Ramsden v Federal Commissioner of Taxation

REASONS FOR JUDGMENT 1 When I delivered my reasons for judgment on 21 May 2004, I invited the parties to submit further submissions as to the form of orders to be made in the light of my reasons, including what orders should be made in relation to the question of costs. 2 The parties are agreed that, so far as the substantive orders are concerned, in each matter the Court should order, and I now order: 1. The applications be allowed. 2. The objection decision dated 26 April 2001 be set aside and the objection of the applicants dated 19 September 2000 be allowed. 3. The matter be remitted to the respondent for re-assessment according to law. 3 The one contentious matter concerns the orders that should be made in each case with respect to costs. Notwithstanding the lack of success in respect of most of the matters on which the applicants relied, my tentative view was that the applicants nonetheless should have the benefit of an ordinary costs order, namely, that the applicants have their costs from the respondent, to be taxed if not agreed. 4 I have had the benefit of submissions from both parties, as well as the applicants' response to the respondent as to the submissions as to costs. 5 It was submitted on behalf of the respondent that the applicants have been successful in appealing the respondent's objection decision solely by reason of their subsequent disclaimer, and that the Court rejected all the original grounds of objection made by the applicants. Accordingly, it was submitted, the respondent's objection decision was correct at the time it was made, and further, it was said, a significant amount of time was spent arguing matters on which the respondent succeeded. 6 It was also submitted on behalf of the respondent that the applicants first sought to add as a ground of objection the disclaimer point on the day of the hearing, and that the only admissible evidence of disclaimer was filed on 8 October 2003, just prior to the hearing of the appeal. But for this evidence produced at a time well after the respondent's objection decision, it was said the respondent would have been wholly successful on the appeal, and it was contended that the respondent should have its costs up to and including the date when the applicants altered the factual matrix in their favour, namely, 8 October 2003. 7 For the applicants in response, it was submitted that the assertion that the Court rejected all of the original grounds of objection is not correct. It was submitted on behalf of the applicants that the issue is not whether the objection decision was correct at the time it was made; rather, it is what the position as to costs to that point would have been if the Commissioner had consented to the appeal being allowed once the formal disclaimers were raised. The point is that the Commissioner persisted all the way to judgment in maintaining the assessment. 8 It seems to me that there is considerable force in this submission. The affidavit of Tamara Ramsden filed 26 August 2002 is relevant to the issue of disclaimer. The facts of the matter are that these applicants, the children and stepchildren of Mr Hart, are the default beneficiaries under the default provisions of the Trust, and the default distribution to them is, in a practical sense, theoretical. The applicants have never received any of the amounts and it is unlikely, as a matter of practical reality, that they have received any benefit as a result of the default provisions of the Trust Deed. 9 The affidavit of Tamara Ramsden filed 26 August 2002 says at pars 14-16: '14. I have never challenged the validity of the distribution by [Steve Hart Family Holdings] as trustee of the [Steve Hart Family Trust] to the Adcock Trust. 15. So far as I am aware, [Steve Hart Family Holdings] as trustee of the [Steve Hart Family Trust] has not exercised any discretion to pay or apply any part of that aforesaid distribution to me. 16. To the best of my knowledge and belief no part of the amount of $429,000.00 distributed to the Adcock Trust has been paid to me or applied to my benefit.' 10 It is true that there is no express disclaimer, as there was in the subsequent affidavits filed, but it has always been the case that each applicant has contended that they are not entitled to any part of the distribution made to the Adcock Practice Trust. 11 In all the circumstances, the fact that in some matters the applicants have been unsuccessful, is not a basis on which the ordinary rule as to costs should not apply. The particular circumstances of this case are that all of the appeals were argued in a day, so that there is no realistic basis on which there can be an apportionment of costs on the basis of separate issues. 12 In all the circumstances I propose to exercise the discretion that the Court has in relation to costs by making the usual order, so that in addition to the orders which I have indicated, in each case, the Court orders that the respondent pay the applicants' costs of and incidental to the application, including any reserved costs, to be taxed if not agreed. Those costs are to include the costs of the submissions and argument on costs today. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender