Zizza, in the matter of; Deputy Commissioner of Taxation v Zizza

REASONS FOR JUDGMENT (ex tempore) 1 By notice of motion filed on 30 August, 1999, the respondent, Mr Zizza, moves the Court for an order that a creditor's petition brought by the Commissioner be adjourned until Mr Zizza's application to the High Court for special leave to appeal against a judgment of the Full Court of this Court delivered on 14 May 1999 has been determined. The motion sought, in the alternative, an order that the petition be dismissed, but counsel for Mr Zizza does not press for that order in the alternative. 2 The creditor's petition was filed on 28 October 1997. On 27 August 1998, a Registrar ordered that the period at the expiration of which the petition would lapse be a period of 24 months commencing on the date of presentation of the petition. Accordingly, the petition will now lapse on 27 October 1999. The petition is founded upon a final judgment in the Supreme Court of New South Wales on 11 December 1996 in a sum of $801,962.28 and $31,824.20 interest down to 28 April 1997, since reduced by $591.28. 3 Mr Zizza applied to the Administrative Appeals Tribunal ("AAT") for an extension of time within which to refer eleven objection decisions to the AAT. The objection decisions related to the successive eleven years of tax commencing with the year ended 30 June 1978 and ending with the year ended 30 June 1988 ("the relevant years"). On 9 October 1989, the Commissioner issued an amended assessment against Mr Zizza in respect of each of the relevant years as a betterment assessment under s 167 of the Income Tax Assessment Act 1936 (Cth). Mr Zizza objected to the relevant assessments in accordance with objections dated 11 December 1989. 4 The AAT gave its decision on 9 April 1998, refusing Mr Zizza's application for the extension of time. In the course of its reasons, which occupied some twenty pages, the AAT stated: "In general terms, the [a]pplicant can aptly be characterised as a person who pays little or no regard to his taxation obligations. His failure to render returns over a number of years is indicative of that fact; it is relevant also that in respect of all of the relevant years, and notwithstanding his admission that some taxes are due, he has never made any payments of any kind of account of his taxation obligations." 5 Mr Zizza applied to this Court for review of the AAT's decision. Katz J heard that application and delivered judgment on 1 February, 1999. His Honour gave extensive and detailed reasons for judgment occupying some twenty-nine pages, and ordered that the AAT's decision be affirmed. 6 Mr Zizza appealed from that decision to a Full Court. On 14 May 1999 the Full Court ordered that the appeal be dismissed ([1999] FCA 848). 7 On 22 July 1999 Mr Zizza filed an application to the High Court of Australia for special leave to appeal from the decision of the Full Court. Mr Zizza filed in the High Court his summary of argument bearing date 11 August - apparently it was filed on 13 August. 8 There is no evidence before me as to when the application for special leave is likely to be heard, but counsel for Mr Zizza accepts that it is unlikely to be heard before the creditor's petition expires on 27 October 1999. 9 Counsel appearing for Mr Zizza has drawn attention to the fact that the summary of argument filed in the High Court is signed by counsel, including senior counsel, experienced in the taxation area. 10 On the present application, I must, of course, have regard to the legitimate interests of both parties. I take into account the fact that the creditor's petition will expire on 27 October. Counsel for Mr Zizza has stated that his solicitor has undertaken to bear the fee payable by the Commissioner on the filing of a fresh petition, if his client should fail in the High Court. Accordingly, the disadvantage in terms of the incurring of a further filing fee, which the Commissioner might suffer from a lapsing of the creditor's petition, would be overcome. There would, however, be a change in the relation back period according to whether the matter had to proceed on a fresh petition. 11 It is put for Mr Zizza that if a sequestration order is made he will lose the opportunity of prosecuting his application for special leave and the chance of appealing. If a sequestration order were to be made, those matters would, of course, become matters for his trustee in bankruptcy. The trustee may or may not elect to pursue Mr Zizza's application for special leave. 12 In Parras Holdings Pty Ltd v Commonwealth Bank of Australia [1999] FCA 644 ("Parras Holdings"), a Full Court of this Court held, applying the relevant parts of the test laid down by Brennan J in Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No. 1) (1986) 161 CLR 681 at 685, that in an application such as the present one, the following questions must be asked: