case_title: Browne v Dunn (1893) 6 R 67 (HL)

case_text: The submissions made on behalf of 3D in this regard were to the following effect: (1) To the extent that assertions were made by the Commissioner against 3D, those accusations had to be squarely put to the relevant witnesses. (2) As certain accusations were not put to the witnesses for 3D, the Tribunal fell into serious error by taking those assertions into account in making its determination. Not only did the Tribunal take those assertions into account but made findings of fact, and findings on credit, based upon matters never put to witnesses (in particular Mrs Montgomery). (3) In this regard the Tribunal must apply notions of procedural fairness: Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ; Jagelman v FCT 96 ATC 4055 , Fletcher & Ors v FCT (1988) 19 FCR 442 , Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248. A breach of these principles constitutes an error of law: Australian Postal Commission v Hayes [1989] FCA 176 ; (1989) 23 FCR 320 at 326 per Wilcox J. The first part of s 39(1) of the AAT Act provides statutory recognition of these principles: Sullivan v Department of Transport (1978) 20 ALR 323. (4) The integrity of the Price Spreadsheets was of fundamental importance to the case sought to be put by 3D. The Price Spreadsheets were recognised by the Commissioner as 'the central plank in the Applicants' case'. (5) In the course of the hearing, counsel for the Commissioner put to Mrs Montgomery in respect of the Price Spreadsheets that '...the numbers have been massaged and fiddled with'. (6) Counsel for 3D strenuously objected to such a question on the following basis: 'Mr McGovern: I object to that, because it is quite important. That proposition may be an ultimate submission, but in fairness to the witness and she is here now my friend should take her directly to each of the figures which he asserts to have been massaged, each of which has been fiddled with, so that we all know, rather than put it globally. Its unfair to the witness to do it otherwise.' Later: 'Mr Fagan: I don't purport to be able to put a positive to this witness about which number has been adjusted in which respect. I submit that it's quite appropriate to put, in this sort of circumstance, to this witness that the whole thing has been an adjustment and fiddling of numbers to reach a number to correspond with a cheque that as [sic] cashed. The Deputy President: I can see no reason why it can't be put. She can deny it if she likes.' Later: 'Mr McGovern: ... But at this point, and this is not just forensic flourish, this is really a question for the decision-maker at the end of the day to have to make a grave determination about this lady's credibility and whether you accept her or not, and, in those circumstances, to just put a rolled-up general proposition which is, now we know, unsupportable by as he frankly confesses he can't ascribe any particularity to any massaged figures or numbers, at least what should be done ... ... Mr Fagan: ... I am entitled to put this general proposition that they have been fabricated, by its very nature I wouldn't know how.' (7) As counsel for 3D feared, and as ultimately eventuated both in the Commissioner's written and oral submissions, counsel for the Commissioner proceeded to make submissions with some particularity as to discrepancies within the Price Spreadsheets. The alleged discrepancies, being the basis for the Commissioner's submissions, were not put to the witness, particularly Mrs Montgomery. Accordingly she was denied an opportunity to be heard on the matter in response. (8) In this regard, the Commissioner's submissions (both written and oral) asserted with some particularity the manner in which the Price Spreadsheets were allegedly manipulated, and these submissions were both taken into account, and adopted by the Tribunal, without demur, in finding against 3D. (9) For the Tribunal to accept submissions on such matters not put to the witness was an error in law, being a clear failure to provide procedural fairness to 3D on a crucial part of 3D's case. (10) In such circumstances it is difficult to resist the conclusion that an acceptance of the Commissioner's submissions by the Tribunal amounted to gross unfairness. (11) Mrs Montgomery in particular was confronted in the witness box with an imprecise, generalised and unspecified assertion about 'fudging and fiddling' the contemporaneous records, but the final submissions, which she was not offered opportunity to address in evidence, then contained detailed allegations never put to her. This was a clear breach of the rule in Browne v Dunn (1893) 6 R 67 (HL), and that rule has been treated as an aspect of procedural fairness, and if breached will give rise to a vitiation of the decision of the Tribunal; see Hoskins v Repatriation Commission [1991] FCA 559 ; (1991) 32 FCR 443 at 446. 17 The submissions made on behalf of the Commissioner were to the following effect: (1) There was no denial of procedural fairness by the Tribunal for the following reasons: (a) It was squarely put to Mrs Montgomery who had reconstructed the Price Spreadsheets that she had 'fabricated' or 'massaged' or 'fiddled' the figures in the Price Spreadsheets. (b) The Tribunal in reviewing a decision is not bound by technicalities, legal forms or rules of evidence and must act according to substantial justice and the merits of the case. In those circumstances, the rule in Browne v Dunn has no application. (c) The Tribunal was entitled to look at the Price Spreadsheets and draw its own conclusions where it was obvious that information had been omitted or falsely inserted, in order to reach a figure corresponding to the cheque which was drawn. (d) In relation to one subject matter, 3D was invited by the Tribunal during closing submissions to re-open its case and call further evidence. It was clearly open to 3D to seek leave to recall Mrs Montgomery in order to overcome any perceived deficiency in the opportunity she had been afforded, when first cross-examined, to explain discrepancies in the relevant documents. 3D did not seek such leave. The substance of the fabrication was put to Mrs Montgomery (2) 3D has submitted that there was a denial of procedural fairness because it is alleged the specific detail of the Commissioner's analysis of the Price Spreadsheets, which forms Annexure A to the Tribunal's reasons for decision, was not put to Mrs Montgomery. The Tribunal referred to this submission but found it to be without substance. (3) From the commencement of the audit and in the hearing before the Tribunal, the Commissioner had directly challenged the story put forward as to the existence of MSH and Mr Borg. It was manifest that any documentation put forward by the taxpayer in support of that story was also under challenge. (4) The Commissioner's challenge to the Price Spreadsheets was also fully appreciated by 3D. So much is clear from paras 14 and 15 of the Submissions of the Applicant dated 1 June 2007 which were provided to the Tribunal before the Commissioner made the submissions of which 3D presently complains. (5) It is significant that notwithstanding the opportunity to do so in submissions in reply, 3D made no submissions about the fabrications in the Price Spreadsheets, but merely confined its complaint to what was said to be a denial of procedural fairness. Indeed, 3D could not possibly have had an answer to the fabrications, which were apparent on the face of the Price Spreadsheets when they were compared with the Job Balance record. (6) In any event, an evaluation of the Price Spreadsheets was not necessary to the Tribunal's decision. Once it found that Mr Borg did not exist, the 'elaborate arrangements alleged as to how he ... was paid may be of limited relevance.' For that reason, the Tribunal took the view that the submissions made by the Commissioner concerning the Price Spreadsheets were of 'peripheral relevance'. (7) It is clear that an immaterial error of law will not vitiate the decision of the Tribunal. Even though it was perhaps not necessary to do so once it found that Mr Borg did not exist, the Tribunal for the sake of completeness annexed the Commissioner's analysis of the Price Spreadsheets to its reasons, and held that it correctly summarised the evidence given in this regard. (8) The evidence showed that Mrs Montgomery, having prepared the Price Spreadsheets, was the person who was most familiar with those documents and may be taken to have intimately known the content of them. She must also be taken to have been aware that the figures in those documents had been manipulated in order to reach the totals on the cheques (as the Commissioner has demonstrated in Annexure A to the Tribunal's reasons). (9) It was also an incontrovertible fact that Mrs Montgomery had also managed to create a Price Spreadsheet in respect of items which proved not to be for hire at all but for sale, demonstrating the fact of its fabrication. Mrs Montgomery was cross-examined about this and it was directly put to her in the following terms: 'Really, Ms Montgomery, what this shows is that your documents at tab 14 are a fabrication, aren't they?---No, they're not. They came out of the computer program. You have told us that the starting point of one of them, the first one behind tab 14 for the week ending 28 December, is a real document from the time, haven't you?---That's right. It's nothing of the kind, is it?---Yes, it is. It's something that you have put together to try to substantiate numbers?---No. I took it out of off the job balance generals. And then you have told us that you have extrapolated back, and, lo and behold, you have been able to extrapolate for the week ending 7 December by adding and subtracting advices and receipts to page 427, a number of 16,500, which you purport would explain another entry in the bank statements and on Mr Borg's statements of account?---These were all these all came out of the computer program. These, being tab 14?---These were all worked out of the computer program. They have been massaged the numbers have been massaged and fiddled with---?---No. ---and put together by you---' (10) Clearly Mrs Montgomery, as the author of the recreated Price Spreadsheets, was only too aware of what the cross-examiner was putting to her when he suggested that she had massaged and fiddled the numbers. If there was an answer to be made by her, 3D was on notice of the need to elicit that explanation in re-examination or by seeking leave to adduce further evidence in chief. Application of the Rule in Browne v Dunn (11) Section 33(1)(b) of the AAT Act stipulates that a proceeding before the Tribunal shall be conducted with as little formality and technicality as the legislation and a proper consideration of the matters permits. Consistent with that legislative approach, s 33(1)(c) provides that the Tribunal is not bound by the rules of evidence. (12) 3D, before the Tribunal, had suggested that there was a 'clear breach of the rule in Browne v Dunn '. In Re Ruddock (in his capacity as Minister for Immigration and Multicultural Affairs) and Another; Ex parte Applicant S154/2002 [2003] HCA 60 ; (2003) 201 ALR 437 , the High Court held that the rule in Browne v Dunn had no application to proceedings before the Refugee Review Tribunal. Section 420(2) of the Migration Act 1958 (Cth) (an equivalent provision to s 33 of the AAT Act) was relevant to that conclusion. The High Court held that the purpose of such provisions was to free bodies such as the Tribunal from certain constraints otherwise applicable in courts of law. (13) In any event, even assuming the rule was to apply, there was no breach of that rule. Where it is obvious that the evidence of the witness is challenged, failure to state this expressly will not necessarily involve a breach of the rule. (14) In Jagelman v Commissioner of Taxation 96 ATC 4055 , it was submitted that there was a denial of procedural fairness by reason of a failure to put a matter to the applicant. Justice Hill observed at 4060: 'However, it has been pointed out in a number of cases that the application of the rule in Browne v Dunn must depend upon the circumstances of the case. Where the issues in a case are such that it would readily be apparent to a party that a particular imputation has been made, there will be no necessity to put that imputation to a witness who denies it and, in consequence, there will have been no denial of procedural fairness: see Seymour v Australian Broadcasting Commission (unreported, Court of Appeal, NSW, 3 June 1977) discussed by Hunt J in Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 at 21-2. In the latter case, Hunt J said (at 23): "In many cases, of course, counsel for the party calling the witness in question will be alert to the relevance of the other material in the case to be relied upon for the challenge to the truth of the evidence given by his witness or to the credit of that witness, and in those circumstances counsel will be able to give his witness the opportunity to deal with that other material in his own evidence in chief."' It was open to the Tribunal to look at the Price Spreadsheets and draw its own conclusions (15) Section 43 of the AAT Act provides that the Tribunal may exercise all the powers and discretions that are conferred on the decision-maker and stands in the shoes of the Commissioner. The Tribunal is not bound by the facts that were before the decision-maker. (16) The Price Spreadsheets and the Job Balance General were 3D's documents and their inherent want of authenticity could be gathered directly from them. 3D's written submissions in chief to the Tribunal invited consideration of the content of the documents, independent of any testimony about them from which 3D asserted that their authenticity was self-evident. The Commissioner was entitled to (and did) respond on the same basis. It was open to the Tribunal to draw the conclusions which the Commissioner invited, simply by looking at the documents. In particular, that there had been manipulation of those documents by either omitting or falsely inserting information in order to reach a figure corresponding to the cheque which was drawn. Opportunity to Re-open (17) Section 39 of the AAT Act requires that the Tribunal ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case. This section is a statutory recognition of the requirement to afford natural justice. Section 33(1)(c) has been held to permit the introduction of further evidence after the conclusion of the hearing. That requirement may extend to permitting a party to adduce new evidence once judgement has been reserved. It has been held that while normally a court will require exceptional circumstances to permit that course, so stringent a test does not apply in AAT hearings. (18) In Sullivan v Department of Transport (1978) 20 ALR 323 , a party was afforded an opportunity by the Tribunal to call further evidence. Justice Deane said as follows: 'In the context of the express invitation to the appellant, at the conclusion of the evidence, to adduce any further evidence or other material and of the complete absence of any indication by the appellant that he was under any misapprehension or that he desired that the proceedings be adjourned, the failure of the Tribunal either to adjourn the proceedings of its own motion or expressly to inform the appellant of his right to seek an adjournment did not, in my view, constitute a failure to ensure that the appellant was given a reasonable opportunity of putting his case or otherwise involve a failure to observe the requirements of natural justice.' (19) After the conclusion of the evidence and during the course of 3D's submissions below, the Tribunal indicated that it would afford 3D an opportunity to reopen its case if Mr Borg could be found. The Tribunal later repeated this invitation a number of times, that 3D should 'go and find Mr Borg', for the reason that he was 'either crucial or important in this equation'. (20) 3D acknowledged that it was open to it to re-open its case. It was open to 3D to have recalled Mrs Montgomery or any other witness it thought could shed light on the figures in the Price Spreadsheets, the authenticity of which the Commissioner had challenged, first in cross-examination of Mrs Montgomery and subsequently in written submissions. It did not do so for the obvious reason that there was no possible explanation for the discrepancies identified by the Commissioner, other than that the figures had been manipulated or fabricated. (21) The Tribunal amply accorded natural justice in the present case by extending an opportunity to 3D to call further evidence and by providing a further opportunity to be heard. Thereafter, any potential lack of procedural fairness arising from the level of detail of the original cross-examination (the Commissioner does not accept that there was any) was averted. 3D did not avail itself of the opportunity. 18 Despite the provisions of subs 33(1) of the AAT Act, I am not persuaded that everything that was said by Gummow and Heydon JJ (with whom Gleeson CJ agreed) in Applicant S154/2002 concerning the non-applicability of the rule in Browne v Dunn to proceedings in the Refugee Review Tribunal can be transported, so to speak, to proceedings in the Tribunal. At [55] and [56], their Honours said: '[55] On occasion the submissions advanced for the prosecutrix were couched in the language of a contention that the rule in Browne v Dunn had not been complied with. Where a complaint is made about the failure of a questioner to put to a person giving oral answers a particular question, it is natural for a lawyer's mind to turn to the rule in Browne v Dunn. In essence, and subject to numerous qualifications and exceptions, that rule requires the cross-examiner of a witness in adversarial litigation to put to that witness the nature of the case on which the cross-examiner's client proposes to rely in contradiction of that witness. [56] However, the rule has no application to proceedings in the tribunal. Section 420(2) of the Act states: The Tribunal, in reviewing a decision: (a) is not bound by technicalities, legal forms or rules of evidence; and (b) must act according to substantial justice and the merits of the case. The purpose of a provision such as s 420(2) is to free bodies such as the tribunal from certain constraints otherwise applicable in courts of law which the legislature regards as inappropriate. Further, as was emphasised in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; [(1996) 185 CLR 259 at 282], administrative decision-making is of a different nature from decisions to be made on civil litigation conducted under common law procedures. There, the court has to decide where, on the balance of probabilities, the truth lies as between the evidence the parties to the litigation have considered it in their respective interests to adduce at trial.' 19 However, at [57], their Honours said: '[57] Accordingly, the rule in Browne v Dunn has no application to proceedings in the tribunal. Those proceedings are not adversarial, but inquisitorial; the tribunal is not in the position of a contradictor of the case being advanced by the applicant. The tribunal member conducting the inquiry is not an adversarial cross-examiner, but an inquisitor obliged to be fair. The tribunal member has no "client", and has no "case" to put against the applicant. Cross-examiners must not only comply with Browne v Dunn by putting their client's cases to the witnesses; if they want to be as sure as possible of success, they have to damage the testimony of the witnesses by means which are sometimes confrontational and aggressive, namely means of a kind which an inquisitorial tribunal member could not employ without running a risk of bias being inferred. Here, on the other hand, it was for the prosecutrix to advance whatever evidence or argument she wished to advance, and for the tribunal to decide whether her claim had been made out; it was not part of the function of the tribunal to seek to damage the credibility of the prosecutrix's story in the manner a cross-examiner might seek to damage the credibility of a witness being cross-examined in adversarial litigation.' 20 The proceedings in the Tribunal are adversarial; there is a contradictor of the case being advanced by the taxpayer applicant in the form of the Commissioner. The Commissioner does have a 'case' to put against the applicant, even if it is only that the taxpayer applicant has not discharged the onus it carries. 21 I incline to the view of Hill J in Jagelman at 4060 that the application of the rule in Browne v Dunn must depend on the circumstances of the case: see the relevant part of his Honour's judgment extracted in [17(14)] above. Where the Tribunal makes a finding contrary to the evidence of a witness in circumstances where the matter found was not put to the witness, this will generally involve a denial of procedural fairness and would be a denial of natural justice on the part of the Tribunal to do so. But this all depends on the circumstances of the particular case. In the present case, it was put to Mrs Montgomery that she had 'fabricated' or 'fiddled' the figures in the Price Spreadsheets she had reconstructed. The real complaint of 3D is the general or holistic way this was put to Mrs Montgomery, rather than it being put with the particularity of the discrepancies manifest in the Commissioner's submissions which are Annexure A.


