McKewins Hairdressing and Beauty Supplies Pty Ltd v Deputy Commissioner of Taxation

McKewins Hairdressing and Beauty Supplies Pty Ltd v Deputy Commissioner of Taxation - [2000] HCA 27 - HCA 2000 case summary — Zoe

[16]

GUMMOW J. On 19 September 1999, the Supreme Court of New South Wales ordered that McKewins Hairdressing and Beauty Supplies Pty Ltd ("McKewins") be wound up on the application of the Deputy Commissioner of Taxation. Mr Warren Pantzer was appointed liquidator.
Earlier, on 29 July 1999, there had been filed in this Court two documents. The first is an application in the name of McKewins and signed by a solicitor, Mr Wayne Levick, "on behalf of the [a]pplicant" seeking removal of part of the then pending Supreme Court winding-up application. This was said to involve questions arising under the Constitution or involving its interpretation within the meaning of s 40 of the Judiciary Act 1903 (Cth) ("the Judiciary Act"). The second document is a notice under s 78B of the Judiciary Act. A third document filed on 12 November 1999 is headed "APPLICANT'S SUMMARY OF ARGUMENT". The second and third documents were signed by Mr Levick, as solicitor for or on behalf of the applicant. The outline of argument and the s 78B notice set out arguments which appear to follow those later rejected by Hill J in a judgment delivered on 1 December 1999[1].
At no time since his appointment on 19 September 1999 has the liquidator consented to the continuance of the application for removal under s 40 of the Judiciary Act. On 15 November 1999, the solicitor for the Deputy Commissioner of Taxation wrote to Mr Levick enclosing a copy of the winding‑up order and, on 19 November 1999, the liquidator wrote to Mr Levick drawing his attention to s 471A of the Corporations Law and objecting to a pending purported application to the Supreme Court contesting the winding‑up order. On 22 November 1999, that application to the Supreme Court was dismissed with costs.
The effect of Mr Levick's evidence in this Court is that, in proceedings respecting McKewins, he has received instructions, including the text of two documents filed on 29 July 1999 and a third on 12 November 1999, subject to checking for typographical errors and the like, not from the directors of the company but from a body based in Melbourne. This is called the Institute of Taxation Research ("the ITR"). Mr Levick gave some information concerning the ITR. In his oral evidence he said:

[37]

There remains the question of costs. The Deputy Commissioner of Taxation should not be left without any prospect of recouping his costs. I make order 1(a) in the notice of motion filed on 2 February 2000. Mr Levick is added as the second respondent to the notice of motion for removal under s 40 before that motion is dismissed. Joinder is not a necessary course but it was undertaken by Hill J in Levick and it is prudent to follow it[10]. I would not add Mr Keith McKewin, a director of McKewins, as third respondent. I am not satisfied he has personally been served with the necessary process, nor is it clear on the present state of the record that he was more than a lay person who, so far as he was involved, was drawn in by the efforts of Mr Levick's instructor, the ITR.
An order for costs should be made against Mr Levick. The power to make such an order should be exercised sparingly, in particular where the order sought is one for indemnity costs. However, it is of the first importance that solicitors observe the basic professional requirement and obligation to the courts before which they appear that they not institute and conduct litigation on instructions for some third party which is a stranger to that litigation. It is not to the point that Mr Levick may have believed that what was sought to be done would have benefited the company or its directors or that for a time at least the directors may have acquiesced in this course. This must be all the more so where a liquidation has supervened in the proceedings and where those proceedings, in any event, have no prospect of success.
In all the circumstances, not only should Mr Levick bear the costs of the Deputy Commissioner but this should be on an indemnity basis[11].
On 1 May, Mr Levick filed a cross-motion, on its face brought by McKewins, in effect seeking to defer the disposition of the Deputy Commissioner's motions pending the outcome of R v Hughes. Nothing in that case could support the propositions of law which Mr Levick seeks to put respecting the validity of a notice of a statutory demand by the Commissioner and of winding-up orders made by the Supreme Court of New South Wales consequent upon a failure to meet such a statutory demand. That motion should be dismissed, with the same consequences as to costs.

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