FEDERAL COURT OF AUSTRALIA

Garrett v Cahill [2015] FCA 664

THE COURT ORDERS THAT:

1.    The application under s 37AR of the Federal Court of Australia Act 1976 (Cth) for leave to institute:

(a)    an application for an extension of time within which to seek leave to appeal and for leave to appeal against interlocutory orders made by a judge of the Federal Circuit Court of Australia on 27 April 2015; and

(b)    an appeal against a sequestration order made by a judge of the Federal Circuit Court of Australia on 15 May 2015 and against other claimed orders,

be refused.

2.    The applicant pay the respondents’ costs of and incidental to the application.

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

REASONS FOR JUDGMENT

introduction

1    The applicant, Mr Andrew Morton Garrett, is subject to orders under s 37AO of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), including an order prohibiting him from instituting proceedings in the Federal Court of Australia without the leave of the Court (vexatious proceedings order). For the reasons stated in VID129 of 2015, which was heard at the same time as this matter, Mr Garrett’s application to institute an appeal against the vexatious proceedings order is stayed by force of s 60(2) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).

2    In this application (filed after Mr Garrett became a bankrupt and therefore not subject to s 60(2)) Mr Garrett applies for leave under s 37AR(2) of the Federal Court Act to commence:

(1)    an application for an extension of time within which to seek leave to appeal and leave to appeal against interlocutory orders made a judge of the Federal Circuit Court on 27 April 2015 that, amongst other things, struck out certain affidavits filed by Mr Garrett (proposed extension of time application); and

(2)    an appeal that, amongst other things, is against a sequestration order made by a judge of the Federal Circuit Court on 15 May 2015 (proposed appeal).

There were other matters that were the subject of this application, as to which see [45] below.

3    Mr Garrett relies on his affidavit sworn on 5 June 2015 and the documents exhibited to it. These documents include a draft notice of appeal (AMG-1) and a (proposed) application for an extension of time to seek leave to appeal and for leave to appeal and a draft notice of appeal (AMG-2). At the hearing on 19 June 2015, Mr Garrett spoke to submissions dated 18 June 2015, which he had previously sought to file without leave. Leave to file these submissions was given after the hearing. The nature of Mr Garrett’s case appears from these submissions and the submissions he made orally at the hearing. Mr Garrett also filed, with leave, submissions dated 25 June 2015, following the receipt of the written reasons for judgment of the Federal Circuit Court Judge after the hearing on 19 June 2015.

4    In written submissions filed on 18 June 2015, the first respondent, Mr Francis Michael Cahill, submitted that the proposed extension of time application and the proposed appeal against the sequestration order had no prospect of success and therefore leave should be refused. He reiterated his position at the 19 June hearing. Mr Cahill filed further written submissions, with leave, after the hearing on 19 June 2015, following the receipt of the reasons for judgment of the Federal Circuit Court Judge.

5    In written submissions filed on 18 June 2015, the second respondent, the Commissioner of Taxation (Commissioner), submitted that the Court should refuse leave with respect to the application for an extension of time and, unless conditions were imposed with respect to certain of the proposed grounds said to have no likelihood of success, refuse leave with respect to the proposed appeal against the sequestration order. The Commissioner subsequently altered his position with respect to the proposed appeal, filing written submissions, with leave, after the 19 June hearing, following the receipt of the Federal Circuit Court Judge’s written reasons. In those submissions, the Commissioner contended that in light of the Federal Circuit Court Judge’s reasons, none of the grounds in Mr Garrett’s draft notice of appeal against the sequestration order has any reasonable likelihood of success. The Commissioner submitted that the defects in the draft notice appeal cannot be cured by imposing conditions on the appeal and, in consequence, Mr Garrett’s application seeking leave to institute the proposed appeal should be dismissed as a vexatious proceeding. The Commissioner relied on written submissions filed on 18 June and 25 June 2015 and on oral submissions at the hearing.

6    The third respondent, Austrade, also appeared by its legal representative at the hearing on 19 June 2015 but did not add anything further to the submissions of the first and second respondents.

