FEDERAL COURT OF AUSTRALIA

Shears v Deputy Commissioner of Taxation [2014] FCA 1145

THE COURT ORDERS THAT:

1.    The application filed 1 September 2014 for an extension of time to seek leave to appeal be dismissed.

2.    The applicant pay the respondent’s costs.

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

REASONS FOR JUDGMENT

Introduction

1    This is an application filed 1 September 2014 for an extension of time to seek leave to appeal from the judgment of a judge of this Court given on 30 July 2014.

2    By his application, the applicant agrees to have the application heard without oral argument.

3    The applicant’s position as put in his application and in his written submissions received 10 October 2014 (“AWS”) is that leave to appeal is not required because the judgment sought to be appealed from is final and not interlocutory. I do not agree for the reasons which follow.

4    The substantive order made by the primary judge from which an appeal is sought to be brought provides:

The applicant’s Application for an Extension of the Time within which he might file an Originating Application for Judicial Review in accordance with the draft Originating Application lodged with the Court on 7 May 2014 is dismissed.

5    At [54] of his reasons for judgment (“R”), the primary judge concluded:

For all of the above reasons, the so-called decisions made by the Commissioner and conduct of the Commissioner sought to be reviewed by the applicant under the ADJR Act are not capable of review under that Act. It follows that the applicant’s Extension of Time Application must be refused with costs. There will be orders accordingly.

6    Contrary to the AWS at para 23 and following, the primary judge did not, objectively or otherwise, uphold a notice of objection to competency of the applicant’s application for judicial review because, in the absence of an extension of time to file such an application, there was none; only a draft filed with the applicant’s extension of time application. The primary judge only considered the merit of a draft notice of objection to competency in the context of deciding whether or not to grant the applicant’s application for an extension of time.

7    It is well established that an order rejecting an extension of time to commence proceedings under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“ADJR Act”) is an interlocutory order: see Barrett v Minister of Immigration Local Government and Ethnic Affairs (1989) 18 ALD 129 at [1]–[2]; Grant v Commissioner Australian Federal Police (No 2) [2006] FCA 1494 at [3]; Mulholland v Australian Electoral Commission [2014] FCA 916 at [41], [45]. Further, in this case, the decision not to grant an extension of time did not finally determine the applicant’s rights in relation to the tax liabilities that were the subject of the application. It was open to the applicant to seek determination of his substantive rights (that is, his liability to tax) under Pt IVC of the Taxation Administration Act 1953 (Cth) (“TAA”), if not before this Court due to effluxion of time (s 14ZZN of the TAA) and this Court’s inability to grant an extension of time, then before the Administrative Appeals Tribunal which does have power to extend time for the filing of applications to it for review of a decision: s 29(7) of the Administrative Appeals Tribunal Act 1975 (Cth) (“AAT Act”).

8    Accordingly, the applicant requires leave to file an appeal and this application is to be treated as an application for relief under Rule 35.14 of the Federal Court Rules 2011 (“FCR”).

Judgment from which the Applicant Seeks an Extension of Time to Seek Leave to Appeal

9    By para 11 of his Reply Submissions before the primary judge (R [23]), the applicant sought leave to amend his draft application:

If the Court is not persuaded that the decisions at para 7–10 of the Draft are reviewable under the AD (JR) Act then, in reliance upon Rawson Finances Pty Limited v Deputy Commissioner of Taxation [2010] FCA 538 the Applicant seeks … relief from these decisions under jurisdiction conferred by s 39 B Judiciary Act 1903.

10    Decisions 7–10 related to the commencement of proceedings for the recovery of tax assessed to the applicant and the issuing and service of a bankruptcy notice.

11    At R [26], the primary judge said:

I am not prepared to entertain an application for leave to amend the applicant’s Extension of Time Application in order to allow that application to be determined in light of a foreshadowed judicial review application which also relies upon s 39B in some fashion. The applicant has not provided a draft of the amendments which he seeks nor has he provided a draft of the case which he would seek to make under s 39B. Further, he has allowed the present application to proceed upon the basis that no s 39B case was in the ring. It is now too late for him to seek to rely upon s 39B in relation to the matter with which I am dealing.

12    The matter with which his Honour was dealing was the application for an extension of time and there is no error in his Honour’s refusal to allow that application to be determined by a belated foreshadowed judicial review application which will also rely, in some way not articulated, on s 39B of the Judiciary Act 1903 (Cth).

13    The primary judge categorised the decisions which the applicant sought to review in his draft application for judicial review into three categories. Category 1 consisted of decisions 1–9, 11 and 15. Decisions 1–9 and 11 comprised decisions to treat certain amounts or payments as assessable income of the applicant or decisions to treat certain amounts in a particular way for the purposes of Australian tax law (R [38]). Decision 15 comprised those decisions whereby the Commissioner imposed penalties, fines and interest upon the applicant (R [39]).

14    Category 2 consisted of decisions 10, 13 and 14 (R [40]). Those decisions comprised the Commissioner’s decisions to seek to recover the applicant’s outstanding tax debt in the Supreme Court of New South Wales.

15    Category 3 comprised challenged decision 12, concerning the Commissioner’s alleged failure to deal with “the hardship application made by the applicant” (R [41]).

16    For the reasons given by his Honour (R [42]–[48]), his Honour concluded that all of the Category 1 decisions are within para (e) of Sch 1 to the ADJR Act and are thus not reviewable under that Act: R [49]. In this regard, his Honour was undoubtedly correct. His Honour further concluded that for the same reasons, the challenged conduct on the part of the Commissioner which corresponds or relates to the making of the Category 1 decisions is also not reviewable under the ADJR Act (R [50]). Again, this is undoubtedly correct.

17    His Honour also concluded that for the reasons given by Yates J in Rawson Finances Pty Ltd v Deputy Commissioner of Taxation (2010) 189 FCR 189 at [30]–[66], the Category 2 decision and conduct relating to the Category 2 decisions sought to be challenged by the applicant are also not reviewable (R [51]). Again, in my view, his Honour was absolutely correct in so concluding. As Yates J said at [54]:

The commencement of legal proceedings would expose the applicant to the prospect of substantive determinations being made in those proceedings by the separate exercise of judicial power. But the challenged decisions themselves did not confer, alter or otherwise affect legal rights or obligations respecting the applicant. They were not substantive determinations of any kind or in any sense.

18    As to the Category 3 decision – the Commissioner’s alleged failure to deal with “the hardship application made by the applicant”, his Honour at R [53] said this:

There is no evidence before me that the applicant made any application to the Commissioner for release of all or part of his tax debt on the grounds of hardship prior to the filing of his Extension of Time Application. It appears that the reference in his Submissions to that hardship application is a reference to claims sought to be made in his draft Originating Application for Judicial Review rather than to any antecedent claim. If that be correct, the Commissioner can hardly be criticised for failing to deal with an application which has not yet been made but only foreshadowed. The true nature of the applicant’s complaint concerning his so-called hardship application is not at all clear from the materials before me. In any event, as submitted on behalf of the Commissioner, such an application has to be made and then determined by the Commissioner in the usual way before consideration could conceivably be given to reviewing the Commissioner’s decision in respect of that application or, alternatively, reviewing his failure to make a decision in respect of that application.

19    In my view, there is no error on the part of his Honour that comes out of this process of reasoning.

20    In summary then, my review of his Honour’s reasons for judgment does not disclose any appealable error.

The Applicant’s Grounds of Application for an Extension of Time

21    Some of the grounds set out on page 2 of the application for an extension of time are repetitive (grounds 6 and 7) while others (grounds 3–6 inclusive) have been addressed in the reasons in [9]–[20] above.

22    The second ground alleges that the primary judge “acted with bias”. This is expanded upon in ground 1 of the draft notice of appeal which accompanied the application for an extension of time as an allegation of apprehended and actual bias sourced in a comment made by his Honour in the course of an exchange between the applicant’s representative and his Honour at the first directions hearing held on 28 May 2014. The transcript relevantly reads:

Mr M. Griffin:    Registrar, if it please, my name is Griffin. I appear for Mr Shears. I have had no news from ---

His Honour:    Have you served this?

Mr Griffin:    Yes, I have. I have got a – I served it personally at the office of the Deputy Commissioner on Goulburn Street.

His Honour:    Right.

Mr Griffin:    And at the time I served it, I got a signed documents acknowledging service from a legal officer. It’s the only copy I have unfortunately, so a legal officer at the ---

His Honour:    With ---

Mr Griffin:    Sorry, did I say “your honour”, did I ---

His Honour:    No. You said “registrar” and I have never been a registrar.

Mr Griffin:    Sorry, sorry, sorry.

His Honour:    That’s all right. That’s just put you about 20 metres behind the mark.

Mr Griffin:    Sorry.

His Honour:    That’s alright. Don’t worry about it.

Mr Griffin:    Apologies.

His Honour:    No[w], officer. Would you please call the matter outside three times, please.

23    The applicant’s submissions on this ground are focused in paras 49 and 50 of his AWS:

49.    The Applicant submits that a fair minded person would reasonably apprehend from the adverse comments and remarks of his Honour that his Honour would not exercise an impartial and unprejudiced mind in resolving the issues in dispute. His Honour … was so disturbed by being referred to, albeit inadvertently, as ‘Registrar’ by the Applicant’s solicitor that his Honour failed to exercise objectivity in determining the issues and gave directions and made orders that were unfair and prejudicial to the Applicant, placed greater burden upon the Applicant that was required and which, in actual fact, did place the Applicant at a disadvantage in relation to the Respondent. These directions and orders included: directing the Respondent to file Notice of Objection to Competency out of time and of his own motion in effect conducting the Respondent’s case for him; making prohibited cost orders against the Applicant; failing to allow the Applicant to amend his Application to rely upon a power of review under the Judiciary Act; imposing higher standards of evidence and a more onerous burden of evidence than is otherwise required in applications for extension of time; treating the Applicant’s ‘Draft’ Application as the proposed and final application; dismissing the Applicant’s evidence in Affidavit that he had made hardship application and, in effect, implying that the Applicant’s statement in his Affidavit was untrue; preferring the Respondent’s submissions in relation to the Applicant making a hardship application despite the fact that the Respondent did not challenge, or submit any contrary evidence to, the Applicant's evidence that he had made a hardship application. The Applicant submits that it is the fact that his Honour acted in accordance with his implied threat – to treat the Applicant differently to the Respondent – upon which the ground of actual bias relies.

50.    The Applicant submits that no waiver can be taken to have occurred in this instance as at the time his Honour made the remarks the only decision in contemplation was an extension of time application for a ‘Draft’ Application not a hearing of the merits; the Applicant was not available for his lawyers to take instructions from, and the effort made by his Honour to reassure the Applicant’s representative as evinced on the page of the transcript annexed to these submissions created the inference that his Honour’s impartiality would not be affected in a manner as suggested by his remarks as he conveyed the meaning his Honour would be prepared to set aside any prejudice he may have. However, the Applicant submits that that did not occur as the bias thought to have been set aside revived in the judgement.

24    With respect, there is no foundation whatsoever for any of these submissions. At worst, his Honour’s comment: “That’s just put you about 20 metres behind the mark” was flippant, but read in the context of the extract from the transcript reproduced in [22] above, it does not exemplify anything approaching a threshold platform for consideration of a suggestion that his Honour would not bring an impartial and unprejudiced mind to resolving the issues in dispute before the Court. Moreover, none of the alleged manifestations of unfairness towards and prejudice against the applicant in the directions and orders made by his Honour withstand scrutiny. I have already dealt with some of these and it suffices to refer to two that I have not.

25    First: “Directing the [r]espondent to file Notice of Objection to Competency out of time and of his own motion in effect conducting the [r]espondent’s case for him”. It is clear from what the representative of the Commissioner said to his Honour on 28 May 2013 that the jurisdictional issue related to “the intended application” (T 3/5), that is, the intended application for judicial review, not the application for an extension of time which was before his Honour. The filing of a draft notice objection to competency before the application for an extension of time was granted could never be out of time because the time for filing a notice of objection to competency under Rule 31.05(1) of the FCR does not begin to run until the impugned application, that is, the application for judicial review, has been filed and that could not be done unless and until the extension of time had been granted.

26    The direction made by his Honour on 28 May 2014 could only ever be construed as the filing of a draft notice of objection to competency to assist his Honour in determining the applicant’s application for an extension of time.

27    Second: “Making prohibited costs orders against the [a]pplicant”. For the same underlying reasons, his Honour’s costs order against the applicant was not prohibited by Rule 31.05(4) of the FCR. The respondent’s draft notice of objection to competency was not before his Honour for determination; only the applicant’s application for an extension of time; and the terms of Order 2 made by his Honour on 30 July 2014 so confined the costs order.

28    In any event, there is nothing to prevent the Court making an order that is inconsistent with the FCR, and in that event the order will prevail: Rule 1.35 of the FCR.

29    What is said in [27] and [28] above also deals with the first ground of the applicant’s application for an extension of time to seek leave to appeal.

30    The applicant’s application for an extension of time to seek leave to appeal from Shears v Deputy Commissioner of Taxation [2014] FCA 800 must be dismissed with costs.

Associate:

Dated:    30 October 2014