Logounov v Commissioner of Taxation

REASONS FOR JUDGMENT The nature of the Application 1 This is an Application to the Court, filed on 10 March 2000, to extend the time to file and serve a notice of appeal from a decision of the Administrative Appeals Tribunal ("AAT") to dismiss the Application for Review of George Logounov ("The Applicant") to the AAT in respect of certain adverse assessments to income tax for the fiscal years ended 30 June 1988, 1989 and 1990. Such dismissal was ordered by Senior Member Block of the AAT pursuant to s 42A(5) of the Administrative Appeals Tribunal Act 1975 (the "AAT Act"). I will refer to the present Application as the "Court Application" and to the dismissed Application for Review as the "Tribunal Application". Section 42A(5) of the AAT Act reads as follows: "If an applicant for a review of a decision fails within a reasonable time: (a) to proceed with the application; or (b) to comply with a direction by the Tribunal in relation to the application; a presidential member or senior member, on behalf of the Tribunal, may dismiss the application without proceeding to review the decision." The Tribunal Application was dismissed as long ago as 20 May 1998, and this present Court Application for an extension of time to appeal has consequently been lodged well out of the time of twenty-eight days allowed by s 44(2A) of the AAT Act, which provides as follows: "An appeal by a person under sub-section (1)… shall be instituted - (a) not later than the twenty-eighth day after the day on which a document setting out the terms of the decision of the Tribunal is furnished to the person or within such further time as the Federal Court (whether before or after the expiration of that day) allows; and (b) in such manner as is prescribed by rules of court made under the Federal Court of Australia Act 1976." 2 Given that an extension of time be granted pursuant to the Court Application, any such ensuing appeal to this Court could only be sustained on a question of law, by reason of s 44(1) of the AAT Act, such sub-section reading as follows: "A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding." There is thus no jurisdiction to review the AAT's decision below unless the same has involved an error of law in contrast to an error of fact or of fact and degree: Commissioner of Taxation v Brixius (1987) 16 FCR 359 at 366-7; FCT v Roberts and Smith (1992) 108 ALR 385 at 390. The Applicant contends that the conduct of Senior Member Block in dismissing the Tribunal Application pursuant to s 42A(5) constituted a denial of natural justice in refusing an adjournment of the hearing the Tribunal Application on the morning of its commencement on 20 May 1998. A question of law is therefore involved in the present Court Application: Sullivan v Department of Transport (1976-8) 1 ALD 383 at 402; New York Properties Pty Ltd v Commissioner of Taxation (1985) 7 FCR 401. 3 Order 53 Rule 7 of the Federal Court Rules governs this Court Application for an extension of time to file and serve the proposed notice of appeal from the decision of the AAT complained of; such Rule is in the following terms: "7(1) Application may be made to the Court or a Judge for an extension of the time specified in sub-section 44(2A) of the Administrative Appeals Tribunal Act 1975 for the filing or serving of a notice of appeal either before or after the expiration of the specified time. 7(2) Such application shall be made in or substantially in the form numbered 55B in the First Schedule. 7(3) An application shall be accompanied by an affidavit showing - (a) the nature of the case; (b) the questions involved; and (c) the reason why an extension of time should be given." The "terms of the decision", being the statutory expression used in s 44(2A)(a) above extracted, were furnished to the Applicant under cover of a letter dated 22 May 1998 from the AAT to the Applicant, notwithstanding that such document did not contain the reasons for the decision: Repatriation Commission v Tuite (1993) 39 FCR 540 at 544. With the assistance, I would infer, of the District Registry, the form of the present Court Application correctly purports to adopt Form 55B of the Federal Court Rules, reference thereon to Form 54A as originally presented having been deleted. I therefore do not think that the Respondent is correct in its submission that "The form of the application is misconceived", but even if that was the case, I would have treated the Court Application as being in substance properly before me, and I do not understand the Respondent to have submitted otherwise. I should add that at least since the filing of the Court Application, the Applicant has been represented by Counsel and Solicitors, the Solicitors being Penhall & Co, neither of whom acted for the Applicant in relation to the Tribunal Application. Circumstances giving rise to the disputed taxation assessments 4 The circumstances giving rise to the assessment of income tax which the Applicant challenged in the AAT Application proceedings may be summarised by reference to the content of the Applicant's contentious Income Tax Return for the year ended 30 June 1988. This document formed part of the s 37 bundle of documents lodged by the ATO with the AAT in the usual way, though such bundle was not formally tendered in the Court Application, nor so it would appear had been formally tendered to the AAT in connection with the Tribunal Application. No objection has been taken however by the Deputy Commissioner to the tender of such documents for the limited purpose of assisting the Court in relation to non-contentious matters, "other than matters touching on the excessiveness of the assessment", which I should record represents a sensible approach on the Deputy Commissioner's part. The circumstances thus to be initially summarised for the limited purpose just stated are as follows: (i) During the earlier fiscal year of income ended 30 June 1982, the Applicant purchased income producing property situate at Number 2 Bridge Street, Hurstville. At the time of such purchase, s 25A(1) of the Income Tax Assessment Act 1936 (as amended) was in force and read as follows: "The assessable income of a taxpayer shall include profit arising from the sale by the taxpayer of any property acquired by him for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit-making undertaking or scheme." According to the Applicant's Notices of Objection which were tendered in evidence, that is to say, the Notices of Objection relating at least to the years ended 30 June 1988 and 1989, there was included in the Applicant's income tax return for such earlier 1981-2 year of income a declaration made in accordance with the then existing s 52 of the Assessment Act, sub-section (1) whereof read as follows: "Any loss incurred by the taxpayer in the year of income upon the sale of any property or from the carrying on or carrying out of any undertaking or scheme, the profit (if any) from which sale, undertaking or scheme would have been included in his assessable income, shall be an allowable deduction: Provided that, in respect of property acquired by the taxpayer after the date of the commencement of this proviso, no deduction shall be allowable under this section (except where the Commissioner, being satisfied that the property was acquired by the taxpayer for the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or scheme, otherwise directs) unless the taxpayer, not later than the date upon which he lodges his first return under this Act after having acquired the property, notifies the Commissioner that the property has been acquired by him of the purpose of profit-making by sale or for the carrying on or carrying out of any profit-making undertaking or scheme." The policy of the proviso to s 52(1) was explained by Northrop J of this Court in FCT v Werchon 82 ATC 4322 at 4344 as follows: "The policy of the proviso is clear. The difficulties involved in determining whether a taxpayer acquired property for the purpose of profit-making, often many years after the acquisition, are notorious. The exception first referred to in the proviso continues the power in the Commissioner to determine that matter of fact at a time after the property has been sold under the first limb of sec. 26(a). The giving of the notification under the proviso places on record the purpose of the acquisition of property. If, subsequently, a profit results from the sale of that property, the application of the first limb of sec. 26(a) is apparent. Likewise with respect to the application of the second limb of sec. 26(a). If a loss results, the application of the first paragraph of sec. 52 likewise is made more apparent. The notification procedure referred to in the proviso is directed to questions of proof and in particular to the establishment of the requisite purpose for which the property has been acquired." Neither party put in evidence the Applicant's 1981-2 tax return, but it may be assumed that the Notices of Objection in evidence have correctly stated that such return was accompanied by a s 52(1) declaration. (ii) About six months after entering into such contract of purchase during the 1981-2 tax year, the Applicant entered into a contract for the resale of the property in favour of the Iraq Embassy upon the footing that settlement of the resale would take place within six months. Such contract for resale stipulated that settlement was conditional upon the approval of the local Council for the establishment of a cultural centre. In the upshot, Council approval was not forthcoming due to adverse publicity in the local community of the intended use, with the consequence that the Applicant was apparently left with the property unsold in his hands, and with the loss of the opportunity to have resold the property to the Embassy for a profit in the order of $250,000, which profit according to the Applicant, if it had been derived, would have comprised assessable income within s 25A(1) of the Act as it was then in force. Such 1988 Income Tax Return bears the endorsement of having been prepared by Paul A Campbell, Taxation Agent; (iii) Also according to the Applicant's 1988 Income Tax Return, the Applicant obtained a mortgage advance from the National Bank of Australasia on the security of the property, I presume to assist the acquisition of the property or else to replace other finance obtained to fund such acquisition. Because the property was not self-funding or sufficiently self-funding for the purposes of servicing mortgage repayments to the Bank and other outgoings costs such as Council rates, default occurred and the Bank entered into possession of the property as mortgagee and obtained a judgment for the amount of the mortgage indebtedness against the Applicant. The property was ultimately resold, whether by the Bank as mortgagee in exercise of its power of sale or by the Applicant is unclear from the 1988 tax return. In the meantime the Applicant had continued to sustain holding costs, and upon the sale of the property, he suffered a shortfall in respect of his mortgage indebtedness to the Bank, in relation to which he was able to secure a release upon payment to the Bank of the net proceeds of resale plus an additional $30,000.00. The original purchase price and legal costs of purchase had approximated $520,000.00, and the net outgoings relating to the property for the years 1980-1 to 1986-7 increased such capital cost of ownership in the Applicant's hands to $600,635.00, and by the following fiscal year 1987-8, the same had further increased to $675,770.00. The actual or approximate amount of the proceeds of resale, however and by whoever effected, is unclear from the limited extent of evidence presently before me. 5 The Respondent Deputy Commissioner disallowed tax deductibility in respect of the losses sustained by the Applicant in the circumstances described above, and the adverse Notices of Assessment the subject of the Tribunal Application were issued to the Applicant on 27 May 1992 in respect of the years ended 30 June 1988, 1989 and 1990, which thereby rejected the Applicant's claim to tax deductibility pursuant to s 52(1). The Australian Taxation Office was reasonably prompt in issuing such Notices of Assessment, since the Applicant's Tax Return for instance for the year ended 30 June 1988 was not received by the Australian Tax Office until 22 November 1991, according to the date stamp on the copy Return tendered in evidence. Notices of Objection in relation to the assessments at least for the years ended 30 June 1988 and 1989 were lodged by the Applicant with the Australian Taxation Office ("ATO") on 28 July 1992. The ATO did not give Notice of Disallowance of the Applicant's Notices of Objections until three and one-half years later on 16 January 1996. The s 37 documents do not disclose the reason for such latter delay on the ATO's part. The pre-hearing events involving the Tribunal 6 The initial course taken in the AAT in relation to the Tribunal Application has been conveniently summarised in writing by Counsel for the Deputy Commissioner for the ensuing period up to 21 May 1997 as follows: "29.3.96 Conference scheduled for 2.5.96 in the Tribunal. 3.5.96 Conference scheduled for 16.7.96 in the Tribunal (vacated at Applicants request). 17.7.96 Conference scheduled for 17.9.96 (subsequently vacated). 18.9.96 Telephone conference scheduled for 9.10.96. 10.10.96 Telephone conference scheduled for 20.11.96. 21.11.96 Telephone conference scheduled for 28.1.96. 29.1.97 Listed for call-over in the Tribunal on 9.4.97. 15.4.97 Directions hearing scheduled for 19.5.97 in the Tribunal (subsequently adjourned). Hearing date set for 23-25.7.97 (subsequently vacated). 21.5.97 Directions given by Tribunal for Applicant to file facts, issues, (?19.5.97) contentions and witness statements by 19.7.97; Commissioner to file evidence by 19.8.97. Hearing scheduled after 1.10.97. Directions given "that except for good reasons, such as serious illness, no further extensions of time will be allowed." The Tribunal file indicates that the conference scheduled for 17 July 1996 was also vacated at the Applicant's request, but that the remaining four conferences were "completed". The findings of Mr Block, Senior Member of the AAT, in relation to such scheduled conferences up to 21 May 1997, are as follows: "1. In this matter an application for review was lodged before this Tribunal on 14 March 1996. 2. …the Tribunal record indicates that there was a considerable number of conferences, some by telephone, and other relevant attendances. In this context: (a) On 24 March 1996 the applicant was provided, at this request, with a video outlining the procedures of the Tribunal; (b) A preliminary conference which was scheduled for 3 May 1996 was vacated at the applicant's request; (c) A preliminary conference was then re-scheduled for 17 September 1996; (d) On 16 September 1996 the applicant advised the Tribunal, firstly that he thought that the preliminary conference was scheduled for the following week, that is, 23 September 1996; secondly, that he had an appointment the following day with his accountant; and, thirdly, that he wanted to re-schedule the telephone conference for the second week in October 1996; (e) Various further telephone conferences were scheduled and held thereafter." 7 During the period of time covered by the chronology in [6] above, certain elaborations upon the above entries were made in AAT's records, apparently by Mr Block's Associate: "10 July 1996. Applicant's accountant, Paul Campbell, fell ill and advised the Applicant that he would be delayed in his preparations for submissions to the AAT; he further advised the Applicant to seek an extension of time to provide information required by the AAT. 10 July 1996. File note by Julianne Tavener… reads in part…: I rang Ms Glennon, rep. The Respondent. She indicated that she believes the Applicant is deliberately stalling the matter…. 16 September 1996. File note by Julianne Taverner reads in part: I rang George Logounov. He advised that (a) he thought the PC was next week… (b) he has an appt. tomorrow with this accountant (c) requests TPC (Telephone Conference) in 2nd week of Oct 96. 21 May 1997: Direction: This Direction is issued by way of confirmation of Directions agreed upon by the parties on 19 May 1997 specifying: 1. That the Applicant file his statement of issues, facts and contentions by no later than 19 July 1997; 2. That the Applicant file his statements of witnesses and all other evidence by no later than 19 July 1997; 3. That the Respondent file its evidence (if any) in reply by 19 August 1997; 4. That the hearing not be listed for hearing prior to 1 October 1997; and 5. That except for good reasons, such as serious illness, no further extensions of time will be allowed." The reference above to Ms Glennon, being the person recorded as having asserted to Mr Block's Associate on 10 July 1996 that the Applicant was "deliberately stalling the matter", was a reference to the ATO Officer identified in [12] below. Only one week's delay seems to have been occasioned by the re-scheduling of the preliminary conference. Otherwise the cause of delay is recorded as attributable to Mr Campbell's illness (Mr Campbell has been already identified in [4(ii)] above). 8 On the last occasion listed in [6] above, namely 21 May 1997, the Applicant appeared in person and the first appointed hearing dates of 23-25 July 1997 were vacated. A directions hearing was listed for 12 February 1998, following which a further directions hearing was scheduled for 4 March 1998. The Tribunal Application was then fixed for hearing from 20 April 1998 to 22 April 1998 inclusive. The Applicant promptly complied with the first of the Directions made on 21 May 1997 [7] by filing with the AAT on 18 July 1997 a statement of facts issues and contentions. By letter dated 8 July 1997, Mr Michael Griffith of M.C. Griffith & Company Solicitors notified the AAT that he had been appointed to represent the Applicant. By that letter the AAT was notified (apparently by Mr Griffith) that it was not intended to file any witness statements and the case to be presented would be entirely documentary in the form of so-called "section 37 documents" by then presumably filed with the Tribunal. Thus the Applicant duly complied with the Directions of the Tribunal of 21 May 1997. There is nothing before me to indicate whether any evidence in reply was ever filed by the Deputy Commissioner. 9 As indicated in [7] above, the AAT had directed that the matter was not to be further listed for hearing before 1 October 1997, and no such further or second listing date for hearing was fixed before 20 April 1998. In the meantime on 11 November 1997, Mr Griffith informed Mr Block's Associate, and she duly noted, that "…the applicant suffers from schizophrenia [and] is having a difficult time…" and that the Applicant "is also hoping to settle the matter". On 16 April 1998, a file note of Mr Block's Associate was made as follows: "10 am M. Griffith called - he had not received notice of the hearing in this matter which commences on Monday (20.4.98). He wanted to know if listing notices had been sent to him or Mr Logounov. I informed him that a listing notice had been sent to Mr Logounov's home address marked with attention to M. Griffith. I faxed him a copy of this notice. 2pm M. Griffith informed me that he had spoken to Mr Logounov who says he received no listing notice for Monday's hearing." On the following day (17 April 1998), Mr Griffith wrote to the ATO as following: "We act for the Applicant in these matters and refer to our telephone conversation today with Member Block's associate. We confirm that notice of the hearing dates was not given to us by the Administrative Appeals Tribunal. We further confirm that we were not aware of the hearing dates until advised thereof by the Respondent at approximately 10:30 this morning. We are instructed that our client has no recollection of receiving notice of the hearing dates and was not aware of the dates until advised thereof by us at approximately 11:00 this morning. We advise that these matters have not been prepared and are not ready for hearing on the part of the Applicant. In the circumstances we anticipate receiving instructions from our client to apply for an adjournment of the hearing and wish to put you on notice thereof. We advise that a copy of this letter has been faxed to the Respondent's solicitors." In relation to the first day of the then re-scheduled hearing, namely 20 April 1998, the Tribunal recorded the following events: "20.4.98 At the hearing, Mr Griffith produced a statutory declaration signed by the Applicant declaring in part as follows: 'I have no recollection of receiving a notice from the Administrative Appeals Tribunal advising that the Applicant had been listed for hearing on 20 to 22 April 1998. I was not aware that the Application was listed for hearing on 20 to 22 April 1998 until my solicitor Michael Griffith phoned me at approximately 11am on Friday, 17 April.'" The Applicant was not present at the AAT on that day, but in any event there is no suggestion in the materials before me that the ATO required him to submit then, or for that matter on any subsequent occasion, to cross-examination upon the contents of such statutory declaration, nor did the ATO seek to prove service of the notice of hearing above referred to in contradiction of the statutory declaration. Yet the ATO opposed the adjournment (see [17] below). Nor apparently did Mr Block on his own initiative seek to question the Applicant on the content of such statutory declaration. There could therefore be no basis for any disregarding on the part of the Tribunal of the content of that statutory declaration. 10 In the result, the AAT vacated hearing dates fixed for 20-22 April 1998, and on 23 April 1998 the AAT issued the following new set of directions, according to the "Chronology of Events" prepared by Counsel for the ATO: "1. That the Applicant file his witness statements, if any, by no later than 4 May 1998, and that the Applicant shall not lead any evidence of witnesses that are not submitted by that date; 2. That if the Applicant intends to file an amended statement of facts and contentions, he shall do so by no later than 4 May 1998; 3. That the hearing be re-listed from 20 to 22 May 1998; and 4. That if a postponement is sought by the Applicant on the basis of serious illness, a medical certificate will not suffice, and the treating doctor must be present in person before the Tribunal." Such Directions as subsequently signed by Mr Block and sealed by the Tribunal on 23 April 1998 were amended from what appears immediately above to the following (compare in particular the respective paragraphs numbered 4 above and below): "Direction: This Direction is issued by way of confirmation of Directions agreed upon by the parties on 20 April 1998 as follows: 1. That notwithstanding the fact that the Applicant has previously advised the Tribunal in writing that he does not intend to file any witness statements, he will be permitted to call witnesses to give oral evidence but only to the extent that he has filed witness statements by not later than 4 May 1998. 2. That if the applicant wishes to file an amended statement of facts and contentions, he must do so by no later than 4 May 1998; 3. That the hearing be re-listed for 20 to 22 May 1998 (all days inclusive); and 4. That excepting only on grounds of very serious illness and then only where a suitable medical practitioner gives evidence in person in support of a postponement, no further postponements will (having regard to the numerous postponements which have been granted previously at the request of the Applicant) be permitted." As will be seen from such Directions, a new hearing date was fixed for 20-22 May 1998. The reason for paragraph 4 of each version above was apparently related to Mr Griffith's mention of the Applicant's schizophrenia, which had been previously made to the Tribunal on 11 November 1997 in the circumstances described in [9] above. Paragraph 6 of an Affidavit of M.J. Walsh (a Solicitor in the employ of the Australian Government Solicitor), filed in the Court Application, states that directions were agreed between the parties on 20 April 1998, but does not explain how the differences in content of the two versions of the Directions, particularly as to paragraph 4 thereof, came about and in what context, and when and by what means the written directions were presumably communicated to the Applicant. Mr Block's Reasons for Decision presently sought to be reviewed state as follows in relation to the re-listing of the Tribunal Application for hearing: "In view of the numerous previous delays this Tribunal was reluctant to grant any further extension. Nevertheless, in the light of the statutory declaration by the applicant, although the applicant did not himself appear at the hearing, the Tribunal did agree to Mr Griffith's request to postpone the matter once more, and this time to dates which were at the hearing, agreed as being acceptable to the parties and being 20, 21 and 22 May 1998." If Mr Block was intending thereby to attribute to the Applicant entire culpability for the delay in the hearing of the AAT Application up to 20 April 1998, he did so without making allowance for the relevant circumstances concerning the loss of the 20-22 April 1998 hearing dates outlined in [9] above. 11 On 4 May 1998 (not 4 April as stated in paragraph 4 of the Tribunal's Reasons for Decision), Mr Griffith wrote to the AAT as follows: "On 20 April 1998, you directed me that if I am unable to get instructions within 2 weeks I must advise the Tribunal personally whether I will be continuing with the case. I therefore advise the Tribunal that I have advised my client that I intend to withdraw from the case and that I will confirm my withdrawal to the Tribunal by 4:00pm on Monday, 11 May 1998." On 6 May 1998, Dr Napper sent a fax to the Applicant's mother Mrs Sanders, in response to her fax to him which is not in evidence, containing the message "…if you do not have a solicitor acting for you it is impossible for me to prepare a medico-legal report". Nevertheless as will shortly be indicated, at least a brief report was provided by Dr Napper on 13 May 1998, presumably for litigious purposes (see [12] below). Then on 8 May 1998, according to paragraph 17 of Mr Block's Reasons for Decision the subject of this present Appeal, a fax was sent to the AAT by Mrs Sanders, as follows: "My son, George Logounov, is suffering from a very serious illness. Suitable medical practitioner will be giving evidence in person in support of postponement on 20 May 1998. George Logounov is not able at this stage to communicate and appears to be out of touch with reality. Medical report will be available on 20 May. I ask permission to speak to you about my son George on 20 May 1998." The "suitable medical practitioner" above referred to was not named, but appears to have been envisaged by Mrs Sanders to be Dr Parmegiani, who is referred to in [19] below. Such faxed information referred implicitly to the Applicant's condition of schizophrenia already notified to the Tribunal and, I would infer, was so understood by Mr Block in the light of the note made by his Associate to such effect (see [9] above). Mr Block's Associate made the following file notes: "3pm I rang M. Griffith re: his fax (4/5/98). M. Griffith informed me that he intends to withdraw from the case, and that was (sic) sent a copy of the fax to Mr Logounov with a covering letter which outlined his reasons for withdrawing and the issues that need to be resolved. Griffith said that if Logounov is unable to resolve these outstanding issues by 11.5.98, he would confirm his withdrawal to the Tribunal. Mr Griffith also stated that he thought my calling Mr Logounov may be of some assistance. 