BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

Practice and procedure - Motion for judgment - Whether statements made constitute admission of liability - Judgment on admissions, discretion of the Court - Turns on own facts

Ex parte Newman [1969] 1 NSWR 538

Re Registered Trade Mark "Certina" (1970) 44 ALJR 191

Termijtelen v Van Arkel [1974] 1 NSWLR 525

1 WHEELER J: On 22 October 2004 the plaintiff filed a notice of motion for judgment, seeking that judgment be entered against each of Venetian Nominees Pty Ltd and Maddeliene Caratti together with orders that each of those parties pay the plaintiff's costs to be taxed. I heard oral argument in relation to that matter on 29 October. I would not grant the relief sought, and would therefore dismiss the application. My reasons briefly are as follows.

2 The application arose out of somewhat unusual circumstances. On 27 September 2004, at a time when the long and complex actions against the defendants had been listed for hearing, counsel for these two defendants advised me as follows:

"There are some matters that I have become aware of that I need to draw to your attention and they are these. I believe that with respect to the accounts of Maddeliene Caratti and Venetian Nominees, those have been settled directly with the Taxation Office and I mentioned this last Friday to my learned friend's instructors and I believe that they are looking into that."

"When you say they have been settled do you mean they have actually paid what the Tax Office maintains they owe?"

"Yes. I haven't received confirmation of this yet, but I'm raising it now because obviously it will bear directly on the length of the trial."

Counsel for the plaintiff had no information about these alleged payments, nor did those instructing him.

3 Enquiries undertaken since by solicitors for the plaintiff reveal that on 7 September 2004 two payments were received at the Albury office of the Australian Taxation Office (ATO), in respect of the accounts of Maddeliene and Sergio Caratti and of Venetian Nominees Pty Ltd. Those amounts were such that, in respect of the Maddeliene and Sergio Caratti account, the amount calculated as owing was slightly exceeded, so that the account now has a current credit balance of some hundreds of dollars, while in relation to the Venetian Nominees Pty Ltd account, payment was the round figure of $110,000 and there is calculated to be a small outstanding balance of $146.15.

4 It is apparently the practice of the Albury office that correspondence received with a payment which does not appear to require any further action by the ATO is destroyed, and the accompanying correspondence seems to have been destroyed. However, in response to a request made to the solicitors for those defendants, the solicitors for the plaintiff were furnished with two letters, unsigned, but on the letterhead of Maddeliene Caratti and Venetian Nominees Pty Ltd respectively. Each was in relevantly identical terms, save for the reference to the amount of the cheque. Each referred to an attached cheque which was said to be "in full and final settlement of my [our] debt and all costs in this matter".

5 On 8 October 2004, my Associate received a letter from the solicitors for those two defendants which stated, inter alia, "I am further instructed that the amounts claimed against Maddeliene Caratti and Venetian Nominees Pty Ltd have settled in full with the plaintiff".

6 On 12 October the solicitors for the plaintiff sought to clarify those payments, asking the solicitor for those defendants to "confirm that such payments were in fact paid in full and final settlement of amounts that are accepted to be due and owing by those two entities to our client". The letter expressed the view, in my respectful submission correctly, that the statement in the letter to my Associate that the amounts "have settled in full" was ambiguous and did not necessarily constitute an assertion that the amounts paid were accepted to be the full amounts due and owing. No reply was received.

7 On 19 October the solicitors for the two defendants wrote to the High Court, in a letter copied to the solicitors for the plaintiff which, inter alia, stated, "Further, the claims of the respondent [that is the present plaintiff] against the applicant, Maddeliene Caratti and Venetian Nominees Pty Ltd have been paid in full".

8 However, on 26 October 2004, the solicitors for the two defendants wrote to my Associate, in a letter copied to the solicitors for the plaintiff, in the following terms:

"I write to confirm that the defendants have instructed me that with respect to the payments made on behalf of Mrs M Caratti and Venetian Nominees Pty Ltd no admission of debt owing or liability is made on their behalf or on behalf of the other defendants by reason of the payments.

The payments were made on the basis of expediency with a view to the reduction of the trial time."

"Where admissions of fact have been made on the pleadings or otherwise, any party may ... apply to the Court for such judgment or order as upon such admissions he may be entitled to ... and the Court may on such application make such order ... as the Court thinks just."

10 It can be seen that the admission upon which judgment may be given does not have to be a formal admission made in pleadings. It would be open to the Court to give judgment upon any of the statements made by or on behalf of these two defendants, provided that the statements did constitute an admission; Re Registered Trade Mark "Certina" (1970) 44 ALJR 191 at 192 per Barwick CJ. However, judgment will not be given unless the admission is adequate and, importantly unambiguous: Re "Certina" at 192 - 193. Further, both the terms of O 30 r 3, and authority, suggest that there is a discretion in the Court either to give judgment or to refrain from giving judgment on the admissions; Termijtelen v Van Arkel [1974] 1 NSWLR 525 at 528-9.

11 In the present case, I am not convinced that any of the statements made constitutes an unambiguous admission of liability. This is particularly the case, when the various statements are considered together, as I think they should be.

12 In relation to the bare fact of payment, the amounts paid were certainly very close to the amounts alleged by the plaintiff to be due and payable. Payment of an amount alleged to be due and payable as a debt can certainly in some circumstances constitute an admission of liability (eg Ex parte Newman [1969] 1 NSWR 538). However, there is a real difficulty with regarding it in that way in a case such as the present, where proceedings to recover the amount have been on foot for many years and where the factual context surrounding the payment includes the incurring of very large legal costs by both the plaintiff and the defendants. The costs factor is emphasised by the content of the accompanying letter, which suggested that the payment was purported to be in satisfaction, not only of any amount owing, but also of any legal costs outstanding.

13 In that context, it seems to me that the payment and accompanying letters are open to the interpretation that what was attempted was some sort of offer of compromise. It is true that the payment was not expressed to be made "without prejudice", but those words do not constitute any magic formula, and it is open to regard a communication as an offer of compromise even where those words are not used. The flavour of compromise too, is suggested by the first letter to my Associate which referred to the amounts having "settled in full".

14 The letter to the High Court comes closest to being an admission, in my view, referring to the amounts having been "paid in full". However, that was in the course of a letter which was written for the purpose of advising that an application would proceed only in relation to one of a number of parties. In the context of the other statements, it seems to me that it would be inappropriate to regard a letter written for that purpose, to another body, as a deliberate admission.

15 The statements originally made to me by Mr Davies, counsel for both of these defendants, on 27 September 2004 might be capable of being regarded as constituting an admission. His response to my request for clarification certainly suggested that it was the intention of both defendants to pay everything which the plaintiff regarded as being due and payable; and it is difficult to see that as other than an admission of liability. However, those remarks were made in the course of an interlocutory hearing, in which counsel for the defendants was anxious to advise me, even in a preliminary way, of anything which might affect the likely duration of the trial. It appears that they were made without full instructions; certainly counsel was unable to give any details of the payments, such as the amount, or when they had been made, or to whom or in what circumstances. It is desirable, particularly in long trials, that counsel should be free to advise the Court, even in a preliminary or tentative way, of anything which might affect the trial, without those matters being construed as admissions. Having regard to the context, I would not be prepared to regard counsel's observations as constituting an admission on behalf of the defendants of liability.

16 Even if it were open to me to regard any of the statements made by or on behalf of the defendants as admissions of liability, upon which judgment could be given, I would not as a matter of discretion be prepared to do so. There are two reasons for that. One is that, at about the same time, other statements were made in relation to the same sums which were ambiguous. The second is that the purpose of the power given by the Rule is to avoid the delay involved in a hearing and to save unnecessary expense (Re "Certina" at 192). In my view, very little delay and expense would be saved by giving judgment on admissions by either of these defendants. It is clear from the plaintiff's opening address that certain conduct of these two defendants is relied upon by the plaintiff as assisting in the drawing of inferences about the significance of conduct by other defendants. Even if judgment were given on the admissions, it would still be necessary for the plaintiff to lead a considerable portion of the evidence relating to these two defendants, and to make submissions about their conduct. In the context of a trial of the length and complexity of the present, any saving of delay and expense which might result from judgment on admissions in relation to these two defendants would in my view be minimal.