FEDERAL COURT OF AUSTRALIA Softex Industries Pty Ltd ACN 010 152 913 v Commissioner of Taxation (No 2) [2000] FCA 1774 SOFTEX INDUSTRIES PTY LTD ACN 010 152 913 (formerly COSCO HOLDINGS PTY LTD) v COMMISSIONER OF TAXATION Q 7 OF 1999 DRUMMOND J 6 DECEMBER 2000 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 7 OF 1999 BETWEEN: SOFTEX INDUSTRIES PTY LTD ACN 010 152 913 (formerly COSCO HOLDINGS PTY LTD) APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: DRUMMOND J DATE OF ORDER: 6 DECEMBER 2000 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The respondent pay one-half of the applicant's costs of and incidental to the appeal, including reserved costs, if any. 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 Q 7 OF 1999 BETWEEN: SOFTEX INDUSTRIES PTY LTD ACN 010 152 913 (formerly COSCO HOLDINGS PTY LTD) APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: DRUMMOND J DATE: 6 DECEMBER 2000 PLACE: BRISBANE REASONS FOR JUDGMENT 1 On 22 November last, I ordered that the applicant's appeal be allowed and the matter remitted to the Administrative Appeals Tribunal for determination of a limited issue, viz, whether the applicant had borne sales tax on certain purchases by it and, if so, whether it was entitled to a credit in respect of such tax. The order has not yet been perfected. At the respondent's request, I have received submissions from it and also the applicant on whether I should accede to the respondent's submission to revoke the order for remitter. 2 In resisting the application to revoke the order for remitter, counsel for the applicant submitted that the Court's power under O 35 r 7(1) is so constrained as to prevent it being exercised in the present case. Reference was made to Qantas Airways Ltd v Cameron (No 2) (1996) 68 FCR 367 at 374 where Lindgren J, with Lehane J's concurrence, drew from a number of authorities involving applications to alter both perfected and non-perfected orders the proposition that the jurisdiction to vary or set aside a judgment or order before it is perfected "should be exercised with caution". The power of the Court to vary or revoke orders and judgments pronounced but not perfected is well established: see Smith v NSW Bar Association (1992) 176 CLR 256 at 265. The power is discretionary and will obviously only be exercised if there is good reason to revoke or vary an unperfected order (which will often have been pronounced only after the giving of reasons). Striking examples of the exercise of the power are provided by cases such as Winrobe Pty Ltd v Sundin's Building Co Pty Ltd [No 3] (1993) NSWJB 42 and Moons Motors Ltd v Kiuan Wou [1952] 2 Lloyd's List Law Report 80, where the Court exercised this power to change its decision in favour of one party to the other after pronouncing oral judgment in court supported by reasons; other examples are given in AB v Federal Commissioner of Taxation (1998) 98 ATC 5,100 at 5,104. Policy considerations relevant to whether the power should be exercised are fully exposed in the reasons of Brennan, Dawson, Toohey and Gaudron JJ in Smith at 265 and of Kirby P, with whom Priestley and Handley JJA agreed, in Haig v Minister Administering The National Parks and Wildlife Act 1974 (1994) 85 LGERA 143 at 152 - 153. The object of the jurisdiction is to prevent injustice, not to give an unsuccessful party an opportunity to re-argue its case to better advantage and the public interest in maintaining the finality of litigation and the availability of an avenue of appeal are all relevant considerations. 3 As is reflected in O 35 r 7(2) and (3), the Court's power to vary or revoke a perfected order is much more tightly constrained. See Haig at 153, where Kirby P said of this power: "It is truly exceptional". 4 In the reasons I published on 22 November last, I recorded in pars [3] and [4] the applicant's submissions to me that, if it succeeded (as it did) in its challenge to the Tribunal's determination that the paper collectors were not manufacturers, the matter should go back to the Tribunal to determine whether the applicant had "borne tax" within the meaning of that term in s 11(3) the Sales Tax Assessment Act 1992 (Cth) because, so the applicant contended, that was an issue which could only be resolved after facts additional to those found by the Tribunal in the initial hearing were found. I also recorded that "the respondent accepted that if the Tribunal went wrong in concluding that the paper collectors were not manufacturers of the bales, the case should be remitted". 5 The respondent contends that it did not adopt that position on the "borne tax" question at the hearing before me. As appears from pp 7 and 16 - 17 of the transcript of the argument before me, senior counsel for the applicant unequivocally stated the applicant's position that this issue could only be determined after additional facts were found. The respondent did, in its written submissions filed well prior to the hearing, contend that because none of the paper collectors had charged the applicant any sales tax on the sales by them of bales to it, "no tax was therefore borne by it in terms of s 11(3) of the Act". However, nowhere in oral argument did the respondent dispute the submission by senior counsel for the applicant that, if it succeeded on the manufacture issue, the matter would need to be remitted for determination of further facts on the "borne tax" issue. I regard the respondent as having, by its conduct of the hearing, acquiesced in the applicant's contention that remitter is necessary, given the applicant's success in the proceedings before me. 6 The respondent also now submits that the Tribunal made a finding of fact that the applicant had not "borne tax" in the relevant sense. It refers to the first sentence of par [77] of the Tribunal's reasons. However, I read that as the conclusion reached by the Tribunal on what it referred to as the "hypothetical" case the applicant ran on that issue before it, a case discussed by the Tribunal in its reasons at pars [72] to [77] (apart only from the first two sentences of par [72]). I do not read it as a finding of fact that conclusively settles the issue whether the applicant has "borne tax". (The respondent did not seek to maintain before me that the simple conclusion expressed by the Tribunal in the first two sentences of par [72] was decisive of this issue.) 7 I see no reason to vary the order for remitter which I made on 22 November last. 8 On the question of costs of the proceedings before me, the applicant seeks an order that it have the costs of the proceedings on the basis that it is the successful party. The respondent submits that there should be no order as to the costs of the appeal, it being said that remission is the product of the way the applicant chose to conduct its case below. I do not accept that this is a proper basis for denying the applicant its costs. 9 However, the applicant was only partly successful on appeal on the issues it chose to run before me. Moreover, the supplementary notice of appeal, a nine page document, contains a very wide ranging attack on the Tribunal's decision, never formally abandoned, though many of the matters raised were not argued before me. In my opinion, sufficient recognition of the measure of success the applicant has achieved will be accorded by an order that the applicant recover one-half of its costs of and incidental to the appeal, including reserved costs, if any. 10 The applicant also seeks the costs of the hearing on 4 December when I heard argument on the respondent's application to revoke my remitter order and on the question of the costs of the appeal. The hearing on 4 December 2000 was made necessary by the respondent's understandable desire to put submissions on costs to the Court only after it had the opportunity of reading the reasons I published on 22 November last. Neither party can be regarded as the successful party on the costs issue. I think justice will be done by the costs order I propose which will include the costs of 4 December. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond. Associate: Dated: 6 December 2000 Counsel for the Applicant: H Alexander Solicitor for the Applicant: Minter Ellison Counsel for the Respondent: JA Logan SC Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 4 December 2000 Date of Judgment: 6 December 2000