FEDERAL COURT OF AUSTRALIA

Atkinson v Commissioner of Taxation [2000] FCA 998

PRACTICE AND PROCEDURE – application for extension of time to file and serve a notice of appeal – whether prospects of success on foreshadowed appeal.

Taxation Administration Act 1953 (Cth), ss 8, 14ZZ, 14ZZP.

Federal Court of Australia Act 1976 (Cth), s 25.

Income Tax Assessment Act 1936 (Cth), ss 167, 218.

Judiciary Act 1903 (Cth), s 78B.

Federal Court Rules, O 52, r 15.

Atkinson v Commissioner of Taxation [2000] FCA 552, cited.

Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543, cited.

Jess v Scott (1986) 12 FCR 187, cited.

Tydeman v Deputy Registrar of Child Support Agency [1999] FCA 936, cited.

Brehoi v Minister for Immigration & Multicultural Affairs [1999] FCA 772, cited.

Deputy Commissioner of Taxation v Levick (1999) 168 ALR 383, cited.

Levick v Commissioner of Taxation [2000] FCA 674, cited.

Joosse v Australian Securities and Investment Commission (1999) 159 ALR 260, cited.

GEORGE ATKINSON v COMMISSIONER OF TAXATION

N 587 of 2000

SACKVILLE J

27 JULY 2000

SYDNEY

THE COURT ORDERS THAT:

1.                  The application be dismissed.

2.                  The applicant pay the respondent’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

THE APPLICATION FOR AN EXTENSION OF TIME

1                     The applicant seeks an extension of time in which to file an appeal against orders made by a judge of the Court, Lindgren J, on 1 May 2000: Atkinson v Commissioner of Taxation [2000] FCA 552.  In that judgment, Lindgren J dismissed appeals bought by the applicant under s 14ZZ of the Taxation Administration Act 1953 (Cth) (“TAA”) against five objection decisions made by the respondent (the “Commissioner”).

2                     The applicant, who is unrepresented, failed to file a notice of appeal within the twenty-one day period specified in Federal Court Rules (“FCR”), O 52 r 15(1). Under FCR O 52 r 15(2), the Court or a judge “for special reasons” may at any time give leave to file and serve a notice of appeal. An application for an extension of time may be heard and determined by a single Judge or by a Full Court: Federal Court of Australia Act 1976 (Cth), s 25(2)(b). The application involves an exercise of the appellate jurisdiction of the Court: Wati v Minister for Immigration and Multicultural Affairs (1997) 78 FCR 543 (FC), at 548.

3                     The Commissioner takes no point as to the adequacy of the applicant’s explanation for the relatively short delay in invoking the Court’s appellate jurisdiction. The Commissioner opposes the grant of leave on the basis that the applicant has not shown that he has any arguable grounds of appeal. The Commissioner correctly submits that if the applicant is unable to identify any arguable ground of appeal, an appeal would be futile and the Court would not grant an extension of time: Jess v Scott (1986) 12 FCR 187 (FC), at 195; Tydeman v Deputy Registrar of Child Support Agency [1999] FCA 936, at [5]; Brehoi v Minister for Immigration and Multicultural Affairs [1999] FCA 772 (FC), at [12].

BACKGROUND

4                     The background to the proceedings determined by Lindgren J are explained in his Honour’s judgment.  The applicant had not filed a taxation return for many years.  As a result of an anonymous “tip-off”, the Commissioner audited the applicant’s taxation affairs.  In the course of the audit, an officer of the Australian Taxation Office inspected affidavits filed by the applicant in a Family Court proceeding between the applicant and his former wife.

5                     On the basis of those affidavits, the Commissioner issued five notices of assessment, one in respect of each of the five taxation years ended 30 June 1993 to 30 June 1997. The assessments were issued pursuant to s 167 of the Income Tax Assessment Act 1936 (Cth) (“ITAA”). The applicant was assessed as having a taxable income for each of the relevant years of between $55,154 and $61,283.  Shortly after the assessments were issued, the Commissioner issued a notice under s 218(1) of the ITAA to the applicant’s bank.  The notice required the bank to pay to the Commissioner moneys held by it on behalf of the applicant, in order to satisfy the applicant’s taxation liabilities.  The bank apparently complied with the notice.

6                     The applicant objected to the assessments issued by the Commissioner.  The Commissioner disallowed the objections in full.  The applicant appealed to the Court against those objection decisions pursuant to s 14ZZ(c) of the TAA.  Ultimately all five proceedings were heard together.

7                     In the applications filed in this Court the applicant denied that he earned the assessed amounts during the relevant taxation years.  The applicant asserted that his living expenses had come from moneys he had previously earned and from contributions made by his ex-wife.  He also complained that in May 1998 the Australian Taxation Office had removed the sum of $157,042.93 from his bank account, presumably by means of the notice under s 218(1) of the ITAA.  The applications claimed return of the sum of $157,042.93 and “punitive damages”.

8                     As is customary in taxation matters in the Court, the parties were required to file statements of facts, issues and contentions.  The applicant’s statement identified the following issues and contentions:

“ISSUES

1.                  Assessments were served by mail upon the applicant, after and following the garnishment of the applicants funds, this in its self was a brazen attempt to circumvent the written law.

2.                  The applicant states that the assessments issued by the Australian Tax Offie in respect of the relevant years are flawed, and thus invalid, and should be set aside.

CONTENTIONS

1.                  The applicant contends, the assessments made against the applicant by the Australian Tax Office, are improper, unfair and incorrectly deduced.”

JUDGMENT AT FIRST INSTANCE

9                     In his judgment, Lindgren J dealt at the outset with several preliminary matters.  The first of these concerned the applicant’s desire, expressed in the course of the hearing, to challenge the validity of the Constitution and the ITAA.  His Honour said this:

“These matters had not been foreshadowed in his application or in his statement of facts, issues and contentions.  I did not allow Mr Atkinson to raise these matters which were without merit, had not been notified to the Commissioner prior to the hearing and had not been the subject of any notice to the Attorneys-General under s 78B of the Judiciary Act 1903 (Cth).”

10                  Lindgren J proceeded to address the applicant’s challenge to the objection decisions.  His Honour pointed out that the applicant bore the burden of proving that the Commissioner’s assessments were excessive and that the applicant had attempted to discharge this burden by proving that he had no taxable income at all in the five years in question.

11                  As Lindgren J observed, the fundamental difficulty facing the applicant was that he had made many inconsistent claims. The position he had taken in the Family Court proceedings was that he, not his then wife, had contributed substantially to the acquisition of the matrimonial assets. In the proceedings in this Court, the applicant’s position was that he had not received income from any source since at least December 1992, apart from a Veteran’s Pension.

12                  Lindgren J outlined in some detail the evidence given by the applicant in the Family Court proceedings. That evidence indicated, inter alia, that the applicant had enjoyed a substantial income over time and that he had made direct financial contribution to the acquisition and improvement of a variety of properties. The applicant had given evidence that he had control of bank accounts totalling over $300,000 and that he had made mortgage repayments in respect of various properties in the eastern suburbs of Sydney. The applicant also gave evidence in the Family Court that he had incorporated a company called Atlas Investments Ltd (“Atlas”) in Vanuatu and that he held the beneficial interest in all shares in the company.  The evidence adduced before Lindgren J showed that Atlas had purchased a property in Muswellbrook in 1994 for $880,000. The applicant had caused a caveat to be lodged against the title asserting that he was the beneficial owner of the property, having provided all the funds for its purchase.

13                  Lindgren J noted that the applicant had attempted to explain away his evidence in the Family Court as well as the documentary evidence relating to the Muswellbrook property. Lindgren J declined to accept the applicant’s explanations. After hearing the applicant give evidence, Lindgren J said that he had no confidence whatever in the applicant’s affidavit or oral testimony. His Honour gave reasons for rejecting the applicant’s evidence.

14                  Lindgren J observed that the Commissioner did not know what the applicant’s taxable income was for each of the five years in question. The Commissioner had taken the private or domestic expenditure figure that the applicant himself had given in an affidavit relied upon in the Family Court proceedings. This was the amount taken as his taxable income for the last four of the five taxation years in question. The Commissioner assessed ninety per cent of that amount as representing the applicant’s taxable income for the first of the five years, namely that ended 30 June 1993. Lindgren J saw no error in this approach.

15                  Lindgren J concluded his judgment with the following paragraph (at [34]):

It is important that [the applicant’s] case is that he had no taxable income whatever in any of the five years in question. This case is totally inconsistent with the affidavits filed in the Family Court proceeding (which was current for some years, involved a final substantive hearing on the merits, a judgment, a successful appeal and a remission for re-hearing and came to an end with the making of consent orders on 16 December 1997). [The applicant] has not satisfied me on the balance of probabilities, that the admissions he made in his affidavits in that proceeding were incorrect. On the basis of those affidavits it was reasonably open to the Commissioner to assess [the applicant’s] taxable income in the way in which he did.

THE GROUNDS OF THE PROPOSED APPEAL

16                  The draft notice of appeal annexed by the applicant to his affidavit filed in support of his application for an extension of time identifies four grounds of appeal. These are as follows:

“(a)     In deciding that funds removed from the [applicant’s] bank account were legally removed as taxable income, when the funds came from the sale of the family home, and were not subject to income or capital gains taxes.

(b)               In refusing the [applicant] the right to complete his opening address.

(c)               On 19 April 2000, the judge requested the [applicant] to file an amended affidavit [and] on 20 April 2000, when the [applicant] presented an amended affidavit to the Court, the judge refused to admit it.

(d)               It was and is the [applicant’s] jurisdictional right to challenge the validity of the Australian Constitution, the judge denied the [applicant] his right.”

17                  It is far from clear what issues the applicant wishes to raise by the first ground of appeal.  It appears to rest on the assumption that Lindgren J made a finding as to the source of funds in the applicant’s bank account.  That assumption is incorrect.  His Honour made no such finding.  The issue he had to decide was whether the applicant had satisfied the onus of proving that the Commissioner’s assessments were excessive.  That issue was resolved unfavourably to the applicant.

18                  It may be that the applicant wishes to challenge the validity of the Commissioner’s notice issued under s 218(1) of the ITAA on constitutional grounds.  If so, one major difficulty facing the applicant is that no such claim was made in his statement of facts, issues and contentions.  Nothing has been put forward which suggests that his Honour erred in declining to allow the applicant to raise constitutional questions at such a late stage in the proceedings.  Moreover, as his Honour pointed out any contention that the ITAA, or perhaps the Constitution itself, is invalid is without merit and doomed to failure.

19                  Ms Leslie, who appeared on behalf of the Commissioner, argued that, in any event, Lindgren J had no jurisdiction to entertain an application by a taxpayer to recover moneys paid by a debtor of the taxpayer pursuant to a notice issued under s 218 of the ITAA. This consequence was said to flow from the fact that the only relevant appealable objection decisions were the Commissioner’s decisions to disallow the applicant’s objections to the assessments issued for the five taxation years. According to Ms Leslie, it might be possible to challenge the decision to issue the notice issued pursuant to s 218 of the ITAA, on administrative law grounds.  But neither s 14ZZP of the TAA, nor any other provision in the legislation, authorises the Court to hear an appeal against the decision to issue the notice. Accordingly, any purported appeal by the applicant under s 14ZZ of the TAA against the issue of the notice would have been beyond the jurisdiction of the Court to entertain.

20                  As I have not had the advantage of full argument on this question, I prefer to say nothing about it. The matters to which I have referred are enough to show that the first ground of appeal is without prospects of success.

21                  The second ground of appeal also appears to relate to an attempt by the applicant to raise a variety of issues beyond the scope of his statement of facts, issues and contentions filed in the proceedings.  I can see no genuine basis for an argument that his Honour was incorrect in confining the applicant to the matters raised in his statement of facts, issues and contentions.  In any event, the applicant has not identified the arguments that he claims he was prevented from pursuing before Lindgren J.  In the absence of any such identification, the applicant has not shown that there are arguable grounds of appeal open to him.

22                  The nature of the complaint encompassed by the third ground of appeal is again not clear. The transcript of proceedings before Lindgren J records that, at the conclusion of the first day of hearing, his Honour invited the applicant to apply for leave to amend his statement of facts, issues and contentions if he wished to introduce new issues into the proceedings.  The next morning the applicant produced a document.  While that document is not in evidence in these proceedings, it appears that it was an amended statement of facts, issues and contentions. After some discussion, the applicant indicated that he did not wish to proceed with what he described as the “tender” of the document.

23                  At this point in the proceedings, the applicant handed up an affidavit. The affidavit is also not in evidence on this application. The transcript suggests that the affidavit was in the nature of submissions challenging the validity of the ITAA and the validity of the appointment of officers of the Australian Taxation Office. Lindgren J declined to permit the applicant to raise these issues. His Honour pointed out that they had not been identified in the applicant’s statement of facts, issues and contentions. Moreover, it would have been necessary to adjourn the hearing for notices to be given under s 78B of the Judiciary Act 1903 (Cth).   It was this ruling to which Lindgren J referred at the outset of his judgment.

24                  In my view, there is no reasonable prospect of the applicant successfully challenging his Honour’s ruling. It was well within his Honour’s discretion to limit to the case to the issues that had been identified by the applicant in his statement. In any event, the grounds relied upon by the applicant are patently without merit.  As I have already noted, the applicant has not advanced any tenable basis on which he wishes to challenge the validity of the ITAA or any part of it.  Nor has he put forward any basis for challenging the Commissioner’s power to delegate his powers or functions: see TAA, s 8; Deputy Commissioner of Taxation v Levick (1999) 168 ALR 383, at 392-393, per Hill J; aff’d Levick v Deputy Commissioner of Taxation [2000] FCA 674 (FC).  Indeed, it seems that the applicant intends to repeat arguments that Hill J in Levick regarded as so spurious as to lead to an order for costs against the legal practitioner who relied on them.

25                  The fourth ground of appeal repeats the applicant’s desire to raise constitutional issues. In so far as these can be identified, none has any prospect of success: cf Joosse v Australian Securities and Investment Commission (1999) 159 ALR 260 (Hayne J).

26                  The applicant has sought to raise a number of other issues in supplementary submissions.  Some are absurd.  None has any merit or prospects of success.

CONCLUSION

27                  The applicant has not shown that he has any prospects of succeeding on the foreshadowed appeal.  In these circumstances, the application for an extension of time should be dismissed.  The applicant should pay the Commissioner’s costs.

Associate:

Dated:              27 July 2000

The applicant appeared in person.