Deputy Commissioner of Taxation v Chemical Trustee Limited

REASONS FOR JUDGMENT (Revised from transcript) 1 Before the Court are three applications. First, there is an application by the applicant, the Deputy Commissioner of Taxation ('Deputy Commissioner'), for an order, pursuant to r 41.10(1) of the Federal Court Rules 2011 (Cth) enforcing a judgment of the Court. Secondly, there is an application by the respondent, Chemical Trustee Ltd ('Chemical Trustee'), for a stay of a judgment given by me on 23 May 2013 in the sum of $28,617,596.68. The third application, also made by Chemical Trustee, is that I should disqualify myself from the hearing of the other applications. 2 It is not necessary to deal with the recusal application in relation to the Deputy Commissioner's application for enforcement orders under r 41.10(1), because under the rules the power to make such an order is conferred upon the Registrar: see r 3.01(1)(b) and Sch 2, Pt 3.7, Item 227 of the Federal Court Rules 2011 (Cth). Given the machinery nature of such orders, it seems more appropriate for the Registrar to deal with that application. To that end, I will merely direct that that application be referred to the Registrar to be dealt with in the ordinary course. 3 I turn then to the applications by Chemical Trustee for a stay of the judgment and also for my disqualification. The present question arises in a reasonably complicated context. Last year I heard and determined complex proceedings between, inter alia, the Deputy Commissioner and Chemical Trustee, resolving those adversely to Chemical Trustee on 19 December 2014 in reasons published on that date: see Hua Wang Bank Berhad v Commissioner of Taxation [2014] FCA 1392 ('the principal judgment'). At an earlier stage in the litigation the Deputy Commissioner had issued notices of assessment to Chemical Trustee in relation to a number of income years in the period 2000 to 2012. It was upon those notices of assessment that the judgment sum, to which I have already referred, was entered on 23 May 2013. Costs at that time were assessed at $130,684.59. 4 The subject matter of the notices of assessment which formed the basis for that judgment were different to the subject matter of the proceedings which I determined on 19 December 2014, although there appeared to be some agreement at the bar table that there was an overlap between the issues. In particular, I was told that the issues which arise from the objections which had been lodged in respect of those notices of assessment involved not only Chemical Trustee but also the role of Mr Vanda Gould. In the principal judgment I was very critical of Mr Gould and made a series of findings about him which ranged from adverse to seriously adverse. 5 The present argument which is put is that in circumstances where I would be dealing with an application for a stay of the judgment given on 23 May 2013, I would be involved in the exercise of a discretion. It is submitted that, given the strength of the adverse findings I made about Mr Gould in the principal judgment, a fair-minded lay observer might reasonably apprehend that I would not bring an impartial mind to the resolution of that issue: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337. The Deputy Commissioner submits that, to the contrary, when one examines the issues which I will be called upon to determine in the course of resolving the stay application, it is apparent that they are of a kind in which there is no logical connexion between the postulated concern regarding Mr Gould and the substantive questions. Particular reference is made to the Full Court's decision in Southgate Investment Funds Ltd v Deputy Commissioner of Taxation (2013) 211 FCR 274 at 294-295 [77], where the Full Court usefully set out the relevant considerations which obtain when considering an application for a stay. 6 I accept that there is some force in what the Deputy Commissioner says, but it seems to me that one of the issues which will need to be addressed is the likelihood of the taxpayer's Pt IVC proceedings or even notices of objection being successful. If, as I apprehend (and it was not suggested that I should not apprehend this), questions of residency and the roles of Mr Gould and Mr Borgas are likely to arise in relation to the affairs of Chemical Trustee, then it seems to me that the prior remarks which I have made about Mr Gould are certainly capable of having a logical bearing upon my assessment of the likelihood of the objection or subsequent Pt IVC proceedings succeeding. It seems to me that a fair-minded lay observer might reasonably apprehend that I would not bring an impartial mind to the resolution of that issue. 7 In saying that, I do not disregard the submission made on behalf of the Deputy Commissioner that a judge in my position ought not to too readily disqualify themselves from a hearing. I also accept that, in applying the test espoused in Ebner, it is important for a judge to take into account that it is relevant that the fair-minded lay observer is taken to be acquainted with the fact that the person deciding the case is a professional judge whose training, tradition and oath require the judge to discard the irrelevant, the immaterial and the prejudicial in performing their task: see Johnson v Johnson (2000) 201 CLR 488 at 493 [12]. But, notwithstanding those matters, this is a case where I think that a reasonable apprehension of bias would arise. For that reason I propose to disqualify myself from involvement in the stay application. 8 I should say for completeness that an additional submission was made that I should disqualify myself from the hearing of the stay application by reason of my having acted for Mr Gould in the past whilst at the bar. When it became apparent that Mr Gould was to be called as a witness at the trial in related proceedings (which culminated in the principal judgment), I had my associate write to the parties bringing this fact to their attention on 7 October 2011 and no objection was raised by either party. Further, I explicitly brought the fact that I had previously acted for Mr Gould to the attention of the parties at the first directions hearing in this matter on 27 February 2012. Again, no objection was then raised. In his written submissions on the present disqualification application, Mr Hyde Page has now raised my having previously acted for Mr Gould as a reason for my disqualification. I reject the submission which, in view of the history of that issue, should not have been made. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.