Gould v Deputy Commissioner of Taxation

REASONS FOR JUDGMENT 1 On 9 July 2010 Mr Gould commenced proceedings in this Court seeking to set aside four penalty notices which had been issued to him by the Australian Taxation Office ("the Tax Office"). The Deputy Commissioner of Taxation is the respondent to that application. The penalty notices in question each imposed upon Mr Gould a fine of $550. Each of the notices was said to have been issued as a result of Mr Gould's non-lodgement of Business Activity Statements. It appears that from about April 2002 Mr Gould has not, in any meaningful sense, needed to have been registered for GST purposes. There is a debate about this but it would now appear that, for all legal purposes, his registration for GST was cancelled effective April 2002. 2 That debate concerns whether that cancellation has taken place recently with retroactive effect or whether, in fact, it took place at an earlier time. In any event, regardless of the answer to that question, it follows that because he has not been registered for GST purposes, the fines imposed by the Tax Office upon him for non-lodgement are no longer legally coherent. Consequently, the Commissioner indicated to Mr Gould a few days before this matter was to be called on for trial today that he was willing to consent to orders which would set aside those notices. When the matter was called on today Mr Gould applied for an adjournment. In applying for the adjournment he relied upon an affidavit of the respondent prepared on 9 December 2010, which I permitted to be read, and also upon an affidavit prepared by himself on 3 December 2010 which apparently he sought to file but which was not, so it would seem, placed upon the court file. I have read both affidavits with care. 3 The gravamen of Mr Gould's adjournment application is that he wishes to adjourn the proceeding for the purpose of formulating a claim for damages against the Deputy Commissioner of Taxation. In substance, the claim he would seek to pursue, I think, is a claim either in the tort of misfeasance in a public office or, alternatively, in the tort of conspiracy, the latter being said to consist of actions of officers of the Tax Office together in concert with other persons, at this stage, unnamed. The gist of that allegation is as follows. 4 Mr Gould has for a long period of time been concerned about a difficulty afflicting the IT industry. That difficulty concerns, broadly, inconsistent formats in electronic addresses. Mr Gould has sought, together with others, to bring this difficulty to the attention of the authorities and his affidavit of 3 December 2010 showed, I think, that he has been assiduous in his pursuit of it. The argument is that there are powerful vested interests which are resistant to, and repellent of, Mr Gould's attempts to bring this matter into public consciousness. Those persons have used their influence over the Tax Office and, so the argument runs, it is they who have effectively persuaded the Tax Office to issue the penalty notices to Mr Gould presumably further to hamper him in efforts to expose the problem. None of the material which Mr Gould placed before me suggests the existence of that conspiracy directly at all and I think it is fair to say that, during the course of oral argument, Mr Gould accepted that there was no direct evidence of the person or persons involved or of the nature of their influence over the Tax Office. 5 The essence of the argument, I think, was that he had sought to have the Tax Office identify who was responsible for the decisions to issue the fines and that they had declined to do so. There were, therefore, two sets of absences of evidence. The first was the Tax Office's refusal to answer his inquiry and the second was the general absence of any evidence for the arrangement or conspiracy. It followed from that absence of evidence that I should infer that there was such an arrangement or conspiracy. The perils of this style of reasoning are frequently noticed in this Court where many people are often persuaded by the absence of any evidence of a conspiracy as confirming that there is a conspiracy. 6 The difficulty with this style of reasoning is that the arguments upon which it rests are not falsifiable. In this case, it seems to me that there is no material which has been put before me which would provide any reasonable basis for thinking that Mr Gould had such a case. That matters because in granting the adjournment I need to address the question of prejudice to Mr Gould if I do not accede to his request and the likely inconvenience to the opposing party if I do. Also relevant in that calculus is the substance of the claim. In this case, if I do not grant the adjournment, Mr Gould remains free, if he wishes, to pursue this claim. Having regard to that fact, and having regard to the fact that it seems to me that, at least as presently advised, I can see no basis for the claim, the appropriate course is that I refuse the adjournment application and I do. 7 I move then to the substance of Mr Gould's original application to set aside the fines. On 7 September 2000, Mr Gould registered for GST pursuant to Part 2-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (hereafter "the GST Act"). On 7 May 2010, the Tax Office issued to Mr Gould a penalty for failure to lodge an activity statement on time. Mr Gould, being registered for GST, was required by s 31-5 of the GST Act to file a return for each relevant period. The penalty notice issued by the Tax Office referred to failure to lodge returns on four separate occasions, and in respect of each of those occasions the penalty which was imposed was $550. The penalty was imposed pursuant to the provisions of the Taxation Administration Act 1953 (Cth) (hereafter "the Administration Act"). 8 Section 286-75(1) of Schedule 1 of the Administration Act permitted the Commissioner to impose an administrative penalty if a notice which was required under some other tax law - which is defined as including the GST Act - was not filed by a particular date. Section 286-80(1) determined the manner in which that penalty was to be calculated by reference to an amount known as the base penalty, a concept which was in turn itself defined in s 286-80(2), so that one penalty unit would be imposed for each period of 28 days that a statement remained outstanding, up to a maximum of five penalty units. 9 The concept of a penalty unit is in turn defined in section 4AA of the Crimes Act 1914 (Cth), as being an amount of $110. It is by that elaborate and somewhat cumbersome route that the Commissioner came to impose four penalties of $550 totalling $2200. Mr Gould was not satisfied with this state of affairs and commenced this proceeding in this Court on 9 July 2010, pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth), and it is that proceeding which has been called on for hearing today. In the period leading up to the trial, it became apparent that the registration of Mr Gould for GST had been cancelled. 10 The power of the Commissioner to cancel registration for GST is contained in Part 2-5 of the GST Act and s 25-60 specifically authorises the Commissioner to cancel the registration of a taxpayer for GST from a retroactive date. The Commissioner has determined that Mr Gould's registration for GST is to be cancelled from 1 April 2002. The necessary consequence of that is that Mr Gould cannot have any legal liability to lodge returns for GST, not having been registered in the relevant period of time, and the ineluctable consequence of that result is that Mr Gould cannot be liable to pay a penalty in terms of s 286-75 of Schedule 1 of the Administration Act. Therefore, the position is legally that the penalties are not capable of being lawfully imposed. 11 No doubt for that reason, on 8 October 2010, the Tax Office advised Mr Gould that the penalties would be remitted. As at today's date, the penalties have not in fact formally been remitted, but Mr O'Brien of counsel, who appeared for the Tax Office, made abundantly plain from the Bar table that they would be remitted. The significance of this is that Mr O'Brien submitted that the proceeding no longer had any utility. Put another way, there would be no point in setting aside the notices because the Tax Office was going to remit the penalty contained in them in any event. Added to that, one might also suppose, the Tax Office is legally obliged to remit them because of the operation of s 286-75 of Schedule 1 of the Administration Act, there having been no failure to lodge a required return. 12 Mr O'Brien submitted that a decision of Olney J in La Roche v Cormack (1991) 33 FCR 414 was authority for the proposition that where a proceeding had become inutile by the effluxion of time or by events extraneous or external to them, an appropriate course was permanently to stay the proceeding. In that case, the applicants had sought judicial review of a decision not to temporarily appoint them to a committee. Had they been appointed, their commissions of appointment would have expired on 24 December 1991. The matter came on for hearing on 13 December 1991. His Honour was of the view that there was no utility in entertaining the proceeding because the period of time which was the subject of the appointment had just about expired. 13 His Honour considered what the appropriate course was in those circumstances and he concluded (at 416) that where a proceeding had been overcome by events, the proper course was permanently to stay that proceeding. I see no reason not to follow that approach. In those circumstances, the order I will make is that Mr Gould's proceeding be permanently stayed. Mr Gould applied for costs of the proceeding. That application should be refused: there should be no order as to costs. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.