The Federal Court has dismissed a taxpayer’s application for leave to appeal from the decision in DCT v Hua Wang Bank Berhad (No 3) & Ors [2012] FCA 594 in which the Federal Court refused to grant the taxpayer a stay of enforcement of a summary judgment obtained by the Commissioner against the taxpayer for a debt of over $9.5m. The taxpayer’s application related to the ongoing Wickenby proceedings involving the liability of various companies (including the taxpayer) to CGT on the sale of Australian shares where the companies claimed they were not residents of Australia and therefore were not liable for CGT on the sale.
In the current proceedings, the taxpayer sought to argue that in refusing to grant the stay until its appeal against the assessment that gave rise to the debt had been heard, the judge at first instance had failed to properly take into account the “merits” of the taxpayer’s case (as the court was required to do in such applications). In short, the taxpayer argued that the decision to refuse to grant the stay had been made without proper regard to the fact that it had an arguable case.
However, in dismissing the taxpayer’s application, the Federal Court found that just because the judge at first instance concluded that he was “not able to make any meaningful assessment of the merits of the case (without a full appeal hearing in view of its complexity and the volume of evidence), this did not mean proper consideration had not been given to the “merits” issue. In this regard, the Court noted that on the material before the judge at first instance, it was impossible to determine the merits of the case and, in the circumstances (including the fact that it was an interlocutory hearing), he was not obliged to do so.
(Derrin Brothers Properties Limited v DCT [2013] FCA 571, Federal Court, Katzmann J, 11 June 2013.)
[LTN 112, 13/6/13]