S.P. Investments Pty Ltd v The Commissioner of Taxation

[1989] FCA 352

Re: S.P. INVESTMENTS PTY LTD. as Trustee of the L.M. Brennan Trust and
PERRON INVESTMENTS PTY LTD
And: THE COMMISSIONER OF TAXATION
Nos. WAG 113, 129 and 130 of 1988
FED No. 352
Practice and Procedure
20 ATR 1021

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Practice and Procedure - taxation appeal - motion for change of venue - appeal involving deed executed in Australian Capital Territory - substantial liability for stamp duty if deed brought into Western Australia - relevant factor on change of venue application - other factors evenly balanced - transfer ordered.

Stamp Act (WA) 1921

Federal Court of Australia Act 1976 s.48

Federal Court Rules O.10 r.1

National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 83 ALR 434

HEARING

PERTH

#DATE 30:6:1989

ORDER

The proceedings be transferred to the New South Wales Registry of the Court.

Costs in the cause.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

S.P. Investments Pty Ltd in Appeal No. WAG 113 of 1988 and Perron Investments Pty Ltd in Appeals 129 and 130 of 1988 each moves for an order that the further conduct of these proceedings take place in the New South Wales District Registry. The motions are supported by an affidavit sworn by John Robin Haywood in WAG 129 of 1988. Mr Haywood is a partner in the firm of Freehill Hollingdale and Page, who in these proceedings acts as the Perth agents of the applicants' Sydney solicitors, C.R. Fieldhouse. Reasons advanced in support of the motion include:

1. The applicants have engaged senior counsel at the New South Wales Bar to act for them as he has acted in the preparation of the applicants' notice of objection and thereafter.

2. Of the witnesses likely to be called by the applicant, Perron Investments, one resides in Western Australia, three in New South Wales and one in the Australian Capital Territory.

The principal factor advanced in support of the motion to transfer, however, has nothing to do with the location of witnesses or counsel. According to a minute of the proposed statement of grounds of appeal of S.P. Investments Pty Ltd as trustee of the L.M. Brennan Trust in 113 of 1988, another company called L.S.P. Pty Ltd was trustee of that Trust in the year ended 30 June 1980. It is said that since 1964 the Trustee was entitled to a share of royalties payable by Hamersley Iron Pty Ltd to Wright Prospecting Pty Ltd and Others. In the year ended 30 June 1980 the right to those royalties was assigned by Deed to the National Mutual Life Association of Australasia Limited for a total consideration of $3,968,900 and for a period exceeding 7 years. In the year ended 30 June 1980, NML is said to have received royalties of $400,000 up to and including that ended on 30 June 1986, the sum of $900,000. On 25 November 1987 the Commissioner served on S.P.Investments Pty Ltd as Trustee of the L.M. Brennan Trust an amended assessment purporting to increase its assessable income by the amount of $3,968,000 paid on the assignment. In May of the same year the Commissioner had issued to Perron Investments Pty Ltd amended assessments for the years ended 31 March 1985 and 31 March 1986, increasing that company's assessable income by $900,000 in respect of each year. The Trustee, S.P. Investments Pty Ltd, appeals against the amended assessment for the year ended 30 June 1980. Perron Investments Pty Ltd appeals against the amended assessment for the 1985 and 1986 tax years.

1. It is obvious that the Deed of Assignment in favour of the NML will be of significance on the hearing of the appeal. But the Deed was executed in the Australian Capital Territory. It is common ground that if brought into Western Australia it will attract a substantial liability for stamp duty under the Stamp Act (WA) 1921. No such liability would be incurred if it were to be produced in proceedings in the State of New South Wales. The threshold question is whether such a consideration can be relevant in an application for change of venue.

