of Mr Kerin. I accept Mr Hackett-Jones QC’s evidence that he did not give any advice of the nature stated by Mr Kerin or anything which, in any respect, remotely approached that advice. It is apparent from the evidence of Mr Hackett-Jones QC that the tenor of his advice was that the factual situation would have to be examined but that, in any event, the argument sought to prove too much in that, if it succeeded, it did no more than reinstate the Letters Patent to the Governor dated 29 October 1900.

1. I have had regard to the fact that Mr Kerin took the step of consulting both Ms Layton QC and Mr Hackett-Jones QC. That is a fact which tells in his favour. However, what tells against him is the fact that neither Ms Layton QC nor Mr Hackett-Jones QC gave him any advice which would encourage him to prosecute the appeal. Ms Layton was at pains to avoid giving any kind of advice, pointing out it would be preferable to get someone expert in the field. Mr Hackett-Jones QC told him that it was likely the argument had, in effect, no prospect of success and that, even if the factual basis could be established, the Letters Patent of 1900 would be reinstated. Furthermore, Mr Hackett-Jones QC said to Mr Kerin that he would in any event check the factual position to see if the facts as asserted by Mr Kerin were correct. Mr Hackett-Jones QC invited Mr Kerin to call him back within a week or two. Mr Kerin did not make any further contact with Mr Hackett-Jones QC. Had he done so, he no doubt would have received advice rather to the effect of the judgment I have already delivered in this matter. Nothing has been put to me that would suggest in any respect that what I have said in my reasons on any of these issues is wrong.

2. There is another consequence of Mr Kerin’s failure to speak to Mr Hackett-Jones QC again. The application by the Commissioner to strike out the appeal as incompetent was not made until 6 July 2000. The application by Money Tree for an extension of time within which to appeal was not made until 3 August 2000. The applications were not heard until 9 August. There was every opportunity in the period from 19 April 2000, when Mr Kerin consulted Mr Hackett-Jones QC, until 6 July at its earliest, and certainly until 9 August, in which Mr Kerin could have spoken to Mr Hackett-Jones QC and reconsidered his position. His failure to make any further contact with Mr Hackett-Jones QC, the very man he consulted as an expert in this area, is a factor that weighs very heavily against any application to set aside the orders I have made.

3. The evidence given by Mr Kerin disclosed a further ground for refusing to accede to his application to set aside the orders made against him.  Mr Kerin said that, after the court rose on 9 August, he discussed the issues which had been raised including the application for costs against him personally.  He said that, based on a comment I had made, Mr Walsh QC did not believe that I was seriously entertaining the application for costs.  He said that Mr Walsh did not therefore see it being a live threat which Mr Kerin should be concerned with.  Mr Walsh added a rider that, if possible, they should meet before the court resumed at 4.00 pm the next day.  Mr Kerin identified the comment he relied on.  It does not in any respect justify the somewhat sanguine attitude taken by Mr Walsh QC and Mr Kerin.  Furthermore, I am not satisfied that Mr Kerin has correctly related the effect of the advice given by Mr Walsh.  Mr Kerin has already misrepresented advice given on other issues.  His evidence does not, therefore, inspire any confidence that he has correctly related the advice he received from Mr Walsh QC on this issue.  The fact that Mr Walsh QC made submissions on the question whether Mr Kerin should pay costs belies Mr Kerin’s evidence.  I do not therefore accept it.  In any event, even if he has correctly stated the effect of the advice which he received, it is apparent that he stood by instead of informing the court that he wished to give evidence on the Commissioner’s application.

4. This is plainly a case where a party has been present in court knowing that an issue concerning him is being debated and has taken no step to inform the court that he wishes to lead evidence.  As I said earlier in Money Tree Management Services Pty Ltd v Deputy Commissioner of Taxation (No 4) [2000] SASC 313, this application has all the hallmarks of an attempt to patch up a case as it wends its way through the judicial system. The attempt is the less meritorious because it is made after an adverse decision. Nothing has been demonstrated which brings this case within the exceptional circumstances required to set aside the orders made on 10 August.

5. Viewed as a whole, the evidence that I have heard today reinforces the reasons for deciding to make the costs order against Mr Kerin. It does not suggest that I should revoke that order. For these brief reasons, I dismiss the application. The order is that the application be dismissed.

6. The Commissioner seeks an order for indemnity costs. The application is grounded on the fact that Mr Kerin ought to have known the application had no prospects of success, yet, prosecuted it nevertheless.

7. Mr Clayton QC, opposed the application pointing out that the application should be considered as a discrete application as, indeed, it should. He further submitted that the party should not be ordered to pay any costs merely by reason of the fact that an adverse finding as to credit has been made. Mr Clayton QC has ably said all that could be put in opposition to the application. However, Mr Kerin is a solicitor. He is aware of the obligation of a party to litigation to be completely candid. He knew both the nature and the content of the advice given to him by both Ms Layton QC and Mr Hackett-Jones QC. He has, in his affidavit, misrepresented the content of that advice. Indeed, to use the word “misrepresent” is to put the matter kindly from Mr Kerin’s standpoint. Had he thought for a brief moment, he would have realised that the advice that they had given him had the effect of reinforcing the orders that I have made rather than undermining them. In short, he knew that his application had little prospect of success. In my view, it is an appropriate case in which to order indemnity costs. I do so bearing in mind all of the observations as to the care which must be taken before making such an order. When speaking of indemnity costs, I do not mean a complete indemnity. The Commissioner should recover only those costs which are reasonably incurred.

8. I, therefore, order that the applicant should pay the respondent’s costs of this application which shall be taxed on the basis that those costs include all costs of the respondent except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the respondent is completely indemnified of his costs. The question of the reasonableness or otherwise of the costs will, of course, be a matter for the taxing officer.