Platypus Leasing & Ors v Commissioner of Taxation [2005] NSWSC 376

New South Wales Supreme Court

CITATION : Platypus Leasing & Ors v Commissioner of Taxation [2005] NSWSC 376

HEARING DATE(S) : 19/11/04

JUDGMENT DATE : 19 November 2004

JUDGMENT OF : Gzell J

DECISION : Motion refused. Taxapayer's summons stayed for three months. Order made that Commissioner might exercise all his powers under the Taxation Administration Act (Cth) in interim.

CATCHWORDS : TAXES AND DUTIES - Goods and Services Tax - Motion by Commissioner of Taxation for summary termination - Summons for declaratory relief filed by taxpayer during Commissioner's investigation - Exercise of investigative powers under Taxation Administration Act 1953 (Cth) feared to constitute contempt of court

Platypus Leasing Inc - 1st Plaintiff International Lease Finance Corporations Inc - 2nd Plaintiff PARTIES : Interlease Aircraft Trading Corporation Inc - 3rd Plaintiff ILFC Australia Pty Ltd - 4th Plaintiff Commissioner of Taxation - Defendant

FILE NUMBER(S) : SC 5056/04

Mr D G Russell QC/ Mr M L Robertson COUNSEL : Mr J A Hogan SC/ Ms J A Needham SC

Ernst & Young Law SOLICITORS : Australian Government Solicitor

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

GZELL J

FRIDAY 19 NOVEMBER 2004

5056/04 PLATYPUS LEASING INC & ORS v COMMISSIONER OF TAXATION EX TEMPORE JUDGMENT 1 By a summons, the plaintiffs sought declarations against the defendant, the Commissioner of Taxation, with respect to their respective liabilities to tax under A New Tax System (Goods and Services Tax) Act 1999 (Cth). 2 The Commissioner filed a notice of motion seeking summary dismissal of the proceedings under the Supreme Court Rules 1970, Pt 13 r 5 together with expedition of that application. 3 I have before me on the application, extensive affidavit material. It reveals that the Commissioner has been conducting an examination of the affairs of the plaintiffs for some considerable time. Allegations are made on behalf of the Commissioner that there has been a lack of co-operation on the part of the professional bodies advising the plaintiffs. Those allegations are contested by the plaintiffs. 4 The application has two strands. First, it is said that unless there is a "matter" before a State court, it is not vested with federal jurisdiction under the Judiciary Act 1903 (Cth), s 39(2) and the proceedings do not raise a "matter". 5 There is an extensive analysis of the cases on this topic by both sides for which I express my gratitude. There is, however, sufficient doubt in my mind as to the accuracy of the Commissioner's argument that no matter exists to instigate federal jurisdiction in the court as not to warrant summary dismissal of the proceedings at this juncture. 6 The principles applicable to summary termination are well understood. The case must be very clear to justify summary intervention to prevent a plaintiff submitting a case for determination in the usual way (Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62 at 91). The court's powers of summary dismissal should not be exercised to deny a plaintiff access to the courts unless the lack of a cause of action is clearly demonstrated (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129). It is for the applicant to demonstrate that the statement of claim is beyond saving by legitimate amendment (Penthouse Publications Ltd v McWilliam, unreported, NSWCA, 14 March 1991, citing Mutual Life & Citizens Assurance Co Ltd v Evatt (1970) 122 CLR 628 at 631). 7 The other strand to the Commissioner's application rests on the interference with the investigation he is conducting of the affairs of the plaintiffs. It is said that as soon as the plaintiffs' summons was filed, it might have constituted contempt of court for the Commissioner to exercise power under the Taxation Administration Act 1953 (Cth). 8 In my view, the matter ought not to be summarily terminated and the assistance of the court should be granted to the continuation of the Commissioner's legitimate investigation. That seems to me, irrespective of the argument as to whether or not a matter exists, to be an incident of the management of the matter, in the absence of its summary termination, in the exercise of functions of this court. 9 Bearing in mind the length of the investigation thus far and what needs to be concluded which may involve examinations of non-residents of this country and bearing in mind the intervention of the Christmas season, it is my view that the matter should be stood over to the end of February 2005 and stayed in the meantime. 10 The fear that the proceedings might cause the Commissioner to risk a charge of contempt of court should he seek to exercise his powers under the Taxation Administration Act 1953 (Cth) has been partially quelled by an undertaking on behalf of the plaintiffs not to take the point. In my view, the Commissioner should be in a position to exercise those powers and it should be made explicit by order of the court that he may do so. In order to attend to any matters that might arise requiring a variation of my orders, it is appropriate to grant liberty to apply. 11 I order that the summons be stayed until 5.00 pm on Friday 25 February 2005 or earlier order of the court. I order that the defendant be at liberty, in that period, to exercise any of his powers under the Taxation Administration Act 1953 (Cth). I stand the summons and the defendant's notice of motion for summary dismissal over before me at 9.30am on Friday 25 February 2005. I grant liberty to all parties to apply on 24 hours' notice. I reserve costs.