DEPUTY COMMISSIONER OF TAXATION v CAPPER [1999] NSWSC 767

Reported Decision : [1999] 99 ATC 4736 [1999] 42 ATR 434

New South Wales Supreme Court CITATION : DEPUTY COMMISSIONER OF TAXATION v CAPPER [1999] NSWSC 767 CURRENT JURISDICTION : COMMON LAW FILE NUMBER(S) : 11139/1996 HEARING DATE(S) : 19 July 1999 JUDGMENT DATE : 30 July 1999

DEPUTY COMMISSIONER OF TAXATION PARTIES : v PENELOPE G CAPPER (ALSO KNOWN AS PENELOPE G PICKERING) JUDGMENT OF : Master Malpass

LOWER COURT JURISDICTION : Registrar's Court LOWER COURT FILE NUMBER(S) : 11139/1996 LOWER COURT JUDICIAL OFFICER : Registrar Irwin

COUNSEL : PLAINTIFF: MR P D RODIONOFF DEFENDANT: MR P WOODS SOLICITORS : PLAINTIFF: AUSTRALIAN GOVERNMENT SOLICITOR DEFENDANT: McLAUGHLINS SOLICITORS CATCHWORDS : Stay of proceedings; defendant has made application to be relieved of liability in respect of unpaid assessments; discretionary considerations. Administrative Decisions (Judicial Review) Act 1977. ACTS CITED : Judiciary Act 1903, s 39B (1). Taxation Administration Act 1953, s 14ZZM, s 14ZZR. Supreme Court Rules 1970, Pt. 44 r. 5. Alexander & Ors v Cambridge Credit Corporation Ltd (Receivers Appointed) & Anor (1985) 2 NSWLR 685. CASES CITED : Deputy Federal Commissioner of Taxation v Mackey 82 ATC 4563. DCT v HO 32 ATR 269. DECISION : SEE PARAGRAPH 19

