Consideration
20 Section 31A of the FCA is in the following terms:
31A Summary judgment
(1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Court has apart from this section.
(5) This section does not apply to criminal proceedings.
21 Rule 26.01 FCR provides:
26.01 Summary judgment
(1) A party may apply to the Court for an order that judgment be given against another party because:
(a) the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or
(b) the proceeding is frivolous or vexatious; or
(c) no reasonable cause of action is disclosed; or
(d) the proceeding is an abuse of the process of the Court; or
(e) the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.
(2) The application must be accompanied by an affidavit stating:
(a) the grounds of the application; and
(b) the facts and circumstances relied on to support those grounds.
(3) The application and the accompanying affidavit must be served on the party against whom the order is sought at least 14 days before the hearing of the application.
(4) If an order is made under subrule (1) dismissing part of the proceeding, the proceeding may be continued for that part of the proceeding not disposed of by the order.
(5) If an order is made under subrule (1) giving judgment for the applicant against the respondent for the whole or part of the applicant's claim, a respondent who has a cross claim against the applicant or some other party may:
(a) continue to prosecute the cross claim against the applicant or other party; and
(b) apply to the Court for an order staying execution on or enforcement of the judgment until the respondent's cross claim is determined.
Note: See also section 31A of the Act.
22 In Singh v Super City Home Loans Pty Ltd [2011] FCA 646 (Singh), I summarised the principles applicable to summary dismissal in light of the High Court's decision in Spencer v The Commonwealth (2010) 241 CLR 118. In Singh, I said ([at 129]):
In Spencer v The Commonwealth (2010) 241 CLR 118, the High Court considered the meaning and effect of s 31A of the Federal Court Act. The following principles may be gleaned from that decision:
(a) Section 31A authorises summary disposition on a variety of bases (at [22] (p 131) per French CJ and Gummow J). At [22], their Honours also said:
… It will apply to the case in which the pleadings disclose no reasonable cause of action and their deficiency is incurable. It will include the case in which there is unanswerable or unanswered evidence of a fact fatal to the pleaded case and any case which might be propounded by permissible amendment. It will include the class of case in the longstanding category of cases which are "frivolous or vexatious or an abuse of process". The application of s 31A is not, in terms, limited to those categories.
(b) The power to order summary dismissal pursuant to s 31A is different from the power to strike out defective pleadings pursuant to O 11 r 16 of the Federal Court Rules (at [23] (p 131) per French CJ and Gummow J);
(c) The power to terminate proceedings summarily should be exercised with caution (at [24] (p 131) per French CJ and Gummow J). At [24] (p 131), their Honours also said:
24 The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-130 per Barwick CJ) or on the basis that the action is frivolous or vexatious or an abuse of process (Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J). The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this Court in Fancourt v Mercantile Credits Ltd said ((1983) 154 CLR 87 at 99. See also Webster v Lampard (1993) 177 CLR 598 at 602-603 per Mason CJ, Deane and Dawson JJ):
"The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried."
More recently, in Batistatos v Roads and Traffic Authority (NSW) ((2006) 226 CLR 256 at 275 [46]) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde ((2000) 201 CLR 552 at 575-576 [57]) which included the following:
"Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways (Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130 per Barwick CJ), but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way."
There would seem to be little distinction between those approaches and the requirement of a "real" as distinct from "fanciful" prospect of success contemplated by s 31A (In A v Essex County Council [2010] 3 WLR 509, the criterion of "real prospect of success" was variously equated to whether the plaintiff "could succeed at a trial", whether there was a "triable issue" and whether there was the "least doubt": at [44] per Lord Clarke of Stone-cum-Ebony JSC; at 541 [119] per Baroness Hale of Richmond JSC; at 544 [133] per Lord Brown of Eaton-under-Heywood JSC; at 552 [163] per Lord Kerr of Tonaghmore JSC). That proposition, however, is not inconsistent with the proposition that the criterion in s 31A may be satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions.
(d) There must be a high degree of certainty that the applicant/plaintiff cannot succeed if the proceeding is allowed to go to trial in the ordinary way (Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 at [46] (p 275) per Gleeson CJ, Gummow, Hayne and Crennan JJ).
(e) At [25]-[26], French CJ and Gummow J also said:
25 Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a "fanciful" prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the Court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
26 Where an application under s 31A requires consideration of apparently complex questions of fact, then the caution uttered by Lord Hope is relevant (see above at [21]). The importance of those considerations is amplified if the case involves resolution of issues of law and fact, or mixed law and fact.
(f) Section 31A requires that there be "no reasonable prospect of success". This is a different concept from the concept of "no real prospect of success" (per Hayne, Crennan, Kiefel and Bell JJ at [50]-[51] (pp 138-139));
(g) The statutory admonition is that a proceeding may be found to have no reasonable prospect of successful prosecution even if it is not hopeless or bound to fail (per Hayne, Crennan, Kiefel and Bell JJ at [52] (p 139)). At [52]-[53] (p 139), their Honours went on to say:
52 … it is important to begin by recognising that the combined effect of sub-ss (2) and (3) is that the inquiry required in this case is whether there is a "reasonable" prospect of prosecuting the proceeding, not an inquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail.
53 In this respect, s 31A departs radically from the basis upon which earlier forms of provision permitting the entry of summary judgment have been understood and administered. Those earlier provisions were understood as requiring formation of a certain and concluded determination that a proceeding would necessarily fail. That this was the basis of earlier decisions may be illustrated by reference to two decisions of this Court often cited in connection with questions of summary judgment: Dey v Victorian Railways Commissioners ((1949) 78 CLR 62) and General Steel Industries Inc v Commissioner for Railways (NSW) ((1964) 112 CLR 125).
(h) Section 31A requires a different inquiry to be undertaken from that undertaken under earlier different regimes (per Hayne, Crennan, Kiefel and Bell JJ at [56] (p 140));
(i) The expression "no reasonable prospect" should be understood in the manner explained by Hayne, Crennan, Kiefel and Bell JJ in Spencer as follows (at [58]-[60] (p 141)):
58 How then should the expression "no reasonable prospect" be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is "no reasonable prospect". The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like "no reasonable prospect" is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes (Weiss v The Queen (2005) 224 CLR 300 at 312-318 [31]-[47]), as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt.
59 In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.
60 Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to "no reasonable prospect" can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase "just and equitable" when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.
23 I propose to apply those principles in the present case.
24 I pause to observe that it is not possible on the material before me to make any sensible observation as to whether SOKS and NumberWorld, or either of them, have (or once had) good grounds for challenging the amended taxation assessments issued to them by bringing judicial review proceedings or other appropriate proceedings in this Court or by lodging appeal proceedings in the Administrative Appeals Tribunal. It appears that objections to those assessments were lodged by the applicant with the Commissioner on behalf of those corporations. Those objections were rejected by the Commissioner. Apart from pursuing avenues unconnected with the appeal rights available to SOKS and NumberWorld, neither of those corporations has taken its objections any further. No attempt to lodge further objections has been made.
25 The causes of action against the Commonwealth based upon the Competition and Consumer Act, however they may be put, confront a fundamental difficulty. Section 2A of the Competition and Consumer Act provides that, subject to certain matters which are not presently relevant, the Commonwealth is bound by that Act (including Sch 2, the Australian Consumer Law) only insofar as it carries on a business either directly or by an authority of the Commonwealth. Section 2C of the same Act provides (amongst other things) that imposing or collecting taxes does not amount to the carrying on of a business for the purposes of the Competition and Consumer Act.
26 As best as I am able to tell, the applicant's complaints in the present case are all directed to the conduct of the officers of the ATO who conducted the taxation audits of SOKS and NumberWorld and who were responsible for the issue of the amended taxation assessments. In particular, as I have already mentioned, the applicant contends that those amended assessments are incorrect.
27 The Commonwealth does not carry on any business by imposing or collecting taxes nor does it do so by conducting activities ancillary to those core activities (such as taxation audits). For these reasons, the applicant's case based upon the Competition and Consumer Act is bound to fail.
28 I should add that, in any event, the applicant has not articulated anywhere in his materials the basis upon which he contends that any of the sections of the Competition and Consumer Act invoked by him (ss 45, 46 and 47 and ss 18, 20 and 21 of the Australian Consumer Law) are engaged in the present case. He has not pleaded in his Statement of Claim any material facts that could conceivably constitute a basis for engaging any of those provisions nor has he set out such a basis anywhere else in his materials. Even if the applicant could overcome the effect of s 2A and s 2C of the Competition and Consumer Act, he would still have to confront and overcome these other fundamental problems with his case. These difficulties do not appear to be curable. In any event, the applicant was given ample time to put his house in order but has been unable to do so.
29 The other statutes upon which the applicant relies do not, on the face of things, give rise to any cause of action capable of being brought by him. In argument before me, the applicant was unable to articulate any claim based upon those statutes.
30 It may be that, in an appropriate case, a person might be able to plead and maintain a cause of action in negligence against officers of the ATO for carrying out their duties in a substandard way. The difficulty in the present case is that, despite the vast amount of material filed by the applicant, there is nothing in that material to suggest that the ATO officers whose conduct is criticised by the applicant acted other than in good faith in a genuine endeavour to perform their duties when they conducted the relevant audits of SOKS and NumberWorld and when they caused the amended taxation assessments to be issued. Even if, as the applicant contends, those amended taxation assessments are wrong, it does not follow that any of SOKS, NumberWorld or he has a cause of action in negligence against the Commonwealth.
31 In Pickering v Centrelink [2008] FCA 561, at [16]-[19] McKerracher J summarised the relevant authorities in the following way:
As established in Jones v Department of Employment [1989] QB 1 at pp 22 and 25, where an exercise of statutory power is subject to a right of review and the decision-maker exercises the power in good faith, the exercise of the power will not give rise to a common law duty of care. See also X v South Australia (No 3) [2007] SASC 125 at [189], [196] and Gimson v Victorian WorkCover Authority [1995] 1 VR 209. The theory behind this principle is that even if some 'negligence' has been proven, it can be cured by an appeal process. The existence of the appeal process is sufficient to remove reliance on breach of any duty of care.
This Court has reached similar conclusions in Scott v Secretary, Department of Social Security [2000] FCA 1241, Scott v Pedler [2004] FCAFC 67 and Wang v Secretary, Department of Employment and Workplace Relations [2006] FCA 898. In Scott [2000] FCA 1241, in the joint judgment of Beaumont and French JJ at [19] they said:
19 We agree with the trial Judge that the Act is not to be interpreted as indicating an intention to confer a private right of action for a breach of any of its provisions now in question, given especially the existence in the legislation of particular mechanisms for the review of decisions made within the Department.
The conclusion was cited with approval by the Full Court in Pedler [2004] FCAFC 67 (at [93]). Conti J further stated at [101]:
101 The authorities which have been cited in these reasons reveal a confined or restricted availability of any viable causes of action for damages at the instance of persons claiming to have been injured by the exercise of administrative power. So much has been exemplified by the High Court decisions in Crimmins, Sullivan, Graham Bailey Oysters and Shaddock, and by the majority judgment of the Full Federal Court in the earlier Scott litigation. …
In Wang [2006] FCA 898, Heerey J held at [48]:
48 The claims of the applicants are not within the jurisdiction of the Federal Court. The Court does not have jurisdiction to try criminal offences such as fraud and conspiracy. Breaches of the Social Security Act do not confer private rights for damages: Scott v Secretary Department of Social Security (2000) 65 ALD 79 at [24], Scott v Pedler [2004] FCAFC 67 at [1], [53], [93], [102-103] and [106]. Nor is there any duty of care owed: Scott v Pedler. The Federal Court does not have a jurisdiction of general oversight of the administrative efficiency of federal government entities.
