Blake v Commissioner of Taxation

Federal Court of Australia|2017-04-26|Before: Siopis J, Gilmour J

The interlocutory application filed by the applicant on 13 March 2017 for an extension of time to the programming orders made by Siopis J on 7 December 2016, and an adjournment of the matter be dismissed.
The appeal be dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GILMOUR J: 1 These proceedings comprise an appeal by the applicant, Mr John Francis Blake, under s 4 of the Administrative Appeals Tribunal Act 1975 (Cth), from a decision of the Administrative Appeals Tribunal (AAT) made on 3 July 2013. This decision affirmed a decision of the Commissioner of Taxation (Commissioner), dated 15 March 2011, which had disallowed Mr Blake's objection against administrative penalty assessments for the years ended 30 June 2004 and 30 June 2005. 2 At the hearing on 23 March 2017, there were two interlocutory applications before me for consideration. The first was filed by the Commissioner on 19 September 2016, seeking interlocutory orders that the appeal be dismissed and as to costs. The second application before me is an interlocutory application filed by Mr Blake on 13 March 2017 seeking to have these matters adjourned, and to have the time for complying with the programming orders of Siopis J extended. 3 I will deal with each of these two applications in turn, starting with Mr Blake's application.

Mr Blake's interlocutory adjournment application 4 This application was dismissed during the hearing and I delivered ex-tempore reasons for doing so. Those reasons are as follows. They have been edited to a small extent but not so as to alter their substance.

Background 5 This proceeding came before Siopis J for directions on 7 December 2016, and orders were made by his Honour on that date, programming the matter towards a two-hour hearing, not before 20 March 2017. This is that hearing. Mr Blake was ordered to file and serve on the Commissioner and on Mr Blake's trustees in bankruptcy, any affidavits that he wished to reply upon, in opposition to the Commissioner's interlocutory application, by 20 January 2017. Mr Blake did not do so. The Commissioner was ordered to file and serve on Mr Blake, and on his trustees in bankruptcy, submissions in support of the Commissioner's interlocutory application by 17 February 2017. The Commissioner complied with this order. Finally, Mr Blake was ordered to file and serve on the Commissioner and on Mr Blake's trustees in bankruptcy, any submissions upon which he wished to rely in opposition to the Commissioner's interlocutory application. Mr Blake did not do this either. 6 In support of his application, Mr Blake filed on 13 March 2017 an affidavit sworn by him on 28 February 2017. In this affidavit, Mr Blake makes contentions concerning the orders made by Siopis J, by saying, in effect, that the orders were incorrectly made. I, of course, am required to treat these orders as correct on their face and I do so. 7 Mr Blake told me during the hearing that he had difficulty opening portable document file (PDF) documents which were attachments to emails sent to him by those acting on behalf of the Commissioner. However, one document - and in my view, the most important document - which was sent to him on behalf of the Commissioner, namely, the Commissioner's outline of written submissions which are fulsome and clear in their terms, was received by Mr Blake as an attachment to an email from Mr Richard McGrade, a senior lawyer acting in the Review and Dispute Resolution department of the Australian Taxation Office, dated 17 February 2017. Mr McGrade followed up that email the same day with an email in which he asked Mr Blake to confirm that he had received the submissions of the Commissioner. Mr Blake did so on 23 February 2017 when he confirmed, in terms, his receipt of the Commissioner's submissions. I took Mr Blake to those documents in the course of his application for an adjournment and extension of time and he confirmed that he had received those documents and that the email confirming that was correct. 8 This matter has a long history. It is, at its heart - that is to say, at the heart of the Commissioner's application - a matter of law, primarily going to the standing of Mr Blake as a bankrupt to have instituted and to prosecute this appeal. The facts on which the Commissioner will rely for that are not in dispute, namely that Mr Blake was, at the time of the institution of the proceedings and remains, a bankrupt. 9 Accordingly, I am not satisfied that this matter should be adjourned. Mr Blake has been provided with the detailed submissions of the Commissioner as to the Commissioner's application for almost exactly one month. The Commissioner's application was instituted in September. This court is required by its governing legislation to proceed with matters as expeditiously and with least expense as possible. More than that, the matters to which Mr Blake points concerning Siopis J's orders and the background to his bankruptcy are beside the point. The fact is that he is bankrupt and there are legal consequences which flow from that and it is these to which the Commissioner points in his submissions. So for these reasons, I refuse the adjournment.

The Commissioner's interlocutory application 10 This application, as I have said, seeks orders dismissing the proceedings and as to costs. In its oral submissions, counsel for the Commissioner withdrew the order sought in its application as to costs. In considering this application, for which judgment was reserved, I will examine the history of the matter, the nature of Mr Blake's bankruptcy and the legal position.

History of the proceedings 11 In 2010, the Commissioner issued Mr Blake with amended assessments and penalty assessments in respect to the 2004 and 2004 income years. Objections to those assessments were lodged and subsequently disallowed in full on 15 March 2011. 12 On 21 September 2011, Mr Blake commenced applications for review of the decisions in respect of administrative penalty only. Those applications went to hearing in April 2013 and were dismissed on 3 July 2013. 13 On 1 August 2013 Mr Blake commenced the present proceedings by filing a notice of appeal and a lengthy affidavit. 14 Directions hearings were held on 19 November 2013 and 13 February 2014. On the latter date the matter was stayed by operation of law, arising from sequestration orders made in respect to Mr Blake in the Federal Circuit Court earlier that day. 15 On 27 May 2014 Mr Blake's application for review of the sequestration orders was dismissed in Lion Finance Pty Ltd v Blake [2014] FCCA 1404. 16 On 15 December 2014, Mr Blake's appeal from this decision, was dismissed in Blake v Lion Finance Pty Ltd [2014] FCA 1416. No further appeal has been filed. 17 On 13 February 2014 the matter was stayed pursuant to s 60 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), following the making of sequestration orders in BRG 22 of 2014, bankruptcy proceedings brought by a third party, pursuant to which the applicant became bankrupt. 18 Mr Blake's trustees have declined to prosecute this appeal and accordingly, on 21 September 2016, the Commissioner made an application to have the proceedings dismissed. 19 In doing so the Commissioner relied on the following affidavits: (a) Affidavit of Richard John McGrade sworn 19 September 2016 and annexures RJM1 - RJM13; (b) Affidavit of Carla Kovacevic sworn 6 May 2016 and annexures CK1-CK18; and (c) Supplementary Affidavit of Richard John McGrade sworn 12 October 2016 and annexure RJM14. 20 Directions for the filing of evidence and submissions were made on 2 December 2016. 21 As I have stated earlier in these reasons, there has been neither evidence nor submissions filed by Mr Blake in relation to the Commissioner's application.

The bankruptcy 22 Following the orders made on 13 February 2014, the Commissioner corresponded with Mr Blake's then trustees, Mr van der Velde and Mr Cronan, of SV Partners Brisbane to ascertain whether the trustees would elect to prosecute this appeal. The trustees did not elect to prosecute the proceedings, either within the 28 day limit provided for in s 60(3) of the Bankruptcy Act, or at all. 23 A report to creditors was provided to the Commissioner on 29 April 2014, which: (a) discloses a net deficiency in the estate of $6.4 million; (b) identifies the Commissioner as an unsecured creditor in the amount of $1.76 million; and (c) notes that Mr Blake will be discharged from bankruptcy by operation of the law on 2 April 2017. 24 On 18 December 2014, the trustees advised the Commissioner that it was unlikely that there would be sufficient funds to enable a dividend to creditors. 25 Notice of the deemed abandonment was given to Mr Blake by letter dated 7 April 2014. No application under s 178 of the Bankruptcy Act has been commenced by him.

Legal position 26 These proceedings are deemed abandoned by operation of s 60(3) of the Bankruptcy Act. 27 The underlying taxation debt owed by Mr Blake to the Commissioner, part of which is the subject of this appeal, was converted to a right of proof in Mr Blake's bankruptcy: s 82(1) of the Bankruptcy Act. 28 Upon Mr Blake's discharge from bankruptcy, all debts provable in his bankruptcy are discharged: s 153(1) of the Bankruptcy Act. The Commissioner submitted a proof of debt provable in Mr Blake's bankruptcy. It follows that Mr Blake will be released from the taxation debt upon his discharge from bankruptcy. 29 Accordingly there can be no prejudice to Mr Blake in the appeal being dismissed. 30 Where there is an actual or deemed abandonment there are cases where an order dismissing the proceedings has been made: see Cole v Challenge Bank [2002] FCAFC 200 at [15]-[19] per Gray J; Gore v Prentice [2012] FCA 660 at [6] and the cases there cited.

Conclusion and order 31 I will allow the Commissioner's application. There will be an order that the appeal be dismissed. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.

Bankruptcy Act 1974(Cth)

Bankruptcy Act 1966(Cth)ss 60, 60(3), 82(1), 109(1)(a), 153(1), 178

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