7    The substance of the respondents’ arguments sufficiently appears from their written submissions and there is no need to repeat them.

analysis

The proposed extension of time application

8    I turn first to Mr Garrett’s application for leave to institute the proposed extension of time application.

9    On 27 April 2015, a Federal Circuit Court judge, Judge Riethmuller, ordered that six affidavits filed by Mr Garrett in that Court in proceeding MLG177/2015, be struck out. At the same time, his Honour ordered that, by 4:30 pm on 13 May 2015, Mr Garrett file and serve a single affidavit, limited to 50 pages, with no more than 100 pages of annexures. This affidavit was to be “confined to evidence of [Mr Garrett’s] solvency and/or other sufficient cause why a sequestration order should not be made”. His Honour further ordered that the matter be listed for hearing on 15 May 2015. Mr Garrett subsequently filed a lengthy affidavit, upon which he relied at the hearing on 15 May 2015.

10    At the hearing on 19 June 2015, Mr Garrett said:

… his Honour said that there was too much material – I think Mr Tavolaro represented there was seven and a half thousand pages of materials that were on the court file. That’s not the case. I haven’t counted the number of pages, but it certainly isn’t seven and a half thousand. …

I filed that additional affidavit, but it was limited in its volume to 150 pages. Now, in a matter such as this, which is incredibly complex and involving some 300 taxation decisions over the last two years, 300 taxation decisions takes up more than that 150 pages. As it turned out, I filed an affidavit of 280 pages and his Honour accepted that larger volume for filing, and that goes to some very serious issues.

11    Mr Cahill submitted that the proposed extension of time application has “no merit, is hopeless at law and has no prospect of success”. The Commissioner submitted that the proposed application has no reasonable likelihood of success based on the grounds that Mr Garrett has set out. Mr Garrett responded to these contentions.

12    The respondents’ submissions and Mr Garrett’s responses are relevant to the question whether Mr Garrett should have the leave he seeks under s 37AR(2) of the Federal Court Act. Section 37AT(4) specifically provides that the Court may grant leave only if it is satisfied the proceeding is not a vexatious proceeding. The term “vexatious proceeding” is defined in s 37AM(1) as including:

(a)    a proceeding that is an abuse of the process of a court or tribunal; and

(b)    a proceeding instituted in a court or tribunal to harass or annoy, to cause delay or detriment, or for another wrongful purpose; and

(c)    a proceeding instituted or pursued in a court or tribunal without reasonable ground; and

(d)    a proceeding conducted in a court or tribunal in a way so as to harass or annoy, cause delay or detriment, or achieve another wrongful purpose.

13    Whilst this is not an exhaustive definition and the four paragraphs represent overlapping categories (Garrett v Commissioner of Taxation [2015] FCA 485 at [6]), plainly enough, the absence of any prospects of success may be indicative of a proceeding falling within subss 37AM(1)(a) (abuse of the process) and (c) (no reasonable ground). A proceeding has been held to be an abuse of the process of a court if it can clearly be seen as “foredoomed to fail”: Walton v Gardiner [1993] HCA 77; 177 CLR 378 at 393; Smits v Loel [2014] FCA 1341 at [74]; Spain v Belcher [2014] FCA 663 at [8], [18]-[19]; SZQYP v Hannigan [2012] FCA 723 at [30] per Katzmann J, who added that “[l]ikewise, a proceeding will be regarded as vexatious where it is obviously untenable or utterly hopeless: von Reisner v Commonwealth (2009) 177 FCR 531 at [27]”. Of course, her Honour was dealing with the position prior to the enactment of Part VAAA of the Federal Court Act, in which ss 37AM and 37AT are found, but nonetheless her comment is instructive.

14    Assuming leave were granted, in considering whether to grant the extension of time that Mr Garrett seeks, a court would consider the various matters, including the length of the delay and any explanation for it, any prejudice to the respondents if time were extended and the merits of the appeal if the extension of time were granted: see, for example, Mehmood v Attorney-General (Cth) [2013] FCA 406; 141 ALD 339 at [5]-[6] per Foster J. Further, it is well established that courts will exercise “particular caution” in reviewing decisions involving discretionary orders concerning matters of practice and procedure: see Adam P Brown Male Fashions Pty v Philip Morris Inc [1981] HCA 39; 148 CLR 170 at 177 per Gibbs CJ, Aickin, Wilson, and Brennan JJ. Not only must there be error shown in the exercise of discretion, but “the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration”: Adam P Brown 148 CLR at 177.

15    Section 42 of the Federal Circuit Court of Australia Act 1999 (Cth) provides that “[i]n proceedings before it, the Federal Circuit Court of Australia must proceed without undue formality and must endeavour to ensure that the proceedings are not protracted”. His Honour’s orders were made in the case management of the proceeding, presumably with s 42 (amongst other provisions) in mind. Whatever the precise number of pages in the affidavits that were struck out, there is no doubt that they were very many indeed. At the same time, his Honour gave Mr Garrett the opportunity to file another affidavit of more appropriate length addressing the relevant issues, such as his solvency, his ability to meet his debts and any other matter that might raise sufficient cause against the making of a sequestration order against his estate. Mr Garrett subsequently filed a further affidavit, consisting of 285 pages. Although in excess of the length for which his Honour’s order provided, the affidavit was accepted, read and considered by Judge Riethmuller in his reasons for judgment: see Cahill & Ors v Garrett [2015] FCCA 1627. In these circumstances, Mr Garrett’s assertion (see, e.g, ground 1 of the draft notice of appeal in AMG-2) that what his Honour did was procedurally unfair must fail. Other proposed grounds in AMG-2 are identical to the grounds set down in AMG-1 and, for the reasons stated below, have no reasonable likelihood of success. Many grounds of appeal do not identify any error capable of sustaining an appeal. Furthermore, it is difficult to see how any relevant injustice could have flowed from his Honour’s orders in view of the fact that Mr Garrett was given the opportunity to file further evidence and in fact did so.

16    If leave were granted, Mr Garrett’s proposed extension of time application is foredoomed to fail, to adopt the language of Walton v Gardiner 177 CLR at 393 and is therefore an abuse of the process of the court within paragraph (a) of the definition of “vexatious proceeding” in s 37AM, alternatively, it is without reasonable ground within paragraph (c). On either basis, I am not satisfied that the proposed extension of time application is not a vexatious proceeding within the meaning of s 37AT(4) and, accordingly, I am unable to grant the leave sought by Mr Garrett under s 37AR with respect to it.

The proposed appeal

17    I now turn to Mr Garrett’s proposed appeal. For the reasons I am about to state, the grounds that Mr Garrett seeks to raise in his draft notice of appeal have no reasonable likelihood of success or are bound to fail. I discuss first those of his grounds that either are irrelevant to the sequestration order against which Mr Garrett seeks to appeal or do not closely relate to the making of that order.

17.1    Proposed ground 1 relates to the contested orders of 27 April 2015 and is the subject of the extension of time application discussed above. As stated above, this ground is foredoomed to fail. Further, as the 27 April 2015 order was a different order from the sequestration order, the former order cannot be challenged on an appeal against the latter order.

17.2    Proposed ground 3 has no prospect of success because it mistakenly assumes that the judgment of Judge Burchardt on 19 January 2015 was the event of bankruptcy for the purposes of s 40 of the Bankruptcy Act. Judge Burchardt’s judgment was not the event of bankruptcy for the purposes of s 40 of the Bankruptcy Act.

17.3    Proposed ground 10 does not arise because the Federal Court Rules 2011 (Cth) do not apply to the Federal Circuit Court.

17.4    Proposed ground 12 does not arise because s 179 of the Bankruptcy Act does not enable the Court to investigate applications made by creditors.

17.5    Proposed ground 13 is untenable because the alleged circumstances could not give rise to a duty on the part of the Federal Circuit Court to refer the relevant matters for prosecution.

17.6    Proposed grounds 14 and 15 are untenable in the context of the proposed appeal because Mr Cahill’s conduct as a legal practitioner was not relevant to the making of the sequestration order.

17.7    Proposed ground 20 does not arise because Judge Riethmuller has since published his written reasons and, in any event, their absence would not entitle Mr Garrett to summary judgment.

17.8    Proposed ground 21 is untenable because it does not state which of the Court’s powers ought to have been exercised to ensure “complete justice”.

17.9    Proposed ground 22 does not arise because matters relating to Mr Garrett’s prior bankruptcy in 2004 were not relevant to the sequestration application before the primary judge.

17.10    Proposed ground 23 is untenable because there is no evidence or other material to show that any contempt was committed before the primary judge and the primary judge had no power to punish any contempt of court allegedly committed in any of the other proceedings identified by Mr Garrett.

17.11    Proposed ground 24 is untenable because a failure to file a genuine steps statement does not deprive the Court of the power to award costs.

17.12    Proposed ground 26 does not arise because this Court does not have jurisdiction under the Charter of Human Rights and Responsibilities Act 2006 (Vic). Further, the parts of Schedule 2 of the Australian Human Rights Commission Act 1986 (Cth) (previously the Human Rights and Equal Opportunity Commission Act 1986 (Cth)) on which Mr Garrett relies are articles of the International Covenant on Civil and Political Rights that have not been enacted as part of Australia’s domestic law.

