Deputy Commissioner of Taxation v Jane Maria Sakovits; Deputy Commissioner of Taxation v Ronald Rudolf Sakovits

Deputy Commissioner of Taxation v Jane Maria Sakovits; Deputy Commissioner of Taxation v Ronald Rudolf Sakovits - [2010] NSWSC 865 - NSWSC 2010 case summary — Zoe

[5]

Baker, Re; Flatwash Pty Ltd v Federal Commissioner of Taxation (1987) 87 ATC 4626 Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates Pty Ltd (1984) 4 FCR 428; (1984) 59 ALR 754; (1985) ATPR 40-531 Clyne v Deputy Commissioner of Taxation (NSW) (No 3) (1983) 48 ALR 545; (1983) 57 ALJR 673; (1983) 83 ATC 4532; (1983) 14 ATR 563; BC8300095 Commissioner of Taxation v Cumins (2008) 101 ALD 78; (2008) 70 ATR 855; [2008] FCA 353; BC200801709 Commissioner of Taxation v Futuris Corp Ltd (2008) 237 CLR 146; (2008) 247 ALR 605; [2008] HCA 32; Convery & Lund v Ziino (1985) 7 ALN N402; (1985) 70 ALR 383 Cywinski v Deputy Federal Commissioner of Taxation (1988) 88 ATC 4800 Deputy Commissioner of Taxation v Alvaro (1990) 90 ATC 4744; (1990) 21 ATR 726; BC9003528 Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473; (2008) 248 ALR 693; Deputy Commissioner of Taxation v Cameron 91 ATC 4056; (1990) 21 ATR 1991 Deputy Commissioner of Taxation v Feldman; Deputy Commissioner of Taxation v Rozenstein (2006) 62 ATR 253; [2006] NSWSC 378; BC200602906 Deputy Commissioner of Taxation v Gergis (1991) 91 ATC 4510; (1991) 22 ATR 1 Deputy Commissioner of Taxation v Ho (1996) 131 FLR 188; (1996) 32 ATR 269; BC9601074 Deputy Commissioner of Taxation v Jennings [2005] QSC 312 Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] ALR 333; (1949) 23 ALJR 48 FJ Bloemen Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 360; (1981) 35 ALR 104; (1981) 55 ALJR 451; (1981) 81 ATC 4280; (1981) 11 ATR 914; BC8100076 CASES CITED : General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1965] ALR 636; (1964) 38 ALJR 253 Gheorghiu v Perpetual Trustees Victoria Ltd [2007] VSCA 83 Hall v Poolman (2007) 215 FLR 243; (2007) 65 ACSR 123; [2007] NSWSC 1330 Held v Deputy Commissioner of Taxation (Vic) (1988) 88 ATC 4315; (1988) 19 ATR 1213; BC8800735 Hurley v Federal Commissioner of Taxation (1992) 37 FCR 11; (1992) 92 ATC 4471; (1992) 24 ATR 9; BC9203801 Olbers Co Ltd v Commonwealth of Australia (No 2) [2003] FCA 177 Snow v Deputy Federal Commissioner of Taxation (WA) (1987) 14 FCR 119; (1987) 70 ALR 672; (1987) 12 ALD 257; (1987) 87 ATC 4078; (1987) 18 ATR 439 Sterling Industries Ltd v NIM Services Pty Ltd (1986) 12 FCR 164; (1986) 66 ALR 657; (1986) ATPR 40-688 Taxation (Vic), Deputy Commissioner of v Held (1988) 19 ATR 852; BC8800786 Taxation (Vic), Deputy Federal Commissioner of v Trower (1986) 86 ATC 4157; (1986) 17 ATR 473 Taxation, Deputy Commissioner of (Vic) v Enal Pty Ltd (1987) 19 ATR 23 Taxation, Deputy Commissioner of v Mackey (1982) 45 ALR 284; (1982) 64 FLR 432; (1982) 82 ATC 4571; (1982) 13 ATR 547 Taxation, Deputy Federal Commissioner of v Akers (1989) 89 ATC 4725; BC8900779 Taxation, Deputy Federal Commissioner of v Niblett [1965] NSWR 1552; (1965) 8 FLR 134; (1965) 83 WN (Pt 1) (NSW) 405 Trade World Enterprise Pty Ltd v Deputy Commissioner of Taxation (Cth) (2006) 64 ATR 316; [2006] VSCA 191 Waterhouse (R W) v Australian Broadcasting Corporation - (1987) 72 ACTR 15 Western Australia v Bond Corp Holdings Ltd and Others (No 2) (1992) 37 FCR 150

