Petroulias v Commissioner of Taxation

EX TEMPORE REASONS FOR JUDGMENT 1 This is an application filed on 5 September 2011 by Mr Petroulias, the applicant in these proceedings, to have me recuse myself. It would have been preferable if I were able to deal with this application soon after it was filed, but various events have intervened to make that impossible. As a consequence, when this matter was last before me on 26 October 2011, I set Mr Petroulias' application down for hearing today and made consequential orders, including orders requiring the parties to file any materials upon which they wished to rely. 2 At the outset, I should record that none of the procedural issues that I considered in Margarula v Northern Territory (2009) 175 ALR 333; [2009] FCA 290 arises in this application. That is, whether it should be brought on a notice of motion (interlocutory application since 1 August 2011); whether the application involves any disputed facts; and finally, whether there is any legal unsoundness in my making an order to recuse myself (if that were the course I had decided to take). 3 At the hearing, Mr Petroulias appeared in person and Mr Fagan SC and Mr Hmelnitsky appeared for the Commissioner of Taxation. 4 The crux of Mr Petroulias' application was that during a directions hearing in this matter in July 2011, I had "expressed clear views about significant issues in the case". The transcript of that part of the directions hearing where Mr Petroulias alleges I did that is set out below. It followed an exchange between Mr Fagan and myself about a garnishee notice that had recently been issued by the Commissioner of Taxation (the Commissioner) to a Mr Robertson, a barrister, whom Mr Petroulias claimed was assisting him to prepare his amended statement of claim. Mr Petroulias had raised this issue earlier in the directions hearing and I told him that if he wished to pursue it, he should file a notice of motion. The relevant part of the transcript is as follows (at pp 36-37): Mr Petroulias: Yes, your Honour, thank you. The missing exhibit 7 might shed some light on this. I'm trying to locate it, get it here, because it goes to that point and so does exhibit 6. I don't think you've obviously had time - because we've been discussing - to properly read that affidavit, but the suggestion is quite serious, and it is that all lawyers that I have used have been frustrated to the point where they have ceased contact. One of the reasons why the pre-paid professional case went to the High Court and then back to Nicholas J was precisely because the lawyers involved were audited, had - their liens were not recognised in the garnishee notice, and that is what exhibit 7 is about. So their liens were not recognised and they did not, as a consequence of that - His Honour: Mr Petroulias, I don't propose to pursue this issue unless you have got a notice of motion before me. I've raised it with Mr Fagan out of a concern - Mr Petroulias: Well, then, your Honour - His Honour: - to find out what exactly motivated the garnishee notice, but I'm not doing that because I intend to deal with any allegation that you're making that the conduct involves contempt or is part of a deliberate strategy. Mr Petroulias: Sorry, your Honour, I think you're employing the wrong legal test. The test in Devonk and other cases is not the intention but the effect. The Commissioner can be as - His Honour: Mr Petroulias, I'm not dealing with an application by you - Mr Petroulias: Yes. His Honour: -in relation to this garnishee notice. You haven't got a notice of motion before me in relation to that. 5 When I pressed Mr Petroulias to identify the "significant issue" upon which I had expressed clear views in this exchange, he described it as the alleged abuse of power by the Commissioner in issuing garnishee orders to any legal advisers he employed to ward them off providing any assistance to him in preparing his statement of claim. I might interpolate that the luncheon adjournment occurred soon after the exchange with Mr Petroulias (above) and after the directions hearing resumed, Mr Fagan informed me that (at p 39 of the transcript): … the Commissioner is willing to withdraw that garnishee notice, which is, I think, annexure 4 to Mr Petroulias's affidavit of today's date, and the Commissioner will do that. And on that basis, it is our submission, your Honour, that there could be no impediment now to Mr Petroulias being able to redraft his statement of claim pursuant to the leave your Honour has indicated you are willing to give him within the 28 days. 6 Mr Petroulias also claimed that I had "bargained" with him in relation to the withdrawal of the contempt proceedings he had earlier issued against Mr Cheetham, an officer of the Australian Taxation Office, in return for more time to file his amended statement of claim. He claimed that bargaining had occurred in a way that would lead a reasonable bystander to conclude that I had shown "strong favouritism" to Mr Cheetham and I may not, therefore, approach the resolution of the issues in his case in a fair and impartial manner. The transcript of the directions hearing where that issue was canvassed occurred immediately after the part set out above. It is as follows (at p 37 of the transcript): Mr Petroulias: Well then why don't we adjourn it until I get one? I mean, have this same - sorry, have the argument again and this time with proper submissions. His Honour: Well, if you wanted to do that you should have filed the notice of motion before now. What I'm dealing with now is your application to replace the existing statement of claim with another statement of claim. Just before I stand the matter down to 2.15, if you decide - and it's completely a matter for you, I'm not pressuring you to do this, but if you decide that you are not going to pursue the contempt charges against these two people, then that will have an affect on the period of time you are allowed for the statement of claim obviously. As I said, that's a matter for you. Mr Petroulias said: That is - well, obviously that is a bargain I have to accept, your Honour or horse trade or whatever you call it. His Honour: Well, you can think about that over lunch. 