Re Jarlas Pty Ltd, v Commissioner of Taxation

[1988] FCA 660

JUDGMENT No. hh Q....l.

IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	) No. VG71 of 1986
GENERAL DIVISION	)

BETWEEN:  PETER GRAEME HUTCHINS :

RE:  JARLAS PTY. LTD.

Appellant

AND:  - THE COMMISSIONER OF

TAXAT I ON THE OF

COMMONWEALTH OF AUSTRALIA

Respondent

CORAM :  Jenkinson J.

Melbourne	PLACE:
- DATE : 7 November, 1988 - 9 NOV 1988

FEDeRAL COURT OF

PRINCIPAL nEQlsTRY

REASONS FOR JUDGMENT

On 24 June 1987 this appeal was allowed and the

assessment set aside, for reasons then published. Mrs. Moshinsky
of counsel for the respondent Commissoner submitted that, although

the applicant was entitled to an order that the respondent pay the

applicant's costs of the hearing, there should be an order

restricting the respondent's liability to pay the applicant's

commenced, which were then abandoned by the applicant. At about

costs incurred before the hearing to one fifth of those costs, and

an order that the applicant pay four fifths of the respondent's

costs incurred before the hearing. There were issues raised by

the grounds of the applicant's objection against the assessment,

and kept alive in the interlocutory transactions between the

parties until a few days before the hearing of the appeal

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that tlme the parties succeeded in agreeing upon a statement of

facts which were received as admissions against the two parties on
the hearing of the appeal. The duration of the hearing was by
that means reduced. It was submitted by Mrs. Moshinsky that both

parties had expended substantial costs In preparation for the

trial of the abandoned issues, and particularly one of those

issues, that the applicant could by the exerclse of reasonable

care and skill on the part of himself and his legal

representatives have reached long before trial the decision to

abandon those issues, and that the orders sought on the respondent

Commissioner's behalf were appropriate, having regard to

principles in accordance with which the costs of dlstlnct lssues

in a proceeding may be separately consldered	in determining what
justice requlres.

Mr. Pagone of counsel for the appllcant submltted that

this was not	a	case merely of issues abandoned, but of issues
abandoned upon the making of an agreement as	to	facts, and that

the Court could not safely infer, in those circumstances, that the

applicant might without detriment to his own interests have

abandoned those issues before, and without regard to, the maklng

of the agreement. Mrs. Moshinsky's reply to that submission was

that, although the making	of such an agreement might suggest	a
process of compromise	in	whlch the abandonment of an lssue could
be thought to have constituted	a	pawn in the game when proof of

some lssues lay on one party and proof of other issues lay on the
other, here the onus was on the applicant alone and there was no

reason to think that the respondent Commissloner had any motlve

for making the agreement except a desire to save time and costs.

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There was no basis here, according to firs. Noshinsky's submission, for the give and take of compromise in which one party might offer to abandon an issue.

The submissions on each side are, I think, substantial. But I consider that certain further conslderations make it right to allow the applicant his whole costs of the appeal. The point

on which the appeal succeeded arose out of a failure to observe

that meticulous care in administration which in my opinion the novel, strange and complex legislation required of the respondent's officers. The applicant is a member of a class of persons against whose activities the legislation was directed. He was during the pendency of this appeal an applicant in a number of other pending appeals which arose out of the same legislation and out of broadly similar activities. This appeal was among the first, if not the first, of the appeals brought to hearing which arise out of this legislation. He and those advislng him would

have been justified, in the particular circumstances, in

proceeding with the greatest caution in the conduct of this appeal, in learning as much as possible of the strengths and weaknesses of the respondent's case, and in having regard to the other pending appeals to which he was party, in determining what	course should be followed in this appeal. Deferment of decisions	concerning the abandonment of issues is a course to which in the
circumstances I do not think I ought to attach a penalty in costs. If this appeal had fallen in a common class of Income tax appeals, and if the applicant had not been party to other appeals raLsLng similar questions, I would probably have treated Mr. Pagone's
faalure to offer any circumstantial justification of so late an
abandonment of issues as justifying my denying the applicant some of his costs of the appeal and, perhaps, as justifying an order
that some of the respondent's costs of the appeal be paid by the
applicant. But in the circumstances I have specified I think that

I should order, as I do order, that the appllcant's costs of the

appeal, including reserved costs, be paid by the respondent.

I certify that his and the 3

preceding pages are	a true copy of
the Reasons for Judgment herein	of

Honourable	the	Mr.	Justice
Jenkinson.

I F-- Associate

Dated: 7 November, 1988

Counsel for the Applicant M r . G.T. Pagone

Counsel for the Respondent Mrs. A. Moshinsky

Solicitors for the Applicant	:	Barker Gosllng
Solicitors for the Respondent :	Australian Government Solicltor
Date of Hearing	2 4 June, 1987