Phillips, in the matter of Starrs & Co Pty Limited (In Liquidation) v Commissioner of Taxation

REASONS FOR JUDGMENT 1 This is an application by the Commissioner of Taxation for an extension of time to today within which to comply with an order of the court until today, to file an affidavit in response to the plaintiffs' affidavit in support of the plaintiffs' originating process. On 1 February 2011, the plaintiffs who are the liquidators of Starrs & Co Proprietary Limited (the company) issued a proceeding against the Commissioner of Taxation under section 588FF of the Corporations Act seeking orders and declarations against the defendant in relation to payments made by the company to the defendant in the sum of $766,818 being, it is claimed, unfair preferences, insolvent transactions or avoidable transactions under the Corporations Act 2001 (Cth). 2 The originating application was supported by an affidavit of Anthony John Arthur Phillips, one of the liquidators, who deposed to the transactions between the company and the Commissioner of Taxation. He asserted that the transactions were either preferences, insolvent transactions or avoidable transactions. The evidence in support of those allegations was exhibited to the affidavit. On 21 February the parties appeared before me on a first directions hearing and the plaintiffs advised me that the defendant, who was then represented by his solicitor, needed six weeks in which to file an affidavit in response to the plaintiffs' affidavit. The Commissioner's solicitor confirmed that was the time which was required to file an affidavit. An order was made directing the defendant to file the affidavit within six weeks. 3 The matter came before me again on 12 April. No affidavit had been filed by the Commissioner in accordance with the direction which I made on 21 February. I was told that the Commissioner had not been able to file the affidavit and that the parties would request that the matter be adjourned for five weeks. I refused to entertain that application at that time. The Commissioner of Taxation is a model litigant and ought to behave as one. The direction of the Court was that the Commissioner file an affidavit within six weeks of the date of the direction. Directions of this Court, of course, have the force of orders. Orders of this Court must be complied with, especially when the party who is obliged to comply is a model litigant. 4 I adjourned the application until today to allow the Commissioner to file any affidavits in support of any application for extension of time within which to file the affidavit which should have been filed prior to yesterday. Yesterday afternoon the Commissioner filed an application seeking an extension of time within which to comply with the order until today. It was supported by an affidavit of the Commissioner's solicitor which exhibited to that affidavit a letter which had been written to the Commissioner informing the Commissioner of the comments which I made yesterday, and the affidavit in response in the proceeding. 5 In the solicitor's affidavit, Mr Lindquist deposes to the difficulties the Commissioner had in complying with the order. I am told that the case officer who was handling the matter was requested to provide further instructions to a litigator within the Legal Services Branch of the Australian Taxation Office but those instructions were not supplied before that case officer left the Commissioner's employment. The litigator in the Legal Services Branch requested these further instructions on 24 March 2011 but was advised that a new case officer had not been allocated. No case officer was allocated until 25 March 2011 and no instructions were given to the litigator in the Legal Services Branch until 4 April 2011, which was the day when time for compliance with my directions expired. 6 On 11 April the Commissioner's solicitors provided the draft affidavit to the Commissioner of Taxation for execution by an officer but the completed affidavit was not executed before yesterday's hearing. Whilst Mr Lindquist's affidavit addresses the difficulties within the Australian Tax Office which apparently was the reason why the order was not complied with, the deponent does not disclose why the Commissioner did not file an affidavit within time, seeking an extension of time within which to comply with the order. 7 Nor does the deponent disclose why the Commissioner thought himself able to simply ignore the direction. The deponent does not disclose the Commissioner's or the litigators' reaction to the letter sent them yesterday informing them of my comments about the Commissioner's failure to comply with my direction. No apology was proffered by the Commissioner or his officers failing to comply with the direction. I was informed from the bar table, after I raised the absence of any apology, that the senior litigator in the Legal Services branch was apologetic. 8 This is not the first time that the Australian Tax Office has failed to comply with a direction which I have made, but I hope it is the last time. The Australian Tax Office is a wellresourced agency or instrumentality of the Crown and a model litigant which is obliged to comply with any directions made by this Court. It is not entitled nor is the Commissioner entitled to disregard any directions of this Court. If the Australian Tax Office or the Commissioner fails to comply with a direction, the Australian Tax Office or the Commissioner will have to suffer the consequences. 9 I will make an order extending the time within which the defendant has to comply with the direction made on 21 February, until today. And I order the defendant to pay the plaintiff's costs on an indemnity basis, such costs to be paid immediately upon taxation. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.