7 To understand how this situation arose, it is necessary to briefly record some of the history of these proceedings. Mr Petroulias issued these proceedings in November 2010. The proceedings were accompanied by a 94-page statement of claim, which set out four causes of action. One sought to attack a taxation assessment issued by the Commissioner and others alleged that officers of the Commissioner had been guilty of the tort of misfeasance in public office. The Commissioner's immediate response to the proceedings was to file a notice of motion seeking to have the proceedings struck out. That was set down for hearing on 2 February 2011, almost exactly a year ago. 8 At that hearing, after both parties had put their arguments , I ordered the statement of claim be struck out and granted leave for Mr Petroulias to file an amended statement of claim by 18 March 2011. An amended statement of claim was filed on 18 April 2011. However, it became clear in subsequent directions hearings that that document may not have been the final version of the statement of claim that Mr Petroulias wished to rely upon. In any event, the Commissioner applied to strike out that amended statement of claim. That application was set down for hearing on 19 May 2011. It was not finalised on that date, but adjourned to 18 July 2011. 9 In the meantime, it appears (although I cannot find any record of such an order on the Court file) I extended the period during which Mr Petroulias was to file a further amended statement of claim to 18 July 2011. Then, on 18 July 2011, I further extended that period to 29 August 2011. While Mr Petroulias' application of 5 September 2011 was filed after that date, no further amended statement of claim was filed. Among the other orders sought in the application of 5 September 2011 were orders that the proceedings be temporarily stayed until various of the applicant's proceedings in other courts and tribunals were dealt with. 10 On 28 October 2011 the Commissioner filed an application to have the proceedings dismissed for failure to comply with the orders for delivery of a further amended statement of claim by 29 August 2011. No further amended statement of claim has been filed to this date. 11 This is a very potted summary of the history of these proceedings over the past 14 months or so. For example, I have made no mention of the parallel appeal proceedings that are still on foot and awaiting hearing in the Full Court. 12 The principles relevant to an application of this kind are well-established. In NTD8 v Australian Crime Commission (2008) 249 ALR 559; [2008] FCA 984 at [40]-[41], I summarised them from the High Court decision of Ebner v Official Trustee (2000) 205 CLR 337; [2000] HCA 63 (Ebner). They include the following: ● Absent actual bias, the test for disqualification on the basis of apprehended bias is: "a judge is disqualified if a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide". ● "The question is one of possibility (real and not remote) not probability" ● "… [the test] requires no prediction about how the judge or juror will in fact approach the matter". (Paragraph references omitted) 13 In Ebner (at [24]), the High Court noted that in Webb v The Queen (1994) 181 CLR 41, Deane J had identified at least four distinct, though overlapping, categories of cases involving disqualification for apprehended bias, viz interest, conduct, association and extraneous information. This application falls into the conduct category. I interpolate that because an application of this kind has to be made before the judicial officer the subject of the recusal, it might be thought to create a situation where the judicial officer concerned becomes a judge in his or her own cause. However, this view is erroneous in light of an appreciation that there is no "cause" as such because a judge does not have a personal interest in hearing a particular case. Rather, as was emphasised by the High Court in Ebner at [19]: Judges have a duty to exercise their judicial functions when their jurisdiction is regularly invoked and they are assigned to cases in accordance with the practice which prevails in the court to which they belong. They do not select the cases they will hear, and they are not at liberty to decline to hear cases without good cause … If one party to a case objects to a particular judge sitting, or continuing to sit, then that objection should not prevail unless it is based upon a substantial ground for contending that the judge is disqualified from hearing and deciding the case. 14 So the question I have to decide is whether I consider a third party - that is, a fair-minded lay observer - might, in the sense of it being a real, not remote possibility, reasonably apprehend that I might not bring an impartial mind to the resolution of the questions I will be required to decide in this case. I have already identified the conduct that Mr Petroulias says might lead me to decide his case, other than on its legal and factual merits. That is, the comments I made on 18 July 2011 as recorded at p 37 of the transcript. Mr Petroulias characterises that conduct in two ways. First, what may be described as preconceived views about his case (see [4] above), and secondly, displaying favouritism to officers of the Commissioner (see [6] above). In relation to preconceived views, in Vakauta v Kelly (1989) 167 CLR 568 at 575, Dawson J, referring to an earlier decision of the High Court, said: … when bias arising from preconceptions is in question, as distinguished from bias through interest, there must be strong grounds for finding its existence. A judge "must so have conducted himself that a high probability arises of a bias inconsistent with the fair performance of his duties with the result that a substantial distrust of the result must exist in the mind of reasonable persons". 