case_outcome: referred to

case_text: The Commissioner submitted that, while it is true that if the Tribunal finds facts for which there is no evidence, its decision will be subject to error, in the present circumstances, the error could not have affected the outcome. That is, where the Tribunal has made an error of law, but the error is immaterial, its decision will not be set aside for that reason: Kumagai Gumi Co Ltd v Commissioner of Taxation [1999] FCA 235 ; (1999) 90 FCR 274 at [53] . Reliance was placed on what was said by Lockhart and Hill JJ in BTR Plc v Westinghouse Brake and Signal Co (Australia) Ltd (1992) 26 ALD 1 at 7 that: '[I]t will not be enough for an applicant to demonstrate that the Tribunal mis-stated the law in the course of its reasons, if that mis-statement could not have affected its decision. The task of the court on an appeal under s 44(1) is essentially to undertake judicial review of the tribunal's decision. An immaterial error of law will not vitiate the decision of the tribunal ...'


case_outcome: cited

case_text: The submissions made on behalf of 3D in this regard were to the following effect: (1) To the extent that assertions were made by the Commissioner against 3D, those accusations had to be squarely put to the relevant witnesses. (2) As certain accusations were not put to the witnesses for 3D, the Tribunal fell into serious error by taking those assertions into account in making its determination. Not only did the Tribunal take those assertions into account but made findings of fact, and findings on credit, based upon matters never put to witnesses (in particular Mrs Montgomery). (3) In this regard the Tribunal must apply notions of procedural fairness: Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ; Jagelman v FCT 96 ATC 4055 , Fletcher & Ors v FCT (1988) 19 FCR 442 , Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248. A breach of these principles constitutes an error of law: Australian Postal Commission v Hayes [1989] FCA 176 ; (1989) 23 FCR 320 at 326 per Wilcox J. The first part of s 39(1) of the AAT Act provides statutory recognition of these principles: Sullivan v Department of Transport (1978) 20 ALR 323. (4) The integrity of the Price Spreadsheets was of fundamental importance to the case sought to be put by 3D. The Price Spreadsheets were recognised by the Commissioner as 'the central plank in the Applicants' case'. (5) In the course of the hearing, counsel for the Commissioner put to Mrs Montgomery in respect of the Price Spreadsheets that '...the numbers have been massaged and fiddled with'. (6) Counsel for 3D strenuously objected to such a question on the following basis: 'Mr McGovern: I object to that, because it is quite important. That proposition may be an ultimate submission, but in fairness to the witness and she is here now my friend should take her directly to each of the figures which he asserts to have been massaged, each of which has been fiddled with, so that we all know, rather than put it globally. Its unfair to the witness to do it otherwise.' Later: 'Mr Fagan: I don't purport to be able to put a positive to this witness about which number has been adjusted in which respect. I submit that it's quite appropriate to put, in this sort of circumstance, to this witness that the whole thing has been an adjustment and fiddling of numbers to reach a number to correspond with a cheque that as [sic] cashed. The Deputy President: I can see no reason why it can't be put. She can deny it if she likes.' Later: 'Mr McGovern: ... But at this point, and this is not just forensic flourish, this is really a question for the decision-maker at the end of the day to have to make a grave determination about this lady's credibility and whether you accept her or not, and, in those circumstances, to just put a rolled-up general proposition which is, now we know, unsupportable by as he frankly confesses he can't ascribe any particularity to any massaged figures or numbers, at least what should be done ... ... Mr Fagan: ... I am entitled to put this general proposition that they have been fabricated, by its very nature I wouldn't know how.' (7) As counsel for 3D feared, and as ultimately eventuated both in the Commissioner's written and oral submissions, counsel for the Commissioner proceeded to make submissions with some particularity as to discrepancies within the Price Spreadsheets. The alleged discrepancies, being the basis for the Commissioner's submissions, were not put to the witness, particularly Mrs Montgomery. Accordingly she was denied an opportunity to be heard on the matter in response. (8) In this regard, the Commissioner's submissions (both written and oral) asserted with some particularity the manner in which the Price Spreadsheets were allegedly manipulated, and these submissions were both taken into account, and adopted by the Tribunal, without demur, in finding against 3D. (9) For the Tribunal to accept submissions on such matters not put to the witness was an error in law, being a clear failure to provide procedural fairness to 3D on a crucial part of 3D's case. (10) In such circumstances it is difficult to resist the conclusion that an acceptance of the Commissioner's submissions by the Tribunal amounted to gross unfairness. (11) Mrs Montgomery in particular was confronted in the witness box with an imprecise, generalised and unspecified assertion about 'fudging and fiddling' the contemporaneous records, but the final submissions, which she was not offered opportunity to address in evidence, then contained detailed allegations never put to her. This was a clear breach of the rule in Browne v Dunn (1893) 6 R 67 (HL), and that rule has been treated as an aspect of procedural fairness, and if breached will give rise to a vitiation of the decision of the Tribunal; see Hoskins v Repatriation Commission [1991] FCA 559 ; (1991) 32 FCR 443 at 446.


case_title: Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248


case_title: Fletcher & Ors v Federal Commissioner of Taxation (1988) 19 FCR 442


case_title: Hoskins v Repatriation Commission [1991] FCA 559 ; (1991) 32 FCR 443


case_outcome: applied

case_title: Jagelman v Federal Commissioner of Taxation 96 ATC 4055

case_text: The submissions made on behalf of 3D in this regard were to the following effect: (1) To the extent that assertions were made by the Commissioner against 3D, those accusations had to be squarely put to the relevant witnesses. (2) As certain accusations were not put to the witnesses for 3D, the Tribunal fell into serious error by taking those assertions into account in making its determination. Not only did the Tribunal take those assertions into account but made findings of fact, and findings on credit, based upon matters never put to witnesses (in particular Mrs Montgomery). (3) In this regard the Tribunal must apply notions of procedural fairness: Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ; Jagelman v FCT 96 ATC 4055 , Fletcher & Ors v FCT (1988) 19 FCR 442 , Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248. A breach of these principles constitutes an error of law: Australian Postal Commission v Hayes [1989] FCA 176 ; (1989) 23 FCR 320 at 326 per Wilcox J. The first part of s 39(1) of the AAT Act provides statutory recognition of these principles: Sullivan v Department of Transport (1978) 20 ALR 323. (4) The integrity of the Price Spreadsheets was of fundamental importance to the case sought to be put by 3D. The Price Spreadsheets were recognised by the Commissioner as 'the central plank in the Applicants' case'. (5) In the course of the hearing, counsel for the Commissioner put to Mrs Montgomery in respect of the Price Spreadsheets that '...the numbers have been massaged and fiddled with'. (6) Counsel for 3D strenuously objected to such a question on the following basis: 'Mr McGovern: I object to that, because it is quite important. That proposition may be an ultimate submission, but in fairness to the witness and she is here now my friend should take her directly to each of the figures which he asserts to have been massaged, each of which has been fiddled with, so that we all know, rather than put it globally. Its unfair to the witness to do it otherwise.' Later: 'Mr Fagan: I don't purport to be able to put a positive to this witness about which number has been adjusted in which respect. I submit that it's quite appropriate to put, in this sort of circumstance, to this witness that the whole thing has been an adjustment and fiddling of numbers to reach a number to correspond with a cheque that as [sic] cashed. The Deputy President: I can see no reason why it can't be put. She can deny it if she likes.' Later: 'Mr McGovern: ... But at this point, and this is not just forensic flourish, this is really a question for the decision-maker at the end of the day to have to make a grave determination about this lady's credibility and whether you accept her or not, and, in those circumstances, to just put a rolled-up general proposition which is, now we know, unsupportable by as he frankly confesses he can't ascribe any particularity to any massaged figures or numbers, at least what should be done ... ... Mr Fagan: ... I am entitled to put this general proposition that they have been fabricated, by its very nature I wouldn't know how.' (7) As counsel for 3D feared, and as ultimately eventuated both in the Commissioner's written and oral submissions, counsel for the Commissioner proceeded to make submissions with some particularity as to discrepancies within the Price Spreadsheets. The alleged discrepancies, being the basis for the Commissioner's submissions, were not put to the witness, particularly Mrs Montgomery. Accordingly she was denied an opportunity to be heard on the matter in response. (8) In this regard, the Commissioner's submissions (both written and oral) asserted with some particularity the manner in which the Price Spreadsheets were allegedly manipulated, and these submissions were both taken into account, and adopted by the Tribunal, without demur, in finding against 3D. (9) For the Tribunal to accept submissions on such matters not put to the witness was an error in law, being a clear failure to provide procedural fairness to 3D on a crucial part of 3D's case. (10) In such circumstances it is difficult to resist the conclusion that an acceptance of the Commissioner's submissions by the Tribunal amounted to gross unfairness. (11) Mrs Montgomery in particular was confronted in the witness box with an imprecise, generalised and unspecified assertion about 'fudging and fiddling' the contemporaneous records, but the final submissions, which she was not offered opportunity to address in evidence, then contained detailed allegations never put to her. This was a clear breach of the rule in Browne v Dunn (1893) 6 R 67 (HL), and that rule has been treated as an aspect of procedural fairness, and if breached will give rise to a vitiation of the decision of the Tribunal; see Hoskins v Repatriation Commission [1991] FCA 559 ; (1991) 32 FCR 443 at 446. 17 The submissions made on behalf of the Commissioner were to the following effect: (1) There was no denial of procedural fairness by the Tribunal for the following reasons: (a) It was squarely put to Mrs Montgomery who had reconstructed the Price Spreadsheets that she had 'fabricated' or 'massaged' or 'fiddled' the figures in the Price Spreadsheets. (b) The Tribunal in reviewing a decision is not bound by technicalities, legal forms or rules of evidence and must act according to substantial justice and the merits of the case. In those circumstances, the rule in Browne v Dunn has no application. (c) The Tribunal was entitled to look at the Price Spreadsheets and draw its own conclusions where it was obvious that information had been omitted or falsely inserted, in order to reach a figure corresponding to the cheque which was drawn. (d) In relation to one subject matter, 3D was invited by the Tribunal during closing submissions to re-open its case and call further evidence. It was clearly open to 3D to seek leave to recall Mrs Montgomery in order to overcome any perceived deficiency in the opportunity she had been afforded, when first cross-examined, to explain discrepancies in the relevant documents. 3D did not seek such leave. The substance of the fabrication was put to Mrs Montgomery (2) 3D has submitted that there was a denial of procedural fairness because it is alleged the specific detail of the Commissioner's analysis of the Price Spreadsheets, which forms Annexure A to the Tribunal's reasons for decision, was not put to Mrs Montgomery. The Tribunal referred to this submission but found it to be without substance. (3) From the commencement of the audit and in the hearing before the Tribunal, the Commissioner had directly challenged the story put forward as to the existence of MSH and Mr Borg. It was manifest that any documentation put forward by the taxpayer in support of that story was also under challenge. (4) The Commissioner's challenge to the Price Spreadsheets was also fully appreciated by 3D. So much is clear from paras 14 and 15 of the Submissions of the Applicant dated 1 June 2007 which were provided to the Tribunal before the Commissioner made the submissions of which 3D presently complains. (5) It is significant that notwithstanding the opportunity to do so in submissions in reply, 3D made no submissions about the fabrications in the Price Spreadsheets, but merely confined its complaint to what was said to be a denial of procedural fairness. Indeed, 3D could not possibly have had an answer to the fabrications, which were apparent on the face of the Price Spreadsheets when they were compared with the Job Balance record. (6) In any event, an evaluation of the Price Spreadsheets was not necessary to the Tribunal's decision. Once it found that Mr Borg did not exist, the 'elaborate arrangements alleged as to how he ... was paid may be of limited relevance.' For that reason, the Tribunal took the view that the submissions made by the Commissioner concerning the Price Spreadsheets were of 'peripheral relevance'. (7) It is clear that an immaterial error of law will not vitiate the decision of the Tribunal. Even though it was perhaps not necessary to do so once it found that Mr Borg did not exist, the Tribunal for the sake of completeness annexed the Commissioner's analysis of the Price Spreadsheets to its reasons, and held that it correctly summarised the evidence given in this regard. (8) The evidence showed that Mrs Montgomery, having prepared the Price Spreadsheets, was the person who was most familiar with those documents and may be taken to have intimately known the content of them. She must also be taken to have been aware that the figures in those documents had been manipulated in order to reach the totals on the cheques (as the Commissioner has demonstrated in Annexure A to the Tribunal's reasons). (9) It was also an incontrovertible fact that Mrs Montgomery had also managed to create a Price Spreadsheet in respect of items which proved not to be for hire at all but for sale, demonstrating the fact of its fabrication. Mrs Montgomery was cross-examined about this and it was directly put to her in the following terms: 'Really, Ms Montgomery, what this shows is that your documents at tab 14 are a fabrication, aren't they?---No, they're not. They came out of the computer program. You have told us that the starting point of one of them, the first one behind tab 14 for the week ending 28 December, is a real document from the time, haven't you?---That's right. It's nothing of the kind, is it?---Yes, it is. It's something that you have put together to try to substantiate numbers?---No. I took it out of off the job balance generals. And then you have told us that you have extrapolated back, and, lo and behold, you have been able to extrapolate for the week ending 7 December by adding and subtracting advices and receipts to page 427, a number of 16,500, which you purport would explain another entry in the bank statements and on Mr Borg's statements of account?---These were all these all came out of the computer program. These, being tab 14?---These were all worked out of the computer program. They have been massaged the numbers have been massaged and fiddled with---?---No. ---and put together by you---' (10) Clearly Mrs Montgomery, as the author of the recreated Price Spreadsheets, was only too aware of what the cross-examiner was putting to her when he suggested that she had massaged and fiddled the numbers. If there was an answer to be made by her, 3D was on notice of the need to elicit that explanation in re-examination or by seeking leave to adduce further evidence in chief. Application of the Rule in Browne v Dunn (11) Section 33(1)(b) of the AAT Act stipulates that a proceeding before the Tribunal shall be conducted with as little formality and technicality as the legislation and a proper consideration of the matters permits. Consistent with that legislative approach, s 33(1)(c) provides that the Tribunal is not bound by the rules of evidence. (12) 3D, before the Tribunal, had suggested that there was a 'clear breach of the rule in Browne v Dunn '. In Re Ruddock (in his capacity as Minister for Immigration and Multicultural Affairs) and Another; Ex parte Applicant S154/2002 [2003] HCA 60 ; (2003) 201 ALR 437 , the High Court held that the rule in Browne v Dunn had no application to proceedings before the Refugee Review Tribunal. Section 420(2) of the Migration Act 1958 (Cth) (an equivalent provision to s 33 of the AAT Act) was relevant to that conclusion. The High Court held that the purpose of such provisions was to free bodies such as the Tribunal from certain constraints otherwise applicable in courts of law. (13) In any event, even assuming the rule was to apply, there was no breach of that rule. Where it is obvious that the evidence of the witness is challenged, failure to state this expressly will not necessarily involve a breach of the rule. (14) In Jagelman v Commissioner of Taxation 96 ATC 4055 , it was submitted that there was a denial of procedural fairness by reason of a failure to put a matter to the applicant. Justice Hill observed at 4060: 'However, it has been pointed out in a number of cases that the application of the rule in Browne v Dunn must depend upon the circumstances of the case. Where the issues in a case are such that it would readily be apparent to a party that a particular imputation has been made, there will be no necessity to put that imputation to a witness who denies it and, in consequence, there will have been no denial of procedural fairness: see Seymour v Australian Broadcasting Commission (unreported, Court of Appeal, NSW, 3 June 1977) discussed by Hunt J in Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 at 21-2. In the latter case, Hunt J said (at 23): "In many cases, of course, counsel for the party calling the witness in question will be alert to the relevance of the other material in the case to be relied upon for the challenge to the truth of the evidence given by his witness or to the credit of that witness, and in those circumstances counsel will be able to give his witness the opportunity to deal with that other material in his own evidence in chief."' It was open to the Tribunal to look at the Price Spreadsheets and draw its own conclusions (15) Section 43 of the AAT Act provides that the Tribunal may exercise all the powers and discretions that are conferred on the decision-maker and stands in the shoes of the Commissioner. The Tribunal is not bound by the facts that were before the decision-maker. (16) The Price Spreadsheets and the Job Balance General were 3D's documents and their inherent want of authenticity could be gathered directly from them. 3D's written submissions in chief to the Tribunal invited consideration of the content of the documents, independent of any testimony about them from which 3D asserted that their authenticity was self-evident. The Commissioner was entitled to (and did) respond on the same basis. It was open to the Tribunal to draw the conclusions which the Commissioner invited, simply by looking at the documents. In particular, that there had been manipulation of those documents by either omitting or falsely inserting information in order to reach a figure corresponding to the cheque which was drawn. Opportunity to Re-open (17) Section 39 of the AAT Act requires that the Tribunal ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case. This section is a statutory recognition of the requirement to afford natural justice. Section 33(1)(c) has been held to permit the introduction of further evidence after the conclusion of the hearing. That requirement may extend to permitting a party to adduce new evidence once judgement has been reserved. It has been held that while normally a court will require exceptional circumstances to permit that course, so stringent a test does not apply in AAT hearings. (18) In Sullivan v Department of Transport (1978) 20 ALR 323 , a party was afforded an opportunity by the Tribunal to call further evidence. Justice Deane said as follows: 'In the context of the express invitation to the appellant, at the conclusion of the evidence, to adduce any further evidence or other material and of the complete absence of any indication by the appellant that he was under any misapprehension or that he desired that the proceedings be adjourned, the failure of the Tribunal either to adjourn the proceedings of its own motion or expressly to inform the appellant of his right to seek an adjournment did not, in my view, constitute a failure to ensure that the appellant was given a reasonable opportunity of putting his case or otherwise involve a failure to observe the requirements of natural justice.' (19) After the conclusion of the evidence and during the course of 3D's submissions below, the Tribunal indicated that it would afford 3D an opportunity to reopen its case if Mr Borg could be found. The Tribunal later repeated this invitation a number of times, that 3D should 'go and find Mr Borg', for the reason that he was 'either crucial or important in this equation'. (20) 3D acknowledged that it was open to it to re-open its case. It was open to 3D to have recalled Mrs Montgomery or any other witness it thought could shed light on the figures in the Price Spreadsheets, the authenticity of which the Commissioner had challenged, first in cross-examination of Mrs Montgomery and subsequently in written submissions. It did not do so for the obvious reason that there was no possible explanation for the discrepancies identified by the Commissioner, other than that the figures had been manipulated or fabricated. (21) The Tribunal amply accorded natural justice in the present case by extending an opportunity to 3D to call further evidence and by providing a further opportunity to be heard. Thereafter, any potential lack of procedural fairness arising from the level of detail of the original cross-examination (the Commissioner does not accept that there was any) was averted. 3D did not avail itself of the opportunity. 21 I incline to the view of Hill J in Jagelman at 4060 that the application of the rule in Browne v Dunn must depend on the circumstances of the case: see the relevant part of his Honour's judgment extracted in [17(14)] above. Where the Tribunal makes a finding contrary to the evidence of a witness in circumstances where the matter found was not put to the witness, this will generally involve a denial of procedural fairness and would be a denial of natural justice on the part of the Tribunal to do so. But this all depends on the circumstances of the particular case. In the present case, it was put to Mrs Montgomery that she had 'fabricated' or 'fiddled' the figures in the Price Spreadsheets she had reconstructed. The real complaint of 3D is the general or holistic way this was put to Mrs Montgomery, rather than it being put with the particularity of the discrepancies manifest in the Commissioner's submissions which are Annexure A.


case_title: Jones v Dunkel (1959) 101 CLR 298

case_text: The Tribunal found (at [154]) that Div 7A of the ITAA 36 should apply. In arriving at that conclusion, the Tribunal found as follows: (1) Mr Docherty was Mr Borg and the payments were made to him [144]; (2) Mr Docherty had made admissions to Ms Hird, the Commissioner's auditor, that it was he who had cashed the cheques [137], [144]; (3) Mr Docherty was the last person holding the cash [147]; (4) Mr Docherty and another brother, Charlie Docherty, were the shareholders during the relevant years [152]; (5) Mr Docherty treated 3D as his own entity. 3D did exactly as he directed and Mr Docherty did not need or seek the consent of Charlie Docherty. 3D was controlled by Mr Docherty who took its money for his own use and plainly considered that he could do what he pleased in relation to 3D [152], [153]; (6) On the evidence it cannot be accepted that Mr Docherty stole the money from 3D or that there was any relevant misfeasance [153]; (7) There was no evidence that Charlie Docherty played a part in running 3D [151]; (8) In any event, a Jones v Dunkel (1959) 101 CLR 298 inference should be drawn as to the failure to call the other shareholder, Charlie Docherty, that is, if he was a shareholder and if he did play a part in running 3D (although there was no evidence of this), he should have been called to give evidence [151].


