Cameron's Unit Services Pty Ltd v Whelpton and Associates Pty Ltd [1984] FCA 406; (1984) 59 ALR 754, discussed and followed.

Baker: Re Flatwash Pty Ltd v Federal Commissioiner of Taxation (1987) 87 ATC 4626 at 4628 followed.

Counsel and Solicitors S.W. Gibb instructed by

HILL J. The applicants, Mr Michael Hurley and Mr Jeffrey Hurley, have brought proceedings against the Commissioner of Taxation by way of appeals against objection decisions. On 21 August 1992 I made orders sought by the applicants that these proceedings be adjourned pending the determination of criminal proceedings against them. I now publish my reasons for making those orders.

2. The applicants have been charged on a number of counts under s.178BA of the Crimes Act 1900, with dishonestly obtaining a financial advantage by deception. In the case of Mr Michael Hurley, one of the charges against him reads:

"Charges that ... Michael Nicholas Hurley on the

28 January, 1986 at Sydney in the State of New

South Wales dishonestly obtained for himself a

financial advantage to wit, a credit of

$60,050.00 deposited in the trust account of

Patrick J Daly and Co at the Westpac Banking

Corporation Limited, St Leonards Branch, by

deception namely, by providing Christopher

Taylor with a letter falsely stating that

Michael Hurley was employed as the manager of

the Orient Hotel on a salary of approximately

$48,000 per year."

3. Other charges in similar terms relate to an alleged employment of Mr Hurley by LGC Publications as an advertising consultant at an income of $50,000 per year and an alleged employment by the same company at an income of $80,000 a year.

4. In the case of Mr Jeffrey Hurley, one of the charges against him reads:

"Charges that..Jeffrey John Hurley on the 20

October, 1988 at Sydney in the State of New

South Wales dishonestly obtained for himself and

Michael Nicholas Hurley a financial advantage to

wit, a credit of $485,000 deposited to the trust

account of Patrick J Daly and Co at the Westpac

Banking Corporation Limited, St Leonards Branch,

by deception namely, by providing Christopher

Taylor with a letter falsely stating that the

said Jeffrey John Hurley was employed by B K

Wylie, bookmaker as a clerk and commission agent

and that he the said Jeffrey John Hurley had an

income which had exceeded $1,500 per week for

the past five years."

5. Each of the applicants denies the charges brought against him and proposes to plead not guilty to them. It is obvious, therefore, that an element in the Crown's case against each of the applicants will be whether it was false that each had the earnings from employment referred to in the charges.

6. The Commissioner, presumably upon becoming aware that each of the applicants was alleged to have represented that he had a particular level of earnings from employment, reassessed the income tax of each for the year of income ended 30 June 1980 in the case of Mr Michael Hurley, and the year of income ended 30 June 1988 in the case of Mr Jeffrey Hurley. Other assessments for other years of income were made at the same time, but these are not before the Court. The adjustment sheet which accompanied the assessments made it clear that the only adjustment made was the inclusion in assessable income of each taxpayer of the amount which he is said to have represented to be his annual earnings. Each of the applicants has objected against his assessment, and upon the objections being disallowed has appealed to this Court against the Commissioner's objection decisions in relation to the years of income to which I have referred. The issue of fact to be determined in the proceedings before this Court will accordingly be whether each of the applicants did in truth derive the amount of assessable income which in the criminal proceedings he is alleged to have derived. For each of the applicants to succeed in the present proceedings it would be necessary that he give evidence which would require him to admit an important element in the criminal proceedings.

7. Counsel for the Commissioner referred me to a number of cases, the majority outside the taxation area, in which this Court had refused to adjourn civil litigation where criminal proceedings were pending. These were; Cameron's Unit Services Pty Ltd v Whelpton and Associates Pty Ltd [1984] FCA 406; (1984) 59 ALR 754; Convery v Ziino (1985) 70 ALR 383; Sterling Industries Ltd v Nim Services Pty Ltd (1986) 66 ALR 657; Waterhouse v Australian Broadcasting Corporation (1987) 72 ACTR 15; Baker: Re Flatwash Pty Ltd v Federal Commissioner of Taxation (1987) 87 ATC 4626; Deputy Federal Commissioner of Taxation v Alvaro (1990) 90 ATC 4744. The first of these, a decision of Wilcox J, followed in all the subsequent cases referred to, establishes the following propositions:

* The court is not concerned to preserve for a taxpayer his

right of silence. The court's concern is whether there is

unjust prejudice to the taxpayer by requiring the case to

proceed: (at 760).

* The fact that the continuance of the civil action might

result in a waiver by an accused person of his right to

silence did not per se constitute unjust prejudice to that

party: (at 760).

* Unjust prejudice is not otherwise established where the

criminal trial would be unlikely to be affected by publicity

attendant upon the civil proceedings: (at 760-1).

* The fact that a witness may need to adduce evidence which

may have the potentiality of incriminating him will not

demonstrate prejudice. The applicant is not compelled to

give evidence: (at 761).

8. With respect to these submissions, I do not think that the question is to be resolved as if there were issues of law which provide an automatic answer to the applicants' request for an adjournment. Indeed, Wilcox J, while listing various matters relevant to the exercise of the court's discretion as suggested by Wooten J in McMahon v Gould (1982) 7 ACLR 202, was at pains to point out that the matter was one of discretion for the court: (at 756). 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 and in Baker as "the requirements of justice overall".

9. Prima facie there are two distinguishing factors between an application to stay or adjourn a tax case and an application to stay or adjourn some other civil proceeding, pending a determination of a criminal trial. First, in a tax case it will be the applicant in this Court who will be seeking the stay or adjournment of his own proceedings. That, however, may be thought to be more a matter of form than substance, since a taxpayer is required by the scheme of the taxation appeal procedures to institute the proceedings to dispute the assessment or lose the right to appeal at all. In Baker, Sheppard J expressed the view (at 4628) that the fact that it was the applicant who was seeking the adjournment ultimately made no difference to the principles to be applied. With respect, I agree.

10. Secondly, in the ordinary case of a civil proceeding, the applicant, whose case the respondent is seeking to delay, will not be entitled to relief until the case has been concluded, subject only to the right of any applicant to seek in an appropriate case a Mareva injunction to protect the status quo, until the proceedings are completed. However, the situation in a taxation case is quite different. Absent any stay to prevent the Commissioner from recovering outstanding tax, the Commissioner's statutory right to recover tax is not affected by the institution by a taxpayer of his appeal. So, the Commissioner may, if he chooses, but subject to such order as a court dealing with the matter may make, obtain judgment and proceed to execution, obtain a sequestration order or in the case of a corporate taxpayer, bring about the appointment of a liquidator of the taxpayer, all before the taxpayer has had a chance of litigating the merits of the assessment. It is for the Commissioner to choose whether he wishes to recover the tax before trial, and if, as counsel for the Commissioner suggests to be the case here, he has not sought to do so, that is a matter for the Commissioner.

11. This is not, however, to say that the principles to be applied in considering whether a taxation case should proceed in the face of a related criminal proceeding differ from those to be applied in other civil cases where the same dilemma arises. It is merely that the rights of recovery which Parliament has seen fit to confer upon the Commissioner are but another factor to be considered in the exercise of discretion by the court in determining where the interests of justice lie in the particular circumstances of the case.

12. Applications for adjournment of taxation cases pending the determination of criminal cases, while not frequent, are equally, not unknown. My experience in practice was that the question was usually dealt with by agreement between the taxpayer's advisers and the Commissioner's advisers, with the consequence that it was unnecessary for an application to be made to a court. It may be noted that the taxation appeals concerning Mr Saffron have only now come to trial some considerable time after Mr Saffron's conviction.

13. In the present case, the prejudice to the applicants of the taxation appeals proceeding is patent. For them to give evidence in the taxation cases would almost inevitably involve them admitting an important ingredient in the criminal proceedings. For them to not give evidence in the taxation case would almost inevitably lead to their appeals being dismissed and the assessments against them being confirmed. Against this must be weighed the interests of the community in the efficient administration of justice and the interests of the Commissioner in having the appeal, which has been instituted by the applicants, disposed of.

14. Given that the Commissioner may, if he chooses, seek to enforce payment of the tax, it is hard to see that any prejudice to the Commissioner arises, save the delay of the proceedings. That prejudice is, in my view, clearly outweighed by the prejudice to the applicants if they are forced to a trial of the taxation appeals prior to the criminal trials being disposed of.

15. In these circumstances, it is in my view in the interests of justice overall, that the present proceedings be adjourned for an appropriate time to enable the criminal proceedings to be heard.

16. According to the evidence, although the applicants have been committed to trial, no date has yet been fixed for that trial. A hearing date is not envisaged before January 1993. The applicants have proffered an undertaking to the court to the effect that they will cooperate with the Department of Public Prosecutions to ensure the earliest hearing date possible. In those circumstances, it is appropriate that the present proceedings be adjourned until 2 April 1993, when either the criminal proceedings will have been heard, or, more likely, it will be known with more precision when they are likely to be heard. Should the criminal proceedings be heard earlier, the matter can be restored to the list on seven days' notice.

17. The question of costs has caused me some concern. Ordinarily the party seeking the adjournment should bear the costs of the application. When the matter came on before me on the last occasion, counsel for the Commissioner indicated that the taxpayer should make clear how the issue in the criminal case interacted with the issue in the present proceedings. The impression given was that the Commissioner was unable to see a connection between the two; this despite the fact that documents on the Commissioner's file made it clear that the assessment was made on the basis of the representations alleged to have been made by the applicants as to their income which representations are critical to the criminal proceedings. It seems that those instructing counsel for the Commissioner had, for some reason, neglected to inform him of the true position. That resulted in the necessity of a short adjournment and a further hearing. In these circumstances I propose to order that the costs of the motion and the hearing today be costs in the cause, but not including the costs of the last hearing day of this motion, 21 August 1992, in respect of which I will make no order as to costs.