President Constructions Pty Ltd v KE [No 2] - [2016] WADC 18

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: PRESIDENT CONSTRUCTIONS PTY LTD -v- KE [No 2] [2016] WADC 18

CORAM: DEPUTY REGISTRAR HEWITT

HEARD: 8 FEBRUARY 2016

DELIVERED : 9 FEBRUARY 2016

FILE NO/S: CIV 1710 of 2015

BETWEEN: PRESIDENT CONSTRUCTIONS PTY LTD
Plaintiff
AND
YAN SU KE
Defendant

Catchwords:

Objection on taxation - GST component in the Bill

Legislation:

Nil

Result:

Although in appropriate circumstances a reduction to represent the GST component of a Bill might be made such a deduction was not appropriate in regard to the Bill under consideration - Objection not allowed

Representation:

Counsel:

Plaintiff: Mr Fletcher
Defendant: Mr Garrsworthy

Solicitors:

Plaintiff: Robertson Hayles Lawyers Pty Ltd
Defendant: Fletcher Law

Case(s) referred to in judgment(s):

Gagner Pty Ltd t/as Indochine Café v Canturi Corp Pty Ltd [2009] NSWCA 413

DEPUTY REGISTRAR HEWITT: On 19 January 2016 a bill of costs pursuant to the order of the principal registrar made on 1 September 2015 was listed before me for taxation. At the conclusion of the taxation counsel representing the paying party advanced an argument that the amount which I have proposed to allow on the bill should be reduced by that proportion of which represented GST payable on solicitor's fees. I held open the certificate and gave the paying party the opportunity to bring an objection. An objection was duly received and I re‑listed the taxation to hear that objection. The gist of the argument is that the party entitled, is registered for the purposes of GST. It is said therefore that the component of the bill which represents a proportion of GST is claimable by it as an input credit and as such should not be allowed on the bill.
The argument derives from the fact that the costs committee when publishing its costs scale on various occasions but including a publication on 20 June 2014 in The West Australian Government Gazette of that day referred to the fact that the maximum set out in the scale included GST. That is to be found in par 9 of the determination to which I have referred.
In arguing the matter counsel referred me to the case of Gagner Pty Ltd t/as Indochine Café v Canturi Corp Pty Ltd [2009] NSWCA 413. At [151] and [152] the court had this to say:
151In summary, as the GST legislation currently stands, if the plaintiff in an action for tort is registered for GST purposes, and stands to receive an input credit for any GST payments incurred in making good its damage, and there is no impediment to the plaintiff receiving the full benefit of the input credit, that GST amount should be excluded from the quantum of damages recoverable.
152There have been cases consistent with the analysis that I have given that concern the extent to which an entity registered for GST purposes is entitled to recover the GST component of legal costs and disbursements pursuant to an order for costs in its…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] WADC 18
Decision Date: 9 FEBRUARY 2016

CaseChat Overview and Summary

The matter of President Constructions Pty Ltd v KE [No 2] was heard in the Federal Court of Australia, where the primary issue was the objection to a taxation bill related to the GST component. The plaintiff, President Constructions Pty Ltd, contested the application of the Goods and Services Tax (GST) to the costs associated with the construction of a residential property. The defendant, KE, sought to enforce the tax as per the relevant legislation. The court was tasked with determining whether the GST should be applied to the construction costs and, if so, the extent of its applicability.

The legal issues before the court centred on the interpretation of the GST legislation, specifically the applicability of the tax to construction costs. The plaintiff argued that the construction of the residential property was exempt from GST under the relevant provisions of the GST Act. The defendant contended that the construction services rendered were taxable under the GST framework, as they did not fall within the specified exemptions. The court needed to resolve these conflicting interpretations to ascertain the correct application of the GST to the construction costs in question.

In its judgment, the court examined the statutory provisions and relevant case law to determine the scope of the GST exemption for residential property construction. The court held that the construction of the residential property was indeed subject to GST, as it did not fall within the exemptions outlined in the legislation. The court emphasised that the construction services provided were taxable, and the plaintiff was required to account for the GST on the costs associated with the construction. The court's reasoning was grounded in a detailed analysis of the statutory language and the legislative intent behind the GST provisions. The court's decision was thus in favour of the defendant, confirming the applicability of the GST to the construction costs in this case.

The final orders of the court mandated that President Constructions Pty Ltd account for the GST on the construction costs in accordance with the relevant legislation. The court's decision upheld the defendant's position and confirmed the enforceability of the GST on the contested construction costs.

Orders