18    There remain other grounds that relate more closely to the making of the sequestration order. Their assessment is greatly aided by the present availability of Judge Riethmuller’s reasons for judgment see Cahill & Ors v Garrett [2015] FCCA 1627. Since his Honour’s reasons did not become available in written form until shortly after the hearing on 19 June 2015, the parties were given an opportunity after the hearing to make further submissions with respect to them. As a result, save for the third respondent, all parties made additional submissions.

19    In order to understand why I have formed the view that the remainder of Mr Garrett’s proposed grounds of appeal have no reasonable likelihood of success or are otherwise devoid of merit, it is necessary to set out Judge Riethmuller’s reasons in some detail.

20    His Honour’s reasons, which were revised from transcript, are thorough, careful and informative. These reasons establish that Mr Cahill, the Commissioner and Austrade each appeared as creditors on the application for a sequestration order. Mr Cahill had a costs order in the sum of $8586.50 made on 26 May 2014 in proceedings in the Supreme Court of Victoria and that costs order founded a bankruptcy notice issued on 10 June 2014 served on Mr Garrett (who did not comply with it). As his Honour said (at [3]):

The case is, therefore, one where the debtor has committed an act of bankruptcy in failing to pay the amount set out in the bankruptcy notice. The creditors put forward evidence, not only of the debt to Mr Cahill, but also of substantial debts to the Australian ATO ...

21    Before turning to the latter debts mentioned by his Honour, I note that his Honour put the position of Austrade to one side, saying (at [5]):

The third creditor that appeared is Austrade, who have a judgment for costs, but have not yet taxed those costs, and therefore that debt is not quantified. It is reasonable to expect that there would certainly be at least several thousand dollars involved in that debt. However for these proceedings it is sufficient to note that, without quantification, it is difficult to rely upon that as a basis for bankruptcy, because without quantification it has not yet become due and owing.

22    I also note that his Honour did not decide the application for a sequestration order on the basis of Mr Cahill’s debt, contrary to Mr Garrett’s submissions in this proceeding. His Honour said (at [6]-[7]):

The case of the debtor is that, as against Mr Cahill, he has a number of claims and actions which could result in damages or other compensation, either as a result of the law of torts, the law of contract, or the law of equity. It is not necessary for me to set out in detail the various ways in which he has attempted to describe these claims at this stage of the proceedings. It is sufficient to note that these matters were relied upon by him against Mr Cahill as a form of set-off to attempt to set the bankruptcy notice aside. This claim was rejected by Judge Burchardt and was not successful on appeal. It is, therefore, a case where, as between he and Mr Cahill, the question that arises is not whether there is a set-off, but whether the nature of his claims against Mr Cahill are such as to provide a proper basis for adjourning the sequestration application until such time as all of those other proceedings are dealt with.

Given the complexity of those matters and the amounts of evidence that would have been involved, I determined in these proceedings to firstly deal with the questions of what case, if any, the debtor had to resist sequestration on the basis of the debts owing to the Commissioner of Taxation, which, if I found was insufficient would only then require me to turn to consider the case as between him and Mr Cahill.

23    His Honour ultimately made the sequestration order on the basis of Mr Garrett’s debts to the Commissioner. His Honour said (at [4]):

The debts to the ATO are set out in an affidavit of Mr Pownell filed in these proceedings and total $8,288,930.31. They consist of a variety of forms of debt, ranging from judgments in the courts through to running account balances.

24    His Honour continued (at [8]-[12]):

The debts said to be owing to the Commissioner are particularly large. A number of them are from running account balances or other assessment documents from the Commissioner through to an evidentiary certificate issued under the Taxation Assessment Act. The evidentiary certificate which creates prima facie evidence of the debt it refers to is in the sum of $3,758,831.25 as at 4 March 2015, which is due and payable by the applicant personally.

A number of the other documents that claim form part of the ATO’s claim [sic] of the debtor’s indebtedness are evidence of indebtedness of the trustee of either OenoViva or the Andrew Garrett Family Trust. The question of the precise role of the applicant as trustee at various times is the subject of some dispute, in that he says he was not the trustee from 8 June 2013 onwards, as a result of a deed that he entered into.

