Arundel Chiropractic Centre Pty Ltd v Dep. Commissioner of Taxation B61/1999 [2000] HCATrans 569 (14 September 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B61 of 1999

B e t w e e n -

ARUNDEL CHIROPRACTIC CENTRE PTY LTD

Applicant

and

THE DEPUTY COMMISSIONER OF TAXATION

Respondent

Notice of motion

CALLINAN J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 14 SEPTEMBER 2000, AT 12.43 PM

Copyright in the High Court of Australia

MR P.V. SLATTERY, I appear with DR G.L. EBBECK for the Deputy Commissioner of Taxation. (instructed by the Australian Government Solicitor) MS A JULIAN-ARMITAGE: I appear for Arundel Chiropractic Centre Pty Ltd, the applicant in this matter, and I also appear for ITR.(instructed by Rea & Sockhill)

HIS HONOUR: ITR, is that the full name?

MS JULIAN-ARMITAGE: ITR is the company that the Commissioner of Taxation seeks to join..

HIS HONOUR: Thank you. So you are appearing for Arundel Chiropractic Centre Pty Ltd and ITR - is that ITR Pty Ltd?

MS JULIAN-ARMITAGE: It is the Institute of Taxation Research Pty Ltd, your Honour, yes.

HIS HONOUR: Yes, all right, thank you.

HIS HONOUR: Dr Ebbeck, you just filed a notice of motion, is that right?

MR SLATTERY: We have, your Honour. We received last evening a notice of discontinuance by Arundel or Nuradel, as it is now called, and our notice of motion is to set aside the notice of discontinuance.

HIS HONOUR: And that was only served yesterday I understand.

MR SLATTERY: The notice of discontinuance, we received it about 5pm last night, but the notice of motion only was served this morning.

HIS HONOUR: Yes, all right. Ms Julian-Armitage, are you ready to deal with the - - -

MS JULIAN-ARMITAGE: Your Honour, there has been a myriad of problems with respect to service in this matter. The matter emanates from a winding-up application in the Supreme Court last December that was settled with my friend's client and the removal under the section 40 to this Court by some error had not been discontinued as a result of that settlement and it just stayed in abeyance. I understand from my instructions that a notice of motion to join ITR and to seek indemnity costs, as against Arundel, was applied for on 15 August of this year. However, there has been a problem with service in terms of - the company was served in Sydney by our solicitor - - -

HIS HONOUR: I think I appreciate all of that; I am just concerned with what we are going to do today. Are you ready to deal with the notion to set aside the notice of discontinuance?

MS JULIAN-ARMITAGE: Your Honour, no. I.....about a quarter to ten this morning.

HIS HONOUR: No. But mind you, you served your notice of discontinuance very late too, did you not?

MS JULIAN-ARMITAGE: Well, we only had notice that this was on yesterday, your Honour. I have an affidavit from a director of the company who states that he was only contacted by the Registrar yesterday.

HIS HONOUR: Yes, all right, thank you, Ms Julian-Armitage.

MR SLATTERY: Your Honour, we would join issue with everything my friend has just said. There have been no problems whatsoever with service in this matter and I can go into detail on that. The question of the removal, it is not correct to tell your Honour that the question of removal should have been discontinued at the same time. Active steps, and it is in the affidavit materials that we have filed, in relation to the removal and, in particular, to the filing of submissions and the filing of applications took place contemporaneously with and after the agreement and the withdrawal of the summons to wind up.

HIS HONOUR: All right, well let me accept all of that, and I understand what you are saying. We are not going to get proper argument on the application today on the other side, are we?

MR SLATTERY: Well, I would challenge that as well, your Honour. Arundel yesterday discontinued; Arundel were served with our applications and they chose to discontinue yesterday. That is the choice that they took. If my friend was not properly instructed in relation to that, we would say that is neither here nor there. They took the step last night.

HIS HONOUR: Are you applying for an adjournment? I assumed you were. Are you applying for an adjournment?

MS JULIAN-ARMITAGE: Your Honour, on the basis that I am not in a position to argue the application to strike-out the notice - - -

HIS HONOUR: Well, are you applying for an adjournment?

MS JULIAN-ARMITAGE: Yes, your Honour.

HIS HONOUR: How long adjournment do you want?

MS JULIAN-ARMITAGE: It would not need to be a long period of time, your Honour.