32 Here, SOKS and NumberWorld had a right to challenge the amended taxation assessments issued to them either by way of judicial review or other proceedings in this Court or by way of merits review in the Administrative Appeals Tribunal. Neither of those corporations could have brought a case for damages in negligence against the Commonwealth. The applicant is in no better position. In fact, he is in a worse position because the losses which he postulates were not suffered by him but by SOKS and NumberWorld.
33 The applicant has not established for present purposes that he has a reasonable prospect of prosecuting any case in negligence against the Commonwealth.
34 It is impossible to discern any proper articulation of a claim for fraudulent misrepresentation or any basis for it.
35 The applicant also has to confront another fundamental problem. That is this. Whatever rights could conceivably have arisen as a result of the service of the allegedly wrongful amended taxation assessments issued by the Commissioner to SOKS and to NumberWorld, those rights are reposed in the corporations to whom the assessments were issued (viz SOKS and NumberWorld). The applicant cannot sue in his own name and for his sole benefit in order to recover for himself damages referable to losses suffered by those two corporations as a result of the issue of those amended taxation assessments. While it is true that the applicant owns and controls the corporations in question and will, therefore, ultimately suffer as a result of the issue of those amended assessments, it is a fundamental principle of corporations law that an action for damages which is intended to compensate a corporation for losses suffered by it must be brought by that corporation itself and not by one or more (or even all) of that corporation's shareholders. Although there are exceptions to this fundamental rule, those exceptions are not engaged in the present case. This particular defect would, however, not necessarily be fatal to the prosecution of the applicant's grievances as I would have been minded to encourage the applicant to remedy it by causing SOKS and NumberWorld to join the proceeding as additional applicants were there not other fundamental problems with the case. As matters presently stand, however, neither SOKS nor NumberWorld is a party to this proceeding.
36 For all of the above reasons, I am of the view that the proceeding should be summarily dismissed.
37 There is one matter to which I have not yet referred but which is relied upon by the applicant as a complete answer to the Commonwealth's application for summary dismissal. He claims that the relevant officers of the ATO have been guilty of criminal conduct. He claims that officers of the ATO have committed the statutory offence of abuse of public office (as to which see s 142.2 of the Criminal Code). None of the officers the subject of this allegation is a party to this proceeding. The applicant brought forward this contention for the first time in his reply argument in an attempt to take the case out of the types of cases which are amenable to s 31A relief (as to which, see subs (5) of s 31A of the FCA). An allegation of this character and seriousness should only be made if the applicant has material available to him which rationally supports the allegation. In addition, such an allegation will only be allowed to be pressed if it is clearly articulated and adequately supported by proper particulars.
38 The present proceeding is not a criminal proceeding within the meaning of s 31A(5) of the FCA. That conclusion is sufficient to dispose of the applicant's argument. However, I should make clear that, in any event, I am not satisfied that the applicant has a proper basis for making the allegation which he has made in the present case to the effect that ATO officers have committed a crime. No such basis is revealed in the materials before me. Nor has the allegation been clearly articulated and supported by proper particulars.
39 For the above reasons, the applicant cannot seek to defeat the current application merely by asserting that there has been criminal conduct on the part of the relevant ATO officers.
40 The Commonwealth has sought an order that I award costs in its favour on a lump sum basis in the amount of $15,000 inclusive of GST. That amount is a reasonable sum for the Commonwealth's costs of dealing with this matter. The applicant did not advance any submission against the Commonwealth's application. I therefore propose to accede to the Commonwealth's application and to assess its costs at $15,000 inclusive of GST. I will, therefore, make a lump sum order for costs in that amount.
41 Accordingly, the orders which I make are that:
(1) The Interlocutory Application filed by the applicant on 24 October 2013 be dismissed.
(2) Pursuant to s 31A of the Federal Court of Australia Act 1976 and r 26.01(a), (b), (c) and (d) of the Federal Court Rules 2011, the whole of this proceeding be dismissed.
(3) The applicant pay the respondent's costs of and incidental to this proceeding assessed pursuant to rule 40.02 of the Federal Court Rules 2011 in the amount of $15,000 inclusive of GST.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.