Tan v Tan

[2009] NSWSC 976

CITATION:	Tan v Tan [2009] NSWSC 976
HEARING DATE(S):	10/09/09
JUDGMENT DATE :	10 September 2009
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	10 September 2009
DECISION:	1. Make orders in accordance with the short minutes of order signed by the parties and their solicitors, initialled and dated today by his Honour and placed with the papers; 2. Order that the plaintiffs’ statement of claim be otherwise dismissed; 3. Direct the Registrar to send a copy of the judgment of today’s date to the Commissioner of Taxation.
CATCHWORDS:	PROCEDURE - judgments and orders – court asked to make consent orders to dispose of proceedings – prima facie evidence that plaintiff transferred money to reduce tax bill without suggesting lawful explanation as to how tax would thereby be reduced – consent orders made – direction made that judgment be sent to Commissioner of Taxation
CASES CITED:	Carantinos v Magafas [2008] NCWCA 304
PARTIES:	Pearlita Socorro Sison Tan & 1 Or v Lester Simon Sison Tan
FILE NUMBER(S):	SC 1187/09
COUNSEL:	Plaintiffs: A Fernon Defendant: L Fermanis
SOLICITORS:	Plaintiffs: Low Doherty & Stratford Defendant: Berrigan Doube Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WHITE J

Thursday, 10 September 2009

1187/09 Pearlita Socorro Sison Tan & 1 Or v Lester Simon Sison Tan

JUDGMENT

1 HIS HONOUR: In these proceedings, the plaintiffs sought declarations that their son, the defendant, holds funds previously contained in a Citibank Term Deposit account number 9014661206 and in a BankWest Term Deposit account number 973003575-5 in the defendant's name on trust for them. They also sought injunctions restraining the defendant from dealing with those funds. Interlocutory injunctions were made on 21 January 2009 and 3 February 2009.

2 The moneys formerly held in the BankWest Term Deposit have been repaid to the plaintiffs. Pursuant to orders made on 3 February 2009, moneys formerly in the Citibank Term Deposit account (which had been transferred by the defendant to an ANZ Bank in his own name) have been transferred to a trust account of his solicitor's.

3 These proceedings were listed for hearing today of the claims for final relief. Pursuant to the usual procedures, affidavits were filed and objections to affidavits were notified. I have read the affidavits.

4 This morning the parties announced that they had reached a settlement of the proceedings. They asked the court to make orders by consent to dispose of the proceedings. Ordinarily no question would arise when the court is asked to take that course.

5 The parties have agreed to orders that the defendant deliver to the plaintiffs a cheque for the moneys held by his solicitors together with any accrued interest; that the defendant pay the plaintiffs' costs in the nominal sum of $1; and the defendant's cross-claim be dismissed. I understand that the plaintiffs' statement of claim is to be otherwise dismissed.

6 The only issue that troubles me concerns the evidence of the first plaintiff in her affidavit of 20 January 2009 filed in support of the summons concerning the plaintiffs’ purpose in investing their moneys in their son's name. I should say that the evidence shows that the defendant, who is in his early twenties, has not derived any substantial income. The first plaintiff deposed that sometime prior to 28 December 2007, she said to the defendant:

“ We have transferred $100,659.83 of our moneys into your account. We want to invest our moneys into a term deposit but we want the term deposit in your name. I only want it in your name to reduce tax from the income that will be earned from it. Citibank have quoted me 7.75% for 6 months. Telephone your relationship manager and find out the best rate from him. "

7 The plaintiffs' case was that the moneys invested in the defendant's name with Citibank were moneys which at all times were beneficially owned by them. The defendant's consent to the first order is a belated concession of that fact.

8 So far as the moneys in the BankWest account are concerned, the defendant deposed that he had not touched the BankWest Term Deposit and did not know any information about the account.

9 Counsel for the plaintiffs was not able to suggest any lawful explanation as to how transferring moneys into accounts in the name of the defendant to earn interest would reduce tax on the income that would be earned.

10 In Carantinos v Magafas [2008] NCWCA 304, Hodgson JA said that there are strong policy reasons why the court should not assist anyone to benefit from illegal conduct. In that case, the plaintiff engaged in a serious fraud on the revenue. Hodgson JA said that had the plaintiff frankly disclosed his fraudulent and illegal conduct to the tax authorities, and made any appropriate arrangements to pay any tax penalties and interest that might be imposed, there would be no reason to withhold equitable relief. As that had not been established, his Honour said that any relief should be subject to conditions to ensure there was no distribution to the plaintiff or at his direction until the court was satisfied that those matters had occurred. His Honour directed that a copy of the court's judgment be sent to the Commissioner of Taxation. Campbell JA and Handley AJA agreed with these parts of Hodgson JA's reasons.

11 I do not consider that I ought to refuse to make the orders which I am now asked to make by consent on the ground that there is prima facie evidence that the plaintiffs' purpose in putting moneys which beneficially belonged to them into their son's name was to reduce their tax bill.

12 There has been no contested hearing and it is possible that there is an innocent explanation for the matters to which the first plaintiff deposed. Not to make the orders by consent would be to compel the parties to expend further costs. Such a course would be a disproportionate response to the matter of concern. The public interest will be sufficiently served by a copy of these reasons being made available to the Commissioner. Hence, as the Court of Appeal did in Carantinos v Magafas, I will direct the Registrar to send a copy of this judgment to the Commissioner of Taxation in order that the court not assist anyone who might be seeking to benefit from illegal conduct.

13 For these reasons, I make orders in accordance with the short minutes of order signed by the parties and their solicitors which I initial and date today and place with the papers.

14 I also order that the plaintiffs' statement of claim be otherwise dismissed. I direct the Registrar send a copy of these reasons, when available, to the Commissioner of Taxation.

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