Futuris Corporation Limited (ACN 004 336 636) v Commissioner of Taxation

REASONS FOR JUDGMENT 1 This is an application under s 48 of the Federal Court of Australia Act 1976 (Cth) and O 10 r 1(2)(f) and O 30 r 6 of the Federal Court Rules. The applicant seeks orders that this proceeding be transferred to the South Australia District Registry of this Court to be heard together with proceeding SAD 110 of 2005. The applicant, accordingly, seeks to have the proper place of the proceeding changed from the Western Australia District Registry to the South Australia District Registry of this Court. The applicant relies upon the affidavit of James Michael Cudmore dated 3 June 2005 and the respondent relies on the affidavit of Graeme John Windsor dated 28 June 2005. 2 The proceeding before this Court is an appeal against the respondent's decision to reject the applicant's notice of objection against an amended assessment of its income tax return for the income year dated 30 June 1998. 3 The income tax return of the applicant for the income year dated 30 June 1998 disclosed a taxable income of $86,088,045. A notice of amended assessment for that income year was issued by the respondent on 27 November 2002. That amended assessment adjusted the taxable income of the applicant to $106,038,100 on the basis that the assessment be amended to include an 'increase in capital gain made on the disposal of the Walshville/Bristile shares of $19,950,088'. 4 The applicant lodged a notice of objection dated 23 December 2002 against the amended assessment. On 22 May 2003 the respondent disallowed the objection and provided reasons for that decision. The relevant transactions which are the subject of the appeal are referred to by the respondent in his reasons for decision as the 'Walshville Float Arrangement'. The 'Walshville Float Arrangement' refers to a series of transactions relating to the applicant and two of its subsidiaries, namely Vockbay Pty Limited and Walshville Holdings Pty Limited, leading up to and including the initial public offering of shares in a company, Bristile Limited. 5 On 17 July 2003, the applicant commenced this proceeding by filing an application in the Western Australia District Registry of this Court. 6 Under cover of a letter dated 9 November 2004, the respondent forwarded to the applicant a paper on the 'Walshville Float Arrangement' which outlined the respondent's position on the matter. The paper also contained a notice of a determination pursuant to s 177F of Pt IVA of the Income Tax Assessment Act 1936 (Cth). The notice stated that the respondent had determined that the 'amount of $82,950,090 being a tax benefit that is referable to an amount that has not been included in the assessable income of Futuris Corporation Limited…(the taxpayer) for the year ended 30 June 1998, shall be included in the assessable income of the taxpayer for that year of income'. 7 On 12 November 2004 the respondent caused to be issued a notice of amended assessment which amended the taxable income of the applicant for the income year ended 30 June 1998 to $188,988,223. 8 On 23 December 2004, the applicant lodged a notice of objection to the amended assessment. 9 By a letter dated 4 April 2005 the respondent issued a notice of decision to disallow the objection. 10 On 1 June 2005, the applicant commenced proceeding SAD 110 of 2005 in the South Australia District Registry of this Court appealing against the disallowance of the objection. 11 It is common cause between the parties that there is a substantial overlap between the proceeding in the Western Australia District Registry and the proceeding which has been commenced in the South Australia District Registry of this Court. 12 It is also common cause between the parties that both proceedings should be tried at the same time. 13 Counsel for the applicant argues that, as it is common cause that there is a substantial overlap between each proceeding and that both proceedings should be tried together, it is convenient that this proceeding be transferred to the South Australia District Registry. Counsel argues that it is inconvenient and inefficient for the two sets of proceedings to be case managed by two separate docket judges in two different registries in circumstances where it is accepted by both parties that both proceedings should be tried at the same time. Counsel argues that it is an inefficient use of the resources of the Court and that it is likely to result in duplication and in the parties incurring additional costs. 14 Counsel for the applicant also says that the applicant is a listed public company which carries on business in South Australia and that its head office is situated in Adelaide. The applicant lodges its tax return at the Adelaide office of the Australian Taxation Office. The officers of the applicant who instruct the applicant's solicitors are based in Adelaide and it is represented in both proceedings by a firm of solicitors which is based in Adelaide. Both counsel representing the applicant are based in Sydney. 15 Counsel for the applicant also says that the only reason why this proceeding was commenced in the Western Australia District Registry of this Court was because it was required to do so under the Federal Court Rules at that time. Order 52B r 4(3)(c) of the Federal Court Rules required the proceeding to be commenced in the registry of the State in which the Australian Taxation Office was located from which the appealable objection decision had emanated. In this case, the appealable objection decision emanated from the Australian Taxation Office in Western Australia. Since then the Federal Court Rules have been amended to permit an applicant to commence an appeal proceeding in the registry of the State in which the applicant, if a corporation, has its head office or carries on a significant part of its business. This entitled the applicant to commence its appeal in proceeding SAD 110 of 2005 in the South Australia District Registry. 16 Counsel for the respondent accepts that there is a substantial factual overlap in the matters which need to be investigated in each of the proceedings, and that both proceedings should be tried together. Counsel argues that it is too soon to know where the most convenient location would be for the conduct of the trial and that in the meanwhile each proceeding should continue to be case managed in separate registries. Once both matters are ready for trial, the respondent argues that a determination can be made as to where the witnesses are located and where the most convenient location is for conducting the trial of both matters. Counsel argues that it is not inconvenient or inefficient in having each proceeding being case managed by a separate docket judge in different registries until both matters are ready for trial. It is said that as the parties have the same representation in both proceedings, the parties can report to the respective docket judges on the progress of the interlocutory stages. In that way, there can be a coordinated management of each of the proceedings to trial. 17 Counsel for the respondent says that, although it is not yet possible to say which persons will be called to give evidence at the trial, some of the persons involved in the formulation and implementation of the 'Walshville Float Arrangement' are based in Perth and the company Bristile Limited was incorporated in Western Australia. The respondent also says that if the question of valuation becomes contentious then valuation evidence is likely to come from Perth based valuers, who will require inspection of documents in Perth. Also, the respondent says that the respondent's audit documents and the review officers are located in Perth. 18 Further, counsel for the respondent says that if any proceeding is to be transferred, it is the proceeding in the South Australia District Registry which should be transferred to the Western Australia District Registry. 19 The principles to be applied in the exercise of a discretion as to whether to transfer proceedings to a different registry of this Court were considered in the case of National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155. In that case the Full Court of this Court stated that there was no onus of proof in the strict sense to be discharged by the party seeking to conduct or continue the proceedings elsewhere.