Federal Court of Australia

Inspector-General in Bankruptcy v Rutherfurd (Bankrupt) [2023] FCAFC 99

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    In proceeding QUD252/2022, the orders made on 11 November 2022 be set aside and in lieu thereof it be ordered that:

(a)    The proceeding be dismissed.

(b)    The applicant pay the first respondent’s costs.

3.    In proceeding QUD109/2022, the orders made on 11 November 2022 be set aside and in lieu thereof it be ordered that:

(a)    The proceeding be dismissed.

(b)    The applicant pay the first respondent’s costs.

4.    The first respondent pay the appellant’s costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    In proceedings in the Administrative Appeals Tribunal, the appellant (‘Inspector-General’) and first respondent (a bankrupt) raised the following question as a preliminary matter:

Where the Applicant has requested the Respondent, being Inspector-General in Bankruptcy (the IG) [to] review a decision of the Trustee to make an “assessment” within the meaning of 139ZA(1)(b) the Act (Trustee’s decision), but the IG has decided not to review the Trustee’s decision within the meaning of section 139ZA(5) (IG’s decision), does the Tribunal nevertheless have [power] to carry out a review of the Trustee’s decision if it were to determine that the IG’s decision should be ‘set aside’ as sought in the Applicant’s application?

2    The Tribunal determined to the effect that it did not have the power to carry out a review of the decision of the trustee in bankruptcy and, as part of that review, make a fresh income contribution assessment.

3    Following an appeal and a separate application for judicial review, a single judge of this Court set aside the decision of the Tribunal and directed that it determine the application according to law: Rutherfurd (Bankrupt) v Inspector-General in Bankruptcy [2022] FCA 1469 (‘J’).

4    That decision is the subject of this appeal.

5    For the following reasons, the appeal will be allowed and the orders of the primary judge in the two proceedings which were before his Honour will be set aside. Costs will follow the event.

Relevant background

6    Division 4B of Pt VI of the Bankruptcy Act 1966 (Cth) requires bankrupts who earn income during their bankruptcy to pay contributions towards their estate: s 139J(a). A bankrupt must pay these contributions if the income they derive during a “contribution assessment period” exceeds a threshold amount calculated under the Act (the ‘actual income threshold amount’): ss 139K, 139P(1), 139Q(1), 139S. Each contribution assessment period lasts for one year, beginning on the date of the bankruptcy’s commencement, and then every anniversary thereafter: s 139K.

7    As soon as practicable after the commencement of each contribution assessment period, the trustee of the estate of the first respondent (‘trustee’) is to make an assessment of: the income that was derived, or is likely to be derived, by the first respondent during that period; the actual income threshold amount; and the contribution (if any) that the first respondent is liable to pay in respect of that period: s 139W(1).

8    Pursuant to s 139W(2) of the Bankruptcy Act, the trustee is empowered to make a fresh assessment of these matters, whether during or after a contribution assessment period.

9    The first respondent was made bankrupt on 5 April 2017. On 18 September 2020, the trustee issued notices of income contribution assessment to the first respondent. Those notices concerned the income contribution assessments which the trustee had made for the first four years of the first respondent’s bankruptcy.

10    On 13 November 2020, the first respondent requested that the Inspector-General review the trustee’s decision to make an assessment under s 139ZA(1)(b) of the Bankruptcy Act.

11    Section 139ZA(1) relevantly provides that the Inspector-General may review a decision of a trustee to make an assessment:

(a)    on the Inspector-General’s own initiative; or

(b)    if requested to do so by the bankrupt for reasons that appear to the Inspector-General to be sufficient to justify such a review.

12    Section 139ZA(5) provides that, when a request is made by a bankrupt to conduct a review, the Inspector-General must, within 60 days after receiving the request:

(a)    decide whether to review the decision; and

(b)    if the Inspector-General decides to review the decision–make his or her decision on the review.

That is, it is only upon a decision being made to review the decision under (a) that a further decision is required to be made on the review under (b).

13    Section 139ZD provides to the effect that, if the Inspector-General decides to conduct a review of the decision, then, on that review, the Inspector-General has all the powers of the trustee and may either confirm the decision or set aside the decision and make a fresh assessment under s 139W(2).

14    On 12 January 2021, a delegate of the Inspector-General wrote to the first respondent in these terms (and attached reasons):

I have decided pursuant to section 139ZA(1)(b) of the Bankruptcy Act 1966 (Cth) not to perform a review of the Trustee’s decision as there are insufficient grounds to justify a review.

15    That is, the Inspector-General made a decision not to review the decision of the trustee (being a decision made under s 139ZA(5)(a)).

16    Because the pre-condition to s 139ZA(5)(b) was not met, being a decision by the Inspector-General to review the decision, s 139ZA(5)(b) did not apply and the Inspector-General was not required to review the decision of the trustee (and did not do so).

17    Further, s 139ZD did not come into play because there was no “review of a decision” by the Inspector-General.

18    On 8 February 2021, the first respondent applied to the Tribunal under s 139ZF(b) of the Bankruptcy Act for a review of the decision of the Inspector-General.

19    Section 139ZF has an important role in this appeal, as it provides for the review of two different types of decisions by the Inspector-General. That section states:

An application may be made to the Administrative Appeals Tribunal for the review of:

(a)     a decision of the Inspector-General on the review of a decision by a trustee to make an assessment; or

(b)     a decision by the Inspector-General refusing a request to review a decision by a trustee to make an assessment.

20    By his application to the Tribunal, the first respondent sought orders pursuant to s 43(1)(c)(i) of the Administrative Appeals Tribunal Act 1975 (Cth) (‘AAT Act’) setting aside the decision and making a substitute decision assessing his income on a particular basis.

21    It was in this context that the preliminary question arose before the Tribunal, as referred to above.

Reasons of the primary judge

22    The reasons of the primary judge tracked through the relevant provisions of the Bankruptcy Act at [14]–[15] J:

Commencing with the text of the conferral of review jurisdiction as found in s 139ZF, at least if that section is read in isolation, tends immediately to support a construction as promoted by the Inspector-General. And that is so if one progresses, as one must, to read s 139ZF of the Act in context. Reading in context takes one to s 139ZA, which confers a review function on the Inspector-General. In this case, the Inspector-General’s review function was that found in s 139ZA(1)(b). In turn, progressing further in context, the powers of confirmation or setting aside and making a fresh assessment under s 139W(2) of the Act as found in s 139ZD are engaged only if the Inspector-General progresses with a review.

Yet, further, the notification obligation found in s 139ZE has a bifurcation in s 139ZE(1) as between reviews and refusing a request by a bankruptcy for a review of a decision. That in turn, so it was submitted, is a precursor to, and engages with the alternative, so it was submitted, posited in the conferral review jurisdiction found in s 139ZF, that the review was confined to, in this instance, the refusal by the Inspector-General of the request for review was said to follow from the disjunctive nature of the word “or” found in s 139ZF…

23    The primary judge summarised the first respondent’s submissions at [16] J (which were maintained on this appeal):

It was submitted that the Tribunal’s jurisdiction was in keeping with the very nature of the jurisdiction exercised by the Tribunal to stand in the shoes of the Inspector-General. Those shoes, it was submitted, were not just found in s 139ZA(1)(b) but found in a way which placed the Tribunal in the position of having the ability to make its own decision as to whether to conduct a review or refuse to conduct a review. It was also put in support of this that the word “or” as it appears in s 139ZF did not necessarily create a disjunct. Rather, it was submitted that this is one of those cases where as a matter of construction the use of “or” created a conjunct. That conjunct, in turn, was submitted to be symmetrical with the power to be exercised in place of the Inspector-General under s 139ZA(1), which was a power to do one thing or the other, to review or refuse to review.

24    At [17] J, the primary judge stated:

Each of the parties correctly emphasised the importance of identifying the particular decision which fell for review by the Tribunal. Section 25 of the AAT Act envisages that particular statutes may confer a review jurisdiction on the Tribunal. Section 139ZF of the Act is one such statute. When such a review jurisdiction is conferred, the nature of that review in the ordinary course is that for which s 43 of the AAT Act provides.

25    After referring to certain authorities, the primary judge continued at [24]–[32] J:

In truth, review by the Inspector-General under s 139ZA(1) is a form of primary, external merits review in respect of which provision is made by s 139ZF for further external merits review by the AAT. However that may be, the point of mentioning this is to acknowledge a submission made on behalf of the bankrupt as to affinities which were to be found between the present case and observations made by the Tribunal in a decision in which the then president Davies J presided, namely, Re Gee v Director-General of Social Services (1981) 58 FLR 347. The Tribunal’s decision in that case is not, of course, binding, although any pronouncement by Davies J in relation to the nature of the Tribunal’s review jurisdiction carries with it particular weight. His Honour stated at 357 – 358:

It is a necessary inference from the Administrative Appeals Tribunal Act that the function of the Tribunal is to review on the merits decisions which affect a person’s interest. See per Bowen CJ and Deane J in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68, and Smithers J in Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1 at 23. It is inconsistent with the tenor of the Act that the Tribunal should concern itself not with an operative decision which affects a person’s rights but merely with a decision which has simply affirmed or varied the operative decision. Moreover, if the respondent's arguments were correct, the Administrative Appeals Tribunal would not be able effectively to use the power conferred by s 43 of its Act to set aside the decision under review and to remit the matter for reconsideration in accordance with any directions or recommendations of the Tribunal. If the only decision which could be set aside were a decision under ss 14 or 15 of the Social Services Act, an applicant to this Tribunal would be precluded from again coming to the Tribunal should he or she be dissatisfied with the decision made after remission. …Nor, if the respondent's contention be correct, could the Tribunal exercise its power under s 41 of the Administrative Appeals Tribunal Act to suspend the operation of the subject decision for, in that event, the decision under review would not be the operative decision.

