Taylor v Deputy Commissioner of Taxation

REASONS FOR JUDGMENT THE COURT BACKGROUND 1 Stephen and Glenda Taylor are the appellants in this appeal. 2 On 18 December 1996 the Deputy Commissioner of Taxation obtained judgment against Mr Taylor in the sum of $16,380.05 for claim and $175.25 for costs, and against Mrs Taylor for $17,184.10 for claim and $175.25 for costs. The claim against each appellant was for unpaid tax. Subsequently each appellant was served with a bankruptcy notice. The appellants failed to comply with the requirements of the notice each received. In consequence, on 8 September 1997 a creditor's petition was filed by the Deputy Commissioner against each appellant. The act of bankruptcy in each case was the failure to comply with the respective notice. The hearing date endorsed on each petition was 9 October 1997. 3 Mr Taylor, on 13 November 1997, lodged a notice of intention to appear at the hearing of the petition to oppose the making of a sequestration order. The grounds of objection were stated as :- "MADE SUBSTANTIAL OFFER TO TAXATION OFFICE - WHICH WAS REFUSED. HAVE NOW LISTED HOUSE FOR AUCTION TO BE HELD 15/11/97 - EARLIEST AVAILABLE." 4 Mrs Taylor lodged an objection in identical terms on 13 November 1997 in the creditor's petition proceedings against her. 5 On 18 December 1997 each appellant filed a further notice of intention to appear and oppose the making of a sequestration order. The ground each appellant stated was :- "LOAN FUNDS HAVE BEEN APPROVED THROUGH STANFIELD FINANCE FOR SETTLEMENT OF DEBT & ARE NOW AWAITING COMPLETION OF PAPERWORK AUCTION OF MARTYN ST PROPERTY FAILED TO ATTRACT ANY BIDS." 6 On 8 February 1998 each appellant filed a further notice of intention to appear and oppose the making of a sequestration order. Again the ground related to the provision of finance to be secured on a refinancing of the Martyn Street, Cairns property. 7 The two creditor's petitions came on for hearing in Cairns on 18 March 1998. The affidavits of debt and search disclosed that the judgment debts remained unpaid. The hearing of each petition was before the District Registrar of the Court acting under an instrument of delegation made by Spender J. Being satisfied that each appellant had committed the respective act of bankruptcy and that each remained indebted in the requisite amount, the District Registrar made orders sequestrating the estate of each appellant. The District Registrar rejected a submission by the appellants that they be granted additional time to pay the judgment debts or that he direct the Deputy Commissioner to accept an offer of part payment with periodic payments over time to discharge the debts. THE PRESENT PROCEEDINGS 8 On 3 April 1998 the appellants filed an application which stated that it was made "... under s30(3) of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") for determination by a jury of an application to extend the time for compliance with a Bankruptcy Notice served on us by the Australian Tax Office." The application also sought, under s 39B of the Judiciary Act 1903 (Cth) the quashing of the sequestration orders made by the District Registrar and that a writ of prohibition issue to prohibit the petitioning creditor and the Registry of this Court from entering the sequestration orders. The relief sought under s 39B of the Judiciary Act 1903 (Cth) was based on the alleged lack of jurisdiction of the District Registrar to make the sequestration orders. 9 On 10 September 1998 the appellants filed a notice of motion seeking discovery against the Australian Taxation Office. 10 Both the application and notice of motion were heard by Dowsett J on 29 October 1998. His Honour made the following orders :- "1. The application for an extension of time for compliance with the bankruptcy notice is refused. 2. The application for an extension of time in which to apply for a review of Registrar's decision is allowed. 3. The application to have review of Registrar's decision determined by a jury is refused. 4. The application for review of Registrar's decision is refused. 5. The applicants are to pay the respondent's costs of these proceedings." 11 On 11 December 1998 the appellants appealed from the whole of the judgment of Dowsett J. The grounds of appeal are :- "2. The Court misconceived the ramifications of Section 79 of the Constitution and that section, at no time permits a Registrar to make a Judicial order or exercise the Judicial power of the Commonwealth. 3. Under section 22 Federal Court of Australia Act of 1976 the Court must hear the matter lawfully brought before it, and is in contempt of the Civil Rights of the Appellant guaranteed by the Human Rights and Equal Opportunity Commission Act of 1986 Schedule 2 Article 2 subsection 3 by failing in It's public duty to ensure that any person claiming such remedy shall have his right thereto determined by a competent judicial Administrative or legislative authority, notwithstanding that the violation has been committed by persons acting in an official capacity." 12 The appellants were represented by Mr Taylor on the hearing of the appeal. Their primary submission is that the District Registrar, in making the sequestration orders, was purporting to exercise the judicial power of the Commonwealth which, by s 79 of the Constitution, was vested exclusively in Judges appointed in accordance with Chapter III of the Constitution. Because the District Registrar had no jurisdiction to make the orders, the appellants submit that the sequestration orders should be quashed and not given effect to. That would leave, they submit, the petitions to be heard by a Judge of this Court on the basis of new grounds of objection which include allegations that the appellants are not insolvent, that the conduct of the Australian Taxation Office and the Deputy Commissioner has been unreasonable and in breach of the Deputy Commissioner's statutory duty, and that the proceedings are an abuse of process. This would also leave the application for extension of time to comply with the bankruptcy notices to be heard. The appellants claim to be entitled to have the questions of fact arising in the resumed proceedings determined by jury under s 30(3) of the Bankruptcy Act.