FEDERAL COURT OF AUSTRALIA

Transcription

1 FEDERAL COURT OF AUSTRALIA Deputy Commissioner of Taxation v Pedley [2018] FCA 2014 File number: WAD 639 of 2017 Judge: MCKERRACHER J Date of judgment: 5 September 2018 Date of publication of reasons: Catchwords: 14 December 2018 TAXATION director penalty notice (DPN) issued in respect of outstanding pay as you go withholding (PAYGW) liabilities proceedings commenced claiming recovery of some of the amounts the subject of the DPN directors parallel liabilities PRACTICE AND PROCEDURE application for a permanent stay of the proceeding application filed shortly before the final hearing whether the proceeding constituted an abuse of process where previous proceeding had entered the District Court s Inactive Cases List whether the commencement of the second action was unjust where the decision not to prosecute the previous proceeding is not open to criticism Held: application dismissed Legislation: Taxation Administration Act 1953 (Cth) s (2) Federal Court Rules 2011 (Cth) rr 16.21, District Court Rules 2005 (WA) rr 44C(1), 44E, 44F, 44G(1), Pt IV subdiv 3(6) Cases cited: Brocx v Hughes (2010) 41 WAR 84 Deputy Commissioner of Taxation v Pedley (No 2) [2017] WADC 107 Hughes v Gales (1995) 14 WAR 434 Laws Holdings Pty Ltd v Short (1972) 46 ALJR 563 PT Sandipala Arthaputra v STMicroelectronics Asia Pacific Pte Ltd (2015) 5 SLR 873 Rowe v Stoltze (2013) 45 WAR 116 Smith v Bank of Western Australia Ltd [2010] WASCA 15 UBS AG v Tyne (2018) 92 ALJR 45

2 Date of hearing: 3 September 2018 Registry: Division: National Practice Area: Category: Western Australia General Division Taxation Catchwords Number of paragraphs: 45 Counsel for the Applicant: Solicitor for the Applicant: Counsel for the Respondent: Solicitor for the Respondent: Ms C H Thompson Jackson McDonald Mr J W Fickling Nova Legal

3 ORDERS WAD 639 of 2017 BETWEEN: AND: DEPUTY COMMISSIONER OF TAXATION Applicant MICHAEL PEDLEY Respondent JUDGE: MCKERRACHER J DATE OF ORDER: 5 SEPTEMBER 2018 THE COURT ORDERS THAT: 1. The Respondent s application for a permanent stay be dismissed with costs. 2. The costs of the application be assessed on a party and party basis if not agreed. Note: Entry of orders is dealt with in Rule of the Federal Court Rules 2011.

4 REASONS FOR JUDGMENT MCKERRACHER J: 1 By amended interlocutory application, Mr Pedley seeks a permanent stay of this proceeding brought by the Deputy Commissioner of Taxation. I dismissed the application. My reasons follow. The terms of the interlocutory application are as follows: 1. Pursuant to FCR 2011 r , the Applicant s Statement of Claim at paragraphs 1, 8-17 and 25 be struck out. Particulars (a) (b) The Applicant particularised liabilities for which the Respondent is purportedly liable at paragraph 11 of the Statement of Claim, being PAYGW withholding amounts for the months ended 31 August 2013, 30 September 2013, 31 October 2013 and 30 November The Applicant previously sought recovery in the respect of the exact same liabilities at paragraph 5 of a writ filed in the District Court of Western Australia on 2 April 2014 known as CIV 1006 of 2014 in that Court ( the CIV 1006/2014 Proceedings ). (c) The District Court of Western Australia placed the CIV 1006/2014 Proceedings in the inactive cases list on 2 April 2015 and dismissed the case pursuant to rule 44G of the District Court Rules 2005 (WA) ( District Court Rules ) on 2 October (d) (e) (f) (g) (h) Pursuant to the District Court Rules r. 44E, at all relevant times on and after 2 April 2015, the Applicant was barred from filing any document other than a memorandum of appearance, an entry for trial, a consent order finalising the case, a summons for order or a summons for dismissal. Without limitation to the aforementioned, pursuant to the District Court Rules r. 44E, at all relevant times on and after 2 April 2015, the Applicant was barred by the District Court Rules from bringing an application for summary judgment. On 2 April 2015, the Applicant filed the current proceedings. On 2 April 2015, an officer, Ms Christine Dickson, employed in the office of the Applicant recorded in the Applicant s information management system SIEBEL that there was full awareness of the Applicant in filing the current proceedings, noting on the aforementioned system: A previous summons issed [sic] and a payment arrangment [sic] put in place by another director, however, amounts now remain outstanding. Judgement [sic] was not filed due to the payment arrangment [sic] and previous summons has now expired. On 17 February 2016, the Respondent personally sent notification via to the solicitor whom at that time had carriage of the current proceedings for the Applicant, one Mr Gianni Bei, that the CIV 1006/2014 Proceedings had been dismissed.

5 - 2 - (i) (j) (k) (l) (m) On 16 July 2016, the Applicant sought summary judgment in the current proceedings in the District Court of Western Australia, an application which was subsequently dismissed on 1 December On 12 December 2016, the Applicant appealed the dismissal of his summary judgment application, an appeal which was subsequently dismissed on 17 August On 20 November 2017, the Applicant provided a FOI release to the Respondent which included the matter particularised in paragraph (g) above. By consequence of the Applicant commencing the current proceedings on 2 April 2015 and then bringing an unsuccessful summary judgment application on 16 July 2016 and an appeal against dismissal of his summary judgment application on 12 December 2016, a summary judgment application which would not have been permitted in the CIV 1006/2014 Proceedings anytime on or after 2 April 2015, the Applicant has caused the Respondent prejudice in the form of substantial legal costs and delay of the matter being brought to trial by at least 18 months. Time prejudice can manifest itself in lost memories and lost witnesses: Baker v Wingo 407 US 514 at 521. The Applicant has had his days in Court. The current proceedings are consequently, without limitation: a. Duplicitous; b. An abuse of process; c. Were filed and have been maintained recklessly or otherwise in flagrant disregard of the District Court Rules as to case management; d. Have been the subject of a failed summary judgment application brought by the Applicant and a failed appeal against the failed summary judgment application, again brought by the Applicant, both of which were advanced recklessly or otherwise in flagrant disregard of the District Court Rules as to case management, where an application for summary judgment could not have been brought in the CIV 1006/2014 Proceedings. (n) This Court has the accrued jurisdiction in this matter of the District Court of Western Australia, this matter having been previously transferred from the District Court of Western Australia to the Supreme Court of Western Australia to this Court. 2. Pursuant to FCR 2011 r , there be summary judgment for the Respondent. Particulars (a) (b) The particulars for the First Order Sought are repeated. Reference is made to FCR 2011 r (1)(d) for without limitation, the reason for summary dismissal, being the proceeding is an abuse of the process of the Court, where the Court has the accrued

6 - 3 - jurisdiction of the Supreme Court of Western Australia and the District Court of Western Australia in this matter. 3. The Applicant pay the costs of the Respondent in this application and the whole of these proceedings on an indemnity basis, save for the costs already ordered against the Applicant of the failed appeal against summary judgment. Particulars (a) The particulars for the First Order sought and the Second Order sought are repeated. 4. FCR 2011 Rule 26.01(3) be dispensed with and this interlocutory application be heard as early as convenient so as to save further costs being incurred by the Respondent. 5. Orders 2-3 and 5-14 of the Honourable Court of 9 July 2018 be vacated. 6. The proceedings otherwise be dismissed save as to any other order considered appropriate in the circumstances by the Honourable Court. BACKGROUND 2 The proceeding concerns certain pay as you go (PAYG) amounts of Stellar Corporate Solutions Pty Ltd, being PAYG payment for the months ended 31 August 2013, 30 September 2013, 31 October 2013 and 30 November 2013, in total $203, The Commissioner issued a director penalty notice (DPN) on 21 January 2014 in respect of the outstanding PAYG withholding amounts. The DPN crystallised Stellar s liability into a parallel liability where it purportedly became owed by both Stellar and Mr Pedley who was a director of Stellar for the periods 28 June 2013 to 15 July 2013 and 26 September 2013 to 30 April On 2 April 2014, the Commissioner filed proceedings in the District Court of Western Australia seeking recovery of the PAYG amounts (the 2014 Proceeding). Although the 2014 Proceeding was commenced on 2 April 2014, it was not served until June 2014 as amounts were paid by Stellar to the Commissioner in the period between April and August 2014 pursuant to a payment arrangement. 5 The last payment received from Stellar was in September 2014, but that payment was dishonoured. There were communications between the Commissioner and each of Mr Pedley s co-director, Mr Pedley s co-director s wife (after the co-director was imprisoned) and with Mr Pedley during the period between September 2014 (when the last payment was dishonoured) and early May 2015.

7 - 4-6 In May 2015, these proceedings (the Current Proceeding), which have been transferred from the Supreme Court of Western Australia after being in turn transferred from the District Court, were issued in the District Court. An appearance was filed in the District Court in the Current Proceeding on 21 May Mr Pedley was represented by solicitors. 7 The internal contemporaneous records of the Commissioner indicate that prior to issuing the Current Proceeding, a relevant officer regarded the 2014 Proceeding as having expired. The reason for this view was that on 2 April 2015 the 2014 Proceeding was deemed inactive under the District Court Rules 2005 (WA) (DCR) and entered on that Court s Inactive Cases List. As there had been default under the payment arrangement and there were amounts outstanding under the original debt as well as, at least allegedly, additional new but smaller amounts, the officer concerned caused this separate proceeding to be issued shortly after notification of the entry of the 2014 Proceeding into the Inactive Cases List pursuant to the DCR. 8 Mr Pedley complains about the issuing of the Current Proceeding at a time when the 2014 Proceeding, whilst on the Inactive Cases List, had not yet been discontinued, struck out or otherwise dealt with. 9 The Commissioner applied for summary judgment in the Current Proceeding on 15 July No issue was taken by or for Mr Pedley on that occasion about the existence of the 2014 Proceeding. Mr Pedley is a professional accountant and was professionally advised by solicitors. 10 There was no suggestion at any time on the evidence that the Commissioner intended to pursue both proceedings, which clearly would have been vexatious. At the time of pursuing summary judgment in the Current Proceeding, the 2014 Proceeding had been entirely inactive and had been the subject of no order, no deliberation, no submission, no pleading and no interlocutory application in the District Court. 11 The Commissioner s summary judgment application was dismissed on 1 December 2016 on the basis that Mr Pedley had raised an arguable defence. An appeal pursued by the Commissioner on that summary judgment application was also dismissed on the same basis by Judge Petrusa in the District Court on 17 August 2017 in Deputy Commissioner of Taxation v Pedley (No 2) [2017] WADC 107.

8 12 Shortly after, on 31 August 2017, a Minute of Proposed Consent Orders signed by both parties was endorsed by the District Court remitting the Current Proceeding from the District Court to the Supreme Court. In the Supreme Court, on 5 December 2017, an order was then made transferring the Current Proceeding to this Court because of defences raised for Mr Pedley engaging certain federal laws. 13 The information on which the interlocutory application is based was received by a freedom of information (FOI) request made of the Commissioner some eight months prior to the interlocutory application being filed. 14 On 13 June 2018, after other appearances in the matter, the Current Proceeding was listed for trial. It was set down to commence on September It was not until 6 August 2018 that Mr Pedley s interlocutory application for summary judgment or a permanent stay was filed. There was no satisfactory explanation as to the delay in the filing of the interlocutory application; it could not be heard until almost a month after filing and even then it was listed as an urgent matter and on an expedited basis. The better explanation is that Mr Pedley has not been troubled at any stage, nor has there been any such risk, that the Current Proceeding would be pursued as well as the 2014 Proceeding. THE RELEVANT DISTRICT COURT RULES 15 The background set out above are sufficient to dispose of the exaggerated and inappropriate contentions in 1(m) of the interlocutory application. It is necessary, however, to address other arguments raised for Mr Pedley based on the DCR. Relevantly, the DCR provides: 44A. Cases inactive for 12 months deemed inactive If no document is filed in a case for 12 months by any party to the case, the case is taken to be inactive unless the Court orders otherwise. [Rule 44A inserted in Gazette 17 Jun 2011 p ] 44B. Registrar may issue summons to show cause (1) A registrar may at any time summons the parties to a case to attend a hearing before a registrar to show cause why the case should not be put on the Inactive Cases List. (2) The hearing date for the summons must be at least 7 days after the date on which it is issued. (3) The issue of the summons does not prevent any party to the case from filing any document in the case. (4) At the hearing the registrar may order that the case be put on the Inactive Cases List if not satisfied that the case is being conducted in

9 - 6 - a timely way, having regard to the requirements of these rules and the circumstances of the case. (5) An order may be made under subrule (4) in the absence of any party. [Rule 44B inserted in Gazette 17 Jun 2011 p ] 44C. Springing order that case be put on Inactive Cases List (1) A judge or registrar making an interlocutory order or case management direction in a case may include an order that unless the interlocutory order or direction is complied with by a date stated in the order or direction, the case is taken to be inactive. (2) Unless countermanded by a judge or registrar before it has effect, the order has effect according to its terms. [Rule 44C inserted in Gazette 17 Jun 2011 p ] 44D. Parties to be notified of case being on Inactive Cases List and to advise clients (1) When a case is taken to be inactive under rule 44 or 44A, or an order is made under rule 44B(4), or an order made under rule 44C(1) takes effect, the Principal Registrar must (a) (b) put the case on the Inactive Cases List; and give all parties to the case written notice that the case is on the Inactive Cases List and of the effect of rules 44E and 44G. (2) If under subrule (1) a practitioner for a party is notified, the practitioner must, as soon as practicable, notify the party of (a) the fact that the case is on the Inactive Cases List and why; and (b) the effect of rules 44E and 44G. [Rule 44D inserted in Gazette 17 Jun 2011 p ; amended in Gazette 26 Jul 2013 p ] 44E. Consequences of case being on Inactive Cases List If a case is on the Inactive Cases List, only these documents can be filed in the case (aa) (a) (b) (c) (d) (e) a Form 1AA (Memorandum of appearance); a Form 1 (Entry for trial); a consent order finalising the case; a summons for an order under rule 44F(3); a summons for an order dismissing the case for want of prosecution; any document that relates to a document listed above. [Rule 44E inserted in Gazette 17 Jun 2011 p. 2161; amended in Gazette 26