[11]

JUDGMENT (Summary judgment; stay of proceedings) 1 HER HONOUR: There are two notices of motion for determination in each matter. By notices of motion filed 15 April 2010, the plaintiff seeks that it be granted summary judgment against the defendants pursuant to Part 13.1 of the Uniform Civil Procedure Rules 2005. 2 By notices of motion filed 16 April 2010, the defendants seek, firstly, an order that the proceedings be stayed until such time as the criminal proceedings against the defendants commenced by way of court attendance notices dated 17 November 2009 by the Australian Federal Police are finalised pursuant to s 67 of the Civil Procedure Act 2005; and secondly, an order that execution of judgment in both proceedings be stayed until such time as the criminal proceedings against the defendants commenced by way of court attendance notices dated 17 November 2009 by the Australian Federal Police are finalised pursuant to s 135 of the Civil Procedure Act. They also apply for these proceedings to be adjourned to a date after the criminal proceedings have been finalised for hearing. 3 The plaintiff in both proceedings is the Deputy Commissioner of Taxation ("the Deputy Commissioner"). The defendant in proceedings number 2009/296363 is Jane Maria Sakovits and the defendant in proceedings number 2009/296388 is Ronald Rudolf Sakovits (together "the defendants"). They are husband and wife. The pleadings in the statement of claim and defences are substantially the same, I shall write one judgment covering both matters. The Deputy Commissioner relied on the affidavit of Yelka Lajic sworn 14 April 2010. The defendants relied on their affidavits sworn 29 April 2010 and the affidavit of their solicitor Peter Joseph Wright sworn 29 June 2010. 4 These proceedings arise from the defendants' failure to pay Notices of Amended Assessment in relation to income tax, Notices of Assessment and Liability to Pay Penalty for having Tax Shortfall, tax shortfall interest charges and subsequent general interest charges. 5 The first issue I shall determine is whether the defendants have arguable defences. If they do not I would not grant a stay of the hearing of these proceedings nor would I adjourn them. I will proceed to enter judgments against the defendants. Then, if judgments are entered, I will consider whether the defendants should be granted a stay on the execution of these judgments.

[17]

9 There is no dispute that the defendants were, firstly, assessed for income tax for the years of income ended 30 June 2001, 2002, 2003, 2004, 2005, 2006 and 2007 (S/C [2]; Def [2]); secondly, the defendants were served with the Notices of Amended Assessment on or about the due dates for the years of income ended 30 June 2001, 2002, 2003, 2004, 2005, 2006 and 2007 (S/C [3]; Def [3]); thirdly, that the defendants have failed to pay the income tax in relation to the Notices of Amended Assessment for the years of income ended 30 June 2001, 2002, 2003, 2004, 2005, 2006 and 2007 on or before the due dates (S/C [4]; Def [4]); fourthly, that the defendants have failed to pay the income tax in relation to the Notices of Amended Assessment for the years of income ended 30 June 2001, 2002, 2003, 2004, 2005, 2006 and 2007 at any time (S/C [4]; Def [4]); fifthly, that the Deputy Commissioner made Notices of Assessment and Liability to Pay Penalty for having a Tax Shortfall against the defendants (S/C [7]; Def [7]); sixthly, that the defendants received the Notices of Assessment and Liability to Pay Penalty for having a Tax Shortfall; seventhly, that the defendants have failed to pay the administrative penalties in relation to the Notices of Assessment and Liability to Pay Penalty for the periods 1 July 2000 to 30 June 2001, 1 July 2001 to 30 June 2002, 1 July 2002 to 30 June 2003, 1 July 2003 to 30 June 2004, 1 July 2004 to 30 June 2005, 1 July 2005 to 30 June 2006 at any time (S/C [9]; Def [9(a)]); eighthly, that the defendants received the Notices of the Shortfall Interest Charge in respect of the additional amounts of income tax the defendants were liable to pay as a result of amended assessments for the years of income ended 30 June 2005, 30 June 2006 and 30 June 2007 (S/C [13]; Def [13]); and ninthly, that the defendants have failed to pay the shortfall interest charge in respect of the additional amounts of income tax the defendants were liable to pay as a result of amended assessments for the years of income ended 30 June 2005, 30 June 2006 and 30 June 2007 (S/C [15]; Def [15]). 10 The Deputy Commissioner seeks payment of the moneys due. In essence the defences simply put the Deputy Commissioner to formal proof as to the amounts outstanding.

[19]

(1) If, on application by the plaintiff in relation to the plaintiff's claim for relief or any part of the plaintiff's claim for relief: (a) there is evidence of the facts on which the claim or part of the claim is based, and (b) there is evidence, given by the plaintiff or by some responsible person, that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part of the claim, or no defence except as to the amount of any damages claimed, the court may give such judgment for the plaintiff, or make such order on the claim or that part of the claim, as the case requires. (2) Without limiting subrule (1), the court may give judgment for the plaintiff for damages to be assessed. (3) In this rule, a reference to damages includes a reference to the value of goods. 12 Rule 13.4(1) of the Uniform Civil Procedure Rules provides that the court may dismiss proceedings generally, or in relation to any claim for relief, in three circumstances. These are, if the proceedings are frivolous or vexatious, or if no reasonable cause of action is disclosed, or if the proceedings are an abuse of the process of the court. 13 Rule 14.28(1) of the Uniform Civil Procedure Rules provides that the court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading, firstly, discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; secondly, has a tendency to cause prejudice, embarrassment or delay in the proceedings; or thirdly, is otherwise an abuse of the process of the court. 14 Rule 14.28(2) provides that the court may receive evidence on the hearing of an application for an order under subrule (1). 15 In Commonwealth of Australia v Griffiths & Anor (2007) NSWCA 370; [2007] 70 NSWLR 268 Beazley JA, with whom Mason agreed, said: 11 The general principles relating to the summary disposal of proceedings are well-known: see General Steel Industries Inc v Commissioner for Railways (NSW) & Ors [1964] HCA 69; (1964) 112 CLR 125 at 129. If it is demonstrated that there is a real question to be tried, the matter is inappropriate for the entry of summary judgment: Dey v Victorian Railway Commissioners [1949] HCA 1; (1949) 78 CLR 62. The tests stated in the authorities as to whether it is appropriate that a case be disposed of by the entry of summary judgment include statements such as that the matter is "so obviously untenable that it cannot possibly succeed"; "manifestly groundless" or "would involve useless expense": see General Steel Industries at 129.

[48]

It is settled law that, by those provisions , a court is compelled to treat a notice of assessment as conclusive evidence that the Commissioner has made an assessment of the amount of tax due to be paid by the taxpayer, and that in making the assessment the Commissioner has complied with the formalities of the Income Tax Assessment Act . In F J Bloemen Pty Ltd v FCT (1981) 147 CLR 360 at 375; 11 ATR 914, Mason and Wilson JJ described as an explicit correct statement of the effect of s 177(1) made by Taylor J in McAndrew v FCT (1956) 98 CLR 263 at 281-2; 6 AITR 359 that the section 'was intended to make it impossible for a taxpayer, in proceedings other than appeal against it, to challenge an assessment on any grounds '." (emphasis added) 24 In Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473; (2008) 248 ALR 693 ("Broadbeach") the High Court (Gummow ACJ, Heydon Crennan and Kiefel JJ) at [43] to [45] commented as follows: "[43] At a time when the provision for objections and appeals was found in Pt V of the Assessment Act, Mason ACJ said in Clyne v Deputy Commissioner of Taxation (1982) 56 ALJR 857 at 858 - 859; 43 ALR 342 at 344 : I was informed that it is a somewhat unusual course for the Deputy Commissioner to commence proceedings for recovery in a court relying on a notice of assessment which is under challenge in proceedings under [the Assessment Act]. It is to be hoped that this is so. The institution of proceedings for recovery on a notice of assessment which is challenged in proceedings under [the Assessment Act] may operate oppressively and unfairly to a taxpayer … In the ultimate analysis the Deputy Commissioner's charter to commence recovery proceedings, notwithstanding a challenge … to the correctness of the assessment, is to be found in s 201 of [the Assessment Act]. It provides: 'The fact that an appeal or reference is pending shall not in the meantime interfere with or affect the assessment the subject of the appeal or reference; and income tax may be recovered on the assessment as if no appeal or reference were pending.' It is a provision which has been stringently criticized. However, it appears to be impervious to criticism for Parliament has not seen fit to amend it. [44] But harsh though the operation of these provisions may be, they implement a long-standing legislative policy to protect the interests of the revenue. In Deputy Commissioner of Taxation v Niblett (1965) 83 WN (Pt 1) (NSW) 40 at 411, Asprey J struck out pleas of non-liability to a recovery action instituted by the Deputy Commissioner in the Supreme Court of New South Wales while objections were pending under what was then s 185 of the Assessment Act. His Honour observed: It may be thought to be a hardship that a taxpayer should have to pay the tax assessed when an objection to the assessment has not been decided upon but there are obvious financial considerations of high policy that must be weighed in the balance against cases of individual hardship with which the Commissioner through the appropriate use of his powers under [the Assessment Act] can cope … Where the meaning of the words of a statute is clear 'it is not open to the Court to narrow or whittle down the operation of the Act by seeming considerations of hardship or of business convenience or the like' - Attorney-General v Carlton Bank [1899] 2 QB 158 at 164.

[49]

[45] Thereafter, Bowen CJ in Eq, when dealing with resistance by the taxpayer to the making of a winding up order, said in Deputy Federal Commissioner of Taxation v Roma Industries Pty Ltd (1976) 6 ATR 54 at 57 : The next question which arises is whether the amount claimed by the Commissioner should be treated as a disputed claim, and an order be refused on this ground. In one sense, of course, the Commissioner's claim is disputed, because appeals to the Board of Review have been lodged. However, the provisions of s 201 of [the Assessment Act] require me to treat the debt as in effect undisputed. Such a statutory provision may in some cases lead to hardship on a taxpayer, particularly where he has paid the amount of tax assessed and later wins his appeal, whereupon the money is repaid to him without interest. This led Higgins J in Hickman v Federal Commissioner of Taxation (1922) 31 CLR 232 at 245; [1922 HCA 58] to describe it as 'unjust and even baneful', but it remains in the [Assessment Act]. It must be appreciated that from the point of view of the revenue it is a protection against that class of taxpayer who might withhold payment and use the money as the sinews of war to conduct appeals against the Commissioner and who, being finally unsuccessful, was found to be unable to meet his tax liability, having spent his money on the litigation ." (emphasis added) 25 In these proceedings certificates are prima facie evidence that refer to the Notices of Amended Assessments and the Notices of Assessment and Liability to Pay Penalty. Under the taxation regime outlined earlier in this judgment, the defendants cannot dispute the correctness of the taxable income and the tax on the taxable income stated in the Notices of Amended Assessment issued in respect of the years of income ended 30 June 2001, 2002, 2003, 2004, 2005, 2006 and 2007 in these proceedings. Nor can the defendants dispute the correctness of the administrative penalties and shortfall interest stated in the Notices of Assessment and Liability to Pay Penalty for having a Tax Shortfall and Notices of the Shortfall Interest Charge in respect of the additional amounts of income tax. Even an outstanding application for review of the Notices of Amended Assessment in the Federal Court does not impede the entry of judgment. 26 While it is not pleaded, the defendants' counsel in oral submissions submitted that the defendants could allege that the Deputy Commissioner acted in bad faith. In order to do so, the defendants would have to engage the provisions of the Freedom of Information Act 1982 to seek production of the internal working papers held by the Taxation Office. It is my view that these new grounds upon which the defendants seek to go behind the assessments issued and the certificates is doomed to fail in this jurisdiction. 27 As previously stated, the defendants have put the Deputy Commissioner to formal proof. In summary, the Deputy Commissioner has established that the defendants were served with the requisite notices; the defendants failed to pay the amounts owing and there are conclusive certificates issued in respect of the Notices of Amended Assessments, Notices of Assessment and Liability to Pay Penalty. Even though there are challenges to the Notices of Amended Assessment, as Broadbeach explains, the income tax may be recovered on assessment as if no appeal was pending. 28 In these circumstances, it is my view that the issues pleaded in the defences are doomed to failure. As I have considered the other potential defences, namely bad faith, and considered that that issue is also doomed to failure, there is no utility in granting leave to amend the defences nor to grant an adjournment. Hence the defences are struck out in each matter. I shall enter summary judgment in each matter. I now turn to consider whether a stay of proceedings should be granted.

[64]

In an appropriate case the proceedings might be allowed to proceed to a certain stage and then be stayed. 31 Both parties referred to Hurley v Federal Commissioner of Taxation (1992) 37 FCR 11 ("Hurley") where the principles in relation to a stay in taxation matters are summarised as follows: "• The court is not concerned to preserve for a taxpayer his right of silence. The court's concern is whether there is unjust prejudice to the taxpayer by requiring the case to proceed: (at 760). • The fact that the continuance of the civil action might result in a waiver by an accused person of his right to silence did not per se constitute unjust prejudice to that party: (at 760). • Unjust prejudice is not otherwise established where the criminal trial would be unlikely to be affected by publicity attendant upon the civil proceedings: (at 760-1). • The fact that a witness may need to adduce evidence which may have the potentiality of incriminating him will not demonstrate prejudice. The applicant is not compelled to give evidence: (at 761)." 32 Hill J makes the point in Hurley that a stay of the Part IVC proceedings may be appropriate because the Commissioner is not prejudiced due to his ability to recover the tax in the debt recovery proceedings. But the reverse applies here because these proceedings are the debt recovery proceedings. 33 The defendants also relied upon the decision of Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates Pty Ltd (1984) 4 FCR 428; (1984) 59 ALR 754 ("Cameron's Unit Services") which did not involve debt recovery involving tax. 34 Cameron's Unit Services concerned a matter where the defendant in civil proceedings for damages sought a stay of the civil proceedings until completion of the criminal proceedings whose offences arose out of the same alleged events. Wilcox J held at [760]: "The fact that the existence of the civil action may result in a decision by the accused person to waive his right to silence is not, in itself, a sufficient reason to stay that action. The real question must be the likelihood of causing injustice in the criminal proceedings. …" 35 In opposing this application for a stay of the civil proceedings the Deputy Commissioner relied, in particular, upon Deputy Commissioner of Taxation v Alvaro (1990) 90 ATC 4744; (1990) 21 ATR 726 ("Alvaro"). The Alvaro decision sets out a number of applicable principles listed previously in Cameron's Unit Services and followed in Convery & Lund v Ziino (1985) 70 ALR 383; (1985) 7 ALN N402; Sterling Industries Ltd v NIM Services Pty Ltd (1986) 12 FCR 164; (1986) 66 ALR 657; Waterhouse (R W) v Australian Broadcasting Corporation (1987) 72 ACTR 15; and Baker, Re; Flatwash Pty Ltd v Federal Commissioner of Taxation (1987) 87 ATC 4626; 19 ATR 11. 36 In Alvaro the court dismissed an application to stay debt recovery proceedings, and for different reasons the Part IVC proceedings, even though criminal proceedings were continuing. In Alvaro O'Loughlin J stated at 732: "The next argument was that the entry of judgment against any of the taxpayers would be a fact that could be used by the prosecution during the course of any criminal trial and that such a fact would be detrimental (presumably, in the eyes of a jury) to the interests of a defendant. The immediate answer to such a proposition is that the obtaining of such a judgment in a civil action would have no relevance whatsoever in a criminal prosecution for conspiracy. Even if I am wrong on the question of relevance, I would venture to suggest that any trial Judge would rule that evidence of the obtaining of such a judgment would be inadmissible because any probative value that it might have would be outweighed by its prejudicial effect. Finally, if all else failed, any competent defence counsel would be able to explain to a jury, briefly and succinctly, the relevant provisions of the ITA Act which enabled the Commissioner to obtain a judgment in recovery proceedings, leaving questions of merit to be resolved in objection proceedings." 37 The Deputy Commissioner also referred to Deputy Commissioner of Taxation v Feldman; Deputy Commissioner of Taxation v Rozenstein [2006] NSWSC 378; (2006) 62 ATR 253 ("Feldman") at [14] - [16] per Johnson J; Deputy Commissioner of Taxation v Ho (1996) 131 FLR 188; (1996) 32 ATR 269 ("Ho") at 271 - 275 per Ireland J; Commissioner of Taxation v Cumins [2008] FCA 353 ("Cumins"); Trade World Enterprise Pty Ltd v Deputy Commissioner of Taxation (Cth) [2006] VSCA 191; (2006) 64 ATR 316 ("Trade World Enterprise") at [19] - [23] per Nettle J; Deputy Commissioner of Taxation v Jennings [2005] QSC 312; Cywinski v Deputy Commissioner of Taxation [1990] VR 193 ("Cywinski") at 196 - 202 per Kaye J; 202 - 204 per King J (Gobbo J concurred with both judges); Deputy Commissioner of Taxation v Gergis (1991) 91 ATC 4510; (1991) 22 ATR 1 ("gergis") at 3 - 5 per Cummins J; Taxation, Deputy Commissioner of v Akers (1989) 89 ATC 4725 ("Akers") at 4726 - 4727 per Nathan J; Taxation (Vic), Deputy Federal Commissioner of v Trower (1986) 86 ATC 4157; (1986) 17 ATR 473 ("Trower") at 476 - 480 per McGarvie J; Taxation, Deputy Commissioner of (Vic) v Enal Pty Ltd (1987) 19 ATR 23 per Nathan J; Snow v Deputy Federal Commissioner of Taxation (WA) (1987) 14 FCR 119; (1987) 70 ALR 672; (1987) 87 ATC 4078 ("Snow") per French J, in particular the seven points at 4093 - 4094; and Taxation, Deputy Commissioner of v Mackey (1982) 45 ALR 284; (1982) 64 FLR 432; (1982) 82 ATC 4571; (1982) 13 ATR 547 ("Mackey"). 38 The defendants submitted that the prejudice they will suffer is the burden placed upon them in having to defend concurrent civil and criminal proceedings, as well as the administrative appeal of the decisions of the Deputy Commissioner giving rise to the alleged taxation liability, is oppressive and therefore unfairly prejudicial to the defendants for the following reasons:

