Deputy Commissioner of Taxation v Bonaccorso (No 2)

In May 2016, I dealt with various motions brought by the Deputy Commissioner and Mr Bonaccorso (see Deputy Commissioner of Taxation v Bonaccorso [2016] NSWSC 595). I then ordered:

As to costs I said:

The Deputy Commissioner submitted that the Court should order that:

Mr Bonaccorso's position was shortly put to be:

Under the Uniform Civil Procedure Rules 2005 (NSW), unless the Court orders that costs are payable forthwith, a costs order cannot be recovered until the conclusion of the proceedings (see Rule 42.7). Unless the Court otherwise orders, costs are payable on the ordinary basis, that is as agreed or assessed (see Rule 42.2).

The Deputy Commissioner contended that the Court’s unfettered discretion to make a costs payable forthwith order would be exercised in this case, that being what justice demanded in the circumstances where Mr Bonaccorso had been unsuccessful in having the statement of claim struck out and where he had not only challenged the existence and validity of the Constitution and relevant legislation enacted pursuant to its provision, but even the very existence of the nation.

The case which Mr Bonaccorso himself pressed however, it was argued, had made it apparent that such submissions ought not to have been made. In the result it was concluded in the May judgment that there were, in truth, no constitutional matters in issue in the proceedings (see at [26]). Submissions as to the Deputy Commissioner’s lack of standing to being the proceedings were also there found to be misconceived (see at [41]). There was also no evidentiary basis for submissions as to claimed fraudulent conduct by the Deputy Commissioner (see at [78]).

Further, it was submitted, Mr Bonaccorso's unsubstantiated claims, unreasonable arguments and disruptive conduct during the hearing had been such that the hearing had been substantially disputed.

Section 58 of the Civil Procedure Act 2005 (NSW) requires the Court to act in accordance with the dictates of justice, when exercising its powers. Parties have a duty under s 56(3) to assist the Court to facilitate the overriding purpose specified in s 56(1), namely, “the just, quick and cheap resolution of the real issues in the proceedings”. That aim has to be furthered by reference to the objects specified in s 57(1), namely:

The cumulative effect of Mr Bonaccorso’s approach to the proceedings and the hearing of the motion had been, it was argued, inconsistent with his obligations to an extent which went beyond the latitude the Court would ordinarily allow an unrepresented litigant. The result of his conduct had been not only unnecessary time spent on the proceedings, but unnecessary costs for the Deputy Commissioner.

In the result, it was submitted, it would be concluded that Mr Bonaccorso’s position was so lacking in merit and his arguments so unreasonable, that the orders sought in his motions should not have even been pressed. The appropriate course, in all of those circumstances, would be to require him to pay the Deputy Commissioner’s costs forthwith, on an indemnity basis.

In the May judgment, Mr Bonaccorso was given leave to file an amended defence, that order not being opposed by the Deputy Commissioner, given that his current defence does not comply with the requirements of the Rules. Otherwise he failed on the motions dealt with in the May judgment, other than in relation to the production of one document.

That result reflected the comprehensive failure of Mr Bonaccorso’s case on almost the entirety of what was in issue between the parties on the motions. In those circumstances the usual costs order would be an order in favour of the Deputy Commissioner.

There is much force in the Deputy Commissioner’s submissions as to the nature of the case which Mr Bonaccorso pursued by his various motions and his conduct of the proceedings. Much of what he argued not only lacked merit, but was not, in truth, in issue. Nevertheless there is an aspect of his case which cannot simply be dismissed as unarguable, for reasons discussed in the May judgment (see at [76]). That was why production of the document identified at [85] was required. That, however, was a small part of all that Mr Bonaccorso raised and pursued so unsuccessfully.

In all of the circumstances discussed in the May judgment, I am satisfied that while the discretion to make an indemnity costs order in favour of the Deputy Commissioner should be exercised, they should not be payable forthwith.

Costs orders are not punitive. They are designed to recompense the successful party for costs incurred (see Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534).

The Deputy Commissioner was overwhelmingly successful in resisting the case Mr Bonaccorso pursued, not only inconsistently with his obligations under s 56, but by unreasonably raising and pursuing as he did matters which, it became clear from the case he himself pursued, were not truly in issue. That approach amounted to misconduct of the kind discussed by McHugh J in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, where his Honour observed at [69]:

Justice demands that the entirely unnecessary trouble and expense that the Deputy Commissioner was put to, as a result of Mr Bonaccorso approach, should be reflected in an indemnity costs order.

Given however, what I have said about the aspect of Mr Bonaccorso’s case which cannot be dismissed and that what is in issue is the Deputy Commissioner’s right to pursue the tax in issue, which on Mr Bonaccorso’s case, was calculated by reference to tax which the Deputy Commissioner had recovered from other taxpayers, with the result that it is not a basis on which his subsequent tax liabilities can be calculated, I do not consider that justice permits an order that the costs be payable forthwith.

No basis for any stay of the question of costs pending determination of an appeal was sought to be established by Mr Bonaccorso. That he might wish to pursue an appeal from the May judgment does not provide such a basis. If such an appeal is pursued, it is more efficient if the Court of Appeal is able to deal with both the conclusions then reached and the resulting costs order made.

Accordingly, I order that Mr Bonaccorso must pay the Deputy Commissioner’s costs of the motions dealt with in the May judgment on an indemnity basis.