FEDERAL COURT OF AUSTRALIA

Transcription

1 FEDERAL COURT OF AUSTRALIA Nugawela v Deputy Commissioner of Taxation [2017] FCA 897 File number: WAD 434 of 2017 Judge: BARKER J Date of judgment: 21 September 2017 Catchwords: Legislation: PRACTICE AND PROCEDEURE application to stay sequestration orders and proceedings pending determination of appeal where appellant seeks to appeal Federal Circuit Court decision upholding sequestration orders whether grounds of appeal are arguable whether grounds of appeal have rational prospect of success balance of convenience application dismissed Bankruptcy Act 1966 (Cth) Federal Circuit Court of Australia Act 1999 (Cth) s 42 Income Tax Assessment Act 1997 (Cth) Taxation Administration Act 1953 (Cth) Pt IVC Cases cited: Deputy Commissioner of Taxation v Nugawela [2015] WASC 468 Nugawela v Deputy Commissioner of Taxation (No 2) [2017] FCCA 1999 Nugawela v Deputy Commissioner of Taxation [2016] FCA 578 Nugawela v Deputy Commissioner of Taxation [2016] FCAFC 164 Nugawela v Deputy Commissioner of Taxation [2017] FCCA 1289 Nugawela v Deputy Commissioner of Taxation [2017] HCASL 114 Nugawela v Deputy Commissioner of Taxation [2017] WASCA 9 Nugawela v Deputy Commissioner of Taxation [No 2] [2017] WASCA 66 R v Deputy Commissioner of Taxation (WA); Ex parte Briggs (1986) 12 FCR 301; (1986) 69 ALR 185 Date of hearing: 5 and 6 September 2017 Registry: Division: Western Australia General Division

2 National Practice Area: Sub-area: Category: Commercial and Corporations General and Personal Insolvency Catchwords Number of paragraphs: 64 Counsel for the Appellant: Counsel for the Respondent: Solicitor for the Respondent: The Appellant appeared in person Mr CM Slater Australian Government Solicitor

3 ORDERS WAD 434 of 2017 BETWEEN: AND: PATRICK ALLEN NUGAWELA Appellant DEPUTY COMMISSIONER OF TAXATION Respondent JUDGE: BARKER J DATE OF ORDER: 21 SEPTEMBER 2017 THE COURT ORDERS THAT: 1. The appellant s interlocutory application dated 31 August 2017 be dismissed. 2. The respondent s costs of the application dated 31 August 2017 be taxed and paid by the appellant or from the appellant s estate in bankruptcy in accordance with the provisions of the Bankruptcy Act 1966 (Cth) whichever is appropriate at the time payment is required. Note: Entry of orders is dealt with in Rule of the Federal Court Rules 2011.

4 REASONS FOR JUDGMENT BARKER J: 1 Dr Patrick Allen Nugawela has been in disputation with the Australian Taxation Office (ATO) for some years. 2 On 19 August 2015, the Deputy Commissioner of Taxation obtained summary judgment against him in the Supreme Court of Western Australia in the sum of $1,668, The judgment sum was comprised of statutory debts in relation to income tax, penalties and interest charges pursuant to the Income Tax Assessment Act 1997 (Cth) and the Taxation Administration Act 1953 (Cth). See Deputy Commissioner of Taxation v Nugawela [2015] WASC In the course of argument resisting summary judgment, amongst other issues raised, Dr Nugawela contested the extent of his liability for the two financial years 2007 and The judge, Justice Kenneth Martin, at [28] of his reasons for summary judgment, noted that in respect of those two financial years, Dr Nugawela had caused his accountants to file tax returns the week before the hearing, ostensibly for the purpose of challenging, under Pt IVC of the Taxation Administration Act, the default assessments which had earlier been made by the ATO. 5 At [35]-[36], the judge said that the fact that someone disputes a tax assessment does not, on the face of it, entitle them to withhold from paying the amount indicated as payable in their assessment, although it is open to apply for a stay of a motion for summary judgment or the execution of a summary judgment in respect of tax recovery proceedings where there are pending tax objection proceedings. However, the judge noted that those situations do not inevitably lead to the grant of a stay. 6 Dr Nugawela also raised a range of issues, including the flooding of his medical practice in January 2014, and his own psychological problems from 2003, as reasons why summary judgment should not be entered. 7 The judge ultimately found, at [51], that nothing had been presented by Dr Nugawela to undermine the prima facie correctness of the default assessments made in respect of the two disputed financial years, or otherwise to show a reason why summary judgment should not be ordered.

5 - 2-8 An appeal from the summary judgment orders to the Court of Appeal of the Supreme Court of Western Australia failed. See Nugawela v Deputy Commissioner of Taxation [2017] WASCA 9. The Court of Appeal, at [26], did not find it necessary to decide whether the judge should have allowed an adjournment of the application before him until after the Deputy Commissioner had considered the tax returns the appellant had lodged the week before the summary judgment hearing. 9 At [26], the Court of Appeal noted that, in any event, the question of an adjournment had been overtaken by events. It noted that, after the hearing of the summary judgment application, the Deputy Commissioner in fact varied the original default assessments in light of the tax returns that the appellant had recently lodged. The Court said that even if it were established that the primary judge was in error in refusing an adjournment, there would be no injustice to Dr Nugawela if that decision were not set aside as no purpose would be served by setting it aside. 10 In relation to a further ground where Dr Nugawela submitted, in effect, that there was an arguable case that the notices of assessment issued initially by the Deputy Commissioner were invalid because the amount of each of the assessments was a figure plucked from the air or had no rational basis, the Court of Appeal said that the decision of the Full Court of this Court in R v Deputy Commissioner of Taxation (WA); Ex parte Briggs (1986) 12 FCR 301; (1986) 69 ALR 185 did not assist the appellant. 11 At [29], the Court of Appeal said that in Briggs, the Deputy Commissioner conceded that neither he nor his officers had made any attempt to ascertain the taxpayer s taxable income, or carried out any proper investigation of the taxpayer s affairs, prior to making the assessments, and that the notices of assessment had been issued simply for the purpose of forcing the taxpayer to consult with the Deputy Commissioner or his officers. The assessments were thus considered invalid. 12 At [30], the Court of Appeal noted there was no evidence in the case of Dr Nugawela that the notices of assessment were the result of anything other than a proper attempt by the ATO to assess Dr Nugawela s liability. The Court also said there was no evidence from which an inference to the contrary might properly be drawn. It went on to note that, in fact, an audit of Dr Nugawela s taxation affairs had been conducted by the ATO in 2011, before the notice of assessment was issued to him.

6 13 The Court of Appeal also dealt with some of the matters concerning Dr Nugawela s personal circumstances, including his psychological health. They did not, however, consider those issues provided any defence to the Deputy Commissioner s claim. 14 The Court of Appeal also dealt with a question about the solicitors for Dr Nugawela before Justice Kenneth Martin, representing him unwillingly. observed as follows: At [37], the Court of Appeal We do not accept what we understand to be a further contention by the appellant that, in circumstances where the primary judge knew that the appellant s solicitors were representing him unwillingly, it was incumbent upon his Honour to indicate any concerns he had about the sufficiency of the appellant s evidence and to enable the appellant to make good any deficiencies by a further affidavit. First, there was no evidence that the appellant s solicitors were representing him unwillingly. Secondly, it was no part of the role of the primary judge to provide a critique of the appellant s evidence so that the appellant might supplement it as necessary. The appellant was given a reasonable opportunity to file any affidavit evidence on which he sought to rely (a time period that was extended at his request after he failed to comply with the original time limit) and it was up to the appellant and his legal advisers to ensure that that evidence was put before his Honour. If at the hearing there were perceived to be deficiencies in it, it was for the appellant s counsel to apply to the primary judge for an opportunity to file additional affidavit evidence. No such application was made. We might add that had it been made it is unlikely to have been granted in circumstances where his Honour had earlier extended the time for the filing of the appellant s affidavit on the express basis that if the time limit was not complied with the appellant would not be permitted to adduce any evidence. 15 Following the entry of summary judgment, but before the Court of Appeal decision, the Deputy Commissioner issued a bankruptcy notice. A challenge to its validity in this Court failed. See Nugawela v Deputy Commissioner of Taxation [2016] FCA 578 (McKerracher J). 16 In that decision, McKerracher J had the opportunity to revisit the history of the litigation, briefly mentioned above, in the course of coming to his decision. The question of the appropriateness of the assessment of taxation in the 2007 and 2008 years was raised. 17 At [67] of his decision, McKerracher J noted that Dr Nugawela s rights were not concluded at that point because the petitioning creditor (the Deputy Commissioner) would have to verify the amount due at the time of petitioning. 18 At [68], McKerracher J said that, as to other issues apart from quantum, such as flooding and the like: It may be that the relevant debts have been varied, but the complaints raised and the defences offered in relation to the non-compliance with meeting tax obligations are the same issues which were raised in the Supreme Court, and (with respect) quite properly there rejected given the statutory assumptions on which the Commissioner

7 - 4 - and the Court proceeded. 19 Then, at [69], McKerracher J stated: The absence of any prospects of demonstrating that he has a valid counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt under s 40(1)(g) precludes reliance upon s 40(1)(g) of the Bankruptcy Act and would also necessarily strongly militate against any application for leave being granted to extend the time for compliance with the bankruptcy notice, even if the Original Application were lodged within time. 20 Dr Nugawela appealed that decision to the Full Court of this Court, which dismissed the appeal. See Nugawela v Deputy Commissioner of Taxation [2016] FCAFC Before the Full Court, Dr Nugawela sought to rely on additional evidence, much of which, the Court noted, at [17], was concerned with his personal circumstances as to why he had not filed tax returns or paid tax since 2000; the burdens imposed on him and his medical practice following the ATO audit in 2011; his attempts to rebuild his medical practice that was subject to a garnishee order which had been issued by the Deputy Commissioner; and other issues, including the flood damage previously mentioned and his deteriorating mental state. 22 The Full Court, at [19], also noted the Deputy Commissioner s submission that Dr Nugawela admitted debt in the Part IVC review process in the sum of $148,632.36, and did not challenge the tax assessment for the years 2003 and 2004, which amounted to $29,711.64; and had not challenged the general interest charges and penalties of $926, The Deputy Commissioner accepted that if the challenges of Dr Nugawela were successful and the general interest charges and penalties were reduced, this would amount to $165, The amount Dr Nugawela would then admit to owing would be $343, The Full Court rejected that there was any error in McKerracher J s decision in not finding a need to go behind the summary judgment so as to relitigate it. 24 It also dismissed a claim that the judge erred in failing to exercise a discretion to grant an extension of time to challenge the bankruptcy notice and a range of other grounds. 25 At [42], the Full Court stated: Finally, even if there had been an error by the primary judge (which there was not) in the re-exercise of discretion, we would not extend time within which to set aside the bankruptcy notice or stay any action upon it. Particular discretionary factors in this case include the very lengthy period of lack of compliance from 2000 onwards, during a period when Dr Nugawela had access to lawyers and accountants sporadically. And although we take into account the stress upon Dr Nugawela and his mental state, his affidavit evidence and conduct of this appeal demonstrates that he is