…

In our view, therefore, the decision which is the subject of the review is the operative decision which affects the claimant’s or pensioner’s rights. The administrative Appeals Tribunal is not involved in an exercise of reviewing on the merits the Director-General’s affirmation or variation of that decision. The regulations may give that particular form to the review, but the essence of the review in relation to decisions made under the Social Services Act is the same as it is in other jurisdictions conferred upon the Administrative Appeals Tribunal, namely, whether the decision which has affected the rights of the applicant was the correct or preferable decision, not whether a decision which reconsidered such decision was the correct or preferable one. As Brennan J said in relation to a review by a Taxation Board of Review, the expression used for the conferral of the authority to review is “form only”.

Of course, those observations, while made in relation s 43 of the Act, were made in relation to a different statutory regime. Nonetheless, the very establishment of the Tribunal was in a reform measure in Australian public law and an approach to statutory construction where competing views are open which affords a breadth rather than constriction of external merits review is, in my view, preferable.

In my view, there are truly competing, not confected, questions of statutory construction at large textually in the present case. The construction promoted for the Inspector-General is certainly open texturally. However, it carries with it the prospect of a bankrupt dissatisfied with a trustee’s income contribution assessment being refused review by the Inspector-General but then successfully reviewing that refusal and, in turn, seeing the case remitted to the Inspector-General who may, perhaps, make a decision on the merits which is not to the bankrupt’s liking which would, in turn, enliven if the Inspector-General’s construction be correct, a later ability to review on the merits the decision by the Inspector-General in respect of income contribution assessment.

Parliament-envisaged expedition rather than elongation of an insolvency administration. In relation to income contribution, it is evident from s 139ZA(3)(a), insofar as the making of a decision by the Inspector-General responsive to a request to conduct a review made by a bankrupt, the Tribunal is not under such a constraint perforce of s 139ZF. In the present case, there was a lapse of some 12 months between the making by the Inspector-General of a decision in accordance with the statutory timeframe and when the Tribunal made its decision in respect of the preliminary issue, and I am in no way critical of the Tribunal, generally, or the member who constituted the Tribunal in respect of that delay. There may well have been good reasons for it lying in the amount of material before the Tribunal and the sheer number of cases which these days are consigned to and instituted in the Tribunal.

However that may be, there is, in prospect, if the Inspector-General's construction be correct, elongation of uncertain length in insolvency administration by a potentially elongated review in succession process. As against that, it is textually possible, and preferentially in my view, to read or as it appears in s 139ZF as a conjunct rather than a disjunct. There are many cases in which “or” has been found to have such a meaning in legal drafting. One such case, which acknowledged that “or” could carry, and had been regarded as carrying, such a meaning, is one to which I was referred by Mr Russell, namely RF Brown & Co Limited v TJ Harrison (1927) 137 LT 549; [1927] All ER Rep 195. In that case, at All ER 201, Banks LJ, with whom Atkin and Lawrence LJJ agreed, stated “It is doing no injustice either to the draftsman or the language to use the word ‘or’ conjunctively and not disjunctively; there is abundant authority for doing that”.

It seems to me that it is quite imperative on the Court to do it in this case. Expressing concurrence, Atkin LJ stated at 203 – 204:

I disagree with the learned judge in his view that the word “or” can never have a conjunctive sense. I think it quite commonly and grammatically can have a conjunctive sense. It is generally disjunctive, but it may be plain from a collation of the words that it is meant in a conjunctive sense. And, certainly, where the use of the word as a disjunctive leads to repugnance or absurdity, it is quite within the ordinary principles of construction adopted by the court to give the word a conjunctive use.

Giving “or” a conjunctive use in s 139ZF makes it an example, in my view, of a hendiadys, an exemplification of the expression of a single complex idea by two words usually connected by the word “and”; see in this regard Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797, at [34], Heydon J.

So construing s 139ZF is symmetrical with s 139ZA(1)(b). That allows the Inspector-General to decide one way or the other whether to conduct a review. If the Inspector-General decides to conduct a review, no further conferral of statutory function is necessary. All that happens is that in that review, the powers specified in s 139ZD may be exercised. Construing s 139ZF so as to put the Tribunal in the place of the Inspector-General enables the Tribunal to decide for itself whether or not to conduct a review and, if so, to proceed on that review and if it decides to conduct a review, to proceed forthwith on that review. That construction presents the singular advantage of truncating times for insolvency administration and controversy resolution.