case_title: Kumagai Gumi Co Ltd v Commissioner of Taxation [1999] FCA 235 ; (1999) 90 FCR 274


case_outcome: considered

case_text: One is reminded of what was said by Beaumont J in the Full Court of this Court in MacFarlane v Commissioner of Taxation (1986) 13 FCR 356 at 373 in relation to a similar argument with respect to s 108 of the ITAA 36, the predecessor to Div 7A: 'The assessments were challenged by the appellant on a number of grounds. In the first place, the appellant contended that the amounts paid to him were not "payments ... made by the company ... for the individual benefit of [one] of its shareholders" within the meaning of s 108(1). It was contended on behalf of the appellant that the situation should be characterised as an appropriation (perhaps a misappropriation) of the company's property on his part rather than a payment made by the company for his individual benefit, as s 108 requires. A similar question arose in Federal Commissioner of Taxation v Blakely [1951] HCA 17 ; (1951) 82 CLR 388. There, in a "de facto" liquidation, the assets of a company were appropriated by its shareholders. Latham CJ, in dissenting on the point, held that such an appropriation was not a distribution by the company and thus, not a "dividend" as then defined in s 6 of the Act. But Fullagar J (Dixon J agreeing) held that there was a distribution by the company: see also the discussion in Federal Commissioner of Taxation v Slater Holdings Ltd [1984] HCA 78 ; (1984) 59 ALJR 89 per Gibbs CJ at 91. In my opinion, the reasoning of Fullagar J is applicable here. The income in question was the property of the company. That income was applied for the benefit of one of the company's shareholders with the acquiescence of the controllers of the company. The application of funds in this way may well have constituted a breach of the director's fiduciary duties at least so far as the company's creditors were concerned: see Walker v Wimborne [1976] HCA 7 ; (1976) 137 CLR 1 per Mason J at 7. But whether the conduct of the company's directors was liable to be challenged as a misfeasance is a different question. Payments were made by the company out of its funds which were for the individual benefit of one of its shareholders. That is sufficient to satisfy the opening words of s 108(1), whatever significance the conduct of those involved may have in other legal contexts.' 37 I agree with the Commissioner's submission that there was ample evidence to support the conclusion of the Tribunal that Mr Docherty controlled 3D and that, when he caused payments out to himself, they were payments by 3D and not a misappropriation of its moneys. The Tribunal's incorrect finding that Mr Docherty was the sole director was not necessary or relevant to the decision of the Tribunal that there had been payments made by 3D and Div 7A should apply. 38 It follows, in my view, that this appeal should also be dismissed. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. Associate: Dated: 3 October 2008 Counsel for the Applicant: Mr D McGovern SC with Mr AJ O'Brien Solicitor for the Applicant: SWAAB Attorneys Counsel for the Respondent: Mr DJ Fagan SC with Mr RS Quinn Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 18 September 2008 Date of Judgment: 3 October 2008 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2008/1477.html


case_text: I would add that even if I had come to the contrary view on the denial of procedural fairness ground, with the consequence that the Tribunal's decision was infected with error of law, I would nevertheless have dismissed the appeal because I consider that the Tribunal's decision in respect of 3D's application was clearly correct on the material before it: see Austin v Deputy Secretary, Attorney-General's Department (1986) 12 FCR 22 at 26 27; McAuliffe v Secretary, Department of Social Security [1991] FCA 268 ; (1991) 23 ALD 284 at 295 296, affirmed at [1992] FCA 483 ; (1992) 28 ALD 609 at 618 619; State Rail Authority of New South Wales v Collector of Customs [1991] FCA 610 ; (1991) 33 FCR 211 at 217. Courts do not remit matters for reconsideration where it is futile to do so: Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550 at 560 562 per Sackville J; Tankey v Adams [2000] FCA 1089 ; (2000) 104 FCR 152 at 182.


case_title: Morales v Minister for Immigration and Ethnic Affairs (1995) 60 FCR 550


