Wall Street Exchange and Finance v Federal Commissioner of Taxation

[2001] FCA 1897

FEDERAL COURT OF AUSTRALIA

Wall Street Exchange & Finance v Federal Commissioner of Taxation [2001] FCA 1897

WALL STREET EXCHANGE & FINANCE PTY LIMITED v FEDERAL COMMISSIONER OF TAXATION

N160 OF 2001

GYLES J
SYDNEY
10 DECEMBER 2001

IN THE FEDERAL COURT OF AUSTRALIA
DISTRICT REGISTRY	N160 OF 2001

BETWEEN:	WALL STREET EXCHANGE & FINANCE PTY LIMITED APPLICANT
AND:	FEDERAL COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	GYLES J
DATE OF ORDER:	10 DECEMBER 2001
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.   The Applicant file and serve all evidence upon which it intends to rely on or before 11 January 2002;

2.   The Respondent to file and serve any evidence upon which it  intends to rely on or before 6 February 2002;

3.   If Respondent does not intend to file any evidence then Respondent to file and serve a list of documents to be relied upon on or before 6 February 2002;

4.   Liberty to apply on three days’ notice;

5.   Stood over for further directions at 9.30am on 8 February 2002.

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

IN THE FEDERAL COURT OF AUSTRALIA
DISTRICT REGISTRY	N160 OF 2001

BETWEEN:	WALL STREET EXCHANGE & FINANCE PTY LIMITED APPLICANT
AND:	FEDERAL COMMISSIONER OF TAXATION RESPONDENT

JUDGE:	GYLES J
DATE:	10 DECEMBER 2001
PLACE:	SYDNEY

REASONS FOR RULING (EX TEMPORE)

1. This matter was mentioned before me for directions this morning.  It is apparent from the comments of both parties, which the transcript will record, that nothing has been done on this case since April 2001, notwithstanding timetables being fixed on two separate occasions.  There has been no application to the Court to extend time. No affidavit has been filed on behalf of Wall Street Exchange & Finance Pty Limited (“the Applicant”) to explain this lack of attention to the orders of the Court.  On the other hand, the Federal Commissioner of Taxation (“the Respondent”) has simply sat by while this has occurred and has not chosen to bring the matter back before the Court.  That is also an entirely unsatisfactory situation.

2. The Respondent now seeks peremptory orders. Having looked at the matter it seems to me that a threshold question is whether or not the Applicant was entitled to take the position that it would not file its evidence until the Respondent produced a list of information.  The Applicant contends that it would need that information before it filed its evidence. 

3. In support of this proposition, Counsel for the Applicant has referred to principles which he says were applied by Lockhart J in John Tanner Holdings Pty Limited v Federal Commissioner of Taxation (1988) 19 ATR 1640 (“John Tanner”) (particularly at 1643 to 1644). That case was about discovery and involved a different factual and legal setting to that which is before the Court. Counsel then referred to the decision of Matthews J in AAT Case  25/95 No 10, 122 (1995) 95 ATC 263, in particular to what her Honour says in pars [18] and [19] at 267 in dealing with the development of procedures to avoid what Counsel called “trial by ambush” in tax cases.

4. Counsel also referred to O52B r 5 of the Federal Court Rules, in particular r 5(a)(iv) which obliges the Commissioner to serve within 28 days of service of the application:

   “…any return or other document in the Commissioner’s possession or under the Commissioner’s control to which the taxation objection relates that is relevant to the hearing of the matter...” [emphasis added]

   It is submitted by Counsel for the Applicant that the Commissioner’s obligation under that provision is to file such documents as are in his possession which are relevant to the issue before the Court and that this would pick up the documents which have been identified by the Applicant in its correspondence.

5. Counsel for the Respondent says in answer to both submissions that, whatever may be said about the decision in John Tanner and no matter what might be said about O52B r 5 in other contexts, they have no practical application in the present case where the issue by reason of the assessment (being a special assessment pursuant to ss167 and 168 of the Income Tax Assessment Act 1936 (Cth)) are those explained by the High Court in Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 (at 619, 621, 623 , 625) (“Dalco”) which, in turn, reaffirmed the position as it is explained in George v Federal Commissioner of Taxation (1952) 86 CLR 183 (at 203).

6. It is submitted by Counsel for the Respondent that, in a case of this character, the starting point is entirely in the hands of the Applicant which must produce whatever evidence it wishes to rely upon to establish that the assessment should be as it contends rather than as the Commissioner contends and that there is no place for the equivalent of preliminary discovery in a case of this kind. 

7. It seems to me that Respondent is essentially on solid ground in relation to this matter. I have some concern about the proper construction of O52B r 5 because the Respondent’s construction of it, at least in the present circumstances, renders the obligation a very slight one.  However, in the absence of authority to the contrary, it seems to me that I must read the provision in light of the decision of the High Court in Dalco’s case.

8. It does not follow from what I have said that, ultimately, documents in the possession of the Respondent will not be relevant and I am not in any sense prejudging the view I would have as to the production of documents or the particulars to be given concerning documents once the Applicant has filed its evidence and the matter is ready for hearing.  The Respondent is of course under no obligation to call evidence itself and the decision as to whether and to what extent there should be any further directions about documents is best dealt with at a later stage of preparation of the case.

9. I take in account the fact that the obligation lying upon the Applicant to produce its evidence now, without knowing in detail what evidence the Respondent may rely upon, may lead to some difficulty in preparation and could lead to some increase in cost but that consideration does not, I think, outweigh those considerations which the Respondent has put to me today.   The peremptory orders will not be made and I will make a set of directions as follows:

   1.   The Applicant file and serve all evidence upon which it intends to rely on or before 11 January 2002;

   2.   The Respondent to file and serve any evidence upon which it  intends to rely on or before 6 February 2002;

   3.   If Respondent does not intend to file any evidence then Respondent to file and serve a list of documents to be relied upon on or before 6 February 2002;

   4.   Liberty to apply on three days’ notice;

   5.   Stood over for further directions at 9.30am on 8 February 2002.

   I certify that the preceding nine (9)
   numbered paragraphs are a true copy
   of the Reasons for Ruling herein
   of the Honourable Justice Gyles.

   Associate:        

   Date:               15 January 2002

   Counsel for the Applicant:  DKL Raphael

   Solicitor for the Applicant:                    Mark Douglass & Associates

   Counsel for the Respondent:                DB McGovern

   Solicitor for the Respondent:                Australian Government Solicitor

   Date of Hearing:  10 December 2001

   Date of Judgment:  10 December 2001