For the purposes of today’s proceedings, it seems to me that it is sufficient for me to consider the taxation debt of $2,021,467.75, together with costs of $7,330.00 that are the subject of a judgment of the Supreme Court of Victoria. They are set out in paragraphs 4 through 7 of the affidavit of Mr Pownell, and the relevant documents annexed thereto. The question of whether or not Mr Garrett was a trustee at the relevant times for these debts was addressed by Associate Justice Mukhtar in his reasons, and it is clear that the debts that are the subject of that judgment were within a time frame such that the question of whether or not he continued to be a trustee after 8 June was not relevant, as Associate Justice Mukhtar said at paragraph 3 of his reasons of 7 August 2014.

The documentary evidence is that from 1 February 2011 up until 8 June 2013, documents show Mr Garrett to be explicitly a joint trustee of the Family Trust. Mr Garrett in Court does not dispute this, and it is the plain fact, according to the Commissioner’s evidence, that the relevant period for the purposes of the taxation liability sought to be imposed as against the Trust is the quarter ended December 2012, and the quarter ended March 2013.

The defence that Mr Garrett runs against the Commissioner is to seek to have me look behind this debt that is the subject of a Supreme Court judgment to determine whether it is truly due and owing. He develops the argument on the basis that he says that the assessments are false, and that they are the result of conduct of the Commissioner of Taxation, through the Commissioner’s various officers, that is a conscious maladministration under the Taxation Administration Act 1953 (Cth) and that, therefore, none of the assessments are valid, and that, as a result, the tax is not due and owing.

(Emphasis added.)

25    Judge Riethmuller set out Mr Garrett’s case about maladministration at [14]-[26], before his Honour said (at [27]-[30]):

The situation is, therefore, that on the matters that have been raised it is difficult for me to see how it could be said that there is any arguable case of conscious maladministration by the ATO. Further, suggestions that perhaps the ATO is in some way in league with Mr Cahill don’t appear to me to have any basis on the material before me, and do not run with common sense.

The further difficulties in this case for Mr Garrett are that he has not, it seems, pursued the processes that are ordinarily available to a taxpayer, after the objection process, to have reviews either in the Administrative Appeals Tribunal or the Federal Court of Australia with respect to assessments until such time as judgments were enter[ed], nor does it seem there was any step taken to obtain any form of private ruling prior to entering into these transactions from the ATO.

These matters, as raised by Mr Garrett, were not able to satisfy Associate Justice Mukhtar that it was appropriate to set aside the default judgment in the Supreme Court of Victoria.

In the circumstances, it seems to me that there is a debt due and owing to the ATO on the judgment of around $2 million and that the claims of conscious maladministration, on the material before me are not sufficient to show an arguable case, nor, indeed, even sufficient issues or material to justify a trial on the question of whether or not the debt is just and truly owing.

(Emphasis added.)

26    Judge Riethmuller also considered the allegations in Mr Garrett’s affidavit about other sums involved in transactions with the ATO, saying (at [31]-[33]):

Importantly, even if he is correct about the Adelaide matters, they could potentially result in a credit of somewhere in the vicinity of $80,000.00 to $90,000.00. Mr Garrett annexes photocopies of a receipt of a further $81,860.55 said to have been paid to the ATO at paragraph 148 of his affidavit. He also sets out that between February 2004 and the date of his affidavit a further $406,475.10 has been paid to the ATO, and that a further $11,598.07 was taken from an account.

The material before me does not enable me to make clear findings about whether all those payments were, in fact, paid to the Commissioner for taxation liabilities or not. For the purpose of today, however, it is sufficient to proceed on the argument that they all were payments and, if one totals them up, it comes to something in the vicinity of $600,000.00. Mr Garrett also raises from the bar table claims of a further $833,000.00 that he says should be accounted for with respect to the ATO. Even if those bar table claims were taken up, these matters come to $1.233 million: this is far less than the $2 million judgment in the Supreme Court of Victoria.

Even on Mr Garrett[‘s] best case he owes over $700,000 in tax debts.

(Emphasis added.)

27    Judge Riethmuller noted (at [34]) that Mr Garrett claimed to be solvent “because he claims to have a good cause of action with respect to conduct of Mr Cahill who was involved in one of the transactions that Ms Barlow set out above. Mr Garrett also says that he also has considerable claims against another company, Treasury Wine Estates Vintners Limited, and a number of other claims”. Mr Garrett sought to document his claims by reference to what his Honour referred to as an ‘aide memoire’. His Honour rejected Mr Garrett’s case on solvency, however, saying (at [36]-[38]):

The question of solvency relates to the ability of one to pay one’s debts as when they fall due, not simply an analysis of an overall asset position. This is the short answer to the claim that his assets exceed his debts as set out in the aide memoire. That is, even if the claims in the aide memoire were to be correct, they do not provide an answer to the current inability to pay debts that have clearly fallen due and are the subject of a judgment. Having said that, I make clear that in no way do I accept that the list in the aide memoire is a realistic list of moneys that may well be recoverable by Mr Garrett. Most of the figures appear to be significantly inflated, if they were to be recoverable at all. I also note that some of these claims have already been to various courts and have been dismissed, in any event. I also note that if a trustee in bankruptcy is appointed the trustee will assess any claims and may pursue claims on behalf of the estate.

Mr Garrett develops the argument further though, and says that with respect to Treasury Wine Estates Vintners Limited there are a large number of actions in the Federal Court (VID158 of 2015 through to VID165 of 2015) which involve multiple millions of dollars. He says that he has issued Notices to Admit in these proceedings, the forms of which would result in him recovering millions of dollars from Treasury Wine Estates Vintners Limited. According to his aide memoire, [t]he amounts that he would recover exceed the amounts of the debts involved in the case with respect to the Commissioner of Taxation.

The date for expiry of response to the Notices to Admit is today. On the material before me, I am not persuaded that there is any real likelihood that Treasury Wine Estates Vintners Limited would make those admissions and, in these circumstances, I am not persuaded that this is a factual basis upon which to show that there will be solvency in the very near future.

(Emphasis added.)

28    After noting that the Commissioner had filed an affidavit of debt and that other formalities had been satisfied, his Honour said (at [40]-[43]):

In summary, there is a significant outstanding taxation debt as a result of a judgment in the Supreme Court of Victoria. The debtor has not been able to establish that he has sufficient funds to meet that debt (or even that part that exceeds his claimed payments and credits) in the reasonably foreseeable future. Rather, I am satisfied that the capacity of the debtor to meet such debt is contingent upon the large number of complex court actions yet to be determined and that in these circumstances he is not solvent.

To the extent that Mr Garrett says that he has direct actions against the ATO that would either be a defence on the basis the debt is not truly owing or perhaps more appropriately described as a basis for an adjournment to allow him to proceed with his collateral attack on assessments, these are, according to him, based upon a claim for conscious maladministration against the ATO. On the material put before me, I am not persuaded that there is sufficient merit in his claim in this regard to justify an adjournment of the sequestration proceedings.

Finally, with respect to the various amounts that Mr Garrett alleges may well be due to him from the ATO (or paid by him to the ATO), even taken at its highest on the argument, these claims are not sufficient to come close to discharging the debts involved.

In the circumstances, the appropriate course today is to make a sequestration order against Mr Garrett, and I so do.

29    As stated in his draft notice of appeal, Mr Garrett’s further grounds are as follows:

Ground 2:    Whether it was “reasonable” for His Honour to make the order as a matter of law in the making of the Judgment and delivery of His Honour’s Reasons in circumstances where his Honour failed to consider and make findings in respect to the factual and legal arguable merits of the Appellants [sic] case against the Respondents.

Ground 4:    If the Court had the Power, His Honour erred as a matter of law, exercise of discretion and finding of fact on the ground that there is no evidence that the Debts relied on by the Second Respondent had merit.

Ground 5:    If the Court had the Power, His Honour erred as a matter of law, exercise of discretion and finding of fact on the ground that the Respondent is entitled to Judgment Debts against the Respondent set out in the Notice of Grounds of Opposition to the Petition dated 7th March 2015 and the amended Grounds of Opposition to the Petition dated 8th April 2015.

Ground 6:    If the Court had the Power, His Honour was bound as a matter of law and interpretation of principals [sic] of Procedural Fairness and Natural Justice to consider all of the evidence adduced in the proceeding, as well as that sought to be adduced from the Notices to Produce dated 23rd April 2015, as a matter of law pursuant to the provisions of the Evidence Act 1995 (Cth) Act and the Federal Court Rules prior to making the Judgment.

Ground 7:    His Honour erred as a matter of law, exercise of discretion and finding of fact in failing to consider any evidence at all as to the historical, equitable and contractual relationships between the Applicant and the Respondent in all of his capacities and that as a Question of Law it was NOT open to His Honour to reach the conclusion he did on the basis of All of the evidence.

Ground 8:    The Question arises whether the exercise of discretion by His Honour was impartial and whether he was acting on the instruction of another to make the findings he made and whether as a question of law he was acting properly in the exercise of the Powers of the Court at the direction or influence of another.

Ground 9:    The Question arises whether His Honour was unbiased as a question of law in the exercise of His Discretion and the Powers of the Court.

Ground 11:    The Question arises whether in the exercise of Power and the Court’s Discretion there was no evidence for Honour [sic] to make the Findings made.

Ground 16:    Whether it was not open to His Honour to make the findings made and had the law been properly applied then the outcome would have been different.

Ground 17:    The Question arises whether His Honour fell into error, was not procedurally fair and failed to apply the principals [sic] of Natural Justice in all of the circumstances.

Ground 18:    The Question arises whether His Honour made findings in circumstances where His Honour did not provide the Applicant the opportunity to address the court on the issue of timing, the FOI Releases and Chronology of Events at the Hearing.

Ground 19:    The Question arises whether there is an absence of the applicable authorities in His Honour’s Reasons on the proper application of the Law.

Ground 25:    Whether His Honour fell into error as a Question of law to find that the Appellant was solvent.

30    Ground 2 has no prospect of success, because Judge Riethmuller has made detailed findings on the factual and legal merits of Mr Garrett’s case against the Commissioner and it was these findings that led him to make the sequestration order. Having regard to Mr Garrett’s claims of conscious maladministration on the part of ATO officers and in accordance with the principles in Wren v Mahony (1972) 126 CLR 212 at 225 per Barwick CJ, with whom Windeyer and Owen JJ agreed, his Honour conscientiously considered Mr Garrett’s submission that the Court should go behind the creditor’s judgment as proof of debt for the purposes of s 52 of the Bankruptcy Act. In so doing, his Honour made the relevant findings of fact and law: see Cahill & Ors v Garrett [2015] FCCA 1627 at [12]-[33] (set out above). His Honour also considered Mr Garrett’s assertion that he had a countervailing claim against the Commissioner in so far as it might have enlivened the Court’s discretion under s 52(2)(b) of the Bankruptcy Act, as a sufficient cause not to make the sequestration order against Mr Garrett’s estate: see Ling v Enrobook Pty Ltd [1997] FCA 226; 74 FCR 19 at 25 per Davies, Wilcox and Branson JJ. In so doing, his Honour made relevant findings of fact and law: see [2015] FCCA 1627 at [36] – [42] (set out above).

31    Having regard to the factual and legal findings Judge Riethmuller made with respect to the Commissioner, it was unnecessary to deal with the other two creditors and the issues that Mr Garrett raised with respect to them. In the circumstances disclosed in his Honour’s reasons, it was clearly sufficient to deal with one of the taxation debts owed by Mr Garrett to the Commissioner, together with an associated debt arising from an order for costs: see [2015] FCCA 1627 at [10]. This taxation debt was in the amount of $2,021,467.75 which was the subject of judgment in the Supreme Court of Victoria, together with an order for costs of $7,330.00. As his Honour said, “[e]ven on Mr Garrett[‘s] best case he owes over $700,000 in tax debts”; and there is nothing to indicate appellable error in his findings on Mr Garrett’s solvency.

32    Ground 4 has no reasonable prospects of success because, as already explained, there was clear evidence of the debts arising in proceedings in the Supreme Court (resulting in the judgment debt of $2,021,467.75 and an order for costs of $7,330.00).

33    Ground 5 has no merit. Mr Garrett asserts an entitlement to “Judgment Debts against the Respondent set out in the Notice of Grounds of Opposition to the Petition dated 7th March 2015 and the amended Grounds of Opposition to the Petition dated 8th April 2015”. Reference to grounds 2 to 6 of Mr Garrett’s Amended Grounds of Opposition discloses that Mr Garrett is relying on a generally endorsed writ filed by him in the Supreme Court of Victoria, in proceedings No SCI 2015 01232, Andrew Garrett v Francis Cahill and Anor. There are two things that disclose the futility of this ground. First, the claims in the writ relate to Mr Cahill, not the Commissioner, and do not concern the Commissioner. Secondly, merely filing a writ does not establish an “entitlement” to a judgment debt against Mr Cahill or anyone else.

34    Ground 6 is also hopeless because Judge Riethmuller’s reasons for judgment show that his Honour considered all the evidence adduced in the proceeding in accordance with his orders of 27 April 2015, including Mr Garrett’s affidavit sworn on 7 May 2015.

35    Ground 7 does not arise because the only relevant relationship between Mr Garrett and the Commissioner arises from Mr Garrett’s status as a taxpayer. Any “historical, equitable and contractual relationship” that may exist between Mr Garrett and Mr Cahill was irrelevant to making of the sequestration order, because Judge Riethmuller did not base this order on debts said to be owing to Mr Cahill, but only on debts owed by Mr Garrett to the Commissioner.

36    Grounds 8 and 9 are hopeless, constituting vague and unparticularised allegations that the primary judge was impartial and was biased, without any evidentiary or other substantiation.

37    Ground 11 has no prospect of success because, as noted already, there clearly was evidence before Judge Riethmuller on which he could make the findings he did concerning the debts owed by Mr Garrett to the Commissioner: see paragraphs [30]-[31] above.

38    Ground 16 has no prospect of success in so far as it seeks to challenge the factual findings made by Judge Riethmuller based on the evidence before him, for the reasons set out in paragraphs [30]-[31] above. Further, the ground does not identify any legal error said to have been made by his Honour in support of the claimed failure to apply the law “properly”. Without identifying legal error, there is nothing capable of sustaining an appeal.

39    Ground 17 is untenable because it fails to identify the way in which Judge Riethmuller is claimed not to have been “procedurally fair” and to have failed to apply the principles of natural justice.

40    Ground 18 does not arise because Mr Garrett was given the opportunity to, and did, file evidence concerning the chronology and timing of events, and the documents received by him pursuant to freedom of information laws. This material was therefore before Judge Riethmuller. His Honour’s reasons for judgment show that he considered the whole of the relevant evidence.

41    Ground 19 has no prospect of success because it does not identify any error of law resulting from the primary judge’s failure to consider any particular authority. A mere failure to cite “applicable authorities” (as alleged here) cannot amount to an appellable error.

42    Ground 25 does not have any prospect of success because Mr Garrett has not identified any error of law in his Honour’s failure to be satisfied that Mr Garrett was able to pay his debts for the purposes of enlivening the discretion not to make the sequestration order under s 52(2)(a) of the Bankruptcy Act. Further, no error is identified in his Honour’s conclusion that, even if he had accepted that Mr Garrett had provided the Court with a “realistic list of moneys that may well be recoverable by Mr Garrett”, nonetheless these claims were not assets capable of being realised within a relatively short period for the purposes of paying his debts; or, as his Honour put it, capable of providing sufficient funds to meet the Commissioner’s debt “in the reasonably foreseeable future”: see [2015] FCA 485 at [36] and [40]; also Australian & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400 at [17].

43    For the reasons stated above, none of the grounds on which Mr Garrett proposes to rely in his draft notice of appeal against the sequestration order has any reasonable prospect of success. They are all devoid of merit. If leave were granted to institute the appeal, the appeal is either foredoomed to fail, to adopt the language of Walton v Gardiner 177 CLR 378 at 393 and an abuse of the process of the court within paragraph (a) of the definition of “vexatious proceeding” in s 37AM; or it is without reasonable ground within paragraph (c) of the definition in s 37AM. I am not therefore satisfied that the proposed appeal is not a vexatious proceeding, within the meaning of s 37AT(4) and accordingly I am unable to grant the leave Mr Garrett seeks under s 37AR.

44    I note that no basis was shown for the interlocutory relief sought by Mr Garrett in his originating application and, so far as relevant, in his draft notice of appeal. I also note that Mr Garrett subsequently emailed further material, which was not accepted for filing because it was not the subject of leave, Mr Garrett having already filed submissions, with leave, on 25 June 2015.

45    Finally, I note that Mr Garrett’s originating application indicates that he seeks also to institute an appeal against what he refers to as “orders” purportedly made by Judge Riethmuller on 18, 19 and 20 May 2015. The Commissioner stated in his submissions dated 18 June 2015 that no orders were made on these dates by the Federal Circuit Court. A perusal of the Federal Circuit Court file confirms that this is in fact the case. The matters to which the originating application apparently refers were not the subject of any judgment or order but were, it seems, the subject of emailed communications on those days. Section 24(1) of the Federal Court Act provides for appeals from judgments of the Federal Circuit Court exercising original jurisdiction (save under certain Acts or regulations), but nothing would permit Mr Garrett to appeal from these emailed communications. It is therefore not open to Mr Garrett to seek to institute an appeal in respect of the matters communicated by emails on 18, 19 and 20 May 2015.

Associate:

Dated:    2 July 2015

SCHEDULE