Alyssa Treasury Services Ltd v Deputy Commissioner of Taxation

The proceedings below 3 The Commissioner filed a motion on 21 July 2009, returnable on 11 August, before his Honour. The motion sought orders that no appeal statement be filed by the Commissioner and that the application be dismissed with Mr Petroulias paying the respondent's costs. The motion was stamped "for directions only", as is the Court's practice when it is intended not to hear the motion. Mr Petroulias received the document and dealt with the matter while in custody in Goulburn prison. Arrangements were made for him to come to Sydney for the hearing. The reason why the application was said to be incompetent was that at the time of its being filed Alyssa had been deregistered in New Zealand and, thus, had no corporate existence for the purposes of Australian law. 4 There was no evidence of the law of New Zealand: see s 601AD(1) of the Corporations Act 2001 (Cth). Under Australian law, once a corporation has been reinstated to the register, it is taken to have continued in existence as if it had not been deregistered with all the incidences that flow from that, as provided in s 601AH(5) of the Corporations Act. Thus, the mere fact that Alyssa had been deregistered, a matter about which Mr Petroulias was aware prior to the hearing on 11 August, was not an insuperable barrier to the proceedings being given retrospective validity so far as they concerned Alyssa's participation, were it restored to the New Zealand companies register.

The Application 5 The test for the grant of leave to appeal is that the applicant must show, first, that the decision in question is attended with sufficient doubt to warrant the grant of leave and, secondly, that substantial injustice would flow if leave were refused: Bienstein v Bienstein (2003) 195 ALR 225 at 231 [29] per McHugh, Kirby and Callinan JJ. 6 Subsequent to his Honour's decision, Alyssa and Mr Petroulias filed proceedings on 28 August 2009 in the Administrative Appeals Tribunal seeking to challenge the same decision as had been challenged in the application that his Honour dismissed. This occurred after some discussion in the course of argument before his Honour. He had pointed out that they could bring proceedings in the tribunal and Alyssa could apply to it for an extension of time. Indeed, I have been informed by the parties that this week Deputy President Tamberlin made a decision in the tribunal extending the time for Alyssa to have made the application. The Commissioner has undertaken to the Court not to take any point that the application filed in the tribunal was not competent because Alyssa had been de-registered at that time. 7 Under s 14ZZ of the Taxation Administration Act 1953 (Cth) a person who is dissatisfied with the Commissioner's objection decision is given a right to choose whether to apply to the tribunal for a review of the decision or to appeal to this Court against the decision. I am satisfied that the decision to appeal to this Court against the objection decision was a considered one. Alyssa and Mr Petroulias deliberately availed themselves of a right that the Parliament granted them to choose the body, namely, the tribunal or the Court, which would exercise the power to determine whether or not the decision complained of would stand. There are different procedures and consequences attaching to the two methods of challenging reviewable objection decisions. 8 In effect, the tribunal makes a decision that is the correct and preferable decision on all the evidence before it and from that there is a right to appeal to the Court on a question of law. An appeal to the Court can involve, among other things, a determination that the decision was not taken validly, in the sense that the taxpayer is able to demonstrate some flaws in the decision making process that must result in the decision being set aside and remitted to the Commissioner for assessment in accordance with law. Once such a further assessment by the Commissioner is made, the taxpayer then obtains the same rights to challenge the new decision as I have referred to under s 14ZZ. If the taxpayer then chooses to apply to the tribunal for a review of the decision, the tribunal makes the correct and preferable decision on all of the evidence, including reassessing the taxpayer's liability to taxation informed by whatever errors of law or fatal flaws may have attended the earlier decision-making process.

The parties' submissions 9 In the course of argument, Mr Petroulias has contended that Alyssa and he wish to attack the decision-making process of the Commissioner on what appear to be discrete questions of law that, if correct, would require the assessment to be set aside and the Commissioner to reassess. The Commissioner, on the other hand, argues that even if there were errors of law in the way in which his Honour made the orders below no injustice will be suffered because Alyssa and Mr Petroulias have been able to institute proceedings for review in the tribunal that will allow them to protect their rights and to fully ventilate any issues. The Commissioner argues that any defects in the decision-making process which Alyssa and Mr Petroulias might seek to ventilate, were the proceedings in this Court restored, can still be taken in the tribunal. Accordingly, the Commissioner says, there is no substantial injustice in allowing the proceedings now instituted in the tribunal to proceed having regard to the extension of time and no objection being taken to the previously defective status of Alyssa's presence on the record.

Consideration 10 I have found this application to be one of some difficulty. I am satisfied that Alyssa has demonstrated that his Honour's decision is attended by sufficient doubt to warrant the grant of leave. This is because, first, the Commissioner's motion was listed for directions only, not for determination; secondly, Alyssa ought to have been given the opportunity to have been able to be re-registered; thirdly, no injustice would have been done by an adjournment for that purpose (indeed, the transcript to which I was taken suggests that his Honour was initially of that view). Fourthly, because his Honour gave no reasons for dismissing the proceedings as incompetent, and for not granting an adjournment. I am satisfied that the failure to give reasons was a substantial error, because it does not enable the Court to identify the basis upon which the order summarily bringing the proceedings to an end was made. The order was made on a motion that had been listed for directions only and in circumstances where Mr Petroulias was appearing as a prisoner brought up from Goulburn jail to Sydney for the hearing. 11 On the other hand, the subsequent regularisation of the application for review in the tribunal, albeit a significant second choice for Alyssa and Mr Petroulias, against their preferred initiation of proceedings in this Court, is a more difficult factor to weigh in determining the issue of substantial injustice. The Parliament has given citizens and taxpayers a right to choose their preferred method of challenge to the Commissioner's reviewable objection decisions. The involuntary deprivation of one means of exercising that right can be a substantial injustice. On the other hand, there is no reason to think that the tribunal's processes and proceedings will be other than fair and will give the applicants for review there the opportunity fully to present their case, and to obtain the correct and preferable decision, having regard to all the evidence. 12 Where a person brings administrative proceedings, rather than proceedings in the Court, utilising their choice of remedy, the bringing of the administrative proceedings allows the second administrative decision-maker to cure any invalidity attending the first decision: Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 308 at 315 per Bowen CJ, 335-337 per Smithers J; Zubair v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 139 FCR 344 at 354 [32] per Finn, Mansfield and Gyles JJ; Twist v Randwick Municipal Council (1976) 136 CLR 106 at 116 per Mason J. The ability to challenge the legal basis on which a decision was made within the jurisdiction given to the Court, pursuant to a valid appeal instituted under s 14ZZ, may be a valuable right that, in certain circumstances, could be seen to be more preferable than the pursuit of the alternative remedy, afforded by the Parliament of review by the tribunal. 13 In this matter, I must balance the potential loss, if the decision sought to be appealed against stands or, indeed, is upheld on appeal, against the institution of an avenue of review that may produce the same or a better outcome for the applicant and Mr Petroulias, in order to determine whether substantial injustice would occur if I were to refuse the grant of leave to appeal. 14 I have found the weighing of the considerations on this topic to be very difficult. There is, in my opinion, no doubt, injustice in the loss of a right to choose the appropriate means of challenging a decision. And, in a case such as the present, I think I can have regard to Mr Petroulias's background and understanding of the avenues which each method of challenge offers the taxpayer as having informed the selection of this Court as that avenue. However, I have come to the view that on balance, I am not satisfied that this injustice is substantial enough to warrant the grant of leave to appeal against his Honour's decision, because of the existence of the Administrative Appeals Tribunal proceedings. 15 If it were the case that those proceedings had not been, either, instituted and an extension of time not granted, and there were still a live issue as to the status of Alyssa, then the matter might be different. But, I think that while it is not, perhaps, as satisfactory as Alyssa and Mr Petroulias may have liked, it is not substantially unjust, then, to allow that proceeding, now instituted to take its course. 16 For these reasons, I will refuse the application for leave to appeal. 17 The Commissioner sought an order for costs. Only today did the Commissioner file in Court an affidavit containing 167 pages of material dealing with the substance of the application. Indeed, as I have said, I am satisfied that there were appellable errors and that there was some injustice in the proceedings before his Honour. While I am not persuaded that substantial injustice has been done, I am equally not satisfied that the need to bring these proceedings was not partly brought about by the Commissioner proceeding on an application for directions only in the way that occurred before his Honour, leading to the unfortunate position that I have already described. 18 In my opinion, it would not be just to grant an order for costs in favour of the Commissioner. I will simply order the motion for leave to appeal be dismissed with no order as to costs. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Associate: Dated: 17 December 2009 The Applicant: Appeared in person

Counsel for the Respondent: J Hmelnitsky Solicitor for the Respondent: Maddocks Lawyers

Date of Hearing: 11 December 2009 Date of Judgment: 11 December 2009