[83]

To exercise the discretion to stay proceedings without regard to either the merits of the notices of assessment or the prospects of success on appeal is a proper exercise of the discretion: Cywinski v Deputy Commissioner of Taxation (Cth) (1989) 20 ATR 672. Sufficient weight will not have been given to the effect and policy of s 14ZZM and s 14ZZR where the exercise of the discretion depends heavily or merely upon whether the taxpayer has an arguable case on appeal and where the balance of convenience lies: Mackey at 287; Deputy Commissioner Of Taxation (Vic) v Trevaskis (1984) 15 ATR 867 at 872." 49 In Cywinski Kaye J at page 197 refers to Mackey in relation to the granting of a stay in light of s 201 of the ITAA 1936, and states: "Glass JA, at 552, agreeing with both the President and Hutley JA in connection with the legislative direction in s 201 added: ". .… the needle stands in the Commissioner's favour close to one hundred and it requires a weighty case to be presented by the taxpayer in order to depress it below the halfway mark." 50 In light of the above authorities, the principles to be applied in this application include: (1) The legislative scheme established in relation to tax recovery, as manifested in provisions like s 14ZZM of the Taxation Administration Act, reflects a clear policy in favour of the revenue against the taxpayer. The Commissioner is placed in a position of special advantage and is in general free to pursue recovery proceedings, despite outstanding appeals and reviews against the disallowance of objections: Trade World Enterprise at [19], referring to Clyne v Deputy Commissioner of Taxation (NSW) (No 3) (1983) 48 ALR 545; (1983) 14 ATR 563 at 564. (2) The policy of the ITAA 1936 as reflected in its provisions gives priority to recovery of the revenue against the determination of the taxpayer's appeal against his assessment: Snow at 4094. (3) The effect of these sections is to give primacy to the general right of the Commissioner to have tax paid irrespective of the pendency of an appeal and its merits: Mackey at 287; Ho at 272; Feldman at [15]; (4) The mere fact that an appeal or review is pending is not sufficient to ground a stay: Trade World Enterprise at [20] - [21]. (5) The liability to pay the assessed tax is not suspended pending the outcome of the review: Alvaro; Trade World Enterprise at [11]; (6) Sections 14ZZM and 14ZZR of the Taxation Administration Act provide that the fact that an appeal to the Federal Court of Australia or a review by the Administrative Appeals Tribunal is pending in relation to a taxation decision does not, in the meantime, interfere with or affect the decision and income tax may be recovered on the assessment as if no appeal or reference were pending: Feldman at 15; Ho at 271; Trade World Enterprise at [11]; (7) The effect of s 204 of the ITAA 1936 is that the fact that the taxpayer has lodged a Notice of Objection against an assessment does not interfere with the assessment and income tax may be recovered on the assessment: Deputy Commissioner of Taxation v Niblett [1965] NSWR 1552; (1965) 8 FLR 134 at 140. (8) The court has jurisdiction to stay recovery proceedings pending a review or appeal of the assessments, but the power is discretionary and should be exercised with great caution and only in special or exceptional circumstances: Feldman at [15]; Ho at 271; Gergis at 3. In the case of Trade World Enterprise at [20], a stay should only be granted "in the most