FEDERAL COURT OF AUSTRALIA
Harding v Deputy Commissioner of Taxation [2008] FCA 1403
Commonwealth of Australia Constitution Act, s 80
Bankruptcy Act 1966 (Cth), ss 30, 31, 40, 41, 52
Federal Court of Australia Act 1976 (Cth), ss 39, 40
Judiciary Act 1903 (Cth), ss 78AA, 78B
Federal Court Rules 1979 (Cth), O 31
Brown v The Queen (1985) 160 CLR 171 followed
Caledonian Collieries Ltd v Fenwick (1959) 76 WN (NSW) 482 considered
Cheng v The Queen [2000] HCA 53, 203 CLR 248 followed
Commonwealth Bank of Australia v Heinrich [2000] FCA 1255 followed
Commonwealth Bank of Australia v Rigg [2001] FCA 590 followed
Dinnison v Commonwealth [2000] FCA 1841, 106 FCR 418 cited
Draper v Official Receiver [2004] FCA 1379 considered
Gargan v Commonwealth Bank of Australia [2004] FCA 641 followed
Haritopoulos Pty Ltd v Deputy Commissioner of Taxation [2007] FCA 394, 66 ATR 225 considered
Hubner v ANZ Banking Group Ltd [2000] FCA 140, 101 FCR 71 followed
Hubner v Australia and New Zealand Banking Group Ltd [1999] FCA 385, 88 FCR 445 followed
Insurance Commissioner v Australian Associated Motor Insurers Ltd (1982) 65 FLR 172followed
Kingswell v The Queen (1985) 159 CLR 264 followed
Li Chia Hsing v Rankin (1978) 141 CLR 182, 23 ALR 151 followed
McDermott v Collien (1953) 87 CLR 154 followed
R v Federal Court of Bankruptcy; Ex parte Lowenstein (1937) 59 CLR 556 considered
R v Snow (1915) 20 CLR 315 followed
Ray v Perrett [2007] FCA 1672 followed
Re Aird; Ex parte Alpert [2004] HCA 44, 220 CLR 308 considered
Re Allen (1905) 5 SR (NSW) 55 considered
Re Shields; Ex parte Australia and New Zealand Banking Group Ltd (1994) 51 FCR 308 followed
Salfinger v Niugini Mining (Australia) Pty Ltd (No 4) [2007] FCA 1594 followed
SBBS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 361, 194 ALR 749 considered
SCAS v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 397 considered
Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537 followed
Spratt v Hermes (1965) 114 CLR 226 followed
Stapleton v Brady [1952] QWN 15 followed
Taylor v Deputy Commissioner of Taxation [1999] FCA 195, 99 ATC 4268 followed
Thurecht v Deputy Commissioner of Taxation (1984) 3 FCR 570; 84 ATC 4480; 15 ATR 822 considered
Vink v Tuckwell (No 3) [2008] VSC 316 followed
Weininger v The Queen[2003] HCA 14, 212 CLR 629 followed
Wilson v Deputy Commissioner of Taxation [2003] HCA Trans 403 considered
Commonwealth, Parliamentary Debates, House of Representatives, 21 September 1983
Kirby M, ‘The High Court of Australia and the Supreme Court of the United States — A Centenary Reflection’ (2003) 31 UWAL Rev 171
Henchman P, ‘The New South Wales Jury of Four Persons’ (1959) 33 ALJ 235
ROBERT HARDING v DEPUTY COMMISSIONER OF TAXATION
NSD 2054 of 2007
FLICK J
15 SEPTEMBER 2008
SYDNEY
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IN THE FEDERAL COURT OF AUSTRALIA |
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NSW DISTRICT REGISTRY |
NSD 2054 of 2007 |
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BETWEEN: |
ROBERT HARDING Applicant
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AND: |
DEPUTY COMMISSIONER OF TAXATION Respondent
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FLICK J |
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DATE OF ORDER: |
15 SEPTEMBER 2008 |
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WHERE MADE: |
SYDNEY |
THE ORDERS OF THE COURT ARE:
1. The Notice of Motion as filed on 8 September 2008 be dismissed.
2. The Applicant is to pay the costs of the Respondent, those costs incurred prior to 8 August 2008 to be paid on an indemnity basis.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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NSW DISTRICT REGISTRY |
NSD 2054 of 2007 |
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BETWEEN: |
ROBERT HARDING Applicant
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AND: |
DEPUTY COMMISSIONER OF TAXATION Respondent
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JUDGE: |
FLICK J |
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DATE: |
15 SEPTEMBER 2008 |
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PLACE: |
SYDNEY |
REASONS FOR JUDGMENT
1 On 9 November 2006 the District Court of New South Wales entered judgment in favour of the Deputy Commissioner of Taxation against the Applicant presently before this Court. Judgment was entered for the principal sum of $373,772.47.
2 There was a failure to satisfy the judgment and the Applicant was served with a Bankruptcy Notice on 17 August 2007. The proceeding commenced in this Court on 5 September 2007 seeks an order setting aside that Bankruptcy Notice.
3 Although it is difficult to discern the issues which the Applicant wished to agitate from the Application as filed, the Affidavits in support, or the written submissions as initially filed by the Applicant, it is understood that at one stage he wished to contend that:
(i) in the proceedings before the District Court he was entitled to the benefit of trial by jury;
(ii) in the proceedings before the District Court “he was given no chance to air … grievances, and a fraudulent deeming of taxation was rubber stamped” by a judge of the District Court; and
(iii) the District Court was improperly constituted.
4 The District Court, when entertaining the proceedings against the present Applicant for unpaid taxes, was said to be exercising federal jurisdiction. It is this exercise of federal jurisdiction that the Applicant apparently relied upon both in respect to his contention that he was entitled to a trial by jury and his contention as to the District Court being “improperly constituted”.
5 The “grievances” to which he previously referred are understood to be contentions that the Respondent had been improperly giving “multinational companies” tax breaks. The relevance of those “grievances” to the position confronting the Applicant remained elusive.
6 A Notice of a Constitutional Matter was filed in this Court on 16 April 2008. By reason of the issues sought then to be agitated, an order was made on 31 March 2008 requiring the service of notices in accordance with s 78B of the Judiciary Act 1903 (Cth). Those notices were apparently served upon the Attorneys-General of each of the States on or about 21 April 2008. No s 78B notice was apparently served upon the Attorney-General of the Commonwealth. Nor was there service upon the Attorneys-General of the Australian Capital Territory or the Northern Territory. Section 78AA of the 1903 Act defines the term “State” as including those two Territories. The Second Reading Speech in the House of Representatives makes it apparent that the purpose of s 78AA was to “put the Northern Territory on an equal footing with the States as regards receipt of such notices”: Parliamentary Debates, House of Representatives, 21 September 1983 at 1049. In such circumstances it is thus apparent that there has been non-compliance with the order requiring service of notices in accordance with s 78B.
7 The Applicant initially appeared before this Court unrepresented but has since 23 June 2008 been represented by a solicitor and Counsel.
8 The most recent Outline of Submissions filed on behalf of the Applicant is that dated 8 August 2008 and was prepared by Counsel. That written outline, not surprisingly, expressly withdraws “prior submissions”.
9 The proceeding was listed for hearing on 8 September 2008 and on that date a Notice of Motion was filed seeking an order that “the Court hear and determine the Applicant’s application for the trial of questions of fact herein with a jury and the trial of those questions”. That Motion thus sought an order that this Court direct a trial by jury of the Application to set aside the Bankruptcy Notice. Reservation may be expressed as to whether or not prior notice of any such Motion was provided to the Deputy Commissioner of Taxation. Whether or not such prior notice was given, Counsel appearing for the Deputy Commissioner did not oppose the Motion being filed and heard on that day.
10 On 8 September 2008 Counsel for the Applicant foreshadowed that the two bases upon which it would be contended that the Bankruptcy Notice should be set aside would be whether:
(i) the requirements of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) have been satisfied;
and whether:
(ii) the Applicant is “able to pay his or her debts” within the meaning of s 52(2) of the 1966 Act.
That Application, it was submitted, would involve the resolution of a series of questions of fact. A “Schedule of Questions of Fact and/or of Mixed Law and Fact” had been prepared on behalf of the Applicant and included questions as to whether representations were made that “the Applicant’s small business was an exempt entity”, whether the representations were “binding on the DCT”, and “[w]hether the Applicant relied on the representations”. As became apparent from submissions subsequently filed by the Applicant on 11 September 2008, some of the questions of fact as formulated in the Schedule were “not pressed”.
11 The Schedule as provided by the Applicant, it should be noted, is no substitute for compliance with O 31 r 1 of the Federal Court Rules. That rule requires a Notice of Motion to be “supported by an affidavit stating the particular facts and grounds upon which the application is based”. There was no such affidavit. The requirement of an affidavit, it is considered, provides a valuable safeguard to ensure that the “particular facts and grounds” are properly formulated.
12 One fundamental difficulty confronting the Applicant was the relevance of any of the asserted facts which he wished to have tried by jury to the Application to set aside the Bankruptcy Notice. The judgment upon which the Bankruptcy Notice was founded was a judgment of the District Court entered summarily against the now Applicant. His defence was there struck out. Section 41(1)(a) of the Bankruptcy Act requires there to be a “final judgment or final order that is of the kind described in paragraph 40(1)(g)”. Section 40(3)(b) would appear to confirm that the judgment of the District Court was such a “final judgment or final order”. How any of the facts which the Applicant wanted resolved would go to that issue remained unexplained. And no cross-claim or set-off as against the Deputy Commissioner was attempted to be formulated or articulated by the Applicant for resolution by this Court.
13 Although considerable reservation is thus expressed as to the relevance of the factual matters which the Applicant wants resolved to the Application as filed in this Court, for present purposes it has been assumed that the relevance of one or other of those facts will ultimately be explained.
14 Compliance with s 78B of the Judiciary Act 1903 (Cth) became unnecessary to resolve when Counsel for the Applicant confirmed that reliance upon s 80 of the Commonwealthof Australia Constitution Actwas abandoned and that no matter would arise under the Constitution or involving its interpretation. The Outline of Submissions dated 8 August 2008, it may be noted, contended that “the obligation does not arise in this case from the Constitution section 80, although the existence of that provision indicates that the Founding Fathers endorsed the jury process as a fundamental part of Commonwealth judicial power”.
15 Evidence and submissions thereafter proceeded in respect to the Motion as filed and necessarily in advance of the Application to have the Bankruptcy Notice set aside.
