FEDERAL COURT OF AUSTRALIA

Larsen v Deputy Commissioner of Taxation [2018] FCA 332

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 9.08 of the Federal Court Rules 2011 (Cth), Club Culture Pty Ltd is removed as a party to the proceedings.

2.    Victoria Larsen is to be named as the sole applicant in the proceedings.

3.    The application is dismissed.

4.    Victoria Larsen is to pay the respondent’s costs of the whole of the proceedings, including that part of the proceedings purportedly commenced in the name of Club Culture Pty Ltd.

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

REASONS FOR JUDGMENT

CHARLESWORTH J:

1    On 12 July 2017 Dr Victoria Larsen presented at the South Australia District Registry. She lodged for filing a process titled “originating application” naming Club Culture Pty Ltd (the Company) as applicant. Dr Larsen is the sole director of the Company.

2    The Company is being wound up in insolvency pursuant to an order made under s 459P of the Corporations Act 2001 (Cth). Whilst it is being wound up, Dr Larsen cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the Company: see s 471A(1) of the Act as in force on 1 December 2016 and s 198G of the Act as presently in force. More precisely, Dr Larsen cannot, in her capacity as the Company’s sole director, cause or purport to cause the Company to commence a proceeding except with the approval of the Court or the liquidator’s written approval: s 471A(1A) of the Act as in force on 1 December 2016 and s 198G(3) as presently in force. At the time that this action was commenced, Dr Larsen had neither. Moreover, the Company did not have leave to appear in a proceeding except by a legal practitioner: r 1.34 and r 4.01(2) of the Federal Court Rules 2011 (Cth).

3    The order for the winding up of the Company was made by a Registrar of this Court on 30 November 2016 on the application of the Deputy Commissioner of Taxation (DCT). The DCT relied on the Company’s failure to comply with a statutory demand seeking the payment of $124,767,987.60 in administrative penalties imposed on the Company in respect of its tax liabilities for four consecutive financial years.

4    On 1 December 2016, Dr Larsen commenced an action in the name of the Company. That action was taken by a single judge of this Court (White J) to be an application made pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) to review the Registrar’s order: SAD 296 of 2016 (first action). In the first action, the Company was granted leave to be represented by a person other than a legal practitioner and Dr Larsen was granted leave to bring the application on the Company’s behalf.

5    White J dismissed the first action by an order made on 31 March 2017: Deputy Commissioner of Taxation v Club Culture Pty Ltd [2017] FCA 338. The reasons for judgment indicate that it had not been easy to identify the objections made by the Company as expressed by Dr Larsen. The learned judge found that much of the evidence relied upon by Dr Larsen was irrelevant, and her written material was marked by repetition, a lack of coherence and a lack of particularity.

6    The present application bears the same characteristics.

Parties

7    Dr Larsen appears to have intended to name herself as a second applicant, although the only applicant presently identified on the Court record is the Company. It is appropriate to make an order rectifying the Court record so as to identify Dr Larsen as an applicant.

8    Although the respondents named on the face of the originating application are the DCT and another individual identified as an employee of the Australian Taxation Office (ATO), the second named respondent is not identified as a party on the Court record. The originating application also names, as respondents, persons described by Dr Larsen as “others named transcript case notes per J White ‘reserved ruling’”. Unsurprisingly, those unnamed persons are not identified on the Court file as parties to the proceeding. In the ordinary course it would be appropriate to rectify the Court record so as to name all persons identified as parties on the face of the originating application, provided that there is a proper basis to join them. There is no proper basis shown by Dr Larsen for joining any of the named individuals as respondents. The DCT shall remain as the only named respondent in the proceeding.

Summary of reasons

9    For the reasons that follow, Dr Larsen should not be retrospectively approved to commence an action on behalf of the Company nor to appear as its representative. Leave will not be granted to file and serve an amended originating application in the Company’s name. The joinder of the Company as an applicant in the proceedings was improper. Its name should be removed as a party and no order should be made in the action that may affect its interests, whether directly or indirectly.

10    Insofar as the action is commenced by Dr Larsen in her own name and right, the originating application should be dismissed pursuant to s 31A(2)(b) of the FCA Act on the basis that no arguable cause of action to the personal benefit of Dr Larsen is disclosed and Dr Larsen accordingly has no reasonable prospects of successfully prosecuting it. Notwithstanding her status as a self-represented litigant, leave should not be granted to Dr Larsen to file an amended originating application.

issues

11    Dr Larsen appeared in person at a first directions hearing on 30 August 2017.

12    Consistent with the observations of White J in the first action, it was apparent that English is not Dr Larsen’s first language and her oral submissions were difficult to understand. Dr Larsen appeared intent upon making submissions concerning her history of dealings with the DCT and the ATO. It was apparent that Dr Larsen did not appreciate (and therefore had not considered) the preliminary issues arising in the proceedings, including the question of whether she required approval to commence an action on behalf of the Company and, if so, whether the Company should have leave to be represented other than by a legal practitioner. She advanced submissions on the wrong premise that she could commence the proceeding on behalf of the Company as of right.

13    It was explained to Dr Larsen that the Court would need to determine whether the action could or should be taken to be an application for an extension of time to appeal from the orders made in the first action. Dr Larsen replied in terms that suggested that the documents had been received by the Registry on that basis. She made submissions to the effect that an extension of time in which to appeal was sought.

14    Orders were made for the following issues to be determined on the papers, and a timetable fixed for the filing of submissions and affidavits in respect of them:

1.    The following questions are to be determined on the papers:

a.    whether the originating application should be treated as an application for an extension of time in which to appeal from the judgment of the Honourable Justice White given on 31 March 2017;

b.    if so, whether the Court should approve the commencement of such an application by Victoria Larsen in the name of Club Culture Pty Ltd;

c.    if so, whether the application for an extension of time should be granted;

d.    howsoever the originating application is characterised, whether it should be:

i.    summarily dismissed; or

ii.    struck out as unintelligible;

e.    what, if any, orders for costs should be made in relation to the questions in paragraphs (a) to (d).

15    The orders required Dr Larsen to file and serve any submissions or affidavit material upon which she relied by 8 September 2017. A further order was made to the effect that if material was lodged for filing by any party outside the time limits specified in the orders, they were not be accepted for filing by the Registrar except with the leave of the Court.

16    Dr Larsen filed written submissions and an affidavit on 8 September 2017. She indicated on the face of the documents that they were the submissions and affidavit upon which she relied for the purposes of the orders made on 30 August 2017. Those materials have been read. Although Dr Larsen was granted an opportunity to file written submissions in reply, she did not do so by the time specified in the orders.

The nature of the proceedings

17    This action was commenced more than four months after judgment was delivered in the first action. Dr Larsen submitted, and it may be assumed, that she was advised by a member of the Registry staff that the originating application would be accepted for filing on the basis that it would be treated as an application for an extension of time in which to appeal from the orders of 31 March 2017.

18    Notwithstanding any advice or assurance given to Dr Larsen at the counter of the Registry, and subject to affording Dr Larsen procedural fairness in respect of the question, this Court is not bound to treat the application as being in the nature of an application for an extension of time. The nature of the application is to be discerned from its title and content.

19    The originating application indicates that Dr Larsen seeks to have the winding up order “rescinded” or “cancelled”. Damages and exemplary damages are sought. The document contains broadly cast allegations of fraud and contempt of court against officers of the ATO, although the factual foundation for those claims is unclear. Whilst the document contains some references to the first action, it does not contain proposed grounds of appeal, nor does the application have annexed to it a draft notice of appeal. There is no explanation advanced for the delay in commencing any appeal. Indeed, the word “appeal” appears nowhere on the document. To the extent that the word “review” is used, it is used in connection with the order of the Registrar and not in connection with the orders of this Court made on 31 March 2017.

20    The following passage is extracted from the originating application It fairly represents the incomprehensible nature of the document as a whole:

1.3.    Contrary to Australian Administrative Law, and Contrary to FCA DUTY OF CARE and CPN FCA and FCA Act ‘evidence’ sections, REGISTRAR MADE ORDER at 30-Nov-2016 to ‘liquidate CLUB Culture Pty Ltd’, aforesaid, REGISTRAR DID NOT REQUEST FROM ATO ANY TRANSCTION, neither any supporting bank documents evidence in the Australian bank of the billions and hundreds of millions of dollars on accounts CLUB Culture Pty Ltd, in 2005-2009, or 2003-2017, CLUB Culture Pty Ltd Preferential Shares Director’s Founder own, which is SME Australian Solely Own, based on Director’s Founding skills in Medicine, Haematology, Pathology, Medicine, ICU-Surgery and Military Medicine, Director is Principal Skilled Independent Australian sole 2003 Citizen [DIAC 2000 CY EU Fmr D1 INTERNAL DPKO UN HQ Specialist-ASD, Expert Pathology-EMST-Hematology-Surgery, Nuclear Medicine and Radiology, PH.D. Biochemistry Principal Skilled Independent UNESCO A1 HQ M.D. PH.D. 1984-1989-1993], Australian Principal Medical Scientist AIMS Physician Surgery M.D. PH.D. and M.D. PH.D. Medical Biochemistry, Doctor of Medicine Surgery and Radiation Oncology Physician Haematology Oncology and Transfusion Medicine Surgical Medical Doctorates UN NQ UNESCO access DOD U.S.A. NCBD UNESCO HQ DEWR Cth. Accredited 2001, 1995, Australian Government TOP-SECRET POSITIVE VETTED AGSVA Defence Security Authority 28-Jan-2011 EL2Pack: Australian Principal Medical Scientist Group A 1995, AIMS, Corporate Member GeMeS 2000 Principal AIMS 2007, Australian Principal General Medical Scientist Defence Sciences AIMS Pathology, Surgical Pathology, Surgical Haematology, Transfusion Medicine, NCBD-NM M.D.N1, N2 and TSPV Director 2003-current where thus there no tax whatsoever in any period of time in 2003-2017 owned to ATO from CLUB Culture Pty Ltd as evidence in ATO;

21    In her written submissions, Dr Larsen addresses the question of whether the originating application should be treated as an application for an extension of time in which to appeal. Her submission on that topic is expressed as follows:

NO. PLAINTIFF IS RETURNED TO TRIBUNAL AS PLAINTIFF at 30-October-2016 per ‘RESERVED RULING Refused review’: transcript of ‘reserved ruling hearing J. White’ contrary rights of TAX Payer: ATO.

22    Other parts of the written submissions lend further support to the inference that it was not Dr Larsen’s subjective intention to file an application for an extension of time in which to appeal on behalf of the Company, notwithstanding her oral submission to the contrary.

23    The principles guiding the exercise of the Court’s discretion to extend the time in which to appeal are well settled: Hunter Valley Developments Proprietary Limited v Cohen (1984) 3 FCR 344; MZABP v Minister for Immigration and Border Protection (2016) 152 ALD 478. If this action is of that nature, there is no clearly articulated and arguable proposed ground of appeal raised, and no explanation has been advanced for the delay. As has been mentioned, no draft notice of appeal has been provided. In the circumstances, and notwithstanding any advice or assurance given to Dr Larsen by the Registry, the proceeding cannot and should not be characterised as an application for an extension of time in which to appeal.

24    The legal nature of the proceeding sought to be commenced by Dr Larsen, whether in her own right or on behalf of the Company, remains unclear. It appears that Dr Larsen seeks to have this Court conduct a first instance trial on the question of whether the administrative penalties levied against the Company (which substantially formed the basis of the statutory demand) were lawfully imposed. The issues appear to go to matters that might conceivably be agitated on an application to set aside the statutory demand (see ss 459G, 459H and 459J of the Act).

25    There is otherwise no arguable cause of action discernible on the face of the originating application. It is simply not open to Dr Larsen to commence a new action in the original jurisdiction of this Court so as to agitate the same questions arising for determination in the first action or so as to agitate the Company’s disputed indebtedness to the DCT.

Additional submissions and evidence

26    After the time fixed for filing written submissions and affidavits, Dr Larsen lodged for filing hundreds of pages of additional material, together with some physical exhibits.

27    By lodging the additional material, I take Dr Larsen to have applied for an order granting leave to the Registrar to accept the material for filing.

28    Leave will not be granted.

29    No explanation is given for lodging the material for filing after the time fixed by the orders made on 30 August 2017. The material is either irrelevant, or its relevance impossible to discern. The materials are as prolix and confusing as those filed within the ordered time. It is particularly concerning that the material includes a document titled “notice of acting – appointment of lawyer” in which Dr Larsen appears to assert that she appears in the proceedings on behalf of the Company, notwithstanding that she has no approval to do so.

30    Any material lodged for filing by Dr Larsen in the action after the times specified in the orders of 30 August 2017 will be collectively marked Exhibit A-1. Subject to further order, the exhibit will be retained by the Court for a period of eight weeks, after which it may be returned to Dr Larsen.

the action purportedly commenced in the name of the Company

31    Notwithstanding her status as the sole director the Company, I am not satisfied that Dr Larsen should be granted approval, retrospectively or prospectively, to exercise her powers as a director so as to cause the Company to commence or continue this proceeding. I am not satisfied that Dr Larsen has the capacity to understand or to articulate (whether orally or in writing) the legal nature of the claim sought to be commenced in the Company’s name. More fundamentally, the materials filed by Dr Larsen support an inference that she either does not understand the requirement to obtain approval to exercise or purport to exercise her powers as the Company’s director, or that she does not consider the requirement to be of any legal significance. I am not satisfied that Dr Larsen would fully appreciate her responsibilities to avoid exposing the Company to adverse costs orders, nor her responsibilities to cause the Company to comply with the obligations of all litigants before this Court under s 37N of the FCA Act, whether personal or corporate, represented or not.

32    I have not overlooked the circumstance that Dr Larsen was given retrospective approval to commence and prosecute the first action in the Company’s name. In that action, however, the Court’s approval was not opposed by the respondent. Furthermore, the application was understood by the presiding judge (at [6] and [16]) to be in the nature of an application for de novo review of the exercise of powers under s 459P of the Act by a non-judicial officer of the Court. The statutory provisions availing the Company of a de novo review have Constitutional significance: Harris v Caladine (1991) 172 CLR 84 at 95 — 96 (Mason CJ and Deane J); 122 — 127 (Dawson J); 150 — 152 (Gaudron J); and 164 — 165 (McHugh J). The respondent submits, and I accept, that these factors were influential in the grant of approval to Dr Larsen in the first action. Those features are lacking in the case before me.

33    Dr Larsen is the only person purporting to have an interest in causing the Company to commence the proceedings. Whatever the nature of the proceedings, the Company has been improperly joined as a party. Its name should be removed as a party pursuant to r 9.08 of the Rules.

the action commenced in Dr Larsen’s NAME

34    Separate consideration has been given to Dr Larsen’s status as a self-represented litigant with a desire to commence proceedings in her own name.

35    The respondent submits that many of the claims advanced by Dr Larsen (insofar as they can be understood) are contrary to established authority, and that the materials filed by Dr Larsen have no apparent relevance to a justiciable matter. Counsel submits that the proceedings are unjustifiably oppressive to the respondent in that it is not possible for him to understand the case which Dr Larsen seeks to advance.

36    In Rana v Commonwealth of Australia [2013] FCA 189, Mansfield J said (at [42] — [43]):

42    Proceedings have been held to be ‘vexatious’ in the past if they are instituted with the intention of annoying or embarrassing the person against whom they are brought; they are brought for collateral purposes, and are not for the purpose of having the court adjudicate on the issues to which they give rise; irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless; or they are scandalous, disclose no reasonable cause of action, are oppressive, are embarrassing, or are an abuse of the process of the court: see generally Attorney-General v Wentworth (1988) 14 NSWLR 481.

43    It has also been pointed out that ‘vexatiousness’ is a quality of the proceeding rather than a litigant’s intention so that the ‘question is not whether they have been instituted vexatiously but whether the legal proceedings are in fact vexatious’: Re Vernazza [1960] 1 QB 197 at 208.

37    I am satisfied that the originating process does not disclose an arguable cause of action, and that the allegations are otherwise so incoherent that it would be oppressive for the respondent to attempt to understand or answer them. The proceedings as presently framed are vexatious, at least in that limited sense.

38    The relief sought by the respondent is an order summarily dismissing the application on the ground that Dr Larsen has no reasonable prospect of successfully prosecuting the proceeding: s 31A(2)(b) of the FCA Act and r 26.01 of the Rules. I am satisfied that grounds for summary dismissal are made out in respect of the originating application as it is presently framed.

39    It remains to be considered whether the Court, in its discretion, should permit Dr Larsen an opportunity to file an amended originating process, a pleading or some other document that alleges facts disclosing an arguable cause of action and that is otherwise comprehensible. In exercising that discretion, it is a matter of considerable weight that Dr Larsen is a self-represented litigant and that the originating application as presently framed is the product of her first attempt to properly articulate her claim.

40    In my view these important considerations are outweighed by other circumstances.

41    First, the dispute agitated by Dr Larsen is one primarily concerning the rights and liabilities of the Company in its dealings with the respondent. Whilst Dr Larsen appears to make a claim for damages payable to her personally, the factual and legal basis for that claim remains opaque. Dr Larsen appears unable or unwilling to delineate between those rights that may be vested in the Company and those that may be vested in her personally, whether in her capacity as a director or otherwise. The case is not one in which an underlying justiciable dispute between Dr Larsen and the respondent is able to be discerned. It is not at all apparent that this defect in the originating process could be cured by amendment.

42    Second, as has already been observed, Dr Larsen has lodged for filing large quantities of written materials, all of which suffer from the same shortcomings as the originating process. Collectively, those materials demonstrate that Dr Larsen lacks the perspective and skills necessary to prepare a reasonably coherent claim on her own behalf.

43    In all of the circumstances, I am satisfied that it would be futile to grant Dr Larsen an opportunity to prepare a proposed amended originating process or, for that matter, a proposed pleading. Even if incremental improvements could be made by a series of amendments, the overarching purpose of the civil practice and procedure provisions would not be advanced by prolonging the proceedings in that way.

44    Insofar as the action was commenced by Dr Larsen in her own name and right, it should be dismissed as disclosing no cause of action and thus having no reasonable prospects of success.

COSTS

45    The Company was improperly joined in this action by a person having no authority to commence a proceeding on its behalf. Accordingly, no order for costs should be made against it.

46    The respondent’s costs of the whole of the action should be paid by Dr Larsen personally.

Associate:

Dated:    16 March 2018