Waterhouse and 2 Ors v Chief Commissioner of State Revenue and Anor [1999] NSWSC 108 (24 February 1999)

Last Updated: 25 February 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Waterhouse & 2 Ors v Chief Commissioner of State Revenue & Anor [1999] NSWSC 108

CURRENT JURISDICTION: Common Law

FILE NUMBER(S): 20824/97

HEARING DATE{S): 18 February 1999

JUDGMENT DATE: 24/02/1999

PARTIES:

WILLIAM JOHN WATERHOUSE

(2nd Plaintiff)

JULIE PATRICIA WATERHOUSE

(3rd Plaintiff)

CHIEF COMMISSIONER OF STATE REVENUE

(1st Defendant)

WILLOUGHBY CITY COUNCIL

(2nd Defendant)

JUDGMENT OF: Master Harrison

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Mr T M Thawley

(Plaintiffs)

Mrs S Kelly

(1st Defendant)

SOLICITORS:

Waterhouse Solicitors, Chatswood

(Plaintiffs)

Crown Solicitors Office, Sydney

(1st Defendant)

Mr K W Davenport

Alderdice & Clarke Solicitors, Chatswood

(2nd Defendant)

CATCHWORDS:

Preliminary determination of questions of law

ACTS CITED:

Land Tax Management Act 1956

Taxation Administration Act 1996

Limitation Act 1969

Local Government Act 1919

Local Government Act 1993

DECISION:

See paragraph 18

JUDGMENT:

9

THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

MASTER HARRISON

WEDNESDAY, 24 FEBRUARY 1999

20824/97 - MARTIN OTTO WATERHOUSE & 2 Ors v

CHIEF COMMISSIONER OF STATE

REVENUE & ANOR

JUDGMENT (Preliminary determination

of questions of law)

1 MASTER: The first and second defendants each seek to have different questions of law be heard separately before the substantive hearing of these proceedings. The first defendant relied on the affidavit of Paul Addison Zikking sworn 8 January 1999 and the second defendant relied on the affidavit of Kevin William Davenport sworn 14 January 1999. All the parties agree that liability should be determined separately and prior to damages.

2 This case involves a dispute between the plaintiffs who were the beneficial owners of the Hotel Charles situated at the corner of Brown and Railway Streets Chatswood (the land). Until 1992 the plaintiffs made payments of land tax to the first defendant. Paragraph 7 of the statement of claim alleges that in 1959 or 1960 the second defendant, Willoughby City Council entered on and took possession of that part of the land and built a public road on it. Since about 1960 the plaintiffs have been paying land tax payments on the whole of the property including part of the land that became a public road. On 16 July 1993 the plaintiffs became the registered proprietors of the Hotel Charles. They sold the property on 5 November 1997.

3 The claim against the first defendant is that they were under a mistaken belief that the amount of land tax paid in relation to this land had been properly levied pursuant to the Land Tax Management Act. Alternatively they claim that the first defendant has been unjustly enriched in the sum of the land tax payments and is liable to make restitution to the plaintiffs.

4 Similarly a claim is made against the second defendant that money was paid to the council for rates on the land and those rates calculated to the land value of the whole of the land. The plaintiff alleges that the second defendant has been unjustly enriched in the sum of the value of the land and the rate payments and is liable to make restitution to the plaintiffs. The amended statement of claim also alleges that from 5 August 1954 to 5 November 1997 the second defendant committed trespass. It also pleads causes of action for breach of fiduciary duty and negligence against the second defendant. The plaintiff also claim that the second defendant failed to compensate them for the acquisition of the land.

5 The damages sought against the first defendant are payments equal to the sum of the land tax payments, interest and costs; as against the second defendant the plaintiff seeks damages for payment of the sum equal to the sum of the rates payments and land tax payments, restitution duties, equitable compensation damages and interest.

6 The first defendant seeks that the following preliminary question of law be determined.

(1) Whether the failure of the plaintiffs and/or the previous registered proprietors of the land the subject of these proceedings ("the subject land") to exercise their rights pursuant to the Land Tax Management Act 1956, Part 5 or the Taxation Administration Act 1996, precludes the plaintiffs from obtaining relief claimed in these proceedings.

(2) Whether the provisions of the Limitation Act 1969 preclude the plaintiffs from maintaining the claims or some of them, in the amended statement of claim against the first defendant.

(3) Whether the plaintiffs are entitled to maintain the claims against the first defendant in the amended statement of claim for the period 1956 to 16 July 1993 by reason of the fact that land tax was paid by the then registered proprietors of the subject land and not the plaintiffs.

(4) Whether the plaintiffs are entitled to maintain the claims against the first defendant in the amended statement of claim by reason that at all material times the land allegedly occupied by the second defendant ("the road") was registered on the title in the names of the registered proprietors who paid land tax to the first defendant.

7 In that regard the second defendant submitted that this question can be determined if the following assumed facts taken from the amended statement of claim are agreed. The plaintiff does not dispute these facts.

(a) The plaintiffs became the registered proprietors of the land the subject of these proceedings ("the subject land") on 16 July 1993 and paid to the first defendant land tax in respect of the subject land including the road, from that date until they sold the land on 5 November 1997.

(b) Prior to the plaintiffs becoming the registered proprietors of the subject land, the register proprietors of the subject land paid land tax to the first defendant in respect of the subject property including the land allegedly possessed by the second defendant ("the road").

(c) At no time from 1956 until the present have either the plaintiffs or the registered proprietors of the subject land prior to 16 July 1993, exercised or asserted rights pursuant to the Land Tax Management Act 1956, Part 5 or the Taxation Administration Act 1996, in respect of land tax allegedly payable in respect of the road.

(d) The second defendant allegedly took possession of the road in or about 1959 or 1960 but the title was never transferred from the registered proprietors of the subject land to the council.

(e) At all relevant times until 13 July 1993 the plaintiffs has a beneficial interest in the subject land.

8 The second defendant's preliminary questions of law are:

(1) Whether the failure by the plaintiffs to exercise rights of appeal pursuant to s 133 of the Local Government Act 1919 or s 574 Local Government Act 1993 precludes them from obtaining relief based upon the claim in these proceedings that part of the subject land was not and is not rateable.

(2) Whether the plaintiffs are entitled to maintain the claims made in the amended statement of claim having regard to the provision of the Limitation Act 1969.

9 Part 31 r 2(a) of the Supreme Court Rules provides:

"2. The Court may make orders for -

(a) the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings."

10 In CBS Productions v O'Neill (1985) 1 NSWLR 601 at 606 Kirby P referred to separate determination of liability and stated:

"Care must also be taken in utilising the procedures now available for the determination of preliminary points to avoid such determination in cases which are not ripe for this treatment. A matter is "ripe" for separate and

preliminary determination where it is a central issue in contention between the parties, the resolution of which will either obviate the necessity of litigation altogether or substantially narrow the field of controversy."

.....

"It is my view that the court should be facultative in the matter of separate decisions on questions arising in the course of the trial. The rules now provide for it. Where the exceptional circumstances exist that make it sensible to do so (and no reason exists to suggest the contrary) the procedure can be beneficial. It can contribute not only to the prompt disposal of crucial issues in the litigation (sometimes resulting in disposal of the whole action and even judgment for a party). It can also contribute to the saving of time and costs where an authoritative decision narrows the issues for trial substantially, excluding the necessity to explore factual matters which, on one determination of the preliminary question, are entirely unnecessary."

11 Kirby P also says that the resolution of a central issue may assist the parties involved in the litigation to reach a settlement.

12 The plaintiffs' case as pleaded spans a period of more than 40 years in respect of overpayments of land tax and council rates. Those claims raise difficult and time consuming issues of evidence including valuation evidence for each of the years in respect of over payments are alleged by the plaintiffs in respect of land tax and rates. Evidence concerning the circumstances in 1959 in which it is alleged that the second defendant the Council of the City of Willoughby took possession of the land will need to be given.

13

The defendants submitted that the determination of the proposed preliminary questions of law will result in the saving of court time and costs of the parties. It was submitted that the limitation questions may take half a day to determine. The plaintiff opposes the determination of preliminary issues as they submit that a determination of the preliminary issues will involve an inquiry into the factual matrix of the case. Further even if part of the claim was found to be statute barred part of the case as pleaded falls within the limitation period. The plaintiffs submitted that it would be prejudicial to both the court and the plaintiff if this evidence has to be put before the court on 2 occasions. The plaintiff submitted that while they do not put in dispute the assumed facts tendered by the first defendant they submit that those facts are incomplete. In relation to the limitation period in relation to the sections of the Local Government Acts, the plaintiff will submit that the notices issued were invalid and the limitation period does not apply.

14 It is my view that even determining the limitation issues and the other preliminary points will take a great deal longer than half a day but I accept that it will be much shorter than running the trial for liability and quantum. The whole case will take some considerable period of court time. Even if the trials of liability and quantum were severed it is my view that both the hearing on liability and on quantum will be classed as long matters.

15 As some of the claims fall within the limitation period the determination of the preliminary questions of law will not obviate the necessity of litigation altogether. However, the results are likely to substantially narrow the field of controversy and save costs and time of the parties in compiling 40 years worth of documents. My reservation in ordering a determination of these preliminary issues is that it will require the court to embark on a detailed analysis of the facts, particularly as to the circumstances by which the second defendant built a public road on part of the premises known as the Hotel Charles in 1959/60.

16 To narrow the facts that need to be traversed in the limitation argument, the parties are to formulate a statement of agreed facts and state of disputed facts that need to be determined. This will give the plaintiffs the chance to add to the facts they consider incomplete. It is my view that on balance it is convenient and in the interest of justice to determine the preliminary questions set out by the first and second defendant.

17 As the plaintiff opposed the orders sought, the appropriate order for costs is that the plaintiff is to pay the defendants' costs.

18 The orders I make are:

(1) Order in accordance with paragraph (1) of the first defendant's notice of motion filed 8 January 1999.

(2) Order in accordance with paragraph (1) of the second defendant's notice of motion filed 14 January 1999.

(3) The parties are to file a statement of agreed facts and statement of facts in dispute within 2 months.

(4) Upon the filing of these documents, the matter is to be placed in the holding list. 1 Day +

(5) The plaintiff is to pay the defendants' costs of the motions.

LAST UPDATED: 24/02/1999