Deputy Federal Commissioner of Taxation v. Bevz.

Judges:
Jenkinson J

Court:
Supreme Court of Victoria

Judgment date: Judgment handed down 25 March 1981.

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Jenkinson J.

Appeal from a Master's Order adjourning sine die the hearing of a summons for final judgment.

The plaintiff Deputy Commissioner of Taxation claims $24,016.10 which he alleges is due by the defendant under the provisions of the Income Tax Assessment Act 1936 in respect of assessed income and additional tax. The defendant does not dispute that such an assessment has been made, but he deposes that in making the assessment the Commissioner of Taxation wrongly disallowed a deduction claimed in respect of a payment by the defendant to a public benevolent institution. The payment was of $50,000 and the Commissioner disallowed in assessment all but $600 of the $50,000 claimed as a deduction. When the defendant objected against the assessment on the ground that the deduction should have been allowed, the Commissioner's decision was that the objection be disallowed. At the defendant's request the Commissioner has referred his decision to a Board of Review, which may be expected to hear the reference within the next few months.

The plaintiff responded to the defendant's assertion on affidavit that the deduction is in law allowable by deposing that a copy of an agreement in writing between the defendant and Sadar Finance Pty. Ltd. had been furnished to him at his request by the defendant's tax agent before the assessment was made. A copy of the agreement was exhibited to the affidavit.

Counsel for the plaintiff submitted that a legal consequence of the makings and performance of that agreement - which as I infer has occurred - was that no more than $600 was allowable as a deduction in respect of the payment of $50,000. The reasons for judgment of the members of the Federal Court of Australia in
Leary v. F.C. of T. 80 ATC 4438 were cited in support of that submission.

Counsel for the defendant pointed out that the date which the copy agreement bears is the date on which the defendant deposed he had delivered a cheque for the $50,000 to the payee thereof, the public benevolent institution, and counsel for the defendant submitted that the evidence did not justify a finding that the payment to the institution was made after the agreement was made. I think that the evidence does justify such an inferred finding, which I make.

Counsel for the defendant further submitted that it was at least uncertain that the High Court would accept the reasoning which found favour with the judges of the Federal Court in Leary's case and that there was a real, as distinct from a remote, possibility that the defendant's payment will be held to be wholly deductible.

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ATC 4186

In my opinion there is very little likelihood that any substantial deduction will be held to be allowable in respect of the defendant's payment. I think that the plaintiff has established his right to an order for leave to enter final judgment for the amount claimed and I think that the proper exercise of the discretionary power to stay execution of the judgment is that there be no order for a stay. The existence of the power is not in doubt, but in this case I find no substantial consideration in favour of the grant of a stay. Weight is to be accorded the other way to the policy which sec. 201 of the Income Tax Assessment Act 1936 reflects. When no more appears in justification of a stay of proceedings to recover a debt which sec. 208 of the Income Tax Assessment Act 1936 has created than that there may be an extinction or a substantial reduction of the debt in proceedings under Pt. V of that Act which have been instituted by the defendant, a stay ought not in my opinion to be granted if that possibility, of extinction or reduction, is judged to be remote. That is the case here. I need not express - and I refrain from expressing - any opinion as to whether an estimation of such a possibility which proved more favourable to a defendant should attract an exercise of the discretion to stay proceedings in favour of the defendant.

I make the following orders:

• 1. Allow the appeal.
• 2. Set aside the order of Master Bergere made 19 November 1980.
• 3. Order that the plaintiff be at liberty to enter judgment against the defendant for $24,016.10...

(I have calculated a sum for the interest at eight per cent under sec. 78 of the Supreme Court Act which I will state but the parties would be well advised to check the arithmetic. It is intended as a calculation from the date of the writ to this date.)

• ... Enter judgment against the defendant for $24,016.10 and for $1,079.07 interest pursuant to sec. 78 of the Supreme Court Act 1958.
• 4. Order that the plaintiff's costs of his application for leave to enter final judgment and his costs of this appeal and his other costs of the action be taxed and paid by the defendant.
• 5. Certify for counsel on the appeal and before the Master.

(Discussion ensued.)