Commissioner of Taxation v Bosanac (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 31 January 2022
• Neutral Citation: [2022] FCAFC 5
• Date: 31 January 2022
• Court: Full Federal Court (Australia)

Federal Court of Australia

Commissioner of Taxation v Bosanac (No 2) [2022] FCAFC 5

Appeal from:	Commissioner of Taxation v Bosanac (No 7) [2021] FCA 249
File number(s):	WAD 82 of 2021
Judgment of:	KENNY, DAVIES AND THAWLEY JJ
Date of judgment:	31 January 2022
Catchwords:	COSTS – where appeal allowed – whether Court should depart from usual order that costs follow the event
Legislation:	Federal Court of Australia Act 1976 (Cth), s 43 Federal Court Rules 2011 (Cth), r 40.03
Cases cited:	Australian Postal Corporation v Botany Municipal Council [1989] FCA 747; 69 LGRA 86 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 Commissioner of Taxation v AusNet Transmission Group Pty Ltd (No 2) [2015] FCAFC 124 Commissioner of Taxation v Bosanac [2021] FCAFC 158 Conder v Silkbard Pty Ltd [1999] NSWCA 459 Firebird Global Master Fund II Ltd v Republic of Nauru (No 2) [2015] HCA 53; 90 ALJR 270; 327 ALR 192 Hughes v Western Australian Cricket Association (Inc) [1986] FCA 511; (1986) ATPR 40-748 Malick v Lloyd [1913] HCA 37; 16 CLR 483 National Australia Bank Ltd v KDS Construction Services Pty Ltd [1987] HCA 65; 163 CLR 668 Ruddock v Vadarlis (No 2) [2001] FCA 1865; 115 FCR 229
Division:	General DivisionGeneral Division
Registry:	Western AustraliaVictoria
National Practice Area:	Taxation
Number of paragraphs:	21
Date of last submissions:	9 September 2021
Counsel for the Appellant:	Mr A J Musikanth SC with Mr J Slack-Smith
Solicitor for the Appellant:	Australian Government Solicitor
Solicitor for the First Respondent:	Mr R Blow of Cove Legal
Counsel for the Second Respondent:	Mr J Hynes with Mr T L Bagley and Mr B A O’Connor (all pro bono)

ORDERS

		WAD 82 of 2021
BETWEEN:	COMMISSIONER OF TAXATION Appellant
AND:	VLADO BOSANAC First Respondent ; BERNADETTE BOSANAC Second Respondent

order made by:	KENNY, DAVIES AND THAWLEY JJ
DATE OF ORDER:	31 January 2022

THE COURT ORDERS THAT:

1. The second respondent pay:

   1. the appellant’s costs of the appeal, as assessed or agreed; and

   2. the appellant’s costs of the proceedings below, as assessed or agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1. On 31 August 2021, the Court published its reasons for judgment in this appeal and made orders, including that the appeal be allowed: Commissioner of Taxation v Bosanac [2021] FCAFC 158 (‘Reasons’). To afford the parties an opportunity to address the disposition of costs, orders were made for them to file and serve written submissions, which they have done in conformity with those orders. These reasons concern the costs issues raised in those submissions.

The Commissioner’s submissions

2. The appellant Commissioner contended that the second respondent should pay the Commissioner’s costs of the appeal, in conformity with the general rule that costs follow the event. The Commissioner submitted that the only substantive issue in the appeal was the one on which the Commissioner succeeded: namely, whether the first respondent, Mr Bosanac, held an interest in the respondents’ former matrimonial home (‘the Dalkeith property’). The Commissioner argued that:

While the first ground of appeal was effectively not accepted … the Court appeared to accept that the “presumption” of advancement was capable of being rebutted by the facts underpinning the Cummins inference … This conclusion was consistent with the Commissioner’s submission made in respect of his second ground of appeal … which, in turn, relied to a significant extent upon the submissions made in relation to his first ground.

3. The Commissioner submitted that the question of the costs of the proceeding below was not straightforward, first, because there had been numerous orders that costs be reserved; and, secondly, because there was an issue about the extent to which Mr Bosanac should also pay the costs of the proceeding below. The Commissioner noted in this regard that:

It was only in April 2020 that Mr Bosanac advised the Court below that he would not be filing responsive evidence, and on 26 June 2020 that he would not be filing any submissions.

4. The Commissioner submitted that, in the circumstances, there were three possibilities respecting the costs of the proceeding at first instance. These were described in [8] of the Commissioner’s submissions as follows:

8.1. [First alternative]

8.1.1. The first and second respondents jointly and severally pay the appellant’s costs of the proceeding below, except:

(a) in relation to the appellant’s costs after 26 June 2020, only the second respondent shall pay those costs; and

(b) in relation to the appellant’s applications for leave to amend made on 12 August 2016 and 8 July 2020, each party shall bear his or her own costs.

8.1.2 All reserved costs be remitted to the primary judge.

8.2. [Second alternative] The second respondent pay the appellant’s costs of the proceeding below (with the exception of the costs referred to in paragraph 8.1.1(b) above, in respect of which the appellant and second respondent shall bear their own costs), and the question of costs as between the first respondent and the appellant, and all reserved costs, be remitted to the primary judge.

8.3. [Third alternative] The costs of the proceeding below be remitted to the primary judge.

The first respondent’s submissions

5. The first respondent submitted that he did not take any active part in the hearing of the appeal, and that there was no basis for an order against him, noting that he had informed that Court that he would appear but not otherwise participate.

6. In relation to the proceeding below, the first respondent noted that he had not filed any evidence or submissions concerning the declaration sought by the Commissioner, and had notified the primary judge that he would “merely be appearing and would otherwise be bound by the Court’s orders”. While the first respondent acknowledged that he, with the second respondent, had opposed the Commissioner’s application for leave to amend his originating application “to add the request for the property declaration back in 2016”, he submitted that, in the context of the actual hearings of the application, these costs were minimal and would “be naturally and appropriately addressed within those underlying proceedings (WAD 291 of 2015)”. As an alternative, the first respondent added:

To the extent that the position of the First Respondent has any relevance to the underlying procedural steps that pre-date the hearing of the application before the primary judge, it is respectfully submitted that such costs should be a matter for determination by the primary judge within the underlying proceedings (WAD 291/2015).

The second respondent’s submissions

7. The second respondent’s primary contention was that the appellant should pay 50% of the second respondent’s costs of the appeal and that the order as to costs made by the primary judge should not be disturbed. In the alternative, the second respondent contended that there should be...