10 - 7 - Jul 2013 p ] 44F. Removing cases from Inactive Cases List (1) If a Form 1 (Entry for trial), or a consent order finalising the case, is filed in a case on the Inactive Cases List, the case is taken to have been taken off the list. (2) Any party to a case on the Inactive Cases List may apply to the Court for an order that the case be taken off the Inactive Cases List. (3) The Court may order a case be taken off the Inactive Cases List if satisfied the case will be conducted in a timely way or for any other good reason. (4) An order that a case be taken off the Inactive Cases List may include any conditions necessary to ensure the case is conducted in a timely way. [Rule 44F inserted in Gazette 17 Jun 2011 p ] 44G. Certain inactive cases taken to have been dismissed (1) A case that is on the Inactive Cases List for 6 continuous months is taken to have been dismissed for want of prosecution. (2) If a case is dismissed under subrule (1), the Principal Registrar must give all parties to the case written notice of the fact. (3) If under subrule (2) a practitioner for a party is notified, the practitioner must, as soon as practicable, send a copy of the notice to the party. (4) If a case is dismissed under subrule (1), any party to it may apply to the Court for, and the Court may make, any order needed as a consequence of the dismissal. (5) The Court may, in exceptional circumstances and on such terms as it thinks just, set aside the dismissal of a case under subrule (1). (6) For the purposes of subrule (5) it does not matter that the case was dismissed before the commencement of that subrule. MR PEDLEY S ARGUMENTS [Rule 44G inserted in Gazette 17 Jun 2011 p ; amended in Gazette 31 Dec 2013 p ] 16 Mr Pedley says the District Court order made under r 44G(1) of the DCR on 2 April 2015 (when the 2014 Proceeding was taken to be inactive) was a springing order and relies on Rowe v Stoltze (2013) 45 WAR 116 concerning the effect of a springing order. This is misconceived. Any springing order arises only under r 44C(1). That did not occur here. 17 He says the filing of the Current Proceeding was an abuse of process as it was a breach of the DCR, being a breach of the springing order. He says it is to be inferred by the Court that the

11 - 8 - breach of the DCR was contumacious. Mr Pedley says it is for the Commissioner to establish that it was not. Mr Pedley is not required to prove intent (as would be the case if an action for contempt was being advanced, and intent need not and is not alleged ). This principle, he says, was outlined in the Western Australia Court of Appeal by Buss JA in Brocx v Hughes (2010) 41 WAR Mr Pedley says the Commissioner has not put forward any evidence justifying the breach of the DCR. The Commissioner has not discharged the inference and as such Mr Pedley says an abuse of process has been made out. Further, relying on the High Court decision of Laws Holdings Pty Ltd v Short (1972) 46 ALJR 563, Mr Pedley submits an abuse of process giving rise to issue estoppel may be raised as an issue as late as trial. 19 Mr Pedley refers to the following passages from Rowe (at [45] and [53]-[55]): 45 [The DCR] regulate the conduct of proceedings in the court by providing a facility by which, after due notice to the parties, litigation which has remained inactive for a lengthy period of time or has been pursued in an unduly tardy fashion may be brought to an end. As the commissioner observed, the dismissal of an action under r 44G(1) does not bar a fresh action for the same relief: see Hughes v Gales (1995) 14 WAR 434 at 438. No question of res judicata or issue estoppel arises as there has been no determination on the merits. Nor will the fact that the action was dismissed under r 44G(1) necessarily mean that any fresh action will constitute an abuse of process; that will depend upon the particular circumstances: see Brocx v Hughes (2010) 41 WAR In other words, a case will only be put on the Inactive Cases List where the case has not been prosecuted with reasonable expedition. 54 Moreover, r 44G(1) only takes effect after a further six months elapses following express notice to the parties that the action will be dismissed if nothing is done to remove it from the Inactive Cases List within that time. In that six-month period any party can apply to have it removed and the court may remove it if satisfied that the case will thenceforth be conducted in a timely way or for other good reason: r 44F(3). 55 A plaintiff who does not seek to have the case removed or, having applied, is unable to persuade the court that there is any good reason why it should be removed, cannot be said to have been deprived of a reasonable opportunity to have their case heard. A failure to have an action removed is consistent only with a failure on the part of the plaintiff to evince any real interest or will to pursue the action in an appropriate manner. In those circumstances there is no reason why in the administration of its affairs the court should devote scarce resources to keep the action afloat. The contention that Pt 4 Div 3(6), or r 44G(1) in particular, deprives a plaintiff of a reasonable opportunity to have their case heard cannot be sustained.

12 (Emphasis added in submissions.) Mr Pedley also relies on the following passages in Brocx (at [97]-[99]): 97 Where a party demonstrates a disregard for the orders or procedures of the court and as a result their claim is dismissed, their right again to invoke the jurisdiction in respect of that same claim cannot be unlimited if the public interest in the efficient use of court resources and the rights of other litigants are to be given due recognition. It cannot be the case that so long as the limitation period has not expired a party can ignore the rules and orders of the court, secure in the knowledge that if the worst happens and the action is struck out they can simply start again. It would bring the administration of justice into disrepute, and be productive of serious and unjustified trouble and harassment to the defendant, if a party whose action had been dismissed by reason of their contumacious conduct could simply institute and proceed with a fresh action and, until the limitation period ran out, could continue to repeat that if and when the same fate befell them. To the extent that statements in the older cases, including Birkett v James and Tolley v Morris, may be understood to suggest that such a party is entitled as of right to prosecute a fresh action, I would not follow them. The High Court pointed out in Batistatos: The right of the plaintiff with a common law claim to institute an action is not at large. It is subject to the operation of the whole of the applicable procedural and substantive law administered by the court, whose processes are enlivened in the particular circumstances. This includes the principles respecting abuse of process. 98 Each case must, of course, depend upon its own circumstances. But, in my view, where an action has been dismissed by reason of the failure of a party to comply with a springing order in circumstances where that party s conduct was contumacious, a second action by that party to enforce the same claim will generally be an abuse of process. I do not, however, consider that the fact an action was dismissed for failure to comply with a springing order establishes, of itself, that the conduct of the party in default was contumacious... In each case, the court found that the conduct was contumacious in the absence of an explanation which showed that it was not. (I think that for all practical purposes contumelious and contumacious have generally been used interchangeably in the cases as denoting a wilful and obstinate resistance or disobedience to authority). As Heydon JA (as his Honour then was) pointed out in Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274 at [54]: A satisfactory explanation on affidavit might negate an inference that the plaintiff s defaults were not [sic] intentional or contumelious. But the absence of any explanation permits that inference to be drawn In the absence of a credible and satisfactory explanation by the appellant as to how the default came about, the court is entitled to infer that the conduct concerned was contumacious. (Emphasis added in submissions.) 21 Mr Pedley says the Commissioner filed the Current Proceeding when the only permissible course of action was to respond to the Springing Order, to apply for the 2014 Proceeding to be removed from the Inactive Case List under r 44F of the DCR. Then, in seeking summary

13 judgment, the Commissioner failed to inform the Court, either on application, or on the de novo appeal of that application, that the Commissioner had brought the 2014 Proceeding that was dismissed. This was a patent reason why summary judgment was not appropriate. Mr Pedley submits the Commissioner has at no time proffered any explanation whatsoever as to why the procedure in r 44F was not followed. ANALYSIS 22 Since the dismissing the application, judgment has been delivered by the High Court in which repeated claims were held by the majority (4:3) to be an abuse of process: UBS AG v Tyne (2018) 92 ALJR 45. The analysis turned very much on the particular facts of that litigation which were very different from the situation now under consideration. 23 In UBS AG v Tyne, Kiefel CJ, Bell and Keane JJ observed (at [45], [52] and [55]): [45] The courts must be astute to protect litigants and the system of justice itself against abuse of process. It is to hark back to a time before this Court s decisions in Aon and Tomlinson and the enactment of s 37M of the FCA to expect that the courts will indulge parties who engage in tactical manoeuvring that impedes the just, quick and efficient resolution of litigation. To insist, for example, on inexcusable delay as a precondition of the exercise of the power to stay proceedings as an abuse of process is to fail to appreciate that any substantial delay is apt to occasion an increase in the cost of justice and a decrease in the quality of justice. And other litigants are left in the queue awaiting justice. Further, there is no reason why the courts should tolerate attempts to manipulate other parties and the courts themselves by the deployment, by a single directing mind and will, of different legal entities under common control for such a purpose. The concern is as to whether the processes of the court are being abused. Given that this is the central concern, the circumstance that the abuse is effected by the use of multiple entities orchestrated by a single mind and will is no reason to tolerate it. [52] Where discontinuance of proceedings brings the proceedings to an end, the later commencement of fresh proceedings may work no unfairness to the defendant. Here, the discontinuance of the Trust s claim did not bring the SCNSW proceedings to an end. Those proceedings were prosecuted to a final determination on the issues before the Court by a plaintiff controlled by Mr Tyne to recover the loss that the Trust claims as its loss in these proceedings. Mr Tyne provided an explanation for the decision not to maintain the Trust s claim in the SCNSW proceedings. The primary judge considered that it was not a proper explanation. To explain that finding it is necessary to refer to Mr Tyne s affidavit. [55] Mr Tyne perceived a forensic advantage to the Tyne-related parties in holding back the Trust s claim. This was a decision that, were Telesto s claim to be stayed, would lead to duplication of resources and increased cost, and would delay the resolution of the dispute between the Tyne-related parties and UBS. Hiving off the Trust s claim, with a view to bringing it in another court after the determination

14 of the SCNSW proceedings, was the antithesis of the discharge of the duty imposed on parties to civil litigation in the Supreme Court of New South Wales and in the Federal Court. That duty is to conduct the proceedings in a way that is consistent with the overriding/overarching purpose. (Citations omitted.) 24 In a judgment agreeing with the joint reasons of Kiefel CJ, Bell and Keane JJ, Gageler J noted (at [78] and [81]): [78] The hearing of the appeal to this Court was hijacked by a contention put forcefully at the forefront of the submissions made orally on behalf of Mr Tyne that discontinuance of the trustee s claims in the SCNSW proceedings constituted no bar to the trustee bringing the same claims in other proceedings. The contention was plainly correct, but beside the point. The primary judge s conclusion that bringing the Trust s claim against UBS in the Federal Court proceedings constituted an abuse of process was based neither in whole nor in part on the consideration that the trustee s claims had been brought in the SCNSW proceedings and had been discontinued. The conclusion was based on the very different assessment that the trustee s claims should have been pursued in the SCNSW proceedings, to which Telesto remained a party, if they were to be pursued at all. [81] What was not reasonable having regard to the totality of the private and public interests involved was for Mr Tyne to take it upon himself to hold the claims of the Trust in abeyance with a view to pursuing them in separate proceedings if it turned out that Telesto s claims were for some reason not successful. 25 Mr Pedley s application was brought pursuant to r of the Federal Court Rules 2011 (Cth). Whether it is still pursued pursuant to r or to r of the Rules is unclear, but it is clear that the ground of the application is that there was an abuse of process by the Commissioner. 26 I accept the Commissioner s submission that the rules contained in Div 3(6) of Pt 4 of the DCR, including r 44G(1), are properly to be categorised as rules regulating or prescribing matters of practice and procedure. A hardly contentious submission given Pt 4 of the DCR is entitled Case Management. They do not alter the substantive rights of the parties. That is evident from the analysis in Rowe (at [45]), being a passage on which Mr Pedley relies. 27 Importantly, the dismissal of an action under r 44G(1) for want of prosecution does not bar a fresh action for the same relief: Hughes v Gales (1995) 14 WAR 434 per Malcolm CJ (at 438, with whom Kennedy and Pidgeon JJ agreed). The commencement of a second action based upon the same cause of action does not of itself constitute an abuse of process: Hughes (at ). As Buss JA observed (at [16]) in Brocx, whether the second action constitutes an abuse of process will depend on the particular facts and circumstances of the case.

15 Clearly, there may be circumstances where the commencement of a second action would be an abuse of process. But it is not invariably so. Each case needs to be examined on its own facts. In Brocx, Buss JA stated (at [15]): In my opinion, the Supreme Court s power to prevent an abuse of process may be exercised in these circumstances if, relevantly, the commencement and prosecution of the second action would cause or be likely to cause: (a) (b) improper vexation or oppression to the defendant; more particularly, if the second action would be seriously and unfairly burdensome, prejudicial or damaging to the defendant; or the administration of justice to be brought into disrepute. 29 The central issue will always be whether to allow the case to proceed would inflict unnecessary injustice on the respondent. That would bring the system of justice into disrepute. In Smith v Bank of Western Australia Ltd [2010] WASCA 15 Pullin JA (with whom Owen JA and Newnes JA agreed) said (at [18]): In Monaveen Pty Ltd v ABB Service Pty Ltd [2007] WASCA 273 at [66] I said in referring to the Hancock and Batistatos cases, that it may be necessary to reconsider the principles set out in Hancock s case insofar as Steytler P and Owen JA said that it is relevant to take into account whether any default by a plaintiff has been intentional and contumelious. I referred to Gleeson CJ, Gummow, Hayne and Crennan JJ s reasons at [70] and to those of Kirby J at [138] in Batistatos case. In my view, Hancock s case and Batistatos case can be reconciled in this way. The plaintiff s conduct, particularly if it has been of an intentional and contumelious kind, will be a relevant point for consideration, but Batistatos makes it clear that it is not a condition which must be shown before proceedings are struck out or stayed. Whether the plaintiff has been guilty of misconduct or not, the critical issue is whether to allow the plaintiff s case to proceed would inflict unnecessary injustice on the defendant. It is likely that in many cases that intentional or contumelious disobedience to orders of the court will inflict unnecessary injustice on the defendant. (Emphasised added.) 30 I turn then to the Current Proceeding. 31 First and foremost, no order of any description has been disobeyed by the Commissioner at any time. There is therefore no evidence of any breach of any order by the Commissioner in the 2014 Proceeding. Indeed, there is no evidence that any orders were made in the 2014 Proceeding. If it is Mr Pedley s submission and I am not certain that it is, that a failure to file a document in accordance with r 44E of the DCR in the 2014 Proceeding is of itself a breach or an abuse, no authority is advanced for that proposition. Under the DCR, the consequences for failing to file a document pursuant to r 44E of the DCR, are simply those prescribed in r 44G(1) of the DCR.

16 Secondly, it is quite clear on any account of the evidence (Mr Pedley himself has tendered the internal records from the Commissioner) that the decision not to prosecute the 2014 Proceeding was directly attributable to the existence of a payment arrangement between Stellar and the Commissioner and the Commissioner s agreement to not pursue the claim whilst that payment arrangement remained on foot. It can hardly be argued that the Commissioner should be criticised for not pursuing and exposing Stellar and its directors to costs and other stresses of litigation in circumstances where there was a successful instalment arrangement on foot. 33 As noted above, the 2014 Proceeding remained entirely dormant. For that reason the 2014 Proceeding was, quite properly, subject to the processes of the District Court Inactive Cases List. However, in the meantime, Stellar, Mr Pedley s co-director and Mr Pedley himself, were gaining the benefit of the payment arrangement while no other legal costs were being incurred. No pleadings were filed, no determination of any substantive right, or indeed any right whatsoever, occurred because no party sought any such determination. There has been no relevant limitation issue arising and, indeed, the claim remains within its limitation period. This is a simple case, essentially based on documents arising from a statutory debt, which occasions limited oral evidence. As appears to be clear, much of the evidence has already been filed by way of affidavits filed for each party in the District Court. There is no suggestion that any of those witnesses is elderly or apparently infirm such that any injustice is inflicted on Mr Pedley by reason of compromised testimony due to lapse of time. 34 In the circumstances of this case, it appears that the Commissioner could either have continued with the 2014 Proceeding and amended it or issued fresh proceedings. It was open, of course, for the Commissioner to seek to enliven the 2014 Proceeding, but there is no requirement for that course to be followed. In the circumstances of this case the view was taken, at least apparently on sound procedural and costs reasons, that a second writ would be preferable. Although the Commissioner has not caused an affidavit to be filed to explain why that course was taken, I am not satisfied in the circumstances of this case that it was necessary for him to do so. The evidence of the internal records obtained months ago by Mr Pedley on a FOI request, tendered by Mr Pedley himself, shows that the officer making the decision regarded the 2014 Proceeding as dormant and noted that there were additional amounts to claim. The Current Proceeding was regarded as being the preferable or appropriate course to take to recover those amounts. It is difficult to see that this decision is wrong in any sense in the circumstances of this case, let alone an abuse of process. Given the

17 differences in the claims in the 2014 Proceeding and the Current Proceeding in light of the payments made under the payment arrangement, enlivening the 2014 Proceeding would have required an application to amend with additional costs and further delay. 35 Further, several of the claims in the Current Proceeding are new causes of action which arose after the commencement of the 2014 Proceeding. It is true, as Mr Pedley argues, that these are smaller claims, but the size of the claim is hardly the test. Also, there would be further amendments required because certain amounts particularised in the statement of claim in the 2014 Proceeding are no longer claimed. Having regard to the fact that the 2014 Proceeding was in the Inactive Cases List, the pursuit of that action would have required the Commissioner to file a summons for an order under r 44F of the DCR, serve it personally, seek that Mr Pedley enter an appearance and then proceed to a directions hearing on that summons, in turn, giving rise to further costs. Rule 44E of the DCR does not permit the applicant to unilaterally file a notice of discontinuance when the action is on the Inactive Cases List. There is no reason to think that the Commissioner would not have proceeded with a summary judgment application on the 2014 Proceeding, given that he did on the Current Proceeding. That cost was also saved by pursuing the Current Proceeding. 36 The reason the case was in abeyance, as expressly recorded by Judge Petrusa in Pedley (No 2) (at [7]), was that there had been ongoing attempts to settle the dispute. The internal documents from the Commissioner also make it clear that at all relevant times Mr Pedley was entirely aware of that reason. 37 In the two summary judgment applications in the District Court (at first instance and on appeal), the Commissioner sought to argue, but was unsuccessful, that Mr Pedley could not succeed in establishing that he had taken reasonable steps as director during the relevant period for the purposes of s (2) of the Taxation Administration Act 1953 (Cth). It was not held on either occasion that he had, simply that that was an arguable issue which should go to trial. 38 I do not accept there has been a disregard of a springing order, let alone that the Commissioner s conduct in any way constitutes contumacious conduct. There was no springing order at all. 39 It is clear that Mr Pedley was made aware of the status of the 2014 Proceeding in April 2015 with the notifications from the District Court. I accept that Mr Pedley is stressed by this

18 litigation as he deposes. It appears that he thought he may have completely succeeded when the Commissioner s summary judgment application was dismissed, as was the Commissioner s appeal from that dismissal. The stress and cost of litigation is regretful, but that does not mean the Commissioner is not entitled to pursue the claim. 40 There has been an unnecessary amount of heat in this interlocutory application. A suggestion that the Commissioner acted duplicitously has been withdrawn. There was no foundation for such a suggestion, even though counsel attempted to explain it on the basis that he meant only that the filing of two proceedings was a duplication: see, for example, PT Sandipala Arthaputra v STMicroelectronics Asia Pacific Pte Ltd (2015) 5 SLR 873 per George Wei J (at [69], [112]-[113] and [142]). Reasonably read, the reference to duplicitous in the context of asserting contumacious conduct and abuse of process by the Commissioner certainly did not convey merely duplicated filing. However, that submission and ground was, as I have noted, withdrawn. 41 There was no proper explanation for the delay in bringing this interlocutory application. The existence of the 2014 Proceeding has been known to Mr Pedley for three or more years. The documents were produced by the Australian Taxation Office under a FOI request in November There was no explanation for waiting a further eight months and until the eve of the trial to bring the interlocutory application. The appropriate time to raise any complaint about proceeding with the Current Proceeding, rather than the 2014 Proceeding, was in 2016 at the time of the summary judgment hearing. 42 That an abuse of process giving rise to issue estoppel may be raised as late as trial is irrelevant to this case. There is clearly no issue estoppel. In any event, the fact that in certain circumstances such an issue may be raised as late as trial, does not explain in this case why there was such a delay in raising the issue after the FOI material became available in November 2017 and in circumstances where the Commissioner would be taken at all times to have known of the existence of the 2014 Proceeding. Not only did the Commissioner know, but Mr Pedley was aware of the existence of the 2014 Proceeding well before the FOI material was obtained. CONCLUSION 43 It is for these reasons that I dismissed Mr Pedley s interlocutory application to permanently stay these proceedings on 5 September 2018.

19 The Commissioner sought costs on an indemnity basis and has even invited the Court to consider an order that the practitioners pay the costs themselves. Neither submission was unreasonable. Although such orders would not be entirely out of place, as a matter of discretion, and in a desire to take some of the heat out of this dispute, I erred on the conservative side with costs following the event on a party and party basis. Although the criticisms were unfounded and the language unfortunate, I consider the circumstances do not warrant the exceptional costs orders sought. 45 I note for completeness that the hearing of this interlocutory application was listed for hearing on 3 September 2018 on an expedited basis in light of the trial listed for September I delivered judgment two days later but advised the parties I would publish written reasons at the same time as publishing reasons in the substantive application. On 13 September 2018, shortly prior to reserving my decision on the substantive application, counsel for Mr Pedley sought orders to the effect that Mr Pedley s right to seek to appeal this decision on the interlocutory application be preserved until the publication of written reasons. Therefore, on 13 September 2018, the following order was made: 1. The time within which to seek leave to appeal from the Court s decision refusing the stay with costs, alternatively, if leave is not needed to appeal from that decision, then time within which to appeal be extended until a period from 14 days after the Court s publication of reasons. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher. Associate: Dated: 14 December 2018