Spirakos v Deputy Commissioner of Taxation

REASONS FOR JUDGMENT 1 Before the Court is an application for an extension of time within which to file a notice of appeal. The applicant, Mr Con Spirakos, wishes to appeal against a decision of the Administrative Appeals Tribunal (the Tribunal), made on 6 May 2005. The Tribunal decided that it did not have jurisdiction to hear the application filed by Mr Spirakos for review of a disallowance of an objection to an assessment of income tax made by the respondent, the Deputy Commissioner of Taxation.

Background 2 On 22 June 1998, the respondent issued default assessments for income tax against the applicant. Those assessments were for the financial years 1995 and 1996. The applicant failed to file taxation returns in respect of those years. Then, in the course of investigations of drug offences, the Victoria Police passed information to the respondent which indicated that the applicant had not disclosed income which he had earned. As a result of the police investigation the applicant was charged with various drug offences, found guilty by the County Court, and imprisoned for about three years. 3 On 2 September 1998, the applicant filed an objection to the assessments. On 28 April 1999, his objection was disallowed by the respondent. The respondent sued the applicant for the amounts owing under the assessments. On 20 January 2000, the County Court gave summary judgment in favour of the respondent for $132,978.06, together with interest and costs. The order of that court, which is an exhibit to the affidavit of Mr Vourgoutzis sworn on 22 July 2005 and filed on behalf of the respondent, indicates that judgment was obtained after hearing from counsel for the defendant, Mr Spirakos. 4 It seems that, as a result of the applicant's failure to pay that judgment, he was made bankrupt on 31 May 2001. He applied on two occasions during his bankruptcy, namely, on 29 April 2005 and 17 May 2005, to annul his bankruptcy. On 20 June 2005, Federal Magistrate O'Dwyer dismissed the applications. On 4 July 2005, the applicant was discharged from bankruptcy. 5 On 3 February 2005, the applicant lodged an application with the Tribunal to challenge the decision of the respondent made on 28 April 1999 to disallow the applicant's objection to the 1995 and 1996 income tax assessments. As the application was over five years late, on 11 March 2005 the applicant also applied to the Tribunal for an extension of time within which to commence the application. It was against this background that the Tribunal determined on 6 May 2005 that it did not have jurisdiction to hear the application. 6 The decision of the Tribunal was made on 6 May 2005, and the application was made to this Court on 5 July 2005. Hence, the applicant requires leave to file the notice of appeal in this Court out of time. The question before this Court is whether the applicant should have that leave. 7 Ms Riley, who appeared as counsel for the respondent, submitted that the application for an extension of time within which to appeal should be refused on the basis that the proceeding before the Tribunal is bound to fail on the merits, and additionally, the applicant has given no explanation for the delay. The respondent contended that the application before the Tribunal is bound to fail. The Tribunal correctly held that it was without jurisdiction because the applicant, having been declared bankrupt, has no standing to contest the disallowance of the objection to the assessments. The effect of the bankruptcy, so it was argued, was that the debt constituted by the tax liability has been expunged. 8 Ms Riley relied upon the principle established in McCallum v Commissioner of Taxation (1997) 75 FCR 458; (1997) 36 ATR 256, which was adopted in Robertson v Commissioner of Taxation (2004) 137 FCR 513 (Robertson) at [21] and [22] as follows: 21 The above statement of Lehane J followed from his Honour's conclusion that the principle laid down in Cummings v Claremont Petroleum NL was applicable to the determination of whether a bankrupt has standing to apply to the Tribunal for review of an objection decision under s 14ZZ of the TA Act. In Cummings v Claremont Petroleum NL at 137-138 the majority of the High Court (Brennan CJ, Gaudron and McHugh JJ), after citing a passage from an unreported decision of Hoffmann LJ, said: So far as a judgment entered in an action against a bankrupt creates or evidences a provable debt, we respectively agree that the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts. Of course, a money judgment entered against a bankrupt has the effect of increasing the amount of the debts provable in his estate. But it is immaterial that, if an appeal against the judgment were successful, there would or might be a surplus in the estate after the remaining creditors are paid. (footnotes omitted) 22 McCallum v Commissioner of Taxation is, unless successfully challenged, authority for the proposition that the principle laid down in Cummings v Claremont Petroleum NL is applicable to the determination of whether a bankrupt has standing to apply to the Tribunal for review of an objection decision. As is mentioned above, the appellant did not challenge the authority of McCallum v Commissioner of Taxation. Nor did he contend that the fact that he had made his application to the Tribunal before he became bankrupt rendered McCallum v Commissioner of Taxation distinguishable. It follows inexorably, in our view, that the contention that he was entitled to maintain his application to the Tribunal under s 14ZZ because, absent any liability to the Commissioner, his estate would have been more than adequate to pay his remaining creditors must fail. 9 The applicant appeared unrepresented but was assisted by an interpreter. Not surprisingly, he did not put any arguments against the application of Robertson. Rather, he contended that the assessments, the judgment and the bankruptcy, were all based on untruths. He suggested that the procedures had been done 'under the table'. He said that his solicitors had stolen from him. He said that he had proof of all these matters. 10 I accept the legal argument relied upon by the respondent. In light of Robertson the applicant has no standing to challenge the disallowance of the objections to the assessments. It follows that the applicant cannot obtain an extension of time for bringing the proceeding in the Tribunal, and it would be futile to grant him an extension of time within which to file a notice of appeal in this Court against the Tribunal's decision. Consequently, the application is dismissed with costs. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.