15 Bearing in mind the statements of principle in the cases set out above, I do not consider the statements I made at p 37 of the transcript of the directions hearing on 18 July 2011 could possibly be interpreted by a fair-minded observer as indicating that I might not bring an impartial mind to the resolution of any question I may be required to decide in this case. 16 As to the first exchange, I do not consider the statement that I did not at that time intend to deal with any allegation in relation to the issue of the garnishee notice to Mr Robinson as being an abuse of the Commissioner's powers, without an application that raised that issue, could possibly be interpreted by a fair-minded observer as indicating that I might not bring an impartial mind to the resolution of that issue, or any other contempt issue in these proceedings. I consider a fair-minded observer would conclude that I was merely indicating that I would not entertain that issue at that time, not that I had already come to any view about that issue or any other contempt issue. 17 As to the second exchange, I do not consider the suggestion that Mr Petroulias should consider whether he intended to withdraw the contempt proceedings over the luncheon adjournment, because that may affect the time allowed to prepare an amended statement of claim, could possibly be interpreted by a fair-minded observer as indicating that I might not bring an impartial mind to the resolution of the issues in this case. I consider a fair-minded observer would take account of the fact, among other things, that I clearly emphasised twice that it was entirely a matter for Mr Petroulias to decide whether he withdrew those proceedings, and I emphasised, as well, that I was not seeking to pressure him about that decision. 18 Furthermore, I consider a fair-minded observer would take account of the other surrounding circumstances. In particular, that I had made it clear to Mr Petroulias earlier in the directions hearing on 18 July, that if he wished to pursue the contempt charges against Mr Cheetham, that it was in the interests of justice that they be heard without delay, and that required him to finalise his statement of claim so the proceedings could be put on a footing where that hearing could proceed. Among other things, this exchange occurred at the top of p 33: His Honour: We have been through this, Mr Petroulias, on the last occasion and you did not seek to withdraw them [I was referring to the contempt charges] between then and now. You have had two months to work that out. Mr Petroulias: Well, obviously. His Honour: You've got them on foot. If you had them on foot then you're going to have to proceed with them quickly and efficiently. Mr Petroulias: Well, I can't proceed. - we have still got the pre-trial. We have got to get the subpoenas, we have got to get - His Honour: … Mr Petroulias, if you want to pursue these things in this court in these proceedings, including the contempt allegations, then I am going to require you to do that efficiently and quickly. Mr Petroulias: Okay. His Honour: If you don't want to pursue the allegations you simply discontinue the proceedings and discontinue the contempt charge against the people you've alleged are guilty of contempt, but so long as you've got the proceedings alive you're going to have to proceed with them; right? Mr Petroulias: Okay, in the face of - if you like - the impossible choice, as I put it, and I - I obviously have to withdraw the contempt proceedings because I need more time for this. It's just not possible to do it. His Honour: Well, you can make whatever choices you like, Mr Petroulias. Mr Petroulias said: No, no, what I'm saying, your Honour, is you said you are influenced with the one month period - excuse me, with a one month rule because of the existence of the criminal contempt proceedings. All right, if we take them away from the table then I can have my six months. His Honour: No, no, no. That is all the more reason why these proceedings should be dealt with quickly, but you've had seven months now to try and get your statement of claim in order and seven months is six months too long. You should have done it at the outset and I'm not going to - I will put it this way, I'm required to progress all proceedings before this court - including this set of proceedings - quickly and efficiently and justly and I consider it is just and quick and efficient to require you to fix your statement of claim quickly. 19 For these reasons I do not consider Mr Petroulias has advanced any basis upon which it could be concluded that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of the questions I may be required to decide in this case. Paragraph 5 of Mr Petroulias' application of 5 September 2011 must therefore be dismissed. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves.