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FEDERAL COURT OF AUSTRALIA - GENERAL DIVISION

CC(NSW) PTY LTD (in liq) v FEDERAL COMMISSIONER OF TAXATION

Sackville J

24, 25, 26, 27 June, 26, 27 August 1996; 24 March 1997 - Sydney

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Sackville J    In this matter, I delivered a judgment on 3 February 1997, in which I indicated that the applicant's application in each matter should be dismissed. I understood that the parties might wish to be heard on the appropriate form of orders and I gave them that opportunity. I also gave the parties the opportunity to make submissions on costs.

   The parties are agreed that the appropriate form of order is simply that the application in each matter be dismissed.

   The applicant accepts that the normal order would require it to pay the respondent's costs. However, it says that it should not pay the costs of two affidavits prepared by Mr Lonergan, an expert witness whose evidence was read by the respondent. The submission appears to be that much of Mr Lonergan's earlier affidavit (sworn 14 March 1995) would have been inadmissible, although all but paras 38-48 of this affidavit were admitted into evidence on a limited basis.

   It would not be possible to resolve the admissibility of Mr Lonergan's affidavit without a further hearing. Such a course is neither desirable nor feasible. In any event, I do not think that, even if the affidavit were inadmissible, it is appropriate (subject to any concession made by the respondent) to make a separate order in relation to the costs of its preparation. It is not unusual for a successful party to be awarded its costs even though some parts of its evidence are inadmissible or are not relied on at the hearing.

   The applicant sough an order that the respondent pay the applicant's costs in relation to the preparation of an affidavit sworn by Mr Bryant, which answered some of the contentions put forward by Mr Lonergan. Having regard to the outcome of the proceedings, I see no justification for such a course.

   Finally, the applicant submitted tht it should not have to pay the costs of the respondent's submissions in respect of the decision of the High Court in FCT v Spotless Services Ltd (1996) 34 ATR 183. As my judgment indicates, the parties were given the opportunity to make supplementary submissions on the operation of Pt IVA of the Income Tax Assessment Act 1936 (Cth) in the light of the High Court's decision, which was handed down after oral argument in the present case had been completed. The respondent characterised the applicant's submission on this aspect of costs as "astonishing". I am disposed to agree and not only for the reason given by the respondent.

   The respondent conceded in its written submissions that the order for costs should not extend to the preparation of paras 38-48 of Mr Lonergan's affidavit. Accordingly, the applicant should pay the respondent's costs in each matter, except the costs of paras 38 to 48 inclusive of the affidavit Wayne Lonergan, sworn 14 March 1995.