Deputy Commissioner of Taxation v Warrick

REASONS FOR RULING ON VALIDITY OF CROSS-VESTING ORDER 1 On 18 September 2003, the Deputy Commissioner of Taxation commenced recovery proceedings in the Supreme Court of Western Australia against Wayne Patrick Warrick in which he claimed a total of $1,429,791.03. The sum claimed comprised allegedly unpaid income tax, administrative penalties and interest upon both the tax and the penalties. 2 Mr Warrick filed a defence on 19 November 2003 in which he denied that any valid assessments had been made for the relevant years of income (1998 to 2002). He alleged that the disputed assessments were not assessments of income tax and that they were not issued in the bona fide exercise or purported exercise of powers under the Income Tax Assessment Act 1936 (Cth). Moreover they were said to have been issued for 'an ulterior purpose'. Objections lodged to the assessments had not been determined. Similar allegations were made in relation to the assessments of penalties and the interest thereon. 3 An application for summary judgment was made in the Supreme Court of Western Australia. However before it was heard an application was made to a Master of that Court for an order that the proceedings be transferred to this Court under the Jurisdiction of Courts (Cross-vesting) Act 1987 (WA). That application was referred to a judge in chambers. Subsequently, a minute of consent orders was filed for the transfer of the matter. The consent order was signed by a Registrar of the Supreme Court on 17 February 2004. It was headed up 'Order for Transfer of Proceedings before Registrar Powell 17 February 2004'. The terms of the order were as follows: 'PURSUANT to Order 43 Rule 16 of the Rules of the Supreme Court and by consent of the parties IT IS ORDERED THAT: 1. The proceedings be transferred to the Federal Court of Australia Western Australia District Registry pursuant to section 5(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987 of Western Australia. 2. The costs of this application be in the cause. BY THE COURT D POWELL REGISTRAR' The terms of the consent order were in accordance with the terms of the minute filed by the parties. 4 The papers on the file were subsequently sent to this Court. The matter came on before me for directions on 12 March 2004. There was at that time no appearance for Mr Warrick. I then made an order that the matter be listed before a Registrar of the Court for directions as I was about to go on leave. New solicitors were appointed for the respondent. A Deputy Registrar then raised the possibility that the consent order signed by Registrar Powell on 17 February 2004 was not valid. The District Registrar referred that question back to me for hearing on 16 April. Written submissions were filed by both parties. 5 The contentions against validity turn upon the assumption that the Registrar of the Supreme Court made the order and in so doing was purporting to exercise federal jurisdiction which he, not being a member of that court, could not do unless under the direction or supervision of the Court. 6 The Supreme Court comprises its Judges and Masters (s 7 Supreme Court Act 1935 (WA)). The Registrars of the Court are appointed under and subject to Pt 3 of the Public Sector Management Act 1994 (WA). Section 155 of the Supreme Court Act provides: '(1) There shall be appointed under and subject to Part 3 of the Public Sector Management Act 1994, a Principal Registrar and such Registrars and other officers as may be necessary for the administration of justice and the execution of all powers and authorities of the Court. (2) The Registrars shall be the taxing officers of the Court, and shall perform such other duties as may be conferred upon them by or under this or any other Act. (3) A person who, immediately prior to the coming into operation of the Acts Amendment (Master Supreme Court) Act 1979, held an appointment as a Deputy Master or as a Deputy Registrar of the Court, or both such appointments, is deemed to have been appointed a Registrar pursuant to subsection (1).' 7 Section 167 of the Supreme Court Act provides, inter alia: '(1) Rules of Court may be made under this Act, by the Judges of the Supreme Court for the following purposes: (a) For regulating and prescribing the procedure (including the method of pleading) and the practice to be followed in the Supreme Court in all causes and matters whatsoever in or with respect to which the Court has for the time being jurisdiction (including the procedure and practice to be followed in the offices of the Supreme Court), and any matters incidental to or relating to any such procedure or practice, including (but without prejudice to the generality of the foregoing provision) the manner in which, and the time within which, any applications or appeals which under this or any other Act are to be made to the Court shall be made. ... (c) For conferring on a Master, Principal Registrar, Registrar or any other officer of the Court either generally or in particular cases and under such circumstances and on such conditions as are prescribed, power to do such things, to transact such business and to exercise such authority and jurisdiction as a Judge may by virtue of a statute, custom or rule or practice of the Court, do, transact or exercise. ...' 8 Order 43 of the Supreme Court Rules confers upon the Registrars responsibility for supervising the drawing up of all judgments and orders whether given in Chambers or by default (O 43 r 1(1)). Order 43 r 16, which deals with consent orders, provides: '(1) The parties to proceedings or their solicitors may file a written consent to the making of an order in those proceedings, other than - (a) an order extending a standard time provided for under Order 29; (b) an order that amends, cancels, or is inconsistent with, a case management direction made under Order 29A; or (c) an order that amends, cancels or is inconsistent with an interlocutory order made by a Case Management Registrar in a case to which Order 29A applies. (2) Upon the written consent being filed, the Registrar may settle, sign and seal the order without any other application being made in any case in which in his opinion the Court would make such an order upon consent of the parties or may bring the matter before the Court which may, if it thinks fit and without any other application being made, direct the Registrar to settle, sign, and seal the order in accordance with the terms of consent. (3) The order shall state that it is made by consent and shall be of the same force and validity as if it had been made after a hearing by the Court.' It is apparent from the terms of the Rule that although the Registrar has a discretion whether to bring the matter before the Court, a consent order settled by a Registrar is not made by him or her but takes effect by operation of the Rules (O 43 r 16(3)). 9 The transfer of proceedings from the Supreme Court to the Federal Court is authorised by s 5 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). Under that section, when a proceeding is pending in the Supreme Court of a State or Territory and it appears to the Supreme Court that it is in the interests of justice that the relevant proceeding be determined by the Federal Court, it shall transfer the proceeding to the Federal Court (s 5(1)(b)(iii)). The Jurisdiction of Courts (Cross-vesting) Act (WA) also provides, in s 5, for the transfer of proceedings from the Supreme Court to the Federal Court. The exercise of the transfer power is conditioned upon consideration of relevant factors including whether, cross-vesting apart, the matter would have been incapable of being instituted in the Supreme Court and capable of being instituted in the Federal Court and the extent to which the matters for determination arise under or involve questions as to the application, interpretation or validity of a law of the Commonwealth and are not within the jurisdiction of the Supreme Court apart from the cross-vesting legislation. The interests of justice is also specified as a matter to be considered. It should be noted that s 5 does not require as a condition of a transfer under the State Act, that the Supreme Court consider that it would not have had jurisdiction apart from that conferred under cross-vesting legislation. In the present case the transfer was purportedly effected pursuant to the State cross-vesting legislation. 10 The transfer of proceedings from the Supreme Court to the Federal Court is dealt with in O 81E of the Rules of the Supreme Court which provides, in r 8, that: 'An application for the transfer or removal of a proceeding under cross-vesting laws must be determined by a Judge.' This must be read, however, with the provisions of O 43 r 16 and, in particular r 16(3), which provides that a court order settled, signed and sealed by a Registrar 'shall be of the same force and validity as if it had been made by the Court'. 11 In my opinion, the cross-vesting order was not made by the Registrar but took effect by operation of O 43 r 16(3) upon the signing and sealing of the order and by reason of the consent of the parties. It is debateable whether the order was made in the exercise of federal or state jurisdiction. It is not necessary for present purposes to resolve that debate. It may be that even though the order purported to have been made under State legislation, namely the Jurisdiction of Courts (Cross-vesting) Act (WA), it involved the exercise of federal jurisdiction because of the nature of the subject matter. The Registrar in carrying out the function of settling, signing and sealing the consent order was carrying out an administrative duty as part of the organisation of the Supreme Court. That was a duty conferred upon him by Rules made by the Judges of the Court. 12 Even assuming that the making of the order involved the exercise of federal jurisdiction and that it was made by the Registrar, federal jurisdiction is vested in the Supreme Court of the State as an institution and not the persons of which it is composed - Commonwealth v Hospital Contribution Fund of Australia (1982) 150 CLR 49. That decision which overruled the earlier decisions of the High Court in Kotsis v Kotsis (1970) 120 CLR 69 and Knight v Knight (1971) 122 CLR 114, held that the Master of the Supreme Court of New South Wales although not a member of that court, did constitute the court for the purpose of the exercise of the powers conferred upon him. So the position of the Master in that case was analogous to that of the Registrar in the present case. Gibbs CJ said at 59: 'The jurisdiction and powers of the court do not cease to be its jurisdiction and powers because they are exercised by an officer of the court, under the rules of the court.' Stephen and Aickin JJ agreed with the reasoning of Gibbs CJ. Mason, Murphy and Wilson JJ came to similar conclusions. Mason J said at 61: 'To me it seems highly improbable that the framers of the Constitution intended to restrict the power to invest federal jurisdiction in State courts so that the exercise of it was limited to an exercise by judges to the exclusion of any exercise by masters, registrars or deputy registrars, who are officers of State courts.' See also Zines, Federal Jurisdiction in Australia, 3rd Edition (Federation Press, 2002) at 204-209. 13 In my opinion the order transferring the proceeding to this Court was validly made. Even if it had not validly been made the proceeding was plainly within the jurisdiction of this Court by virtue of s 39B(1A) of the Judiciary Act 1903 (Cth) and, it is here by consent of the parties. Were it necessary, I would have made a direction that the transfer of the papers to this Court were to be treated as the commencement of the proceedings in this Court. 14 The point as to the validity of the cross-vesting order was taken by a Deputy Registrar of the Court. The costs of the directions hearing on 16 April 2004 and the preparation of submissions on the point will be costs in the cause.