National Australia Bank Limited v Commissioner of Taxation [2011] FCA 44 (3 February 2011)

Last Updated: 3 February 2011

FEDERAL COURT OF AUSTRALIA

National Australia Bank Limited v Commissioner of Taxation [2011] FCA 44

Citation:		National Australia Bank Limited v Commissioner of Taxation [2011] FCA 44
Parties:		NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) v COMMISSIONER OF TAXATION
File number:		NSD 1296 of 2009 NSD 1297 of 2009 NSD 1298 of 2009 NSD 1299 of 2009 NSD 1300 of 2009 NSD 1301 of 2009 NSD 1472 of 2009
Judge:		EDMONDS J
Date of judgment:		3 February 2011
Catchwords:		PRACTICE AND PROCEDURE – appeals against appealable objection decisions made under the Taxation Administration Act 1953 (Cth) - O 30 r 6(2) of the Federal Court Rules – motion to transfer trial of a proceeding to a place other than where proceeding commenced – criteria by reference to which motion to be determined – where application of certain criteria do not enable a conclusion on a place of preferred suitability – the role and extent of the criterion ‘the most efficient administration of the Court’ where the motion is brought close to trial. Held: motion dismissed.
Legislation:		Federal Court Rules O 30 r 6(2)
Cases cited:		Church v Barnett (1871) LR 6 CF 116 cited National Mutual Holdings Pty Ltd v Sentry Corp (1988) 19 FCR 155 applied
Date of hearing:	On the papers
Date of last submissions:	31 January 2011
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	18
Counsel for the Applicant:	Mr M Richmond SC with Mr J Williams
Solicitor for the Applicant:	Freehills
Counsel for the Respondent:	Mr MK Moshinsky SC with Mr SJ Sharpley and Mr DC Morgan
Solicitor for the Respondent:	Australian Government Solicitor

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1296 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	3 FEBRUARY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion on notice dated 14 December 2010 be dismissed.
2. The respondent pay the applicant’s costs of the motion, as taxed or agreed, forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1297 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	3 FEBRUARY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion on notice dated 14 December 2010 be dismissed.
2. The respondent pay the applicant’s costs of the motion, as taxed or agreed, forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1298 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	3 FEBRUARY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion on notice dated 14 December 2010 be dismissed.
2. The respondent pay the applicant’s costs of the motion, as taxed or agreed, forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1299 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	3 FEBRUARY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion on notice dated 14 December 2010 be dismissed.
2. The respondent pay the applicant’s costs of the motion, as taxed or agreed, forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1300 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	3 FEBRUARY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion on notice dated 14 December 2010 be dismissed.
2. The respondent pay the applicant’s costs of the motion, as taxed or agreed, forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1301 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	3 FEBRUARY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion on notice dated 14 December 2010 be dismissed.
2. The respondent pay the applicant’s costs of the motion, as taxed or agreed, forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1472 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	3 FEBRUARY 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The motion on notice dated 14 December 2010 be dismissed.
2. The respondent pay the applicant’s costs of the motion, as taxed or agreed, forthwith.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1296 of 2009 NSD 1297 of 2009 NSD 1298 of 2009 NSD 1299 of 2009 NSD 1300 of 2009 NSD 1301 of 2009 NSD 1472 of 2009

BETWEEN:	NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937) Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE:	3 FEBRUARY 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. By motion on notice dated 14 December 2010 the respondent, pursuant to O 30 r 6(2) of the Federal Court Rules (‘the Rules’), seeks orders that these proceedings and, in consequence, the collateral proceedings in the Administrative Appeals Tribunal, which have been set down for a four week hearing in Sydney commencing on 21 March 2011, be heard in Melbourne; alternatively, that the evidence of witnesses who reside in Victoria be heard in Melbourne. The parties were content that I deal with the respondent’s motion on the papers.
2. Having considered the respondent’s written submissions in support of the motion, those of the applicant against the motion as well as certain other matters referred to below, the application must be dismissed because I am not satisfied ‘that there is sound reason to direct that the proceeding be conducted’ in Melbourne, or that the evidence of Victorian resident witnesses be heard in Melbourne: National Mutual Holdings Pty Ltd v Sentry Corp (1988) 19 FCR 155 at 162.
3. The applicant commenced the proceedings in the New South Wales registry of the Court as it was entitled to do (O 52B r 4(3)(c)(iii) of the Rules) on 16 November 2009. The respondent complained that he is ignorant of why the applicant chose to commence proceedings in New South Wales and, in the absence of any explanation, the Court should conclude that the applicant chose to commence in the New South Wales registry because it was convenient to its external lawyers (most of whom have been based in Sydney) regardless of the numerous links the proceedings have to Melbourne (see [6] below) and the residence of the applicant’s witnesses (see [7] below).
4. The applicant could have chosen to commence the proceedings in New South Wales for any number of reasons. It is, after all, a major bank carrying on business as such throughout Australia and a significant part of its business is in New South Wales. In the absence of an explanation as to why it chose to commence the proceedings in New South Wales, rather than in Victoria, I am not prepared to conclude that it did so because it was convenient to its external lawyers.
5. As the Full Court said in Sentry Corp at 162, the starting point for the Court in considering applications such as these ‘is that the proceeding has been commenced at a particular place. Why should it be changed?’ Even if the applicant chose to commence the proceedings in the New South Wales registry because it was convenient to its external lawyers, the applicant does not suggest, nor could he, that that is a capricious choice (see Sentry Corp at 162), although he does suggest that the Court should have little or no regard to that choice in determining where the trial is to be conducted. On the facts before me, I do not agree, particularly as the proceedings have been on foot for over 14 months, most of the interlocutory steps have already been taken and the hearing is a little over a month away. As the Full Court said in Sentry Corp at 162:

‘At the other end of the scale, a proceeding may have continued for some time at the place of commencement with many steps having been taken there, for example, filing of pleadings and affidavits, discovery and inspection. Due weight would be given by the Court to such matters before directing that the proceeding should continue at a different place.’

6. In support of its motion the respondent pointed to the following links with Melbourne, and the lack of a link with New South Wales:

(1) the applicant’s head office is and was at all relevant times located in Melbourne;

(2) the transaction the subject of the proceedings was developed and executed primarily in Melbourne. To the extent that it was developed and executed elsewhere, it was done so overseas and not in Sydney;

(3) board approval for the transaction was given at a board meeting held in Melbourne and a subsequent board committee meeting held in Melbourne;

(4) the applicant’s notices of objection were issued out of its Melbourne office;

(5) the principal officers and employees of the applicant involved in and responsible for the transaction were, at the relevant times, located in Melbourne;

(6) the applicant’s legal advisers for the transaction were located in Melbourne;

(7) the great majority of the applicant’s witnesses are located in Victoria, and this must have been apparent to the applicant when it commenced proceedings. This point is elaborated further in [7] below;

(8) those officers and employees of the applicant who remain involved in and responsible for the transaction are, to the best of the respondent’s knowledge, located in Melbourne;

(9) prior to the commencement of proceedings, three mediations were held. Despite being conducted by a Sydney-based mediator, all three were held in Melbourne;

(10) prior to the commencement of proceedings, four of the people who have now given affidavits in support of the applicant’s case were examined by the respondent pursuant to s 264 of the Income Tax Assessment Act 1936 (Cth). These examinations were all conducted in Melbourne; and

(11) there is no geographic link between any matter in issue in this proceeding and New South Wales.

7. The respondent submitted that, in the present case, it is the residence of witnesses that leads to the conclusion that the balance of convenience favours most or all of the trial being conducted in Melbourne. In an affidavit supporting the motion, the senior executive lawyer in the office of the Australian Government Solicitor with the conduct and carriage of this matter on behalf of the respondent set out tables noting the various witnesses who are to give evidence on behalf of the applicant. There are 41 witnesses. Twenty-six (or twenty-five) of them are located in Melbourne; five (or six) in Sydney. The balance are overseas, save for one in Tasmania and one in regional Victoria. The respondent’s best estimate of the time needed for cross-examination of each witness is that it will reflect the length of that witness’s affidavit. One table calculates that 82% of the witness evidence (based on the number of paragraphs in their affidavits) is based in Melbourne, with only 6% in Sydney. If Mr Allerton is in Sydney, then 69% of the witness evidence (by number of paragraphs) is based in Melbourne, and 18% in Sydney. Of the Melbourne witnesses, only five (9% of the evidence, by number of paragraphs) are current employees of the applicant and about whom it might be said that it is the convenience of the applicant that is relevant.
8. A solicitor in the law firm acting for the applicant deposed that none of the Victorian-based witnesses has expressed any concerns to him about travelling to Sydney to give evidence. In response, the respondent submitted that in the absence of evidence that these witnesses were asked about their attitude to travelling to Sydney, or that they were told the proceedings could be heard in Melbourne, this evidence has no weight. I do not agree. The fact that most of these witnesses are not employees of the applicant and yet are prepared to give evidence would indicate to me that they have no concerns about travelling to Sydney.
9. The respondent has already indicated to the applicant that he intends cross-examining each of the first 25 witnesses in the Australian witnesses table, and may call some of the remaining six, in particular, Messrs MacFarlane and Park, whose position is not materially different from the other former directors of the applicant. It is likely that at least six of the overseas witnesses will be cross-examined, most likely by video-link.
10. In his affidavit, the solicitor in the law firm acting for the applicant calculated the accommodation expenses for the Victorian-based witnesses based on an assumption that each will be required to spend one night in Sydney. The respondent replied that this assumption is, with respect, wholly unrealistic. Many of the more substantial Melbourne witnesses are likely to be cross-examined and re-examined across more than one day. Even those who are required for only one day are likely to spend more than one night in Sydney because it is not possible to say precisely when a witness will be required. In any event, the disruption and inconvenience to a large number of Victorian witnesses, some of whom are retired and thus likely to be elderly, of having to travel and stay interstate to give evidence is not so easily quantified.
11. In addition, if the respondent is unsuccessful and the usual costs order is made against him, it is likely that he will have to pay the costs of having a large number of the applicant’s witnesses travel to and stay in Sydney.
12. Leaving aside witness expenses, the solicitor in the law firm acting for the applicant deposed that the applicant will incur additional expenses if the trial is heard in Melbourne. In response, the respondent said he will incur additional expenses if the trial is heard in Sydney. Ultimately, the respondent conceded that the cost of flying the respondent’s lawyers to Sydney and of providing office space and hotel accommodation for them is not likely to be significantly different from the applicant’s costs if the trial were to be held in Melbourne. In my view, this consideration is neutral.
13. On the other hand, the respondent submitted that the cost of moving lawyers, witnesses and documents are entirely of the applicant’s making. He submitted that, in substance, these are Melbourne proceedings; the applicant is entitled to brief Sydney lawyers to act for it, but it cannot be heard to complain if that decision leads to it incurring additional costs. Whether this is right or not, it is hardly a consideration to which any real weight should be attached in determining the respondent’s motion.

ANALYSIS AND CONCLUSION

14. In Sentry Corp at 165 – 167, the Full Court declined to follow the English approach which required there to be a ‘manifest preponderance of convenience’ in transferring a hearing from the place in which the proceeding is commenced: see Church v Barnett (1871) LR 6 CF 116. The Full Court said at 162:

‘The balance of convenience will generally be a relevant consideration, but not necessarily determinative of each case ...

The balance of convenience is important, but its weight must vary from case to case. Ultimately the test is: where can the case be conducted or continued most suitably bearing in mind the interests of all the parties, the ends of justice in the determination of the issues between them, and the most efficient administration of the Court. It cannot and should not, in our opinion, be defined more closely or precisely.’

15. If it were not for the last criterion – where can the case be conducted or continued most suitably, bearing in mind the most efficient administration of the Court – it would be difficult to conclude, by reference to the other criteria, that Sydney was more suitable than Melbourne or that Melbourne was more suitable than Sydney. That inability, or at least difficulty, to draw one conclusion or the other, points, if only by default, to the hearing staying where the proceeding was commenced: in Sydney.
16. On the other hand, the last criterion dictates that the hearing stay in Sydney because to transfer it to Melbourne at this late stage would potentially interfere with the efficient administration of the Court at a number of levels. For example, for the trial judge in re-arranging other matters in his docket of cases which are scheduled to be the subject of direction and other interlocutory hearings during the period of the trial. Such matters are generally heard prior to the commencement of the hearing on the scheduled day and while absence from one’s home registry can, and has been in the past, overcome by recourse to video link, it is not as efficient, particularly where contentious issues arise, as they often do at the interlocutory stage. Had the motion been brought at an earlier point in time, such potentiality for interference may have been avoided by alternative scheduling.
17. In conclusion, I have to say that while I have rejected (see [3] and [4] above) the respondent’s submission that I should conclude, in the absence of an explanation from the applicant, that the applicant commenced the proceeding in the New South Wales registry because it was convenient to its external lawyers, on the material that has been put before me, I think there is force in the applicant’s submission that the respondent’s motion was brought to suit the convenience of his external lawyers, rather than out of a real concern over the welfare of the applicant’s Victoria resident witnesses and the cost of bringing them to Sydney.
18. The motion must be dismissed with costs.
    

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.

Associate:

Dated: 3 February 2011