Bell and Deputy Commissioner of Taxation
[2001] AATA 598
•28 June 2001
DECISION AND REASONS FOR DECISION [2001] AATA 598
ADMINISTRATIVE APPEALS TRIBUNAL )
) NT1999/199-200
TAXATION APPEALS DIVISION ) NT1999/472-475
Re JOHN BERNARD BELL and NARELLE GAY BELL
Applicant
And DEPUTY COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal Ms G Ettinger Senior Member
Date28 June 2001
PlaceSydney
Decision The Administrative Appeals Tribunal refuses to reinstate the applications of Mr John Bell and Mrs Narelle Bell pursuant to either sections 42A(9) or 42A(10) of the Administrative Appeals Tribunal Act 1975 or grant an extension of time to lodge an application for review pursuant to section 29(7) of the Administrative Appeals Tribunal Act 1975, following the dismissal of Mr and Mrs Bell's applications on 21 February 2001 pursuant to section 42A(5)(b) of the Administrative Appeals Tribunal Act 1975.
..............................................
Senior Member
Ms G Ettinger
CATCHWORDS
Matters dismissed pursuant to section 42A(5)(b) of the AAT Act for failing within a reasonable time to comply with a direction of the Tribunal - whether reinstatement is appropriate pursuant to sections 42A(9) or (10)- whether section 29(7) extension of time applicable – reinstatement refused – extension of time not granted.
LEGISLATION
Acts Interpretation Act 1901 s15AB(1)
Administrative Appeals Tribunal Act 1975 ss 29(7), 42A(5), (8), (9) and (10)
Administrative Appeals Tribunal Amendment Act 1993
Administrative Appeals Tribunal Amendment Bill 1992 Explanatory Memorandum
Income Tax Assessment Act 1936 s 188
Taxation Administration Act 1953 ss 14ZZ(f), 14ZZC(d) and 14ZZL
CASE LAW
Birkett v James [1978] AC 297
Brehoi v Minister for Immigration and Multicultural Affairs (1999) 58 ALD 385
Brown v Commissioner of Taxation [1999] FCA 563
Charlie Brown Pty Limited v Green (Supreme Court of New South Wales, 25 August 1997, 4074/1194)
Comcare v Grimes (1994) 50 FCR 60
Guse v Comcare (1997) 49 ALD 288
Hunter Valley Developments Pty Limited v Cohen, Minister for Home Affairs and Environment (1984) 3 FCR 344
Lighthouse Philatelics Pty Ltd v Commissioner of Taxation (1991) 32 FCR 148
L Shaddock & Associates Pty Ltd v The Council of the City of Parramatta [No 2] (1983) 151 CLR 590
Paczalski v Comcare [1999] FCA 366
Re Mulheron and Australian Telecommunications Corporation (1991) 23 ALD 309
Re Nicholson and Secretary Department of Social Security (1990) 21 ALD 537
Secretary Department of Social Security v Clear (1991) 23 ALD 22
Secretary, Department of Social Security v Sword (1991) 23 ALD 52
Tak Ming Co Ltd v Lee Sang Metal Supplies Co [1973] 1 WLR 300
Taxpayer v Commissioner of Taxation (AAT 12330, 22 October 1997)
Trevisan v Federal Commissioner of Taxation (1991) 101 ALR 26
Windshuttle v Deputy Federal Commissioner of Taxation (1993) 93 ATC 4992
REASONS FOR DECISION
28 June 2001 Ms G Ettinger Senior Member
The matter before the Administrative Appeals Tribunal ("the Tribunal") concerned six applications by the Applicants John Bernard Bell and Narelle Gay Bell, against rulings by the Deputy Commissioner of Taxation, the Respondent in these proceedings:
·For the tax year ending 30 June 1992:
·Mr Bell – NT1999/199;
·Mrs Bell – NT1999/200;
·For the tax years ending 30 June 1993 and 1994:
·Mr Bell – NT1999/472-3
·Mrs Bell – NT1999/474-5.
The Applicants applied to the Tribunal for review of the rulings of the Respondent and the date of lodgement of their applications was as follows:
·NT1999/199-200 on 31 May 1999; and
·NT1999/472-475 on 21 September 1999.
All of the applications were dismissed by the Tribunal on 21 February 2000 pursuant to section 42A(5)(b) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") for failure by the Applicants to comply with a direction of the Tribunal within a reasonable time.
In the application before this Tribunal, Mr and Mrs Bell sought reinstatement pursuant to sections 42A(9) or (10) or an application for extension of time pursuant to section 29(7) of the AAT Act for all six applications in order that the substantive matters could be heard on the merits by the Tribunal.
The Applicants were represented by Mr K Connor of counsel who was instructed by Nash O'Neill Tomko and the Respondent by Mr I Young of counsel who was instructed by the Australian Government Solicitor.
ISSUES BEFORE THE TRIBUNALThe issues before the Tribunal were:
·Whether any discretion should be exercised pursuant to sections 42A(9) or (10) of the Administrative Appeals Tribunal Act 1975, to reinstate Mr and Mrs Bell's matters NT1999/199-200 for the tax year ending 30 June 1992, and NT1999/472-475 in respect of tax years ending 30 June 1993 and 1994, ("the applications"), dismissed by an order made by Senior Member B Barbour on 21 February 2000 in the following terms:
"Having heard the parties at a directions hearing today, the Tribunal is satisfied that the applicant has failed within a reasonable time to comply with a direction by the Tribunal in relation to these applications.
The Tribunal therefore directs that the applications be dismissed pursuant to section 42A(5)(b) of the Administrative Appeals Tribunal Act 1975 without proceeding to review the decisions."
·In the alternative whether the matters could be recommenced pursuant to section 29(7) of the Administrative Appeals Tribunal Act 1975 by way of an application for extension of time to lodge a further claim.
LEGISLATIVE FRAMEWORK
Section 42(5) of the Administrative Appeals Tribunal Act 1975 deals with dismissal and reinstatement and follows as relevant:
"42A Discontinuance, dismissal, reinstatement etc. of application
…
(5)If an applicant for a review of a decision fails within a reasonable time:
(a)to proceed with the application; or
(b)to comply with a direction by the Tribunal in relation to the application;
a presidential member or senior member, on behalf of the Tribunal, may dismiss the application without proceeding to review the decision.
(6)If, under this Act, the Tribunal dismisses an application or an application is dismissed on its behalf, the proceeding to which the application relates, unless it is reinstated under subsection (9) or (10), is taken to be concluded.
(7)Before exercising its powers under subsection (2), the Tribunal must be satisfied that appropriate notice was given to the person who failed to appear of the time and place of the directions hearing, conference, mediation or hearing, as the case may be.
(8)If the Tribunal, under subsection (2), has dismissed an application (other than an application in respect of a proceeding in which an order has been made under subsection 41(2)), the person who made the application may, within 28 days after receiving notification that the application has been dismissed, apply to the Tribunal for reinstatement of the application.
(9)If it considers it appropriate to do so, the Tribunal may reinstate the application and give such directions as appear to it to be appropriate in the circumstances.
(10)If it appears to the Tribunal that an application has been dismissed in error, the Tribunal may, on the application of a party to the proceeding or on its own initiative, reinstate the application and give such directions as appear to it to be appropriate in the circumstances."
Section 29(7) of the AAT Act deals with extensions of time and states relevantly:
"29 Manner for applying for review
…
(7)The Tribunal may, upon application in writing by a person, extend the time for the making by that person of an application to the Tribunal for review of a decision (including a decision made before the commencement of this section).
…"
Section 34 of the AAT Act deals with conferences conducted at the AAT. The Tribunal noted that annexures to the affidavit of Mr Poulos (Exhibit R6), which was before the Tribunal, were documents lodged separately as Exhibit A17, comprising amongst other documents, copies of Conference Reports prepared by Conference Registrar Desses after conferences conducted on 3 November 1999 and 22 November 1999 in the Bell matters. The main purpose in referring to these, was to note the agreements for timetabling made by the parties and recorded by Conference Registrar Desses at the conferences of 3 November and 22 December 1999 for preparation and service of documents. As relevant section 34 follows:
"34 Conferences
…
(1) Where an application is made to the Tribunal for a review of a decision, the President may, if he or she thinks it desirable to do so, direct the holding of a conference of the parties or their representatives presided over by the President or another presidential member, by a non-presidential member assigned to the relevant Division or by an officer of the Tribunal.
…
(3) At the hearing of a proceeding before the Tribunal, unless the parties otherwise agree, evidence shall not be given, and statements shall not be made, concerning any words spoken or act done at a conference held in accordance with this section.
…"
Mindful of the confidentiality issues associated with reports of proceedings of conferences, I noted that it was the parties who raised the Conference Reports, the Respondent who annexed them to the statement of Mr Poulos, and the Applicant who tendered them. As noted above they were in evidence as Exhibit A17. Neither party objected to the tender, and both referred to the contents in examining witnesses and making submissions.
EVIDENCE BEFORE THE TRIBUNALThe Tribunal had before it documents lodged pursuant to section 37 of the AAT Act in matters (NT1999/199-200 for the tax year ending 30 June 1992, and NT1999/472-475 in respect of tax years ending 30 June 1993 and 1994), ("the T-documents") and the following other Exhibits:
ITEM DATE NAME
Notice of Assessment for John and Narelle Bell for the year ending 30 June 1992 Date of Issue 19 September 1996 Exhibit A1
Letter from the Deputy Commissioner of Taxation to Narelle Bell 5 March 1997 Exhibit A2
Document prepared by Steve Davidson headed "Brief Re Objections and Referral to the Federal Court or AAT" 10 May 1999 Exhibit A3
Facsimile from Steve Davidson to Peter Bunting 13 May 1999 Exhibit A4
Facsimile from Stephen Fitzsimons to Steve Davidson 20 May 1999 Exhibit A5
Facsimile from Steve Davidson to John Bell 24 May 1999 Exhibit A6
Facsimile from Steve Fitzsimons to Steve Davidson 24 May 1999 Exhibit A7
Letter from Deputy Commissioner of Taxation to John Bell together with Notice of Assessment for the year ending 30 June 1993 Date of Issue 26 May 1999 Exhibit A8
Notice of Assessment for John Bell for the year ending 30 June 1994 Date of Issue 5 February 1999 Exhibit A9
Fee Memorandum from Spencer Steer to Mr and Mrs John and Narelle Bell 27 July 1999 Exhibit A10
Letter from Stephen Fitzsimons to Stephen Davidson 19 August 1999 Exhibit A11
Letter from Stephen Davidson to Mr and Mrs J Bell 26 August 1999 Exhibit A12
Facsimile from Steve Fitzsimons to John Bell together with six pages of attachments 20 September 1999 Exhibit A13
Facsimile from Stephen Fitzsimons to Stephen Davidson headed "URGENT FAX" 20 September 1999 Exhibit A14
Facsimile from Stephen Davidson to John Bell 20 September 1999 Exhibit A15
Statement of Account from Spencer Steer to Mr and Mrs John and Narelle Bell 30 September 1999 Exhibit A16
Annexures A – O to the Statement of Peter Poulos dated 19 July 2000 Exhibit A17
Statement of John Bell 4 July 2000 Exhibit A18
Statement of John Bell together with Annexures B1 – B16 10 August 2000 Exhibit A19
Letter from John Bell to the Administrative Appeals Tribunal 13 March 2000 Exhibit A20
Statement of Narelle Bell Date Stamped 4 July 2000 Exhibit A21
Statement of Narelle Bell 10 August 2000 Exhibit A22
Affidavit of Micah Louise Kelly together with Application for Extension of Time for John Bell Date Stamped 9 August 2000 Exhibit A23
Statement of Stephen William Davidson together with Annexures SD 1 – 58 18 August 2000 Exhibit A24
Statement of John Bell 6 March 2001 Exhibit A25
Facsimile from Spencer Steer to Jonathon (sic) Dobinson of Senior Member Barbour's Chambers 2 February 2000 Exhibit A26
Letter from Peter Poulos to Micah Kelly 8 August 2000 Exhibit R1
Optus Record for Mobile Number (User Name Mr John Bell) page 23 Issue Date 8 November 1999 Exhibit R2
Five Pages from Australian Government file in Patricia Slattery and Commissioner of Taxation Exhibit R3
Optus Record for Mobile Number (User Name Mr John Bell) page 17 Issue Date 7 March 2000 Exhibit R4
Optus Record for Mobile Number (User Name Mr John Bell) page 22 Issue Date 7 March 2000 Exhibit R5
Statement of Peter Poulos 19 July 2000 Exhibit R6
Statement of Peter Poulos 8 August 2000 Exhibit R7
Letter from Deputy Commissioner of Taxation to the Administrative Appeals Tribunal enclosing section 37 statements Regarding matters NT1999/199-200 dated 29 June 1999 Regarding matters NT1999/472-475 dated 2 November 1999 Exhibit R8
Oral evidence was given by the Applicants Mr John Bell and Mrs Narelle Bell, Mr Stephen Davidson, chartered accountant and Mr Stephen Fitzsimons, chartered accountant.
EVIDENCE OF THE APPLICANT - JOHN BERNARD BELLMr Bell, whose statements dated 4 July 2000 and 10 August 2000 were before the Tribunal as Exhibits A18 and A19 respectively, told the Tribunal he had trained as a carpenter and worked as a builder and developer. He also made a further statement of 6 March 2001, which was before the Tribunal as Exhibit A25. The giving of his evidence was quite protracted, and for ease of reference I have where possible, delineated it into dates of the relevant fixtures before the Tribunal.
involvement with brogana pty ltdWhen recalled for cross-examination in relation to his statement (Exhibit A25) of 6 March 2001 tendered on the fourth day of hearing, 7 March 2001, Mr Bell was asked whether he was a salaried employee of Brogana Pty Limited ("Brogana"), and other companies listed at paragraph 9 of his statement. Mr Bell appeared uncertain regarding whether his status was director or employee. He also described himself as unemployed at the date of 7 March 2001.
greg pearsonWhen asked regarding the identity of Mr Greg Pearson, Mr Bell said that he was a solicitor for the Hunter Valley Community Investment Ltd Partnership, in which the Cooma Partnership was involved. Mr Bell said that he had introduced Mr Pearson to that partnership. He also confirmed that Mr Pearson had acted for him and Mrs Bell in filing objections to the 1992 Tax Assessments on 25 October 1996. Mr Bell told the Tribunal that Mr Pearson had not represented him for approximately the past eighteen months because Mr Pearson had believed there was a conflict in doing so. I noted this and did not consider that there was further involvement regarding Mr Pearson as far as this hearing was concerned.
stephen davidson of davidson accountants and other persons involved in the bells' taxation affairsMr Bell told the Tribunal that Mr Stephen Davidson of Davidson Accountants ("Davidsons") had prepared his and his wife's tax returns for the past twenty years. Mr Davidson had arranged for a meeting with Mr Peter Bunting on or about 13 April 1999 in order for Mr Bunting to assist with advice on the Bells' tax situation he said. Mr Bell said that he attended a meeting in May 1999 with Trevor Bell, Peter Bunting, and Stephen Davidson at the offices of Stephen Fitzsimons of Spencer Steer Chartered Accountants ("Spencer Steer") in Sydney with regard to the Bells' taxation affairs.
In cross-examination, Mr Young, referring to Exhibit A6, asked Mr Bell as follows:
Mr Young: "So Mr Bell, you would be aware from that fax of 24 May 1999 to you that the briefing of a barrister was required to carry out the scope of the work proposed. Do you accept that?"
Mr Bell: "Yes"
…
Mr Young: "You knew that the barrister who was to undertake that work was Mr Peter Frazer?"
Mr Bell: "Yes"When Mr Bell was asked about the dates of issue of assessments, and the dates for objections lodged, Mr Bell said that he did not recall the exact dates and that the transactions were always handled on his behalf by his accountants.
In respect of Trevor Bell; Mr John Bell said that he had first met Trevor Bell in 1990, and said that he "is the person that put together the way the partnership works … he wanted to buy our subdivision at East Maitland and do something with it amongst this Austhome Group. … It's a fifty unit development…" Mr Bell said that permission had been received for the company Brogana of which Mr and Mrs Bell were directors, and Amtrao Pty Limited, a trustee company to commence the development.
I then moved to consider the evidence regarding Mr Bell's involvement in and knowledge of the conferences before Conference Registrar Desses at the Tribunal which took place on 3 August 1999, 3 November 1999 and 22 December 1999, and the Directions Hearings of 2 February 2000 and 21 February 2000 before Senior Member Barbour.
conference before conference registrar desses of 3 august 1999 at the aat and later eventsIn his evidence in chief, and his statement of 10 August 1999 (Exhibit A19), Mr Bell denied knowledge of the conference conducted on 3 August 1999 at which he was represented by Mr Peter Frazer of counsel. He said he did not find out about the conference until after the matters before the Tribunal had been dismissed on 21 February 2000, and after telephoning Mr Frazer in March or April 2000, and making inquiries about progress of the matter.
