Commissioner of Taxation v Bosanac

THE PRIMARY APPLICATION 2 The cross-vesting application is more difficult. The portion of the proceeding which Ms Bosanac seeks to have transferred to the Family Court is the Commissioner's application for a declaration that Ms Bosanac holds a one half interest in Property in Dalkeith, Western Australia on resulting trust for Mr Bosanac (the Commissioner's declaration proceeding).

EVIDENCE 3 In support of her application, Ms Bosanac relies upon an affidavit recording recent events focusing on commencement of the Family Court proceedings. The couple were married on 3 October 1998. They are not yet divorced, but they separated 'under one roof' on 6 March 2013. 4 On 31 January 2020, Ms Bosanac filed an application in the Family Court seeking: (a) a declaration that she is the sole owner of the Property and that her husband has no interest in the Property; (b) leave to amend her application to seek an alteration of property interests, if the Family Court or this Court finds that Mr Bosanac has some interest in the Property; (c) spousal maintenance; and (d) child support orders. 5 Ms Bosanac had previously been represented by the same firm of solicitors as her husband in these proceedings. In September or October 2019, that firm informed Ms Bosanac that it believed it may be in a position of conflict and could not act for her in relation to the Commissioner's declaration proceeding. Clearly that was so. 6 Ms Bosanac contacted another firm and has been represented by that firm in this Court and in the Family Court since that time. Annexed to her affidavit is correspondence between Ms Bosanac's previous and current solicitors and the Australian Government Solicitor. Much of the correspondence goes to explaining the delay in pursuing this application. Determination of this application will not be decided by reference to past delay, but the future timetable is a matter of significance. 7 Importantly, in her affidavit, Ms Bosanac explains that she has sought orders in the Family Court which, subject to the freezing orders in this Court, would permit her to sell the Property. She is hopeful (based on an appraisal) of achieving a sale price of about $3.6 million for it. The equity in the Property, subject to two mortgages, would be in the order of $400,000 if she achieves a sale at the intended price (which in today's market may not be guaranteed). 8 Ms Bosanac has made clear that once the Property is sold, she would have no objection to half of the net proceeds (if any, after deduction of the mortgage debt and expenses), being held in an interest bearing account, pending resolution of the Commissioner's declaration proceeding. (I observe that such a sum may be rather modest, a factor surely relevant to how the parties proceeds.) She says that once the house is sold and there is some certainty around the quantum of the dispute, she hopes that she may be able to resolve it sensibly by consent. 9 Ms Bosanac has been able to discharge the principal of her tax liability outstanding to the Commissioner as a result of a loan of $200,000 from a friend. There is however interest still outstanding on that liability. 10 The Commissioner's opposition to the cross-vesting application is supported by an affidavit of Mr Burrows on behalf of the Australian Government Solicitor. The main focus of Mr Burrows' affidavit is to point to the comparative progress of the respective proceedings. I will deal with the history of these proceedings shortly, but the Family Court proceedings have only commenced recently. At the first appearance on 17 February 2020 when Mr Burrows sought to intervene for the Commissioner, there was no appearance by or on behalf of Mr Bosanac. The proceedings were adjourned to 23 March 2020.

HISTORY IN THIS COURT TO DATE 11 The Commissioner's declaratory relief application was commenced on 17 June 2015. At that stage, declarations were sought as to the tax liabilities of both Mr and Mrs Bosanac and payment of those liabilities. On 29 April 2016, summary judgment was entered against Mr Bosanac with respect to his tax liability in excess of $9 million plus costs. On 3 June 2016, summary judgment was entered against Ms Bosanac with respect to her tax liability in the sum of approximately $280,000 plus costs. 12 Execution of summary judgment against Mr Bosanac was stayed on 12 August 2016 until further order and the Commissioner at the same time applied to amend his originating application to seek a declaration that Ms Bosanac holds a one half interest in the Property on resulting trust for Mr Bosanac. That amendment was granted on 26 October 2016. 13 On 22 June 2018, Steward J dismissed an appeal by Mr Bosanac under Pt IVC of the Taxation Administration Act 1953 (Cth) relating to assessments made which had given rise to the tax liabilities the subject of the summary judgment against him: Bosanac v Commissioner of Taxation [2018] FCA 946. On 15 July 2019, the Full Court dismissed an appeal by Mr Bosanac against that decision: Bosanac v Commissioner of Taxation (2019) 267 FCR 169. 14 On 15 August 2019, I made orders programming the declaratory relief application to a hearing on 10 and 11 March 2020. Pursuant to directions of 15 August 2019: (a) The Commissioner was to file affidavits in support on 12 September 2019 and 29 November 2019; and (b) Mr and Mrs Bosanac were both required to file any affidavits in opposition by 20 December 2019. No affidavits were filed by Mr and Ms Bosanac due to preoccupation with addressing the conflict that arose and preparing other proceedings for filing in the Family Court. They were ultimately filed on 6 February 2020. The next day, Ms Bosanac filed this interlocutory application for transfer of the Commissioner's declaration proceeding to the Family Court.

RELEVANT PRINCIPLES 15 The interlocutory application is based on ss 5(4)(a), 5(4)(b)(i) and 5(4)(b)(iii), read with s 3 of the Jurisdiction of the Courts (Cross-Vesting) Act 1987 (Cth). Section 5(4) reads as follows: 5 Transfer of proceedings … (4) Where: (a) a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Federal Court or the Family Court (in this subsection referred to as the first court); and (b) it appears to the first court that: (i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory and it is more appropriate that the relevant proceeding be determined by that Supreme Court; (ii) having regard to: (A) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been incapable of being instituted in that court, apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and (B) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been capable of being instituted in the Supreme Court of a State or Territory, apart from this Act and any law of a State or Territory relating to cross-vesting of jurisdiction; and (C) the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub-subparagraph (B) and not within the jurisdiction of the first court apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and (D) the interests of justice; it is more appropriate that the relevant proceeding be determined by that Supreme Court; or (iii) it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory; the first court shall transfer the relevant proceeding to that Supreme Court. 16 Pursuant to s 3(2) of the Cross-Vesting Act, reference in that Act to a Supreme Court of a State includes, subject to exceptions not presently relevant, a 'State Family Court' of that State. The Family Court falls into that category. Part of this proceeding may also be transferred under the Cross-Vesting Act. 17 Pertinent considerations on a transfer application were recently collected in The President's Club Limited v Palmer Coolum Resort Pty Ltd [2019] QSC 209, where Wilson J said (at [147]-[159]): [147] On a transfer application it is necessary to take into account: 1. The importance of making the best use of scarce judicial resources. 2. The specialist nature of one court or another in relation to the subject matter of the litigation to prevent unnecessary costs being incurred by the parties to litigation. 3. The desirability of avoiding the risk of inconsistent findings. [148] In addition: 1. If it appears to the Court that the legislative criteria are established such that it is in the interest of justice that the proceedings be determined by another court then the first court is required by legislation to exercise the power of transfer. No exercise of discretion arises. 2. The elements of evaluation or discretion that lead to the conclusion that it is in the interest of justice to transfer (thus making it obligatory to transfer) include the likelihood that there will be more efficient use of judicial resources, the likelihood that contrary findings of fact arise or conflicting orders being made on the same material can be achieved and the likelihood that costs can be minimised. 3. The interests of justice referred to in section 5 of the Cross-Vesting Acts is not divorced from practical reality. 4. The decision calls for a 'nuts and bolts' management decision as to which Court is the more appropriate to hear and determine the substantive dispute. [149] The words "related to" are of wide import and do not require the applicant to point to specific issues common to both proceedings - it is the "proceeding" in this Court which must "appear" to be "related to" the proceeding in the Federal Court. [150] Those words are evidently directed at avoiding a multiplicity of proceedings. The commencement of like actions in different jurisdiction are part of what the cross-vesting laws seek to avoid. [151] In Amalia Investments Ltd v Virgtel Global Networks NV (No 2) Greenwood J stated: "A relevant proceeding arises out of another proceeding if there is some causal element between the two even if the causal element is not "… direct or proximate": Re Hamilton Irvine (1990) 94 ALR 428 at 432. A pending proceeding relates to another proceeding if the two are associated or connected: Re Hamilton Irvine at p 433; Leithead v Leithead (1991) 109 FLR 177; Hoddell v Hoddell Pty Ltd [1999] WASC 156; Armstrong v Armstrong [2004] WASC 121, [49] to [56]; Bell Group Ltd v Westpac Banking Corporation (2000) 173 ALR 427 at [186] to [203]. A proceeding is related to another proceeding where "… a substantial and common question" arises in both proceeding (Mattock v Mattock (1989) 13 Fam LR 288 per McLelland J at 290) or where the "… facts and circumstances in the two proceedings … appear to be intertwined" (Foley v Green [2011] VSC 155 per Almond J at [21]. In Buckley v Gibbett, the two proceedings were found to be related on the footing of the "… essential commonality of facts and of parties" thus satisfying the "… requirements of relationship" per RD Nicholson J at p 560F." [152] Where common questions arise in proceedings in separate jurisdictions, considerations of comity between courts require considering the transfer of proceedings. [153] Even assuming that the first threshold is established, namely that this proceeding is "related to" the Federal Court proceeding, the same considerations as to what is involved in resolution of each of the proceedings are also relevant to the question of whether it is in the interests of justice for there to be a transfer. This is generally viewed as being a value judgment. [154] The "interests of justice" are the same under section 5(2)(b)(ii)(C) as under section 5(2)(b)(iii) and "the inquiry directed by consideration of the term 'interests of justice" encompass all the matters that determine which is the more appropriate forum…" which involves determining with which court the action has the most real and substantial connection. [155] Philippides J in World Firefighters Games Brisbane v World Firefighters Games Western Australia Incorporated & Ors set out the range of factors considered relevant in assessing the "more appropriate forum": 1. The application of the substantive law, if it is peculiar to a particular jurisdiction. 2. Forensic advantages or disadvantages conferred by the competing procedural laws. 3. The plaintiff's choice of forum and the reasons for that choice. 4. Substantive connections with the forum (e.g. residence, domicile, place of occurrence and choice of law). 5. Balance of convenience to parties and witnesses. 6. Comparative cost and delay. 7. Convenience of the court system. [156] The "justice" is not however disembodied, or divorced from practical reality. The interests of the respective parties, although not the same as the interests of justice, are relevant considerations. [157] Relevantly, the interests of justice are merely a factor in the "appropriateness" test under the first limb, but remain the sole consideration under the alternative limb. [158] In Commissioner of Taxation v Residence Riverside Pty Ltd, McKerracher J stated that ordinarily where cross-vesting transfer occurs, the factors in support of it would be obvious and a conclusion that the value judgment or decision about whether it is in the interests of justice for the proceeding to be dealt with in another court will be readily instinctive taking into account a variety of matters including: 1. The stage of the proceeding in the respective courts. 2. The commonality or diversity of the parties. 3. The nature of the proceedings. 4. The commonality or diversity of issues. 5. The risk of conflicting findings of fact or conflicting orders. 6. A cost benefit analysis. 7. The potential unnecessary drain on judicial and other public and private resources. 8. Whether there is any particular judicial expertise residing in one court or the other. [159] As Mason P stated in James Hardie & Coy Pty Ltd v Barry, the applicant carries a persuasive onus. (Citations omitted.)

MS BOSANAC'S CONTENTIONS 18 In written submissions, Mr Bosanac contends that the proceedings now afoot in the Family Court between herself and Mr Bosanac deal with precisely the issue of both parties' interests in the property that the Commissioner is pursuing in this Court. It is argued that the Family Court has 'exclusive jurisdiction' in relation to such matters pursuant to s 8 of the Family Law Act 1975 (Cth) (the FLA) in conjunction with the definition of matrimonial cause at s 4(ca) and s 4(f) of the FLA. 19 There was debate about this issue, but in the end the real question is whether it is more appropriate, or in the interests of justice, that there be a transfer to the Family Court. In support of that outcome, Ms Bosanac stresses that the Family Court must, in any event, undertake the assessment of identifying what interest, if any, the husband has in the Property before deciding whether to make: (a) a declaration in relation to the Property interest of either party pursuant to s 78 of the FLA; or (b) an order altering those Property interests pursuant to s 79 of the FLA. 20 Ms Bosanac stresses that pursuant to s 79 of the FLA, the Family Court may then go on to alter that interest by reference to a number of matters set out in that section, including non-financial contributions, child support issues and future circumstances. Those matters would, of course, not be raised in the Commissioner's declaration proceeding in this Court. 21 It is stressed that the Family Court proceedings will continue regardless of whether the Commissioner's declaration proceeding is cross-vested to it as there are various other family law issues which arise between the parties, including child support and spousal maintenance, none of which this Court has jurisdiction to determine. Having now paid the principal on her outstanding tax liability, the only substantive issue left in this Court which affects her is the issue relating to the Property. The controversy insofar as it relates to her can then be dealt with in its entirety in the Family Court in which the Commissioner may intervene. Regardless of what relief the Commissioner obtains, whether in this Court or in the Family Court, the Family Court will still then need to deal with specialist issues concerning the legal and equitable rights as between parties to a marriage. Ms Bosanac says the most cost effective solution would be for the matter to be dealt with in its entirety in the Family Court. 22 Ms Bosanac also emphasises that although the Federal Court proceedings relating to the Property have been ongoing for some years, they have been largely dormant due to no fault on the part of Ms Bosanac until the recent months. The Commissioner has now filed two affidavits which could also easily be relied upon in the Family Court. The Commissioner has not yet provided any particulars of the argument at law for the declaration sought. 23 It is noted that a declaration between parties to a marriage as to their existing rights in property falls within the meaning of 'matrimonial cause' and is therefore a matter exclusively within the jurisdiction of the Family Court. 24 In my view, the important considerations are the practical considerations and Ms Bosanac in that regard stresses that even if the Commissioner were successful in obtaining the declaratory relief, it would still be subject to any alteration pursuant to s 79 of the FLA and could lead to conflicting findings and declarations between the two Courts. No particulars were advanced as to such a potential conflict. In the absence of such particularisation, I am not prepared to infer a likelihood of conflict. Absent a transfer, it was not suggested that the Family Court would reach its conclusions about the parties' interests in the property on the basis of the existence or otherwise of a resulting trust. 25 As to any future delay in the matter being heard in the Family Court as opposed to being heard in this Court within the next few weeks, Ms Bosanac contends that this debate should be put to one side. This is because even if the Commissioner is successful in this Court, the outcome would still have to be part of a further hearing in the Family Court in any event, particularly pursuant to s 79 of the FLA. She also says that if the freezing orders are varied so as to give her access to Family Court orders entitling her to funds for the payment of legal expenses, she would then be in a position to advance the relief she seeks under s 79 and s 90AE of the FLA. 26 Senior counsel for Ms Bosanac makes the point that it would be possible to apply to have the Commissioner's declaration proceeding heard as a preliminary matter in the Family Court, although he cannot estimate the prospects of success of such an application or even if it were approved, when it would be heard or determined. 27 From a practical perspective, Ms Bosanac argues that even if the matter proceeds in this Court and the Commissioner is successful and even if Ms Bosanac discontinues her application in the Family Court, the Commissioner would still need to take steps to take possession of, and sell Mr Bosanac's interest in the Property. It is argued that such an approach will cause further delay and could instead be dealt with in one hearing in the Family Court where orders for sale and disbursal of funds could be considered along with the other issues the subject of Ms Bosanac's present action in that court. 28 Senior counsel for Ms Bosanac submitted that the Commissioner would suffer no prejudice in the matter being dealt with in the Family Court in due course, rather than in this Court when listed. In that regard, the only real prejudice the Commissioner points to is the further delay caused by abandoning the hearing dates in this Court and the fact that he has waited a very long time for the opportunity to obtain a final judgment in this matter. Moreover, he should not be required by reason of very recent events to intervene in a more complex Family Court proceeding in which the central issues are of peripheral interest to his pursuit of final declaratory relief.

CONSIDERATION 29 The debate about the exclusive jurisdiction of the Family Court is something of a 'red herring'. Clearly that court has exclusive jurisdiction over the proceeding commenced in it by Ms Bosanac. Clearly it has much more appropriate expertise to resolve property disputes between spouses than this Court does and clearly that court could also determine the Commissioner's declaration proceeding if it were cross-vested: see, for example, Commissioner of Taxation v Worsnop (2009) 74 ATR 401 and Trustee of Property of Cummins (a bankrupt) v Cummins (2006) 227 CLR 278. But there cannot be, and no suggestion is made, that the Commissioner's declaration proceeding presently falls in the exclusive jurisdiction of the Family Court simply by reason of Ms Bosanac having recently commenced a proceeding in that court. This Court retains jurisdiction over the Commissioner's declaration proceeding unless and until it is cross-vested. 30 Although the jurisdiction of the Family Court has been expanded since R v Ross-Jones; Ex parte Green (1984) 156 CLR 185, the following remarks of Gibbs CJ (at 197-198) are still pertinent as they focus attention on the true protagonists in a dispute: … the relationship must exist between the proceedings themselves. It is not enough that what is done in one of the proceedings would indirectly affect the practical outcome of the other proceedings. This may be illustrated by a number of examples. Suppose that proceedings are brought in the Family Court by a wife against her husband claiming an alteration of property interests under s.79 of the Act. Suppose also that there is pending in [the Federal] Court a claim by a stranger to the marriage against the husband for damages, or a claim by the Commissioner of Taxation for tax, in an amount so large that if it succeeded it would denude the husband of all his assets, leaving no property which could be made the subject of an order in favour of the wife. The proceedings against the husband may have a devastating effect on the proceedings in the Family Court but that does not mean that there is a relationship between the two proceedings themselves or that the Family Court has jurisdiction - which, of course, would mean exclusive jurisdiction - to entertain the claim for damages or the claim for the recovery of tax. … (Citations omitted.) 31 As senior counsel for the Commissioner notes, if there needs to be a reason identified for this conclusion, it is that the Commissioner's declaration proceeding is not a 'matrimonial cause' as defined in s 4(1) of the FLA because the Commissioner's declaration proceeding is not a proceeding 'between' Mr and Ms Bosanac. To the contrary, it is a proceeding brought against both of them by the Commissioner, which they each oppose and of which Mr Bosanac does not contend that he enjoys any beneficial interest in the Property. The only party contending that Mr Bosanac enjoys that interest is the Commissioner. 32 Ms Bosanac is the sole registered proprietor of the Property. She is prima facie the sole beneficial owner. Nonetheless, she seeks declaratory relief to that effect in the Family Court in circumstances where it can only be inferred that the purpose is to resist a claim or anticipate a claim that she is not the sole beneficial owner. At this stage, however, the only person who has made such a claim is the Commissioner in this Court. Ms Bosanac has neither asserted that Mr Bosanac has made such a claim, nor that she anticipates he will do so in the future. No reason has been advanced as to why he might do so. Any benefit in doing so would appear to be illusory in light of the very substantial judgment against him in favour of the Commissioner and also the relatively small equity in the Property. It follows that the fact that the s 78 application has been introduced into the Family Court proceedings against the back drop of the Commissioner's long standing declaration proceeding in this Court, does not figure largely in the weighing of the respective interests. 33 At this stage, no alteration of property interests has been sought in the Family Court. Ms Bosanac's evidence is to the effect that it is only contemplated that such an order pursuant to s 79 of the FLA will be applied for if the Family Court finds Mr Bosanac has some interest in the Property. The application suggests that Ms Bosanac may only seek an order pursuant to s 79 of the FLA 'should she so choose'. (An earlier version of the unsealed Form 1 initiating application in the Family Court was handed up at the case management hearing in this Court on 31 January 2020.) At present there is no more than a mere possibility that Ms Bosanac may at some future date apply for such an order. This is not sufficient in the circumstances of this case to conclude that it is 'more appropriate' that the subject matter of the Commissioner's declaration proceeding be determined by the Family Court rather than in this Court which has been seized with the matter for several years and has programmed it to hearing within a matter of weeks. 34 Significantly, if the proceeding is not cross-vested but determined in this Court, Ms Bosanac will not lose whatever rights she has to pursue relief under s 79 of the FLA should she choose to do so at some future date. That right will remain intact regardless of any determination by this Court on the Commissioner's declaration proceeding. 35 It is relevant, in my view, that the hearing dates for the Commissioner's declaration proceeding were first set some four months before Ms Bosanac filed her application in the Family Court. It is listed for hearing in this Court on 8 and 9 July 2020. There is no hearing date, other than a directions hearing on 23 March 2020 presently listed in the Family Court. While I put to one side the statistics on which the Commissioner relies in terms of hearing dates for trials in the Family Court and I take into account at least the possibility of some expedited preliminary hearing, it seems to be common ground that there is no doubt the matter will be resolved in this Court substantially earlier than in the Family Court. There is, at least at this stage, no suggestion in the Form 1 initiating application relied upon by Ms Bosanac that she proposes seeking the declaration, the subject of her s 78 application other than at a final hearing. 36 A further consideration is that there appears to be no good reason as to why the proceedings already pending in this Court would not provide Ms Bosanac with a suitable opportunity to assert her beneficial ownership in the entirety of the Property. But, regardless of the outcome of that proceeding, Ms Bosanac will still retain her rights to pursue s 79 relief in the Family Court.

CONCLUSION 37 For these reasons, I am not persuaded that this is a suitable case where it is appropriate or in the interests of justice to cross-vest any part of this proceeding to the Family Court. Although the Commissioner has largely succeeded on this issue, I consider that costs in the cause is the appropriate costs disposition. If the Commissioner does not succeed in the Commissioner's declaration proceeding, then costs would be likely to follow the event in the usual course. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.