8 - 5 - well capable of making decisions in what he perceives to be his interests. Finally, although Dr Nugawela filed a lengthy affidavit, he did not depose to the extent of his net assets. It is possible that he has sufficient resources to contest the creditor s petition which he opposes and the AAT proceedings. He is able to contest these proceedings in the absence of an extension of time or a stay. 26 Subsequent to the decision of the Court of Appeal, in 2017 Dr Nugawela sought special leave to appeal from the Court of Appeal s decision to the High Court of Australia. Before that special leave application was determined, Dr Nugawela sought a stay on the summary judgment pending the determination of the special leave application. That application was rejected by the Court of Appeal. See Nugawela v Deputy Commissioner of Taxation [No 2] [2017] WASCA In refusing the stay application, the Court of Appeal, at [5], said that the judgment was simply one for a money sum and there was no question as to the capacity of the Deputy Commissioner to repay the money in the event of a successful appeal. 28 At [7], the Court of Appeal also said that it was not satisfied that there was a substantial prospect that special leave would be granted on any of the proposed grounds. 29 Subsequently, the special leave application was also refused on the basis that it did not raise any reason to doubt the correctness of the decision of the Court of Appeal. Nugawela v Deputy Commissioner of Taxation [2017] HCASL The matter of the bankruptcy then proceeded. On 21 February 2017, a Registrar of the Federal Circuit Court of Australia made a sequestration order under the Bankruptcy Act 1966 (Cth) against Dr Nugawela s estate. 31 On 10 March 2017, Dr Nugawela applied to the Federal Circuit Court to review the Registrar s orders. He also separately filed an interim application with that Court for a stay of the sequestration order. 14 March 2017, pending further orders of the Court. See That stay application was allowed on an interim basis on 32 The stay application was heard on 14 March 2017 and 2 June On 19 June 2017, the Federal Circuit Court (Judge Lucev) dismissed the application. See Deputy Commissioner of Taxation v Nugawela [2017] FCCA Judge Lucev then proceeded to hear and determine the application of Dr Nugawela for review of the Registrar s sequestration orders.

9 34 On 9 August 2017, Judge Lucev made a number of orders which included an order dismissing the oral application made by counsel on behalf of Dr Nugawela for an adjournment of the proceedings before him on the day the review application was listed for hearing; an order dismissing the stay application of 6 July 2017; and an order dismissing Dr Nugawela s application for review of the Registrar s sequestration orders. 35 Dr Nugawela has recently appealed from these orders of the Federal Circuit Court. 36 By an application to this Court dated 31 August 2017, which is the particular matter now before me, Dr Nugawela seeks to stay all proceedings of sequestration pending the determination of his appeal. 37 The stay application was listed for hearing before me on 5 September 2017, at which time, in light of written submissions recently filed on behalf of the Deputy Commissioner opposing a stay, Dr Nugawela sought an adjournment to the following day, which I granted. following day he himself presented extensive written submissions. 38 The parties were substantially in agreement that the question pertinent to whether or not a stay of the sequestration order should be permitted pending the appeal required consideration of whether there was any arguable appeal point with a rational or reasonable prospect of success, as well as the balance of convenience. 39 Put simply, in light of much of the preceding litigation history that I have alluded to above, the Deputy Commissioner contends there is no rational prospect of success on any of the grounds of appeal. 40 The grounds of appeal, stated in the notice of appeal, are as follows: 1.1 The learned Judge erred in the exercise of his discretion in failing or refusing to grant a short/reasonable adjournment to enable the appellant s newlyappointed counsel, any or reasonable time to properly represent the appellant in the de novo rehearing against the Registrar s granting of the sequestration order. Particulars The (a) (b) (c) the learned Judge failed to take into account relevant considerations in the exercise of his discretion; the learned Judge s discretion miscarried in that no reasonable decision-maker would have come to the extempore conclusion that he did; further or amended particulars to be provided upon receipt of the

10 - 7 - learned Judge s reasons for decision. 1.2 The learned Judge failed to provide any or adequate reasons for making the decision referred to in ground 1.1 above. 2. In failing or refusing to grant any or a short/reasonable adjournment to enable the appellant s newly-appointed counsel any or reasonable time to properly represent the appellant in the de novo rehearing against the Registrar s granting of the sequestration order, the learned Judge demonstrated a reasonable apprehension of, or actual bias or predisposition against the appellant personally or against the appellant s application. Particulars (a) In refusing a previous stay application, the learned Judge had previously (at [71]) stated that that it was not apparent that Dr Nugawela will be able to resist the issuance of a sequestration order in the de novo hearing of the Review Application ; (b) a consideration of the transcript of proceedings on 9 August 2017 demonstrates (on balance) that the learned Judge had already decided to dismiss the appellant s de novo review application; (c) further or amended particulars to be provided upon receipt of the learned Judge s reasons for decision. 3. In failing or refusing to grant any or a short/reasonable adjournment to enable the appellant s newly-appointed counsel, reasonable time to properly represent the appellant in the de novo rehearing against the Registrar s granting of the sequestration order, the learned Judge denied procedural fairness to the appellant. 4. The learned Judge erred in extemporaneously dismissing the appellant s application for a de novo review of the Registrar s summary making of the sequestration order and/or failed to give any or adequate reasons for such dismissal, when: (a) (b) (c) there was a genuine, unresolved (or judicially unresolved) disagreement as to the underlying debt owed; no court had as yet gone behind the judgment debt as required/permitted, and as (for instance) observed by McKerracher J in Nugawela v Deputy Commissioner of Taxation [2016] FCA 578; the respondent s conscious maladministration had yet to be judicially determined or examined. 5. Further or amended grounds of appeal to be provided after receipt of the learned Judge s reasons for decision. 41 Pursuant to ground of appeal 5, no further or amended grounds of appeal have been indicated by Dr Nugawela. 42 I will set out the Deputy Commissioner s written submissions because, without doing so, the written submissions made by Dr Nugawela in response to them, which I will also record, will be difficult to appreciate.

11 The Deputy Commissioner relevantly submits as follows: Requirements for a stay: arguable point or rational prospect of success 22. The respondent opposes a stay, the appeal grounds are not arguable nor do they have a rational prospect of success. 23. Grounds 1 and 3 of the appellant s notice of appeal say an error arises from the failure to afford him procedural fairness and refusing an adjournment. 24. Ground 2: asserts that an error arose from an apprehended bias. 25. Ground 4 raises errors in relation to resolving three matters: (1) the quantum of the debt - genuine unresolved disagreement as to the underlying debt owed; (2) no court has gone behind the judgment; and (3) conscious maladministration or vindictive action. These matters are set out below, none of them are sufficiently arguable that they warrant a stay of the administration of this bankrupt estate. Grounds 1 and 3 procedural fairness and the respondent s health 26. The discretion to adjourn is an interlocutory decision reviewable on the grounds set out in House v R (1936) 55 CLR 499 at The Federal Circuit Court carefully considered the question of an adjournment and refused it [2017] FCCA 1999 at [5] - [11]. No error is discernible. 28. The appellant refers to the effect of the appellant s audit and the litigation on his health [Affidavit of Dr Nugawela sworn 10 March 2017 para 61]. 29. There was at the date of these submissions no admissible independent medical evidence to support the assertion. 30. The question of the health of the appellant was raised and rejected by: (1) The Full Court of the Federal Court [2016] FCAFC 164 at [42]. (2) The WA Court of Appeal [2017] WASCA 9 at [32] - [38]. (3) The Federal Circuit Court of Australia [2017] FCCA 1999 at [72]. Ground 2 Apprehended bias 31. An objection to the constitution of a court or tribunal on the ground of apprehended bias may be waived, and, if a litigant who is aware of the circumstances constituting a ground for such objection fails to object, then a waiver will result, see Vakauta v Kelly (1989) 167 CLR 568 at 572, and Smits v Roach (2006) 227 CLR 423 at [43]. 32. According to Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at [31]: the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (in this case, in the form of prejudgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.

12 The bias is said to arise from statements in an earlier decision to refuse a stay [2017] FCCA The appellant s legal advisers were present in court at the later time of judgment on the application to adjourn. There was no application for a different judge at that time. 34. The apprehended bias objection should be considered waived and this appeal ground is either not reasonably arguable or it has no rational prospects for success. Ground 4(1) the quantum of the debt and 4(2) going behind the judgment; 35. The appellant disputes the judgment [Affidavit of Dr Nugawela sworn 31 August 2017 para 3, 10, 11, 12, 14, 27, 43, 48, 50, 64, 69]. 36. The question whether there is a basis to go behind the judgment was considered and rejected by: (1) The Federal Court [2016] FCA 578 at [55] - [69]. (2) The Full Court of the Federal Court [2016] FCAFC 164 at [23] - [31]. (3) The WA Court of Appeal rejected the suggestion that the audit process could be relevant to the amount of the assessments [2017] WASCA 9 at [19] - [31]. (4) The Federal Circuit Court of Australia and dismissed in [2017] FCCA 1999 at [60]. 37. The Administrative Appeals Tribunal appeal relates only to the assessments and penalties for the years ending 30 June 2007 and 2008, the other objections were rejected. There is no objection process that relates to the penalties the undisputed amount of which, together with general interest charge, is $629, The appellant refers to a genuine dispute as to the debt owed to the respondent but does not offer any evidence in opposition [Affidavit of Dr Nugawela sworn 31 August 2017 para 26, 31, 32, 42]. 39. The existence of a continuing debt owed to the respondent was addressed by the Federal Circuit Court in substance accepting the evidence of the respondent [2017] FCCA 1999, [62] - [64]. 40. The absence of evidence that demonstrates that the appellant has a reasonably arguable case in the Administrative Appeals Tribunal renders the appeal ground devoid of merit see Deputy Commissioner of Taxation v Caporale Group Pty Ltd [2011] FCA 1189 at [9] - [14]. In any event the appeal under Part IVC TAA53 relates to only part of the debt. Ground 4(3) conscious maladministration or vindictive action 41. The appellant refers to the process of the audit conducted by the respondent and the consequences of the audit or the assessments on the value of his medical business. 42. The basis for this claim is either already rejected by other courts or not currently capable of being progressed or likely to be refused because of alternate relief available under Part IVC TAA53 in the Administrative Appeals Tribunal see Deputy Commissioner of Taxation v Futuris [2008]

13 HCA 32; (2008) 237 CLR 146 at [10]. 43. In any event, an appeal on this point lacks a rational basis for success as the appellant had not established a reasonably arguable case in the s39b Judiciary Act 1903 (Cth) proceedings see Deputy Commissioner of Taxation v Caporale Group Pty Ltd [2011] FCA 1189 at [13]. 44. The question of conscious maladministration was raised and abandoned before or rejected by: (1) The Federal Court [2016] FCA 578 at [51] - [58]. (2) The Full Court of the Federal Court [2016] FCAFC 164 at [40]. (3) The WA Court of Appeal [2017] WASCA 9 at [30], [31]. (4) The Federal Circuit Court of Australia [2017] FCCA 1999 at [79]. Requirements for a stay: Balance of convenience 45. The appellant has not sought to establish his solvency. In the absence of that evidence it is not possible to establish a consequence for him that warrants protection. There is no basis to believe that this appeal will be rendered nugatory or that practical difficulties may arise in relief that may be granted if successful. 46. The absence of this evidence was considered fatal to the application for a stay of the enforcement of the judgment in the WA Court of Appeal [2017] WASCA 66 at [5]. 47. A further delay in the administration of the bankrupt estate of the appellant would prejudice the public interest in recovering taxation obligations and avoiding the continuance of insolvent trading. ALTERNATE TO VEST POWERS TO APPEAL 48. The application to vest rights of appeal should be dismissed. The suggestion arises from similar orders in Stratton v Bowles [2014] FCA The vesting of powers in that case assisted a related Family Court appeal. 49. The vesting did not concern the prosecution of the appeal against the sequestration orders themselves. That appeal was permitted as the appeal rights are not property under s 5(1) of the Bankruptcy Act 1966 (Cth) (see Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at per Brennan CJ and Gaudron and McHugh JJ). 44 In his written submissions, Dr Nugawela dealt with the following paragraphs of the Deputy Commissioner s submissions, as follows: PARA 3 a) The Appellant rejects the Respondent s submissions for a dismissal of a stay and contends there are persuasive grounds for granting a stay pending the outcome of the Federal Court of Australia (FCA) Appeal. PARA 5 a) The Appellant draws attention to the error of law in stating that Part IVC proceedings had not commenced and that discretion to grant a one-month

14 adjournment on Southgate principles was therefore denied for consideration. This error of law was condoned by the Respondent as Model Litigant and finally admitted at a subsequent hearing. b) The error of law in terms of Part IVC proceedings is highly significant because the judgment debt was in contest for a significant quantum of more than half million for a two-year period for 2007 and Notwithstanding the conclusive evidence provisions, there was a legitimate expectation that the litigation would not proceed if the dispute was related to quantum as the Tax Policy provides. c) The error of law is far more significant because a proper assessment of the tax liability would have been far more easily resolved in terms of solvency rather than a highly inflated and purported tax assessment. d) The Appellant was represented by unwilling counsel who asked to be released and whom the same judge had refused to release. The Appellant was therefore disadvantaged by hostile counsel. e) The Appellant was also under medical treatment for a diagnosed depression disorder and on the facts and evidence available to the judge, through interlocutories on appointment of a Next Friend, there was sufficient information for it to be open to the judge to ensure Equality Before the Law and exercise discretion in granting a one-month extension. PARA 6 a) The respondent allowed the review to the sum of quarter million! This is a significant error of assessment for a 2-year period! It has not yet been determined if the original default assessment was plucked out of the air and if the amounts across the 10-year audit period was done on the same basis. Nonetheless, the Respondent is able to proceed on the basis of conclusive evidence provisions to create bankruptcy rather than enabling negotiation and resolution thorough solvent status of a fair and proper tax liability to ensure recovery of public funds. The priority and policy appears to be sacrifice of public funds through creation of insolvency and bankruptcy instead of a policy of recovery of funds. This might be regarded as procedural unfairness to the Appellant in terms of abuse of process of the conclusive evidence provision by the Respondent. b) The Respondent delayed providing a taxation objection to the Appellant and issued this concurrently with a Bankruptcy Notice. There was no apparent intention to allow procedural fairness and Futuris constitutional rights to challenge an improper tax assessment. c) The Administrative Appeals Tribunal (AAT) review is not adjourned but in the Respondent s haste to bankrupt the Appellant, the trustee has now made a decision to abandon the proceedings, thus blocking access to natural justice through the Futuris constitutional rights of challenge. PARA 7 a) The Appellant objected to the Bankruptcy Notice on the grounds of misstatement. This matter has yet to be properly tested and adequately examined. b) There are credits that have been omitted and information was not available to the Appellant to quantify the exact position of a fair and proper tax liability.

15 PARA This is currently being undertaken and the estimated tax liability is well below the default assessments applied. Nonetheless, the law permits the Respondent to pursue an improper tax liability on the basis of conclusive evidence without any regard to destruction of livelihoods and reduced capacity to recover public funds. a) The Appellant did not have access to information required to evidence that the tax liability was seriously erroneous and that solvency could be evidenced on the basis of a fair and proper assessment of tax liability. b) The AAT proceedings were incomplete but the race to bankruptcy was relentlessly pursued by the Respondent against the Appellant within their conclusive evidence provisions. PARA 9 a) The Appellant did not have the required or sufficient information to evidence the Respondent s errors. b) Some significant issues could not be tested such as the quantum of the Medicare garnishee and other credits because the pleadings were insufficient. PARA 10 a) The Respondent has full discretion to allow out-of-time tax lodgments but prefers to adopt an adversarial approach and cause the Appellant to pursue channels of litigation. b) The Appellant filed Tax Objections for the years 2005, 2006, 2009 and 2010 in November All four Tax Objections were subsequently disallowed. c) These assessments were filed as Tax Objections to the default assessments, and not as amended assessments, and therefore the Respondent has legislative power and discretion to allow the tax objections to be considered and to review or revise the claimed tax liability. d) By refusing the Tax Objection lodged, the Respondent is able to cling to its alleged tax liability and create a high-debt status for the Appellant denying procedural fairness in being able to challenge a tax liability. e) The Respondent s Objection Decisions for the four years were lodged and accepted by the Administrative Appeals Tribunal. PARA 11 a) The Registrar refused to go behind the judgment debt. b) The Registrar failed to assess the accuracy of the Respondent s affidavits verifying debt. c) The Registrar failed to consider Medicare garnishee and other credits. d) The Registrar did not consider the legality, appropriateness and harshness of the Respondent s decision to impose a 100% Medicare Garnishee (Edelston v Wilcox FCT (1988) 83 ALR; PSLA 2011/18). e) The Registrar failed to consider a Part IVC application was on foot at the AAT, which was to be heard within three weeks, and yet he proceeded to

16 sequester the Appellant s estate, thereby putting the AAT Review Application on hold; thus, denying quantification of the debt under the Tax Administration Act 1953 (Cth) and in breach of the Appellant s constitutional rights. f) The Registrar failed to consider the Respondent s terms of reference and conduct of the ten-year audit. PARA 12 a) The application to the High Court was framed on very specific grounds and several issues were not framed or pleaded. b) The High Court ruled therefore that the Application for Special Leave does not raise any reason to doubt the correctness of the decision of the Court of Appeal of the Supreme Court of Western Australia. c) On that same day, the High Court determined an application on conscious maladministration in Gould v DCT [2017] HCASL 126 stating that the decision of the Full Court of the Federal Court is not attended with sufficient doubt to warrant the grant of Special Leave. The application should be dismissed. It would be futile to grant an extension of time. This quite clearly indicates that it was the application that was inadequate in the Appellants pleadings rather than an endorsement of the decision of the Court of Appeal. d) The Appellant was self-represented. e) New information has since become available to the Appellant that was not previously included for consideration. PARA 13 a) The Respondent requested an adjournment claiming that the Appellant was a bankrupt with no standing to proceed in this matter. A stay of all proceedings of sequestration and a stay of sequestration order was in place. The issue of standing in the light of the fact that there were stays and the effect of those stays was not discussed b) The Appellant was not accorded procedural fairness in seeking legal advice if the stays had no effect whatsoever in proceeding with the s 39b Judiciary Act 1903 (Cth) application. The Appellant is of the view that the Respondent wished to avoid accountability of judicial review which could expose the procedural unfairness and natural justice issues claimed by the Appellant. c) The subsequent removal of the stay has enabled the trustee to abandon the application, further disadvantaging the Appellant from rights at law which have been systematically blocked. d) The Appellant seeks an order from the Court to enable the trustee to exercise and prosecute such rights at the direction of the appellant; or to permit the appellant to exercise and prosecute such rights for himself. (Stratton v Bowles Orders) PARA 14 a) The Stay was removed on application by the Respondent. PARA 15