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MASTER MALPASS

FRIDAY 30 JULY 1999

11139/1996 DEPUTY COMMISSIONER OF TAXATION v PENELOPE G CAPPER (ALSO KNOWN AS PENELOPE G PICKERING) JUDGMENT 1 During a period of about nine to twelve years ago, the plaintiff served assessments on the defendant. The liability was in the order of $360,000.00. In January 1995, application was made for waiver of the tax liability. In March 1995, the application was refused by the plaintiff. A similar application by certain of other siblings had been allowed. 2 These proceedings were commenced on 7 March 1996. The proceedings are founded on the unpaid assessments. On 13 May 1999, by consent there was an entry of judgment for the plaintiff. The defendant applied for a stay of proceedings. The application came before Registrar Irwin. On 20 May 1999, the Registrar delivered his decision. It is a written decision. The application was refused with costs. 3 There had been proceedings brought in the Federal Court (pursuant to s 39B (1) of the Judiciary Act 1903). The proceedings have been dismissed. The defendant then brought proceedings (QG 153/97) pursuant to the Administrative Decisions (Judicial Review) Act 1977 (The Federal Court proceedings). In the Federal Court proceedings, the defendant seeks a review of the decision refusing the application for waiver of tax liability. The proceedings have been fixed for hearing to take place on 13, 14 and 15 October 1999. 4 The Federal Court proceedings are relevant to part only of the defendant's existing tax liability. Since the matter has been before the Registrar, the defendant has made a further application. This is an application made to the Tax Relief Board for release from payment of the balance of the liability. The Court has been told that this application has been made on the basis of hardship. 5 The defendant now seeks a review of the decision of the Registrar. A hearing took place on 19 July 1999 (strictly speaking it was not a review because the defendant had sought to adduce fresh evidence). The Court had before it the material placed before the Registrar together with a further affidavit sworn by Mr Peace on 14 July 1999 (it deposed to matters that had transpired since the decision of the Registrar). The review principles were not in contest. The applicant bears the onus of satisfying the Court that the decision of the Registrar should be disturbed. 6 The Court has a discretionary power to grant a stay (see Part 44 rule 5 of the Supreme Court Rules 1970). In the exercise of its discretion, the Court has regard to the relevant circumstances of the particular case before it and is concerned that justice is best served between the parties. The applicant bears the onus of demonstrating an entitlement to relief. 7 The Court has been referred to a number of decided cases (including Deputy Federal Commissioner of Taxation v Mackey 82 ATC 4563, Alexander & Ors v Cambridge Credit Corporation Ltd (Receivers Appointed) & Anor (1985) 2 NSWLR 685 and DCT v HO 32 ATR 269). 8 There has been reference to sections 14ZZR and 14ZZM of the Taxation Administration Act 1953. These sections make provision to the effect that the fact that an appeal or a review is pending in relation to a tax decision does not in the meantime interfere with or affect the decision and any tax may be recovered as if no appeal or review was pending. It is common ground that the application for review pending in the Federal Court proceedings is not a review in the sense contemplated by these sections. Nevertheless, it is contended by the plaintiff that these provisions implement a legislative policy which has application in the present case. 9 There is authority to the effect that such provisions disclose legislative policy and that it is a matter to which weight should be attached. 10 In this case, the tax liability due under the assessments has merged in the judgment of this Court. The effect of the sections is really not dissimilar to the principles of general law which relate to judgments (viz a judgment is presumed to be correctly entered and is liable to be enforced until it is disturbed (by appeal or otherwise)). 11 The defendant contends that the decision of the Registrar is flawed by reason of a number of errors. It seems to me, that for present purposes it is not necessary to pursue these contentions. The real question is whether or not the decision should be disturbed and a stay granted. 12 The prospects of success of the pending application for review in the Federal Court proceedings are far from clear. What is known is that a similar application for waiver made by certain of the other siblings was successful. The pending review relates to part only of the tax liability. There is a lack of material to contemplate the prospects of success of the application for release. In the light of the material, the Court is not really in a position to make a preliminary assessment of the defendant's prospects of being relieved of her tax burden. 13 This is not a case in which it can be said that recovery back of the judgment moneys (if the applications made by the defendant are successful) would be improbable. On the defendant's case, such a situation would not arise. There is material in which it is asserted that the defendant lacks the financial resources to satisfy the judgment. 14 The attitude of the plaintiff is unhelpful. Whilst there is no pending threat of execution of the judgment, the position taken by the plaintiff has engendered some fear or uncertainty that bankruptcy proceedings may be brought. The plaintiff is prepared to say little more than that it is presently considering its position. 15 In the past, there has been a demonstrable lack of urgency both in the steps taken to recover the tax and the prosecution of these proceedings. The plaintiff has taken bankruptcy action in relation to certain of the other siblings. However, in this case, it would seem unlikely that the defendant could be made bankrupt prior to the disposition of the pending application. The Federal Court proceedings have a hearing date in October next. Further, if any proceedings are brought, there is the prospect of them being adjourned until inter alia the Federal Court proceedings are disposed of. 16 If the Federal Court proceedings are resolved adversely to the plaintiff, any bankruptcy proceedings brought prior to the determination could prove abortive and see the plaintiff throwing away costs. A sudden flurry of activity from the plaintiff in this matter would seem unusual and may be productive of little advantage. Commonsense would indicate that further action should abide inter alia the result of the Federal Court proceedings. 17 The present state of affairs arises because of the attitude adopted by the plaintiff. Whilst there is no pending threat of enforcement action, the plaintiff is not prepared to give any indication that it will not take action either pending the disposition of the Federal Court proceedings or until further notice. If such a stance had been taken, the defendant may not have been led to a position where she felt the need to bring an application for a stay. 18 Be that as it may, it does not seem to me that the material placed before the Court throws up circumstances justifying the grant of a stay. In my view, the defendant has failed to discharge the relevant onus. In these circumstances, there is no basis for disturbing the decision of the Registrar. 19 I dismiss the Notice of Motion filed on 17 June 1999. The question of costs has its complications. In the circumstances of this case, I consider that justice is best served if each party bears their own costs and I so order. **********