Federal Court of Australia

Rusanov v Commissioner of Taxation (No 3) [2025] FCAFC 117

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the respondent’s costs of and incidental to the appeal on a lump sum basis to be fixed by a registrar if not agreed.

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

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    Earlier this morning, for reasons respectively delivered ex tempore (Rusanov v Commissioner of Taxation (No 2) [2025] FCAFC 116), the court refused an application by the solicitor for, at least, the male appellant, for an adjournment of the hearing of the appeal. The appeal was then called on for hearing. When called on, the solicitor who had previously appeared for, at least, the male appellant, signified that she had no instructions to appear on the substantive hearing of the appeal and sought leave to withdraw on the basis that a notice of withdrawal from acting would be filed in due course. Such leave was granted. There was an appearance on behalf of the Commissioner of Taxation (the Commissioner) by counsel.

2    The court then had the appeal called in the usual way: three times in the public area. The resultant report by the court officer was that there was no appearance by the appellants. In those circumstances and as the Rules contemplate, the Commissioner made application orally for the appeal to be dismissed on the basis of an event of default, namely, failure of appearance, as well as, as I understood it, the related want of prosecution. In my view, that application should be granted. I form that view, having regard to the history of this appeal after its institution, as set out in detail in an affidavit of Lila Samysheva filed on 4 August 2025.

3    The appellants have had the benefit, for reasons given earlier, of an adjournment of the originally listed hearing in March 2025. Even prior to then, it is evident that some indulgence was granted to them in the interests of justice in relation to the prosecution of the appeal. Thereafter, further indulgence has been granted in the sense that the responsibility for the preparation and filing of the appeal books has been assumed by the Commissioner. The appellants have never filed an outline of submissions in respect of the merits of the appeal. What they have done three times is to apply for an adjournment of the hearing.

4    Initially, that was dealt with by me exercising the powers of the court under s 25 of the Federal Court of Australia Act 1976 (Cth) as a single judge. On that occasion, adjournment was refused.

5    Thereafter, a further application was made for an adjournment, which was dealt with by the Full Court as earlier constituted and which, for reasons given (Rusanov v Commissioner of Taxation [2025] FCAFC 11), succeeded. Part of the orders then made included a pro bono referral which came to fruition. For reasons earlier this morning respectively given, a further application for an adjournment was refused. That the appellants engaged but yesterday a solicitor - or, at least, the male appellant did, and I have to confess, it was not entirely clear to me that the engagement was only for the male appellant - indicates an absence of confronting a need to prosecute an appeal which, as of right, they instituted.

6    Statements from the bar table are not evidence. It was unclear in terms of statements from the bar table whether or not the male appellant was or was not in hospital, but it needs to be observed explicitly that there is no evidence whatsoever of that. It would have been a quite straightforward and simple matter for that evidence to have been placed before the court by way of information and belief by the solicitor who at least acted for the male appellant. There is just no such evidence. What the court is left with is a history of indulgences and adjournments, culminating in no appearance at all. The contingency that court orders in respect of the disposition of the appeal might be made, even in the absence of the appellants, was foreshadowed to the appellants by the registry.

7    It is relevant, in my view, to take into account the merits prospectively, in any event, of the appeal in deciding whether to dismiss the appeal on the bases put forward by the Commissioner. The appellants exercised the right conferred under the Taxation Administration Act 1953 (Cth) (Taxation Administration Act) to have the objection decision concerning their assessments reviewed on the merits by the then Administrative Appeals Tribunal (the Tribunal). In that review proceeding, and as s 14ZZK of the Taxation Administration Act provides, they bore the onus of proving the assessments to be excessive and what the taxable income should have been.

8    It is evident from the Tribunal’s reasons that the essence of the reasons why the review application failed was that the Tribunal was not satisfied that the assessments had been shown to be excessive.

9    The Tribunal reached that conclusion having considered both the oral evidence given by the appellants; their father-in-law; and also an accountant who had prepared in draft taxation returns which were said to represent their taxable income in the years assessed.

10    The case before the Tribunal was noteworthy for the absence of any documented detail as to asserted loans or gifts which were said to be explanatory of sums, the receipt of which, and existence of bank accounts about when, the Commissioner had raised default assessments under s 167 of the Income Tax Assessment Act 1936 (Cth).

11    In the challenge before the court in its original jurisdiction under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), the appellants questioned the reasonableness of the conclusions reached by the Tribunal, as well as asserting a denial of procedural fairness. It was also put that the Tribunal was, in effect, obliged to act on their accounts. The primary judge found no merit in any of these bases for the challenge. Error in those conclusions, as best as one can tell from the notice of appeal, forms the basis of the appellants’ invocation of appellate jurisdiction.

12    This is one of those cases where, before the Tribunal, a question of factual evaluation was required. The Tribunal’s reasons for expressing an absence of satisfaction are not irrational. They are grounded in the absence of supporting documentation, as well as an absence of persuasion that Mr Rusanov would have undertaken particular services for his father-in-law without remuneration.

13    Against that background, all of the observations made by Jagot J when a judge of this Court, with the concurrence of Nicholas J in Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307 (Rawson Finances), are pertinent. The court could not have, in the exercise of the statutory original jurisdiction conferred by s 44 of the AAT Act, under the guise of dealing with a question of law, have remade matters which were consigned to the Tribunal’s factual evaluation. To have done so would have been to have repeated exactly the error found by the Full Court in Rawson Finances.

14    As to the asserted denial of procedural fairness, it is a moot point, indeed, in my view, as to whether the Commissioner should, by way of compliance with directions made prior to the substantive hearing, have filed and served the results of searches of various public records concerning various companies which were said to be the sources of finance or with whom Mr Rusanov had dealt.

15    Mr Rusanov was, as between him and his wife, undoubtedly the active participant in business. Ms Rusanov’s role appears to have been that of a supporting spouse, but nothing more. It was her father-in-law, rather than her, who engaged with Mr Rusanov, on the evidence, in various business activities.

16    However that may be in terms of compliance with the Tribunal’s direction, the Commissioner did serve on the appellants in advance of the hearing the results of various searches which he had conducted. Further, insofar as he sought to rely on them, the results of those searches were put to Mr Rusanov in the course of cross-examination. In the result, the Tribunal does not, having regard to its reasons, appear to have made terribly much of that aspect of the case. But in any event, it seems to me that there was no denial of procedural fairness in the events which unfolded in the Tribunal. So the dismissal of the appeal by the primary judge on that basis looks to me to be unremarkable.

17    The Tribunal was not obliged just to accept the evidence given on behalf of the applicants unequivocally. The primary judge did no more than recognise this. Once again, that conclusion appears to me to be unremarkable.

18    Thus, in deciding to dismiss this appeal for want of prosecution and default of appearance, I also take into account what appears to me to be an unpersuasive case for error on the part of the primary judge in dismissing the appeal from the Tribunal. This is just one of those cases which has not been prosecuted, had dubious merit, and needs to be brought to an end. For these reasons, I would dismiss the appeal.

Associate:    

Dated:    28 August 2025

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

FEUTRILL J:

19    I largely agree with the presiding judge’s reasons. Although I also agree there is dubious merit in the appeal, for the reasons that have just been given by the presiding judge, I place little weight on those myself. I am satisfied, based on the affidavit material that was before the Court on the interlocutory application that the appellants were both well aware of the time, date and place of the appeal and that if the application to adjourn was unsuccessful, then the appeal would be heard. The appellants evidently have sufficient command of the English language to have been able to make that application and file affidavits and yet none of the other orders of the Court dealing with the progress of the appeal were complied with.

20    In the absence of any evidence of an explanation for their failure to attend, I am satisfied that, in those circumstances, having regard to the overarching purpose of the civil practice and procedure provisions described in s 37M of the Federal Court of Australia Act 1976 (Cth) and the parties’ duty to conduct proceedings consistently with that purpose in s 37N, it is appropriate that the appeals be dismissed.

Associate:

Dated:    28 August 2025

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

WHEATLEY J:

21    I agree and gratefully adopt the reasons given by the learned presiding judge, Justice Logan, and also those added by Justice Feutrill, that the appeal must be dismissed. However, it is appropriate in these circumstances for me to also make some short observations. In doing so, I expressly refer to s 37P of the Federal Court of Australia Act 1976 (Cth) and the orders of the court of 6 May 2025, which required, by orders 5 and 7, for the appellants to file and serve their outline of submissions and chronologies and an outline of submissions in reply. Those matters were required by 4pm on 10 July 2025 and 24 July 2025, respectively. As has already been observed, that was not done. At the end of the orders of the court dated 6 May 2025, there is a note which expressly states:

In accordance with paragraph 2.1 of Practice Direction APP2, any default of a requirement set out in the above mentioned orders or related Practice Note of more than 5 days is to be brought to the attention of the chambers of the judge hearing the appeal, or presiding judge if there is more than one judge, or the appeals registrar, who will then give or arrange for appropriate directions. Other parties to the appeal are to be notified also.

22    In addition to this default, on the appellants’ interlocutory adjournment application, the court made orders on 23 July 2025. Order 1 of those orders required that the appellants file and serve a written outline of submissions, together with any additional or any further affidavits by 4pm on 4 August 2025, in relation to the adjournment application. The appellants did not comply with these orders.

23    None of those previous orders of the court were complied with by the appellants, and in those circumstances, taking into account the powers under s 37P(5), if a party fails to comply with a direction given by the Court or a Judge, the Court or Judge may consider such order or direction as the Court or Judge thinks appropriate and, under s 37P(6)(a), may dismiss the proceedings in whole or in part.

24    In this regard, I also add to the observations of Justice Feutrill in relation to the appellants’ command of the English language and note the Tribunal’s express finding at [21] that the male appellant had good English skills. There was a qualification to that in relation to his ability to give evidence.

25    In relation to the ground of a denial of procedural fairness, the learned primary judge dealt with that under the heading of Ground 4, and I am satisfied that those reasons are correct. There has been no denial of procedural fairness in the particular circumstances of this case.

26    As such, for all of the reasons given by Logan and Feutrill JJ and those above, the appeal must be dismissed.

Associate:    

Dated:    28 August 2025