Alyssa Treasury Services Ltd and Commissioner of Taxation

[2011] AATA 644

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 644

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/4046

TAXATION APPEALS DIVISION		)
Re		ALYSSA TREASURY SERVICES LTD

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Mr P W Taylor SC, Senior Member

Date12 September 2011

PlaceSydney

Decision Pursuant to section 42A(2) of the Administrative Appeals Tribunal Act 1975, the Tribunal dismisses the application.

..................[sgd]............................

Mr P W Taylor SC
  Senior Member

CATCHWORDS

PRACTICE AND PROCEDURE – failure of a representative of the Applicant to appear – administrator purportedly appointed prior to hearing – non-appearance where adjournment application not determined – whether appropriate to proceed in the absence of the Applicant – application dismissed for non-appearance

Administrative Appeals Tribunal Act 1975 (Cth) ss 2A, 40, 42A

REASONS FOR DECISION

12 September 2011 Mr P W Taylor SC, Senior Member

1.      At the conclusion of the hearing of the above matter the terms of the decision intended to be made and the Senior Member’s reasons were stated orally.

2.      The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service. Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reasons for the decision.

3.      The transcript is annexed and furnished to the Applicant and to the Respondent as it is the reasons for the Tribunal’s decision.

I certify that the 3 preceding paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor SC, Senior Member

Signed:         ...............[sgd].................................................................
  Associate

Dates of Hearing  12 September 2011
Date of Oral Decision  12 September 2011
Date of Written Reasons                15 September 2011
Appearance for the Applicant        No appearance
Counsel for the Respondent          Mr J Hmelnitsky
Solicitor for the Respondent          Maddocks

EXTRACT OF TRANSCRIPT OF PROCEEDINGS

1.      I propose to dismiss the proceedings, and I will do so for the reasons that I will now give.  This application for review arises out of a special assessment of the applicant’s income for the financial year ended 30 June 2008.  It was the subject to an objection by the applicant on 10 June 2008 and the Commissioner’s subsequent decision disallowing the objection on 9 September 2009.  The proceedings themselves commenced with a formal application on 15 December 2009, an application which was lodged out of time for the reasons contained in Mr Petroulias’ covering letter of 22 August 2009, in which he explained some circumstances that were subsequently accepted as permitting the proceedings to be commenced, notwithstanding the delay since the Commissioner’s decision.

2.      Following the application commencing the proceedings, the applicant provided a provisional statement of facts and contentions on 15 September 2010, which was followed by the respondent’s statement of facts and contentions of 6 October 2010.  Following that, the respondent provided an amended statement of facts and contentions on 26 November 2010.  Proceedings were originally fixed for hearing on 15 February 2011.  Shortly before that hearing date, a summons was issued by the applicant to a Mr Andrew Lovett seeking the production of a range of documents.  There was also a summons or notice to produce issued to the Commissioner himself.

3.      At a directions hearing on 9 February 2011 before Deputy President Tamberlin the summons addressed to Mr Lovett was set aside on various grounds, including a lack of satisfaction about the relevance of that material and, more significantly, the element of oppression implicit in the width – or explicit in the width of the summons, that oppression being the subject of an affidavit that Mr Lovett had provided in support of his application to set aside the summons.

4.      Following that ruling by Deputy President Tamberlin, the matter came before his Honour again on the indicated date for hearing of 15 February 2011.  On that occasion Mr Petroulias appeared for the applicant.  He provided his Honour, on that occasion, with a document that listed four directions that were sought to be made.

5.      One of those included an application to revisit the ruling that the Deputy President had made in relation to a summons to Mr Lovett.  Another asked him to revisit a matter which had been raised on 9 February 2011 but which I did not refer to a moment ago, and that is an application by the applicant to adjourn the proceedings.  In the course of the hearing on 15 February 2011 Mr Petroulias, after having been engaged in a brief exchange with Deputy President Tamberlin, indicated that he was not particularly concerned about that part of his application involving the setting aside of a subpoena to Mr Lovett.  He did, however, pursue his application for an adjournment.

6.      That application ultimately was not the subject of contest and, indeed, was consented to by the respondent.  That consent was principally related to the fact that some few days before 15 February 2011 the applicant served a substantial affidavit from Dr Lamont.  The respondent, in the course of submissions before Deputy President Tamberlin, indicated that he was not in a position to proceed effectively with the proceedings and, in particular, the prospective cross-examination of Dr Lamont, in the light of the late service of that material.  Given the application and the respondent’s attitude to it, Deputy President Tamberlin adjourned the proceedings and fixed them for hearing to commence on 27 June 2011.