17 a) Under the Bankruptcy Rules the Registrar was only permitted to grant a 21-day stay pending any further applications that might arise for a review or further stay. b) This was an application for an extension of stay permitted under the Federal Circuit Court Rules. The stay was requested pending a de novo hearing of the review of the decision of a Registrar. c) Unfortunately, or by design, the Stay Application was listed on the same day as the Review hearing and the Appellant was not accorded sufficient time to review the reasons for the refusal of the Stay Application and consider legal advice on the matter. d) The Reasons for judgement was issued on 31 August 2017, less than a week ago. PARA 16 a) The Appellant had not contested the programming orders made when a stay was refused on 19 June b) The Appellant subsequently requested the Respondent for an adjustment of the hearing date on 9 August The Respondent declined. c) The Appellant wrote to the Justice Lucev explaining the need for an adjustment of hearing on 9 August The Appellant was advised to have this decided at a stay hearing. As pointed out, the Stay hearing was then listed on the same morning as the de novo Review application d) The Appellant had several incidents take place in the 4 weeks of July-August that required court hearings at other courts in relation to an outstanding tenancy issue that the Courts were aware of since 2015 which involved a restraining order against the landlord. This had a medical impact on the Appellant. In addition, the Appellant s father-in-law passed away. The Appellant was in a medically unfit state to adequately brief a lawyer. e) Eventually, the Appellant managed to secure legal representation who requested an adjournment to sufficiently prepare for the de novo hearing. f) The Appellant was medically unfit to attend Court and had medical evidence but was not able to present it to Court nor forward it to his legal representative in sufficient time. However, there was sufficient history of medical illness since 2011 that had been previously adduced and it was sufficiently open to the court to grant an adjournment to enable the Appellant s lawyers to adequately represent him. g) The Court declined an adjournment. The Appellant s lawyers withdrew. h) The Court dismissed the de novo Review Application in the absence of the Appellant. i) The Reasons for the Judgment were issued on 31 August 2017, less than a week ago and three weeks after the case was dismissed. j) The Appellant has filed an Appeal without the benefit of the Reasons document. k) The Appellant has filed the Application for a Stay without the benefit of a Reasons document.

18 l) The Appellant has had less than a week to fully consider the Reasons document and to seek legal advice on the matter. m) The Appellant has only just received this submission from the Respondent and has been granted a 24-hour adjournment to respond. LEGISLATIVE FRAMEWORK PARA 17 (2) However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. The law allows for a stay pending an appeal being heard and determined. RELEVANT PRINCIPLES PARA 22 a) The Appellant does not accept the Respondent s views on this matter as they remain unsubstantiated. PARA 26 a) The case concerns a sentence of a term of imprisonment which required judicial discretion. There is no bankruptcy offence here nor imprisonment. ADDRESSING GROUNDS FOR DISCRETION The discretion to adjourn is an interlocutory decision Justice Lucev erred in his discretion not to grant an adjournment. The general principles hold in the Appellant s favour as it can be evidenced that the Justice Lucev s decision: 1) Did not take into account Relevant Factors (a) (b) (c) Absence of the Appellant the hearing rule. Need for legal representatives to adequately prepare and refusal to grant an adjournment for even 24 hours. Sufficient medical evidence of ill health since It was sufficiently open to the court to consider if legal representatives were given an adjournment, medical evidence could be provided and the Professor Skerritt could be present to give expert witness evidence. 2) Focused on Irrelevant Factors a) Reasons focus on the Notice to Produce this is extraneous to being denied the opportunity to have a de novo hearing related to sequestration. The Notice to Produce issue arose from orders sought by the Respondent and could have been adjourned to an interlocutory without disturbing the proceedings of a de novo. b) A de novo hearing is a fresh hearing of a case. It gives the Appellant a last chance to present reasons why sequestration should be avoided. The concern with past cases is redundant. The Court itself endorses this point of view when transcripts and the notes of the Registrar s

19 hearing were requested ) Unreasonable and Plainly Unjust PARA 27 a) Counsel sought an adjournment of 1 week to prepare for the case. It was declined as was an amended request for 48 hours, and then 24 hours. As a result, counsel was left with no option but to withdraw. b) This is decision that no reasonable person of authority would extend to well-established senior legal representatives of an Appellant experiencing a mental disorder and facing the dire consequences of sequestration and being deprived of natural justice to contest an unfair tax liability. a) Paras 5-11 of [2017[ FCCA 1999 are infected with error. b) Para 5 - The application for adjournment was to allow preparation and representation for the de novo review. At that stage, the AAT hearing were frozen. c) Para 6 The enclosed report from Professor Skerritt speaks for itself. It is not open to the Court to determine how a consultant physician should make an assessment. d) Para 7 The presumptions contained in Para 7 are not in keeping with a fresh de novo hearing. e) Para 8 These are matters outside the control of the Appellant. f) Para 9 There is evidence as indicated in Para 6. g) Para 10 This para 1o reflects that the Court s view is already prejudiced. It has already determined and formed a view of what might be put before the Court in due course. PARA 28 a) There has been long-standing medical evidence by the Appellant s consultant psychiatrist and it cannot be dismissed. b) Medical evidence has been provided to the Court since 2011 and over the years a portfolio of evidence has been adduced in Court documents Book B). c) Independent medical evidence has never been requested before and is not a pre-requisite for certification. PARA 29 a) Health has not been an issue since November 2016 as reflected in Professor Skerritt s report dated 18 November b) Health issues recurred when an incident occurred in June 2017 in a separate forum. c) If necessary, the Appellant s health can be fully canvassed in the Court of Appeal and at a de novo hearing.

