Donoghue v Commissioner of Taxation

JUDGE: LOGAN J DATE: 17 MARCH 2015 PLACE: BRISBANE

REASONS FOR JUDGMENT 1 A sequel to the orders made in QUD 353 of 2012 and QUD 360 of 2013 (see Donoghue v Commissioner of Taxation [2015] FCA 235 - the principal judgment) is what should be the fate of proceedings for the recovery of a taxation liability, grounded in the quashed assessments and related general interest charge, originally instituted by a Deputy Commissioner of Taxation (Commissioner) against Mr Donoghue in the Supreme Court of Queensland (No 12021 of 2012)? Those proceedings were, by the joint request of the parties, cross-vested to this Court where they acquired the number QUD 727 of 2013. 2 Given that the Supreme Court of Queensland, as the national taxation laws presently stand, has no jurisdiction to determine a taxation appeal, it will often be a convenient course for related taxation recovery proceedings either to be instituted in this Court or cross-vested to this Court. The reason for that is that it minimises the prospect of a court, which is not vested with any relevant jurisdiction to determine taxation liability, then being confronted with the task of having to make an assessment of the prospects of success in respect of a taxation appeal in the context of deciding whether or not at least to stay the execution of a judgment given in a taxation recovery proceeding. Even though the assessments are under challenge in this Court, they are, when tendered in recovery proceedings, by s 177 of the Income Tax Assessment Act 1936 (Cth) (the Act), conclusive evidence as to the existence of a liability. Yet the court exercising jurisdiction in the ordinary proceeding retains a jurisdiction to stay execution. Relevant to that can be that the assessments concerned are under challenge in this Court and that the grounds of objections are reasonable arguable. 3 Given that the assessments concerned have been quashed (as to the reasons for which, the principal judgment), it seems to me that it is a necessary consequence that the recovery proceeding must be dismissed. That is because, in light of the quashing of the assessments, there is no taxation liability which is the subject of those recovery proceedings. 4 The general interest charge otherwise payable must necessarily as a matter of law abate in full with the disappearance of the primary assessments to which the charge relates. 5 It was put for this Commissioner that I ought really to adjourn further the recovery proceedings. To do that, though, would be to deny Mr Donoghue the consequential fruit of the forensic success which he has enjoyed in the judicial review proceedings mentioned. 6 The position is different in relation to taxation appeals separately instituted by him in respect of those tax assessments: QUD 326 of 2013. I can see that, in respect of those proceedings, there may be at least forensic embarrassment by presently ordering their dismissal on the basis of the quashing of the assessments, the subject of appeal under Pt IVC of the Taxation Administration Act 1953 (Cth). In the event that the Commissioner were to appeal the orders made in QUD 353 of 2012 and QUD 360 of 2013 and was successful, Mr Donoghue might be placed by a present order of dismissal of the taxation appeal in the invidious position of being left without any particular means of challenging his taxation liability or at least having to challenge the order of dismissal of his tax appeal. 7 For these reasons, in respect of QUD 727 of 2013, I order that the proceedings be dismissed. There is a further contingency that there may be, on the part of one or the other or each party to those proceedings, an application for a special order as to costs. I, therefore, reserve consideration of costs until 24 March 2015 at 2.45 pm, the date fixed for further consideration in respect of consequential, further orders in the judicial review proceedings. 8 So as to permit the parties to reflect further on what ought to be the fate in the longer term of the taxation appeals, I also adjourn those proceedings (QUD 326 of 2013) for directions on 24 March 2015 at 2.45 pm and reserve costs in respect of those proceedings. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.