case_text: The submissions made on behalf of the Commissioner were to the following effect: (1) There was no denial of procedural fairness by the Tribunal for the following reasons: (a) It was squarely put to Mrs Montgomery who had reconstructed the Price Spreadsheets that she had 'fabricated' or 'massaged' or 'fiddled' the figures in the Price Spreadsheets. (b) The Tribunal in reviewing a decision is not bound by technicalities, legal forms or rules of evidence and must act according to substantial justice and the merits of the case. In those circumstances, the rule in Browne v Dunn has no application. (c) The Tribunal was entitled to look at the Price Spreadsheets and draw its own conclusions where it was obvious that information had been omitted or falsely inserted, in order to reach a figure corresponding to the cheque which was drawn. (d) In relation to one subject matter, 3D was invited by the Tribunal during closing submissions to re-open its case and call further evidence. It was clearly open to 3D to seek leave to recall Mrs Montgomery in order to overcome any perceived deficiency in the opportunity she had been afforded, when first cross-examined, to explain discrepancies in the relevant documents. 3D did not seek such leave. The substance of the fabrication was put to Mrs Montgomery (2) 3D has submitted that there was a denial of procedural fairness because it is alleged the specific detail of the Commissioner's analysis of the Price Spreadsheets, which forms Annexure A to the Tribunal's reasons for decision, was not put to Mrs Montgomery. The Tribunal referred to this submission but found it to be without substance. (3) From the commencement of the audit and in the hearing before the Tribunal, the Commissioner had directly challenged the story put forward as to the existence of MSH and Mr Borg. It was manifest that any documentation put forward by the taxpayer in support of that story was also under challenge. (4) The Commissioner's challenge to the Price Spreadsheets was also fully appreciated by 3D. So much is clear from paras 14 and 15 of the Submissions of the Applicant dated 1 June 2007 which were provided to the Tribunal before the Commissioner made the submissions of which 3D presently complains. (5) It is significant that notwithstanding the opportunity to do so in submissions in reply, 3D made no submissions about the fabrications in the Price Spreadsheets, but merely confined its complaint to what was said to be a denial of procedural fairness. Indeed, 3D could not possibly have had an answer to the fabrications, which were apparent on the face of the Price Spreadsheets when they were compared with the Job Balance record. (6) In any event, an evaluation of the Price Spreadsheets was not necessary to the Tribunal's decision. Once it found that Mr Borg did not exist, the 'elaborate arrangements alleged as to how he ... was paid may be of limited relevance.' For that reason, the Tribunal took the view that the submissions made by the Commissioner concerning the Price Spreadsheets were of 'peripheral relevance'. (7) It is clear that an immaterial error of law will not vitiate the decision of the Tribunal. Even though it was perhaps not necessary to do so once it found that Mr Borg did not exist, the Tribunal for the sake of completeness annexed the Commissioner's analysis of the Price Spreadsheets to its reasons, and held that it correctly summarised the evidence given in this regard. (8) The evidence showed that Mrs Montgomery, having prepared the Price Spreadsheets, was the person who was most familiar with those documents and may be taken to have intimately known the content of them. She must also be taken to have been aware that the figures in those documents had been manipulated in order to reach the totals on the cheques (as the Commissioner has demonstrated in Annexure A to the Tribunal's reasons). (9) It was also an incontrovertible fact that Mrs Montgomery had also managed to create a Price Spreadsheet in respect of items which proved not to be for hire at all but for sale, demonstrating the fact of its fabrication. Mrs Montgomery was cross-examined about this and it was directly put to her in the following terms: 'Really, Ms Montgomery, what this shows is that your documents at tab 14 are a fabrication, aren't they?---No, they're not. They came out of the computer program. You have told us that the starting point of one of them, the first one behind tab 14 for the week ending 28 December, is a real document from the time, haven't you?---That's right. It's nothing of the kind, is it?---Yes, it is. It's something that you have put together to try to substantiate numbers?---No. I took it out of off the job balance generals. And then you have told us that you have extrapolated back, and, lo and behold, you have been able to extrapolate for the week ending 7 December by adding and subtracting advices and receipts to page 427, a number of 16,500, which you purport would explain another entry in the bank statements and on Mr Borg's statements of account?---These were all these all came out of the computer program. These, being tab 14?---These were all worked out of the computer program. They have been massaged the numbers have been massaged and fiddled with---?---No. ---and put together by you---' (10) Clearly Mrs Montgomery, as the author of the recreated Price Spreadsheets, was only too aware of what the cross-examiner was putting to her when he suggested that she had massaged and fiddled the numbers. If there was an answer to be made by her, 3D was on notice of the need to elicit that explanation in re-examination or by seeking leave to adduce further evidence in chief. Application of the Rule in Browne v Dunn (11) Section 33(1)(b) of the AAT Act stipulates that a proceeding before the Tribunal shall be conducted with as little formality and technicality as the legislation and a proper consideration of the matters permits. Consistent with that legislative approach, s 33(1)(c) provides that the Tribunal is not bound by the rules of evidence. (12) 3D, before the Tribunal, had suggested that there was a 'clear breach of the rule in Browne v Dunn '. In Re Ruddock (in his capacity as Minister for Immigration and Multicultural Affairs) and Another; Ex parte Applicant S154/2002 [2003] HCA 60 ; (2003) 201 ALR 437 , the High Court held that the rule in Browne v Dunn had no application to proceedings before the Refugee Review Tribunal. Section 420(2) of the Migration Act 1958 (Cth) (an equivalent provision to s 33 of the AAT Act) was relevant to that conclusion. The High Court held that the purpose of such provisions was to free bodies such as the Tribunal from certain constraints otherwise applicable in courts of law. (13) In any event, even assuming the rule was to apply, there was no breach of that rule. Where it is obvious that the evidence of the witness is challenged, failure to state this expressly will not necessarily involve a breach of the rule. (14) In Jagelman v Commissioner of Taxation 96 ATC 4055 , it was submitted that there was a denial of procedural fairness by reason of a failure to put a matter to the applicant. Justice Hill observed at 4060: 'However, it has been pointed out in a number of cases that the application of the rule in Browne v Dunn must depend upon the circumstances of the case. Where the issues in a case are such that it would readily be apparent to a party that a particular imputation has been made, there will be no necessity to put that imputation to a witness who denies it and, in consequence, there will have been no denial of procedural fairness: see Seymour v Australian Broadcasting Commission (unreported, Court of Appeal, NSW, 3 June 1977) discussed by Hunt J in Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 at 21-2. In the latter case, Hunt J said (at 23): "In many cases, of course, counsel for the party calling the witness in question will be alert to the relevance of the other material in the case to be relied upon for the challenge to the truth of the evidence given by his witness or to the credit of that witness, and in those circumstances counsel will be able to give his witness the opportunity to deal with that other material in his own evidence in chief."' It was open to the Tribunal to look at the Price Spreadsheets and draw its own conclusions (15) Section 43 of the AAT Act provides that the Tribunal may exercise all the powers and discretions that are conferred on the decision-maker and stands in the shoes of the Commissioner. The Tribunal is not bound by the facts that were before the decision-maker. (16) The Price Spreadsheets and the Job Balance General were 3D's documents and their inherent want of authenticity could be gathered directly from them. 3D's written submissions in chief to the Tribunal invited consideration of the content of the documents, independent of any testimony about them from which 3D asserted that their authenticity was self-evident. The Commissioner was entitled to (and did) respond on the same basis. It was open to the Tribunal to draw the conclusions which the Commissioner invited, simply by looking at the documents. In particular, that there had been manipulation of those documents by either omitting or falsely inserting information in order to reach a figure corresponding to the cheque which was drawn. Opportunity to Re-open (17) Section 39 of the AAT Act requires that the Tribunal ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case. This section is a statutory recognition of the requirement to afford natural justice. Section 33(1)(c) has been held to permit the introduction of further evidence after the conclusion of the hearing. That requirement may extend to permitting a party to adduce new evidence once judgement has been reserved. It has been held that while normally a court will require exceptional circumstances to permit that course, so stringent a test does not apply in AAT hearings. (18) In Sullivan v Department of Transport (1978) 20 ALR 323 , a party was afforded an opportunity by the Tribunal to call further evidence. Justice Deane said as follows: 'In the context of the express invitation to the appellant, at the conclusion of the evidence, to adduce any further evidence or other material and of the complete absence of any indication by the appellant that he was under any misapprehension or that he desired that the proceedings be adjourned, the failure of the Tribunal either to adjourn the proceedings of its own motion or expressly to inform the appellant of his right to seek an adjournment did not, in my view, constitute a failure to ensure that the appellant was given a reasonable opportunity of putting his case or otherwise involve a failure to observe the requirements of natural justice.' (19) After the conclusion of the evidence and during the course of 3D's submissions below, the Tribunal indicated that it would afford 3D an opportunity to reopen its case if Mr Borg could be found. The Tribunal later repeated this invitation a number of times, that 3D should 'go and find Mr Borg', for the reason that he was 'either crucial or important in this equation'. (20) 3D acknowledged that it was open to it to re-open its case. It was open to 3D to have recalled Mrs Montgomery or any other witness it thought could shed light on the figures in the Price Spreadsheets, the authenticity of which the Commissioner had challenged, first in cross-examination of Mrs Montgomery and subsequently in written submissions. It did not do so for the obvious reason that there was no possible explanation for the discrepancies identified by the Commissioner, other than that the figures had been manipulated or fabricated. (21) The Tribunal amply accorded natural justice in the present case by extending an opportunity to 3D to call further evidence and by providing a further opportunity to be heard. Thereafter, any potential lack of procedural fairness arising from the level of detail of the original cross-examination (the Commissioner does not accept that there was any) was averted. 3D did not avail itself of the opportunity. 18 Despite the provisions of subs 33(1) of the AAT Act, I am not persuaded that everything that was said by Gummow and Heydon JJ (with whom Gleeson CJ agreed) in Applicant S154/2002 concerning the non-applicability of the rule in Browne v Dunn to proceedings in the Refugee Review Tribunal can be transported, so to speak, to proceedings in the Tribunal. At [55] and [56], their Honours said: '[55] On occasion the submissions advanced for the prosecutrix were couched in the language of a contention that the rule in Browne v Dunn had not been complied with. Where a complaint is made about the failure of a questioner to put to a person giving oral answers a particular question, it is natural for a lawyer's mind to turn to the rule in Browne v Dunn. In essence, and subject to numerous qualifications and exceptions, that rule requires the cross-examiner of a witness in adversarial litigation to put to that witness the nature of the case on which the cross-examiner's client proposes to rely in contradiction of that witness. [56] However, the rule has no application to proceedings in the tribunal. Section 420(2) of the Act states: The Tribunal, in reviewing a decision: (a) is not bound by technicalities, legal forms or rules of evidence; and (b) must act according to substantial justice and the merits of the case. The purpose of a provision such as s 420(2) is to free bodies such as the tribunal from certain constraints otherwise applicable in courts of law which the legislature regards as inappropriate. Further, as was emphasised in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; [(1996) 185 CLR 259 at 282], administrative decision-making is of a different nature from decisions to be made on civil litigation conducted under common law procedures. There, the court has to decide where, on the balance of probabilities, the truth lies as between the evidence the parties to the litigation have considered it in their respective interests to adduce at trial.'


case_title: State Rail Authority of New South Wales v Collector of Customs [1991] FCA 610 ; (1991) 33 FCR 211


case_outcome: distinguished

case_text: Implicit in Mr Docherty's argument is that the Tribunal was required to take into account the fact that Mr Docherty was not the sole director of 3D during the relevant years in deciding whether 3D had 'paid an amount' for the purposes of s 109C and Div 7A of the ITAA 36. Underlying this argument is the proposition that for there to be a payment there had to be a consensus between 3D and Mr Docherty and in the face of the reality that Mr Docherty was only one of two directors, there could be no such consensus. Reliance was placed on what was said by the Special Commissioners in Stephens v T Pittas Ltd (1983) 56 TC 722 in particular at 733, namely, that in the absence of consensus between the company and Mr Pittas in that case, it was not possible to regard the relevant sums as loans or advances by the company; and what was said by Goulding J on appeal at 736 and 737, namely, that an outright misappropriation of the company's money could not be treated as the act of the company, except possibly if all the corporators of a solvent company consent to it. 33 Section 109C of Div 7A is in the following terms: 'Payments treated as dividends When private company is taken to pay a dividend (1) A private company is taken to pay a dividend to an entity at the end of the private company's year of income if the private company pays an amount to the entity during the year and either: (a) the payment is made when the entity is a shareholder in the private company or an associate of such a shareholder; or (b) a reasonable person would conclude (having regard to all the circumstances) that the payment is made because the entity has been such a shareholder or associate at some time. Note 1: Some payments do not give rise to dividends. See Subdivision D. Note 2: A private company is treated as making a payment to a shareholder or shareholder's associate if an interposed entity makes a payment to the shareholder or associate. See Subdivision E. Amount of dividend (2) The dividend is taken to equal the amount paid, subject to section 109Y. Note: Section 109Y limits the total amount of dividends taken to have been paid by a private company under this Division to the company's distributable surplus.' 35 It is to be noted that subs 109C(1) contains no requirement that the payment be by way of loan or advance. In other words, a bare payment having no legal or commercial character will suffice provided the other requirements of the subsection are satisfied. This stands in contrast to the consensus requirement referred to by the Special Commissioners in T Pittas Ltd . There the Special Commissioners were referring to the need for consensus for it to be possible to regard the relevant amounts 'as loans or advances by the company to Mr Pittas'. Subsection 109C(1) contains no such requirement; any payment will suffice. Moreover, the appeal judge's observation that an outright misappropriation of the company's money cannot be treated as the act of the company is answered by the Tribunal's finding in [34(6)] above.