20 d) Courts may not recognize the impact and effect of a diagnosed depression disorder. The AGS Equality Before the Law lists depression as a mental disorder and hence consideration should be extended when an appellant requires more time to process information as Professor Skerritt has assessed in a professional capacity. e) The judge had no basis for discrediting a member of the medical profession without sufficient evidence or basis for impeaching his credibility as a medical professional and University Professor!!!! PARA 31 a) The Appellant has not failed to object and is now raising an objection. b) The Appellant was not present in Court to object! PARA 32 a) There is ample evidence of statements made by Lucev J that a fairminded person could reasonably apprehend as bias. b) However, this is a matter to be fully exposed in the Appeal and given 24 hours to respond at depth to this submission does not afford a fair and unbiased approach to the hearing rule. PARA 33 a) The application by the legal representatives was for an adjournment. Had this been granted one of the issues to be raised was recusal of Lucev J on the grounds that he had fettered his decision in the earlier stay application. PARA 34 a) The Respondent is understandably not an unbiased party in this action and in making this claim to waiver bias. b) This is a matter that should properly be considered by an Appeal judge. PARA 36 a) The High Court in Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28 offers a binding ruling to the previous Courts that have rejected going behind the judgment debt. As in Ramsay, a judgment debt was contested. However, in the Appellant s case, unlike Ramsay, the judge made a serious error of law that led to Summary Judgment. There are several parallels and distinctions that provide a strong case for going behind the judgment debt. This will be tested in the Appeal Court. b) This ruling by the High Court on 17 August was not available at the time of the Stay Application. c) There is new information which neither of the courts mentioned have considered or been tested. d) The purpose of this opportunity for a de novo hearing is precisely to allow for a fair and full hearing over what has progressively emerged and been obtained under Freedom of Information legislation. PARA 37

21 a) The Appellant has submitted 2005, 2006, 2007, 2008, 2009, These are pending at the AAT but opportunity to have this assessed has been denied by the trustee. b) The GIC is cancelled by the tax lodgments. PARA 38 a) The absence of the Appellant did not allow the opportunity of a fair hearing to present the evidence. b) This is a matter for the Appeal Court and may require proper discovery. c) The Appellant should have his constitutional rights to contest tax under Part IVC and/or s 39b Judiciary Act 1903 (Cth) as noted in Futuris. The trustee has sought to block this process and should be directed by the Court to enable a proper a proper assessment of the Appellant s tax liability. PARA 39 a) The evidence was unrebutted in a hearing where the Appellant was absent. b) If there was a continuing debt, bankruptcy would simply pass the burden to the public. It would be to the taxpayers favor if a properly assessed tax liability can be obtained and payments be made, so that public policy of recovery is upheld rather than negated by bankruptcy. PARA 40 a) The Respondent has no basis for making a claim which has not been tested due to the sequestration orders of the Registrar which has blocked the AAT proceedings. b) The AAT hearings which would have enabled this were adjourned by the Respondent at their request and caused further delays in having the matter resolved. c) Then after the stay was lifted, the Respondent made a move to place all proceedings on hold, enabling the trustee to make a decision to abandon! d) Futuris constitutional rights to challenge a tax liability have been systematically removed. PARA 41 a) The earnings and income of the business was severely decimated by the 100% Medicare garnishee. b) The income earned which is reflected in subsequent tax returns speak for themselves. PARA 42 a) The is no alternate relief because of the orders of the Registrar and the actions of the trustee. b) The outcomes of other courts is still subject to review and does not preclude a de novo hearing where there is new or additional evidence, c) There is no evidence this has been rejected and it is highly speculative that is

22 PARA likely to be refused. There is no substantive evidence for this assertion. a) In the event of an Appeal, the Appellant will ask the de novo hearing be combined with the s 39b Judiciary Act 1903 (Cth) hearing. PARA 44 a) Conscious Maladministration can only be tested under s 39B Judiciary Act 1903 (Cth) actions which has yet to be advanced. PARAS OVERVIEW a) The province of Conscious Maladministration rests with s 39b Judiciary Act 1903 (Cth) and is outside the jurisdiction of other courts beyond an expression of opinion. b) All these matters from para have been systematically blocked by delays on the part of the RESPONDENT asking for adjournments on the one hand, while progressing with creditors petition and sequestration such that the race to bankruptcy status would remove all rights of challenge. c) This was foreshadowed by Whitlam J in McCallum v Commissioner of Taxation [1997] FCA 533; (1997) 75 FCR 458, where his Honour said (at 469): PARA 45 The Commissioner issues an assessment. The taxpayer objects to it. The assessment may be recovered as a debt. The Commissioner proceeds to do so. The taxpayer seeks a stay, but on the principles enunciated by the Court of Appeal in Deputy Commissioner of Taxation (Cth) v Mackey (1982) 64 FLR 432 the stay is refused. The Commissioner proceeds to judgment and then issues a bankruptcy notice. That notice can not be challenged because if one sought to go behind the judgment debt one is met by an assessment unchallengeable under s 177: Clyne v Deputy Federal Commissioner of Taxation (Cth) (1982) 82 ATC 4510; Clyne v Deputy Commissioner of Taxation (Cth) (1983) 83 ATC On the same basis, the taxpayer is made bankrupt. He is insolvent as a result of the tax debt. There may or may not be other creditors. The Commissioner appoints a trustee in bankruptcy or perhaps the Official Receiver becomes trustee. In either case the trustee has no interest in fighting the objection in the Administrative Appeals Tribunal. It is immaterial to the trustee. And the trustee has no funds to do so. Hence the taxpayer loses the right to appeal and is made bankrupt without ever having a right to challenge the assessment. It could not happen, could it? In my view, the Court should adopt an interpretation of s 14ZZ which ensures that taxpayers will always have a right to challenge assessments made against them. a) The issue of solvency has been complicated by the actions and persistent failure of the Respondent to make a serious effort to assess tax liability. b) The Appellant has property that warrants protection for the benefit of third