Cassaniti v Commissioner of Taxation

REASONS FOR JUDGMENT 1 These proceedings were instituted on 15 December 2000. There is no dispute about the circumstances leading up to, and immediately following, the institution of the proceedings so I do not propose to take time in reciting those matters. It is sufficient for present purposes to say that by 22 December 2000, shortly after the institution of the proceedings and as a result of discussions between the legal representatives of the parties, steps were taken that made the further prosecution of the proceedings irrelevant. Those steps included the withdrawal of the notices that were the subject of the proceedings and the granting of extensions of time within which to lodge income tax returns. I do not mean to suggest that involved any concession on the part of the Commissioner that the institution of the proceedings were appropriate. I simply state as a matter of fact that once these steps were taken a further prosecution of the proceedings became pointless. 2 The issue which I have to determine this morning is what order for costs should be made, it being common ground that the proceedings should be dismissed. In doing so, I am guided by the decision of Hill J in Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194 at 201 and by the judgment of Finkelstein J in Gribbles Pathology Pty Ltd v Health Insurance Commission, Commonwealth of Australia and Grayson (1997) 80 FCR 284 and in particular at 287. As Finkelstein J points out, in the absence of a hearing on the merits it is difficult to see how any order other than an order that each party should bear its own costs can be made, except in exceptional circumstances. As Hill J pointed out in Aust-Home Investments Ltd, the principal inquiry is whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them. 3 It seems to me that in the circumstances of this case the applicant did act reasonably in commencing the proceedings. He was exposed to a risk of prosecution and he was entitled to obtain, if he could, a determination from the civil courts that the administrative processes as a result of which he was exposed to that risk had not been carried out in conformity with the law. Equally, on the information available to me, the Commissioner acted reasonably in defending the proceedings, because it is by no means clear that the applicant would have succeeded in obtaining the relief which was sought. But I do think that I should obey the injunction issued in the cases to which I have referred that without a hearing on the merits it is difficult to make any order other than no order as to costs. It seems to me that the matters advanced by Mr McGovern in support of his client's position really involve me in embarking upon a trial of the action and upon a forecast as to its likely outcome, which in all the circumstances, is not an appropriate exercise for me to undertake. 4 I think the proper order should be that the proceedings be dismissed but there should be no order as to the costs of the proceedings. I certify that the preceding four (4) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.