DE SIMONE & ANOR v FC of T

Judges:
Jessup J

Court:
Federal Court, Melbourne

MEDIA NEUTRAL CITATION: [2009] FCA 446

Judgment date: 9 May 2009

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Jessup J

1. In this proceeding, the applicants, Giuseppe de Simone and Serafino de Simone, appeal on questions of law, pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act"), from a decision of the Administrative Appeals Tribunal ("the Tribunal") made on 13 August 2008. By that decision, the Tribunal varied decisions of the respondent, the Commissioner of Taxation, by which objections lodged by the applicants to their income tax assessments for the year ended 30 June 1999 had been disallowed. The effect of the variations was to allow a deduction of $50,000 to each applicant. The decision of the Commissioner was also varied in other respects, but those aspects are not presently material. What is material is that each applicant had claimed a deduction of $250,000. For each of them, the decision of the Tribunal left him short of the amount which, he contended, should have been allowed as a deduction by the sum of $200,000. The applicants submit that, in deciding not to allow them the full deduction of $250,000 each, the Tribunal erred on questions of law.

2. In the 1999 year of income, the applicants were investors in a proposed theatrical production called "Jolson - The Musical". Investment in that production was promoted by a lawyer experienced in the entertainment industry, Mr Michael Brereton. The means by which the production was financed involved a partnership in which the investors would be the partners. The capital contributions of the partners would provide the initial finance for the production, with subsequent funding intended to be derived from the revenues arising from the staging of the production itself, by way of ticket sales and otherwise.

3. As arranged by Mr Brereton, the mechanics of the initial financing of the production were to be more or less as follows. Each partner would contribute $500,000 to the partnership. The partnership would be managed by a company, Jolson Management Pty Ltd ("Jolson Management"). Another company, Jolson Australia Pty Ltd ("Jolson Australia"), would produce the show on behalf of the partnership, pursuant to a production services and licence agreement entered into with Jolson Management on 30 June 1999. Under that agreement, the partnership was to be entitled to the net profit derived by the production until running expenses were fully recouped. Thereafter, the net profits were to be shared between the partnership and Jolson Australia on a 60/40 basis.

4. An important feature of the financing arrangements was that, of the $500,000 which each partner would contribute, $400,000 was to be borrowed from a finance company (introduced by Mr Brereton) which would have recourse only to the income from the production. The other $100,000 was to be provided in cash by the partner concerned. For their part, the applicants together took up a single share in the partnership. They paid the cash contribution of $100,000 which was appropriate to that share. They were obliged to pay the remaining $400,000, but that obligation was to be discharged by the finance company on their behalf. Overall, the total sum of $14,962,000 was to be contributed by the partners, of which $2,993,600 was to be in cash, and $11,974,400 was to be contributed by the finance company. However, the Tribunal found

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that no such contribution by the finance company was ever made. The only start-up funding provided to the production was constituted by the total of the cash contributions of the partners, namely, $2,993,600.

5. Under the production services and licence agreement, Jolson Management agreed to pay Jolson Australia a "production services fee", in accordance with the following provisions of that agreement:

• "2.1 Appointment
• The Manager appoints Jolson and Jolson hereby accepts the appointment to provide all the Production Services to the Partnership to facilitate the Production within the provisions of this Agreement.
• 2.2 In consideration for the performance by Jolson of its obligations hereunder and in full discharge of all the Manager's obligations to Jolson in connection with the Production, the Manager agrees to pay and Jolson agrees to accept the Production Service Fee at a time and in the manner mutually agreed by both parties. In the event of a dispute the Manager's decision shall prevail.
• 2.3 Calculation of Production Services Fee
  • a) The parties agree that the Production Service Fee in respect of the Production will be calculated on the basis of the actual cost to Jolson of providing the Production Services (as disclosed in the budget) together with a margin (if any) as agreed by the Manager from time to time;
  • b) The Manager hereby irrevocably undertakes to pay Jolson the Production Service Fee as provided in Schedule 1 hereto, upon execution of this Agreement;
  • c) Jolson shall not provide Production Services to the Manager requiring payment of any amount in excess of the Production Services Fee;
  • d) The parties acknowledge and agree that until the Partnership has fully recouped the Running Expenses, the Manager (on behalf of the Partnership) shall be entitled to all Net Profit derived from the Production, thereafter Net Profits shall be shared 60% as to the Partnership and 40% as to Jolson."

