FEDERAL COURT OF AUSTRALIA

Sibir v Glanville [2000] FCA 1108

PRACTICE AND PROCEDURE – summary dismissal – whether reasonable cause of action pleaded – whether applicant should be given opportunity to replead.

Income Tax Assessment Act 1936 (Cth), ss 177, 185, 187, 188, 189

Fair Trading Act 1987 (NSW), ss 42, 68.

Federal Court Rules, O 20 r 2.

Sibir v Glenville [2000] FCA 968, cited.

General Steel Industries Inc v Commissioner of Railways (NSW) (1964) 112 CLR 125, cited.

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, cited.

ALEX SIBIR v DAREN GLANVILLE & ORS

N 413 of 2000

SACKVILLE J

14    AUGUST 2000

SYDNEY

THE COURT ORDERS THAT:

1.                  The application be dismissed.

2.                  The applicant pay the respondents’ costs of the proceedings, including the costs of the motion filed on 25 July 2000.

3.                  The applicant pay the costs of the Commissioner of Taxation, in so far as they are not covered by Order 2.

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

REASONS FOR JUDGMENT

the application for summary dismissal

1                     In a judgment delivered on 20 July 2000, I directed that the applicant was to be taken as having filed a statement of claim in these proceedings on 22 June 2000: Sibir v Glenville [2000] FCA 968.  (It appears that the first respondent’s name was incorrectly recorded in that judgment.)  I gave leave to the respondents, if so advised, to file a motion seeking orders striking out the statement of claim and dismissing the proceedings. I also stood over a motion by the applicant insofar as it sought a stay of proceedings instituted against him in the District Court of New South Wales by the Deputy Commissioner of Taxation. The earlier judgment should be read in conjunction with this judgment.

2                     In the event, the respondents filed a motion seeking, inter alia, orders that the proceedings be stayed or dismissed generally pursuant to Federal Court Rules (“FCR”) O 20 r 2.  Order 20 r 2 provides as follows:

“(1)     Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding –

(a)               no reasonable cause of action is disclosed;

(b)               the proceeding is frivolous or vexatious; or

(c)               the proceeding is an abuse of the process of the Court,

the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding.

(2)        The Court may receive evidence on the hearing of an application for an order under sub-rule (1).”

3                     The applicant filed affidavits in opposition to the motion.

4                     The statement of claim filed by the applicant is set out in the earlier judgment. It is convenient, nonetheless, to set out the statement of claim here:

“1.       The applicant is a professional architect for over 30 years with a Degree from University of New South Wales and a Diploma in Structural Engineering and Design from the British Institute of Technology.  The Applicant has a clean record and no convictions have ever been recorded against him in his business endeavours.

            The applicant is entitled to sue in the business name of Alex Sabir  Architect as registered by the Board of Architects of NSW, Registration No 2961.

2.                  At all material times since 1989 the applicant and the respondents have engaged in verbal and written correspondence concerning the applicant’s business tax assessment.

3.                  The respondents are public service officers acting on behalf of the Australian Taxation Office Parramatta in the state of New South Wales.  Under the Crown Proceedings Act they are each capable of being sued by their individual names and are liable for their own actions on behalf of the Australian Taxation Office.

…

4.                  The applicant was entitled to a review of his tax for year ending 30 June 1989 as five letters were submitted within the 60 days time limitation as under the Income Tax Assessment Act 1936 and under the Income Regulation Section 207.

5.                  The respondents engaged in malicious acts of threats and harassment causing psychological emotional stress aggravating other related health problems to the applicant in their attempts to collect the tax for 1989.

6.                  The applicant declares that all the tax returns are up to date, except 1989 which is in dispute.  Also, the tax assessment dated 17 August 1998 which included the 1989 period is disputed as $38,471 in tax credits should have been recorded.

7.                  The Affidavit made by the Deponent Ohnmar Khin from the Australian Taxation Office in the District Court of Australia No 519/1999 and dated 8 June 2000 includes Notice of Assessment for year ending June 1988.  As I have been in the middle stages of bankruptcy until October 1989, it seems to be unfair that my claim for office losses of $244,000 were reduced to $138,328 by Mr Darren Glenville, on my assessment for the tax year ending June 1989.  A few weeks later I received a taxation bill for $44,687.57 dated 8 August 1990 then another statement for $18,424.79 dated 8 August 1990.  On the following week I received a further tax assessment of $17,389.57 dated 15 August 1990.

In the latest assessment dated 17 August 1998 as included in my registered Application refer to Appendix “D”, states that on 19 September 1990 the debit was $18,424.79 and a credit of $18,421.79 on 15 August 1990 with a resultant debit of $3.00 only.  There is much confusion in all these assessment.  Since then a total of $37,771.01 in credits was made and not $27,990.01 as stated by the Australian Taxation Office.

8.                  The applicant declares that due to the problems encountered over this matter, that severe and prolonged depression causing a build up of severe anxiety and stress/tension etc has been suffered by the applicant and he was not able to carry out his business duties effectively.  Effective loss of productivity is estimated at 55%.  Also the closure of four offices due to the harassment and threats and letters received from Australian Taxation Officers (respondents) caused a great deal of goodwill losses.

9.                  The total claim for damages is estimated at $1,068,717.00 less any amount due for Tax for 1989 as determined by the Federal Court of Australia.

Particulars: Refer to details as set out in the Application dated and registered in the Federal Court of Australia on 27 April 2000 No N413 of 2000.”

the respondent’s submissions

5                     Mr Williams, who appeared on behalf of the respondents, submitted that the statement of claim did not disclose any reasonable cause of action against the respondents.  In his submissions, Mr Williams approached the pleading on the basis that the applicant intended to raise two issues.  Mr Williams identified the two issues as follows:

·        First, the applicant wished to challenge the notice of assessment issued to the applicant in respect of the year ended 30 June 1989 (the “1989 assessment”).  The assessment, which was issued on 8 August 1990, stated that the sum of $44,687.51 was due and payable to the Commissioner of Taxation.

·        Secondly, the applicant alleged, albeit in the vaguest and most general of terms, that some or all of the respondents engaged in misleading and deceptive conduct towards the applicant and, in addition, maliciously threatened and harassed him.

6                     Mr Williams submitted that, insofar as the statement of claim sought to challenge the 1989 assessment, it disclosed no reasonable cause of action.  According to Mr Williams, if the applicant had wished to challenge the assessment, the only course open to him was to follow the prescribed statutory procedure which, at the relevant time, was set out in Part 5 of the Income Tax Assessment Act 1936 (Cth) (“ITAA”).  He contended that there was nothing in the statement of claim or the application to suggest that the Court’s jurisdiction had been properly invoked.

7                     In support of this contention, Mr Williams pointed out that the pleadings did not suggest that the applicant had lodged an objection to the 1989 assessment within the prescribed time (ITAA, s 185) or had sought an extension of time within which to do so.  Nor was there anything to suggest that the Commissioner had made an objection decision in relation to the 1989 assessment or that the applicant had requested the Commissioner to refer the objection decision to the Court (this being the means by which the Court’s jurisdiction in relation to an assessment was enlivened under the statutory regime then in place: ITAA, ss 187, 189(3); see now Taxation Administration Act 1953 (Cth), s 14ZZ).  Moreover, the Commissioner of Taxation was not a party to the proceedings, notwithstanding that he would have to be joined if the applicant wished to challenge the 1989 assessment.

8                     Mr Williams further submitted that the statement of claim did not plead a reasonable cause of action in relation to the other matters of which the applicant complained.  He said that par 3 of the statement of claim did not allege the material facts necessary to establish a cause of action under ss 42 and 68 of the Fair Trading Act 1987 (NSW) (assuming that this was the cause of action the applicant intended to plead).  In particular, the pleading did not specify the nature of the conduct on the part of each respondent that the applicant claimed was misleading or deceptive.  Nor did the pleading specify the manner in which the applicant claimed to have relied on the conduct or otherwise to have been damaged by it.  Moreover, the statement of claim did not allege that the respondents’ conduct took place in trade or commerce, notwithstanding that this is an essential element in a cause of action arising under ss 42 and 68 of the Fair Trading Act.

9                     Mr Williams contended that par 5 of the statement of claim suffered from similar fundamental defects.  No material facts were alleged that support the broad brush claim that the respondents had engaged in “malicious acts of threats and harassment”.

