Golden City Car & Truck Centre Pty Ltd v Deputy Commissioner of Taxation

REASONS FOR JUDGMENT 1 The applicants have applied for judicial review of two decisions of the respondent not to grant an extension of time within which to pay amended assessments of taxation issued on 9 October 1997. 2 On 30 April 1998 the respondent instituted recovery proceedings in the Supreme Court of Queensland. 3 On 20 May 1998 the appellants commenced proceedings in this Court (QG 43 of 98) for review of various decisions of the respondent, including the decision to refuse an extension of time to pay the tax. 4 On 24 July 1998 the appellants sought orders staying or restraining further proceedings in the Supreme Court of Queensland pending determination of the proceedings in this Court. On 31 July 1998 the respondent, in exchange for certain undertakings on the part of the applicants as to the disposition and encumbrance of assets, undertook not to further prosecute Supreme Court Writs 3970 and 3971 of 1998 without the leave of this Court. 5 On 2 December 1998 criminal proceedings were brought against the natural applicant, Mr Wall, arising out of the circumstances which the respondent alleges entitled the amended assessments to issue. 6 In consequence of the criminal prosecution, appeals against the amended assessments in the AAT have been stayed, pending resolution of the criminal charges. 7 On 8 February 1999 the applicants sought an extension of time within which to pay the outstanding tax until the expiration of sixty days after the determination of the presently stayed appeals in the AAT. That request was refused on 18 February 1999 and an application for an order for review (Q 42 of 1999) was sought on 15 March 1999. 8 On 26 February 1999, in QG 43 of 1998, I made directions for the hearing of the substantial application which hearing was set for 12 July 1999 at 10.15 am. Such directions included liberty to apply to vacate the hearing date dependant upon what occurred as a result of committal proceedings then pending against Mr Wall. 9 On 22 April 1999 I made orders and directions in Q 42 of 1999 to the same effect as those made in QG 43 of 1998 in February 1999. 10 Mr Wall has been committed for trial in the District Court to commence in November 1999. 11 The applicants have applied to have the hearing date vacated on the ground that to proceed to a hearing will prejudice the defence of Mr Wall in his criminal proceedings. 12 The respondent opposes the vacation of the hearing date and brings an application to be released from his undertaking not to prosecute the Supreme Court proceedings pending determination of the proceedings in this Court if the hearing date is to be vacated. 13 There is a discretion to stay civil proceedings arising out of the same circumstances as the criminal proceedings where it is shown that there is a real prospect of substantial prejudice in the criminal proceedings if the civil action continues: Black & White Cab Co Pty Ltd v Kelk [1984] 2 QdR 484 at 485; Federal Commissioner of Taxation v Ahern (1986) 17 ATR 535; Hurley v Commissioner of Taxation (1992) 37 FCR 11. 14 In Hurley, Hill J expressed the proper approach in cases such as the present, as follows (at 13) : "... The true position, in my view, is that the court must weigh up against the Commissioner's right to have the taxpayer's application heard and decided, the danger that prejudice or injustice may be caused to the taxpayer in the criminal proceedings. What must be considered is what Sheppard J referred to in Sterling (supra) and in Baker (supra) as 'the requirements of justice overall'." This approach was adopted and applied by Mansfield J in Chambers v Commissioner of Taxation [1999] FCA 163 at 9. I agree with their Honours and intend to adopt such an approach to the exercise of the discretion in this case. 15 The basis of the application is that Mr Wall is a necessary witness in order that each applicant's application may be fairly and fully determined. Because Mr Wall is the alter ego of the company I accept that for present purposes their position on the stay application is indistinguishable. 16 The applications for orders for review are restricted to reviewable errors of law alleged against the decision maker. The case is not one of merits review and not one as to the correctness of the factual conclusion drawn by the decision maker on the basis of the material before her. 17 For practical purposes the "second" decision to refuse to extend time to pay is the relevant operative decision. The grounds for review of that decision are:- (a) that the decision was an improper exercise of power or an exercise that no reasonable person could have made because of a failure to take into account eleven specified matters; (b) that there was no evidence to justify making the decision in that there was no evidence to make the factual determinations upon which the decision was based. (c) that the decision was so unreasonable having regard to the weight of the evidence and material that no reasonable decision-maker could have made the decision. None of the eleven specified matters referred to in (a) above requires that evidence be given by Mr Wall. 18 In respect of ground (b) above, there are listed three facts which it is pleaded do not exist. The two which it is said require Mr Wall to give evidence are those contained in paragraphs 12(a) and 12(b) - whether there existed a risk to the revenue and whether or not there was a debt raised on the basis of fraud or evasion. It is said that Mr Wall must give evidence establishing that he is not likely to flee with his or the other applicant's assets and so leave the respondent unable to satisfy the debt for tax, and, further that he must give evidence of an absence of fraud or evasion in the conduct of the business to make out the requirements of s 5(3)(b) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act"): Curragh Queensland Mining Limited v Daniel (1992) 34 FCR 212 at 223 - 224. 