exceptional circumstances". (9) The onus is on the applicant to demonstrate sufficient circumstances to warrant the grant of a stay: Ho at 273. The power to grant a stay is therefore exercised sparingly and the onus is on the taxpayer to justify it: Snow at 4094. (10) In exercising such discretion, great weight must be given to the terms of, and intention and policy embodied in s 14ZZM and s 14ZZR of the Taxation Administration Act, formerly s 102 of the ITAA 1936, a provision that which been referred to in a number of decisions of the Supreme Court and the Federal Court of Australia: Mackey at 287; Trade World Enterprise at [20]; Feldman at [15]; Ho at 271. (11) The effect of s 14ZZM and s 14ZZR must be to preclude the court from considering the prospects of success of any review or appeal by a taxpayer to either the Administrative Appeals Tribunal or the Federal Court of Australia: Ho at 272; Feldman at [15]. (12) Any speculation as to the prospects of the taxpayer on review or appeal is entirely inappropriate in recovery proceedings, such matters fall necessarily for determination by the appropriate forum, which will have before it all relevant and necessary evidence, upon appeal or review under Divisions 4 and 5 of Pt 4C of the Taxation Administration Act: Mackey at 289; Ho at 272; Feldman at [15]. (13) The existence of a valid objection is not a relevant matter for consideration and determination by the Supreme Court in recovery proceedings having regard to the statutory scheme: Ho at 272 - 273; Feldman at [16]. (14) Hardship to the taxpayer is a relevant matter: Trade World Enterprise at [21]. If the taxpayer can establish "extreme personal hardship" a stay should be granted: Cywinski at 197; Ho at 273; Enal at 24. However: the mere obligation to pay the assessment is not a hardship in itself: Cywinski at 197; Ho at 273; the possibility that the taxpayer may be bankrupted is not of itself an extreme personal hardship: Ho at 274; Akers at 4727; and the extreme personal hardship must be in relation to the taxpayer called on to pay: Snow at 4094; (15) Whether the Commissioner has abused his or her position is a relevant matter: Cywinski at 197. (16) Delay by the Commissioner is a relevant matter: Trower at 478. (17) If a taxpayer has been party to a contrivance to avoid his or her liability to tax, the court should not stay proceedings or execution otherwise than in the most exceptional circumstances: Trade World Enterprise at [21]; Gergis at 3; Mackey at 287. 51 So far as the defendants' financial hardship in being able to meet the judgment amounts, neither defendant has provided any evidence of their respective financial positions. Had there been persuasive evidence that if the defendants were called upon to pay the judgments, they would not be able to meet the costs of their legal representation in the criminal proceedings that would have been a relevant matter for consideration. 52 I have considered the factors outlined in this judgment and I have come to the view that the defendants have failed to discharge their onus of establishing sufficient circumstances for the grant of a stay in these proceedings. Hence a stay on the execution of the judgment is refused in each matter. 53 Costs are discretionary. Costs normally follow the event. The defendants have been unsuccessful. The defendants are to pay the costs of the motions and of their proceedings. The court orders:

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