7.      His Honour also indicated that the applicant should file promptly any amended statement of facts and contentions.  The applicant, on 28 February 2011, provided an amended statement of facts and contentions, that document replacing the version which had been previously filed on 15 September 2010.  The second hearing date, 27 June 2011, was fixed for hearing before me.  A few days before that hearing date, Mr Petroulias communicated to the respondent and to the tribunal another application to adjourn the proceedings.  That application came before me in a telephone directions hearing on 24 June 2011.  The real basis for the application on that occasion was a combination of Mr Petroulias’ lack of convenience, and I use that expression in a completely non-pejorative term to indicate that he regarded his ability to prepare the proceedings as compromised, to some extent, by his involvement in other proceedings.

8.      The second, and perhaps more substantial basis for the application, was surgery which was to be carried out in the following week, but which had been in prospect for some time.  Ultimately, the respondent also consented, particularly in the light of the medical evidence that Mr Petroulias provided on that occasion, to the adjournment of the proceedings for the second time.  However, on that occasion, in the light of the concern that the respondent had expressed, and in the light of my own concern about the lack of expedition in the progress of the proceedings, I had an exchange with Mr Petroulias in which I obtained from him his disclosure that he was not the only director of the company, and that there was another director who was aware of the proceedings.

9.      Mr Petroulias also indicated on that occasion that the applicant was essentially a dormant entity, it hadn’t operated since some time in 2008, I infer in connection with the Commissioner’s activity in undertaking the special assessment which is the subject of the proceedings.  Mr Petroulias indicated that the applicant was dormant, had not operated for three years, and that its sole function was the conduct to conclusion of these proceedings.  In the light of that disclosure and my own concern about the progress of the proceedings and the prospect that they not be adjourned needlessly for the third time, I indicated to Mr Petroulias that he should provide a copy of the transcript of the exchange between me and him in the telephone conference to the other director of the company, and to obtain an acknowledgement from that other director, and to provide to the tribunal and the respondent, that director’s acknowledgement that we was aware of the proceedings and that read the transcript.

10.     The purpose of that acknowledgement was to ensure that those in a position to control the affairs of the applicant were fully informed of the fact of the second adjournment, of the fact that the second adjournment was granted substantially because of the compromise of Mr Petroulias’ personal circumstances, both pressure of work and ill health, and to ensure that those controlling the company were aware of the tribunal’s concern not to have a further adjournment of the proceedings, except for good reason.  The final purpose of the requirement that I imposed was to obtain a degree of comfort that the other director of the company was not only aware of the fact of the proceedings, but was aware of the concerns that had been expressed.

11.     The entire purpose of that requirement was to bring home to the other director the requirement for that director to properly discharge their function in connection with the progress of the proceedings, and if that involved anticipating further inability on Mr Petroulias’ behalf, then that was a matter that needed to be addressed.  In particular, the purpose of the requirement of disclosure and acknowledgement was to provide the other director with ample notice and opportunity to properly inform themselves to the extent required to conduct or have the proceedings conducted effectively on the applicant’s behalf on the resumed hearing date.  Subsequently, a Mr Ian Daley signed an acknowledgement which Mr Petroulias provided to the tribunal on 29 June 2011.  That communication is exhibit 5 in the proceedings. 

12.     In granting the adjournment application on 24 June 2011 I fixed the matter for hearing to commence today.  In the course of the directions hearing on 24 June 2011 Mr Petroulias raised the question of an objection to the evidence that the respondent had indicated it proposed to call from Mr Andrew Lovett.  Mr Petroulias invited – perhaps requested is the more accurate description – the tribunal to rule in advance of the proceedings whether or not the applicant’s objection to the tender, in particular of a transcript of a conversation between himself, Mr Lovett and Mr Lovett’s father in March 2008.  That course was opposed by the respondent, but I indicated to the parties that I was prepared to entertain Mr Petroulias’ application for an advance ruling on the admissibility issue.  Subsequently, both Mr Petroulias and the respondent provided submission and affidavit, in the case of Mr Petroulias’ affidavit evidence, in connection with the admissibility argument he wanted the Tribunal to consider.  On 22 August 2011 I provided, in response to the parties’ respective submissions, a preliminary ruling on the tender of the conversation of the Lovett transcript.  I refused Mr Petroulias’ request on behalf of the applicant for an indication prior to the hearing itself that the transcript of the conversation was inadmissible.  However, in that preliminary ruling I made it clear that the applicant was in a position to re-argue any objection it wished to make to that ruling when and if the evidence was led by the Commissioner in the review proceedings.  Nothing further was provided to the Tribunal in relation to the preliminary ruling until a matter to which I will come in a moment.

13.     On 2 September 2011 a man called Steven Flaws purported to consent to appointment as an administrator of the applicant.  He purported to do so in response apparently to a meeting, if that is what it should be called, of the directors of the applicant on 1 September 2011.  On that occasion, as appears from the minutes which are contained in exhibit 4, Mr Daley, apparently the only director of Alyssa Treasury Services Limited, resolved to appoint Mr Flaws as administrator of the company.  The minutes indicate that he intended to do so in the exercise of the relevant power conferred by Part 15A of the Companies Act 1993.

14.     The intention appears not to have been carried out effectively because the relevant statutory power is contained in section 239I of the New Zealand Companies Act 1993.  Subparagraph (1) of that section appears to condition the validity of an appointment of an administrator by the company on two propositions: first, that the company has resolved that, in the director’s opinion, the company is insolvent or may become insolvent, and, secondly, that an administrator of the company should be appointed.  In terms, the purported minutes contained in exhibit 4 contain no resolution that satisfies either of those requirements.  It certainly contains no resolution recording an opinion that the company is insolvent. 

15.     Following Mr Daley’s resolution and Mr Flaws’ purported consent, he communicated to the Tribunal and the respondent by letter on 6 September 2011.  That request was then the subject of a further telephone directions hearing which I conducted on the afternoon of 7 September.  The application I then refused substantially on the basis of lack of evidence and explanation from Mr Flaws either about the fact or the circumstances of his appointment.  However, I indicated that he was at liberty, if he chose to so do, to renew his application for an adjournment of the proceedings. 

16.     Prior to the directions hearing I had communicated to the parties a list of seven topics upon which I invited their assistance and, in particular, the assistance of Mr Flaws.  Those seven topics substantially addressed the circumstances and the formality of his appointment and, in particular, invited him to elaborate upon the proposition which he had communicated in his original application, the letter of 6 September 2011.  That topic was the proposition that, by virtue of his purported appointment and the operation of section 239ABE  of the Companies Act 1993, the present proceedings were necessarily stayed.  That contention is as I presently conceive it and without the benefit of Mr Flaws’ assistance, difficult to reconcile with what appear to be the plain terms of the section.

17.     Section 239ABE is in the following terms.  It has the heading Proceedings Must Not Be Begun Or Continued, and then the text of the section is:

During the administration of a company, a proceeding in a court against a company or in relation to any of its property must not be begun or continued, except –

(a) with the administrator’s written consent; or

(b) with the permission of the court and in accordance with the terms that the court imposes. 

18.     Even assuming that the section should be construed so as to regard the expression of “the court” as including not only a tribunal but an Australian tribunal, the applicant’s contention advanced through Mr Flaws seems to ignore the potential significance of the contingency expressed in paragraph (b).  It certainly pays little regard to the other contingency of the prospect of the administrator providing his own consent to the continuation of the proceedings.

19.     Mr Flaws’ response to the points that I had raised were subsequently provided with an affidavit he swore on 9 September 2011 in connection with his renewed application for adjournment;  that application was communicated to the Tribunal in about mid-afternoon last Friday.  Late Friday afternoon, I convened a further telephone directions hearing.  In that hearing I had read Mr Flaws’ affidavit of 9 September but at the time I do not recall seeing the details of his seven-point response.

20.     For reasons associated with the lateness of the application and my own personal situation on Friday afternoon, I indicated that I was unwilling to determine the application on Friday afternoon but that I would adjourn it to be dealt with this morning.  That course was partly dictated by the additional consideration that when I asked Mr Flaws if he proposed to invite the Tribunal to treat his affidavit of 9 September 2011 as evidence in the proceedings Mr Hmelnitsky, on behalf of the respondent, quite properly indicated that he wished to cross-examine Mr Flaws about the contents of the affidavit but that in order to be in a position to do so effectively he required both some time and, secondly, the applicant to produce documents the existence of which appeared to be rendered highly probable by the contents of parts of Mr Flaws’ 9 September 2011 affidavit.  For the combination of those two reasons, the respondent’s attitude and the simple administrative difficulties of addressing the matter effectively on Friday afternoon, I adjourned Mr Flaws’ application for an adjournment of the hearing to be dealt with at the commencement of proceedings this morning. 

21.     At about 9.30 this morning I received – although they appear to have been sent at around 6 am this morning – two emails from Mr Flaws, the substance of which were (1), an expression of concern by him in a letter addressed to the registrar and dated today about the tribunal’s conduct of these proceedings, his complaint that the tribunal’s conduct of these proceedings was in effect jeopardising his statutory function, and in particular, he expressed the view that according to his understanding of the law that his statutory functions are not subject to negotiation with a member of this tribunal, nor to negotiation with lawyers for the respondent.  He contends in the second paragraph of his letter that, quite to the contrary, the tribunal’s activities in attempting to pursue these proceedings in the discharge of its own statutory functions under Australian law are interferences with his statutory functions under New Zealand law.

22.     Mr Flaws does not address beyond that mere assertion the substance of the two statutory functions, how and in what circumstances, if at all, they can properly be reconciled, nor the existence of any breach of the New Zealand law provisions that would juristically justify the contentions that he made.  This silence by Mr Flaws may be acceptable in the light of the apparently limited time he may have had to acquaint himself with the circumstances of these proceedings.  However, it is, with respect to him, the very topic which I first raised in point number 1 of the seven topics which I communicated to Mr Flaws I think on 7 September 2011 and which both in the course of the telephone directions hearing on that day and apparently by inference from his latest affidavit of 9 September 2011 he said he had addressed.

23.     Again, with respect to Mr Flaws, having read paragraph 1 of his responses to the topics I raised and having conducted a limited review of the New Zealand Companies Act provisions to which he refers in his answer, I can only say, unassisted by more elaborate submissions than that he has provided, his contentions do not demonstrate to me any kind of foundation for the propositions he has so vehemently asserted in the second paragraph of his letter of 12 September that he provided to the tribunal this morning.  The other – a consequence of Mr Flaws’ strongly expressed views about this tribunal’s proceedings being an interference with the discharge of his statutory functions is the statement that he made in the third paragraph of his letter.  There he says:

Accordingly, with great respect to the Tribunal, I will not be attending a hearing on the 12^th of September 2011.  I have already made plain what my statutory duty is and until I have completed my investigation and statutory process, I am not in position to continue with any proceedings which the law provides must be suspended in the interim.

24.     Consistent with that indication, Mr Flaws has not appeared today.  At the commencement of the proceedings I had Ms Ackerman, my associate, telephone Mr Flaws’ office and then his mobile telephone.  The transcript will record that whilst his office was answered he was not present.  His mobile telephone was answered by a recorded message.  Mr Flaws was called outside the hearing room and did not respond to the call.  Consequently, the rest of the proceedings this morning have occurred in his absence.  The second matter that was addressed in Mr Flaws’ communications this morning were his purported response to the request that the respondent had foreshadowed on Friday afternoon for the production of documents, particularly documents disclosing communications between Mr Flaws, Mr Daley and Mr Petroulias since 24 July 2011 in relation to the appointment of an administrator to the company or in relation to the subject of these proceedings.

25.     The material that Mr Flaws produced this morning does not appear, in the absence of any explanation from him, to make any attempt whatsoever to comply with the respondent’s request for the production of that kind of material.  It may be that no such communications exist.  However, if that was the case, I would have thought that Mr Flaws would have said so.  On the other hand, what he does say in the second paragraph of his letter of 12 September 2011 after referring to and indeed attaching a copy of the Commissioner’s solicitor’s email letter of 9 September 2011, and after having acknowledged that he understands that letter to be a demand, which he characterises pursuant to purported directions by this tribunal, Mr Flaws says:

Neither the demand, nor the direction can be accommodated within my function.

26. Now, again, with the greatest of respect to Mr Flaws, that assertion seems to ignore a proper interpretation of the scope of section 239ABE of the New Zealand Companies Act to which I have earlier referred. In addition, under section 239U of the Companies Act, the administrator’s role is said to be one which confers upon him control of the company’s business, property and affairs, a function which also permits him to carry on that business, manage the company’s property and affairs, and finally, to perform any function and exercise any power that the company or any of its officers couldn’t perform or exercise if the company were not in administration. It is difficult to understand the basis for the assertion Mr Flaws makes in the third paragraph of his letter that the request that the respondent made could not reasonably and properly be accommodated by him in the proper discharge of his statutory functions.

27.     In that context, I should make it clear that in the course of the telephone directions hearing on Friday afternoon I made it – I made an express statement to the effect that I was not imposing any requirement on Mr Flaws to produce any documents that the respondent might request.  I simply invited him to consider whether he wished to respond to them and indicated to him that the absence of a response would be a matter that I would take into account with whatever his explanation was in the course of the proceedings this morning.  Against that background, Mr Flaws’ characterisation of that exchange as purported directions and the, if I may say so, defiant way in which he has asserted that the respondent’s entirely reasonable request cannot be accommodated consistently with his statutory functions is, to my mind, but with a reservation required by Mr Flaws’ absence, difficult to understand.

28.     The end result, therefore, is that, as matters presently appear, the proceedings have been on foot since December 2010 but have obviously been the subject of great concern to the applicant since the time of the applicant’s objection in 2008 and certainly since the Commissioner’s decision in April 2009.  We are now some two and a half years since the Commissioner’s decision.  Moreover we are at this point on the third occasion when the matter has been fixed for hearing in the Tribunal at a time when Mr Daley, who appears to be the sole remaining director of the applicant, has been aware of the proceedings, at the very latest, since the time of his acknowledgement to which I earlier referred at the end of June 2011.  We are also in a situation where Mr Daley as the sole director of the company, appears to be in a position if he chose to do so, to ensure the applicant was in a position to pursue the proceedings effectively.  Indeed, exhibit 9 is a New Zealand company’s office form which was apparently signed by Mr Daley on 31 March 2010.  It appears to have been signed by him in his capacity as a director of the applicant.  It’s not entirely clear to me whether or not Mr Daley was the sole director of the company at that time.  But he certainly was, if the form can be taken at face value, a director at that time.  The only other persons the evidence discloses who have relevantly asserted status as director are Mr Levick who resigned in – sometime before 9 April 2009, and Mr Petroulias who appears to have some director status at least during 2009.  Mr Daley appears, therefore, to have been a director of Alyssa at all times since 31 March 2010.  In those circumstances it would appear an inescapable conclusion that he has been aware of the proceedings, their commencement, their substantial conduct by Mr Petroulias on the applicant’s behalf up until very recent times.

29.     I would infer therefore, that Mr Daley has been both informed of Mr Petroulias’ activities on the applicant’s behalf as his acknowledgement of June 2011 appears to indicate, and fully content for Mr Petroulias to represent the applicant’s interest in these proceedings.  Furthermore, he appears to have been fully content to accept Mr Petroulias’ involvement in representing the applicant, notwithstanding Mr Daley’s knowledge of the issues in the proceedings which appear to be an allegation of sham on the Commissioner’s behalf.  Mr Daley appears also to be well aware of the Commissioner’s intention to rely upon the contents of the transcript of the conversation between Mr Petroulias and the two Messrs Lovett to which I referred earlier in these reasons.  That awareness comes from the content, or likely awareness, comes from the content of Mr Flaws’ affidavit of 9 September 2011 in which in paragraphs 15 and 16 he records the content of information conveyed to him by Mr Daley.

30.     That information is directly related to the potential relevance of the conversation to which I’ve just referred.  It contains Mr Daley’s views about the appropriateness of the decision I made in the reasons I published on 22 August 2011, and it also contains Mr Daley’s assertions about the potential breadth of the relevant evidence in the proceedings, and in particular the extent to which Mr Daley appears to be of the view that the summons to produce which was the subject of Deputy President Tamberlin’s decision in February this year is in fact a matter of great significance to the applicant’s interest, and as I would infer from the contents of Mr Flaws’ affidavit, a matter that should have been pursued by the applicant notwithstanding the Deputy President’s setting aside of the summons in February. 

31.     All of this material only reinforces my view of the likelihood that Mr Daley is well informed of the true nature of the issues in the proceedings and the extent of potential benefit to the applicant from the successful conduct of the proceedings.  It also suggests that he does not and has never accepted that Mr Petroulias’ representation of the applicant in contesting these proceedings on its behalf would in any way be adverse to the company’s interests.  If Mr Daley had ever been of that view it would be difficult to understand his apparently condign acceptance, if not encouragement of Mr Petroulias’ representation of the company in these proceedings.  That then takes me to the substance of Mr Flaws’ reasons for his non-appearance today on behalf of the company.  I’ve already indicated that Mr Flaws appears to be of the view that this tribunal’s proceedings are an interference with his statutory functions.

32.     I have also indicated why, in the absence of any further elucidation of that contention from Mr Flaws, it is not one which I accept.  It appears, with respect, to misinterpret his statutory functions and in particular to misinterpret the provisions of section 239ABE of the New Zealand Companies Act 1993.  The plain fact of the matter is that these proceedings, even assuming 239ABE otherwise applied to them, could be continued if the administrator consented.  They could be continued if he allowed the directors to – Mr Daley to continue the proceedings and they could be continued with the permission of this tribunal and in accordance with any directions that it gave, and I add in parenthesis, assuming that this tribunal is, in any event, a “court” to which section 239 ABE otherwise would relevantly apply.

33.     Mr Flaws, apart from his assertions about interference with his statutory functions, in fact provides no real reason for his unwillingness to take an active part in the proceedings, either directly or by allowing Mr Daley and/or Mr Petroulias to conduct the proceedings.  It is very plain, it seems to me, from the content of paragraphs 11, 12 through to 16 of Mr Flaws’ affidavit of 9 September 2011, that he has obtained a sufficient understanding of the issues in the proceedings to be aware both of their general nature and of the extent to which the company would potentially benefit from success in these proceedings.  Furthermore it is highly likely, having regard to the content of the information he attributes to Mr Daley in his affidavit, that Mr Flaws has some degree of insight as to the way in which the proceedings might effectively be pursued on the company’s behalf. 

34.     I do not by those statements intend to underestimate the difficulty that Mr Flaws would have in effectively taking part in the proceedings at such short notice, and as appears to be the case, on behalf of a company which has no readily identifiable assets to which he could resort in retaining competent legal advice.  However, Mr Flaws’ personal difficulties, in a sense of his difficulties as administrator, whilst they are relevant considerations also need to be evaluated against the background of the company’s own capacity to conduct the proceedings by resort to the personnel he has available.  Mr Flaws’ appointment, even assuming it is valid, does not terminate Mr Daley’s status as a director of the company. 

35.     It certainly does not terminate his knowledge, and it would appear from the information that Mr Flaws attributes to him in paragraph 15 and 16 at the least of his affidavit, that it certainly does not terminate Mr Daley’s willingness to contribute his information and abilities to Mr Flaws in properly informing him about the subject matter of the proceedings.  Indeed, it is apparent that Mr Daley would have statutory obligations under the New Zealand Companies Act 1993 to co-operate relevantly with Mr Flaws to provide him with such information as he reasonably requires.  But the real reality behind all of this is that the applicant has for years been a company whose ability to conduct these proceedings appears to be completely reliant upon Mr Petroulias and Mr Daley and perhaps the witness Dr Lamont.  Mr Flaws’ unwillingness to participate in the proceedings appears ultimately to be principally attributed to what he says at paragraph 12 of his affidavit where, after displaying an acknowledgement of the sham allegation which underlies the Commissioner’s assessment, he asserts that this should be treated as an allegation of dishonesty which he says is an allegation of dishonesty “against Mr Petroulias and others”.  He then goes on to say:

It is highly inappropriate to allow either Mr Petroulias or Mr Daley to conduct such proceedings.

He continues:

Indeed it would be inconsistent with my duties to allow them to conduct proceedings that are prejudicial to the best interests of the company and its creditors.

That statement is one in which I would have been greatly assisted by Mr Flaws’ explanation.  The assessment in the present proceedings involves, as it presently appears, an asserted liability to the Commissioner for a primary tax amount of something in the vicinity of $180,000.  With the interest on top of that, the total amount of the Commissioner’s proof is approximately $390,000-odd.  It is surprising to my mind that these proceedings, which if successful on the company’s behalf would remove a potential liability, or an actual liability, of that amount, it is surprising to have an administrator characterise those proceedings as prejudicial to the interests of the company.  I would have thought in the absence of elaboration from Mr Flaws that indeed the conduct of these proceedings with the prospect of ultimate success of the company is directly in the company’s benefit.  And that to assert as he does without explanation that these proceedings are prejudicial to the company’s affairs is a statement, frankly, which I find difficult to understand. 

36.     It may be that there are apprehensions unexpressed by Mr Flaws about the bona fides of Mr Petroulias in wishing to conduct the proceedings.  But if he has those doubts it is difficult to reconcile his subjective doubts with what I would infer to be Mr Daley’s contrary view, a view which I would infer is both contrary and long-held, having regard to Mr Petroulias’ active involvement in the conduct of these proceedings for a very long time since their commencement.  Furthermore, it is to my mind significant that paragraph 12 of Mr Flaws’ affidavit, whilst it expresses some awareness of the potential for an accusation of dishonesty to be made against Mr Petroulias, actually stops short of any expressed apprehension of the honesty, diligence, or competence of Mr Daley himself.  In paragraph 12, Mr Flaws simply says:

It is highly inappropriate to allow … Mr Daley to conduct such proceedings.

37.     I have been unable to discern from anything else contained in Mr Flaws’ affidavit any factual basis which would indicate has been the basis for his asserted opinion that it would be “highly inappropriate to allow … Mr Daley to conduct [the] proceedings”.  Perhaps the basis is that he assumes his statutory function is one in which he must take the ultimate responsibility for all of the activities of the company.  And perhaps he is presently not satisfied on his awareness of the affairs of the company that he could give a properly informed consent to Mr Daley’s participation.  And that may in truth be his not clearly expressed true reasoning.  However, Mr Flaws in the present circumstances needs to have turned his mind not only to what he, if I may say so, somewhat myopically characterises as his “statutory functions” under the New Zealand Companies Act 1993. He is an administrator of the applicant. The applicant is a party to these proceedings. The applicant has now for the third time sought to adjourn proceedings for reasons substantially to suit its own convenience. This tribunal has its own statutory functions. One of those functions is expressed in section 2A [of the Administrative Appeals Tribunal Act 1975].  It is

… the Tribunal must pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick.

38.     The discharge of its statutory functions consistent with that mandate is extremely difficult to achieve in the face of an applicant who on three occasions at short notice seeks to adjourn the proceedings.  It is even more difficult to discharge that statutory function when an administrator recently appointed – or apparently appointed in circumstances where the justification for his appointment is unexplained, simply appears to present the tribunal with an application for – which is disguised as an application for an adjournment but which in truth is little more than a statement of fact that the applicant does not propose to participate in the proceedings.  That appears to be precisely the course that Mr Flaws has undertaken in these proceedings.  In so saying, I do not intend to convey any personal criticism of him.  So far as the information available to me reveals, whilst he is likely to have obtained information from Mr Daley about the company’s affairs – information that may have an uncertain extent – he may not be fully apprised of all the relevant circumstances. 

39.     But what Mr Flaws should be apprised of in his role as an administrator is the importance of the company discharging its obligations having initiated these proceedings, to assist the tribunal in ensuring that the proceedings are conducted effectively, efficiently and economically.  In a situation where this is the third occasion for adjournment, in a situation where the tribunal has no costs sanction, in a situation where the applicant appears to lack a demonstrable ability to be able to provide any costs compensation and in a situation where, as it seems to me, it would be difficult, in any event, to provide adequate costs compensation to the respondent for exposing it to a situation of preparing the proceedings for a fourth time to be conducted to a contested hearing, in that situation it seems to me that an applicant has to do more than simply declare reliance upon statutory functions of another jurisdiction.  And to simply assert a lack of confidence in the personnel who have previously conducted the proceedings on the applicant’s behalf.

40.     It is a matter of concern to me, not only the apparent lack of cogency in Mr Flaws’ responses to the tribunal’s request for assistance on the proper application of his appointment in the light of the provisions of the Companies Act 1993 of New Zealand, but also some of the steps that he appears to have taken in pursuing this application.  I referred earlier to the adjournment of the proceedings in February this year in response to the applicant’s late service of affidavit evidence by Dr Lamont.  It has been apparent since that time that Dr Lamont was proposed to be an important if not the principal witness on the applicant’s behalf.  And it has also been apparent that the respondent intended to cross-examine Dr Lamont on his evidence.  In June this year, when the second adjournment application was dealt with by me, there was further discussion about Dr Lamont’s availability.  And the exchange between Mr Petroulias and myself recorded in the transcript on that occasion made it clear that Dr Lamont would be required to make himself available for the effective conduct of the proceedings commencing this week.  In those circumstances it is surprising, to my mind, that paragraph 18 of Mr Flaws’ affidavit of 9 September 2011 is in the following terms.

I have informed Dr Lamont that I will not be calling him to give evidence on Monday as Alyssa will not be proceeding for the reasons I have identified above as my paramount duties at law.  I will not be taking any steps in respect of this litigation before conducting the necessary investigation.  If no adjournment is given to the current proceedings, the applicant’s recourse will have to be to the Federal Court if it is considered appropriate by the creditors on the basis of my investigation.  

41.     It would appear to me in those circumstances to be a situation in which Mr Flaws has never had any intention of conducting the proceedings that were due to commence this morning and that his application to the tribunal for an adjournment is simply little more than an exercise of apparent politeness in telling the tribunal that no matter what the tribunal regards as its statutory functions, and no matter what the tribunal regards as the proper exercise of its discretion, the proceedings simply will not continue.  That suggests to me a misunderstanding of the tribunal’s functions and a misunderstanding by Mr Flaws, as the administrator of the applicant, of the proper scope of his own functions and responsibilities.  However, it is not necessary to investigate beyond noting the possibility the extent to which Mr Flaws may have been in error in the way in which he has proceeded.

42.     The important point is that the tribunal does have its own statutory function and it must exercise that statutory function in the light of the material that has been presented to it.  That material, insofar as the applicant seeks an adjournment of these present proceedings, is, to my mind, significantly deficient.  The Act under which the tribunal operates, the Administrative Appeals Tribunal Act 1975, contains in section 42A the power to dismiss proceedings where a party fails to appear before the tribunal. In subsection (5) of section 42A, the tribunal may also dismiss proceedings if an applicant fails to proceed or fails to comply with the tribunal’s directions. If proceedings are dismissed in the exercise of the power in section 42A(2), the tribunal has a further saving power where it has dismissed an application to reinstate the proceedings on the application of the applicant if that application is made within 28 days after receiving notification of the dismissal, the tribunal can reinstate the application and give such directions as appear appropriate in the circumstances.

43. Section 40 of the Act also permits the tribunal to proceed to determine the application in the absence of a party who has had reasonable notice. I am completely satisfied that the applicant has had reasonable notice of the proceedings. It would be open to me to continue with the review proceedings to deal with them on their merits. However, it is a course that the respondent does not contend for, and it is a course which might prove counterproductive in the absence of active participation by an informed representative of the applicant. It is readily apparent from the statements of facts and contentions that the applicant’s grounds of objection involve points of potential difficulty. It is also readily apparent from the contents of paragraphs 15 and 16 of Mr Flaws’ affidavit where he records Mr Daley’s concern about the potential breadth of the factual investigation required, that apart from the intrinsic conceptual difficulty of the issues in the proceedings, there is a potential for a great deal of careful factual analysis being required.

44.     It would not be in the interests of either the applicant or the respondent to attempt to engage, without informed assistance from the applicant, in a detailed review of the merits of the decision under review.  In addition, it is relevant to take into account the circumstances in which the company presently finds itself.  The respondent has submitted that no inference favourable to the company, about the extent of its present apparent inability to conduct the proceedings, should be drawn.  The reason for not drawing any favourable inference is the long history of informed involvement by Mr Petroulias and Mr Daley about the content of the issues in the proceedings, and, on the other hand, the lack of information from Mr Flaws about the extent of his dealings with Mr Daley of recent times.

45.     The further element of contrast upon which the respondent relies is the lack of explanation for the company and, to be specific, Mr Daley placing the company in administration some fortnight before the hearing when Mr Daley is the person who provided the acknowledgement to the tribunal on 29 June 2011.  In the light of what Mr Petroulias said about the nature of the applicant’s circumstances and affairs, in the course of the telephone directions hearing on 24 June this year, it would appear likely that the company’s relevant circumstances have not changed at any time in the three years since the end of June 2008.  In those circumstances, it is, and remains, a valid point of enquiry and concern that Mr Daley moved to appoint an administrator of the company some two weeks before the hearing and no explanation of any kind has been forthcoming from the applicant.

46. However, it may be that some explanation is available, and it may be that on proper mature consideration, the applicant, notwithstanding the unsatisfactory way in which it has made but not pursued its adjournment application, and failed to appear this morning, it may be that the company ultimately has the ability to demonstrate probable real merit in its contest of the application to review the Commissioner’s decision of 9 April 2009. Because of that possibility, and because that possibility might be able to be pursued by the company, on more mature consideration, by bringing an application for reinstatement under section 42A on any of the limbs for which the section provides, the more appropriate course than proceeding to determine the application on its merits, is to dismiss the application because of the company’s non-appearance this morning.

47.     Dismissing the application is the appropriate course in the circumstances, and that dismissal obviates any need to address the company’s adjournment application that was made on Friday and adjourned to this morning.  For those reasons I dismiss the application without proceeding to review the decision.