HIS HONOUR: Yes, all right. Yes, Mr Slattery. Well there is an application for an adjournment.

MR SLATTERY: Well, there is an application for an adjournment. I really would like to be assisted by proper argument on this. I understand, I think, some of the background of this. One of the cases I heard, did I not, that is referred to - - -

MR SLATTERY: Certainly, the Malika matter your Honour has heard and I think the.....matter - - -

HIS HONOUR: I understand the substance of your contention, that your contention is that totally untenable cases are being brought at very great expense to the revenue and to the public and that there has been persistence in them, notwithstanding clear decisions that they have no validity and that there ought to be indemnity costs and the instigators ought to be similarly liable for those costs; in substance that is what you want to impress?

MR SLATTERY: Yes, your Honour. Can I put to your Honour as well, in relation to the question of the notice, that the company was served with the applications which are before you today, the company has been served with the application in relation to the setting aside of the notice of discontinuance, but in relation to the application for costs, it was served by the Court and letters have been sent to it, so that it had full knowledge of everything that was to happen today. It chose it last evening. So we would vigorously oppose the application for adjournment, because - - - HIS HONOUR: Obviously I am suspicious about the very late discontinuance.

MR SLATTERY: Yes, and your Honour would have received, I think, written submissions from us.

HIS HONOUR: I have, but it is not going to be effective if I set it aside, is it?

MR SLATTERY: No.

HIS HONOUR: So there is no further prejudice to your client and frankly, Mr Slattery, I want to be assisted by argument if possible on this. I do not think it is a light matter to award costs against a non-party nor a light matter to award indemnity of costs. I appreciate your position but I must say I am minded at present to grant a short adjournment in order that the Court may be assisted and, upon terms. I would make an order for costs in respect of today thrown away by the notice of discontinuance. Subject to what Ms Julian-Armitage puts, I would order that those costs be paid on an indemnity basis.

MR SLATTERY: I hear what your Honour says, and I have put everything I think I can to you and it is a matter for your Honour's discretion and I would not put anything further to you. There are a number of other applications. Your Honour mention the question of the costs against the non-party. My friend also mentioned, and she has mentioned to me outside of this Court, that there may be some challenge in relation to the service of that application. I would like to have those matters clarified. If we are going to use today to set some steps in relation to further hearing, I think I would like to know precisely what it is that is being said and I think my friend ought to make her instructions quite clear and put on the record what she is saying of her instructions. There is also then, your Honour, behind that, the question of the subpoenas, which we have sought to be issued by the Court, which I understand is still with your Honour, and we would seek orders for the issue of those subpoenas.

HIS HONOUR: There may be a question of legal professional privilege involved in respect of some of those documents.

MR SLATTERY: If that is the case, your Honour, then the recipient of the subpoena is quite at liberty to take the point.

HIS HONOUR: To take the point.

MR SLATTERY: There can be no question of legal professional privilege between the taxpayer and the ITR. The ITR is not a legal entity or a legal adviser, so there can be no question of privilege except what might have been transmitted from a legal adviser.

HIS HONOUR: You made an application for those subpoenas.

MR SLATTERY: Yes, your Honour.

HIS HONOUR: Has there been any application to set them - I have not issued those.

MR SLATTERY: That is correct, your Honour, yes.

HIS HONOUR: They can only be issued with the leave of a Judge, is that right.

MR SLATTERY: That is correct, your Honour, under the Rules.

HIS HONOUR: I can do that; I do not need to have a hearing on that.

MR SLATTERY: No, your Honour. I would have thought that was reasonably administrative, your Honour. The question then becomes what the recipient wants to do with the subpoena and that may be a matter for another day.

HIS HONOUR: Yes, I understand that.

MR SLATTERY: But we would certainly press their issue, your Honour, because - - -

HIS HONOUR: Well, I had better look at thrm again. I have looked at them. Assume that I were to issue them today.

MR SLATTERY: Yes, your Honour.

HIS HONOUR: Say I were to adjourn this matter for a week - and I would adjourn it to meet your convenience, what is your situation next Thursday?

MR SLATTERY: I happen to be in Sydney next week, your Honour.

HIS HONOUR: I will not put it on a date that does not suit you, Mr Slattery.

MR SLATTERY: Thank you.

HIS HONOUR: What about the following week?