REASONING

10                  In my opinion, the statement of claim is clearly defective for the reasons advanced by Mr Williams.  Insofar as the applicant seeks to challenge the 1989 assessment, the pleading does not establish a basis for the Court to go behind the assessment (see ITAA, s 177).  Insofar as the applicant alleges that the respondents have engaged in misleading or deceptive conduct or malicious threats or harassment, the statement of claim does not set out material facts sufficient to enable the respondents to understand the case the applicant seeks to make against them.  The pleading in its present form does not disclose a reasonable cause of action.

11                  The power to order that proceedings be summarily dismissed must be exercised with exceptional caution: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, at 129, per Barwick CJ. The power should not be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, at 99, per curiam. I am, however, satisfied that the power should be used in the present case.

12                  Insofar as the applicant seeks to challenge the 1989 assessment, there is nothing in the evidence to suggest that he has any arguable basis for doing so.  The applicant relied on two letters which were, or might have been, sent within the sixty day period prescribed by s 185 of the ITAA for the lodging of an objection to the 1989 assessment.  The applicant maintained that these constituted objections to the assessment and thus enlivened the procedure for objecting to an assessment laid down by Part 5 of the ITAA.

13                  Neither letter, in my opinion, is capable of being read as an objection.  The first, dated 18 August 1990, thanked the Department for certain information and said that the applicant did not realise that certain losses apparently claimed by him as deductions had no bearing on taxable income.  The letter acknowledged that the applicant had prepared his return in haste and stated that he would be going through all his receipts and submitting careful amended returns.  The second letter, of 12 October 1990, merely expressed disappointment that the Commissioner had foreshadowed enforcement action and sought additional time to pay tax due by the applicant.

14                  None of the other letters referred to at the hearing is capable of constituting an objection or an application for extension of time pursuant to s 188 of the ITAA.  In consequence, there has never been an objection decision.  There is therefore nothing that could enliven the jurisdiction of the Court to entertain an appeal against an objection decision made by the Commissioner.

15                  I invited the applicant to explain the nature of the case he wanted to make against the four respondents, should he be given an opportunity to replead.  The applicant’s response in relation to his complaint against the first respondent was not entirely clear.  However, the substance of it appears to be that in 1990 the first respondent had rejected certain deductions claimed by the applicant and had not explained the procedures that were available to challenge the assessment that was later issued.  The applicant was not able to explain the manner in which the first respondent’s conduct was said to be misleading or deceptive.  Nor did the applicant explain how, if there were any misleading or deceptive conduct, he had been prejudiced by it.  It is, perhaps, significant that, so far as the evidence goes, no complaint was made by the applicant about the conduct of the first respondent until some ten years after the relevant events.

16                  The applicant’s allegations of threats and harassment against the second and third respondents appear to amount to a complaint that they had pursued enforcement action on behalf of the Commissioner at a time when the applicant claimed that he was ill.  The applicant also complained that one of the respondents had been rude.  It is difficult to see how these complaints, whether or not justified as a matter of fact, could give rise to any cause of action against the second and third respondents.  It remains unclear what complaint, if any, the applicant has against the fourth respondent.

17                  It is appropriate to make some allowance for the fact that the applicant is unrepresented.  Nonetheless, in my opinion, the applicant has failed to demonstrate that there is any real question to be tried as against any of the four respondents.  In these circumstances, the appropriate course is to dismiss the proceedings.

the applicant’s motion

18                  In my earlier judgment, I stood over a motion that had been filed by the applicant seeking an order restraining proceedings that had been brought against him by the Commissioner of Taxation in the District Court of New South Wales.  In view of the conclusion I have reached, the motion should be dismissed.  In any event, there is evidence that the District Court proceedings have now been resolved by consent orders.

conclusion

19                  The respondents’ motion for summary dismissal of the proceedings succeeds.  The application should be dismissed.

20                  The applicant should pay the respondents’ costs of the proceedings, including the costs of the motion filed by them.  Mr Williams sought an order for costs in favour of the Commissioner, who was granted leave to intervene in the proceedings in view of the fact that the party initially named as a respondent (the Australian Taxation Office) is not an entity capable of being sued.  In the circumstances, I think it appropriate that the applicant should also pay the costs of the Commissioner of Taxation in so far as they are not covered by the order in favour of the respondents.

Associate:

Dated:              14 August 2000

The applicant appeared in person.