case_text: The submissions made on behalf of 3D in this regard were to the following effect: (1) To the extent that assertions were made by the Commissioner against 3D, those accusations had to be squarely put to the relevant witnesses. (2) As certain accusations were not put to the witnesses for 3D, the Tribunal fell into serious error by taking those assertions into account in making its determination. Not only did the Tribunal take those assertions into account but made findings of fact, and findings on credit, based upon matters never put to witnesses (in particular Mrs Montgomery). (3) In this regard the Tribunal must apply notions of procedural fairness: Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550 ; Jagelman v FCT 96 ATC 4055 , Fletcher & Ors v FCT (1988) 19 FCR 442 , Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248. A breach of these principles constitutes an error of law: Australian Postal Commission v Hayes [1989] FCA 176 ; (1989) 23 FCR 320 at 326 per Wilcox J. The first part of s 39(1) of the AAT Act provides statutory recognition of these principles: Sullivan v Department of Transport (1978) 20 ALR 323. (4) The integrity of the Price Spreadsheets was of fundamental importance to the case sought to be put by 3D. The Price Spreadsheets were recognised by the Commissioner as 'the central plank in the Applicants' case'. (5) In the course of the hearing, counsel for the Commissioner put to Mrs Montgomery in respect of the Price Spreadsheets that '...the numbers have been massaged and fiddled with'. (6) Counsel for 3D strenuously objected to such a question on the following basis: 'Mr McGovern: I object to that, because it is quite important. That proposition may be an ultimate submission, but in fairness to the witness and she is here now my friend should take her directly to each of the figures which he asserts to have been massaged, each of which has been fiddled with, so that we all know, rather than put it globally. Its unfair to the witness to do it otherwise.' Later: 'Mr Fagan: I don't purport to be able to put a positive to this witness about which number has been adjusted in which respect. I submit that it's quite appropriate to put, in this sort of circumstance, to this witness that the whole thing has been an adjustment and fiddling of numbers to reach a number to correspond with a cheque that as [sic] cashed. The Deputy President: I can see no reason why it can't be put. She can deny it if she likes.' Later: 'Mr McGovern: ... But at this point, and this is not just forensic flourish, this is really a question for the decision-maker at the end of the day to have to make a grave determination about this lady's credibility and whether you accept her or not, and, in those circumstances, to just put a rolled-up general proposition which is, now we know, unsupportable by as he frankly confesses he can't ascribe any particularity to any massaged figures or numbers, at least what should be done ... ... Mr Fagan: ... I am entitled to put this general proposition that they have been fabricated, by its very nature I wouldn't know how.' (7) As counsel for 3D feared, and as ultimately eventuated both in the Commissioner's written and oral submissions, counsel for the Commissioner proceeded to make submissions with some particularity as to discrepancies within the Price Spreadsheets. The alleged discrepancies, being the basis for the Commissioner's submissions, were not put to the witness, particularly Mrs Montgomery. Accordingly she was denied an opportunity to be heard on the matter in response. (8) In this regard, the Commissioner's submissions (both written and oral) asserted with some particularity the manner in which the Price Spreadsheets were allegedly manipulated, and these submissions were both taken into account, and adopted by the Tribunal, without demur, in finding against 3D. (9) For the Tribunal to accept submissions on such matters not put to the witness was an error in law, being a clear failure to provide procedural fairness to 3D on a crucial part of 3D's case. (10) In such circumstances it is difficult to resist the conclusion that an acceptance of the Commissioner's submissions by the Tribunal amounted to gross unfairness. (11) Mrs Montgomery in particular was confronted in the witness box with an imprecise, generalised and unspecified assertion about 'fudging and fiddling' the contemporaneous records, but the final submissions, which she was not offered opportunity to address in evidence, then contained detailed allegations never put to her. This was a clear breach of the rule in Browne v Dunn (1893) 6 R 67 (HL), and that rule has been treated as an aspect of procedural fairness, and if breached will give rise to a vitiation of the decision of the Tribunal; see Hoskins v Repatriation Commission [1991] FCA 559 ; (1991) 32 FCR 443 at 446. 17 The submissions made on behalf of the Commissioner were to the following effect: (1) There was no denial of procedural fairness by the Tribunal for the following reasons: (a) It was squarely put to Mrs Montgomery who had reconstructed the Price Spreadsheets that she had 'fabricated' or 'massaged' or 'fiddled' the figures in the Price Spreadsheets. (b) The Tribunal in reviewing a decision is not bound by technicalities, legal forms or rules of evidence and must act according to substantial justice and the merits of the case. In those circumstances, the rule in Browne v Dunn has no application. (c) The Tribunal was entitled to look at the Price Spreadsheets and draw its own conclusions where it was obvious that information had been omitted or falsely inserted, in order to reach a figure corresponding to the cheque which was drawn. (d) In relation to one subject matter, 3D was invited by the Tribunal during closing submissions to re-open its case and call further evidence. It was clearly open to 3D to seek leave to recall Mrs Montgomery in order to overcome any perceived deficiency in the opportunity she had been afforded, when first cross-examined, to explain discrepancies in the relevant documents. 3D did not seek such leave. The substance of the fabrication was put to Mrs Montgomery (2) 3D has submitted that there was a denial of procedural fairness because it is alleged the specific detail of the Commissioner's analysis of the Price Spreadsheets, which forms Annexure A to the Tribunal's reasons for decision, was not put to Mrs Montgomery. The Tribunal referred to this submission but found it to be without substance. (3) From the commencement of the audit and in the hearing before the Tribunal, the Commissioner had directly challenged the story put forward as to the existence of MSH and Mr Borg. It was manifest that any documentation put forward by the taxpayer in support of that story was also under challenge. (4) The Commissioner's challenge to the Price Spreadsheets was also fully appreciated by 3D. So much is clear from paras 14 and 15 of the Submissions of the Applicant dated 1 June 2007 which were provided to the Tribunal before the Commissioner made the submissions of which 3D presently complains. (5) It is significant that notwithstanding the opportunity to do so in submissions in reply, 3D made no submissions about the fabrications in the Price Spreadsheets, but merely confined its complaint to what was said to be a denial of procedural fairness. Indeed, 3D could not possibly have had an answer to the fabrications, which were apparent on the face of the Price Spreadsheets when they were compared with the Job Balance record. (6) In any event, an evaluation of the Price Spreadsheets was not necessary to the Tribunal's decision. Once it found that Mr Borg did not exist, the 'elaborate arrangements alleged as to how he ... was paid may be of limited relevance.' For that reason, the Tribunal took the view that the submissions made by the Commissioner concerning the Price Spreadsheets were of 'peripheral relevance'. (7) It is clear that an immaterial error of law will not vitiate the decision of the Tribunal. Even though it was perhaps not necessary to do so once it found that Mr Borg did not exist, the Tribunal for the sake of completeness annexed the Commissioner's analysis of the Price Spreadsheets to its reasons, and held that it correctly summarised the evidence given in this regard. (8) The evidence showed that Mrs Montgomery, having prepared the Price Spreadsheets, was the person who was most familiar with those documents and may be taken to have intimately known the content of them. She must also be taken to have been aware that the figures in those documents had been manipulated in order to reach the totals on the cheques (as the Commissioner has demonstrated in Annexure A to the Tribunal's reasons). (9) It was also an incontrovertible fact that Mrs Montgomery had also managed to create a Price Spreadsheet in respect of items which proved not to be for hire at all but for sale, demonstrating the fact of its fabrication. Mrs Montgomery was cross-examined about this and it was directly put to her in the following terms: 'Really, Ms Montgomery, what this shows is that your documents at tab 14 are a fabrication, aren't they?---No, they're not. They came out of the computer program. You have told us that the starting point of one of them, the first one behind tab 14 for the week ending 28 December, is a real document from the time, haven't you?---That's right. It's nothing of the kind, is it?---Yes, it is. It's something that you have put together to try to substantiate numbers?---No. I took it out of off the job balance generals. And then you have told us that you have extrapolated back, and, lo and behold, you have been able to extrapolate for the week ending 7 December by adding and subtracting advices and receipts to page 427, a number of 16,500, which you purport would explain another entry in the bank statements and on Mr Borg's statements of account?---These were all these all came out of the computer program. These, being tab 14?---These were all worked out of the computer program. They have been massaged the numbers have been massaged and fiddled with---?---No. ---and put together by you---' (10) Clearly Mrs Montgomery, as the author of the recreated Price Spreadsheets, was only too aware of what the cross-examiner was putting to her when he suggested that she had massaged and fiddled the numbers. If there was an answer to be made by her, 3D was on notice of the need to elicit that explanation in re-examination or by seeking leave to adduce further evidence in chief. Application of the Rule in Browne v Dunn (11) Section 33(1)(b) of the AAT Act stipulates that a proceeding before the Tribunal shall be conducted with as little formality and technicality as the legislation and a proper consideration of the matters permits. Consistent with that legislative approach, s 33(1)(c) provides that the Tribunal is not bound by the rules of evidence. (12) 3D, before the Tribunal, had suggested that there was a 'clear breach of the rule in Browne v Dunn '. In Re Ruddock (in his capacity as Minister for Immigration and Multicultural Affairs) and Another; Ex parte Applicant S154/2002 [2003] HCA 60 ; (2003) 201 ALR 437 , the High Court held that the rule in Browne v Dunn had no application to proceedings before the Refugee Review Tribunal. Section 420(2) of the Migration Act 1958 (Cth) (an equivalent provision to s 33 of the AAT Act) was relevant to that conclusion. The High Court held that the purpose of such provisions was to free bodies such as the Tribunal from certain constraints otherwise applicable in courts of law. (13) In any event, even assuming the rule was to apply, there was no breach of that rule. Where it is obvious that the evidence of the witness is challenged, failure to state this expressly will not necessarily involve a breach of the rule. (14) In Jagelman v Commissioner of Taxation 96 ATC 4055 , it was submitted that there was a denial of procedural fairness by reason of a failure to put a matter to the applicant. Justice Hill observed at 4060: 'However, it has been pointed out in a number of cases that the application of the rule in Browne v Dunn must depend upon the circumstances of the case. Where the issues in a case are such that it would readily be apparent to a party that a particular imputation has been made, there will be no necessity to put that imputation to a witness who denies it and, in consequence, there will have been no denial of procedural fairness: see Seymour v Australian Broadcasting Commission (unreported, Court of Appeal, NSW, 3 June 1977) discussed by Hunt J in Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 at 21-2. In the latter case, Hunt J said (at 23): "In many cases, of course, counsel for the party calling the witness in question will be alert to the relevance of the other material in the case to be relied upon for the challenge to the truth of the evidence given by his witness or to the credit of that witness, and in those circumstances counsel will be able to give his witness the opportunity to deal with that other material in his own evidence in chief."' It was open to the Tribunal to look at the Price Spreadsheets and draw its own conclusions (15) Section 43 of the AAT Act provides that the Tribunal may exercise all the powers and discretions that are conferred on the decision-maker and stands in the shoes of the Commissioner. The Tribunal is not bound by the facts that were before the decision-maker. (16) The Price Spreadsheets and the Job Balance General were 3D's documents and their inherent want of authenticity could be gathered directly from them. 3D's written submissions in chief to the Tribunal invited consideration of the content of the documents, independent of any testimony about them from which 3D asserted that their authenticity was self-evident. The Commissioner was entitled to (and did) respond on the same basis. It was open to the Tribunal to draw the conclusions which the Commissioner invited, simply by looking at the documents. In particular, that there had been manipulation of those documents by either omitting or falsely inserting information in order to reach a figure corresponding to the cheque which was drawn. Opportunity to Re-open (17) Section 39 of the AAT Act requires that the Tribunal ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case. This section is a statutory recognition of the requirement to afford natural justice. Section 33(1)(c) has been held to permit the introduction of further evidence after the conclusion of the hearing. That requirement may extend to permitting a party to adduce new evidence once judgement has been reserved. It has been held that while normally a court will require exceptional circumstances to permit that course, so stringent a test does not apply in AAT hearings. (18) In Sullivan v Department of Transport (1978) 20 ALR 323 , a party was afforded an opportunity by the Tribunal to call further evidence. Justice Deane said as follows: 'In the context of the express invitation to the appellant, at the conclusion of the evidence, to adduce any further evidence or other material and of the complete absence of any indication by the appellant that he was under any misapprehension or that he desired that the proceedings be adjourned, the failure of the Tribunal either to adjourn the proceedings of its own motion or expressly to inform the appellant of his right to seek an adjournment did not, in my view, constitute a failure to ensure that the appellant was given a reasonable opportunity of putting his case or otherwise involve a failure to observe the requirements of natural justice.' (19) After the conclusion of the evidence and during the course of 3D's submissions below, the Tribunal indicated that it would afford 3D an opportunity to reopen its case if Mr Borg could be found. The Tribunal later repeated this invitation a number of times, that 3D should 'go and find Mr Borg', for the reason that he was 'either crucial or important in this equation'. (20) 3D acknowledged that it was open to it to re-open its case. It was open to 3D to have recalled Mrs Montgomery or any other witness it thought could shed light on the figures in the Price Spreadsheets, the authenticity of which the Commissioner had challenged, first in cross-examination of Mrs Montgomery and subsequently in written submissions. It did not do so for the obvious reason that there was no possible explanation for the discrepancies identified by the Commissioner, other than that the figures had been manipulated or fabricated. (21) The Tribunal amply accorded natural justice in the present case by extending an opportunity to 3D to call further evidence and by providing a further opportunity to be heard. Thereafter, any potential lack of procedural fairness arising from the level of detail of the original cross-examination (the Commissioner does not accept that there was any) was averted. 3D did not avail itself of the opportunity.


case_outcome: discussed

case_text: The applicant referred to three cases in support of its claim. The first is Air India v Commonwealth [1977] 1 NSWLR 449, a decision of the New South Wales Court of Appeal. The facts of the case can be briefly summarised. The owner of the Sydney International Airport, the Commonwealth, demanded increased rent from the lessees, a number of airlines, purportedly pursuant to their leases. In general terms, the airlines paid the increased rent, but stated that they may need to challenge the validity of the rent increase. 62 The airlines brought claims for money had and received on the basis of compulsion. The trial judge found that the Commonwealth had no right to require the payment of increased rent. However, he refused to order the repayment of the increased rent because he found the payments had been made voluntarily. That latter finding was the focus of the appeal. 63 The Court of Appeal upheld the trial judge's finding that there had been no compulsion. It did so on the basis that there was no express threat to forfeit the leases should the increased rent be paid, and that such a threat could not reasonably be implied. The Court found (at 455): It hardly seems to be reasonable to fear that the Commonwealth would determine the leases of seven major international airlines servicing Sydney and Australia because of a rent dispute involving the construction of a lease document, when they could be held to their leases and sued to fruitful verdicts. Bringing about an almost empty and non-productive facility would hardly seem a likely course of action." 64 The applicant contends that its case stands in sharp distinction to that of Air India . It points to the two letters from the first respondent, extracted above, dated 6 and 12 March 2003, and the file note of the conversation of 17 March 2003. It submits that in its case a clear threat to evict was being made.


case_title: Antaios Compania Naviera SA v Salen Rederierna AB (The Antaios) [1985] AC 191

case_text: In the face of a plain inconsistency within a lease, regard must be had to the general canons of contractual construction. The objective intention of the parties must be ascertained, and a common sense and commercially sensible approach must be taken. See, for example, Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191 cited by Gleeson CJ, Gummow and Hayne JJ in Maggbury Pty Limited v Hafele Australia Pty Limited [2001] HCA 70 ; (2001) 210 CLR 181 at [43] , and Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] UKHL 19 ; [1997] AC 749 at 770-71 per Lord Steyn.


case_text: The recognition of a "unifying legal concept" does not, however, render the traditional categories of restitutionary claims, such as the action for money had and received, null and void. On the contrary, in recent years the High Court, and superior State courts, have chosen to frame claims in restitution within the bounds of these established categories. See Roxborough v Rothmans of Pall Mall Australia Limited [2001] HCA 68 ; (2001) 208 CLR 516, Baltic Shipping Company v Dillon [1993] HCA 4 ; (1993) 176 CLR 344, David Securities , Pavey & Matthews , Ovidio , McKay (referring to Mason v New South Wales ), and Vickery v JJP Custodians Pty Ltd (2002) 11 BPR 20,333.


case_text: The relevant principles relating to the imposition of indemnity costs were summarised by Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (at 233-4): "In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (supra) at 141 said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston (supra) at 637; namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at p 8) in Tetijo , "The categories in which the discretion may be exercised are not closed". Davies J expressed (at p 6) similar views in Ragata (supra). Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo ); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata ) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp (supra)); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata ); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v Keng (unreported, Court of Appeal, NSW, Kirby P, Priestly JA, Cripps JA, No 40744/1992, 27 September 1993) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records (supra)). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice." (emphasis added) 173 Although the second respondent submits that the facts going to causation were entirely matters within the knowledge of the applicant, and about which it had the onus to adduce evidence, I do not consider that its case was "hopeless", or, in the words of Sheppard J in "wilful disregard of known facts or clearly established law". This is a very high bar indeed to meet. 174 Nor do I consider that the applicant imprudently rejected an offer of compromise. The second respondent's offer can hardly be described as generous. It was an offer for each party to walk away and bear their own costs. Moreover, the offer was made very early in the proceeding, prior to discovery being given by the parties. In addition, the offer appears to have been open for, at most, 24 hours. The 16 February 2004 offer requested a response to the offer no later than 10 am the following day. One can hardly be critical of the applicant rejecting an offer in these circumstances. 175 I also do not consider that the applicant's failure to withdraw the claim at an earlier time constitutes a basis for indemnity costs to be awarded in relation to the entire claim against the second respondent. I am not prepared to infer that it was incorporated in the proceeding in order to prejudice the Court against the respondents. Nor was the deceit claim "irrelevant" in the sense in which the authorities on indemnity costs use that term. An "irrelevant" claim is one that has nothing to do with the matters in dispute between the parties. That can hardly be said to be true in the present case. The arrangements between the first and second respondent with respect to the leasing of the premises are important, given that the second respondent provided a rental assessment to the first respondent, and that assessment was central to the first respondent's attempt to increase the rent. 176 The second respondent does have an arguable case for being paid its costs on an indemnity basis with respect to the deceit claim alone. As previously indicated, the claim should have been withdrawn, at the very latest, following the cross-examination of Mr Allen. An explanation for the internal Colliers email which pricked the applicant's attention was given in the defences of the respondents. No affidavit material was adduced by the applicant to meet those denials. 177 However, I am not inclined to make an order that the applicant pay the second respondent's costs of the deceit claim on an indemnity basis. Those costs, in the context of the entire proceeding, are likely to be insubstantial. Moreover, separating out these costs from those of the rest of the proceeding is likely to be a difficult process which is unwarranted in the circumstances, particularly given that the applicant is already paying those costs on a party/party basis.


case_title: Cretazzo v Lombardi (1975) 13 SASR 4

case_text: In general, costs follow the event and any departure from this principle should only occur in exceptional circumstances: Trade Practices Commission v Nicholas Enterprises Pty Ltd (1979) 28 ALR 201; Cretazzo v Lombardi (1975) 13 SASR 4; and Ritter v Godfrey [1920] 2 KB 47 at 52-3. 136 First, the applicant submits that although it only succeeded on one of its claims, it only needed to succeed on one. It relies upon the following comments of Jacobs J in Cretazzo (at 16), cited with approval by Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) ATPR |P40-748 (at 48,136): "trials occur daily in which the party, who in the end is wholly or substantially successful, nevertheless fails along the way on particular issue of fact or law. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues."