James v Deputy Commissioner of Taxation

High Court of Australia|1957-07-01|Before: Kitto JJ

High Court of Australia Dixon C.J. Fullagar and Kitto JJ. James v Deputy Commissioner of Taxation [1957] HCA 36

ORDER Order that the appeal from the order of sequestration of 27th February 1957 be allowed with costs and that the said order be set aside and in lieu thereof that the petition of the respondent be dismissed with costs. Execution for costs not to issue without the order of the court or judge. The question whether such costs should be set off against the claim of the commissioner reserved. Liberty to apply.

Dixon C.J. The Court delivered the following written judgment: -

This is an appeal from an order pronounced on 27th February 1957 in the Supreme Court of Queensland by Moynihan A.J. The order, which was drawn up, in accordance with the Bankruptcy Rules (S.R. 1934 No. 77 as amended to S.R. 1956 No. 61), under the caption "In the Court of Bankruptcy District of Southern Queensland" was an order for sequestration. The appellant is the debtor and the order was made against him on the petition of the Deputy Commissioner of Taxation based upon the unpaid balance of £13,524 15s. 0d. of a final judgment for £13,923 3s. 0d. which he had recovered for income tax and costs. The act of bankruptcy alleged was failure to comply with a bankruptcy notice. The appellant filed a notice of opposition to the petition disputing, among other things, the alleged act of bankruptcy. We have come to the conclusion that the bankruptcy notice was served out of time so that failure to comply with it did not amount to an act of bankruptcy. Subject to the power of the court exercising jurisdiction in bankruptcy to extend the time the bankruptcy notice must be served within one month of its issue. The notice was issued on 18th January and served on 7th April 1956. On 23rd February 1956 there was endorsed upon the notice what purported to be an order of "the Court" made pursuant to s. 27 (2) (c) of the Bankruptcy Act 1924-1955 and r. 148 of the Bankruptcy Rules extending the time for service to 23rd April 1956. The purported order of extension was not in fact made by any court but by a "registrar in bankruptcy". For reasons which we shall give it appears to us to have no legal effect. It was said for the respondent that even on the footing that service of the bankruptcy notice was out of time, the appellant had waived service within due time. Of this contention it is enough to say that no foundation of fact can be found for it. It is true that the exact legal ground for concluding that no act of bankruptcy had been committed was not raised before the Supreme Court of Queensland but it arose on the face of the proceedings and the commission of the act of bankruptcy was in issue. We cannot regard the conditions of par. (j) of s. 52 as satisfied if before service of the bankruptcy notice it has expired and the time for service has never been extended.

Section 27 (2) (c) of the Bankruptcy Act, under which the registrar purported to extend time for service of the notice, provides that "the Court may (c) extend, either before or after its expiration, or abridge any time limited by the Act for doing any act or thing." "The Court" is defined to mean any court having jurisdiction in bankruptcy or a judge thereof (s. 4). Rule 148 provides: " Subject to the power of the Court to extend the time, a bankruptcy notice shall be served within one month after the issue thereof". It seems clear enough that the power to which r. 148 refers is that conferred by s. 27 (2) (c) on "the Court" and that means any court with bankruptcy jurisdiction or a judge of such a court. Clearly enough the Supreme Court of Queensland or a judge thereof might have made an order extending the time for service of the bankruptcy notice, but that did not happen. Instead an order, purporting on its face to be a judicial order, was made in fact by a registrar in bankruptcy and in form "By the Court" and sealed with a seal of "The Court of Bankruptcy District of Southern Queensland." There is in fact no such court; the name "Court of Bankruptcy" is a description adopted by the Rules and the forms to the Rules, a description intended to apply indifferently and in a distributive manner to all the courts covered by s. 18 of the Act. The Rules have been made by the Governor-General in Council as under s. 223 of the Act. Rule 12 (1) provides that every proceeding before the Court shall be entitled "In the Court of Bankruptcy" with the name of the District in which it is taken, and r. 6 provides that the forms in the schedules, where applicable, and where they are not applicable forms of the like character, with such variations as circumstances require, shall be used. The first form is a general title "In the Court of Bankruptcy District of". The succeeding forms indicate that the title is to be used. Rule 473 provides that the seal to be used by any court having jurisdiction in bankruptcy under the Act shall describe the court as "The Court of Bankruptcy" and the name of the district shall be added thereto. The districts are now set out and named by r. 481. The result is that the seal does not necessarily identify the court, though probably that was part of the purpose of the requirement in s. 49. It is possible that Mr. Johnstone, the registrar who inscribed the order on the bankruptcy notice and caused it to be sealed and tested it with his signature, conceived himself to be making or recording an order of the Supreme Court of Queensland exercising its bankruptcy jurisdiction. But no one but a judge could make such an order or cause it to be recorded. It is equally possible, however, such is the power of words, that he supposed a court of bankruptcy existed bearing that precise name. A registrar in bankruptcy is not, in that capacity, an officer of any court. He is a federal officer who is not attached to a court although, by s. 12A, he is controlled by "the Court", that is any court corresponding with the defined description. "It is not easy to get a clear appreciation of the meaning and legal effect of the indefinite expression "controlled by the Court", but it seems to amount to no more than requiring the registrar to comply with the court's orders and directions. Instead of forming part of its official system and exercising the authority of an office in the court, the registrar is now to be a stranger to the court and its organization. But the registrar is, nevertheless, to be amenable to the court's orders and directions, if it choose to give him any": Bond v. George A. Bond & Co. Ltd. [1] . Considered as a judicial order, as it purports to be, the order authenticated by the seal and Mr. Johnstone's signature is without authority and void. There is, we think, no other light in which it can be considered. One may concede that the issue of a bankruptcy notice is ministerial (cf. Bond v. George A. Bond & Co. Ltd. [2] ), and it may well follow that a power to extend time for service of such a notice might be committed by the Parliament to administrative hands. But that is not what Parliament has done. Section 27 (2) (c) confides to the court as part of its judicial power the extension of any time limited by "this Act", an expression defined to include the Rules. Some of the times limited by the Act are of a character going to substantive rights and it would be strange if there were an attempt to entrust the power of abridgement and extension to anybody but "the Court". Even if, however, it would be possible constitutionally to confer power to abridge or enlarge administratively all the times to which s. 27 (2) (c) applies, it is exactly the opposite of what the legislature has done. " there are many functions or duties that are not necessarily of a judicial character but may be performed judicially, whether because they are incidental to the exercise of judicial power or because they are proper subjects of its exercise. How a particular act or thing of this kind is treated by legislation may determine its character. If the legislature prescribes a judicial process, it may mean that an exercise of the judicial power is indispensable. It is at that point that the character of the proceeding or of the thing to be done becomes all important": Reg. v. Davison [3] . In the same case, speaking of a receiving order made on the debtor's own petition, Fullagar J. said: "In England, the nature of the function performed in the making of a receiving order is a matter of no importance. The fact that the statute makes it a judicial function does not preclude its performance being entrusted to any person or body chosen by the legislature for the purpose. The person chosen may be appointed on any terms thought fit, and the body may be constituted in any manner thought fit. But the fact that the statute makes the function judicial is of great importance in Australia. For it means that it can only be validly entrusted to a court constituted in the manner provided by Chapter III of the Constitution. The registrar is not a court so constituted" [4] . The order made by Mr. Johnstone cannot be supported under s. 12A (3), which says that a registrar may exercise such of the powers, duties and functions of an administrative nature exercisable by the court as the court directs or authorises him to exercise. The power conferred by s. 27 (2) (c) is conferred as and for a judicial power exercisable as part of the judicial power of the Commonwealth. In Bond v. George A. Bond & Co. Ltd. [1] the meaning and validity of a power of delegation contained in s. 23 and similarly expressed was discussed and it was upheld on the footing that it was confined to "strictly ministerial functions". It is perhaps right to add that in any case the actual delegation on which reliance was placed by Mr. Johnstone (a document handed up at the end of the argument) by no means carries upon its face an assurance of regularity and efficacy. It does not purport to be a direction or authorisation of a court but of a number of gentlemen, two only of whom are described as judges of the Supreme Court of Queensland, though we know all of them hold or have held that office. Two of those mentioned in the document have ceased to fill the office and one of them did not execute the instrument. It does not bear a seal of the Supreme Court of Queensland.

(1930) 44 C.L.R. 11, at p. 20. 2. (1930) 44 C.L.R., at p. 22. 3. (1954) 90 C.L.R. 353, at pp. 369, 370. 4. (1954) 90 C.L.R., at p. 378. 5. (1930) 44 C.L.R., at pp. 21, 22.

For the foregoing reasons the attempt to extend the time for service of the bankruptcy notice was nugatory and there was no act of bankruptcy in failing to comply with it after it was served out of time.

Other objections were raised in support of the appeal against the order of sequestration. They fell under two descriptions. There were objections, or at all events an objection, basis for which was discovered in the anomalous confusion of the identity of different State and federal courts exercising bankruptcy jurisdiction which the Rules and forms produce and in the equally anomalous situation with reference to bankruptcy officials created by the provisions upheld in Bond's Case [2] . No doubt so long as the statute and statutory rules adhere to a system depending on comprehending these two anomalies constitutional and other difficulties will continue to arise and all the courts can do is to decide them as and when it is necessary and in the form they actually take. Little or no advantage can accrue from any attempt to solve such questions in advance of strict necessity. So it seems better to put aside the other objections mentioned which fit under this heading. The second description of objections, however, depends entirely on the relation of the Commissioner of Taxation and his deputies to s. 52 (j) and ss. 54 and 55 of the Bankruptcy Act 1924-1955. These provisions relate respectively to the act of bankruptcy founded on a bankruptcy notice and to the petition by a creditor. The objections made under this head must be open almost daily in proceedings in which the commissioner or one of his deputies is seeking to make taxpayers bankrupt for unpaid income tax. In the view we have taken of this case and have expressed above nothing we say can amount to a decision of any of these objections but it would be undesirable if by passing them by without observation we created the impression that we think they may be well founded and desire to reserve them for consideration on some other occasion. In the present case the deputy commissioner recovered judgment against the appellant for the tax forming the debt. It may be taken for present purposes that a delegation to him by the commissioner under s. 8 of the Taxation Administration Act 1953 existed enabling the deputy commissioner to exercise the powers of the commissioner with respect to the enforcement of the relevant liability and the recovery of tax. Under s. 208 of the Income Tax and Social Services Contribution Assessment Act 1936-1955 the tax is a debt due to the Crown on behalf of the Commonwealth and payable to the commissioner, that is to say the deputy commissioner: cf. s. 13 (b). By s. 209 any tax unpaid may be sued for and recovered in any court of competent jurisdiction by the commissioner or a deputy commissioner suing in his official name. Under s. 52 (j) of the Bankruptcy Act the person causing the bankruptcy notice to be served must be a creditor and must have obtained a final judgment or order. A second paragraph of s. 52 (j) enlarges the meaning of creditor but we do not think the respondent can safely place reliance upon it to answer the appellant's objection nor does s. 53 assist him. Section 54 requires simply that the petition be presented by a creditor. The notice served called on the appellant to pay the judgment debt to the deputy commissioner (scil. the plaintiff who had recovered judgment) or to secure or compound for the sum to his satisfaction or that of the court or to satisfy the court that the appellant had a counter-claim, set-off or cross-demand against him (of the required amount).

The substantial points taken are (1) that the Crown is the creditor not the deputy commissioner; (2) that a set-off etc. against the Crown must be enough and certainly this requirement of the notice should not be limited to one against the deputy commissioner; (3) that the deputy could not compound the debt or take security; and (4) that his satisfaction in any case would be irrelevant. All these difficulties arise out of incongruities of, on the one hand, the form supplied by the rules, the rules themselves and expressions in the text of s. 52 (j) and s. 54 of the Act with, on the other hand, the situation which ss. 208 and 209 of the Income Tax and Social Services Contribution Assessment Act produce, a situation which verbally the language of the form, the rules and the sections does not aptly fit. We agree, however, in the general view of provisions like ss. 208 and 209 which Street J. took in Re W. Carter Smith; Ex parte Commissioner of Taxation [1] . We think that the commissioner or deputy commissioner is empowered to take proceedings in bankruptcy for the recovery of the tax as a Crown debt. The officer may proceed in his own name but he sues for the Crown and as plaintiff or actor it is not in his own right but that of the Crown that he proceeds. If he has no statutory power himself to compound, nevertheless a composition in his name may no doubt be made by the Government of the day. His is but an official name, but it is the correct name in which the Crown sues. This is not the occasion to consider what if any descriptions of set-off might be available to the judgment debtor. It is enough to indicate our general view of the position. It is unnecessary in this case to consider whether as a matter of expression the notice should be amended to conform with that view. It is enough to say that in substance we think the contentions mentioned should fail. For the reasons given earlier, however, we would allow the appeal.

(1908) 8 S.R. (N.S.W.) 246, at pp. 248-250; 25 W.N. 92.

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