16 It is considered that the Notice of Motion should be dismissed.
Trial by Jury: The Constitution
17 The Applicant’s initial contention — albeit framed without the benefit of Counsel who ultimately appeared on 8 September 2008 — that he had been wrongly deprived of a trial by jury called in aid s 80 of the Constitution. As understood, that prior submission was directed to whether a jury was required before the District Court. But it would matter not whether the submission was directed to the District Court proceedings or to the proceeding presently before this Court.
18 However the contention be expressed, it was rightly abandoned by Counsel on behalf of the Applicant on 8 September 2008. It was a contention without substance. But some brief reasons should be set forth for reaching that conclusion in order to avoid the prospect that the Applicant is left believing that an argument of substance had been wrongly abandoned.
19 Section 80 provides as follows:
The trial on indictment of any offence against any law of the Commonwealth shall be by jury, and every such trial shall be held in the State where the offence was committed, and if the offence was not committed within any State the trial shall be held at such place or places as the Parliament prescribes.
20 The contention as previously sought to be advanced by the Applicant was understood to be a contention that in bankruptcy proceedings “potential bankrupts … [are] entitled to the higher standard of proof”. It is further understood that the argument was that there had been some “abolition” of the “common law” in that such proceedings should have been commenced by way of indictment. It is this assertion which was the springboard for the contention that s 80 guaranteed the Applicant a right to trial by jury.
21 Section 80, it may readily be accepted, “lays down … a fundamental law of the Commonwealth”: R v Snow (1915) 20 CLR 315 at 323 per Griffith CJ. The entitlement conferred by that provision “is an important constitutional privilege”: Weininger v The Queen[2003] HCA 14 at [54], 212 CLR 629 at 646.
22 The difficulty, however, which would have inevitably confronted the Applicant — even had it not been abandoned — is the simple fact that s 80 is confined to a “trial on indictment”. It is Parliament, and not this Court or the High Court, which determines whether proceedings are to be commenced by way of indictment. It is not for this Court to determine that proceedings are sufficiently “serious” that they should be commenced by indictment: Li Chia Hsing v Rankin (1978) 141 CLR 182 at 189–90. Barwick CJ there concluded:
Further, if in truth from s 80 you could derive the conclusion that, constitutionally, all “serious” offences must be tried on indictment by a jury, it would be for the Court and not for the Parliament to determine whether any given offence was relevantly a “serious” offence. The limited submission of the applicant that, for the reasons given on his behalf, the present offence was a “serious” offence, in my opinion, fails.
…
Further, to so reduce the universality of the language of the section would be insufficient to create a constitutional guarantee that those offences must be treated as indictable offences. The applicant’s submission in reality is that s 80 postulates that some offences are of their nature, or of their nature and circumstances, “indictable” offences, ie offences which may not be prosecuted except on indictment. The applicant describes these offences as “serious” offences.
Section 80, however, only operates on indictment. Its language was chosen in the knowledge of Art 3 of the Constitution of the United States and of the experience of that country with the construction and operation of that article over the considerable period of time which had elapsed before the terms of s 80 were accepted.
… [I]t is, in my opinion, not possible to conclude, apart of course from the expressed intention of the Parliament in the relevant statute, that an offence is of its nature “indictable”. Summary prosecution for a wide variety of offences has a long history, though punishment upon summary conviction is generally limited so far as imprisonment is provided to a term of twelve months or less. It was unanimously decided in R v Archdall and Roskruge; Ex parte Carrigan and Brown [(1928) 41 CLR 128] that the section placed no impediment in the way of the Parliament providing for the summary prosecution of an offence.
23 Confined in this way, it has been said of s 80 that “[w]hat might have been thought to be a great constitutional guarantee has been discovered to be a mere procedural provision”: Spratt v Hermes (1965) 114 CLR 226 at 244 per Barwick CJ. Early judgments of the High Court were strongly critical of a narrow construction of s 80: eg, R v Federal Court of Bankruptcy; Ex parte Lowenstein (1937) 59 CLR 556 at 581–2 per Dixon and Evatt JJ (dissenting). Writing extra-judicially, Justice Kirby has commented that the “significance of the Australian guarantee has been diminished by the narrow interpretation applied to its language”: ‘The High Court of Australia and the Supreme Court of the United States — A Centenary Reflection’ (2003) 31 UWAL Rev 171 at 180. See also: Re Aird; Ex parte Alpert [2004] HCA 44 at [112], 220 CLR 308 at 343–4 per Kirby J.
24 But it must now to be accepted — at least in this Court — that s 80 is confined to a “trial on indictment”: Kingswell v The Queen (1985) 159 CLR 264 at 276–7; Cheng v The Queen [2000] HCA 53, 203 CLR 248.
25 The rejection of this contention of the Applicant — even had it been advanced — is not only dictated by the terms of s 80 itself, as it has been interpreted; it is further dictated by the rejection of the same argument by the High Court: Wilson v Deputy Commissioner of Taxation [2003] HCA Trans 403.
Trial by Jury: The Bankruptcy Act & Federal Court Act
26 Consistent with the abandonment of reliance upon s 80 of the Constitution as the source of any entitlement to have this Court hear the Application before it by Judge and jury, the relief as sought in the Notice of Motion as filed on 8 September 2008 sought to place reliance upon ss 30 and 31 of the Bankruptcy Act. Reference was also made to ss 39 and 40 of the Federal Court of Australia Act — but those provisions, it was contended by the Applicant, were “qualified or not determinative of jury usage to decide factual questions in bankruptcy cases”.
27 This Court unquestionably has a discretionary power to direct that a trial be by jury. The relevant source of that power is said by the Applicant to be ss 30(3) and 31 of the Bankruptcy Act. Those sections relevantly provide as follows:
30 General powers of Courts in bankruptcy
…
(3) If in a proceeding before the Federal Court under this Act a question of fact arises that a party desires to have tried before a jury, the Federal Court may, if it thinks fit, direct the trial of that question to be had before a jury, and the trial may be had accordingly in the same manner as if it were the trial of an issue of fact in an action.
…
31 Exercise of jurisdiction
(1) In exercising jurisdiction under this Act, the Court shall hear and determine the following matters in open Court:
…
(i) applications for the trial of questions of fact with a jury and the trial of those questions;
…
(2) All other matters under this Act may, in the discretion of the Court, be heard in open Court or in Chambers.
Section 30(3) is a provision which “specifically provides for a discretion to order trial by jury in a bankruptcy matter”: Commonwealth Bank of Australia v Rigg [2001] FCA 590 at [8] per Beaumont J.
28 Also to be noted, however, are ss 39 and 40 of the Federal Court of Australia Act, which provide as follows:
39 Trial without jury
In every suit in the Court, unless the Court or a Judge otherwise orders, the trial shall be by a Judge without a jury.
40 Power of Court to direct trial of issues with a jury
The Court or a Judge may, in any suit in which the ends of justice appear to render it expedient to do so, direct the trial with a jury of the suit or of an issue of fact, and may for that purpose make all such orders, issue all such writs and cause all such proceedings to be had and taken as the Court or Judge thinks necessary, and upon the finding of the jury the Court may give such decision and pronounce such judgment as the case requires.
29 It was understood that Counsel for the Applicant quite properly did not contend that the Applicant had any entitlement to a trial by jury — whichever Act was invoked. It was understood that Counsel for the Applicant accepted that the question as to whether or not there should be a trial with a jury was ultimately a matter — not of entitlement — but a matter for the discretion of this Court.
30 Those matters which it was contended indicated that that discretion should weigh in favour of a jury resolving those facts set forth in the Schedule were variously expressed but may conveniently be summarised as being:
(i) the existence of what was contended to be a “plausible” basis upon which each of the issues of fact could be raised for resolution;
(ii) the public interest in questions of fact going to the manner in which the Deputy Commissioner — or her officers — conducted themselves and the representations being made by those officers to taxpayers; and
(iii) the need to ensure public confidence in the manner in which this Court resolves issues arising under the Bankruptcy Act, especially where there was a basis for contending that the powers of the Deputy Commissioner or her officers were being exercised for an “improper purpose”. In the written submissions as filed on 11 September 2008 the Applicant also sought to urge that a further “factor” as to why this Court should order a jury was that “questions of ulterior or improper purpose, misrepresentation, fraud, reliance and loss are peculiarly appropriate for a jury trial”.
On behalf of the Applicant it was further contended that the Motion should not be resolved with any “predisposition” against the appointment of a jury; the common law, it was suggested, favoured the resolution of disputed questions of fact being resolved by a jury.
31 It was further contended that the Bankruptcy Act itself, in particular s 31, provided a basis upon which a legislative intent could be discerned favouring the resolution of questions of fact being undertaken by a jury.
32 Rather than supporting the conclusion being sought by the Applicant, it is considered that the provisions of both the Federal Court of Australia Act and the Bankruptcy Act — and the authorities which have previously considered those provisions — strongly support the rejection of the relief sought in the present Motion in the exercise of the Court’s discretion.
Federal Court of Australia Act
33 The power conferred on this Court by s 40 of the 1976 Act to appoint a jury has never been exercised.
34 But that history, contends the Applicant, should be put to one side. Indeed, the Applicant contends that these provisions of the 1976 Act “are not to the point, as they deal with the general jurisdiction of the Court in civil cases not the exercise of its jurisdiction as a court of bankruptcy”. “[S]ection 39”, the Applicant contends, “is not the governing provision in determining the notice of motion before the Court”.
35 Whether that be correct or not need not be resolved; the provisions of the 1976 Act nevertheless remain a useful starting point for any consideration of the circumstances in which a proceeding in this Court should be heard with a jury.
36 By reference to those provisions, the Federal Court of Australia Act provides no support for the submissions advanced on behalf of the Applicant.
37 The normal method or mode of trial in this Court is by judge alone: Insurance Commissioner v Australian Associated Motor Insurers Ltd (1982) 65 FLR 172 at 182. “Substantial reason”, it has been said, must be shown for a departure from the usual mode of trial: Gargan v Commonwealth Bank of Australia [2004] FCA 641 at [6] per Hely J.
38 Sections 39 and 40 of the Federal Court of Australia Act, it may further be noted, are in substantially the same form as ss 12 and 13 of the High Court Procedure Act 1903 (Cth). Those latter provisions were considered by Fullagar J in McDermott v Collien (1953) 87 CLR 154. His Honour there formulated the “general policy” as follows (at 157):
Two things … seem clear enough. The first is that with the merits and demerits of trial by jury as a means of determining civil causes I have nothing whatever to do. … [S]o far as any question of general policy is involved, it is settled for me by the High Court Procedure Act. Trial without a jury is the normal mode of trial of actions in this Court, and some special reason must be shown for a departure in any particular case from that normal mode. The second thing that seems clear is that it is not enough to show that the cause of action is of a kind which could quite properly be tried with a jury and which was normally tried with a jury in England before the Judicature Act 1873 (36 & 37 Vict. c. 66). The decisions of Hodges J. and of Isaacs J. perhaps suggest that the nature of the cause of action is not even a relevant consideration. I would not be prepared to assent to that as a general proposition: indeed I would rather have thought that it might in some cases be a potent consideration. But it is clear that it is not enough to say: “This is a kind of action which is quite suitable for trial with a jury, and I would like to have it tried with a jury.”
Appl’d: Dinnison v Commonwealth [2000] FCA 1841, 106 FCR 418.
39 It is not considered that the present proceeding exposes any sufficient reason to depart from the “general policy” set forth in s 39 of the 1976 Act. The only legislative limitation on the exercise of the discretion conferred by s 40 is one directing attention to whether “the ends of justice appear to render it expedient to do so”: Insurance Commissioner v Australian Associated Motor Insurers Ltd (1982) 65 FLR 172 at 181. Relevant to the exercise of the discretion is a recognition of the important role that juries have long played in English and Australian law and the circumstances in which juries have traditionally been employed. Although the scarcity of the population was a reason why in colonial New South Wales the number of jurors was confined to 4 and not 12 persons (see: Henchman P, ‘The New South Wales Jury of Four Persons’ (1959) 33 ALJ 235), the importance of juries in the administration of justice was acknowledged from the outset: Caledonian Collieries Ltd v Fenwick (1959) 76 WN (NSW) 482 at 488–92 per Else-Mitchell J. “It is the fundamental institution in our traditional system of administering criminal justice”: Brown v The Queen (1985) 160 CLR 171 at 197 per Brennan J.
40 Even in the absence of any “general policy” as may be exposed by s 39, however, it is independently considered that the discretion conferred by s 40 should be exercised adversely to the application as made in the Motion. Two reasons in particular have been relied upon as discretionary reasons for rejecting the relief sought in the Motion, namely:
(i) the appropriate forum in which such questions of fact as the Applicant wishes to have resolved was the District Court. The statement of claim as filed in that Court was available to this Court, as was a note of the reasons for judgment of the District Court Judge. That note recorded in part as follows:
The defendant argued that the plaintiff was not entitled to judgment due to the Constitution, the Trade Practices Act, the Judiciary Act, the District Court Act, the Imperial Habeas Corpus Act and the Human Rights & Equal Opportunity Commission Act. The defendant also relied on the High Court decision in Kable v. Director of Public Prosecutions (1996) 189 CLR 51. The defendant also appears to assert that collection of tax in the form commonly known as “GST” is a form of civil conscription contrary to s.51(23A) of the Constitution and that because the defendant has declined to be conscripted, he owes the plaintiff nothing. I hope not to have done injustice to the defendant by summarising the defence in this way. In my view the whole defence in untenable. …
If there was dissatisfaction with the manner in which the District Court Judge proceeded, it was that decision which should have been challenged. Other than that which may be gleaned from the note of the reasons for judgment, little is known as to the manner in which the District Court proceeded, other than the fact that a statement of claim was there filed and summary judgment entered. The learned District Court Judge obviously considered that the case then pending before him was an appropriate matter in which to enter summary judgment. The defenceto the proceedings in the District Court was not sought to be tendered in this Court, nor was there any evidence as to whether any cross-claim or set-off was there sought to be relied upon. Whether or not there was in those proceedings in the District Court (or any collateral proceeding) any claim for (for example) damages as against the Deputy Commissioner was not a matter pursued in the present application before this Court.
And, irrespective of this consideration, and even if it were otherwise appropriate for this Court to entertain evidence and submissions in respect to the Schedule of facts:
(ii) each of the questions of fact in that Schedule as are now “pressed” can properly and satisfactorily be resolved by a Judge of this Court sitting alone and without the assistance of a jury.
41 An acceptance of the important role long played by juries provides no basis for any different exercise of the discretion conferred by s 40. The “ends of justice” in the present proceeding do not “render it expedient” to appoint a jury to determine such questions of fact as may be contained within the Applicant’s Schedule. Included within the written submissions as filed on 11 September 2008 was a submission that “a grievous wrong is being perpetrated on Mr Harding by the Respondent by now denying him the chance to have his story told and his claim heard in this proceeding”. Whatever facts may be relevant to the Application to have the Bankruptcy Notice set aside will be heard and determined by this Court; no “grievous wrong” will be suffered by the Applicant if it is a Judge alone who determines that Application.
42 Notwithstanding a contrary submission advanced on behalf of the Applicant, it is not considered that public confidence in the administration of justice by this Court would be impaired or called into question by a Judge of this Court sitting alone in the present proceeding to hear evidence as to the conduct of the Deputy Commissioner of Taxation or her officers and to make findings of fact based upon such evidence, always assuming such evidence is relevant.
43 Albeit in a different context, applications made pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) may allege in an appropriate case that statutory powers have been exercised for an “improper purpose”. Indeed, the 1977 Act expressly contemplates that a ground upon which an administrative decision may be sought to be impugned is “bad faith”: s 5(2)(d). It may be considered that an allegation of “bad faith” is a more serious allegation than one of pursuing an “improper purpose”. Both are serious allegations. But such applications have long been heard and determined by Judges of this Court without a jury. Although it must readily be recognised that an allegation of “bad faith” is a “very serious allegation” to make, it is an allegation that has in fact been made in other proceedings against both a Deputy Commissioner of Taxation (eg, Haritopoulos Pty Ltd v Deputy Commissioner of Taxation [2007] FCA 394 at [32], 66 ATR 225) and against others exercising statutory power (eg, SCAS v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 397 at [19]; SBBS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 361, 194 ALR 749). “Fraud” or “equitable fraud” is likewise a very serious allegation. Public confidence in the administration of justice by this Court, it is considered, has only been enhanced by this Court entertaining and resolving such “serious” allegations. Such allegations have been made in the past and presumably will continue to be made. And when made they will be resolved. It may be that a case will arise where a Judge of this Court orders a jury. But this proceeding is not that case.
44 Proceedings against a Deputy Commissioner of Taxation are not relevantly different for present purposes to proceedings against other Commonwealth office holders or decision-makers. But Deputy Commissioners have attracted in the past allegations of serious wrongdoing. Thus, for example, in Thurecht v Deputy Commissioner of Taxation (1984) 3 FCR 570; 84 ATC 4480; 15 ATR 822 there was an allegation that a statutory power had been exercised in “bad faith” by reason of the Deputy Commissioner seeking to make an example of the applicants. Sheppard J referred to the evidence and summarised the allegations as follows (at 587):
… it is capable of suggesting that there had in fact been decided upon at a high level in Canberra, a policy designed to disadvantage — really to punish — those who had had the temerity to force the Commissioner’s hand by making applications for writs of mandamus. That policy was designed to ensure that anybody else minded to make such an application would be discouraged from doing so. That is the applicants’ case. The question is whether I should accept it.
The allegation was rejected. There was no suggestion, however, in that case that public confidence in this Court would have been enhanced if those facts relevant to the resolution of such an allegation had been resolved by a jury.
45 The conferral by the Commonwealth legislature of such jurisdiction as that conferred by the 1976 Act upon this Court is only consistent with a legislative recognition that this Court will impartially and independently determine each case which comes before it, including litigation in which the Commonwealth or its instrumentalities may be respondents. No submission was advanced, nor could it be advanced, that there is any lack of public confidence in the manner in which this Court resolves contentious disputes involving allegations of misconduct or the pursuit of improper purposes by the Commonwealth or its instrumentalities; nor is it considered that public confidence in the administration of justice by this Court would be enhanced if such applications were to be heard by Judge and jury.
46 Each application for a trial by jury must necessarily depend on the facts upon which such an order is sought and the individual judgment of the legal practitioners making the application. Subject to that qualification, the decision of the Full Court in Taylor v Deputy Commissioner of Taxation [1999] FCA 195, 99 ATC 4268 provides some limited assistance. The Deputy Commissioner had there obtained judgment, a bankruptcy notice and a sequestration order. The trial judge had declined to appoint a jury. As in the present case, Constitutional rights were there also sought to be invoked; unlike the present case, the scope for disputed facts was apparently more confined. Cooper, Kiefel and Tamberlin JJ there concluded:
[40] The appellants advance an additional argument on the appeal as to their entitlement to have a jury trial on the hearing of the petitions. They submit that the power to make a sequestration order is a power to acquire property of a person which falls within s51(xxxi) of the Constitution. The constitutional guarantee that the power may only be exercised upon the provision of just terms to the person from whom the property is acquired gives rise, they submit, to the jury issue of whether the taking of their property is upon just terms. The submission misunderstands the administration of the property of a bankrupt for the benefit of the bankrupt’s creditors. There is no acquisition of property within the operation of s51(xxxi) of the Constitution when the property of a bankrupt is sequestrated and vested in a trustee in bankruptcy. S51(xxxi) has no bearing on the matter: Re Dohnert Muller Schmidt and Co; Attorney-General of the Commonwealth v Schmidt (1961) 105 CLR 361 at 372.
[41] The appellants’ submission as to the right to trial by jury on a trial on indictment of an offence against a law of the Commonwealth (s80 of the Constitution) and to the requirements of full faith and credit being given to the laws of every State (s118 of the Constitution) do not advance their case to a right to a trial by jury on the hearing of the bankruptcy petitions.
[42] In these circumstances there were no issues of fact in dispute on the hearing of the bankruptcy petitions or on the hearing of the review of the District Registrar’s decisions, which were capable of, or appropriate for, resolution by the verdict of a jury. …
As in the present case, it is not considered that any such questions of fact which may require resolution are appropriate for resolution by the verdict of a jury.
47 A submission that public confidence in this Court would be affected if a jury were not appointed in this case is, with respect, without substance.
Bankruptcy Act
48 The manner in which provisions such as ss 39 and 40 of the Federal Court of Australia Act have been interpreted and applied was, presumably, the reason why the Applicant placed greater — if not exclusive — reliance upon ss 30(3) and 31 of the Bankruptcy Act.
49 Section 30(3) employs the language of this Court being empowered to “direct the trial” of a question of fact “if it thinks fit”. The sub-section confers a “wide discretion”: Hubner v Australia and New Zealand Banking Group Ltd [1999] FCA 385 at [29], 88 FCR 445 at 450. This language, it was submitted in oral submissions, places a “gloss” upon the language employed in s 40 of the 1976 Act. Section 30(3), it was submitted, is the more specific test to be applied by this Court when considering an application for trial by jury in bankruptcy proceedings.
50 Whether or not s 30(3) does in fact place any such “gloss” upon the statutory test as formulated in s 40 may also be left to one side. Even if attention is confined to the language of ss 30 and/or 31 of the 1966 Act, it is not considered that any different conclusion should be reached in respect to the Applicant’s Motion. Sections 30(3) and 31, it is again considered, support a conclusion contrary to that now advanced on behalf of the Applicant.
51 Neither section confers any entitlement to a trial by jury; indeed, it was understood that Counsel for the Applicant again properly accepted that conclusion.
52 Section 31(1)(i), it was accepted, is simply a provision which sets forth the manner in which applications for the trial of questions of fact are to be made — such applications are to be made in open court. The Application in the present proceeding was made in “open Court”. The importance of that provision may readily be understood. If there are said to be “questions of fact” which it is appropriate for a jury to determine, it is assumed that there is a public importance in having those questions exposed in “open Court”.
53 The Bankruptcy Act, it must nevertheless be accepted, confers no entitlement to trial by jury: Hubner v Australia and New Zealand Banking Group Ltd [1999] FCA 385, 88 FCR 445. Cooper, Kiefel and Tamberlin JJ were there addressing s 30(3) of the 1966 Act, and not s 30(1)(i), but relevantly concluded:
Jury
[27] Mr and Mrs Hubner also say that the bankruptcy proceedings should be heard with a jury pursuant to s30(3) of the Act. That provision reads:
“(3) If in a proceeding before the Court under this Act a question of fact arises that a party desires to have trial before a jury, the Court may, if it thinks fit, direct the trial to that question to be had before a jury, and the trial may be had accordingly in the same manner as if it were the trail of an issue of fact in an action.”
[28] The appellants say that it is a civil right of all Queenslanders to have a trial by jury under s30(3).
[29] In view of the approach taken by his Honour, which we consider to be correct, the question of a jury trial does not arise; so we do not accept the applicants’ submissions in relation to this matter. Moreover, there was no relevant question of fact raised for a jury to determine. The Court under s30(3) has a wide discretion and there is no entitlement to a jury trial given by the section. We are not persuaded, given the necessity for a clear case of error to be shown on a matter of principle that there is any justification for ordering a jury trial in the present case. We see no error on the part of his Honour.
Section 30(3) is not beyond the legislative competence of Commonwealth Parliament and is not invalid because of any unfounded assertion that it “undermines or perverts” the Constitution: Commonwealth Bank of Australia v Heinrich [2000] FCA 1255 at [18]–[25] per Mansfield J. Nor is there any entitlement to trial by jury arising by reason of either some “unwritten law” such as natural justice or by reason of Schedule 2 to the Human Rights and Equal Opportunity Commission Act 1986 (Cth): Hubner v ANZ Banking Group Ltd [2000] FCA 140 at [9]–[10], 101 FCR 71 at 73 per Drummond, Dowsett and Katz JJ.
54 Moreover, and although there may be trial by jury in bankruptcy proceedings, it is the exception rather than the rule: Re Shields; Ex parte Australia and New Zealand Banking Group Ltd (1994) 51 FCR 308. Einfeld J there observed (at 309):
… in bankruptcy proceedings jury trials will be the exception rather than the rule. …
A jury trial involves a great deal of expense and time both to the parties and the Court, as well as considerable inconvenience to the members of the community who constitute the jury. The use of juries in civil matters has steadily declined during this century and is now largely reserved for those areas where serious imputations are to be made against the character of a party. Like divorce, bankruptcy is no longer regarded as such a matter. In the absence of some very compelling special circumstance, the intention of Parliament is clearly that bankruptcy proceedings be heard by a judge.
See also: Re Allen (1905) 5 SR (NSW) 55 at 57; Draper v Official Receiver [2004] FCA 1379 at [5] per Mansfield J. Some “special reason” must be shown for a departure from the normal mode of trial: Commonwealth Bank of Australia v Rigg [2001] FCA 590. Section 30(3) only applies where “a question of fact arises”. See: Ray v Perrett [2007] FCA 1672. “While fraud generally is some ground for giving the parties or one of the parties a right to trial by jury, this fact is not conclusive”: Stapleton v Brady [1952] QWN 15 per Clyne J.
55 Such authority as there is in respect of s 30(3) (and other comparable provisions) provides no support for any conclusion other than that there is no entitlement to trial by jury in bankruptcy proceedings and, of more immediate importance, no support for a conclusion that trial by jury in bankruptcy cases is the norm. Even in the more confined context of bankruptcy proceedings, it has thus been accepted that “special reason” must be shown if a jury is sought.
56 The Applicant’s Outline of Submissions dated 8 August 2008 contends that “Justices in civil cases especially bankruptcy cases should not approach applications for a jury with diffidence, or with an inclination to refuse such an order, or to feel somehow diminished or limited by an application for the trial of a civil matter by a jury”. It is not considered that any application for trial by jury in any bankruptcy application should be approached in any manner other than that set forth in the authorities. To the extent that the written submissions seem to advocate a different approach, they are rejected.
57 Confining attention to the language of s 30(3) of the Bankruptcy Act, the present proceeding is not one in respect to which it is considered “fit” to “direct the trial” of such questions of fact as now remain in the Applicant’s Schedule. The same discretionary reasons which have been relied upon to refuse the relief sought in the Motion, if the provisions of the Federal Court of Australia Act were invoked, are also relied upon when considering the discretionary power conferred by s 30(3).
58 There nevertheless remains a difference in the statutory language employed in the 1966 Act and the 1976 Act. In the context of the former Act, it has been said that there must be some “special reason” to direct a trial with a jury; in the context of the 1976 Act, it has been said that there must be some “substantial reason” to order a trial with a jury. Obvious care must necessarily be exercised in substituting for the terms employed by the legislature other words which merely attempt to give content to statutory language. There may be little difference in the circumstances of an individual case to the approach to be pursued in the application of either provision. Common to both statutes, however, remains the fact that the normal mode of trial is a trial without a jury. Whichever approach is pursued in the present proceeding, the end remains the same — there is considered to be no reason, be it “special” or “substantial”, to order or direct a trial with a jury.
Conclusion
59 Nothing in either the evidence or the Federal Court of Australia Act or the Bankruptcy Act supports either as a matter of principle or as a matter of discretion the need or desirability for acceding to the relief as sought in the Notice of Motion.
60 In the event that the Motion was dismissed, the Deputy Commissioner sought an order that her costs be paid on an indemnity basis. Considerable costs were incurred prior to 8 August 2008. Prior to that date the written submissions as were filed by the Applicant raised issues without substance. Those arguments were withdrawn in the submissions dated 8 August 2008, albeit only filed on 11 August 2008.
61 Although this Court has expressed greater reluctance to order indemnity costs against an unrepresented litigant, it may do so: Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537 at [20] and [26] per Kenny J. In Salfinger v Niugini Mining (Australia) Pty Ltd (No 4) [2007] FCA 1594 Heerey J relevantly observed:
[7] In Spalla v St George Motor Finance Ltd [2006] FCA 1537 Kenny J at [26] recently noted that courts have from time to time overcome a reluctance to order indemnity costs against self-represented litigants: Bhagat v Global Custodians [2002] FCAFC 51 and Ogawa v The University of Melbourne (No 2) [2004] FCA 1275. Kenny J considered the competing interests in determining whether to make an award of indemnity costs against a self-represented litigant. A lack of knowledge of the law, unfamiliarity with court practice and a lack of objectivity are common traits of unrepresented litigants. A person’s ability to get redress should not depend on lawyerly skills or an ability to pay for legal representation. However, the Court owes a duty to all parties to ensure that the trial is conducted in a fair and timely fashion (at [28]) and without significant difficulties and unnecessary expense for the parties against whom an unrepresented litigant proceeds. see Bhagat v Royal & Sun Alliance Life Assurance Australia Ltd [2000] NSWSC 159 at [13] per Hodgson CJ. …
See also: Vink v Tuckwell (No 3) [2008] VSC 316 at [103]–[108] per Robson J.
62 In the circumstances of the present case it is considered that the arguments which the Applicant initially wished to have resolved were without substance and that it is appropriate to make an order that costs incurred prior to 8 August 2008 be paid on an indemnity basis. Those allegations were properly withdrawn, but prior to that date the Respondent had been unreasonably subjected to the expenditure of costs. The proceeding in this Court has been unnecessarily prolonged by reason of those prior submissions being advanced — only to be withdrawn shortly prior to the hearing of the Motion. Moreover, the Applicant, it may be noted, had previously tried to agitate at least some of the same arguments before the District Court and there had been told that such arguments were “untenable”. To again seek to agitate those same arguments in this Court was, in such circumstances, to expose the Respondent to unnecessary expense.
63 Although it is further considered that the arguments as were ultimately advanced in the 8 August 2008 submissions and during the hearing on 8 September 2008 also had little merit, it is considered that the Applicant should pay the costs of the Deputy Commissioner as from that date — but not on an indemnity basis. Although applications for trial by jury may be uncommon in this Court, when made they should be heard and determined in the usual way. The circumstances in which the present application was ultimately presented may have had little merit, but the absence of such merit is not a sufficient reason in itself to attract an indemnity costs order.
Orders
64 The orders of the Court are:
1. The Notice of Motion as filed on 8 September 2008 be dismissed.
2. The Applicant is to pay the costs of the Respondent, those costs incurred prior to 8 August 2008 to be paid on an indemnity basis.
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I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. |
Associate:
Dated: 15 September 2008
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Counsel for the Applicant: |
P King |
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Solicitor for the Applicant: |
McKells |
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Counsel for the Respondent: |
P Rodionoff |
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Solicitor for the Respondent: |
Australian Government Solicitor |
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Date of Hearing: |
8 September 2008 |
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Date of Judgment: |
15 September 2008 |