3:05pm Logounov not there: left message on voice-mail to return my call. Spoke to 'Val' who said Logounov is out of Sydney and will be returning on the morning of 13.5.98." As appears from the transcript of the proceedings on 20 May 1998, "Val" was the husband of Mrs Sanders. On 12 May 1998, Mr Griffith faxed to the Tribunal confirmation of his withdrawal from appearance on behalf of the Applicant in the Tribunal proceedings. On the next day, Mr Block's Associate made the following file note: "1pm Left message on Logounov's voice-mail to return my call. 2pm Spoke to M. Griffith: he has faxed the faxes of 12 May 1998 and 4 May 1998 to Mr Logounov, who should therefore be aware that M. Griffith no longer acts for him." The Tribunal proceedings of 20 May 1998 12 At the outset of the rescheduled hearing date of 20 May 1998, fixed as above stated by the AAT on 23 April 1998, the Applicant's mother Mrs Sanders identified herself as appearing as representative for her son the Applicant, as she had foreshadowed in her fax to the AAT of 8 May 1998 [11]. Also on 20 May 1998, and prior to attending the Tribunal as I would infer from what was stated by the ATO's representative at the hearing on that day (see [18] below), Mrs Sanders had faxed to the ATO for the attention of Ms Helen Glennon, and the ATO had received, the following message: "Re: Your ref: APRE/SB1/137779011 Re: My Son George Logounov Tax File No. 137779011 My son George Logounov is seriously ill and not able to care for himself. Medical certificate from Dr Napper is enclosed. Disability Support Pension has been applied for and should be granted in the next few weeks to him. He is not able to work and has been without income (no job) for more than 5 years. He is being supported by his relatives and is not able to cope. My son, George Logounov agreed for me to take over and to provide any information ATO requires. Please write to me and let me know what information you require. G. Logounov is getting divorced and has no money, no car, no house, no job. But he will have disability support pension soon. My son has a lot of debts (it appears more than $700,000) and allowed me to go through all his papers to find his total debts. May I beg you to hold legal action and to allow me to take care of son's affairs. Please let me know what information you require and what can I do to help. Thank you Sgn: N. Sanders I George Logounov allow and request my mum Nina Sanders to deal with ATO and all my creditors. Sgn: George Logounov." The attached medical certificate of Dr Napper read as follows: "Dr Howard J Napper St John of God Medical Centre 3 Grantham Street BURWOOD NSW 2134 Medical Certificate of George Logounov This is to certify that I am the treating psychiatrist of George Logounov. Mr Logounov has been suffering from chronic schizophrenia for 12 years. He presents with thought disorder and various persecutory delusions. I have treated Mr Logounov since February 1998. He is currently psychotic and is unable to manage his personal affairs. His mother, Nina Sanders, is responsible for his affairs. Mr Logounov appears unable to understand the complexities of his impending court case, unable to understand court procedure and unable to manage the legal aspects of his case. Mr Logounov does not yet have a solicitor prepared to manage his case. Michael Griffith had previously managed his case. Yours sincerely Sgn: Howard Napper 13/5/98." 13 A transcript of what was said on that day in the Tribunal, other than of the extempore judgment delivered by Mr Block, has been placed in evidence. Mr James, an officer of the ATO, represented the Deputy Commissioner on that occasion and apparently on previous occasions involving the Tribunal Application. By this time, Mr Block was aware of an assertion advanced on behalf of the Applicant that he suffered from schizophrenia (see [12] above), and in paragraph 21 of his Reasons for Decision, Mr Block mentioned that in his preparation for the hearing on 20 May 2000, he had read a medical textbook on the subject of schizophrenia. He there also said that he "found that in fact there are various types of schizophrenia, some more serious than others, some of which, with suitable medication, allow a patient to continue his life more or less normally, whereas there are other and more serious conditions which would tend to indicate that a patient is not able to manage his normal life". The medical certificate bearing date 13 May 1998 [12], which the Deputy Commissioner accepts was placed before the AAT in the context of the hearing on 20 May 2000, indicated that the Applicant was in the latter rather than the former category, as was also indicated from what Mrs Sanders stated to the AAT as recorded in [14] below. In extracting from the transcript of 20 May 1998 in the following paragraphs, I have corrected the erroneous spelling of her surname from "Saunders" to Sanders, and that of "Dr Knapper" to Dr Napper. 14 The opening dialogue between Mr Block and Mrs Sanders was as follows: "Your Honour, …about my son. He's completely sick. He's very sick. He put now on invalid pension, suffering from serious illness, all the time on medicine and he's not able at this stage to be here but if you give six months or how can you, maybe he will better. He's on strong medicine now. No job, no money, very sick, screaming and he apply for invalid pension. Give him six months, maybe we will have - I have form and wrote to my friend in Montreal, Canada, maybe she will send me money. I'll be able to pay for solicitor but I can't and all information, you know, will my son another…. He's sick, 20 years more with - he's very bad. Yes, he has very bad sickness." 15 Mr Block responded in the following terms: "MR BLOCK: Listen very carefully to me. Your son lodged this application more than two years ago. Since that time he has applied over and over again for postponements. Sometimes that application has been made by a solicitor, sometimes the solicitor comes in and then goes. Just to give you an idea of what has been going on in this matter, this is only since I came into it. The first hearing before me was in May 1997, that is a year ago. The applicant was then directed, that is your son was directed to file his statement of issues, facts and contentions by no later than 19 July. There were other directions and it was noted at that time that except for good reasons no further extensions would be allowed. Are you understanding me so far? MRS SAUNDERS (sic): Yes. MR BLOCK: Right, in November 1997 Mr Griffith who was then acting for your son asked for a hearing date of four days in March, that is March of this year. That was given. A directions hearing was listed on 12 February and that directions hearing resulted in a further directions hearing on 4 March. On that day the matter was listed for three days commencing on 20 April. Again an application for a postponement was asked for on the basis that your son said that he had not received the listings notice. Somewhat reluctantly I gave that extension and these days, that is today, tomorrow and Friday were agreed as new hearing days at that hearing in April. So in other words these days were chosen to suit the convenience of the parties…." 16 From the material I have been able to review in paragraphs [6-11] above, with respect to the Senior Member I am unable to accept that his above account to Mrs Sanders as to the history of the proceedings before the AAT given to Mrs Sanders in [15] above was wholly accurate. To recapitulate up to that point in time, the hearing dates which had been fixed consecutively before Senior Member Block were as follows: 23-25 July 1997 [6] 20-22 April 1998 [8] 20-22 May 1998 [10] The first hearing date was vacated on 21 May 1997, whether opposed or unopposed is unclear from the Tribunal record, and on that day directions were given to the Applicant first as to statements of issues, facts and contentions and secondly as to statements of witnesses [7]. The Applicant complied with the former and the latter became immaterial because it was indicated to the AAT by the Applicant's Solicitor that the Applicant's evidence would be wholly documentary [8]. A documentary case would not necessarily have been inadequate. Whilst s 25(A)(1) (formerly s 26(a)) "first limb" cases usually involved viva voce evidence of the taxpayer as to his or her subjective purpose of acquisition, the more compelling evidence adduced by taxpayers upon such issues tended to comprise contemporary documentary evidence which objectively evinced the requisite purpose of the taxpayer. The second hearing date was vacated because the Applicant asserted through his then Solicitor Mr Griffith that he had not received notice thereof, and such absence of notice was verified by the Applicant on oath by way of statutory declaration in the circumstances described in [9]. Also in relation to such second appointed hearing date, paragraph 4 of the second consequential version of directions is at variance with paragraph 4 of the first version which had been apparently orally made, in that the second version alone recorded in paragraph 4 "…no further postponements will (having regard to the numerous postponements which have been granted previously at the request of the Applicant) be permitted" (see [10] above). Moreover it is unclear whether the reference in the second version of the written directions to "numerous postponements" referred only to the two vacated preliminary conferences set out in [6] above, as to only one of which there was recorded as the reason for cancellation "vacated at the Applicant's request". One occasion recorded by Mr Block's Associate related specifically to the illness of the Applicant's Accountant Mr Campbell, who had prepared the 1988 income tax return [4(ii)]. The adverse assertions of Mr Block made to the Applicant's mother [15] imply that all postponements, whatever their number, were wholly attributable to the failure of the Applicant to fulfil his obligations to the Tribunal to secure an early determination of the Application, which seems to me upon the basis of the Tribunal records, which I have reviewed above, to have been an overstatement which required qualification. 17 The transcribed record of the dialogue between Mr Block and Mrs Sanders thereafter ensued as follows: "MR BLOCK: …On 20 April, with great reluctance I gave a further postponement against the opposition of the Commissioner and I said that there would be no further postponements excepting on the basis of serious illness and if serious illness were alleged I would not accept a medical certificate, I wanted to see the treating doctor in person. The treating doctor. Now, if Dr Napper (sic) is coming to this Tribunal he was due here at 10 o'clock. MRS SAUNDERS (sic): Excuse me, would you please to (sic) find he's sitting there now, Dr Napper, like to phone, do you want to phone him, he's sitting… MR BLOCK: Mrs Sanders, you appear to mistake what my function is. It's not for me to phone him. MRS SANDERS: Yes, I'm sorry. MR BLOCK: I think it's for you to go and phone him. MRS SANDERS: Yes, Paul Campbell, accountant will be witness to if you postponed. He will (sic) here too and I will have money. MR BLOCK: Mrs Sanders, what is the point of my postponing this matter? Your son has no intention of fighting this matter. Who is going to fight it for him? MRS SANDERS: But he is sick, very sick. MR BLOCK: He is sick but have you been appointed his guardian. MRS SANDERS: Yes. I am. MR BLOCK: Have you been appointed by the court? MRS SANDERS: Yes. Yes, I was. I put my application there because I look after him. I force him to take medicine. MR BLOCK: Have you got a certificate showing that you are his appointed guardian? MRS SANDERS: I don't know, where it is? I know that I put application there. He's not able to be here. If you give him - to feel better, to recover from this sickness, he takes strong medicine. MR BLOCK: But why do you think he's going to get better. MRS SANDERS: I hope that God help him to because I look after him now. I force him take medicine. MR BLOCK: Is he working? MRS SANDERS: No, he is put, no, no, he put for invalid pension now." Mr Block then questioned Mrs Sanders about the message recorded by his Associate in [11] above. Thereafter Mr Block directed Mrs Sanders to telephone "the doctor" and request his attendance by 11:00am, the time then being 10:25am. Mr Block added: "If the doctor is not here at 10 past 11, Mrs Sanders, I intend to listen to an application for dismissal." Up to that point in time, the ATO representative is not recorded in the transcript as having foreshadowed any such application for dismissal, so that Mr Block was thus conditionally eliciting an application on the part of the ATO for dismissal of the proceedings. And he did so again as will shortly appear. The transcript continued: "MR BLOCK: How far away is the doctor? MRS SANDERS: I just phone Dr Napper and another doctor, two doctors should be here. I just ask you very much to postpone him when he will come… MR BLOCK: I am not going to postpone it until I've heard the doctors. I will not grant the application. MRS SANDERS: Yes, yes. MR BLOCK: What I might do is dismiss the application, Mrs Sanders unless the doctor comes and persuades me that there's a genuine case for postponement. MRS SANDERS: I'm going to phone now. MR BLOCK: Right now. Gentlemen, hold on Mrs Sanders… MRS SANDERS: Where is the telephone? MR BLOCK: Just hold on a second, Mrs Sanders. The time now is 25 past 10. Mrs Sanders, listen to me carefully. Did you say the doctor is going to be here at what time. MRS SANDERS: 10 past 11, to wait, to wait. MR BLOCK: No, I will postpone until 10 past 11. If the doctor is not here at 10 past 11, Mrs Sanders, I intend to listen to an application for a dismissal. And we're talking about Dr Napper, are we? Do you understand what I'm saying? MRS SANDERS: Yes, yes. I understand. Dr Knapper and another doctor should be here too. MR BLOCK: Who is the other doctor? MRS SANDERS: I forgot the surname. I phone now, okay, I just phone…" 18 Prior to temporarily adjourning the hearing, in the context above stated, Mr Block asked for submissions on behalf of the ATO. Mr James on behalf of the ATO (already identified in [13] above) referred to "the length of time this matter has gone on, continual adjournment after adjournment, postponement, it just goes on and on". Without qualification in relation the circumstances referred to in [9] above, such a submission was an overstatement and should have been understood by Mr Block as such upon the basis of his own recall of the history of proceedings. Mr James next referred Mr Block to what he described as "the treating doctors report", which was apparently that of Dr Napper of 13 May 1998 extracted in [12] above, and he seems to have referred Mr Block also to the form prepared for Centrelink by Dr Napper and which bore the date 25 March 1998, which the Deputy Commissioner accepts by his counsel to have been also placed before the AAT during the hearing on 20 May 1998. Dr Napper had referred in those documents to the Applicant's history of schizophrenia of at least ten years, to his "thought disorder", to his ongoing psychotic symptoms, to the Applicant's inability to manage his personal affairs and to understand the complexities of the "court case", to the Applicant having previously seen a psychiatrist Dr Roberts, and to the Applicant being too unwell to participate in a training programme. In his Reasons for Decision, Mr Block referred to the "ticking" of boxes by Dr Napper in the Centrelink document to the effect that the Applicant was likely to be absent or late for work for "four or more days per month", and was "unable to work full days because of endurance problems" and "can understand and follow instructions less than half the time", but not to that of particular relevance to the adjournment application, namely "unable to communicate". Mr James thereafter submitted to Mr Block as follows (inter alia): "By Dr Napper …[is] virtually saying this person is a vegetable, basically. I mean, he can't do anything. And the ability to perform any kind of work over the next two years, he's saying he's not going to be able to do anything. Now, I would guess the doctors evidence is going to be something to that effect. Now, the matter can't go on indefinitely and in two years time there's no guarantee that he's going to be fit to prosecute his case. Our submission is that if the matter is dismissed and Mr Logounov recovers he can apply to the Tribunal under 42A(9) for the Tribunal to reinstate the application if at some stage in the future he recovers and in those circumstances the Commissioner wouldn't oppose that application but for the present - it deals with the situation at the present because otherwise we're just going to be coming back here next month and we'll be going through the same thing again and the following month and whether you adjourn for a month or six months, just like has done for the last two years, call overs, directions hearing, adjournments." From the history of events which I have already given, such statements on Mr James' part overstated the history of the proceedings before the Tribunal adversely to the Applicant. Section 42A(9), to which Mr James made reference, reads as follows: "If it considers it appropriate to do so, the Tribunal may reinstate the application and give such directions as appear to it be appropriate in the circumstances." Mr James did not say however that the ATO would support any such application for reinstatement. In any event, any such application would be misconceived, since the operation of sub-section (9) depends on the application for reinstatement having been made under sub-section (8), that is to say, within 28 days after notification of dismissal. Mr Block then observed to Mr James (inter alia): "I know on one occasion he appeared before me to ask for a postponement. Sorry, in May 1997 he represented himself and I must say he was perfectly comprehensive and comprehensible. … It is conceivable that his position has deteriorated since that (sic)." 19 Mr Block thereafter spoke again to Mrs Sanders. He referred to "Two years of almost unprecedented wasting of this Tribunal's time". A few minutes earlier, Mr Block had told Mrs Sanders: "Not once in my experience has the Tribunal ever been treated with such complete and total discourtesy, disdain, demonstrating a complete absence of desire to fight this case". I have already said enough in relation to observations of such width [16]. Mrs Sanders then said that "…I'm looking for him medicine and everything and I hope he will feel better, he will come himself here and I will receive money, I can pay solicitor…". Mr Block then indicated that Mr Griffith, the Applicant's former solicitor [8-9], had informed him that he had withdrawn from the Applicant's case because of absence of instructions. Whilst Mrs Sanders was still addressing the Tribunal, Mr Block announced that he had just received a fax from Dr Julian Parmagiani, a forensic and general psychiatrist, the text of which read as follows: "I have just received background information on Mr Logounov's case, after agreeing to give evidence at the AAT. I was originally asked to simply explain the terms of the medical certificate to the AAT on the grounds of Dr Napper, his treating psychiatrist, not being available. I have just contacted Dr Napper by phone, and discussed the case with him. I have decided not to attend the AAT hearing, as there are significant issues that need to be resolved before psychiatric testimony can be of any use. Dr Napper was in fact available, but he decided not to be involved with legal proceedings. He highlighted a number of valid concerns, and I suggest Ms Sanders should go through the standard procedures to obtain a psychiatric opinion." Mr Block read out such contents to Mrs Sanders. 20 Mr Block then adjourned the Tribunal at 10.45am until 11.00am, that is to say for fifteen minutes. He returned at 11.08am and said to Mrs Sanders: "What will I do now? No doctor? Perhaps I should tell you that Dr Parmagiani phoned my associate a few moments ago and he said that although he is not the treating doctor he had agreed to attend because he had been told that Dr Napper who is the treating doctor is out of the country but he had heard that Dr Napper is in the country and therefore he wasn't coming. Any comments. Mrs Sanders? Mrs Sanders responded: "Dr Napper said to me, I'm going from Sydney for a few days with his family. He's still in Sydney. Dr Napper. Why he didn't want to come here I don't know." Thereupon Mr Block asked Mr James whether he applied for a dismissal of the proceedings. After Mr James answered in the affirmative, Mr Block said "I'd like this recorded please in case there are any further developments", and he thereafter delivered his decision on an extempore basis. 21 A transcript of the extempore judgment is not in evidence before me, but I have been furnished with a one page "Decision" document bearing date 20 May 1998 and containing the Tribunal's seal, and a further eight page document which is unsigned but bears the date 20 May 1998, which latter document is described by the Applicant's Solicitor as a transcript of the reasons for the decision of the AAT given on 20 May 1998. As will later be mentioned, such reasons for decision were not apparently transcribed and made available to the parties until after the filing by the Applicant of the Court Application on 31 March 2000, that is to say, until about the end of July 2000, as Counsel for both parties have agreed. Counsel for the Applicant has submitted that the time taken between the lodgment of the Court Application and the fixing of the hearing date before me is substantially attributable to the AAT's unexplained delay in transcribing the reasons for the original decision, a submission to which I will later return in the context of my consideration of the second issue arising. The former document bearing date 20 May 1998 headed 'Decision", omitting formal parts, merely stated "Decision for the reasons given orally at the hearing, the application is dismissed pursuant to section 42A(5) of the Administrative Tribunal Act 1975". Yet the letter of the AAT of 22 May 1998, which forwarded such "Decision" document to the Applicant, commenced "Pursuant to section 43(3) of the [AAT] Act 1975 enclosed is a copy of the decision and reasons of the Tribunal in the above mater". Plainly such letter was erroneous to the extent that it represented that it was thereby enclosing the reasons for the AAT's decision of 20 May 1998. On 19 June 1998, Mrs Sanders wrote to the Deputy Registrar of the AAT as follows: "Dear Deputy Registrar Re: My Son George Logounov NT.96/136-138 Re: Appeal to Federal Court of Australia Re: Request for Copy of Reasons for Tribunal's Decision as per Section 43(3) of the Administrative Appeals Act 1975 For and behalf of my sick son George Logounov, and pursuant to section 43(3) of the A.A.T. Act 1975. I request a copy of reasons for the decision of the Tribunal in the above matter. We will be submitting an appeal to the Federal Court as per section 44 of the Act and we request a period of 28 days after receipt of a copy of reasons for the decision in writing to allow our solicitor to prepare appeal, for and on behalf of my son George Logounov. Sgn: his mother N. Sanders I hereby request and authorise my mum, Nina Sanders to act on my behalf at the Tribunal. Sgn: George Logounov." There is no suggestion in the evidence of any response to such letter, and in particular, no reasons in writing for the Tribunal's decision were provided for more than two years. The Respondent has submitted that "It is unknown by the Respondent whether this letter was faxed or sent by post or that the Tribunal received it. In the absence of the Tribunal file the matter is not clear". There was no cross-examination however in relation to the letter, and Mrs Sanders and the Applicant both made Affidavits in the proceedings. Accordingly I would accept the authenticity of the above letter of 19 June 1998. 22 Mr Block's written Reasons for Decision state (in paragraph 22) "…nor was there evidence that an application for the postponement, whether for six months or for any lesser period, would serve any useful purpose whatever". Mr Block thereafter concluded as follows: "23. In the course of my directions delivered in April I made it clear that I would require the appearance of the treating doctor before I would consider, on grounds of ill health, any further postponement. No such medical evidence has been produced. Moreover, and as I indicated during the course of the proceedings, the conduct of the applicant has been characterised from the outset as one of delay and as evidence of his reluctance to continue or contest these proceedings. I have before me no medical evidence other than a medical certificate notwithstanding, as I said previously, that I had indicated that medical evidence in person by the treating doctor would be required. 24. In all the circumstances I have no alternative but to accede to the application of Mr James, on behalf of the respondent, that this application be dismissed in accordance with the provisions of section 42A(5) of the Administrative Appeals Tribunal Act. The evidence and the previous history of this matter indicate in the clearest possible terms that the applicant has, having regard to the terms of that section, failed to proceed with the application and, moreover, has failed to company with directions of the Tribunal. The Tribunal is adjourned." The three issues arising for resolution 23 For the Applicant to succeed on the present Court Application, the Applicant must establish in his favour the resolution of the following three issues: First, whether the Tribunal Application, based as it is on s 42A(5) of the AAT Act, if re-instated by the upholding of the Court Application, has reasonable prospects of success, or put another way, whether there would be sufficient merit in favour of the Applicant in presenting to this Court an appeal pursuant to s 42A(5) of the AAT Act against Mr Block's dismissal of the Tribunal Application, if the extension of time to appeal as sought by the present Court Application be granted; Secondly, whether the Applicant has demonstrated a sufficient explanation of his long inaction in bringing the Court Application (ie this current application before me made pursuant to Order 53 Rule 7); and Thirdly, whether the Deputy Commissioner would be materially prejudiced if the Court Application was to be granted by me. For a recent instance where such three factors were enunciated and discussed, see Peazalski v Comcare [1999] FCA 366, and see also, in relation to the analogous context of an application for an extension of time to object to a taxation assessment, Brown v FCT 99 ATC 4516. The prospects of success if leave to appeal be granted 24 As to the first of the above issues, I make the preliminary observation that it is not necessary for the Applicant to additionally establish that denial of the opportunity for the Tribunal Application to be heard by the AAT necessarily deprived the Applicant of the opportunity of pursuing what would have been a likelihood of a successful challenge to the income tax assessment(s) referred to in [5] above. In Guse v Comcare (1997) 49 ALD 288, Burchett J at 292 said as follows: "Having pointed out that there were, or might have been, issues which Mr Guse could reasonably have advanced, had he been given the opportunity, why the application should not have been dismissed, I should add that the principle of natural justice does not place on him any onus to show that an opportunity to be heard would in fact have proved fruitful. Natural justice stands on a higher plane than that." On appeal on other issues (reported (1997) 49 ALD 495), the Full Court did not identify error in the principle so enunciated by Burchett J. It follows that on the hearing of any appeal to this Court against the AAT refusal of the adjournment on 20 May 1998, if leave be granted by me for an extension of time for the Applicant to appeal, it would be unnecessary for the Applicant at that stage of the Applicant's litigation to establish reasonable prospects of succeeding on any ultimate review of the adverse income tax assessments (see again [4] above). The Applicant submits here that he presently fulfils the requisite test before me upon the basis that he has sufficient merit in his proposition that he was denied natural justice by Senior Member Block, on account of the circumstances of and reasons advanced for the dismissal of the Applicant's Application for Review of his disallowed income tax assessments. In Sullivan v Department of Transport (ante at [2] above), Deane J (with whom Fisher agreed at 410), in relation to the AAT's statutory power to review income tax assessments, said as follows (at 402): "In dealing with an application for review, the Tribunal is plainly under a duty to act judicially, that is to say, with judicial fairness and detachment." And specifically in relation to the grant or refusal of adjournment applications, as follows (at 403): "The failure of a tribunal which is under a duty to act judicially to adjourn a matter may, concurrently, constitute a failure to allow a party the opportunity of properly presenting his case…." As I indicated at [2] above, issues of the foregoing description constitute questions of law. The requirement contained in s 39 of the AAT Act that the Tribunal shall ensure that a party to the proceedings being conducted before it be given a reasonable opportunity to present his or her case constitutes statutory recognition of the common law obligation which is in any event implicit. Where a Tribunal is under a duty to act judicially, as was the situation of the Tribunal Application here in connection with the determination of an adjournment application, the principle that a party must be given a reasonable opportunity to present his case is at the heart of the requirements of natural justice which the Tribunal is judicially obliged to observe and implement in connection with the performance of such duty (see R v Moodie (1977) 17 ALR 219 at 225). Sub-section 39(1) of the AAT Act in its present form, and so far is presently material, reads as follows: "…the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case and, in particular to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents." Indeed, given that the rules of procedural fairness apply to AAT hearings in any event, it may rightly be said that s 39 is probably superfluous, as Mr S Hinchcliffe explained in his Article "Theory, Practice and Procedural Fairness at Administrative Appeals Tribunal Hearings" (1995) 13 Aust Bar Rev 243 at 256. In Fletcher v Commissioner of Taxation (1988) 19 FCR 442 at 454-5, the Full Federal Court (Lockhart, Wilcox and Burchett JJ) said as follows: "…[T]he law relating to procedural fairness has evolved considerably since 1963, to the point where Mason J was able to say, in Kioa v West (1985) 159 CLR 550 at 584; 'The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention.' Mason J (at 585) went on to speak of the expression 'procedural fairness' as conveying 'the notion of a flexible obligation to adopt fair procedures which are appropriate and adjusted to the circumstances of the particular case'. We see no reason to doubt that the obligation of procedural fairness, understood in the sense explained by Mason J, applies to the proceedings of the Administrative Appeals Tribunal, in a taxation case as much as in any other case. The duty of the Tribunal can be likened to that of a Court." 25 There is merit, in the sense discussed in [24] above, in the contention of the Applicant to the effect that dismissal of the Tribunal Application on 20 May 1998 constituted a denial of natural justice on the AAT's part, an issue which as indicated in [24] above I am not required to finally determine in the context of this Court Application. I have reached the conclusion as to the existence of such merit for the following reasons at least cumulatively: (i) The scheduled hearing dates previously fixed for 20-22 April 1998 were not shown to have been vacated by reason of any culpability on the Applicant's part; indeed it would appear that the contrary was the case: see [16] above; (ii) The previous hearing dates fixed for 23-25 July 1997 were vacated, albeit at the instance of the Applicant, two months in advance, thereby minimising inconvenience to the Tribunal's hearing lists, if the same had been then under pressure, which is unclear; no hearing dates had been fixed prior to 23-25 July 1997; (iii) Prior to the initial hearing dates fixed for 23-25 July 1997, there were cancelled preliminary conferences, but the same do not appear to have exceeded two in number: see [6] above. During that preliminary period of time, the Applicant also occasioned some delay in preparation of the written submissions directed by the AAT to be filed, but such additional delay was apparently occasioned by the illness of his Accountant who had prepared the comprehensive income tax return of the Applicant for the 1987-8 fiscal year [7]; (iv) There had been nevertheless presented to the AAT the Applicant's Statement of Facts and Contentions in a timely manner [8], and the Applicant's then Solicitor had indicated that he would not be adducing any viva voce testimony from the Applicant or any witnesses [10]; conversely there had been no direction to the ATO to present a statement of facts and contentions that I have been able to detect or locate in the documentary material presented to me; there was an earlier direction made to the ATO to file any evidence in reply [7], but I have not encountered any indication of the ATO having propounded any such evidence; the inference I would draw is that the ATO was simply intending to put the Applicant to proof of its case, which it was entitled of course to do; doubtless it was ready to do so and to defend its assessment, in the light of the time it took to disallow the Applicant's Notices of Objection [5]; consequently to the extent that the proceedings had become protracted, there was not the level of prejudice to the ATO which delay in prosecution of proceedings might otherwise have occasioned; (v) Whilst the withdrawal by Mr Griffith as Solicitor for the Applicant from the Tribunal proceedings about 16 days prior to the hearing date fixed for 20 May 1998, upon the basis of his inability to obtain instructions from the Applicant, carried the consequence that the Applicant became potentially responsible for loss of the 20-22 May 1998 hearing date for that reason alone [11], nevertheless that circumstance needs to be balanced against the circumstance that following upon such withdrawal of legal representation, the Applicant's mother promptly informed the AAT on 8 May 1998 that the Applicant was "suffering from a very serious illness", and appeared "to be out of touch with reality", and that "a suitable medical practitioner will be giving evidence in person in support of the postponement on 20 May 1998" [11]; (vi) Mr Block had already been aware of the Applicant's condition of schizophrenia, and that the Applicant "is having a difficult time", having been so informed by Mr Griffith on 11 November 1997 in the circumstances described in [9], and hence no doubt the reasons for the directions of the AAT made on 23 April 1998 as to the adducement of medical testimony [10]; nevertheless it was reasonably apparent that such medical condition of the Applicant had at least some bearing upon Mr Griffith's withdrawal from legal representation by reason of Mr Griffith's assertion of inability to obtain instructions from the Applicant [11]; (vii) At or prior to the commencement of the proceedings on 20 May 1998, Mr Block appears to have been provided with the medical certificate dated 13 May 2000 of Dr Napper, which had been also sent to the ATO under cover of Mrs Sanders' letter of the same day namely 20 May 2000 [12] and [18], doubtless in anticipation of the Applicant's schizophrenic condition becoming an issue at the hearing on 20 May 2000; at the same time Mr Block appears to have been provided with Mr Napper's Centrelink Report of 25 March 1998 [18]; Mr Block could not reasonably have been left in any doubt from such material that the Applicant was suffering from a serious psychotic condition and had become radically disadvantaged in the presentation of his case by the recent resignation of his legal representative, and was not able to present his own case as a litigant in person; (viii) It should have been readily apparent to Mr Block that Mrs Sanders was unable to present the Applicant's case for setting aside the taxation assessments, and hence the reason why she was seeking a postponement of the hearing for at least six months to enable her to raise the funds needed to instruct a replacement legal representative; if the postponement of the hearing for a further period of six months was considered to be excessive, at least initially, a shorter period of adjournment could reasonably have been entertained in the first instance in order to ensure that genuine efforts were being made to obtain legal representation; moreover by this time (May 1998), it was well known throughout the legal community in Sydney that many firms of solicitors, including those of the largest sizes, and in addition the NSW Bar Association, were willing to provide resources for legal representation upon a pro bono footing in circumstances considered to be reasonable in terms of prospects of success; accordingly it would be strongly arguable that the application for an adjournment merited a favourable response at least in order to afford the Applicant a reasonable opportunity to replace the legal representative, who had resigned from the proceedings about two weeks earlier, with a pro bono lawyer; (ix) Given that Mr Block had formed the view prior to the hearing date, based upon his own private reading on the subject, as to variations in gravity of the condition of schizophrenia [13], it is understandable that he would wish to hear from a medical practitioner in person in connection with the adjournment application; however to have terminated forthwith the Applicant's entitlement to review of his adverse taxation assessments by reason of the non-attendance at the Tribunal of a medical practitioner to verify the written material from Dr Napper already before him is difficult to justify; in that regard I would observe that for decades, judicial officers have traditionally recognised the need in the public interest to accommodate the competing demands upon the professional time commitments of specialists medical practitioners within the exigencies of litigation; putting aside the confusing differences in the context of paragraph 4 of the critical directions issued by the Tribunal on 23 April 1998 (to which see [10] above], it seems to me that there is a very real prospect that upon any hearing of an appeal against Mr Block's decision now complained of, the Court may hold that the refusal of the adjournment application and dismissal of the Tribunal Application on the ground of non-attendance of a medical practitioner in the Tribunal within the time regime stipulated by the Senior Member, constituted in the circumstances of this case a denial of natural justice; (x) Of course the circumstances of the opposing litigant, the Deputy Commissioner, were also material to Mr Block's decision; there was detriment to the ATO in the unnecessary prolongation of the litigation and in having its officer Mr James diverted from his other duties of office on account of the postponement of the hearing, but such a detriment was hardly comparable to the converse detriment of the Applicant as a litigant apparently placed already on the vulnerable edge of society; as I have already indicated, the Deputy Commissioner would appear to have been relying in any event in the litigation before the AAT upon the statutory advantage already conferred by s 190(b) of the Income Tax Assessment Act (see [16] above), and I should add s 177(1) of the Act (and see generally F.J. Bloeman Pty Ltd v FCT (1980-1) 147 CLR 360), and Mr James registered no prejudice with the Senior Member by reference to the availability of witnesses or otherwise (see again [18] above); moreover the ATO was not in a position to assign all culpability for delay upon the Applicant in securing the finalisation of the assessment and income tax collection process, having taken three and one half years for its part to respond to the Applicant's notices of objection (see again [5] above); nevertheless it was not a situation of the Deputy Commissioner initiating the process of termination of the proceedings by for instance making any submission of prejudice which would be occasioned to the ATO by reason of an adjournment; it was not until after the dialogue extracted in [17] above, namely on the eighth page of the transcript of the proceedings of 20 May 1998, that Mr Block asked the Deputy Commissioner's representative Mr James "…What do you suggest?", to which Mr James first answered "Mr Block, that decision is up to you"; (xi) It follows that Mr Block's conclusion that there was no evidence "…that an application for the postponement, whether for six months or for any lesser period, would serve any useful purpose" was not the decisive question for him to ask; rather in the light of all the circumstances I have recounted, the appropriate question to be asked was whether in all the circumstances of the case which I have reviewed, being the circumstances summarised in sub-paragraphs (i) to (x) above, it was correct and just for the AAT to terminate forthwith the Applicant's reference to the Tribunal with the inevitable financial consequences which would ensue to the Applicant. 26 The Respondent Commissioner has drawn my attention to the decision of Sackville J in Greer v Deputy Commissioner of Taxation [1999] FCA 933, and in particular [40] and [42] hereof respectively as follows: "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. 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." However the present Applicant's "chronic schizophrenia", and accompanying "thought disorder" and "psychotic" condition, and his consequential inability to manage his personal affairs, to cite from Dr Napper's report of 13 May 1998 [12], his loss of legal representation about sixteen days prior to the hearing date without replacement, and his mother's lack of comprehension of the issues in the litigation and familiarity with Tribunal procedures, all referred to by Dr Napper in his report extracted in [12] above, together with the Applicant's inability to communicate which was 'ticked" in the circumstances referred to in [18] above, and the Applicant's likely inability to raise funds for about six months in order to retain a new solicitor [14], duly combine to place the circumstances of the Applicant here involved in quite a different context to that involved in Greer. The history of the taxpayer's litigious behaviour in Greer, involving as it did the bankruptcy of the taxpayer at the instance of the ATO in relation to default assessments based on undisclosed revenue sources including (mainly) the illicit sale of drugs, the non-pursuit of AAT proceedings by decision of the taxpayer's trustee in bankruptcy, the discontinuance of the proceedings by consent of the taxpayer, and subsequent reinstatement of the AAT proceedings in somewhat extraordinary circumstances, followed thereafter by the non-appearance by the taxpayer or any person on his behalf, combine to present quite a different landscape to the proceedings now before me. 27 I have therefore concluded that the Applicant has sufficiently reasonable prospects of succeeding on an appeal to this Court, instituted pursuant to s 44(2A) of the AAT Act, against Mr Block's decision made pursuant to s 42A(5) of the AAT Act, to justify an order on my part for an extension of time, subject to the remaining two issues which require to be addressed. Adequacy of explanation for delay 28 The next hurdle for the Applicant to overcome is his protracted failure, following upon the AAT decision of 20 May 1998, to file the Court Application until 10 March 2000. I accept the submission of the Respondent Commissioner that the likely catalyst for the ultimate lodgment of the Court Application was the commencement of recovery proceedings in the District Court by the Deputy Commissioner on or about 12 February 2000. That circumstance is not however decisive of this further hurdle for the Applicant to overcome for reasons which may emerge, and it is necessary to also take account of certain other events which took place after the Tribunal application was dismissed. A convenient starting point is the Applicant's Affidavit of 10 March 2000 and paragraphs, 4, 5, 6 and 7 thereof in particular, which read as follows: "4. Annexed hereto marked "B" is a true copy of a letter dated 20 May 1998 transmitted by facsimile to the Australian Tax Office and the enclosed medical certificate of Dr Howard Napper. 5. Prior to and on the date fixed for hearing on my appeal, namely 20-22 May 1998, I was seriously ill and in receipt of a Disability Support Pension. I was unable to afford representation and unable to represent myself. 6. I am informed by my mother Nina Sanders and verily believe that she attempted to have Dr Howard Napper attend the Tribunal to give evidence as to my illness as provided in the Direction of 23 April 1998 issued by the Tribunal, however Dr Napper was unavailable to attend the Tribunal because of work commitments. 7. Consequently, the Administrative Appeals Tribunal determined my appeal ex parte on 20 May 1998 and without my having an opportunity to comply with Directions for witness statements due to my ill health." 29 The reference to "witness statements" in paragraph 7 above thereof is at odds with what I have recorded at [16] above and the reference thereto should be put aside. The first material matter to which reference should be repeated is the omission of the AAT to provide to the Applicant the reasons for its decision as required by s 43(3) of the AAT Act, in the circumstances described in [21] above, and in particular the unanswered request made by Mrs Sanders by letter to the AAT for provision of the same. Once served with the ATO's District Court recovery process, the Applicant wrote again to the Registrar of the AAT on 10 March 2000, that is to say, on the same day as the lodgment of the Court Application, in the following terms: "Re: G. Logounov and Commissioner of Taxation NT 96/136-138 On 20 May 1998, Mr J Block dismissed my Application pursuant to section 42A(5). On 19 June 1998, my mother Nina Sanders transmitted by facsimile a letter to you requesting a copy of the reasons for the Tribunal's decision pursuant to section 43(3) of the Act. By letter dated 22 May 1998 - Ref: NT 97/1361 I was forwarded a copy of the decision and reasons for the decision. However, the document forwarded stated under the heading "Decision" only "for the reasons given orally at the hearing, the application is dismissed pursuant to section 42A(5) of the Administrative Appeals Tribunal Act 1975". I understand that the document forwarded is not a compliance with my request made within time pursuant to section 43(3). Please forward to me a transcript of the reasons for decision." Significantly, the AAT did not write back and deny receipt of such fax of 19 June 1998, and as I have earlier pointed out in [21] above, such assertion made on behalf of the Applicant as to non-compliance with s 43(3) of the AAT Act was sustainable. As I have indicated in [21] above, in fact no reasons for decision, in the sense required by s 43(3), had ever been furnished by the AAT to the Applicant. However, the Respondent rightly points out that the Applicant did not further press the AAT to remedy such non-compliance on the AAT's part until after the commencement of the District Court proceedings on 12 February 2000. Also on 10 March 2000, Penhall & Co Lawyers of Burwood wrote to the Registrar of the AAT on behalf of the Applicant and complained of the failure of the AAT to provide a copy of the reasons for dismissal of the AAT Application. Presumably Penhall & Co had been retained to act for the Applicant shortly prior to 10 March 2000. Ultimately the Reasons for Decision were finally provided to the Applicant at the end of July 2000, as the parties mutually agree, for reasons which remain nevertheless unexplained by the AAT; incidentally, Mr Block announced on 20 May 1998, immediately prior to delivery of his reasons orally that he required the same to be recorded "…in case there are any further developments" (see [20] above). The AAT was doubtless prompted further by Mr Penhall's letters to the AAT of 10 July 2000 and to Auscript of 18 July 2000, both of which have been placed in evidence before me. Nevertheless, the non-compliance by the AAT of its statutory obligations to provide in a timely way the reasons for its Decision of 20 May 1998 does not necessarily vindicate Applicant's inaction in making the Court Application until 10 March 2000. I will return to that subject shortly.