FEDERAL COURT OF AUSTRALIA

Petroulias v Commissioner of Taxation (No 2) [2012] FCA 950

THE COURT ORDERS THAT:

1.    The applicant’s application filed on 5 September 2011 is dismissed.

2.    The applicant pay the respondent’s costs of the applicant’s application filed on 5 September 2011 and the respondent’s application filed on 28 October 2011.

3.    By 23 February 2012, the applicant is to file an application seeking to appoint Ms Luk as his litigation representative.

4.    By 30 April 2012, the applicant is to file a further amended statement of claim.

5.    Should Order 4 of these orders not be complied with by 30 April 2012, these proceedings are to thereby stand dismissed.

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

EX TEMPORE REASONS FOR JUDGMENT

Appointing a litigation representative

1    Mr Petroulias seeks to have Ms Luk appointed as his litigation representative in these proceedings. Since Mr Petroulias had filed no application to that effect, I ordered him to file such application by close of business today. However, I will proceed to deal with the matter on the assumption that Mr Petroulias will comply with that order.

2    A litigation representative is appointed under Pt 9 of the Federal Court Rules 2011 (the Rules). In particular, Div 9.6 deals with persons under a legal incapacity. Rule 9.62 provides that a person (other than a person excluded by Rule 9.62(1)) may consent to being appointed a litigation representative. In this case, Ms Luk has consented to being appointed a litigation representative for Mr Petroulias. She is not excluded by any of the subparagraphs of Rule 9.62(1).

3    The criteria for the appointment of a litigation representative for a person are set out in Rule 9.63. In essence, it must be established that the person concerned is a “person under a legal incapacity” as defined in the dictionary to the Rules. That expression is there defined to mean either “… a minor; … or a mentally disabled person”. Mr Petroulias is obviously not a minor. The other expression: “mentally disabled person”, is defined in the dictionary to mean “a person who, because of a mental disability or illness, is not capable of managing the person’s own affairs in a proceeding”.

4    On this application, I do not need to consider in any detail the complex debate between the various doctors – Dr Lee on the respondent’s part, and Dr Hampshire and others on Mr Petroulias’ part – as to whether Mr Petroulias is suffering from a mental disability or illness. The evidence of his treating psychiatrist, Dr Hampshire, is that he is suffering from Asperger’s syndrome and that he has a bipolar disorder. For the purposes of this interlocutory application, I consider I should accept this evidence from his treating doctor. However, that does not meet the whole of the criteria set out in the definition of the expression “mentally disabled person”. The balance of that definition requires proof that because of his mental disability or illness, Mr Petroulias is not capable of managing his own affairs in these proceedings.

5    At the conclusion of Dr Hampshire’s oral evidence [about Mr Petroulias’ Asperger’s condition and his bipolar disorder which he had earlier described as two co-morbid chronic conditions], I asked Dr Hampshire’s opinion as to the: “… effect, if any, [those two conditions had] on [Mr Petroulias’] capacity to manage his affairs in these proceedings”.

6    Dr Hampshire replied:

In my opinion, having Asperger’s syndrome will make it extremely difficult for him to comprehend all the subtleties that are involved in court appearances, and I think, whilst he might have a single-minded capacity, you know, of some - of intelligence in an area, it is a very narrow area, and I think that the nuances required to represent well or present his legal arguments well are going to be very diminished.

7    I then asked Dr Hampshire whether Mr Petroulias was in a position where he considered he was unable to manage his affairs in these proceedings. Dr Hampshire replied:

I don’t think he requires a tutor. He will get through without a tutor if that’s the decision. It’s just my view that it would be helpful to him, useful to him to have a tutor But I’m not implying that he’s so psychiatrically unwell that he could not run his own defence.

8    Accepting Dr Hampshire’s opinion (which I do), while Mr Petroulias has a mental disability or illness that is causing him some distress and requires treatment, I do not think that his condition is such that he meets the definition of a “mentally disabled person” as defined in the dictionary to the Rules. In particular, he is not so affected by his condition that he is not capable of managing his own affairs in these proceedings. For these reasons, I dismiss Mr Petroulias’ application to appoint a litigation representative.

9    I would add this however. In some of the affidavit material, Ms Luk’s appointment is referred to as the appointment of a “legal” representative, rather than a “litigation” representative. This may be a mere slip, but if it is not, it is apt to observe that Mr Petroulias does not require an order of this Court to appoint a legal representative. He can do that by simply filing a notice of appointment of a lawyer under Rule 4.03. There is therefore no impediment to Mr Petroulias doing that immediately if he wants Ms Luk to act as his lawyer in these proceedings.

Declaration and injunction sought

10    I turn then to the third paragraph of Mr Petroulias’ application of 5 September 2011. That paragraph seeks a declaration and injunction against the respondent and the Australian Crime Commission from taking any action that interferes with or adversely affects the applicant’s witnesses. There is any number of reasons why that particular application should be dismissed. First, the Australian Crime Commission is not a party to these proceedings. Secondly, there is no evidence before me that the Commissioner of Taxation, as the respondent in these proceedings, is interfering with, or adversely affecting, Mr Petroulias’ witnesses in these proceedings. Finally, until such time as a statement of claim is filed in these proceedings, that properly defines the causes of action Mr Petroulias wishes to pursue, it is difficult to see how the applicant’s witnesses can be identified. It follows that para three of Mr Petroulias’ application of 5 September 2011 must be dismissed.

Application to dismiss proceedings

11    On 28 October 2011, the Commissioner filed an application seeking two orders: first, that pursuant to Rule 5.23(1)(b), the proceedings be dismissed by reason of the applicant’s default in relation to an order of the Court and, secondly, that pursuant to Rule 5.21(a), unless the applicant files a further amended statement of claim by 5 pm on 8 February 2012, the proceedings be dismissed. That date has already passed.

12    The default to which the Commissioner’s application is directed is Mr Petroulias’ failure to file an amended statement of claim by 29 August 2011. To understand the context in which this application is made, it is necessary for me to briefly summarise the history of these proceedings.

13    The proceedings were commenced in November 2010. At that time, they were supported by a lengthy statement of claim. Mr Petroulias has since claimed that statement of claim defined four causes of action. As described by Mr Petroulias, they were:

1)    misfeasance on the Commissioner’s part;

2)    a refusal to issue rulings amounting to misfeasance on the Commissioner’s part;

3)    a challenge to various administrative actions illegally taken by the Commissioner; and

4)    a challenge to the default assessments issued by the Commissioner in relation to Mr Petroulias and various companies with which he is connected.

14    From what Mr Petroulias has said, the first cause of action, viz misfeasance by the Commissioner, is in a different category to, and requires much more work to define, than the other three causes of action. Those all relate to specific rulings made, administrative actions untaken or assessments issued by the Commissioner.

15    On 4 February 2011, on the Commissioner’s application, I ordered that this first statement of claim be struck out and Mr Petroulias have leave to file an amended statement of claim by 18 March 2011. It is not clear exactly when Mr Petroulias filed his amended statement of claim. It appears to have occurred during a directions hearing held in March 2011. However, it is clear from the record that the Commissioner applied to strike out Mr Petroulias’ amended statement of claim and on 18 July 2011, I ordered that the amended statement of claim be struck out and that Mr Petroulias have leave to file a further amended statement of claim by 29 August 2011.

16    No further amended statement of claim was filed by 29 August 2011. Indeed, none has been filed since then.

17    Mr Petroulias filed an application for various orders (see above) on 5 September 2011. However, he did not include any application for an extension of the time within which to file a further amended statement of claim.

18    On 26 October 2011, a number of orders were made, including one requiring Mr Petroulias to file any application seeking any extension of time within which to file a further amended statement of claim by 4 pm on 9 December 2011.

19    At the same time, Mr Petroulias’ existing application filed on 5 September 2011 and any future application he may file under the abovementioned order were set down for hearing on 1 February 2012.

20    By 9 December 2011, Mr Petroulias had not filed any application seeking an extension of time within which to file a further amended statement of claim.

21    In the meantime, on 28 October 2011, the Commissioner filed the present application.

22    This history demonstrates very clearly that Mr Petroulias is in default of the orders of 18 July 2011 that he should file his further amended statement of claim by 29 August 2011. Furthermore, it is clear from this history that he has made no attempt, despite orders that he should do so, to seek any extension of time for compliance with those orders. That compounds his default.

23    Nonetheless, there is clear authority that the court should be very slow to dismiss proceedings under Rule 5.23 if there exists a genuine cause of action which a litigant wishes to litigate. There have been two previous statements of claim in this matter. While those two statements of claim were seriously defective in relation to the pleading of the first cause of action, the pleading of the other three causes of action, albeit defective enough to be struck out, was perhaps not as fundamentally defective as the first.

24    On the face of those documents, there is, therefore, some possible basis for a cause of action against the Commissioner, for example in relation to the challenge to the default assessment (cause of action 4 above).

25    Mr Petroulias has told me in very emphatic terms that he wishes to pursue all of the causes of action he has described (see [13] above). In those circumstances, I consider it would be harsh and unjust to dismiss these proceedings if there is a possibility that Mr Petroulias could plead at least one of the four causes of action and that cause of action has some prospects of proceeding to a determination without offending s 31A of the Federal Court of Australia Act 1976 (Cth).

26    While there is no doubt Mr Petroulias’ default or failure to comply with my order of or 18 July 2011 is deliberate and continuing, I do not consider that I should dismiss his proceedings at this stage. Instead, in the exercise of my discretion, I consider I should give him one last chance to properly plead his cause, or causes, of action against the Commissioner. He claims that he will require approximately two months to do that. Mr Fagan SC, for the Commissioner, submits I should only allow Mr Petroulias one month in view of the time he has already had to date. In the circumstances, whether Mr Petroulias is allowed one month or two months is not going to make a great deal of difference in the context of the delay that has already occurred in these proceedings. However, should Mr Petroulias fail to comply within the period of his own choosing, viz two months, that will obviously be a significant factor in any subsequent application to strike out these proceedings.

27    So, I propose to adjourn the Commissioner’s application to be relisted, if he wishes, after the next order is complied with. I also propose to order that Mr Petroulias have leave to file a further amended statement of claim by the close of business on 30 April 2012. Further, I propose to order that, unless Mr Petroulias files a further amended statement of claim by the close of business on 30 April 2012, these proceedings do thereby stand dismissed.

Associate:

Dated:    31 August 2012