Agriwealth Capital Limited v Commissioner of Taxation (No 2) [2019] FCA 253

FEDERAL COURT OF AUSTRALIA

Agriwealth Capital Limited v Commissioner of Taxation (No 2) [2019] FCA 253 File number: NSD 618 of 2018

Judge: ROBERTSON J

Date of judgment: 28 February 2019

Catchwords: COSTS – where parties had mixed success – whether a separate issues analysis appropriate

Date of hearing: Heard on the papers

Date of last submissions: 26 February 2019

Registry: New South Wales

Division: General Division

National Practice Area: Taxation

Category: Catchwords

Number of paragraphs: 21

Counsel for the Applicant: Mr JM Ireland

Solicitor for the Applicant: McGirr Lawyers

Counsel for the Respondent: Mr NJ Williams SC with Ms TL Phillips

Solicitor for the Respondent: Australian Government Solicitor

ORDERS NSD 618 of 2018

BETWEEN: AGRIWEALTH CAPITAL LIMITED Applicant

AND: COMMISSIONER OF TAXATION Respondent

JUDGE: ROBERTSON J DATE OF ORDER: 28 February 2019

THE COURT ORDERS THAT:

1. The applicant pay 50 percent of the respondent's costs, as agreed or assessed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ROBERTSON J: 1 These reasons concern the question of costs and should be read with the reasons for judgment in the principal proceedings: Agriwealth Capital Ltd v Commissioner of Taxation [2019] FCA 56. 2 In that judgment I expressed the provisional view that the applicant should pay 50% of the respondent Commissioner's costs. I ordered that if either party wished to contend for a different costs order they should notify my associate within 14 days. 3 The applicant did so notify my associate and a timetable was arranged for the filing of short written submissions, with the matter to be determined on the papers. 4 The applicant, by submissions dated 22 February 2019, sought an order that there be no order as to costs, to the intent that the parties bear their own costs of the proceedings. 5 The respondent Commissioner, by submissions dated 26 February 2019, contended that the costs order sought by the applicant should not be made and that the proper order was that the applicant pay 50% of the respondent's costs. 6 The matters relied on by the applicant included that there were three issues in contention, expressed in broad terms, referring the substantive judgment at [21]. The applicant submitted that the Commissioner failed on the first issue, as the Court declared that the respondent's decision made on 5 February 2018 was a decision to which s 13 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) applied. 7 The applicant next submitted that the Commissioner failed on what it contended was the second issue, which was whether the letter of 9 March 2018 was to be regarded as part of the "statement" contemplated by s 13. 8 The applicant accepted that it failed on what it described as the third issue because, although the applicant was entitled to make the request for a statement of reasons, the Court declined as a matter of discretion to order a further statement. 9 The relevant orders were as follows: 1. The application for an order that the respondent furnish to the applicant an additional statement containing further findings on material questions of fact, further reference to the evidence or other material on which those findings were based or further particulars of the reasons for the decision is refused. 2. The applicant's originating application dated 13 April 2018 as amended in the form dated 23 July 2018 is otherwise dismissed. 10 On this basis, the applicant submitted that the respondent Commissioner failed on two and succeeded on one of the three issues litigated before the Court. The two issues on which the Commissioner failed were large issues, the consideration and determination of which occupied a preponderance of the hearing and the reasons for judgment. The applicant submitted that a fair assessment of the outcome would be reflected in an order that the parties bear their own costs. 11 The respondent Commissioner submitted that, for the purposes of determining costs, the "event" was the practical result of a particular claim. Whether an order contrary to the general rule that costs follow the event should be made depended on the circumstances of the case viewed against the wide discretionary powers of the Court, which power should be liberally construed. The respondent Commissioner submitted that the practical relief sought by the applicant was an order that the respondent furnish the applicant with a statement of reasons. While the applicant also sought declarations as to its entitlement to request such a statement, those declarations were in aid of the ultimate relief sought by the applicant, that is, an order that a statement of reasons be provided. The refusal of such relief was the relevant "event". Accordingly, pursuant to the general rule, the applicant should pay the respondent's costs. 12 The respondent Commissioner accepted, however, that there were grounds for the Court, in the exercise of its discretion, to make an order departing from the usual rule. Nevertheless, he disputed that the issues on which the applicant succeeded occupied the "preponderance" of the hearing. Much of the hearing and the preparation were directed to the question of whether a statement of reasons of 9 March 2018 that had already been provided to the applicant fulfilled the substantive requirements of a s 13 statement. The Court ultimately held that it did, so that there was no basis to make an order requiring a further statement of reasons. It was submitted that it was appropriate for the costs order to reflect the respondent's success on that aspect. 13 In my opinion, the starting point is that the parties had mixed success, as may be seen from the declaration and orders made on 1 February 2019. The applicant obtained the declaration it sought but did not obtain an order that the respondent furnish an additional statement of reasons. 14 I do not accept the applicant's submission that the issue on which it succeeded occupied the preponderance of the hearing. It also does not follow, as suggested by the applicant, that a mere count of the number of paragraphs in the judgment dealing with that issue is necessarily of substantial significance in the exercise of the Court's discretion to award costs. I place little weight on the number of paragraphs that each issue occupied in the judgment in the principal proceedings. Those numbers do not in this instance reflect accurately what I assess, in a broad and non-technical sense, to have been the costs on either side. 15 I do not accept the applicant's submission that what was said at [117] of the substantive judgment would constitute an estoppel in any future proceedings upon judicial review. Even if it did, I would not take that matter into account on the question of costs. 16 In my opinion the appropriate characterisation of the proceedings is that the applicant sought, but failed to obtain, an order for a further statement of reasons. I do not regard the point on which the applicant succeeded, that the decision in issue was a decision to which s 13 applied, was a discrete issue in the relevant sense. Rather, it was a step towards the claimed ultimate relief which the applicant failed to obtain. 17 Further, in terms of the substance of the written and oral submissions on each side and what I assume to have been the corresponding costs of preparation on either side, I accept that much of it concerned whether an adequate statement of reasons had already been provided to the applicant. 18 I also note that the respondent does not submit that the proper order is that the applicant pay the entirety of the respondent's costs or that the applicant pay a greater proportion of the respondent's costs than that indicated by my provisional view: see [2] above. 19 In these circumstances, I consider that some allowance should be made for the applicant's success on a point of substance, even though it was not a discrete issue, and that therefore the respondent should not be awarded the entirety of his costs. 20 In assessing the appropriate proportion, although I do not proceed strictly by reference to the three issues identified by the applicant, I do take into account that the point of substance upon which the applicant was successful took up some time in submissions and in preparation as did, to a much lesser extent, whether the statement dated 9 March 2018 did or did not accompany the decision given on 5 February 2018. 21 In my view, the appropriate order is that the applicant pay 50% of the respondent's costs, and I so order. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson.