Federal Court of Australia

Watson v Commissioner of Taxation (No 2) [2026] FCA 1341

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s application for leave to appeal from the Orders dated 21 November 2025 in NSD 1539 of 2023 be dismissed.

2.    The applicant pay the respondent’s costs of the application for leave to appeal.

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

REASONS FOR JUDGMENT

SARAH C DERRINGTON J

INTRODUCTION

1    By an application filed on 29 December 2025, Mr Adam Watson seeks an extension of time within which to apply for leave, and leave to appeal (see Federal Court of Australia Act 1976 (Cth) s 24(1A)), from an interlocutory decision striking out an Amended Notice of Appeal filed on the basis that it does not disclose any question of law for the purposes of s 44 of the now repealed Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act).

2    On 9 March 2026, the Court ordered, by consent, that Mr Watson be granted an extension of time within which to file his application for leave to appeal. Accordingly, the only remaining issue for determination is whether leave to appeal should be granted.

3    For the reasons that follow, the application must be dismissed.

Background

4    By the Amended Notice of Appeal, Mr Watson appeals from a decision in proceedings before the then Administrative Appeals Tribunal concerning two applications, filed on 5 October 2021 and 13 May 2022 respectively, seeking review of the Australian Taxation Office’s decision to disallow Mr Watson’s objection to a default and penalty assessment issued in respect of the 2017 income year.

5    At the heart of Mr Watson’s appeal to this Court is an email dated 25 November 2022 by which he informed the Tribunal that he wanted to withdraw his applications. The Tribunal consequently dismissed the applications with effect from 25 November 2022. It is not in dispute that the email was written on Mr Watson’s behalf by his bookkeeper, Ms Helen Preketes. Mr Watson claims, however, that the content of the email was different from that which he had directed Ms Preketes to send and that he was oblivious to that fact because of his illiteracy. Ms Preketes had apparently admitted that she had failed to lodge the relevant tax return. Mr Watson submits, without evidence, that Ms Preketes sent the email because she “had a direct and substantial financial interest in ensuring that Mr Watson did not successfully reinstate his Tribunal proceedings, because reinstatement would have exposed her [sic] potential liability for the losses her omission caused”.

6    Mr Watson contends that the Tribunal’s acceptance of Ms Preketes’ evidence has caused him a great injustice and that the Tribunal would not have accepted her evidence had it properly considered Mr Watson’s inability to read or write. What he really hopes to achieve by the appeal process is the opportunity to, effectively, re-open the Tribunal proceedings and to challenge the evidence of Ms Preketes that was accepted by the Tribunal.

7    Despite Mr Watson’s obvious frustration with what he sees as an injustice perpetrated on him before the Tribunal, his difficulty is that the law does not permit an appeal from a decision of the Tribunal except on a question of law: AAT Act s 44; Haritos v Federal Commissioner of Taxation [2015] FCAFC 92; 233 FCR 315 at [62]. Further, the email sent by Ms Preketes asking to withdraw the applications was not the end of the matter before the Tribunal. Mr Watson sought subsequently, and the Tribunal granted him, seven opportunities to make submissions and/or provide evidence in support of the reinstatement of his applications. On the first six occasions, the reinstatement hearing was vacated or adjourned at the behest of Mr Watson because of his unavailability, or to allow him time to provide additional medical evidence to assist the Tribunal in determining whether his proceeding had been dismissed in error. When Mr Watson sought yet a seventh adjournment on 26 October 2023, the Deputy President denied his request. On 8 November 2023, the Deputy President refused the application for reinstatement and gave reasons for doing so.

8    Consequently, it is tolerably clear that, by the time the Tribunal brought the proceedings to an end almost 12 months after Ms Preketes sent the initial email seeking to withdraw, whether or not it had been sent on Mr Watson’s instructions was hardly to the point. He had had 12 months in which to have the matter reinstated before the Tribunal and seven opportunities to have a reinstatement hearing.

Primary Judgment

9    In his Amended Notice of Appeal filed on 29 July 2024, Mr Watson purports to rely on three questions of law as a sufficient basis to appeal the decision of the Tribunal. These are framed as follows:

1.    Natural Justice and Procedural Fairness: The AAT is bound by the principles of natural justice and procedural fairness. This means that all parties should have a fair opportunity to present their case and respond to evidence against them. If [Mr Watson] believes the failure to consider the medical certificate or to allow cross-examination of the doctor violated these principles, this could be a basis for challenging the AAT's decision.

2.    Evidence and the Discretion of the Tribunal: Under sections 33(1) and 33(1B) of the Administrative Appeals Tribunal Act 1975, the AAT has broad discretion to determine the procedures to be followed in its reviews, including what evidence it accepts and the weight given to that evidence. The Tribunal is not strictly bound by the rules of evidence that apply in courts. However, its decisions on evidentiary matters must still adhere to principles of fairness and relevance.

3.    Denial of Cross-Examination Rights. The refusal by the AAT to allow for the cross-examination of the medical professional who issued the medical certificate undermines the fundamental principles of procedural fairness and natural justice, impacting the applicant's ability to challenge and clarify the evidence presented.

10    Before the primary judge, consistent with its obligations as a model litigant and the principles expounded in Onassys v Comcare [2022] FCA 90, the Commissioner of Taxation suggested reformulation of the questions in the following terms:

(a)    The Tribunal failed to afford Mr Watson procedural fairness by not allowing him to explain his reasons for the withdrawal of his application. (Reformulated Ground A)

(b)    The Tribunal based its decision on findings for which there was no evidence. (Reformulated Ground B)

(c)    The Tribunal failed to afford Mr Watson procedural fairness by refusing to adjourn the reinstatement hearing on a further occasion in order to allow him to adduce medical evidence to explain the reasons for the withdrawal of his application. (Reformulated Ground C)

11    The primary judge ultimately considered a further reformulation of Mr Watson’s questions of law (referred to by the primary judge as the 19 September grounds) which her Honour described as “phrased slightly differently, but the themes remained that the Tribunal did not give proper consideration to medical evidence, denied him procedural fairness, and that the decision was legally unreasonable” (PJ[49]). The 19 September grounds were not before the Court on the present application.

12    The primary judge found that: the Tribunal had given Mr Watson the opportunity to provide sufficient medical evidence to establish, within the meaning of s 42A(10) of the AAT Act, that the proceeding had been dismissed in error (PJ[66]); the Tribunal had accepted that Mr Watson suffered from a range of medical and other difficult personal circumstances (PJ[68]); Mr Watson was unable to point to a matter of substance by reason of which it is fairly arguable that he was denied procedural fairness (PJ[69]); the Tribunal’s conclusion to dismiss the proceeding could not be said to be legally unreasonable (PJ[70]); and what, albeit scant, evidence Mr Watson did adduce was taken into account by the Tribunal (PJ[71]). For these reasons, the primary judge found that no question of law for the purposes of s 44 of the AAT Act had been disclosed (PJ[73]).

Mr Watson’s Application

13    Mr Watson raises three grounds of appeal in respect of the primary judgment. First, he submits that the primary judge erred in law in finding that his inability to read was not raised in the proceedings before the Tribunal (Ground one). Secondly, Mr Watson contends that the primary judge erred in not properly considering the medical evidence (Ground two). Thirdly, Mr Watson contends that the primary judge erred in accepting that the grounds of appeal contained in the Amended Notice of Appeal did not disclose a question of law (Ground three).

14    Mr Watson also submits that he will suffer substantial injustice if leave is not granted because he will, in effect, be left unable to challenge the Tribunal’s refusal to reinstate his review proceedings and consequently have no way to challenge the underlying tax assessment which he maintains is incorrect. Further, Mr Watson argues that his proposed appeal raises three important issues: that courts should assess procedural fairness when a litigant has significant disabilities, including illiteracy; the extent to which a self-represented litigant with disabilities should be assisted in formulating grounds of appeal; and whether an inability to read constitutes a relevant consideration in assessing whether Tribunal proceedings were “dismissed in error” under s 42A(10) of the AAT Act.

Leave to Appeal

15    It is well accepted that an applicant seeking leave to appeal must generally demonstrate two criteria. First, that the decision in question is “attended with sufficient doubt to warrant its being reconsidered by the Full Court”; and secondly, that “substantial injustice would result if leave were refused, supposing the decision to be wrong”: Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; 33 FCR 397 at 398-399; Advanced Holdings Pty Ltd v Commissioner of Taxation [2020] FCAFC 157; 281 FCR 149 at [35]; Davidson v Official Receiver [2021] FCAFC 73; 286 FCR 148 at [15]. While those two criteria may not represent a “hard and fast rule” (Samsung Electronics Company Ltd v Apple Inc [2011] FCAFC 156; 217 FCR 238 at [29]), they nevertheless provide “general guidance which the Court should normally accept”: Rawson Finances Pty Ltd v Commissioner of Taxation [2016] FCAFC 95 at [39] citing Decor at 399.

Whether decision is attended by sufficient doubt

16    As to the first of the two Decor criteria, it is clear that, to secure leave to appeal, Mr Watson does not have to demonstrate that the proposed grounds of appeal are likely to succeed, or even that he has strong grounds. He need only demonstrate that there is sufficient doubt about the correctness of the judgment to warrant appellate reconsideration.

17    Mr Watson’s application falls far short of demonstrating that there is sufficient doubt as to the correctness of the primary judgment.

Ground one

18    As to Ground one, Mr Watson proceeds on the misunderstanding that his illiteracy was the basis for the dismissal of the proceedings before the Tribunal. On this application, and before the primary judge, Mr Watson submitted that the reason he was contesting the disallowance of his objection to the default and penalty assessment in the Tribunal was because he had “done nothing wrong”. Rather, it was his bookkeeper, Ms Preketes, who had failed to lodge the relevant tax return and then, on a “frolic of her own”, sought to have the Tribunal proceeding dismissed to protect her own position. He submitted that he had dictated an email to her, but that she had sent a differently worded email, of which he was oblivious because of his illiteracy.

19    The difficulty with Mr Watson’s submissions is that this version of events was not raised with the Tribunal on any of the reinstatement hearings, nor in any version of the various formulations of his grounds of appeal before the primary judge. Not only did he not make any application in the primary proceedings to adduce new evidence directed to these contentions, he had also never suggested, prior to the hearing before the primary judge, that the email had not been written in accordance with his instructions (PJ[63], [72]) because of his inability to read. The primary judge was correct to observe (PJ[75]) that his inability to read was not something which had been raised in clear terms previously.

20    It is in any event plain that Mr Watson’s illiteracy had no bearing on the degree of procedural fairness accorded to him by the Tribunal. Indeed, the Tribunal provided Mr Watson with every opportunity to provide medical evidence to establish that he was medically unable to have made the judgement to withdraw his application in the first place. That evidence may or may not have included evidence of the effect of his illiteracy on his judgement. In addition to the seven listings of the reinstatement hearing, as the primary judge observed, the Tribunal took care “to ensure that Mr Watson understood the kind of evidence that it needed to consider, including the reminder by the Deputy President’s Associate as to the evidence required, which Mr Watson agreed he understood and passed on to his doctor” (PJ[69]). Mr Watson did not challenge this finding. The reason the proceeding was ultimately dismissed by the Tribunal was because Mr Watson was unable to produce the necessary evidence. He submitted that this too was “not [his] fault”, because he could not force the doctors to provide their opinions. That may be so, but that did not absolve him of the need to produce evidence to support whatever assertion on which he wished to rely. The primary judge was correct to so find (PJ[77]).

21    Ground one cannot succeed.

Ground two

22    Ground two is similarly without merit. The primary judge observed that, despite the lack of specific medical evidence, the Tribunal found that Mr Watson suffered from diabetes, mental health challenges and “other difficult personal circumstances”, which her Honour suggested could have been a reference to his illiteracy (PJ[68]). Those conditions of themselves were not enough to satisfy the Tribunal that the proceeding should be reinstated. The Tribunal specifically asked for evidence from a treating specialist as to “whether [his] medical conditions were capable of making [him] prone to outbursts that affected [his] judgment around November 2022” (PJ[16]). Absent that evidence, and after seven chances over the course of 12 months to provide it, there was nothing illogical or irrational about the Tribunal’s decision to dismiss the proceeding. The primary judge was correct to so find (PJ[71]).

Ground three

23    Ground three is equally unpromising. Whether the Amended Notice of Appeal raises any question of law is a matter of substance. The question(s) of law must be the very substance of the appeal, and not just a factual question formulated to be a purported legal question: TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation [1988] FCA 198; 82 ALR 175 at 178; Haritos. In Haritos, the Full Court said, at [94]:

… the issue must be approached as one of substance. In cases of doubt, the Court should consider the notice of appeal, the alleged question or questions of law, the grounds raised, the statutory context, and the Tribunal’s reasons for the decision, and having considered all those matters, satisfy itself that there is in fact a question of law.

24    No formulation such as “erred in law” can reformulate a question into a question of law if it is not otherwise such a question: P v Child Support Registrar [2013] FCA 1312; 62 AAR 17 at [49].

25    The matter of defining questions of law has been clarified by several decades of common law. A non-exhaustive list of established questions of law was set out in Rauchle v Q-Super Board [2022] FCA 1537 at [89]:

•    a question as to the meaning of an Act

•    questions of construction of the law or agreements

•    a finding of fact made of which there is no evidence to support it

•    a failure to afford procedural fairness

•    a wrong principle of law has been applied

•    a failure to take into account relevant (mandatory) considerations

•    determining matters to be taken into account when making a decision by reference to the construction of the statute conferring power

•    taking into account an irrelevant consideration

•    the decision is so unreasonable that no reasonable decision-maker would make it.

26    In substance, Mr Watson’s complaints, albeit described as questions of law, are issues of fact finding or procedure that lay solely within the purview of the Tribunal, namely: the weight to be given to a medical certificate and the exercise of the discretion to refuse or to permit cross-examination of a witness. The primary judge was correct to find that no question of law was disclosed by the Amended Notice of Appeal (PJ[73]).

Substantial injustice

27    As to the second of the two Decor criteria, the Commissioner submits that no substantial injustice will flow from the refusal to grant leave to appeal in circumstances where the primary proceedings are concerned with the Tribunal’s refusal to reinstate his application to challenge an underlying tax assessment which, at best, is a remote opportunity or “optimistic conjecture”, as described in Advanced Holdings at [66]-[67]. The only real opportunity of which Mr Watson will be deprived is the ability to challenge the primary judge’s decision. Having regard to the multiple opportunities afforded to Mr Watson to reformulate his grounds of appeal and the assistance provided by the Commissioner in doing so (PJ[46]-[49]), it is apparent that there is simply no underlying question of law arising from the primary judgment. For that reason, no substantial injustice flows from the refusal to grant leave.

28    For these reasons, the application for leave to appeal must be refused.

Other matters raised by Mr Watson

29    As to the further issues raised by Mr Watson, the question of how courts should assess procedural fairness when a litigant has significant disabilities, including illiteracy, is not in a different category from questions of procedural fairness generally. As Gleeson CJ said in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6; 214 CLR 1 at [37]:

Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.

30    Similarly, in Condon v Pompano Pty Ltd [2013] HCA 7; 252 CLR 38 at [68], French CJ said:

Procedural fairness, manifested in the requirements that the court be and appear to be impartial and that parties be heard by the court, is defined by practical judgments about its content and application which may vary according to the circumstances. 

31    There are practical steps that may need to be taken, and which are routinely taken, by decision-makers to assist litigants with disabilities. As Mr Watson himself submitted, he is assisted by his friend “Costa” who reads documents to him. There is nothing to prevent an illiterate litigant from having the assistance of a “McKenzie friend”, and there was no evidence that Mr Watson had requested but been denied the assistance of such a person.

32    Nevertheless, the assistance that can be provided to a self-represented litigant is constrained by Mr Watson’s prior concern of ensuring procedural fairness. The Full Court had occasion to consider the duty of the Court (or a Tribunal) to assist a self-represented litigant in Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138; 280 FCR 479, in which it said:

[52]    As acknowledged by the High Court in Neil v Nott [1994] HCA 23; 68 ALJR 509; 121 ALR 148, 150, “[a] frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy”. In addition, litigants-in-person commonly fail to lodge documents in the correct form, observe court formalities and procedures, understand the significance of court processes, put the relevant evidence or law before the Court; and understand the role of the Court in adjudicating the matter.

[53]    However, whilst disadvantages exist and the Court is obliged to act to ameliorate them by giving assistance to the unrepresented litigant, its role is constrained by its concurrent duty to remain an impartial adjudicator: see, eg, Barghouthi v Transfield Pty Ltd (2002) 122 FCR 19, 23 [10]. Indeed, the Court must strike a fine balance between providing assistance to a litigant-in-person, and ensuring a fair trial for all parties: Hamod v New South Wales [2011] NSWCA 375 [315]; Minogue v Human Rights and Equal Opportunities Commission (1999) 84 FCR 438, 446 [29]; SZRUR v Minister for Immigration and Border Protection (2013) 216 FCR 445, 452-453 [37] per Justice Robertson (with whom Allsop CJ and Mortimer J agreed); AMF15 v Minister for Immigration and Border Protection (2016) 241 FCR 30, 44-46 [39] per Flick, Griffiths and Perry JJ.

[54]    The assistance provided to a litigant-in-person must therefore be limited to that which is necessary to diminish the disadvantage which he or she will ordinarily suffer, and the Court should be wary to avoid placing a litigant-in-person in a position of advantage or privilege over a represented opponent. As acknowledged by Samuels JA in Rajski v Scitec Corporation Pty Ltd (unreported, Court of Appeal, NSW, 16 June 1986), 27, and cited with approval by the High Court in Nobarani v Mariconte (2018) 265 CLR 236, 250 [47]:

[T]he absence of legal representation on one side ought not to induce a court to deprive the other side of one jot of its lawful entitlement ... An unrepresented party is as much subject to the rules as any other litigant. The court must be patient in explaining them and may be lenient in the standard of compliance which it exacts. But it must see that the rules are obeyed, subject to any proper exceptions. To do otherwise, or to regard a litigant in person as enjoying a privileged status, would be quite unfair to the represented opponent.

[55]    In practical terms, the Court may find it appropriate to provide the following kinds of assistance to a litigant-in-person:

(a)     Ensuring the litigant has sufficient information about the practice and procedure of the Court to make effective choices in the conduct of the matter: Hamod [311]. For example, failing to explain the difference between formal sworn testimony and statements made from the bar table, and the significance of failing to file an affidavit, to enable a litigant-in-person to choose whether or not to give oral evidence, may amount to a denial of procedural fairness: SZRUR [39]. Additionally, failing to explain the risks in not leading evidence where adverse inferences might be drawn may also constitute a denial of procedural fairness: Downes v Maxwell Richard Rhys & Co Pty Ltd (in liq) (2014) 46 VR 283.

(b)     Ensuring the litigant is informed of procedures which, if invoked, may prove to be advantageous: MacPherson, 534. For example, failing to inform a litigant-in-person of their ability to apply for an adjournment may amount to a denial of procedural fairness: AMF15, 50 [47].

(c)     Ensuring the litigant has not, because of a lack of legal skill, failed to claim rights or put forward arguments: Rajski.

[56]    The duty of the Court does not extend to providing judicial advice, counselling a litigant on how to exercise their rights, or conducting the case on their behalf: Hamod, [312]; Bhagwanani v Martin (1999) 204 LSJS 449, [23]; Clark v New South Wales (No 2) [2006] NSWSC 914, [13]. Nor does the duty of the Court require it to view a litigant-in-person’s case with a favourable eye. As stated by the High Court in Northern Territory v Sangare (2019) 265 CLR 164, 174 [27], albeit in the context of a determination on costs, “unmeritorious litigation is no less unmeritorious because it is pursued by a person who is ... a litigant-in-person”.

(Emphasis added.)

33    The Court may, in an appropriate case, be “prepared to frame questions in order to found its jurisdiction” where, for example, an applicant is unrepresented and it is “possible to discern a question which, if properly framed, could found the jurisdiction of the court”: Child Support Registrar at [53], quoting Hoe v Manningham City Council [2011] VSC 37; 183 LGERA 441 at [9]; Kolya v Tax Practitioners Board [2012] FCA 215; 87 ATR 474 at [8]. It is plain that the Court can, and does, discern questions of law from grounds of appeal where such questions are capable of being identified: see, eg, Lingard v Commonwealth Bank Officers Superannuation Corporation Pty Ltd [2024] FCA 174 at [29]-[32]. This is not such a case.

34    The recent promulgation of the Court’s “Litigants in Person Practice Note” (GPN-LIP) may also be of some assistance in addressing Mr Watson’s concerns for self-represented litigants.

35    Further, whether illiteracy constitutes a relevant consideration under s 42A(10) of the AAT Act does not arise for determination in this proceeding. As has already been addressed, the primary judge was correct to observe (PJ[75]) that Mr Watson’s inability to read had not been raised in clear terms before the Tribunal and, in any event, had no bearing on the way in which the Tribunal dealt with the evidence (PJ[76]). As the primary judge found (PJ[68]), the Tribunal considered Mr Watson’s medical capacity on the basis of the medical evidence before it, that being the relevant consideration in assessing reinstatement under s 42A(10) of the AAT Act.

Disposition

36    For these reasons, the application for leave to appeal must be dismissed.

37    Mr Watson must pay the Commissioner’s costs of the application for leave to appeal.

Associate:

Dated:    14 September 2026