Mr Bell was cross-examined extensively by Mr Young regarding his knowledge of the conference of 3 August 1999. Mr Bell said:
Mr Bell: "Most of the problems or most of the conferences and everything that I became more aware of them when it had been struck out. I don't recall being made aware of the one in August 1999. That's not to say I wasn't. I just don't recall being made aware of it."
Mr Young also cross-examined Mr Bell on his knowledge of the joinder, including the dates of the joinder of the Bells' four applications relating to the 1993 and 1994 tax years, with the 1992 applications already before the Tribunal. Mr Bell's replies were to the effect that he thought "it was all one case". Mr Bell also agreed that the applications for the 1993 and 1994 years were lodged on approximately 26 August 1999, while I noted that the actual date stamp of the Tribunal showed they were received on 21 September 1999. Further to the joinder, Mr Bell recalled having a discussion with Mr Fitzsimons in approximately mid-October 1999, and said that he remembered being concerned at having to pay another $1010. lodgment fee when he "thought it was all one hearing". When asked by Mr Young:
Mr Young:"So I take it then Mr Bell, in relation to paragraph 16 of your first statement, [Exhibit A18] were you simply just not able to say when you became aware that the proceedings were joined, is that your evidence?"
Mr Bell: "That's correct."Mr Bell's attention was drawn by Mr Connor to letters from his accountants which he agreed he must have received, in particular a facsimile dated 20 September 1999 (Exhibit A13, Annexure A) which stated in part:
"… I enclose a copy of a letter sent to you regarding the action required to be ready for the next conference with the AAT for the 1992 objections …"
His attention was also drawn to a letter dated 23 August 1999 (Exhibit A13) from Mr Fitzsimons to Mr Davidson which stated with regard to "the barrister" (Mr Frazer):
"He has advised that at the next conference the facts and contentions need to be prepared which will consist of the evidence to be provided and a basic outline of the matter."
Mr Bell:
"I'm not saying I haven't seen them but I don't recall them."Mr Bell was then questioned about his first statement (Exhibit A18), a record of a conversation with Mr Fitzsimons where the latter was said to have stated: "We need to get on with this, we need to prepare affidavits and prepare the case" and where Mr Bell said: "Yes but the Cooma argument is a lot further advanced that (sic) this." Mr Bell explained that "the Cooma argument" , was, as he understood it, a partnership which had an appeal before the Tribunal. His role was, he said, "a cross investment with Brogana and the – a Cooma company ...". Mr Bell said that Mr Trevor Bell had something to do with the Cooma matter.
When referred to the provision of information to Mr Trevor Bell, and the time and involvement required, the questioning was as follows:
Mr Connor: "Were you in March 2000 tied up with the supply of information in relation to the Melbourne case?"
Mr Bell: "I gave Trevor Bell some information but … I wasn't tied up doing it, it was just here's some drawings and some papers … It didn't take long to put together … couple of hours … There were some foolscap, some AO laminated drawings and I think there were some documents from a file relating to what Brogana had done or was doing which may have been a document like this that was already prepared …"Mr Bell agreed he had been in touch with Mr Fitzsimons in mid-October 1999 in relation to preparation for the conference scheduled before the Tribunal on 3 November 1999. As to Mr Davidson, he said that he had had "several hundred conversations with Mr Davidson", so could not recall specific ones.
In relation to the mid-October meeting with Mr Fitzsimons, Mr Bell said:
"I don't recall the exact conversation. I recall him wanting me to get things prepared but obviously it was for that conference. … Just affidavits and make sure everything was ready for him when he goes to see the Tribunal."
Mr Bell also said that he thought Mr Davidson already had all the information which was required for the Tribunal, and when he told Mr Davidson that information was required for Mr Fitzsimons, Mr Davidson had told him that Mr Fitzsimons already had it.
From the evidence before me, I was satisfied that the Bells' representatives knew of the conference held by telephone before the AAT on 3 August 1999. I was satisfied Mr Bell either had actual or constructive knowledge of the conference. Conference Registrar Desses' report of it indicated that Mr Frazer of counsel attended to represent the Applicants. She had recorded:
"Parties agree this is complicated matter & requested 2 months to clarify issues, ascertain evidence required & obtain evidence. Parties do not expect to have all evidence by next TPC [telephone preliminary conference]".
I was also mindful that Mr Bell agreed in reply to questioning that he had not paid the account of Mr Peter Frazer which I noted was dated 27 July 1999, amounting to in excess of $5000.
conference before conference registrar desses on 3 november 1999 at the AATMr Bell was referred to the contents of the Tribunal's record of the conference on 3 November 1999 before Conference Registrar Desses, including the mention of the parties' agreement to a timetable for the production of a Statement of Facts and Contentions. When asked whether he knew what such a statement was, Mr Bell answered "no". He also said that he did not have any conversation with Mr Fitzsimons about such a document.
In the course of examination of matters arising from the Conference Registrar's record dated 3 November 1999, which stated: "Mr Simons (sic) stated that they are waiting on information from T/payers. They will be organising meeting with taxpayers to obtain statements", Mr Bell was referred to Mr Poulos' statement dated 19 July 2000 and his own second statement dated 10 August 2000. In his reply to the contents of Mr Poulos' statement, Mr Bell stated:
"I refer to paragraph 5 of Mr Poulos' statement and deny that I had a conversation with either Steve Fitzsimons or Steve Davidson or any representative of either … I was not advised in writing or otherwise by Steve Fitzsimons or Steve Davidson of the need for provision of information to prepare facts and contentions as described in paragraph 5 of Mr Poulos' statement."
Mr Bell also maintained that he did not know anything of the conference on 22 December 1999 until after the matters had been dismissed, "crossed out" as he termed it.
Mr Young, referring to a letter of Mr Fitzsimons to Mr Bell of 20 September 1999, asked:
Mr Young: "So Mr Bell on 20 September 1999 you were aware, you were made aware, were you not, that there had been a conference in the Tribunal and there was another conference coming up?"
Mr Bell: "At around that date, yes."
Mr Young: "So Mr Bell I put it to you that what you said in paragraph 3 of your second statement is just plain wrong?"
Mr Bell: "Well it would appear that I've done that by this, made a mistake in what I've said, yes. I'm not saying it was definitely wrong because as I said, I still don't recall reading all these documents at the time."Mr Young asked Mr Bell to consider paragraphs 2,4, and 5 of his statement at Exhibit A19 bearing in mind paragraph 5 of Mr Poulos' statement at Exhibit R6, regarding the knowledge of the necessity to prepare documents. Mr Bell said that to the best of his knowledge, (paras 2,4,5 of A19) of his own statements were correct. Mr Young then cross-examined Mr Bell further:
Mr Young: "Mr Bell are you saying that you simply did not know about the conference on 3 November 1999?"
Mr Bell: "I am saying I don't recall being made aware of it."
Mr Young: "Paragraph 4 is actually a bit stronger than that isn't it Mr Bell in fact it's a denial – in fact you denied that you had a conversation with Fitzsimons or Mr Davidson or any representative of them?"
Mr Bell: "I was referring to the AAT hearing. I may speak to Steve Davidson every day of the week."Mr Bell was questioned about his Optus record of billing for his mobile telephone number, which showed he had retrieved his mobile phone messages at 3:13 pm and 3:25 pm on 3 November 1999 (Exhibit R2):
Mr Young: "So you accept that a call was made on your mobile phone to Spencer Steer?"
Mr Bell: "Yes". …
Mr Young: "I put it to you that you called Spencer Steer … at 3.28 on 3 November 1999?"
Mr Bell: "Yes, I did."Mr Young drew my attention to the fact that the time was some 45 minutes after the time listed for the conference at the Tribunal, and noted that that was in contradiction of paragraphs 2, 4, and 5 of the statement of Mr Bell of 10 August 2000 (Exhibit A19). Mr Bell said that it appeared he had confused the conversation he said he had with Mr Fitzsimons in mid-October with that of 3 November 1999 as referred to in paragraph 18 of his statement of 4 July 2000 (Exhibit A18).
After further lengthy questioning, Mr Bell agreed that he had been speaking with Mr Fitzsimons as follows:
"I don't think he rang up and said we have just finished a hearing and the judge said, point A, B and C. … I'm only going off memory, he wanted - he made comment that we had to get together the necessary information, the documentation in order to proceed. … The phone call was, okay, this is where we're at, this is what we need to start and put together, and that's when I interrupted him and said, well hang on a minute, what about this other one, I thought this is the process – I thought that's what the process was because I believed everything was running in conjunction with everything else. We're talking about 200 people involved and I thought they were going to try and have it once rather than 200 times …"
There was further questioning on that point, and I accepted that the telephone conversation with Mr Fitzsimons took place shortly after the conference with Conference Registrar Desses on 3 November 1999, and that Mr Bell had known about the conference prior to it being held, and its result immediately afterwards. I was mindful that Mr Fitzsimons represented Mr and Mrs Bell at the face-to-face conference held at the Tribunal on 3 November 1999. I was therefore unable to accept Mr Bell's evidence that he had not known of the conference in advance, or its result on that day.
I noted also that Conference Registrar Desses recorded Mr Fitzsimons saying that Mr Frazer was not available to attend the conference, and that he was awaiting information from the Bells. Her record indicated that Mr Fitzsimons informed the Conference Registrar "they" were organising a meeting with the Bells to obtain statements. As no documents had been filed, a timetable was agreed to between the parties as follows:
"Parties agreed to the following T/Table. Applicant to file & serve SF&C w/in 2 weeks. Resp to file & serve SF&C 2 weeks thereafter. Applicant to file & serve evidence they seek to rely on 4 weeks there after matter will be listed for F to F Conf in 7 weeks."
conference before conference registrar desses on 22 december 1999 at the AAT
Mr Bell was again referred to Mr Poulos' statement dated 19 July 2000 where Mr Poulos described the conference of 22 December 1999 as follows:
"[Mr Fitzsimons said to the Deputy Registrar over the telephone at this conference on 22 December] I have sent a letter to the Bells noting that various things had to be done but they have not been done. I have also sent a letter to counsel. I have not got a statement from the Bells. I'm getting no response from the Bells. I have told them that it was a serious matter."
Mr Bell was further referred to the Tribunal's record of the conference of 22 December 1999 where the words: "Applicant to seek instructions whether applicants wish to proceed or withdraw" appeared. Mr Bell said that he had never been asked by Mr Fitzsimons, Mr Davidson or Mr Frazer, nor by the Tribunal itself whether he wished to proceed or withdraw. I noted, however, that Mr Connor in making submissions on behalf of the Bells at the close of the hearing submitted that it had been their intention at all times to proceed with the reviews before the Tribunal.
In respect of the conference on 22 December 1999, I noted that listing notices were forwarded to Mr and Mrs Bell care of the business address of Spencer Steer. I was mindful that when Conference Registrar Desses realised there was no appearance on behalf of the Applicants, she telephoned Mr Fitzsimons whom (she recorded) as apologising, saying that "he thought the barrister had contacted the Tribunal." It seems that Mr Fitzsimons attended by telephone, while representatives for the Respondent were present at the Tribunal with the Conference Registrar. The report indicated the timetable of the previous time was repeated and that the Respondent made an application to have the matter struck out if the Applicant failed in future to attend or comply with directions of the Tribunal.
I was satisfied that the Applicants were represented before the conference conducted at the AAT on 22 December 1999, and that their representative was able to make any contribution or representations on their behalf that he considered necessary.
directions hearing before senior member barbour of 2 february 2000 at the aatMr Bell was also directed to Mr Poulos' statement regarding the circumstances of the directions hearing conducted by Senior Member Barbour on 2 February 2000, in which Mr Poulos stated that Senior Member Barbour reported: "I've received a message saying the applicants would not be attending." Mr Bell replied: "I have no idea what this is about."
In relation to why no documentation was prepared for the directions hearing of 2 February 2000, Mr Bell said that he did not recall Mr Davidson or Mr Fitzsimons speaking to him about providing facts or paperwork in January 2000. Mr Connor questioned Mr Bell regarding statements of Mr Poulos dated 19 July 2000.
Mr Connor then put to Mr Bell:
"Senior Member Barbour said: I do not accept that John Bell's involvement with another matter is a sufficient excuse. Is it the case that you were not involved in another matter?"
Mr Bell replied: "No, not at all."
….
Mr Connor: "Senior Member said words to the following effect [regarding the Cooma matter] "What is taking their time they were operating the partnership". That's an incorrect statement is it?"
Mr Bell: "Absolutely".In reply to further questioning about the conference of 22 December 1999, Mr Bell said that he had had no correspondence regarding it, nor had he heard from Mr Fitzsimons until after the conference had taken place. When read the words said to have been used by Senior Member Barbour on 2 February 2000 regarding his inclination to strike the matters out, Mr Bell said he did not recall knowing that the matters were at risk of being struck out. Neither could he recall the deadline of 11 February 2000 set for the lodgment of documents.
Mr Young further cross-examined Mr Bell regarding his knowledge of the fixtures at the Tribunal and his communications with Mr Fitzsimons. He asked Mr Bell if he had had a conversation with Mr Fitzsimons shortly after the directions hearing of 2 February 2000.
Mr Young: "… I put it to you that there was a conversation [with Mr Fitzsimons] shortly after 2 February 2000 and Mr Fitzsimons told you about the directions hearing in the Tribunal of 2 February 2000. He told you about the short time now to respond to the request for information, and Mr Fitzsimons said words to you to the effect, that 'we cannot do the job on promised money.'"
Mr Bell: "No, I don't recall a conversation."I was mindful that notices for the directions hearing of 2 February 2000 were sent on 17 January 2000 to the parties by the Tribunal, and that the Bells' notices were sent to the offices of Mr Fitzsimons. There was also a facsimile from the Associate to Senior Member Barbour dated 17 January 2000 in which he stated:
"Listing notice for this matter follows. Your participation in the Telephone Directions Hearing is compulsory. Please confirm your participation as soon as possible."
A reply from Mr Fitzsimons followed by facsimile on 2 February 2000 indicating he had not received notices and requesting an adjournment, which was not granted. On the basis of that, Mr Fitzsimons attended by telephone on that day. I was satisfied that Mr and Mrs Bell had at the very least, constructive knowledge of the directions hearing on 2 February 2000, and that their representative had instructions to represent them, and that he sought an extension of time to lodge statements at the directions hearing on that day.
directions hearing before senior member barbour of 21 february 2000 at the aatWhen his attention was drawn to the statement of Mr Fitzsimons who informed Senior Member Barbour on 21 February 2000 that the Bells had by then deposited sufficient money in order for the Statement of Facts and Contentions to be prepared, Mr Bell said that he did not recall being asked to deposit monies in January or February 2000. He also said that: "Steve Davidson is always asking for money but …"
As to the issue of $50,000. to be deposited in Mr Davidson's account in connection with the cases before the Tribunal; Mr Bell said that he did not recall conversations about the cheque having to be cleared before other professionals could be briefed in connection with the preparation of the case.
Mr Young referred Mr Bell to paragraph 18 of his statement dated 10 August 2000 where he had deposed: "… I was unaware and not advised that third parties needed to be retained for the purposes of the application of my wife and me." Mr Young suggested that the statement was wrong and that Mr Bell knew that solicitors and barristers needed to be retained. Mr Bell insisted it was correct and said:
"What I'm saying in paragraph 18, is that I was unaware and I wasn't advised that additional people had to be obtained other than those we were already talking to, which would have been Spencer Steer, Mr Bunting and the gentleman he was talking to at the time, who was Peter Frazer."
I noted that there were a number of undated handwritten file notes on Spencer Steer letterhead produced on summons by Spencer Steer, apparently from Mr Fitzsimons to Mr Bell at (amongst others), folios 65, 68, 77 of "Chronology of Events with Description of Events and Reference Source")("the Young folder"). In connection with those notations, Mr Young asked again:
Mr Young: "Could I put it to you, that you had a conversation with Mr Fitzsimons on or about Friday,18 February 2000, where you said words to the effect to Mr Fitzsimons that the sum of $50,000. had been telegraphically transferred to Spencer Steer's account to cover costs and Mr Fitzsimons said to you, words to the effect that he would need to check that the funds were cleared before he would engage third parties and in the event it was probably too late for purposes of the Tribunal. I put it to you that that conversation took place Mr Bell?"
Mr Bell: "No, I definitely never said that I put $50,000. into anyone's trust account."
…
Mr Young: "Do you recall having a conversation with Mr Fitzsimons after 21 February 2000 where Mr Fitzsimons told you that your Tribunal case had been dismissed because the information was not ready. Do you recall that?"
Mr Bell: "I recall I rang Mr Fitzsimons."Other file notes of Mr Fitzsimons drawn to Mr Bell's attention included the following, Documents B5 and B6 in the Young's folder: At B5: "Told Bell about hearing and short timeframe to now respond to request for information. We cannot do the job on promised funds". Mr Bell agreed with what he had written in his statement at paragraph 19, which was that he had no knowledge of the conversation recorded at document B5. As to Document B6 which recorded: "Spoken to John re urgency of the matter still is trying to obtain more time to get funds", Mr Bell said: "Don't know the conversation", and: "Spoke to J Bell, case dismissed because info not ready. This was indicated to John and has now happened."
Mr Bell denied knowledge of the content of these file notes except for a conversation with Mr Fitzsimons on 28 February 2000 after the dismissal of the applications on 21 February 2000.
Mr Young asked Mr Bell about a letter of 20 September 1999 from Spencer Steer to Davidsons with an enclosure for Mr Bell regarding preparation for the next conference at the AAT.Mr Bell answered "yes", in reply to a question from Mr Young as follows: "You were aware then that action had to be taken to be ready for the next conference in the AAT?"
In a further question from Mr Young: "You were aware that something next had to happen in the AAT?" Mr Bell answered: "Yes".
I was satisfied from the questioning of Mr Bell and his replies to those questions, that by 20 September 1999, Mr Bell knew that Statements of Facts and Contentions and other documents had to be prepared, and that a Hearing, subsequently postponed, had been set down for 7 October 1999. I was also satisfied that at 20 September 1999 Mr Bell knew he had outstanding accounts with his financial advisors and that he had been advised $30,000. was required to be deposited so that work on his applications could commence.
Mr Young continued with cross-examination of Mr Bell as follows:
Mr Young:"So you're aware that you were required to remit funds before the work would proceed, are you aware of that?"
Mr Bell: "I'm aware that they requested funds before they were going to do too much."
…
Mr Young: "You were aware, that again a considerable amount of time involved in the taking of Narelle's statement of both solicitors and barristers?"
Mr Bell: "Can I get a definition of aware like when I'm saying I'm aware am I saying that I agree that that is the case? Because I don't agree."
Mr Young: "I'm not asking you to agree Mr Bell, I'm asking you if you had knowledge if you were aware of the requirement in this document?"
Mr Bell: "Yes I was." [at 20 September 1999]
When asked whether Mr Fitzsimons' file note, which reflected that Mr Bell was "tied up with the Cooma case" and could not get to Sydney to consult a lawyer was correct, Mr Bell said that it was not.
I then noted from cross-examination and from Exhibit R4, and R5, records of Optus telephone call billings, that Mr Bell had spoken with Mr Davidson, Mr Frazer and Mr Fitzsimons on 2 March 2000 whereas in his statement Exhibit A19 he had deposed that the conversations about the dismissal of the Bells' applications had been 28 February 2000.
Mr Bell was recalled to give evidence regarding his statement dated 6 March 2001, which was tendered on the fourth day of hearing, 7 March 2001, and marked Exhibit A25. Mr Young cross-examined Mr Bell with regard to the contents of his tax return at Exhibit A25. I noted that Mr Bell did not appear to have considered the figures there and could not explain a figure of $13,520. shown as a loss which may have been a management fee. Mr Bell said that he did not believe that it was a management fee but that it may have been consulting income.
I was satisfied from the above evidence given by Mr Bell that he knew about the directions hearing at the AAT on 21 February 2000, and that his representative had instructions to appear for him and seek a further extension of time to lodge documents which in fact was not granted.
EVIDENCE OF THE APPLICANT - NARELLE GAY BELLMrs Bell, a hairdresser by profession, whose statements of 4 July 2000 and 10 August 2000 were before the Tribunal as Exhibit A21 and Exhibit A22, gave oral evidence.Mrs Bell said that she had owned her own hair dressing salon at one time, but had not worked for some time. She said that Mr Davidson had looked after her accounting, but said she could only understand some of it.
Mrs Bell said that her knowledge of Tribunal proceedings in the period 1 July 1999 to the end of February 2000 was through her husband, and not because of contact with either Mr Davidson or Mr Fitzsimons. Mrs Bell acknowledged that she had signed documents with and for her husband and had been a director of his company in the past, but said that she had never worked in his business.
Mr Young asked:
Mr Young: "So everything that you know is what you've been told by John Bell."
Mrs Bell: "Correct."
Mr Young: "Did John Bell tell you, do you recall having any conversations with John Bell in that period, 1 July 1999 through to the end of February 2000, concerning the carriage or the progress of what was happening with your applications in the Tribunal?"
Mrs Bell: "No."Mrs Bell acknowledged in cross-examination that she realised she had tax in the order of $357,454. assessed against her which she had not paid. She said that she had not realised that there was a further late penalty amount of $111,000. owing but agreed that in the "last few days" [before giving her evidence] she had learned that the total amount owing by her was $519,000.
I noted that In answer to my questions Mrs Bell said that she had been a director of a company associated with Mr Bell in the past, but presently had no further involvement. No specific submissions were made regarding Mrs Bell's knowledge of matters impacting on the dismissal of the claims before the Tribunal. I accepted Mrs Bell's evidence that she had little or no knowledge of any issues in that regard.
EVIDENCE OF STEPHEN WILLIAM DAVIDSON – ACCOUNTANTMr Davidson of Davidson Accountants, who has acted as accountant for Mr and Mrs Bell for approximately twenty years, gave oral evidence before the Tribunal. His statement of 18 August 2000 and attachments was before the Tribunal as Exhibit A24.
Mr Davidson gave evidence that he did not know of any conference at the Tribunal on 3 August 1999 as also stated at paragraph 61 of Exhibit A24 with regard to matters related to Mr and Mrs Bell. However, he was then referred by Mr Young to the record of a telephone conversation with "Belinda" of the Tribunal on 12 June 1999 regarding a facsimile transmission for Spencer Steer, and paragraph 3 of folio 143, which indicated that he knew of such conference on 3 August 1999. When asked by Mr Young:
Mr Young: I take it that you were aware that something, be it a telephone conference or a face-to-face conference was to occur in the Tribunal, was proposed to occur in the Tribunal on 3 August 1999 and you were aware of that?"
Mr Davidson: "I would say to you sir, that if you go back to a number of the correspondences in letter format about proposed conferences or communications, that the briefing person or the person managing the case, Spencer Steer had made comments that there were discussions that were going to happen a number of times including a time schedule of which it was certainly stated in a letter format, but I had no evidence, no knowledge, other than a bi-line that something was to occur on that date. I didn't know it was to do with the AAT. It could have been a conference between the person and Mr Bell."Mr Davidson gave evidence that the first information he had that the Bells' applications had been dismissed was after his receipt of documents on 2 March 2000 relating to the dismissal.
I found that Mr Davidson, who had handled the Bells routine accounting for at least 18 years, referred the Bells to Mr Bunting in early 1999 and that the latter in turn made a referral to Mr Fitzsimons and others for advice regarding the Bells' more complex taxation matters. He may not have known precisely the dates for the different fixtures at the Tribunal apart from the conference of 3 August 1999, and he did not attend on behalf of the Bells. However I noted Mr Bell's evidence that he spoke often with Mr Davidson very often and that Mr Davidson was always asking for money, consistent with Mr Bell not having provided funds as required, certainly not for the preparation of documents for the AAT matters.
EVIDENCE OF STEPHEN ALOYSIUS FITZSIMONS – CHARTERED ACCOUNTANTMr Fitzsimons, a chartered accountant for over 20 years, and the taxation partner of Spencer Steer since 1996, gave oral evidence before the Tribunal. Mr Fitzsimons said that his practice included certain compliance work for accounting clients, returns and advice work, but not litigation. He said that he had not personally represented anyone before the Tribunal until this occasion arose with regard to the Bells. He said that he had provided expert reports to solicitors in litigation matters, but had not previously done so for Tribunal matters.
Mr Fitzsimons was asked about his contact with Mr Peter Bunting, solicitor/chartered accountant practising in tax. He said Mr Bunting referred work to Spencer Steer in accounting and tax matters, and told the Tribunal that he had commenced involvement in the Bell matter in February or March 1999 as a result of a referral by Peter Bunting. Mr Fitzsimons said that the nature of his involvement was "to prepare objections to be lodged against amended assessments for Mr and Mrs Bell and then to be involved in instructing a barrister to conduct argument of those objections."
Mr Fitzsimons said that he had not prepared the Bells' 1992 objections, but that he had prescribed what was to go into the applications for review for the 1992 returns. He said that he had a role in the preparation of the Bells' objections for the 1993 and 1994 years, which were dated 1996 and signed by Greg Pearson, solicitor for and on behalf of the taxpayers.
Mr Connor questioned Mr Fitzsimons regarding his knowledge of documents before the Tribunal, in particular the T-documents. Mr Fitzsimons said that the Bells' documents had been sent to Peter Frazer of counsel. Mr Connor raised the provision of documents by the Commissioner pursuant to section 14ZZ(f) of the Taxation Administration Act 1953 ("TAA") and their adequacy.
Mr Connor put to Mr Fitzsimons: But it is your evidence that you yourself did not go through the T-documents to ensure the Commissioner put everything relevant before the Tribunal?
Mr Fitzsimons: No I didn't do that.
Mr Connor: And if anyone has done that, that – you thought that the responsibility for that rested with Mr Frazer is that right?
Mr Fitzsimons: That would be correct."Mr Connor then asked Mr Fitzsimons:
Mr Connor: "What did you understand the difference to be between statements of facts, issues and contentions and evidence as at 1999 when you were acting for the Bells?"
Mr Fitzsimons: "In regard to this case, that was a matter that was going to be handled by the barrister and at an appropriate time a solicitor would have taken all that information from Mr and Mrs Bell and worked with the barrister to prepare all those items."Mr Connor asked:
Mr Connor: "You did not see yourself as having the requisite skill to prepare – and experience to prepare a statement of facts, issues and contentions?
Mr Fitzsimons: "No."Mr Fitzsimons said that Mr Frazer spoke to him after he attended the 3 August 1999 conference at the Tribunal on behalf of Mr and Mrs Bell, a conference which Mr Fitzsimons did not attend.
Mr Young drew Mr Fitzsimon's attention to many of the folios in the Young folder including folios 46 and 48 with annotations "Copy sent to John in Newcastle". Mr Fitzsimons confirmed that the notations were in his handwriting. With regard to folios 46-49, Mr Young asked Mr Fitzsimons whether he had sent these to the Bells. Mr Fitzsimons confirmed he had sent the notices for the 3 November 1999 conference at the Tribunal to Mr and Mrs Bell soon after they had been received, that is by 30 September 1999.
Mr Fitzsimons was cross-examined regarding whether he had contacted Mr Bell by telephone immediately after the conclusion of the 3 November 1999 conference at the Tribunal, and whether he had left a message for Mr Bell to return his call. He replied that when contact was made with Mr Bell, perhaps the day following the conference, he remembered discussing the time frame agreed at the conference for the production of documents. Mr Fitzsimons said that he recalled emphasising the urgency of the situation to Mr Bell. When shown the telephone records of 3.28 pm of 3 November 1999 indicating he had spoken to Mr Bell on his mobile telephone on the day of the conference, Mr Fitzsimons agreed he may have forgotten that it had been on the same day immediately following the conference.
When questioned as to the conference of 22 December 2000 and the call from Conference Registrar Desses on that day, Mr Fitzsimons said: "My recollection was that I wasn't actually aware that the conference was going to happen on that day."
Mr Fitzsimons also said:
"The nature of the misunderstanding was that that call was just before Christmas, … and I did not understand that 17 January was an important date on the basis that our office closes down. If at the time, in that December conference, it had been clearly stated that 17 January was a date to do various things by, I would have said that it was impossible to do."
Mr Fitzsimons, although not certain exactly on which occasion the question was asked, said that in reply to Conference Registrar Desses' question regarding whether the Bells intended to proceed with the case, he would have answered in the affirmative.
Mr Fitzsimons was taken by Mr Young through his file with regard to the absence of notices for the conference of 22 December 1999. Mr Fitzsimons confirmed that his practice was to keep an original, write a file note on the original letter and send a copy of all relevant correspondence to the Bells. He had no precise recollection of what he had done with regard to any notices for the conference of 22 December 1999.
Mr Fitzsimons replied to questioning by Mr Connor which indicated to me that he knew the Bells were required to attend the Tribunal in person for the directions hearing of 2 February 2000.
Mr Connor then referred Mr Fitzsimons to Mr Poulos' statement dated 19 July 2000, specifically page five. Mr Fitzsimons agreed with the statement there attributed to him which indicated as follows (regarding 2 February 2000):
"I was not aware until yesterday that a directions hearing was set down and that when I found out that no extension of time would be granted, I attempted to contact legal advisors but have been unable to obtain advice."
Mr Fitzsimons said that he recalled himself as having understood as follows:
"The extension of time that I was referring to there, was the fact that on the next hearing the whole matter was going to be finished, struck out. So there was no extension of time on that strike out date. I'm pretty sure that that's what I meant there."
Mr Fitzsimons gave evidence that he did not contact either Mr Fraser or Mr Davidson after the 22 December 1999 conference, nor after the directions hearing of 2 February 2000. In direct contradiction of this, Mr Fitzsimons replied in cross-examination when asked by Mr Young whether he had contacted Mr Bell after the 2 February 2000 conference that he did. He said that: "I was stressing how serious the matter was getting and it was going to be dismissed and until we had money in the bank, we couldn't actually proceed."
Mr Fitzsimons said that he did not contact the other people involved immediately after the 21 February 2000 conference either. He said that he did not know the whereabouts of Mr Frazer at that time, and was not in contact with him about the Bell matters. Mr Fitzsimons said that he did not get involved in taking any witness statements, and did not do any work on the matter apart from the telephone calls, between 3 November 1999 and 22 December 1999.
When questioned about his undated file notes produced under summons, Mr Fitzsimons said that he was not "diligent" in making file notes, neither in dating them, and made them either during a conversation with the person, or in the alternative, when he prepared his time sheets once a week or once a fortnight. He also said that for minor "short duration" telephone calls, he did not keep files notes, (Transcript p55 7.3.01). I noted that as a result, the dates on some file notes were quite inaccurate as the one on page 94 of the Young folder which had apparently been written some weeks after the date shown.
Mr Fitzsimons said that he had written to the Bells and to Mr Davidson in September 1999 and when asked by Mr Connor: "Did you understand on 22 December that that was required?" Mr Fitzsimons indicated he knew various statements were required for the Tribunal. He said:
"Well the arrangements that I made were that I – well there were two things: I informed Mr Bell that all of this work needed to be done and I also told him that we, my firm, wouldn't be proceeding until we had money in our trust account to pay for all that."
Mr Fitzsimons said that he spoke to Mr Bell on several occasions, and remembered one letter now (incorrectly) dated 19 April 2000 where he stated:
"I need your immediate attention. I again state that I cannot proceed to instruct third parties without funds in our trust account. Promises of moneys is not sufficient. I am very concerned that if appropriate statements are not provided by you the matter could be dismissed. Please contact me urgently."
Mr Fitzsimons identified problems with his computer regarding the dating of letters, and said that the letter referred to above was sent to Mr Bell just after the 22 December 1999 conference. He then changed his mind and said it must have been after the case was dismissed in February 2000.
In re-examination Mr Fitzsimons said that he understood he did not have to do anything over the January period when his office would be closed, and that there was to be another conference in February 2000. Mr Fitzsimons said that he realised on 2 February 2000 or the day before, that in fact his understanding of matters was erroneous. He also said that at the time of the reinstatement applications, he informed the Tribunal that he was no longer involved on behalf of the Bells.
When asked whether he had discussed the dismissal of the case by the Tribunal with Mr Bell or Mr Davidson, Mr Fitzsimons said that he didn't speak to "the Davidson people" until they contacted him because:
"Well, fairly early on once the – and we had one fairly long conference in the middle of 1999, May or so of '99 with Steve Davidson present there and I was sending, initially corresponding with him directly but he fairly early on in the matter said I should be directing all my correspondence directly to John Bell, not always through his office."
Mr Fitzsimons confirmed that from 6 October 1999, he had directed all correspondence directly to the Bells rather than through Davidson. In that connnection, Mr Fitzsimons confirmed that from the period 1 October 1999 to April 2000, there was only one letter on file from him to Mr Bell.
Mr Fitzsimons was referred to paragraph 21 of Mr Poulos' statement where he had paraphrased Mr Fitzsimons as saying that the Bells had dispensed sufficient funds on about 18 February 2000 into Spencer Steer's account to enable completion of the Statement of Facts and Contentions for the Tribunal. Mr Fitzsimons confirmed he had said words to that effect.
When asked by Mr Young whether his accounts clerk had been alerted to check for the $50,000. which he expected to be deposited by Mr Bell before the 21 February 2000 directions hearing, Mr Fitzsimons said that he had spoken with Mr Bell after 2 February 2000, but before 21 February 2000 and had been expecting the funds to be deposited in that interim period. Mr Fitzsimons confirmed he telephoned Mr Bell after the directions hearing of 21 February 2000 and left a message, and spoke to him when Mr Bell returned the call.
Mr Fitzsimons explained that what was meant in the Mr Poulos' statement dated 19 July 2000, where he (Mr Fitzsimons) was reported to have said that he could not contact legal advisors. Mr Fitzsimons said that he had asked a solicitor who worked on the same floor as he did, for advice. He had followed the advice and attempted to get a barrister to attend at the Tribunal on 2 February 2000, but had been unable to do so. He also said that he had seen no official notification for the directions hearing of 2 February 2000.
The conclusion I have drawn from the evidence of Mr Fitzsimons is that he represented the Bells in their applications before the Tribunal, and was concerned because payment by them had not been made. He was therefore unable to engage a barrister to prepare the proofs of evidence and Statement of Facts and Contentions which he said he was unable to prepare himself. His evidence which I accepted in relation to notices he received, was that whenever he received notification of the fixtures before the Tribunal, he copied them and sent them on to Mr Bell. I accepted he also spoke with Mr Bell after his AAT appearances. As to the directions hearing of 2 February 2000; notwithstanding Mr Fitzsimons' evidence that he had not known of the directions hearing until the previous day, I was satisfied from the evidence that he did know of it beforehand. He also knew that the Tribunal required Mr and Mrs Bell to attend in person, and had been in contact both with them and with the Tribunal about the directions hearing of 2 February 2000.
SUBMISSIONS AND CONCLUSIONSI am obliged to take into account all the evidence, submissions, legislation and case law before me to make the correct and preferable decision regarding whether:
A discretion should be exercised pursuant to section 42A(9) or (10) of the AAT Act to reinstate the applications of Mr and Mrs Bell relating to their 1992-1994 tax returns, dismissed pursuant to section 42A(5)(b) of the AAT Act; or
In the alternative, whether an extension of time can be allowed to enable new applications to be made pursuant to section 29(7) of the AAT Act.
Both Mr Connor and Mr Young made oral closing submissions and I was provided with their written submissions as follows:
Applicant: 4 July 2000
28 February 2001
19 March 2001
24 April 2001
Respondent 19 July 2000
22 February 2001
4 March 2001
9 April 2001
I was mindful that Mr Connor and Mr Young naturally approached their oral submissions by emphasising different points. Mr Connor did not consider that credit of the Applicants, which encompassed an entire section in the written submissions of the Respondent dated 9 April 2001, was appropriate to be considered in the context of a reinstatement application. I noted the submissions of the Respondent with regard to credit, and was mindful of Mr Connor's objections. I was satisfied that credit of the Applicants was a relevant factor in weighing up their evidence, and in the decision whether to exercise the discretion to reinstate.
Mr Connor also submitted (in the context of whether Mr Fitzsimons should be called to give evidence):
"It is obviously not something that is going to be resolved as a result of Mr Fitzsimon's evidence either, it is going to be obviously an incredibly difficult question to work out what each person knew at particular times and that is not at the forefront of our case. It is really that there are serious questions that should be heard on the merits and that is very much to periphery (sic) trailing through the events that led to the dismissal."
I found that Mr Fitzsimons' evidence was of assistance in establishing to my satisfaction what Mr Bell knew about the way matters were proceeding at the AAT.
Mr Young commenced his oral submissions by pointing to inconsistencies in Mr and Mrs Bell's applications before the Tribunal, indicating first that the basis of the applications for reinstatement made in the written submissions of the Applicants of 4 July 2000 later changed. I have not put much weight on the fact that the thrust of the submissions changed after Mr Connor had been briefed, and have not relied just on the earliest submissions of either party in coming to a decision.
However I make the following comment here regarding Mr Bell's demeanour before the Tribunal. He was on several occasions evasive in his replies, and I made comment on that during the hearing (Transcript p62-66 of 18.12.2000). There were also a number of inconsistencies which were identified when statements made by him in writing which were Exhibits before the Tribunal, were put to him in cross-examination.
Taking into account all the evidence, submissions, legislation and case law involved, I have then proceeded to consider whether the discretions in sections 42A(9) or (10) should be exercised to reinstate the Bells' applications.
I have also noted that the parties disagreed whether section 29(7) of the AAT Act would apply in this case in order to enable an extension of time to lodge fresh applications. I am mindful that the principles for consideration of an extension of time application have been very well established, in particular in the cases of Hunter Valley Developments Pty Limited v Cohen, Minister for Home Affairs and Environment (1984) 3 FCR 344, and Brown v Commissioner of Taxation [1999] FCA 563, and have considered the issue further on in these reasons.
WHETHER THE DISCRETION TO REINSTATE MR AND MRS BELL'S APPLICATIONS SHOULD BE EXERCISED PURSUANT TO SECTION 42A(9) OR (10) OF THE ADMINISTRATIVE APPEALS TRIBUNAL ACT 1975Mr Connor submitted that the Applicants were seeking reinstatement pursuant to sections 42A(9) or (10) of the AAT Act because their applications had been dismissed pursuant to section 42A(5)(b) of the AAT Act.
Mr Connor in his submissions recognised, and I agreed, that reinstatement pursuant to section 42A(8) of the AAT Act could only be applicable had the applications been dismissed pursuant to section 42A(2). Consideration of section 42A(8) of the AAT Act was therefore, not relevant to this case.
Mr Young, relying on Brehoi v Minister for Immigration and Multicultural Affairs (1999) 58 ALD 385 submitted that reinstatement pursuant to subsections 42A(8) and (9) did not apply in this case due to the dismissal having been made pursuant to section 42A(5)(b) of the AAT Act. Mr Connor in his final closing submissions dealt as follows with the application of section 42A(9) of the Act:
"The applicants would wish to preserve the position in relation to section 42A(9) and put formally that an application be based on section 42A(9) but appreciating that the Tribunal is not in a position to grant an application under section 42A(9), having regard to a decision of the Full Court in Brehoi."
I was mindful that in Brehoi (supra), which is of course, binding on this Tribunal, their Honours Whitlam, Moore and Katz JJ discussed the amendments to the AAT Act by the Administrative Appeals Tribunal Amendment Act 1993 (Cth) and insertion of the new provisions with regard to reinstatement. Their Honours held that although section 42A(8) only applied to a dismissal pursuant to section 42A(2), section 42A(10) was not so limited. Their Honours, referring to the Report of the Review of the Administrative Appeals Tribunal 1991 and the Explanatory Memorandum, linked sections 42A(8) and 42A(9) of the AAT Act to dismissal pursuant to section 42A(2) and certain sub-sections of section 42A(1) of the AAT Act which do not concern me in this matter.
In paragraph 27 of Brehoi (supra) their Honours stated:
"As to what became s 42(8) and (9), the report had identified as a problem (See App 9, Proposal 28) [Review of the Administrative Appeals Tribunal 1991] the following: 'An application which has been dismissed for failure to appear cannot at present be reinstated although such failure is found to be excusable.' Its proposed amendments to overcome that problem had been to provide (relevantly): first, that 'the applicant may apply to the tribunal within 28 days of receipt of notification for dismissal for a direction that the dismissal be vacated'; and, second, that: 'if the tribunal is satisfied that it is appropriate to do so, it may so direct.'
28 As to what became s 42A(10), the report had identified as a problem (see App 9, Proposal 29) the following:
The amendment proposed by proposal 28 would deal with the situation of vacation of a dismissal after failure to appear, and that failure is later found to have been excusable. There remains a need, both generally and if Proposal 23 [which was that an applicant be permitted to 'discontinue' an application in writing] be enacted, for there to be a power to vacate a dismissal where the application has been dismissed by administrative error on the part of the AAT.
In other words, the problem identified was the absence of a 'slip' rule. The report's proposed amendment to overcome that problem had been to provide that 'the tribunal may vacate the dismissal of any application for review where such dismissal has occurred through administrative error on the part of the tribunal.'
29 The Senate explanatory memorandum for the bill which became the 1993 Act, in explaining the clause which became, without debate or amendment, s 42A(10) adopted (at p11) the language which had been used in the report, saying that the clause provided for the tribunal 'to reinstate an application which has been dismissed through administrative error on the part of the tribunal.'"
I was therefore mindful that to reinstate an application dismissed pursuant to section 42A(5)(b) of the AAT Act, I was obliged to look to the discretion in section 42A(10) of the AAT Act, noting that section 42A(10) of the AAT Act contemplates the possibility of the discretion to reinstate being exercised where "it appears to the Tribunal that an application has been dismissed in error". As relevant, section 42A of the AAT Act provides:
"42A Discontinuance, dismissal, reinstatement etc. of application
…
(5)If an applicant for a review of a decision fails within a reasonable time:
(a)to proceed with the application; or
(b)to comply with a direction by the Tribunal in relation to the application;
a presidential member or senior member, on behalf of the Tribunal, may dismiss the application without proceeding to review the decision.
(6)If, under this Act, the Tribunal dismisses an application or an application is dismissed on its behalf, the proceeding to which the application relates, unless it is reinstated under subsection (9) or (10), is taken to be concluded.
(7)Before exercising its powers under subsection (2), the Tribunal must be satisfied that appropriate notice was given to the person who failed to appear of the time and place of the directions hearing, conference, mediation or hearing, as the case may be.