19 The final ground in (c) above does not require evidence from Mr Wall. 20 The only possible prejudice Mr Wall points to is that he would expose himself to cross-examination on issues which will arise in the criminal proceedings and, unless he claims privilege against self-incrimination, his answers may be used against him in the criminal trial. There is no evidence of any prejudice of the type referred to by Wilcox J in Cameron's Unit Services Pty Ltd v Kevin R Whelpton Associates (Australia) Pty Ltd (1984) 4 FCR 428. Examples of real prejudice given by his Honour were : (i) the possibility of publicity that might reach and influence jurors in the civil proceedings; (ii) the proximity of the criminal hearing; (iii) the possibility of miscarriage of justice eg by disclosure of a defence enabling the fabrication of evidence by prosecution witnesses, or interference with defence witnesses; (iv) the burden on the defendant of preparing for both sets of proceedings concurrently ; (v) whether the defendant has already disclosed his defence to the allegations. 21 As to the "right of silence", Wilcox J said (at 434) : "... The 'right of silence' is a right which a person has in relation to present or anticipated criminal proceedings. As a matter of everyday experience, suspects or accused persons waive the right by giving an explanation of their conduct during the course of interrogation by police or other investigating authorities or in evidence at their trial. No doubt the right is often waived incautiously or through ignorance, but it is also deliberately waived by informed persons who take the view that waiver will best serve their interests overall. The conflicts of interest which give rise to waiver already exist; the law does not step in to prevent those conflicts or to deny the ability to waive the right. The existence of a civil action which an accused person may wish to defend provides simply another example of a conflict of interest between maintaining silence and disclosing the substance of the defence in the criminal proceedings. I see no basis for the view that the court should intervene to relieve against this particular conflict, when it does not relieve against others. The fact that the existence of the civil action may result in a decision by the accused person to waive his right of 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. ..." 22 Sheppard J referred to this passage with approval in Baker: Re Flatwash Pty Ltd v Federal Commissioner of Taxation (1987) 87 ATC 4626 at 4629. 23 The applicants in the present proceedings seek that decisions refusing an extension of time to pay the disputed assessments be set aside. A stay of these proceedings pending determination of the criminal charges would not prejudice the respondent if he was free to exercise his statutory right to recover the disputed tax pending hearing of the taxation appeals in the AAT and these proceedings: Hurley at 13 - 14. However, the existence of the undertaking precludes such a course being taken and the applicants oppose release of that undertaking. If the undertaking is discharged the applicants will be obliged to pay or make suitable arrangements with the respondent to avoid judgments being entered in the Supreme Court. To release the undertaking will have the practical effect of rendering the applications for judicial review nugatory. The existence of the undertaking has the practical effect of granting to the applicants time to pay the disputed amount until the proceedings in this Court are determined. In those circumstances the existence of the undertaking weighs heavily against the vacation of the hearing date, the applicants having failed to come to any satisfactory arrangement with the respondent to secure both the vacation of the hearing date and the maintenance of the undertaking. 24 On the material before me I am not persuaded that Mr Wall will be caused real prejudice or injustice in his criminal trial by requiring that the applications listed for hearing on 12 July 1999 proceed. Nor am I persuaded that it necessarily follows that he must waive his right to silence in order to make out the requirements of s 5(1)(h) and s 5(3)(b) of the ADJR Act in the circumstances pleaded in paragraphs 12(a) and 12(b) of the amended applications for orders for review. Unless the applicants can show there was no evidence or material to justify the decision maker's conclusion that there was a risk to the revenue and/or that there was a debt raised on the basis of fraud or evasion, that is, to satisfy the requirements of s 5(1)(h), the additional limitations imposed by s 5(3)(b) do not fall to be satisfied. That there was a debt raised on the basis of fraud or evasion seems to follow from the existence of the amended assessment and the operation of s 170(2) and s 177 of the Income Tax Assessment Act 1936 (Cth) irrespective of anything Mr Wall may say as to the facts entitling the Commissioner to form the opinion under s 170(2)(a). 25 It is sufficient for present purposes to say that the applicants have not demonstrated in the material filed to date any real likelihood of making out the first limb of the no evidence ground as pleaded in paragraph 12(b) of the amended application. 26 If the case can be conducted without Mr Wall being required to elect to waive his "right to silence" in order to make good the applicants' claims for relief, then no basis exists for vacating the hearing date. However, the circumstance that he may elect to waive his right to silence in order to make out part of one ground in the present proceedings does not per se constitute unjust prejudice to Mr Wall. Nor does the fact that he may elect not to waive the "right to silence" constitute unjust prejudice to the company in these proceedings. 27 The applicants, in my view, upon the application of the approach discernible in the cases cited above, have not made out the necessary grounds for the exercise of the discretion to stay the civil proceedings pending conclusion of the criminal trial. The requirements of justice overall are best met by the hearing and determination of the present applications and by maintaining the undertaking in place for that limited purpose. 28 The applicants' notice of motion is dismissed with costs. 29 It is unnecessary to determine the respondent's application to be released from the undertaking having regard to my conclusion on the applicants' notice of motion. The respondent's notice of motion will be adjourned to 12 July 1999 at 10.15 am for mention with costs reserved. I certify that the preceding twenty-nine (29) paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper.