Oswal v Commissioner of Taxation

1 The applicants ("the Oswals") in Part IVC proceedings in this Court apply for an order that the proceedings be referred for mediation before Associate Justice Efthim of the Supreme Court of Victoria. His Honour is currently conducting a mediation of other proceedings in the Supreme Court of Victoria to which the Commissioner is not a party. The Oswals seek to have the mediation of the Part IVC proceedings conducted by Associate Justice Efthim on 26 August 2016 but the Commissioner would not be represented by senior or junior counsel on that day. The Commissioner submitted that mediation should not be ordered but that if mediation were to be ordered it ought to be for a mediation to be conducted on 1 September 2016 in Sydney and that it should be conducted before the Hon. Kevin Lindgren QC. 2 The application by the Oswals for the matter to be referred to mediation was made by interlocutory application dated 18 August 2016. The application that day was supported by an affidavit indicating that Associate Justice Efthim was available for the Part IVC proceedings to be mediated before him the following morning at 11am or on Monday, 22 August 2016. The interlocutory application was mentioned at 4.15pm on 18 August 2016 but the Commissioner had not had sufficient notice of the application for it to be dealt with at that time. It was listed again for mention at 2.15pm the following day but there was insufficient time for it to be fully considered. At that hearing, however, counsel for the Commissioner said that the Commissioner's counsel would not be available to attend a mediation on 22 August 2016 if a mediation were to be ordered to take place on that day. In the meantime a further affidavit was filed on behalf of the Oswals, including a confidential exhibit, and the Court was informed that Associate Justice Efthim would be available to conduct a mediation on 26 August 2016. In those circumstances, the interlocutory application was adjourned to 10am on 22 August 2016 to consider whether a mediation ought to be ordered and if so whether it should be ordered to be conducted before Associate Justice Efthim and whether it should be ordered to take place on 26 August 2016. A further affidavit was filed in support of the application on 22 August 2016 updating some of the matters in the previous affidavits in support of the application for the matter to be referred to mediation. 3 The occasion for the interlocutory application for the matter to be referred to mediation is the developments in proceedings in the Supreme Court of Victoria before Justice Dodds-Streeton. The applicants in the Part IVC proceedings in this Court are also plaintiffs in the Supreme Court proceedings which her Honour referred for mediation before his Honour Associate Justice Efthim. The hearing of those proceedings commenced on 30 May 2016 but has been adjourned for the mediation to be conducted by his Honour. The proceedings in the Victorian Supreme Court have some connection with the Part IVC proceedings although a substantial issue with potential overlap was abandoned in both proceedings: Oswal v Commissioner of Taxation (No 5) [2016] FCA 916. However the ability of either proceedings being settled may be affected by the other. 4 The Court may refer proceedings in the Court to a mediator for mediation or to a suitable person for resolution by an alternative dispute resolution process: Federal Court of Australia Act 1976 (Cth), s 53A; Federal Court Rules 2011 (Cth), r 28.02. In deciding whether to refer the Part IVC proceedings to mediation it is relevant to take into account that a previous mediation was unsuccessful and that the hearing has concluded with judgment reserved. A decision to order another mediation in the Part IVC proceedings is a decision fundamentally to be made about the proper management of the dispute in this Court rather than whether it will assist a party in dealing with the disposition of other proceedings in another jurisdiction. The existence of other proceedings, however, may bear upon whether the proper management of the dispute in this Court warrants an order that the proceedings in this Court be referred to mediation. The fact that the Oswals are in dispute elsewhere may have a direct bearing upon the resolution of the proceedings in this Court. 5 The fact that a previous attempt to mediate the Part IVC proceedings has failed does not mean that another mediation should not be ordered at this stage. There have been significant developments in the Part IVC proceedings since the matter had previously been referred to mediation. The parties have since fully argued their cases in Court and have substantially narrowed and focused their differences. The potential resolution of the dispute in the Victorian Supreme Court may also have a significant impact upon whether, and if so the basis upon which, the Part IVC proceedings in this Court may be resolved. 6 The involvement of a common mediator is apt to facilitate that process. It is desirable, however, that the parties have available to them at any mediation those advisers whose guidance and knowledge will facilitate the proper consideration of the matters arising in the mediation. The Part IVC proceedings in this Court involved complex questions of tax law and administration in respect of which forensic judgments were made in the conduct of the proceedings. It is desirable that the Commissioner have available at a mediation those advisers and decision-makers who were significantly involved in the conduct of the dispute sought to be resolved by mediation and which is presently reserved for judgment. It is therefore not desirable for the mediation to be ordered on a day when neither of the Commissioner's counsel would be able to participate in a mediation, especially given that they are available to assist in a mediation six days after the date proposed by the Oswals. It is reasonable, proper and desirable for the Commissioner to participate in a mediation with counsel who were responsible for the conduct of the proceedings which have taken place and to have in attendance the relevant decision-makers. The mediation before Associate Justice Efthim began some time ago and there is no evidence to indicate that a mediation six days after the date currently sought by the Oswals is unlikely to be more successful than a mediation to be conducted six days before. 7 Having the mediation take place before Associate Justice Efthim may assist in the resolution of the Part IVC proceedings by bringing to the mediation of the Part IVC proceedings a significant circumstance that would not be present if the Part IVC proceedings were to be mediated by a mediator without knowledge of matters relevant to the settlement of the Part IVC proceedings based on an understanding of the issues and positions arising from the Victorian Supreme Court proceedings. Any issue of confidentiality should, of course, be raised with the mediator and should be maintained. The mediation should be conducted in Sydney if Associate Justice Efthim is available to travel and to have his costs of travel met by the applicants seeking the mediation. A mediation is nonetheless desirable even if Associate Justice Efthim is not available to conduct the mediation in Sydney on 1 September 2016. In that event the mediation should be before the Hon. Kevin Lindgren QC who has prior knowledge of the taxation issues raised in the Part IVC proceedings and is apparently available on 1 September 2016 in Sydney. 8 Accordingly, there will be orders that: 1 The proceedings be referred to mediation on 1 September 2016 before Associate Justice Efthim in Sydney if the applicants notify the Respondent by 4.30pm on 24 August 2016 that his Honour is able to conduct the mediation in Sydney on that day. 2 The proceeding be referred to mediation on 1 September 2016 before the Hon. Kevin Lindgren QC in Sydney in the event that his Honour Associate Justice Efthim is not able to conduct the mediation in Sydney on that day in accordance with the preceding order. 3. The costs of any mediation be shared by the Applicants and Respondent save for any travel expenses of Associate Justice Efthim which are to be paid in advance by the Applicants. 4. The costs will otherwise be reserved. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone.