Day v Commissioner of Taxation [2006] FCA 154 (14 February 2006)

Last Updated: 2 March 2006

FEDERAL COURT OF AUSTRALIA

Day v Commissioner of Taxation [2006] FCA 154

SHANE DAY v COMMISSIONER OF TAXATION
ACD 4 OF 2003

MADGWICK J
14 FEBRUARY 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACD 4 OF 2003

BETWEEN:	SHANE DAY APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT
JUDGE:	MADGWICK J
DATE OF ORDER:	14 FEBRUARY 2006
WHERE MADE:	SYDNEY

THE COURT ORDERS AND DECLARES THAT:

1.	As to the amount of $4,266.73, order number 3 made by Justice Finn on 5 December 2003 in Federal Court proceedings number A4 of 2003 has not been complied with.
2.	As to the balance, should events prove that the applicant is out of pocket more or less than the said amount of $4,266.73, the parties have liberty to apply.
3.	The respondent is subrogated to, and at its own expense may exercise in the name of the applicant, all of his legal and equitable remedies against Alan Powrie and A2M Pty Limited trading as Powrie Partners.
4.	The applicant is liable to render to the respondent all reasonable assistance to enable the respondent so to proceed, should it be so advised.
5.	By consent, there will be no order as to costs.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACD 4 OF 2003

BETWEEN:	SHANE DAY APPLICANT
AND:	COMMISSIONER OF TAXATION RESPONDENT

JUDGE:	MADGWICK J
DATE:	14 FEBRUARY 2006
PLACE:	SYDNEY

REASONS FOR JUDGMENT

HIS HONOUR:

1 This is an unfortunate matter.

2 The applicant was an officer of the Commonwealth who had a dispute with the respondent. He apparently sought legal advice from a Mr Powrie, a solicitor in the Australian Capital Territory. Mr Powrie practised as such under the business name Powrie & Co Barristers and Solicitors. Mr Powrie also was associated with an entity known as Powrie Partners. That is the business name of a company, A2M Pty Limited. At relevant times, Mr Powrie was the sole director and the secretary of that company. Mr Powrie procured the applicant to engage Powrie Partners to give him ‘general Taxation and Business advice’ and Mr Day authorised ‘Alan Powrie, Barrister and Solicitor, Registered Tax Agent’:

‘To act on [his] behalf, and to seek relevant information about [his] commercial and taxation affairs, from the Australian Taxation Office ... and banking and financial institutions...’

3 Mr Powrie undertook legal work for the applicant in connection with the dispute including initiating proceedings in this Court. It seems that, as between the applicant and Mr Powrie, Mr Powrie, in his emanation as Powrie & Co., billed Powrie Partners for the legal

work and Powrie Partners in due course billed Mr Day directing payments to an account in the name ‘A2M Pty Ltd, ACN 075 093 186, ITF (in trust for) The Powrie Family Trust’.

4 The upshot of the litigation was that by consent on 5 December 2003, Finn J ordered:

‘1. The Respondent amend the Applicant’s income tax assessment for the year ended 30 June 2001, to allow a deduction of $6,000 for legal fees incurred by the Applicant in that year of income.

2. The Respondent effect the amendment referred to in Order 1 above within 28 days of the making of this order.

3. The Respondent pay the costs of the Applicant in the amount of $9,000 within 28 days of the making of this order.’

5 The officer of the respondent who presently has carriage of this matter, and Mr Murray, the solicitor in the Australian Government Solicitor’s Office who presently has conduct of the matter, are to some extent hamstrung by an apparent lack of records, but from the records that are available there is no suggestion that the applicant ever authorised the respondent or its solicitors to pay the agreed amount of his costs to anybody else but himself. In those circumstances, the order of the Court operated to impose an obligation on the respondent to pay the costs to the applicant, or to any person whom he might have directed, but so far as is known, did not. The applicant denies that he so authorised any payment and there is no reason to disbelieve him. In a sense, that is the end of the matter but there are some further oddities.

6 On 24 December 2003 an officer of the respondent, Mr Walpole, completed a Tax Office form known as a ‘Proposal to Spend Public Moneys’ for a cheque to be drawn in the sum of $9,000 in favour of ‘Powrie & Co’. So far as is known, a cheque for $9,000 was drawn by ATO Accounts Payable Section on 6 January 2004 in favour of ‘Powrie Partners’. The cheque was presented and paid on 20 January 2004.

7 The applicant is unrepresented and has been unrepresented in other proceedings in relation to this relatively small amount of money. When he discovered that the money had been paid to Powrie Partners, he sued A2M Pty Limited trading as Powrie Partners, in the Local Court of New South Wales through proceedings issued from the Redfern Local Court. He did not sue for the full $9,000 but for $3,821, being approximately the amount that he regarded as due to him from Mr Powrie and/or the emanations and/or entities abovementioned, with which Mr Powrie is connected. The applicant had made some payments to what I might call the Powrie interests, and he obtained judgment including interest on 11 January 2005 in the sum of $4,266.73. He has received no satisfaction in respect of that amount.

8 He now seeks by Notice of Motion to compel the respondent to pay him an amount of $9,000 plus interest. The respondent takes no objection to the process by which the applicant brings this matter to the Court, although under s 65 of the Judiciary Act 1903 (Cth) execution is not available against the Commonwealth. The respondent suggests that the appropriate order for the Court to make would be a declaration either that Finn J’s order has, or that it has not, been complied with.

9 The respondent submits, in substance, that the Taxation Office in good faith has paid the $9,000 to an agent of the applicant but, because of the Local Court judgment, the applicant is pursuing inconsistent remedies: he cannot have a right to $9,000 from the debtor against whom he has obtained judgment, and also a right to $9,000 from the Australian Taxation Office. Further, he has elected, by pursuing the matter to judgment, to seek to remedy for the $9,000 he is owed, if he is owed, from that judgment debtor.

10 For the moment there is no active contest between any of the Powrie interests and the applicant to suggest that they, or any of them, owe the applicant less than $4,266.73, but it is not beyond the bounds of possibility that some such dispute may arise. For the moment the applicant is only out of pocket in that amount leaving aside trifling sums for interest since the judgment was obtained with which I do not concern myself.

11 It seems that a mistake was made in good faith. At some point, absent clear and unambiguous authorisation from Mr Day, the $9,000 should have been paid to him, and he is entitled to a declaration which would reflect that position in principle. On the other hand, that is an equitable remedy and equity moulds remedies to circumstances. There is no reason to here enrich or to pre-arm, as it were, Mr Day with a war chest against any possible further claim against him, by any of the Powrie interests.

12 The declarations I will make are as follows:

1. As to the amount of $4,266.73, order number 3 made by Justice Finn on 5 December 2003 in Federal Court proceedings number A4 of 2003 has not been complied with.

2. As to the balance, should events prove that the applicant is out of pocket for more or less than the said amount of $4,266.73, the parties have liberty to apply.

3. The respondent is subrogated to, and at its own expense may exercise in the name of the applicant, all of his legal and equitable remedies against Alan Powrie and A2M Pty Limited trading as Powrie Partners.

4. The applicant is liable to render to the respondent all reasonable assistance to enable the respondent so to proceed, should it be so advised.

5. By consent there will be no order as to costs.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate:

Dated: 24 February 2006

Solicitor for the Applicant:	The applicant appeared in person
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	14 February 2006
Date of Judgment:	14 February 2006