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[1999] FCA 933
Federal Court of Australia
1999-07-09
Lehane J, Sackville J
Original judgment source is linked above.
The Proceedings 1 This is an application for an extension of time in which to file and serve a notice of appeal from a decision from the Administrative Appeals Tribunal ("AAT"), given on 2 November 1998. The applicant requires an extension of time because he did not lodge an appeal from the decision of the AAT within the twenty-eight day period specified in s 44 (2A) of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act"). The Court has power under sub-s (2A) to extend the time for the filing of an appeal and may exercise that power before or after the time has expired. The application for an extension of time in this case was lodged on 4 January 1999, in the form prescribed for the purpose by Federal Court Rules ("FCR"), O 53 r 7(2). 2 It is of some importance that the applicant did not appear at the hearing in this Court. Mr Aldridge, who appeared for the Commissioner, invited me to take the applicant's non-appearance into account in determining whether to grant an extension of time. His submission, in essence, was that I should decline to grant leave by reference to the usual criteria governing such applications. Rather curiously, the Commissioner did not apply, pursuant to the Federal Court Rules ("FCR"), O 32, r 2(1)(c), to dismiss the application by reason of the non-appearance of the applicant. The Decision of the AAT 3 The decision of the AAT is recorded in the form of a "direction" made by a Deputy President, as follows: "1. Pursuant to subsection 60(2) of the Bankruptcy Act 1966 the applications were stayed pending advice from the applicant's trustee in bankruptcy. 2. That trustee has indicated that he does not wish to pursue these applications. 3. The applicant has no standing to continue the applications, not being a person "dissatisfied" within the meaning of section 14ZZ of the Taxation Administration Act 1953, as was decided by a Full Court in MaCallum v Commissioner of Taxation (1997) 145 ALR 446. 4. At a directions hearing today called to consider whether the observations of Lehane J at page 462 had application to the present circumstances, it was decided that they did not. 5. Accordingly the applications are dismissed." 4 The AAT is required to give reasons for its decision, provision being made for a party to request written reasons where the AAT does not give reasons in writing: AAT Act, s 43(2), (2A). The applicant has not sought written reasons for the AAT's decision. However, Mr Aldridge said that the "direction" of the AAT should be understood as its reasons, albeit expressed "succinctly". In order to understand the decision and the direction, some background is necessary. Events Leading to the AAT's Decision 5 On 6 December 1990, the respondent ("the Commissioner") issued assessments to the applicant in respect of the tax years ended 30 June 1982 to 30 June 1988, inclusive. The assessments were issued pursuant to s 167 of the Income Tax Assessment Act 1936 (Cth) ("ITAA"), and followed the failure of the applicant to lodge any taxation returns in respect of those years. 6 The assessments issued to the applicant were based on an asset betterment report, which was prepared after what appears to have been a detailed audit of the applicant's affairs. The audit revealed that the applicant had acquired very substantial assets, in a variety of names, over the relevant period. According to the Commissioner's statement of findings, the applicant's revenue sources included the illicit sale of drugs over a two year period. In 1989, the applicant had been convicted and sentenced to a term of imprisonment for the supply and possession of prohibited drugs in 1987. 7 On 25 October 1991, the applicant requested that the Commissioner refer to the AAT, pursuant to s 187 of the ITAA as it then stood, his decision to disallow the applicant's objections to the assessments. Section 187, which was repealed by the Taxation Laws Assessment Act (No 3) 1991 (Cth), provided that a taxpayer who was "dissatisfied with" a decision on objection could lodge with the Commissioner a request to refer the decision to the AAT. For reasons that are not altogether clear, but may have been associated with other legal proceedings on foot between the Commissioner and the applicant, the reference to the AAT in this case apparently did not take place until December 1994. 8 Once the matter was before the AAT, it proceeded slowly. However, on 24 November 1995, the parties signed a form of Agreement to Discontinuance. The AAT thereupon ordered, pursuant to s 42A(1) of the AAT Act, that the application for review of the objection decisions should be dismissed. This order was apparently made by consent. (Section 42A(1) provides that, where all parties to an application for review consent, the AAT may dismiss the application without proceeding to review the decision.) 9 The applicant subsequently applied to reinstate the AAT proceedings. He appears to have taken this step pursuant to sub-ss 42A(6) and (9) of the AAT Act. Section 42A(6) provides that, if the AAT dismisses an application under the AAT Act "the proceeding to which the application relates, unless it is reinstated under subsection (9) or (10), is taken to be concluded." Section 42A(9) provides that the AAT, if it considers it appropriate to do so, may reinstate the application and give such directions as appear to be appropriate. Section 42A(10) deals with the special case of an application dismissed in error. 10 It is perhaps arguable that s 42A(9) is limited to the reinstatement of an application which has been dismissed under s 42A(2) by reason of a party failing to appear in the proceedings, as distinct from an application which has been dismissed by consent pursuant to s 42A(1). In any event, the applicant's attempt to reinstate the proceedings was unsuccessful. 11 While the applicant was endeavouring to secure reinstatement of the proceedings, the Commissioner obtained a default judgment against him, on the basis of the assessments that had already been issued. The judgment, which was obtained from the Supreme Court of New South Wales, was in an amount exceeding $2 million. 12 On 5 December 1996, the applicant lodged a fresh application with the AAT, in which he sought an extension of time to enable him to maintain a second application for review of the Commissioner's objection decisions. On this occasion, the applicant was successful and, on 17 March 1997, the AAT made orders, presumably pursuant to s 29(7) of the AAT Act, extending the time for the filing of the second application. 13 The second application was set down for hearing before the AAT on 2 March 1998. On that day, the applicant was represented by a solicitor, who sought an adjournment of the proceedings. The AAT acceded to this application and adjourned the proceedings until 7 April 1998. However, this was done on the basis that, if an agreed amount of costs thrown away was not paid by the applicant, the application would be dismissed. In the event, orders were made on 7 April 1998 dismissing the application. The precise status of those orders may be a matter for debate, since they appear not to have been made by consent, nor to have been made after a hearing on the merits. 14 Prior to the dismissal of the AAT proceedings, the Commissioner had lodged a creditor's petition, founded on the judgment against the applicant, seeking a sequestration order against the estate of the applicant. The petition was heard on 25 June 1998. The applicant, who was represented by counsel at the hearing, relied on the general principle that a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation for the bankruptcy proceedings. 15 Burchett J, in an ex tempore judgment, held that the general rule should not be applied in the circumstances of the case before him. He stated (at 6) that "It is a case in which repeated delays, and almost constant irresolution as to the pursuit of attempts to appeal against the assessments, have continued over a lengthy period. These matters must either undermine the genuineness of any appeal or, at the least, provide strong reasons in themselves why the court should not now, at the eleventh hour, withhold its hand, when the Deputy Commissioner seeks the remedies provided under the Bankruptcy Act". Accordingly, his Honour made the sequestration order against the applicant's estate. 16 It should be noted that on 16 February 1999, a Full Court dismissed an appeal by the applicant against the sequestration order made on 25 June 1998. In a brief ex tempore judgment, the Full Court held that the primary Judge's decision had not been attended by any error. 17 To return to the chronological narrative, on 26 May 1998, shortly before the hearing of the creditor's petition, the applicant filed an application in the AAT for the reinstatement of the second application. Once again, it is not clear on what basis the applicant sought reinstatement of the proceedings, although doubtless his application was related to the then imminent hearing of the creditor's petition. 18 On 16 July 1998, soon after Burchett J had made the sequestration order, the Official Receiver, as trustee of the applicant's bankrupt estate, elected not to continue, inter alia, the proceedings in the AAT. The trustee's election was made pursuant to s 60(2) of the Bankruptcy Act 1966 (Cth) ("Bankruptcy Act"), which provides as follows: "An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action". The word "action" is defined to mean "any civil proceeding, whether at law or in equity": s 60(5). Of course, at this stage, the only "proceeding" on foot in the AAT was the application to reinstate the second application which had been dismissed on 7 April 1998. 19 The proceedings in the AAT then took a rather strange course. Apparently at the urging of the AAT Deputy President presiding at a directions hearing, the Commissioner consented to the reinstatement of the proceedings. This was effected by a direction made on 10 August 1998, as follows: "Having found that this matter was dismissed in error, the Tribunal reinstates the matter pursuant to subsection 42A(10) of the [AAT Act]". The direction does not identify the "error" and there is no transcript to shed light on the nature of the error. It is perhaps possible that the Deputy President took the view that the dismissal of the proceedings on 7 April 1998 was based on a misapprehension of the AAT's powers. In any event, there is nothing to suggest that the reinstatement of the proceedings was intended to address or resolve the question of the effect of the sequestration order on the proceedings. 20 The effect of the order presumably was to revive the second application, which had been lodged by the applicant with the AAT on 5 December 1996. The "reinstated" proceedings came on for directions on 2 November 1998. A different Deputy President from the one who had made the direction of 10 August 1998 made the "direction" quoted earlier in these reasons. The Reasoning of the AAT 21 The "succinct" reasons of the AAT suggest that the Deputy President took the view that the proceedings in the AAT had been stayed by reason of the operation of s 60(2) of the Bankruptcy Act. This view presumably rested on the proposition that proceedings in the AAT constitute a "civil proceeding", within s 60(5) of the Bankruptcy Act, and that there were proceedings on foot in the AAT at the date of the sequestration order. 22 The reference in the reasons to McCallum v Commissioner of Taxation (1997) 145 ALR 446, was to a decision of a Full Court of this Court (Whitlam and Lehane JJ; Hill J dissenting). The majority in that case held that a taxpayer who has been made bankrupt lacks standing to apply for review of an objection decision pursuant to Part IVC of the Taxation Administration Act 1953 (Cth) ("TAA"). In particular, it was held that, although a trustee in bankruptcy can be "a person [who] is dissatisfied with the Commissioner's objection decision", for the purposes of s 14ZZ of the TAA, the bankrupt cannot be such a person, unless he or she can show that the objection decision would have consequences in relation to tax payable by the bankrupt personally, for example, after his or her discharge from bankruptcy. (Section 14ZZ of the TAA replaced s 187 of the ITAA in 1991). 23 The reference in par 4 of the AAT's reasons to the absence of any circumstances identified by Lehane J in McCallum, was presumably intended to be a finding that the objection decisions could not have imposed any obligation on the applicant to pay tax personally, bearing in mind that a sequestration order had been made against his estate on 25 June 1998. In short, it appears (although perhaps not with complete clarity) that the AAT intended to hold that, independently of s 60(2) of the Bankruptcy Act, the applicant lacked the standing necessary to institute or pursue a challenge to the objection decisions in the AAT.
The Conduct of the Present Application 24 Of course, since the applicant did not appear at the hearing of the present application for an extension of time, the affidavit he filed in support of his application was not read. However, he claimed in the affidavit to have been unaware of the time limit for an appeal to the Court against the decision of the AAT. He also claimed to have been unable to obtain legal representation because of his financial position, which he said had been exacerbated by actions of the New South Wales Crime Commission in seizing assets held by his mother. The applicant said that he had applied for legal aid. 25 The first directions hearing in connection with the present application was held on 4 February 1999. The applicant appeared and the matter was stood over for a month, partly to allow the applicant time to attempt to obtain legal representation. 26 On 4 March 1999, the current application came on for a further directions hearing. The parties were directed, within fourteen days, to approach the Registry, to make an appointment for the settlement of the appeal book index. The matter was not then set down for hearing, but was stood over for further directions until 22 April 1999. 27 An appointment to settle the index was made for 25 March 1999, on the initiative of the Commissioner. The applicant, however, did not appear before the Registrar on that date and a further appointment was made for 15 April 1999. The Registrar directed the Commissioner to file and serve the draft index by 8 April 1999 and to notify the applicant of the next appointment. The Commissioner's solicitors complied with that direction. 28 The applicant again failed to appear at the appointment before the Registrar on 15 April 1999. Once again, a fresh appointment was made, this time for 27 April 1999. 29 In the meantime, the directions hearing scheduled for 22 April 1999 took place. On this occasion, the applicant appeared. The report of listing records that I warned the applicant that, if he failed to appear before a Registrar for the third time, he risked an application being made to dismiss the proceedings for want of prosecution. An order was made that the applicant prepare appeal books, in accordance with any directions given by the Registrar. The applicant was also warned that non-compliance with that order could lead to dismissal of his application. The matter was set down for hearing on 30 June 1999. The applicant was directed to file and serve written submissions by 23 June 1999. 30 Yet again, the applicant failed to attend the appointment before the Registrar on 27 April 1999. No explanation has ever been given for that failure or for the applicant's non-attendance on the previous occasions. 31 The Commissioner has filed an appeal book with the Court, although many documents referred to in the index (which had been settled by the Registrar in the absence of the applicant) were not copied. On 22 June 1999, the Commissioner's solicitors advised the applicant by letter that the appeal books had been prepared and asked him to sign a certificate of correctness. The applicant did not respond to that letter. 32 At about noon on 29 June 1999, the day before the scheduled hearing, the Court received by facsimile a letter from the applicant dated 28 June 1999. In this letter, the applicant stated that he would be unable to attend the Court on 30 June 1999, because he had suffered neck and back injuries in a motor vehicle accident said to have occurred on 3 June 1999. The applicant said in the letter that he was not in a position to inform the Registry of his "ability to go forward with this matter at this time". 33 The letter had attached to it a faxed copy of a medical certificate dated 7 June 1999, on a printed form. This certified that the applicant had suffered a ruptured disc and would be unable to follow his "usual occupation" for a period of three weeks. In addition, the applicant's letter attached a report of clinical findings by a doctor from the Emergency Department of the Concord Repatriation General Hospital. The report indicated that the applicant had presented on that day with increasing lower back pain and sciatica. The applicant had been offered surgery, but had declined. He informed the doctor that physiotherapy had helped his pain. The report went on to state that the applicant was able to walk and that neurologically he was "unremarkable". The doctor recommended a repeat CT scan and a course of physiotherapy, together with referral to an orthopaedic specialist. 34 Finally, the applicant's letter of 28 June 1999 attached a copy of a medical certificate dated 25 June 1999, also on a printed form. This merely stated that the applicant was suffering from a "lower back injury" and would be "unfit for work" until 23 July 1999. 35 On 29 June 1999, I caused a letter to be sent to the applicant by courier, advising him that the matter would proceed in the Court as scheduled on 30 June 1999, but that he could apply for an adjournment at that time if he wished. The letter indicated that any such application would be dealt with at that time. A copy of the letter was sent to the Commissioner's solicitors.
The Adjournment Application 36 The first question is whether the applicant's request for an adjournment should be granted notwithstanding his non-appearance. 37 I am, of course, conscious that illness may prevent a litigant from attending a scheduled court hearing and that the illness itself may preclude the litigant from explaining his or her position to the Court personally. However, I do not think that this can be regarded as such a case. 38 It must be remembered that the applicant, without any explanation, has failed to meet appointments made for the settling of the appeal book index on three occasions. His failure to appear on the third occasion followed an explicit warning to him about the possible consequences of ignoring the appointment. That warning was given only four days before the appointment. Nor has there been any explanation as to the applicant's failure to comply with the direction to file written submissions in advance of the hearing. 39 Even so, I think it appropriate to take into account the material supplied by the applicant in and with his letter of 28 June 1999. For this purpose, I leave to one side the fact that the accident causing the back injury is said to have occurred on 3 June 1999, yet the applicant chose to communicate with the Court and the respondent only the day before the hearing was scheduled to take place. I also leave to one side the formal difficulty that the applicant has not supported his claims by affidavit evidence, but has relied simply upon assertions in a letter and medical certificates in printed form. 40 In my opinion, the material supplied by the applicant does not establish that he was physically unable to attend Court. In particular, the medical report and the certificate fall far short of demonstrating that it would be unduly difficult for him to attend the Court in order to conduct his case or, alternatively, to pursue his claim for an adjournment. 41 The first medical certificate merely certifies that the applicant would be unfit for work for three weeks from 7 June 1999. That period expired prior to the scheduled hearing date. The medical report from Concord Hospital supports the applicant's claim to have sustained a back injury, but it does not suggest that the applicant was at the time so disabled as to be unable to attend court. Much less does it establish that, over three weeks later, he would be unable to attend Court. The medical certificate issued on 25 June 1999 takes the matter no further, since it merely states that the applicant is suffering from a lower back injury and is unfit for work for a period of several weeks. It does not address the question of whether the back injury is such as to prevent him attending Court for less than a day. 42 Nor does the fact that the applicant is legally unrepresented warrant an adjournment of the proceedings. Although the applicant has asserted from time to time that he has actively sought legal representation, there is no evidence as to the steps, if any, he has taken since the date the matter was set down for hearing to secure legal representation. Moreover, there is nothing to suggest that a delay is likely to assist the applicant in obtaining legal representation in these proceedings. He is, after all, the party seeking to challenge the decision of the AAT. He has had six months to arrange for a legal representative.
Should an Order for Extension of Time Be Made? 43 The next question is whether an order for extension of time should be made in favour of the applicant. In Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344, at 348-349, Wilcox J set down six criteria to guide the exercise of the Court's discretion under s 11 of the Administrative Decisions (Judicial Review) Act 1977(Cth) (which allows the court to extend the time for filing an application for judicial review under that Act). His Honour made it clear that the criteria were not intended to be exhaustive and that they were intended as guidance only. Recent authorities have emphasised that the criteria identified by Wilcox J are not complete and that the six principles do not necessarily apply to every application for extension of time under different legislation: Zizza v Commissioner of Taxation [1999] FCA 848 (FC), at par 13, approving Brown v Commissioner of Taxation [1999] FCA 563 (Hill J), at pars 33-41. 44 It is clear that one factor to be taken into account in determining whether an extension of time should be granted is the merit or otherwise of the substantive application. Mr Aldridge submitted that the applicant's substantive application was bound to fail. He contended that, at the date the sequestration order was made, no proceedings were on foot in the AAT. The second application to the AAT had been dismissed on 7 April 1998 and, in accordance with s 42A(6) of the AAT Act, had been concluded. The only application current at the date of the sequestration order was the application to reinstate the concluded proceedings before the AAT. 45 In these circumstances, Mr Aldridge submitted that, on the authority of McCallum, the applicant lacked standing to pursue the application for reinstatement of the proceedings in the AAT. This was a matter exclusively for the trustee, who had elected not to proceed with the AAT proceedings. It followed that the orders made by the AAT on 2 November 1998 merely acknowledged what should have been recognised on 10 August 1998, when the order reinstating the proceedings was made. He submitted that there was nothing in the direction made on 10 August 1998 which foreclosed the Commissioner from relying on the applicant's lack of standing on the basis that he was not a person "dissatisfied" with the objection decisions for the purposes of s 187 of the ITAA or, if it was relevant, s 14ZZ of the TAA. 46 Mr Aldridge, as I followed him, acknowledged that there might be an argument that proceedings in the AAT were on foot at the date the sequestration order was made. It might be said, for example, that the order dismissing the second application on 7 April 1998 was not made in accordance with the provisions of the AAT Act. Mr Aldridge contended that, even if that were so, s 60(2) of the Bankruptcy Act would have the effect of staying the proceedings. He pointed out that, in McCallum (at 459-460), Lehane J had held that the review of an objection decision in the AAT was a "legal proceeding" for the purposes of s 134(1)(j) of the Bankruptcy Act. Mr Aldridge argued that it would be very strange if such a review, whether under Part IVC of the TAA or its predecessor, were not a "civil proceeding" within s 60(5) of the Bankruptcy Act. If this were the case, the AAT proceedings would have been stayed by reason of s 60(2) of the Bankruptcy Act. 47 Since the issues were not fully argued before me, I do not think it either necessary or appropriate to express a final view. It is enough to say that I think there are formidable obstacles in the applicant's path. In particular, it is not easy to see how he can negotiate a path between the Scylla of s 60(2) of the Bankruptcy Act and the Charybdis of McCallum. I would regard the applicant's prospects of success on the substantive application as slim. 48 A further factor militating against an extension of time is the absence of evidence to suggest that injustice will be occasioned to the applicant if his application is refused. There is no evidence to suggest that, if the matter were to be remitted to the AAT, the applicant's attempts to set aside the objection decision would enjoy any real prospect of success. Moreover, even if the applicant were to enjoy some measure of success before the AAT, the fact that he is a bankrupt means that he will derive no personal benefit from any such success. The appeal against the sequestration order has been dismissed and there is no material to suggest that, as a practical matter, there is a realistic prospect of a surplus in the bankrupt estate. 49 In the present case, there was a relatively short delay in the applicant taking steps to challenge the decision of the AAT. Since the applicant did not appear in this Court, no explanation for that delay has been adduced in evidence although, as I have indicated, an explanation was given in the affidavit which accompanied the application. I would not regard the absence of evidence explaining the relatively short delay as a necessarily insuperable obstacle in the case of an application by an unrepresented litigant (cf Hunter Valley, at 348). 50 However, I think it is relevant to take into account the applicant's lack of diligence in pursuing the application for an extension of time. Considerations of fairness, not to mention the orderly conduct of the business of this Court, dictate that this should be so. The applicant's conduct of the proceedings in this Court is especially relevant in a case where he seeks to keep alive proceedings in the AAT which have languished for long periods and, indeed, which have actually been dismissed on two separate occasions. 51 As I have explained, the applicant has repeatedly either failed to comply with directions or failed to take the steps required to ready the case for hearing. It is only because the Commissioner chose to prepare an appeal book that the application could be dealt with on the scheduled hearing date. The applicant's unwillingness to conduct the application in this court diligently suggests his pursuit of the AAT proceedings is considerably less than wholehearted. In my view, his failure to conduct the current proceedings diligently is a factor that weighs against the grant of an extension of time in which to appeal against the AAT's decision. 52 It might be said by the applicant that the delay of a month in challenging the AAT's decision has not caused any substantial prejudice to the Commissioner. However, the mere absence of prejudice does not of itself justify the grant of an extension of time: Hunter Valley, at 349. All the relevant circumstances of the case must be considered. In my opinion, having regard to the matters to which I have referred, this is not a case in which an order should be made extending the time for filing an appeal against the decision of the AAT.
Conclusion 53 An order extending time for the filing of an appeal to this Court against the decision of the AAT should not be made. Accordingly, the application should be dismissed, with costs. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.
Associate: Dated: 9 July 1999 Counsel for the Applicant: No appearance
Solicitor for the Respondent: Australian Government Solicitor
Greer
Deputy Commissioner of Taxation