MR SLATTERY: In a fortnight - if that is possible for your Honour. I do not know what your Honour's convenience is and we are at your Honour's convenience, obviously.

HIS HONOUR: There is no problem about a fortnight? Well, say I were to make an order for costs, if I were to make an order that if the subpoena is issued today, any objection that the subjects of the subpoena want to take must be taken by filing and serving an affidavit to that effect within seven days from service - - -

MR SLATTERY: Yes, and we would want to perhaps give you an idea when we could serve, today being Thursday, probably by next Monday, I would hope, yes. If your Honour would issue them today, we would have them served by next Monday.

HIS HONOUR: Yes, all right. Now, what other orders do you think would be appropriate?

MR SLATTERY: My friend has put into issue a number of matters, and that is why I would like her to state what her instructions are.

HIS HONOUR: I think it is probably better if I make it a term of the ground of an adjournment that the respondent file detailed written submissions raising every point that the respondents wish to raise, again, by say, Monday week.

MR SLATTERY: Thank you, your Honour.

HIS HONOUR: Now, is there anything further that would be appropriate?

MR SLATTERY: Yes. Your Honour, the question of the costs. Our position in relation to Arundel is that there is an application, it is in the papers, for that company to be struck off. A costs order against that company might well be nugatory.

HIS HONOUR: I understand that, but I would still make it, and that would not preclude you from making an application in respect of a non-party.

MR SLATTERY: Thank you, your Honour.

HIS HONOUR: I understand your concern, but I shall make it clear that I am reserving the costs in respect of your application to join a non-party; that would cover that situation, would it not?

MR SLATTERY: Yes, thank you. Thank you, your Honour, I do not think there is anything more I can put to you.

HIS HONOUR: Now, Ms Julian-Armitage, you have heard what I have been discussing with Mr Slattery; is there anything you can say against any of that?

MS JULIAN-ARMITAGE: No, your Honour. At this stage I have no instructions with respect to the indemnity cost issues, but I do have some material that I would like to file before your Honour adjourns, if I may, with respect to the service issues that my friend has raised, that I raised with him outside.

HIS HONOUR: Yes.

MS JULIAN-ARMITAGE: And also if I could formerly read and file the notice of discontinuanc. The Registry would not allow that to occur by fax yesterday.

HIS HONOUR: Yes. There is a rule, is there, Mr Slattery, that allows you to apply to have the notice of discontinuance set aside?

MR SLATTERY: I do not know of a formal rule, your Honour. The rule in relation to discontinuance is Order 27.

HIS HONOUR: Which means it can only be done by leave of the Court?

MS JULIAN-ARMITAGE: No, your Honour.

MR SLATTERY: No, we are not in that position yet, your Honour. That rule would apply in so far as there may be a hearing proceeding and, for example, where it may have come to a position concerning judgment. The jurisdiction and exercise of discretion would be in the inherent jurisdiction of the Court, your Honour, and that is the way the matters have been treated.

HIS HONOUR: What is the notice of discontinuance rule itself, Order - - -

MR SLATTERY: Order 27, your Honour.

HIS HONOUR: Yes, I have Order 27.

MR SLATTERY: You will see in rule 1(2) that is where the question of costs is considered concerning discontinuance and that is the point I was making to you previously. The issue is whether or not it is an abuse of process in the circumstances currently before the Court to have filed the notice of discontinuance. Can I tell you his Honour Justice Gummow dealt with that matter in the McKewin's Case.

HIS HONOUR: Yes, what did he say?

MR SLATTERY: In that case, slightly differently from this, the solicitor himself purported to discontinue the action. Justice Gummow treated that as a nullity but did consider the question, in passing only, of whether or not that could be set aside as an abuse, and the Castanho decisions was discussed which has been discussed in two other Australian - - -

HIS HONOUR: What did Justice Gummow say?

MR SLATTERY: I can hand your Honour a copy of the transcript, and to my friend. Page 7 to 19, does your Honour have that, the top right-hand corner?

HIS HONOUR: Yes, I do.

MR SLATTERY: At about point 5 of the page Mr Orr says:

our principle submission.....If that submission fails, then we say that the Court is able to set aside the notice of discontinuance in order to enable our notice of motion In relation to costs to be heard.

There is a summary of argument:

HIS HONOUR: Yes, well it is pretty obvious.

MR ORR: We rely on the House of Lords in Castanho.

HIS HONOUR: There will be no need to worry about the House of Lords.

Now, that was the only discussion on the point.

HIS HONOUR: Do you have any objection to my allowing the notice of discontinuance to be filed? I suppose it has to be filed in order for you to set it aside, is that right?

MR SLATTERY: Yes, your Honour. Yes, it does, I think that is right.

HIS HONOUR: Yes, all right, thank you, Mr Slattery.

MR SLATTERY: Thank you.

HIS HONOUR: I give you leave to file a notice of discontinuance, Ms Julian-Armitage.

MS JULIAN-ARMITAGE: Thank you, your Honour.

HIS HONOUR: The affidavits. Now, has Mr Slattery seen those affidavits?

MS JULIAN-ARMITAGE: No, your Honour. I have copies for him.

HIS HONOUR: I will give you leave to file them but, of course, it will be a matter for Mr Slattery's or Mr Slattery's client whether he wants to take any objection to any parts of them on the grounds of form or irrelevance or anything else but I will give you leave to file them.

MS JULIAN-ARMITAGE: Thank you, your Honour.

HIS HONOUR: Is there anything that you want to draw my attention to in them?

MS JULIAN-ARMITAGE: Your Honour, in my submission, the appropriate costs order to be made today would be the conceded costs that flow naturally from Order 27 and that would be on a party/party basis as against Arundel, in light of the concession that the notice of discontinuance should have been filed and it was overlooked, but I have no further submissions in terms of indemnity costs and I look forward to being able to get somebody to get those to you in written form, pursuant to your order.

HIS HONOUR: All right. Is there anything further you want to - - -

MS JULIAN-ARMITAGE: Nothing further, your Honour.

HIS HONOUR: All right. Mr Slattery, if you just make sure I cover everything.

MR SLATTERY: Yes, your Honour.

HIS HONOUR: Is there something you want to say, though?

MR SLATTERY: I would like my friend to indicate the purpose for which this affidavit was put forward.

MS JULIAN-ARMITAGE: Which one?

MR SLATTERY: The affidavit of Ian Henke sworn 13 September 2000, which I have just received. Are there two affidavits?

MS JULIAN-ARMITAGE: There are two.

HIS HONOUR: I am only allowing them to be filed at this stage. That does not mean that all or any of the matter in them is taken at this stage to be relevant or in admissible form. I do not think the relief I am going to give you as a condition of the grant of the adjournment is affected in any way by it. I am not persuaded by anything in these affidavits which I have looked at that I should give different relief from what I foreshadowed I would give by way of costs today.

MR SLATTERY: Thank you, your Honour.

HIS HONOUR: If you just pay attention to the orders I propose to make.

I will adjourn this matter until 10.30 am on Thursday, 28 September on the respondent's application for an adjournment but upon terms. The respondent, Arundel Chiropractic Centre Pty Ltd, is to pay the Deputy Commissioner of Taxation's costs of today on an indemnity basis.

The applicant, Arundel Chiropractic Centre Pty Ltd, is to take objection, if any, to any subpoenas that may be served upon it, or any other person, by an affidavit to be filed in the Court not later than 25 September next.

Further, the applicant, Arundel Chiropractic Centre Pty Ltd, is to file in the Court a written outline of argument in relation to all matters in issue by 25 September next.

Now, are there any other matters, Mr Slattery?

MR SLATTERY: I ask for a certificate for counsel in relation to that costs order, your Honour.

HIS HONOUR: Yes. I will certify for costs of counsel in relation to this application. I should also make it clear that any order for costs that I make today does not foreclose the possibility of an order for costs against any other party who might be joined in these proceedings. That will depend upon argument if other parties are joined.

Is there anything further, Mr Slattery?

MR SLATTERY: No, thank you, your Honour.

HIS HONOUR: Yes. Do you have anything further?

MS JULIAN-ARMITAGE: Is your Honour intending to certify for one counsel or two?

HIS HONOUR: No, I will certify for two. It is an important matter.

MS JULIAN-ARMITAGE: Thank you, your Honour.

HIS HONOUR: Anything further?

MR SLATTERY: No, thank you, your Honour.

HIS HONOUR: Thank you. Call the next matter.

AT 1.08 PM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 28 SEPTEMBER 2000