Tourism Holdings Australia Pty Ltd v State of Victoria & Anor [2019] HCATrans 170 (30 August 2019)

Last Updated: 5 September 2019

[2019] HCATrans 170

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M77 of 2019

B e t w e e n -

TOURISM HOLDINGS AUSTRALIA PTY LTD

Plaintiff

and

STATE OF VICTORIA

First Defendant

COMMISSIONER OF STATE REVENUE (VICTORIA)

Second Defendant

GORDON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 30 AUGUST 2019, AT 9.59 AM

Copyright in the High Court of Australia
MR D.F. JACKSON, QC: If your Honour pleases, I appear with my learned friend, MR T.M. GRACE, for the plaintiff. (instructed by Arnold Bloch Leibler Lawyers)

MS R.J. ORR, QC: If the Court pleases, I appear with MR C.P. YOUNG and MS S. ZELEZNIKOW for the defendants. (instructed by Victoria Government Solicitor)

HER HONOUR: Mr Jackson.

MR JACKSON: Your Honour, the materials which the Court has for the purposes of the present application are listed in our further submissions on the application in paragraph 2.

HER HONOUR: I have read those materials, Mr Jackson. I should tell both you and Ms Orr that I have read them. I cannot say I have read the entire affidavit filed by the State of Victoria but I have read parts of it.

MR JACKSON: Yes. I was going to say, your Honour, the only material additional to that I think are the defendants’ submissions and the affidavit relied on.

HER HONOUR: I have read that as well.

MR JACKSON: Thank you, your Honour.

HER HONOUR: As I said, I have not read it all but I have read sufficient of it to get a flavour of the dispute.

MR JACKSON: Your Honour, may I say something briefly about the nature of the proceedings ‑ ‑ ‑

HER HONOUR: Yes.

MR JACKSON: ‑ ‑ ‑ before going to the reasons why our learned friend’s contention that the matter should be remitted to the Supreme Court of Victoria should be rejected?

HER HONOUR: Before you do that, is it still the position that the State maintains that position, Ms Orr? I just want to make sure I understand the extent of the dispute before Mr Jackson continues.

MS ORR: Yes. Well, our position, your Honour, is that – as your Honour would have seen from the correspondence that has passed between the parties, which is annexed to Mr Mengolian’s second affidavit, a short affidavit ‑ we have written to the plaintiff and asked for the statement of claim deficiencies, as we see it, in the statement of claim to be addressed and for material to be provided to allow us to assess whether we can admit allegations that are in the statement of claim and the document that is described as a draft special case which is annexed to that affidavit.

HER HONOUR: Does that mean that you do not maintain your position it should be remitted today but we need more time?

MS ORR: Well, I am sorry, I wanted to preface our position. We had not expected that that letter would be met with resistance; we had not expected that there would be resistance to amending or to providing us with that material, and it leaves us in a position where there is a potential factual dispute and it may be that we end up in a situation where no material is provided that allows us to admit the key allegations about ‑ ‑ ‑

HER HONOUR: Process.

MS ORR: ‑ ‑ ‑ what is characterised as a production process, five different types of production process, which is critical, we think, to the case if we are not provided with information that allows us to assess whether we can agree that those processes are, as they are alleged to be, not at the moment in the statement of claim, which troubles us, but in the draft special case then we may be in a different position but at the moment we do not have a basis to agree those matters and that raises the problem of the lack of a factual foundation for the matter to proceed at this time in this Court.

HER HONOUR: This reminds me of something I would have had when I was sitting on the Federal Court, with no disrespect to two very senior counsel standing in front of me. Has this been the subject of discussion between you, as you would ordinarily expect?

MS ORR: We have had some discussions this morning. I understand that it remains the position that there is no intention to amend the statement of claim other than by what my friend described to me and will describe no doubt to the Court as a minor amendment. As I understand the position, there is no willingness to provide us with material that we say we need in order to respond to the allegations.

HER HONOUR: All right. Mr Jackson, is that the position, that there cannot be some – I mean, these matters are ordinarily, in my experience, the subject of discussion and debate and materials provided informally and people work out whether or not they can admit facts, and sometimes some States are a bit more stubborn than others and they require it to be put on affidavit and then they will say, well, we have seen the affidavit and we are prepared to agree to it. I mean, it is a very arid debate, is it not, at the moment?

MR JACKSON: Well, your Honour, may I just say that we would agree, with respect, that on one view of it it has an aridity to it. That arises because we are not talking about prospective cases where there is to be a prospective assessment of duty. These are two cases where there are assessments of duty which we are liable to pay.

HER HONOUR: I get that, and that is a fact – that is why you are here, I accept that, but as I understand the dispute – and either the dispute is a real dispute on the facts or it is not – there is this complaint about whether or not the five processes that are set out in some detail in the draft special case are capable of being either established – and I will use that in neutral terms – sufficiently to enable the case to go forward to the High Court.

MR JACKSON: Well, your Honour, may I just say this? If I could just repeat myself in one respect?

HER HONOUR: Yes, please.

MR JACKSON: What your Honour will see is that the relevant provisions of the Duties Act are not I think in dispute, and you will see them set out in the statement of claim.

HER HONOUR: Yes.

MR JACKSON: The duty is based on the value of the vehicle at the time when it is presented for registration ‑ ‑ ‑

HER HONOUR: Yes.

MR JACKSON: ‑ ‑ ‑ and then the case relates to two assessments of that duty and they do not relate to potential liabilities ‑ ‑ ‑

HER HONOUR: No.

MR JACKSON: ‑ ‑ ‑ they relate to liabilities and the basis of calculation of those liabilities is set out in the materials that have been provided at the time of making the assessments. So that it is not the case, your Honour, where there is a kind of need to know or we know nothing ‑ ‑ ‑

HER HONOUR: Well, I think that is where the parties divide, and at the moment, as I understand it – and, as I said, I have not read everything but I have read I thought sufficient. I have got a statement of claim which does not identify five processes. I have got a draft special case which does. At the moment – in ordinary practice one would have pleadings closed, there would be identification of issues. I was trying to avoid that because it is clear on its face, whether it is right or wrong, the State of Victoria are going to contend that they cannot answer, it would seem, at least part of the allegation because it is not – the special case does not match the statement of claim and the statement of claim itself does not contain the materials necessary to make good the case.

Now, that might not be right but that is the way they are putting it, so it is a practical issue initially at the start. Now, we either confront it or I am left in a quandary as to whether or not the matter can go forward and should be remitted. Now, I would have thought it would have been better for two juniors sitting either side of the lectern to sit down and try and work it out.

MR JACKSON: Well, your Honour, the difficulty we have in that regard comes from two things.

HER HONOUR: Yes.

MR JACKSON: The first is that it is entirely apparent from the two assessments that are in question and from the material accompanying them how it is that the very detailed calculations there set out are made out, and it is very simple in the sense that it is the difference between the amount that we have – we paid the duty on and that is the amount of buying a cab and chassis and motor, on the one hand, and on the other hand, the value of the vehicle when the thing is completed.

HER HONOUR: Yes.

MR JACKSON: So that is – and it is made perfectly clear that is what is done. It is set out that there were various samples done, samples looked at ‑ ‑ ‑

HER HONOUR: I saw all that.

MR JACKSON: ‑ ‑ ‑ all this kind of thing, and it becomes – and we have been told that is the basis on which it was done.

HER HONOUR: If that is right, does that mean that the five processes set out in the special case just get removed, they are irrelevant to the question you put forward?

MR JACKSON: Well, in the end, the question is this, your Honour. What they demonstrate is that ‑ ‑ ‑

HER HONOUR: This is the five processes?

MR JACKSON: Yes, the five processes. What they demonstrate is that these are goods that are – whether one uses a word like “manufactured” or “produced” and at the last stage of their manufacture or production the tax is imposed, so they are steps on the way to showing that these are not vehicles that are just sold on, in effect, they are vehicles on which something is done to increase the value between the two occasions. You will see a difference ‑ in some cases $5.40 I think is the amount of the additional duty that is payable in respect to a large number of them. But what one does see, your Honour ‑ and I can go into this in a little more detail – is that the respondent refers to the various types of vehicles that are involved ‑ ‑ ‑

HER HONOUR: Well, they refer to the vehicles but we are talking about this intermediate stage, are we not, and this is the area of dispute. As I understand the way you put your submission, you say, well, the fact that there are steps taken without identification of them, as I understand it, in your statement of claim is sufficient.

MR JACKSON: Well, yes, your Honour ‑ ‑ ‑

HER HONOUR: That is not how the special case is set up, so that is my problem, practically. Now, if they come out of the special case then I understand that, but at the moment I am told by the State of Victoria, by responsible counsel, that they cannot either answer by accepting or otherwise in the special case what is set out in those five processes. So there is a division amongst you about the significance of that conduct, as I understand it. If you wish to take it out of the special case then they can plead to the statement of claim and I can work out what the issues are and whether or not it should go forward, but if you are going to rely upon it, as you seek to do, then I am in a position where there is non‑admission or non‑acceptance of it, for whatever reason, it might be good or bad, I do not know, it has to be resolved.

MR JACKSON: Well, could I, your Honour, just seek to develop what I wanted to say about those matters ‑ ‑ ‑

HER HONOUR: Yes.

MR JACKSON: ‑ ‑ ‑ because the issue is not one where there is no knowledge on the part of the respondent. Could I just say, your Honour, the duty is based on the value of the vehicle as at the time of the application for registration. There are a number of documents showing the defendants’ knowledge of what took place. In the first place, from the letter and closing the result of the investigations which had been carried out by the defendants you will see that if you go to the affidavit of Mr Langton – perhaps I could just go to the page number, at the bottom of the right‑hand page of the material attached to it, page 10.

HER HONOUR: Now, this is the investigation by the State Revenue Office?

MR JACKSON: Yes.

HER HONOUR: Yes.

MR JACKSON: This is writing to the tax agent, as it were, saying the result of the investigation. Your Honour will see that the third paragraph of that sets out the findings of the investigation in attachment 1.

HER HONOUR: Yes.

MR JACKSON: And the fourth paragraph on page 10 encloses the notice of assessments. The fourth last paragraph on page 2 – I am sorry – there is a reference to potential enforcement proceedings on the top of page 11, and then the fourth last paragraph on page 11 contains a reference to liability in respect of vehicles which ultimately became the subject of the second assessment.

HER HONOUR: That was the self‑disclosure?

MR JACKSON: Yes, your Honour. Could I go then to the attachment at page 12 and you will see the essence of it is in the first paragraph, it is known that we convert vehicles in the manner there shown. There is a concession in respect of recycled pods under the heading “Concession to apply ‑ ‑ ‑

HER HONOUR: Yes, I have read that.

MR JACKSON: Yes. And under the heading “Calculation of duty”, it is accepted we supplied accurate figures. And the last two paragraphs make it perfectly clear that there has been a determination of duty payable in respect of each vehicle and, your Honour, the ‑ ‑ ‑

HER HONOUR: May I ask a question at that point?

MR JACKSON: Yes, your Honour.

HER HONOUR: What information did the taxpayer, your client, provide to the SRO to enable that – as part of that investigation?

MR JACKSON: Well, your Honour, may I ‑ ‑ ‑

HER HONOUR: If so, is that not the material that can be the subject of discussion and debate between the respective sides of the Bar table in order to determine what goes into the special case?

MR JACKSON: Well, your Honour, that appears from – you will see page 74 the Commissioner has a notice of determination ‑ ‑ ‑

HER HONOUR: I know, I have read that, that is why I am asking.

MR JACKSON: Yes. And under the heading at page 76, “THA’s manufacture, production and registration of its mobile caravans” you will see that it sets out at considerable ‑ ‑ ‑

HER HONOUR: It sets out four processes. You have five in your special case but I am going to put that to one side at the moment. I think this is why, Mr Jackson, it seems to me that there should just be discussion between both sides by reference to what happened in the investigation and the material, consistent with, as you would expect, both sides to behave in order to determine whether or not it can be agreed. Now, I am not going to lay fault either side of the Bar table but it needs to have the heat taken out of it and someone to sit down and talk about it.

MR JACKSON: Well, your Honour, we are perfectly happy to do that. A problem that we do have is, first of all, no basis for justifying – if I might use that expression – the validity of the law as yet emerged ‑ ‑ ‑

HER HONOUR: No, I will come to that. I am dealing with factual basis first because what I would like to happen – there are two questions. There is the factual basis and then there is the legal basis and I was going to ask Ms Orr about this, when it is that the State of Victoria are going to outline what their legal basis is because that is a different question. They have not done that yet and I accept, at least on the papers that I have read, they have not provided that. So I am dealing with them separately; at the moment, trying to work out whether there is a factual basis that can be agreed and then identify what the level of the dispute is on a legal basis.

MR JACKSON: Well, your Honour, a difficulty we have with the first of those things is that you will see in that determination that it sets out the basis on which the assessments have been made. Now, is there to be – is there some disagreement with that? We have no idea.

HER HONOUR: No, you are about to get that, I hope.

MR JACKSON: Well, I would hope so, your Honour. We have not – little has emerged so far.

HER HONOUR: Well, I accept that, but let us just see if we cannot move it forward. So, Ms Orr, is it the position that you have any objection to there being consultation between counsel to seek to resolve these factual matters?

MS ORR: Not at all, your Honour, that is what we were seeking to open up.

HER HONOUR: Well, then it should happen because this correspondence backwards and forwards should just stop and it should be done between counsel, as you would ordinarily expect.

MS ORR: Yes.

HER HONOUR: That rates as a second issue. When are we going to get what the answer is on the legal question, given that you have got the factual basis and you have conducted your investigation?

MS ORR: We do not yet have the factual basis is our position ‑ ‑ ‑

HER HONOUR: Well, I do not know about that. I mean, I think that there is obviously material within the SRO.

MS ORR: There is material, and in answer to the question that your Honour put to Mr Jackson, there was a sample of invoices provided in the course of the investigation. There was at a later point a spreadsheet provided. There has been material that has been provided that is directed to the calculations, as Mr Jackson referred to them.

HER HONOUR: No, I am not talking about calculations, Ms Orr, I am talking about process.

MS ORR: That is right. So in terms of the process, what has been provided is assertions in the objection; that is what the determination is based on. The factual material that has been provided, the documentary material that has been provided, does not assist. As your Honour will see from the page open in front of you at the moment ‑ ‑ ‑

HER HONOUR: I am not going to have any more debate between you and Mr Jackson about this; enough. I am sorry. It really is an arid debate that should never have got to this stage. Now, at some point someone has to sit down and work out whether or not there can be agreement.

MS ORR: Yes.

HER HONOUR: The State has to sit down and work out whether or not it is going to provide and be satisfied with whatever is provided, subject to what it has already got ‑ ‑ ‑

MS ORR: Yes.

HER HONOUR: ‑ ‑ ‑ by consultation with Mr Jackson’s counsel ‑ Mr Jackson’s client and/or the counsel and if it cannot happen, it cannot happen.

MS ORR: Yes.

HER HONOUR: Now, how long is that going to take?

MS ORR: Well, I am very happy to continue the discussion that we started earlier this morning right now.

HER HONOUR: All right.

MS ORR: I do not know if your Honour has in mind that sort of timeline of coming back before you this morning.

HER HONOUR: Happy to do that. I have got four other matters listed and I am happy to stand down and let that develop.

MS ORR: Yes. Thank you, your Honour, I think that would be a good approach.

HER HONOUR: Thank you. People are excused from the Bar table.

MS ORR: Thank you, your Honour.

AT 10.17 AM THE MATTER WAS ADJOURNED
UNTIL LATER THE SAME DAY

UPON RESUMING AT 11.50 AM:

HER HONOUR: Mr Jackson.

MR JACKSON: Your Honour, the parties have arrived at an agreement in relation to the orders which your Honour might be inclined to make.

HER HONOUR: Right.

MR JACKSON: Could I take your Honour – we have agreed to use the paragraph 18 of the defendants’ submissions as the base.

HER HONOUR: I have them, thank you.

MR JACKSON: We are content, and the parties were agreed, I think, that the orders that should be made are those that are there set out.

HER HONOUR: Right.

MR JACKSON: Your Honour, might I say in relation to paragraph (1) that we have agreed to make some amendments to the statement of claim and to ensure that there is a similarity between that and a proposed special case.

HER HONOUR: All right.

MR JACKSON: Your Honour, if there is anything more I am happy to deal with it.

HER HONOUR: No. Are you both – I am happy to make these orders but on the assumption that it is going in the right direction.

MR JACKSON: Your Honour, we will have, as your Honour will see, by 8 October a defence which will take care, if I could put it this way, of the second of the two aspects your Honour mentioned earlier.

HER HONOUR: The first I am also concerned about. Anyway, maybe I will have a chat to Ms Orr as well and make sure that this is the position.

MR JACKSON: Yes. Would it help your Honour if I said what we have agreed to do to the statement of claim?

HER HONOUR: No, no, I think – that is one issue but the second is the evidence position. Has that been resolved, Ms Orr?

MR JACKSON: Look, I think so, your Honour. Yes, we have agreed to provide various documents.

HER HONOUR: All right. I am not going to inquire any more. Is the position that the parties wish me to make paragraphs 18(1) through to (10)?

MS ORR: Yes, it is, your Honour.

HER HONOUR: All right, I will make orders in those terms. Anything else?

MS ORR: No, not at this stage. Thank you, your Honour. Thank you for that time to allow us to reach this position.

HER HONOUR: That is all right. Thank you very much. Adjourn the Court.

AT 11.53 AM THE MATTER WAS CONCLUDED