2. In National Mutual Holdings Pty Ltd v Sentry Corporation (1988) 83 ALR 434, the Full Court discussed the matters to be taken into account in deciding questions of venue under s.48 of the Federal Court of Australia Act 1976 and O.10 r.1 of the Federal Court Rules. At p 441 of the judgment the Court said:
   

"The power conferred on the Court or a Judge by s.48 is in terms wholly unfettered. It should be exercised flexibly having regard to the circumstances of the particular case. It would be regrettable and unwise if the Court were to circumscribe the general power conferred by s.48 with inflexible rules or impose inelastic constraints upon its exercise. As the power may be exercised subject to conditions, the Court or a Judge is in a position to mould orders under the section to take account of the many and varied circumstances that arise in particular cases. The power conferred by s.48 recognises the national character of this Court. The factors which the Court is entitled to take into account in considering whether one city is more appropriate than another for interlocutory hearings or for the trial itself are numerous. The Court must weigh those factors in each case. Residence of parties and of witnesses, expense to parties, the place where the cause of action arose and the convenience of the Court itself are some of the factors that may be relevant in particular circumstances."

1. The Court, it was said, must be satisfied, after considering all relevant matters, that there is sound reason to direct that the proceeding be conducted or continued at some case other than that at which it started. As to the impact of the laws of various States on venue their Honours said at 442:
   

"Difficult questions arise where the relevant law in more than one State or Territory of Australia differs in its effect on the rights of the parties. The weight to be given to this factor in determining motions to continue a proceeding at a different place will be considerable where the differences between the laws of the two States or Territories are material and affect significantly the rights of the parties. "

Their Honours discussion of the impact of varying State laws on choice of venue, related to cases where State laws might affect the relief or remedies available to a party in proceedings e.g. pre-judgment interest or the statutory rate at which an award of damages as compensation for future loss was to be discounted. In the present case, the liability to stamp duty on the Deed if it is brought into Western Australia, is a factor extraneous to the litigation. It is, in my opinion nevertheless, relevant to the venue at which these proceedings are to be conducted. This is a national Court, the fact that the continuance of proceedings in one place may impose a burden on access to the Court that does not exist in another is a matter to be weighed in the balance. There is nothing to suggest that there was anything improper about the execution of the Deed in the Australian Capital Territory. Nor is there any basis suggested for the view that the Court, by taking into account this possible liability, would somehow lend itself to avoidance of an impost otherwise properly payable.

1. Opposing the motion, the Commissioner relies upon an affidavit sworn by Kimberley Richard Buttfield, formerly an Administrative Service Officer attached to the Appeals and Review Group of the Office of the Deputy Commissioner of Taxation in the State of Western Australia. Mr Buttfield is no longer employed by the office. He points out in his affidavit that SP Investments Pty Ltd is a company incorporated in Western Australia, while Perron Investments Pty Ltd is incorporated in New South Wales and was at all material times a beneficiary of the Perron Group Trust, whose Trustee, S.P. Management Pty Ltd, was a beneficiary of the L.M. Brennan Trust.

2. Taxation returns in respect of the L.M. Brennan Trust have been lodged in Perth and the address for service of notices on the Trustee is also in Perth. The principal officers of S.P. Investments Pty Ltd and Perron Investments Pty Ltd are in Perth, which is where their books of account are kept. The Commissioner's files and records relating to the Trust and the two companies are all said to be in Perth. The taxation affairs of the Trustee and Perron Investments have in all aspects, according to Mr Buttfield, been investigated by the Perth office of the respondent and its officers who reside in Perth. This has included the audit investigation of the companies, the issue of the assessments the subject of the proceedings, the decision on the applicants' objection to those assessments and instructions to the Perth office of the Australian Government Solicitor. Mr Buttfield said in his affidavit that several officers of the Commissioner who reside in Western Australia may be required to give evidence at the hearing of the appeals. However, in cross examination it emerged that he was really in no position to say one way or the other whether that would be the case or whether the appeal would be dealt with entirely on the papers. In the circumstances he contended that it was far more convenient to the Commissioner for the proceedings to continue in the Western Australian District Registry.

3. In my opinion, the convenience of the parties in relation to the various locations of witnesses, legal advisers and counsel, is fairly evenly balanced. Having regard to these factors alone, I would not be inclined to make an order for transfer. The use of solicitors or counsel based in New South Wales is a matter of choice and does not have great weight in determining venue in this case. In my view, however, there is no requirement that the Court insist upon hearing the appeal in a venue where the price of access to it is a substantial liability to pay stamp duty on the Deed imposed on the Trustee or other party seeking to rely upon it. I am satisfied, in the circumstances, that the future conduct of these proceedings should be transferred to the New South Wales Registry of the Court and I will so order.