The production service fee referred to in Clause 2.3(b) was $14,968,000. In the 1999 year, it seems that Jolson Management (ie, for present purposes, the partnership) earned no income, and had no other expenses. In the circumstances, the applicants contended before the Tribunal that the sum of $14,968,000 was the trading loss of the partnership for the year, and that the share of each, for the purposes of s 92 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"), was $250,000.

6. The Tribunal decided this point adversely to the applicants. It did so in the following terms:

"The first question for consideration is whether the share of loss of the partnership of $250,000 claimed for the year ended 30 June 1999 is an allowable deduction. This, in turn depends on whether the expenditure of $14,968,000 shown in the partnership returns was an allowable deduction under s 8-1 of the Income Tax Assessment Act 1997 (the 1997 Act). That is, was the expenditure incurred for the purpose of gaining or producing assessable income or necessarily incurred in carrying on a business for such purpose and not a loss or outgoing of capital or of a capital nature or private or domestic expenditure. It was submitted for the respondent that there was no loss or outgoing incurred or if there was, it was not incurred for the required purposes but in order to generate a tax deduction. It was further submitted that there was no business carried on by the applicant.

In relation to the first argument of the respondent, I have no difficulty in finding that there was no loss or outgoing incurred by the partnership of $14,968,000. There is simply no evidence of a loan or outgoing of $11,974,400. There were no loan agreements executed for the alleged loan of such an amount by any financier and no evidence of any payment of such amount toward the costs of the production. All the evidence is to the contrary."

As is apparent from this extract, the Tribunal took the view that the absence of any actual

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transaction in the sum of $14,968,000 was fatal to the applicants' claim to deduct their proportionate share of that sum.

7. The applicants are not satisfied with the decision of the Tribunal. They contend that the effect of the production services and licence agreement was that Jolson Management came under an immediate obligation, on 30 June 1999, to pay the sum of $14,968,000 to Jolson Australia. They say that the existence of that obligation gave rise to an outgoing incurred on 30 June 1999 within the meaning of s 8-1 of the 1997 Act, notwithstanding that the funds were never provided by the finance company, and that the obligation was never discharged. They say that the partnership's loss was indeed $14,698,000 in the year in question, and that $250,000 was the share of each of them in that loss.

8. The applicants' case in this respect should be accepted. An outgoing is incurred for the purposes of s 8-1 at least where the taxpayer is subject to an immediate obligation to pay the sum referred to, notwithstanding that payment is not in fact made in the year in question:
Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492, 506;
Commissioner of Taxation v Citylink Melbourne Limited 2006 ATC 4404; (2006) 228 CLR 1, 36-37. It seems that these authorities were not drawn to the attention of the Tribunal in the present case. By treating the question of the deductability of the $250,000 claimed by each of the applicants as dependant upon whether the partnership had in fact paid, as distinct from having agreed to pay, the full sum of $14,968,000 referred to in the production services and licence agreement, the Tribunal applied the wrong legal test to the operation of s 8-1 of the 1997 Act. The Tribunal did, in this respect, err on a question of law.

9. That conclusion, however, does not resolve the present proceeding favourably to the applicants. Both before the Tribunal and in this court, the Commissioner contended that the obligation of Jolson Management to pay the production services and licence fee to Jolson Australia was an element of a scheme of the kind referred to in Part IVA of the 1936 Act. The Tribunal accepted that submission. It dealt with the point in the following terms:

"The alternative submission of the respondent was that the deductions claimed, to the extent, if any, that they are allowable are disallowed pursuant to Part IVA of the Income Tax Assessment Act 1936 (the 1936 Act). It is clear that even if I am incorrect in the view that the full amount of $250,000 is not deductible under s 8-1 of the 1997 Act, Part IVA of the 1936 Act would apply to disallow the deduction. Pursuant to s 177D of that Act it could be readily concluded, looking objectively at the arrangement, that the promoter and the partners entered into the scheme purporting to borrow funds to increase the claim for expenditure beyond that actually incurred for the purpose of obtaining a tax benefit by inflating the amount sought to be deducted. As stated earlier, 80 per cent of the amount claimed as a deduction was attributable to funds allegedly provided by a financer by way of a loan to the partners but no actual funds were provided and, not unusual in situations such as these, a round robin of book entries was entered into. The effect of such a finding is that s 177F(1) would disallow the deduction claimed. However, in common with many other schemes which have been considered by the Tribunal and the courts, it is appropriate that a compensating adjustment be made under s 177F(3) to allow as a deduction the expenditure actually incurred by the participants. It is of some interest that, in common with many other schemes involving a genuine commercial operation, the promoters embark on a course of seeking to attract investors by a somewhat artificial increase in the promised income tax deduction using non-existent allegedly non-recourse loans."

The applicants submit that this conclusion was infected by errors of law, in two respects.

10. The applicants first submit that they lost "real money", by which I understood them to say that, notwithstanding the findings of the Tribunal, they did not derive a tax benefit within the meaning of s 177C of the 1936 Act because they were in fact each out of pocket to the tune of $250,000 with respect to their investments in the Jolson Partnership. This submission, however, seeks to take issue with a

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finding of fact made by the Tribunal. It raises no question of law.

11. The applicants' other point was that they were not themselves parties to any scheme of a kind referred to in Part IVA, and that the existence of such a scheme should not, therefore, impact adversely upon their own claims for deductions under s 8-1 of the 1997 Act. To the extent that this submission involves a question of law, there is no substance in it. Under s 177D of the 1936 Act, a scheme is one where, having regard to various enumerated factors, "it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme …." This provision, which requires an objective approach, is concerned with the purpose of the person, or any of the persons, who entered into or carried out the scheme. It need not be the purpose of the taxpayer. It is apparent from the extract from the Tribunal's reasons set out above that the Tribunal took an objective approach, and concluded that "the promoter and the partners entered into the scheme purporting to borrow funds to increase the claim for expenditure beyond that actually incurred for the purpose of obtaining a tax benefit by inflating the amount sought to be deducted". To avoid the operation of s 177D, it would not be enough for the applicants to establish that they did not have the purpose there referred to: they would have to show that none of the persons who entered into or carried out the scheme had such a purpose. Notwithstanding their own protestations, the Tribunal's finding on that point was one of fact which was amply open to it. To the extent that it involved an (objective) inference about the purpose of the applicants (along with that of other partners), it was equally open to the Tribunal. It involved no error of law.

12. Notwithstanding the error of law made by the Tribunal with respect to the operation of s 8-1, therefore, I consider that the alternative basis upon which the Tribunal decided the matter was free from legal error, and was sufficient to sustain the Tribunal's conclusion, and the decision which it made. I would not, therefore, uphold the present appeal to the extent that it involves allegations of errors of law said to arise under the 1997 Act or the 1936 Act.

13. The applicants have a further basis upon which they contend that the Tribunal erred in point of law. It involves an allegation of denial of natural justice. The applicants say that the Tribunal proceeded to hear and determine their applications for review notwithstanding the absence from the witness box of Mr Brereton, in relation to whom the applicants had caused a summons to be issued under s 40(1A) of the AAT Act. The applicants contend that, in so proceeding, the Tribunal denied them the opportunity to call evidence which would have been material - they say essential - to the conduct of their case.

14. Before the Tribunal, the applicants' application for review was heard over the period 19-21 November 2007. Some time before that, the applicants had made it clear that they needed Mr Brereton to give evidence as part of their case. For reasons which do not presently need to be canvassed, he did not do so at the hearing on those days. At the end of their evidentiary case, the applicants informed the Tribunal that they could go no further without the evidence of Mr Brereton. The Tribunal decided to hear the final submissions of the parties, and, in the light of a full understanding of the case such as would be provided by those submissions, to revisit the question whether the hearing should be adjourned to give the applicants a further opportunity to produce Mr Brereton to give evidence.

15. After the luncheon adjournment on 21 November 2007, and immediately before Mr Giuseppe de Simone (on behalf of himself and Mr Serafino de Simone) was to make his submission in reply, the Tribunal returned to the question whether an adjournment should be granted. The Tribunal said:

"And yes, I have come to the conclusion with - have to say, with strong reservations. And those reservations are primarily because you left it till last Friday to - talking about summonses when we've been talking about summonses for six months. But it was only last Friday that they actually appeared, because I think I said I wouldn't have issued them on such short notice anyway if I had

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been here. And reservations as to what Mr Brereton is going to be able to add to this which will have any material effect on the evidence, most of which is plain on the face of the documents. But in the circumstances, and so as not to be seen as inhibiting you presenting your case as thoroughly as you wish, I will - I know the respondent doesn't like it - but I will agree that we will resume this hearing for one day. Hopefully it will only take half a day, but we'll take one day. And that's conditional upon you within 14 days providing in writing to the tribunal a confirmation that Mr Brereton has agreed that he will give evidence, and the dates on which he is not available to give that evidence."

In the result, on the same day, the Tribunal gave the following directions:

• 1. On or before 5 December 2007 the applicant provide confirmation to the Tribunal and the respondent from his proposed witness, Mr Michael Brereton, that:
  • (a) he will attend and give evidence to the Tribunal in these matters; and, if so,
  • (b) on which of the following dates Mr Brereton is available to give evidence: 28, 30 January 2008; 12, 14 February 2008; 3-5, 10-12, 17-19, 24-26, 31 March 2008;
• 2. on or before 5 December 2007 the respondent advise the Tribunal of availability for resumed hearing: 28, 30 January 2008; 12, 14 February 2008; 3-5, 10-12, 17-19, 24-26, 31 March 2008; and
• 3. subject to paragraph 1, these matters be listed for resumed hearing on a date to be fixed.

16. Subsequently, the applicants took steps to comply with paragraph 1 of the Tribunal's directions. Having ascertained from the Tribunal that it would resume the hearing on 11 March 2008, the applicants caused a summons to Mr Brereton to be issued on 12 February 2008. The summons was left for Mr Brereton at his office on 13 February 2008. On 20 February 2008, Mr Giuseppe de Simone sent an email to a staff member at Mr Brereton's office, seeking confirmation that she had brought the summons to Mr Brereton's attention. On the same day, the staff member replied to Mr de Simone with the information that she had scanned and emailed a copy of the summons to Mr Brereton but had not yet received a response from him. She added: "He is due back from overseas tomorrow." These two emails were copied to the Commissioner's solicitor, who, in an email to Mr de Simone of 21 February 2008, drew the latter's attention to reg 15 of the Administrative Appeals Tribunal Regulations 1976 (Cth) ("the AAT Regulations"), and added:

"Clearly you have not complied with Regulation 15.

There would therefore be no obligation on Mr Brereton to comply with the Summons.

Are you going to remedy the situation?"

Mr de Simone replied as follows:

"Mr Brereton is overseas. I was told by the Registrar that a copy could be served by leaving it at his office. I will attempt to effect service on Mr Brereton when he returns which I understand is in the next few days. He will most probably seek to avoid this fate but let us see."

There was no evidence of any further service, or purported service, of the summons upon Mr Brereton.

17. On 27 February 2008, Mr Brereton wrote to Mr Giuseppe de Simone in the following terms:

"As mentioned yesterday, I prefer that we confine our discussions via emails. At the outset, please note that I will not answer anything that I deem to be self serving in your usual style.

In relation to your Summons left at Lennox Street, without dealing with it properly or merit, I have discussed the matter with my Tax Counsel. It is his advice that your interests (and of course my interests) would be best served if my AAT case was run and completed first. This is because we will be able to provide a more expansive explanation and present the matter better than you.

To this end we have reinstated our AAT challenge referable to Jolson and other matters. They had been adjourned sine die, although we have no record of every [sic]

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making such a request. It appears to have been a convenient mistake by the ATO to take my AAT challenge out of the list.

My question is, can you at this time adjourn your matter pending the completion of my AAT challenge? We are attempting to expedite the Hearing as my advisors believe my case is strong. This is particularly so in relation to Jolson where I do not have the same issue that you may have namely, that my expenditure could not be argued to be on capital account as I was clearly in the business of acting as a producer."

Mr Giuseppe de Simone replied to Mr Brereton in the following terms:

"I have referred your request to the ATO for their response. The ATO's legal representative is Vincent Tavaloro and his email details are as above. If ATO consents to the adjournment, then there ought not be a problem and the Tribunal would usually be minded to grant the adjournment.

It may be that if the ATO does not consent to this course of action (which by the way seems quite sensible to me provided you do pursue your case expeditiously), that the Tribunal will provide an order to this effect on my and your joint application. In the absence of the ATO's consent, you would need to attend on 11 March 2008 so you could be sworn in to give evidence of your separate application being afoot and the adjournment application could then be made on the basis that the Tribunal ought not hear the same evidence twice. Would attending the Tribunal on 11 March 2008 be a problem for you?"

18. It seems that the applicants thereafter corresponded with the solicitors for the Commissioner, foreshadowing an application for an adjournment on 11 March 2008, the effect of which would be to defer the finalisation of their proceeding in the Tribunal pending the hearing and determination of proceedings which concerned Mr Brereton himself. In a letter dated 4 March 2008, the solicitors for the Commissioner made it clear that the Commissioner would strenuously oppose any such application for an adjournment.

19. The applicants continued to correspond with Mr Brereton, in terms which made it clear that they expected him to be present to give evidence on 11 March 2008. Matters were, it seems, brought to a head by a lengthy, argumentative and, it must be said, quite bellicose letter from Mr Brereton to Mr Giuseppe de Simone (with a copy to the Tribunal) dated 7 March 2008. In that letter, Mr Brereton contended that the summons was not properly served pursuant to reg 15 of the AAT Regulations. He contended that the contents of the summons were "absurdly wide, oppressive and vexatious" in various respects. He contended that the summons was so wide (by requesting "nearly every document which this firm presently holds in storage") as to be impossible to comply with. He alleged that, notwithstanding that the applicants knew that he was overseas on business, they confirmed a date for the resumed hearing of their matter before the Tribunal "without conferring with Mr Brereton on the dates he was available". He alleged that the applicants had made no mention of their request for documents (ie, as distinct from a request to give evidence) "and it was only when Mr Brereton returned from overseas late last week he became aware of the summons requiring those documents". After referring to the significance of his own pending appeal in the Tribunal, Mr Brereton alleged that the summons left at his office was "invalid and illegal", and said that he would not be attending the Tribunal on behalf of the applicants on 11 March 2008 to give evidence and to produce documents. As though there might have been something left ambiguous by the terms of this correspondence, the letter concluded: "If you have any queries in relation to the above please contact this office."

20. The applicants' proceeding before the Tribunal resumed on 11 March 2008. It seems that the applicants had not received Mr Brereton's letter of 7 March, and the Tribunal stood the matter down for 15 minutes so that they might read the copy of the letter which had been sent to the Tribunal, and make telephone contact, if possible, with Mr Brereton. Upon the resumption, Mr Giuseppe de Simone informed the Tribunal that he had spoken to a staff member at Mr Brereton's office, and had been informed that Mr Brereton was "at an airport

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on his way to leave the country today and his office does not know when he will return". There was some discussion as to the relevance, to the applicants' matter, of Mr Brereton's own matter which was, apparently, listed for directions the following morning. Ultimately, the Tribunal gave a ruling in the following terms:

"Whatever we do, unfortunately, or fortunately, this tribunal does not have power to enforce its summonses. That has to be done through the courts. I have little doubt that any action in the courts would be strongly defended by Mr Brereton. As far as the thought that, well, let's adjourn this and we'll proceed with Mr Brereton's matter, given Mr Brereton's attitude at the moment, I don't have any great confidence that his matter is going to progress with any great speed. I have to say I haven't looked at the file, but I note that Mr Brereton mentions Jolson and other matters, so I assume that there are other matters to be dealt with within his application.

Therefore, I suspect it's a long time before we're actually going to get Mr Brereton down to a hearing and giving evidence. All sorts of things might happen to Mr Brereton in the meantime. So the simple answer is I am not prepared to adjourn this application any further, certainly not for the possible appearance of Mr Brereton, which I have no confidence will happen. I had some reservations last time, and that's why I said that I would only adjourn if you're able to confirm that he would appear. Now, I'm not criticising you. Your understanding was that he would appear. But he hasn't, and my guess is he has no intention of appearing, and unlikely to appear.

Therefore, there is absolutely no point in me further adjourning this matter. The only possible argument for adjourning it would be to await the actual hearing on Mr Brereton's own matter, and I have no idea when that will be. My guess is it will be a long time in the future, if ever. So the simple answer is no, I am not prepared to adjourn this any further."

In the result, the Tribunal did not grant the adjournment requested by the applicants, and proceeded to determine their application adversely to them.

21. The content of the fair hearing rule in the present circumstances is set out in s 39(1) of the AAT Act, which provides, subject to presently irrelevant qualifications, that -

"… the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case and, in particular, to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents."

In
Sullivan v Department of Transport (1978) 20 ALR 323, Deane J said (at 342) that s 39(1) of the AAT Act constituted "statutory recognition of an obligation which the law would, in any event, imply". His Honour also said of the provision (at 343):

"In this regard, however, it is important to remember that the relevant duty of the Tribunal is to ensure that a party is given a reasonable opportunity to present his case. Neither the Act nor the common law imposes upon the Tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled." [Emphasis in original.]

In making that observation, Deane J had in mind circumstances of the kind which arose in Sullivan, namely, those of a party before a tribunal who, being self-represented, omitted to request an adjournment when, if requested, it would most likely have been granted. That is not the present case. Although also self-represented, the applicants here knew that they needed an adjournment, and sought it.

22. There are two presently relevant respects in which a party may be denied a reasonable opportunity to present his or her case. The first, and perhaps more conventional, respect relates to the period allowed the party to prepare for the hearing in question. Whether that is a reasonable period will, of course, depend on all the circumstances of the case, including its complexity and the availability of evidence of the kind required to be led. A period which would be adequate in a case in which the party himself or herself was to be the only witness may not be so in a case in which, to take an

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extreme example, witnesses had to be brought from overseas. The other respect relates to the unusual situation in which, despite a reasonable period having originally been allowed and despite also the conscientious intentions of the party concerned, some unexpected supervening event interferes with the party's ability to present his or her case. In such a situation, a refusal to grant an adjournment may be tantamount to a denial of a reasonable opportunity to present the case. The principle here is that "a failure to accede to a reasonable request for an adjournment can constitute procedural unfairness":
Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597, 611 [40].

23. In the present case, there could be no suggestion that the period between 21 November 2007 and 11 March 2008 was not a reasonable one to enable the applicants to take such steps as were necessary to procure Mr Brereton to give evidence. However, when the hearing resumed on 11 March, Mr Brereton was not present, but had sent a letter to the Tribunal contending that he had not been properly served with the applicants' summons. If there was substance in that contention, I do not think the applicants would be in any position to say that Mr Brereton's absence was the result of an unexpected supervening event for which they had no responsibility. At this point, the court is confronted with an unresolved question of fact (which cannot be sidestepped simply on the basis that the appeal as such is limited to a question of law, namely, whether the applicants were denied natural justice). The Tribunal made no finding on the subject of the efficacy of the applicants' service on Mr Brereton. Neither have the applicants led any evidence on the subject in the present proceeding. The matter was, quite clearly, one on which the applicants carried both the legal and the evidentiary onus. In the circumstances, I cannot take it to have been established in point of fact that Mr Brereton was duly served in accordance with reg 15 of the AAT Regulations. Indeed, the applicants' own email to Mr Brereton's office of 20 February 2008 implies that personal service was not effected.

24. I would not hold that it would necessarily be a denial of natural justice for a tribunal to refuse an adjournment requested merely because of the non-attendance of a proposed witness who had been duly served. However, in the circumstances of the present case (ie where the applicants knew that a summons would be necessary to secure the attendance of Mr Brereton), I have no hesitation in holding that the applicants' failure to establish that Mr Brereton had been duly served is fatal to their contention that their application for an adjournment was a reasonable one, and to their allegation that they were denied natural justice.

25. For the above reasons, the Application must be dismissed. There does not appear to be any reason why costs should not follow the event in the normal course, but, against the chance that there might be such a reason, I shall give the parties liberty to apply within seven days.