For these reasons, then, and with respect, I depart from the Tribunal’s construction of the Act and thus the answer given by the Tribunal. In lieu thereof, the Tribunal was empowered, in my view, to decide for itself whether to conduct a review as requested by the bankrupt and, if so disposed to conduct a review, to do so. I would, therefore, bring up the Tribunal’s decision to be quashed and direct that a mandamus issue.

Grounds of appeal

26    The Inspector-General relies on three grounds of appeal, namely:

1.    The primary judge erred in finding that the Administrative Appeals Tribunal (Tribunal) erred in finding that it did not have power to review a decision that had been made under s 139W of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) by a trustee in bankruptcy to make an assessment and could not itself make a fresh decision under s 139W. His Honour ought to have found that the Tribunal made no jurisdictional error.

2.    Contrary to the primary judgment, on a review of the Inspector-General in Bankruptcy’s decision under s 139ZA(1)(b) of the Bankruptcy Act to refuse to conduct a review of a trustee in bankruptcy’s decision to issue an assessment, the Tribunal’s powers under s 43 of the Administrative Appeals Tribunal Act 1975 (Cth) do not include the power to make a fresh assessment under s 139W of the Bankruptcy Act, or to review the decision of the trustee in bankruptcy to make an assessment under s 139W. His Honour ought to have so found and there was no reviewable error by the Tribunal.

3.    Contrary to the primary judgment, s 139ZF of the Bankruptcy Act does not allow the Tribunal to review a decision of a trustee in bankruptcy to make an assessment, in a case where there has been no decision on review by the Inspector-General of the trustee’s decision.

Issue on the appeal

27    The central issue on this appeal is whether, if the Inspector-General makes a decision refusing a request to review a decision by a trustee to make an assessment and an application is brought to review that decision under s 139ZF(b) of the Bankruptcy Act, the Tribunal has the power to set aside the decision of the trustee and make a fresh assessment under s 139W(2).

Consideration

Identification of the decision on review

28    Section 43 of the AAT Act empowers the Tribunal to exercise “all the powers and discretions” conferred on the original decision-maker, provided it does so “[f]or the purpose of reviewing a decision”.

29    In Frugtniet v Australian Securities and Investments Commission (2019) 266 CLR 250; [2019] HCA 16 at [51] (Bell, Gageler, Gordon and Edelman JJ), it was stated that:

[Except where altered by some other statute], the jurisdiction conferred on the AAT by ss 25 and 43 of the AAT Act, where application is made to it under an enactment, is to stand in the shoes of the decision-maker whose decision is under review so as to determine for itself on the material before it the decision which can, and which it considers should, be made in the exercise of the power or powers conferred on the primary decision-maker for the purpose of making the decision under review. The AAT exercises the same power or powers as the primary decision-maker, subject to the same constraints. The primary decision, and the statutory question it answers, marks the boundaries of the AAT's review. The AAT must address the same question the primary decision-maker was required to address, and the question raised by statute for decision by the primary decision-maker determines the considerations that must or must not be taken into account by the AAT in reviewing that decision. A consideration which the primary decision-maker must take into account in the exercise of statutory power to make the decision under review must be taken into account by the AAT. Conversely, a consideration which the primary decision-maker must not take into account must not be taken into account by the AAT.

(citations omitted.)

30    It is necessary to identify the decision that is the subject of the Tribunal’s review with some precision: Shi v Migration Agents Registration Authority (2008) 235 CLR 286; [2008] HCA 31 at [133] (Kiefel J, as her Honour then was). In this case, that identification turns upon the proper construction of the Bankruptcy Act.

31    The first respondent submitted that the trustee’s decision was the “primary” or “operative” decision because it affected his rights and it was this decision which was subject to review by the Inspector-General within the meaning of s 139ZA(1). The first respondent also submitted that there are not separate paths of decision-making within the statutory scheme of the Bankruptcy Act but, instead, there is a single process of review of the trustee’s decision which may proceed in different ways as a matter of procedure.

32    However, three situations can arise under the Bankruptcy Act, each of which raises different issues and which have different statutory consequences and constraints.

33    The first situation provided for by the legislation is where the Inspector-General has conducted a review of a decision of a trustee on his or her own initiative, or if requested to do so by the Ombudsman: s 139ZA(1)(a) and s 139ZA(2). If a review is conducted in these circumstances, then s 139ZD provides the Inspector-General with certain powers, including the power to make a fresh assessment. Pursuant to s 139ZE(1)(a), the Inspector-General must give written notice to the bankrupt and the trustee of the decision on the review. That decision must include a notice containing a statement to the effect that, if the bankrupt or trustee is dissatisfied with the decision, application may be made to the Tribunal for review: s 139ZE(3). If the Inspector- General makes a fresh assessment, written notice must be given to the bankrupt setting out the particulars of the fresh assessment as soon as practicable: s 139ZE(7). An application may be made to the Tribunal for review of a decision by the Inspector-General on the review of a decision by a trustee to make an assessment: s 139ZF(a).

34    The second situation provided for by the legislation is where the Inspector-General receives a request from the bankrupt to review a decision of a trustee: s 139ZA(1)(b) and s 139ZA(3). The Inspector-General must decide if there are reasons that appear to be sufficient to justify a review of the decision of the trustee as requested and, upon deciding that there are such reasons, conduct a review of the decision: s 139ZA(1)(b) and s 139ZA(5)(a). The Inspector-General then makes his or her own decision on the review: s 139ZA(5)(b). If a review is conducted in these circumstances, then s 139ZD provides the Inspector-General with certain powers, including the power to make a fresh assessment. If the Inspector-General makes a fresh assessment, written notice must be given to the bankrupt setting out the particulars of the fresh assessment as soon as practicable: s 139ZE(7). Pursuant to s 139ZE(1)(a), the Inspector-General must give written notice to the bankrupt and the trustee of the decision on the review. That decision must include a notice containing a statement to the effect that, if the bankrupt or trustee is dissatisfied with the decision, application may be made to the Tribunal for review: s 139ZE(3). An application may be made to the Tribunal for the review of a decision by the Inspector-General on the review of a decision by a trustee to make an assessment: s 139ZF(a).

35    The third situation provided for by the legislation is where the Inspector-General receives a request from the bankrupt to review a decision of a trustee (as described above) and refuses that request: s 139ZA(5)(a). The Inspector-General does not have the power to make a fresh assessment because such powers are only conferred when the Inspector-General has decided to conduct a review. That is a constraint imposed by the language of s 139ZD, which only applies “[o]n a review of a decision”. Upon a decision being made to refuse the request, the Inspector-General must give written notice to the bankrupt and the trustee of the decision on the request: s 139ZE(1)(b). That decision must include a notice containing a statement to the effect that, if the bankrupt is dissatisfied with the decision, application may be made to the Tribunal for review: s 139ZE(4). An application may be made to the Tribunal for the review of a decision by the Inspector-General refusing a request to review a decision by a trustee to make an assessment: s 139ZF(b).

36    In the case of the second and third situation only, if, within 60 days after lodgement of a request by a bankrupt, written notice of the decision has not been provided in accordance with s 139ZE(1), the Inspector-General is taken to have conducted a review and confirmed the trustee’s decision: s 139ZE(6).

37    By way of overview, then, s 139ZA(5) contains express recognition of two separate decisions by the Inspector-General, namely:

(1)    a decision to review the trustee’s decision: s 139ZA(5)(a); or

(2)    a decision on the review of the trustee’s decision (which decision only arises if there is an earlier decision made to conduct the review, or the deeming provision in s 139ZE(6) applies): s 139ZA(5)(b).

38    Unless a decision is made to conduct the review, the Inspector-General does not have the power to set aside the trustee’s decision and make a fresh assessment: s 139ZD. That power is only conferred on a review. No such decision was made in this case and so the powers available under s 139ZD were not conferred.

39    Each type of decision has its own notice requirements, which differ in a way that reflects that different persons would have an interest in that decision: s 139ZE(3) and s 139ZE(4).

40    The provisions of s 139ZF(a) and (b) mirror s 139ZE(3) and (4) because they recognise that there are separate means of review with respect to separate kinds of decisions. These are:

(1)    an application by either the trustee or the bankrupt to the Tribunal from a decision on the review (if the Inspector-General has reviewed, or is deemed to have reviewed, the trustee’s assessment); or

(2)    an application by the bankrupt from a decision on the request (if the Inspector-General has refused a request to review the trustee’s decision, as occurred in this case).

41    It was the latter decision which was the subject of the application by the first respondent to the Tribunal. The trustee was not a party to the hearing before the Tribunal. That this occurred is consistent with the notice requirement in s 139ZE(4) and with the notion that an application to review a refusal of a request to conduct a review is not a matter in which the trustee is a necessary party or would wish to be heard.

42    Accordingly, the legislation provides expressly that two separate decisions may be made by the Inspector-General, and that each decision may be the subject of an application to the Tribunal for review of that decision. That they are alternative and separate decisions is made plain by the use of the word “or” between the description of each alternative decision in s 139ZF.

43    This construction is reinforced by s 139ZE(6). That is because it provides that, if the Inspector-General does not make a decision under s 139ZA(5) within 60 days, then he or she is deemed to have made a decision under ss 139ZA(5)(a) and 139ZD(a) to confirm the trustee’s decision, thus attracting the right to apply to the Tribunal for a review under s 139ZF(a). If the Parliament intended that the Tribunal’s review would be at large regardless of whether the Inspector-General made a decision under s 139ZA(5)(a) or (b), then s 139ZE(6) would not have been expressed to deem a failure of the Inspector-General to make a decision within 60 days as attracting the specific right to apply for a review of a decision under ss 139ZA(5)(a) and 139ZD(a). It follows that the Parliament necessarily intended that the character of the Inspector-General’s decision (i.e. being either a refusal to review (s 139ZA(5)(a)), or a decision to review (s 139ZA(5)(b)) and determine under s 139ZD to confirm or set aside and remake, the trustee’s decision) determined the Tribunal’s powers on a review of that decision.

44    This conclusion is also supported by the fact that s 139ZF has the heading “Review of assessment decisions”, which is a reference to more than one decision. The section heading forms part of the Act for the purposes of statutory construction: s 13(1) of the Acts Interpretation Act 1901 (Cth); Kingdom of Spain v Infrastructure Services Luxembourg S.à.r.l. (No 3) (2021) 392 ALR 443; [2021] FCAFC 112 at [5] (Allsop CJ, with whom Perram and Moshinsky JJ agreed). While the heading must give way to the text of the provision, it can be taken into consideration: Quikfund (Australia) Pty Limited v Airmark Consolidators Pty Limited (2014) 222 FCR 13; [2014] FCAFC 70 at [81]–[82] (Allsop CJ, White and Wigney JJ); Silk Bros Pty Ltd v State Electricity Commission of Victoria [1943] HCA 2; (1943) 67 CLR 1 at 16 (Latham CJ, with whom Rich, McTiernan and Williams JJ agreed).

45    In this case, the correct characterisation of the decision under review by the Tribunal was the decision by the Inspector-General refusing a request to review a decision by the trustee.

46    As such, the Tribunal may only exercise the same powers as the Inspector-General had under the applicable legislation by reason of s 43 of the AAT Act for the purpose of reviewing that decision. As the power to set aside the decision of the trustee and make a fresh assessment was not conferred on the Inspector-General because no review was conducted (which was necessary for s 139ZD to apply), that power was not conferred on the Tribunal pursuant to s 43 of the AAT Act: Frugtniet at [51].

47    The primary judge accepted at [26] J that this construction of the Bankruptcy Act was “open texturally [sic]” but then did not accept that construction for various reasons, each of which was in error. These reasons will now be addressed.

Errors by the primary judge

Expansive construction of legislation

48    When considering the competing contentions concerning construction of the legislation in this case, the primary judge found that “an approach to statutory construction where competing views are open which affords a breadth rather than constriction of external merits review is, in my view, preferable” including because “the very establishment of the Tribunal was [a] reform measure in Australian public law”: [25] J. In support of this proposition, his Honour endorsed observations made in Re Gee v Director-General of Social Services [1981] AATA 21; (1981) 58 FLR 347 at 357–358, including that it is the “operative decision” that is the subject of review before the Tribunal, being the decision which affects the aggrieved party’s rights: [24] J.

49    The first respondent maintained the utility of the observations in Re Gee on the appeal, and also submitted that the decision of Yolbir v Administrative Appeals Tribunal (1994) 48 FCR 246; [1994] FCA 69 (Davies, Burchett and O’Connor JJ) confirms that the legislation should be given “a broad meaning, in which the Tribunal [is] concerned with the ‘operative decision’ which affects the interested party’s rights”.

50    However, the primary judge’s reliance on Re Gee to prefer an expansive construction of the Bankruptcy Act was, with respect, misplaced.

51    That is because, as the primary judge recognised, Re Gee concerned the proper construction of different legislation to that which was before his Honour. In that case, the Tribunal considered the distinction between a “determination, direction, decision or approval” which may be the subject of a review or appeal and a decision under ss 14 or 15 of the Social Services Act 1947 (Cth) to “affirm, vary or annul the determination, direction, decision or approval” (at 355), and it was in that context that the Tribunal considered whether a decision which had affirmed or varied an earlier decision was the operative decision for the purposes of the review by the Tribunal. The passage cited by the primary judge at [24] J was stated in Re Gee in response to a submission to the Tribunal that “the decision under review by the Administrative Appeals Tribunal in its social security jurisdiction is not the operative decision but rather the decision which on appeal or review has reconsidered the operative decision”.

52    Critically, the legislation (and facts) in Re Gee did not concern a situation where the intermediate decision-maker had the statutory ability to (and did, as in the case before the primary judge) refuse to reconsider the original decision. It follows that there were no “affinities” between this case and Re Gee as the first respondent submitted to the primary judge, and which his Honour appeared to accept at [24] J.

53    Further, the primary judge appears to have not been taken to later cases which confined the Tribunal’s observations in Re Gee. As summarised by the Tribunal (composed of different members) in Re Drs Sullivan, Nicolaides and Partners v Minister for Health, Housing, Local Government and Community Services (1994) 32 ALD 517; [1994] AATA 15 at [68]:

The Tribunal in Gee’s case decided, therefore, that the affirmation of a decision simply leaves the original decision in place. It is that original decision which remains operative and which is under review rather than the affirmation itself. It does not follow from this, however, that the original decision is necessarily the decision under review in every case. As the tribunal said in that case, where a decision is set aside, that is the end of that decision and it no longer operates as its place is taken by the new decision. What is clear from Gee’s case is that the decision under review must be determined according to the relevant legislation and the facts of each case.

54    The Full Court in Yolbir cited Re Gee for the limited purpose of interpreting s 41 of the AAT Act (not s 43, with which we are concerned) and the Social Security Act 1991 (Cth). Section 41 of the AAT Act empowers the Tribunal to make orders staying or otherwise affecting the operational implementation of a “decision to which the relevant proceeding relates” (emphasis added).

55    In Yolbir, the relevant facts were that the Tribunal had decided that it had no power to stay the decision to cancel the pension because the application for review could relate only to the decision of the Social Security Appeals Tribunal (i.e. the decision affirming the cancellation of the pension) and not the original decision (i.e. the decision to cancel the pension). Although the proceedings in the Tribunal were resolved by consent before the matter came before the Full Court, the Court considered that the relevant or operative decision, which was able to be the subject of orders made by the Tribunal pursuant to s 41 AAT Act, was the decision to cancel the pension.

56    In that case, the Court observed (at 248) that the decision in Re Gee “turned on the terms of s 41 of the AAT Act” and (at 249) that the conclusion was drawn in Re Gee that:

…where a decision which was originally made by an officer has since been affirmed by a body such as the Social Security Appeals Tribunal, s 41 is concerned with the decision itself, that is the operative decision, and not merely with its affirmation. Accordingly, the decision as affirmed can be stayed under s 41.

57    In an attempt to bolster the primary judge’s reliance on Re Gee, the first respondent submitted that the Inspector-General’s decision to refuse the request for a review was an implied confirmation (or affirmation) of the trustee’s decision. However, no support for this submission can be found in the text of the provisions of the Bankruptcy Act which are referred to above.

58    It follows that, while the first tier or original decision may be the “operative decision” for review purposes, Re Gee and Yolbir do not stand for the proposition that this will necessarily be the case in all circumstances. Instead, the correct characterisation of the decision under review, and of the associated powers which may be exercised by the Tribunal on that review, ultimately turns on the particular legislation: see, for example, Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v PDWL (2021) 284 FCR 1; [2021] FCAFC 48 (McKerracher, Burley and O’Callaghan JJ) at [85]–[87].

Construction by reference to purpose

59    The primary judge stated that Parliament had “envisaged expedition rather than elongation of an insolvency administration”: [27] J. By reference to this consideration, his Honour then found that, because the Inspector-General’s construction of the legislation led to an “elongation of uncertain length in insolvency administration by a potentially elongated review in succession [sic] process” and the first respondent’s construction of the legislation presented the “singular advantage” of “truncating times for insolvency administration and controversy resolution”, the first respondent’s construction was to be preferred: [28] and [31] J.

60    However, as observed in Walker v Members Equity Bank Ltd (2022) 406 ALR 539; [2022] FCAFC 184 (Wigney J, with whom Lee and Abraham JJ agreed) at [105] and [106]:

It may be accepted that a construction of a provision of an Act that would promote the purpose or object underlying the Act will be preferred to a construction that would not promote that purpose or object: s 15AA of the Acts Interpretation Act 1901 (Cth) (see also s 5A(2) of the ASIC Act). The problem with the prosecutor’s submission, however, is that focussing upon a general legislative purpose often does not assist, and may even be a distraction, in resolving questions of construction in respect of specific provisions in the legislation in question. As Gleeson CJ said in Carr v Western Australia (2007) 232 CLR 138; 239 ALR 415; [2007] HCA 47 at [5]–[6], in relation to the general rule that a construction that promotes the purpose or object of the underlying Act should be preferred:

… That general rule of interpretation, however, may be of little assistance where a statutory provision strikes a balance between competing interests, and the problem of interpretation is that there is uncertainty as to how far the provision goes in seeking to achieve the underlying purpose or object of the Act. Legislation rarely pursues a single purpose at all costs. Where the problem is one of doubt about the extent to which the legislation pursues a purpose, stating the purpose is unlikely to solve the problem. For a court to construe the legislation as though it pursued the purpose to the fullest possible extent may be contrary to the manifest intention of the legislation and a purported exercise of judicial power for a legislative purpose.

To take an example removed from the present case, it may be said that the underlying purpose of an Income Tax Assessment Act is to raise revenue for government. No one would seriously suggest that s 15AA of the Acts Interpretation Act has the result that all federal income tax legislation is to be construed so as to advance that purpose. Interpretation of income tax legislation commonly raises questions as to how far the legislation goes in pursuit of the purpose of raising revenue. In some cases, there may be found in the text, or in relevant extrinsic materials, an indication of a more specific purpose which helps to answer the question. In other cases, there may be no available indication of a more specific purpose. Ultimately, it is the text, construed according to such principles of interpretation as provide rational assistance in the circumstances of the particular case, that is controlling.

Fixing upon the “general legislative purpose” also carries with it the “danger” that the text does not “receive the attention it deserves”: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; 260 ALR 1; [2009] HCA 41 at [51] (Hayne, Heydon, Crennan and Kiefel JJ).

61    It cannot be said that the sole purpose of the statutory scheme in the Bankrupty Act is expedition of an insolvency administration. There are other purposes such as, for example, the minimisation of costs associated with the administration of a bankrupt estate, which would tend to favour a reduced scope of any review by the Tribunal. Nor can it be assumed in this case that the Parliament pursued the purpose of expedition at all costs, especially having regard to the text of the provisions used in the Bankruptcy Act, as addressed earlier.

62    Even accepting that one of the purposes of the statutory scheme in the Bankruptcy Act is expedition rather than elongation of an insolvency administration, it cannot be assumed, as was done by the primary judge without any evidence, that it would be more expedient for the Tribunal to decide for itself whether to conduct a review and, if so disposed to conduct a review, to do so.

63    That is because it is just as feasible that a decision by the Tribunal to conduct a review of the refusal of the request by the bankrupt would not be a prolonged affair. If the Tribunal determined that the Inspector-General should have conducted the review and remitted the matter back to the Inspector-General for that purpose, it is also feasible, if not likely, that the Inspector-General would take less time to conduct the review than the Tribunal would take. Further, a decision upon such a review by the Inspector-General might but not necessarily would lead to a further review application to the Tribunal.

64    As accepted by the first respondent, and properly so, the Inspector-General’s construction might therefore elongate the process of reviewing a trustee’s decision, in that it adds at least one more step to the process, but it cannot be assumed that the addition of an extra step or more would necessarily take more time overall. Indeed, earlier in his Honour’s reasons, even the primary judge seemed to accept that the elongation in the insolvency administration was only “in prospect” ([28] J) although that position had changed by [31] J.

65    For these reasons, the primary judge erred in relying on the purpose of expedience to prefer the construction of the first respondent, particularly in circumstances where expedition would not necessarily be achieved and such an approach failed to give due attention to other purposes of the legislation and to the text of the provisions of the Bankruptcy Act.

Conjunctive use of “or” in s 139ZF

66    The primary judge accepted the submission of the first respondent below that the word “or” in s 139ZF has a conjunctive meaning, rather than its ordinary disjunctive meaning: [28] J. This was done by the primary judge “so as to put the Tribunal in the place of the Inspector-General” which had the “singular advantage of truncating times for insolvency administration and controversy resolution”: [31] J.

67    For the following reasons, we do not agree that the word “or” in s 139ZF should be given a conjunctive meaning as found by the primary judge.

68    On appeal, the first respondent maintained that the primary judge’s construction was correct on the basis that it reflected that the legislation created a single pathway for review. However, this submission cannot be accepted because, as already addressed, the text and structure of Div 4B, Pt VI of the Bankruptcy Act provides for different decisions by the Inspector-General and for separate means of review with respect to each of those decisions.

69    Further, we have already rejected the primary judge’s assumption that the first respondent’s construction would necessarily “truncate” the time associated with the administration of the bankrupt estate (being one of the primary judge’s reasons for reading “or” as being conjunctive).

70    Contrary to the findings of the primary judge, there is no reason to depart from giving the word “or” its ordinary disjunctive meaning. That would be the case where the context supported such a reading, including the purpose of the provision: Commissioner of Taxation v Industrial Equity Ltd (2000) 98 FCR 573; [2000] FCA 420 at [19] (Hill, Heerey and Hely JJ). Such a case does not exist here for the reasons already explained.

Conclusion

71    If the Inspector-General makes a decision refusing a request to review a decision by a trustee to make an assessment, and an application is brought to review that decision under s 139ZF(b) of the Bankruptcy Act, the Tribunal does not have the power to set aside the decision of the trustee and make a fresh assessment under s 139W(2).

72    It follows that, contrary to the conclusion of the primary judge, the Tribunal’s answer to the preliminary question was correct.

73    Accordingly, we will allow the appeal with costs and order that the primary judge’s orders in each of the proceedings be set aside and instead those proceedings be dismissed with costs.

Associate:

Dated:    28 June 2023