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The Federal Court (Logan J) has refused the Commissioner leave to file an amended appeal statement in which it was alleged that an agreement entered into by the taxpayer was a sham. This followed an express statement made by the Commissioner's counsel at an earlier directions hearing that the Commissioner would not be alleging that the document was a sham.

Leave to file the amended appeal statement was belatedly sought by the Commissioner after the statement had been filed in Court contrary to the Federal Court's rules.

His Honour said, at para 53:

"Accepting, as I do, that an appeal statement is not a pleading document, its purpose nonetheless is to serve the ends of justice by ensuring procedural fairness. At this late stage of a proceeding, and having regard to sentiments evident in [the High Court decision of Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 83 ALJR 951], the purpose of Tax List directions and of case management generally, it seems to me that it would be procedurally unfair to permit the Commissioner to rely upon the appeal statement in its amended form. Especially that is so in light of the deliberate statement made in open court six months ago by reference to which the appellant taxpayer has cast its case."

His Honour also noted that shortly before the directions hearing, the Commissioner filed a document entitled Notice of Removal of Solicitor, by which he gave notice that he was no longer represented by the Australian Government Solicitor, but appeared by himself. His Honour commented, at paras 58-59:

"In modern times the Bar Rules have been relaxed in a way which permits the direct briefing by a lay client of a member of the Bar. That practice is fraught, though, with the potential of not having a necessary distance that a responsible instructing solicitor introduces into the conduct of litigation...I cannot help but reflect on whether or not the late filing of a document without leave, which radically changes the complexion of the basis upon which the Commissioner seeks to defend an assessment, was related in some way to the absence of a solicitor on the record. That is not in any way to deprecate the conduct of [the Commissioner's] counsel, but merely an observation in passing as to the hazards which are entailed when persons choose to act for themselves."

In refusing leave, his Honour ordered that the "purported amended appeal statement" be removed from the court file: Pacific Exchange Corporation Pty Ltd v FCT [2009] FCA 1155 (Federal Court, Logan J, 28 September 2009).

For a copy of the decision. go here


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