FEDERAL COURT OF AUSTRALIA Eastern Nitrogen Ltd v Commissioner of Taxation [1999] FCA 1643 EASTERN NITROGEN LIMITED v COMMISSIONER OF TAXATION QG 197 OF 1995 QG 22 OF 1996 DRUMMOND J 25 NOVEMBER 1999 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 197 OF 1995 BETWEEN: EASTERN NITROGEN LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: DRUMMOND J DATE OF ORDER: 25 NOVEMBER 1999 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant pay the Commissioner's costs of the proceedings, including reserved costs if any, other than costs otherwise expressly the subject of orders of the Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 22 OF 1996 BETWEEN: EASTERN NITROGEN LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: DRUMMOND J DATE OF ORDER: 25 NOVEMBER 1999 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant pay the Commissioner's costs of the proceedings, including reserved costs if any, other than costs otherwise expressly the subject of orders of the Court. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 197 OF 1995 QG 22 OF 1996 BETWEEN: EASTERN NITROGEN LIMITED Applicant AND: COMMISSIONER OF TAXATION Respondent JUDGE: DRUMMOND J DATE: 25 NOVEMBER 1999 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicant submits that the respondent should not have all his costs of the proceeding because, though successful in defeating the challenge to his decisions the subject of the appeals, he failed on two of the issues he raised, viz, the characterisation and sham questions, and his case was conducted in a way which prolonged the hearing unnecessarily. 2 Once the respondent raised the issue of sham by seeking and obtaining leave to amend his statement of facts, issues and contentions, the introduction of that issue into the litigation had no significant impact on the duration of the hearing (though it was the subject of fairly extensive written submissions). The applicant has, in my opinion, been sufficiently protected in respect of the sham issue by the costs order I made in its favour as the price of granting the respondent leave to raise this issue. The factual matters upon which submissions were made in respect of the respondent's characterisation argument on which he failed were almost all, if not entirely, relevant to the two major issues in the case, upon which the respondent succeeded, viz, whether the plant was a fixture and as to the applicability of Pt IVA to the transaction. 3 That the respondent failed on these two issues does not therefore justify depriving him of a successful litigant's ordinary entitlement to all his costs of the proceedings. 4 It is true that at least in some respects, the conduct of the hearing by counsel for the Commissioner was such that the hearing did not proceed as expeditiously as it might have. But the hearing still finished well within the period originally set aside. The conduct of the Commissioner's case was not so deficient as to justify depriving the Commissioner of his prima facie entitlement to all his costs. 5 I will therefore order that the applicant pay the Commissioner's costs of the proceedings, including reserved costs if any, other than costs otherwise expressly the subject of orders of the Court. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond. Associate: Dated: 25 November 1999 Counsel for the Applicant: Mr J Logan Solicitor for the Applicant: Minter Ellison Counsel for the Respondent: Dr M Robertson Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 5 November 1999 Date of Judgment: 25 November 1999