(8)If the Tribunal, under subsection (2), has dismissed an application (other than an application in respect of a proceeding in which an order has been made under subsection 41(2)), the person who made the application may, within 28 days after receiving notification that the application has been dismissed, apply to the Tribunal for reinstatement of the application.
(9)If it considers it appropriate to do so, the Tribunal may reinstate the application and give such directions as appear to it to be appropriate in the circumstances.
(10)If it appears to the Tribunal that an application has been dismissed in error, the Tribunal may, on the application of a party to the proceeding or on its own initiative, reinstate the application and give such directions as appear to it to be appropriate in the circumstances."
Mr Connor made submissions regarding what he termed the "pre-condition" to the existence of the power to reinstate, namely "if it appears to the Tribunal that an application has been dismissed in error …" (section 42A(10) of the AAT Act). He submitted that provided this pre-condition could be satisfied, then the Tribunal had discretion to exercise its "broad discretionary power" to reinstate the applications.
Mr Connor then submitted that the words of section 42A(10) of the AAT Act and its reference to error were quite clear, and that there was no ambiguity. The error referred to in section 42A(10) of the AAT Act he submitted, could be any error, and not necessarily that of the Tribunal. Mr Connor submitted that given the rules of statutory interpretation, and pursuant to section 15AB(1)(b)(i) and (ii) of the Acts Interpretation Act 1901 ("the Acts Interpretation Act"), only if there was ambiguity, or if the ordinary meaning of the words led to a result that was manifestly absurd, could, or should one go to secondary materials. Mr Connor also submitted that the pre-condition could be satisfied as long as it "appeared" to the Tribunal that the applications had been dismissed in error. In this regard, he submitted that there did not need to be proof or certainty of facts. In support of his submissions he cited, Secretary Department of Social Security v Clear (1991) 23 ALD 22; Trevisan v Federal Commissioner of Taxation (1991) 101 ALR 26; and Secretary, Department of Social Security v Sword (1991) 23 ALD 52.
Mindful of the principles of statutory interpretation, I agreed that reference to secondary materials was indeed only appropriate where there is uncertainty regarding interpretation of what Parliament has drafted.
Mr Connor made further submissions regarding what was intended by "error" in subsection 42A(10) of the AAT Act, submitting that it did not simply comprise matters of the "slip rule". He compared it with the Rules of the NSW District Court and the body of principle developed in connection with setting aside of default judgments.
Mr Connor also submitted cases in which issues related to the "slip-rule" were raised, submitting they were there not confined the "slip" being that of the Court itself, (Charlie Brown Pty Limited v Green (Supreme Court of New South Wales, 25 August 1997, 4074/1194) and Tak Ming Co Ltd v Lee Sang Metal Supplies Co [1973] 1 WLR 300)). I am mindful of both these cases, noting that they do not in any way resemble the present case or consider reinstatement issues.
Mr Young, on the other hand, relying on Brehoi (supra), in particular on paragraphs 23-29 of the decision, submitted that it would have to be established that the application had been dismissed due to an error of the Tribunal on 21 February 2000 for reinstatement to be considered, and that it would then be through the application of section 42A(10) of the Act. It was not a question of error at large which was contemplated he said, but rather an error of the Tribunal.
Mr Young in the Respondent's written submission of 19 July 2000, also submitted that error meant an administrative error or omission in the nature of the slip rule (L Shaddock & Associates Pty Ltd v The Council of the City of Parramatta [No 2] (1983) 151 CLR 590 at 594-5) but that in the instant case it was not a slip by the Tribunal but rather "continuing failure on the part of the Applicants as from 3 November 1999 to comply with the directions of the Tribunal and file a statement of facts contentions and evidence."
I found that it was not entirely clear from the words of section 42A(10) of the AAT Act to whom the application "dismissed in error" was intended to be attributed, so in addition to considering their Honours in Brehoi (supra), I looked to section 15AB(1)(b)(i) and (ii) of the Acts Interpretation Act and the Explanatory Memorandum to the Administrative Appeals Tribunal Amendment Bill 1992. The latter states at paragraph 56 that the:
"New subsection 42A(10) provides for the Tribunal, on its own initiative, to reinstate an application which has been dismissed through administrative error on the part of the Tribunal."
Sections 15AB(1)(b)(i) and (ii) of the Acts Interpretation Act, as relevant, provide:
"15AB Use of extrinsic material in the interpretation of an Act
(1) Subject to subsection (3), in the interpretation of a provision of an Act, if any material not forming part of the Act is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
(a) …
(b) to determine the meaning of the provision when:
(i) the provision is ambiguous or obscure; or
(ii) the ordinary meaning conveyed by the text of the provision taking into account its context in the Act and the purpose or object underlying the Act leads to a result that is manifestly absurd or is unreasonable."
I agreed with Mr Connor's submission that section 42A(10) of the AAT Act was not simply concerned with correcting clerical or accidental errors. I was mindful of the discussion of error in Brehoi (supra) and accepted also what Deputy President Block found held in Taxpayer v Commissioner of Taxation (AAT 12330, 22 October 1997) as follows:
"The Tribunal does not agree with the Respondent's submission that subsection (10) is confined to an error of the 'slip-rule' type. It is true that the Explanatory Memorandum in respect of subsection (10) refers to an administrative error, but the subsection in its terms is not so confined, referring as it does merely to an error, and thus encompassing, in the view of the Tribunal, any type of error whether or not of the 'slip-rule' type. As Deputy President McDonald stated in Thomson and Comcare (AAT 10552, 24 November 1995):
"The words 'in error' used in s.42A(10) do not have a technical meaning and should not be given a narrow interpretation."I then proceeded to consider Mr Connor's submissions with regard to what errors the Applicant submitted had been made pursuant to section 42A(10) of the AAT Act in the dismissal of the applications on 21 February 2000 by Senior Member Barbour. I have also considered the general discretion to reinstate below.
Mr Connor referred to perceived errors both in his oral submissions, and as detailed at paragraph 3 of the Applicants' written submissions dated 28 February 2001 as follows:
"(a) Senior Member Barbour must be taken to have treated the applications as having been the subject of directions by the Tribunal prior to 2 February 2000 when in fact they had not.
(b) Senior Member Barbour incorrectly believed that the applications had been before the Tribunal since 31 May 1999 and for eight months. In fact, only the 1992 applications were filed on 31 May 1999 and the 1992 applications were in effect stood over to be dealt with the 1993 and 1994 applications, which were not made until about 23 (sic) September 2000.
(c) Senior Member Barbour incorrectly regarded section 42A(5)(b) as permitting the dismissal of an application for failure to comply with a direction per se."In considering these matters, I noted that there was no disagreement between the parties, and I accepted that in the lead-up to the dismissal of the applications, there had been conferences with Conference Registrar Desses on 3 August 1999, 3 November and 22 December 1999, and directions hearings before Senior Member Barbour on 2 February 2000 and 21 February 2000, the latter being the date of the dismissal of the applications by him.
alleged error one: "whether senior member barbour treated the applications as having been the subject of directions by the tribunal prior to 2 february 2000 when in fact they had not"In considering the first head of error of the Tribunal as alleged by the Applicant, that is "whether Senior Member Barbour treated the applications as having been the subject of directions by the Tribunal prior to 2 February when in fact the had not", I have noted that there was a timetable for the lodgment of Statements of Facts and Contentions agreed between the parties on 3 November 1999 and noted again in a further conference on 22 December 1999. These were documented as a result of conferences which took place before Conference Registrar Desses of the Tribunal. No Statements of Facts and Contentions or similar documents were lodged by the Applicants with the Tribunal or served on the Respondent by the agreed dates, so a directions hearing was held on 2 February 2000 with Senior Member Barbour presiding. That directions hearing was convened at the request of the Respondent to counter the Applicants' non-compliance with respect to timetables set at conferences. The Tribunal made a direction on 2 February 2000 in relation to timetabling and the lodging of documents in the Bells' applications.
I noted that further non-compliance with the direction of Senior Member Barbour of 2 February 2000 led at the request of Mr Fitzsimons, to an extension of time to 11 February 2000 to lodge documents. It was followed by the dismissal of the matters on 21 February 2000 for non-compliance with the direction of Senior Member Barbour. I was mindful that even by the date of the hearings before me, no Statements Facts and Contentions had been lodged on behalf of the Applicants.
I have later in these reasons for decision, by considering the evidence of the Applicants and other witnesses, dealt with the reasons for any non-compliance with timetables and a direction of the Tribunal.
For the present, I have noted that Mr Connor made submissions about each of the errors alleged to have been made. He drew my attention to the statement of Peter Poulos dated 19 July 2000, specifically a record of the conversation of Mr Poulos with Senior Member Barbour on 2 February 2000, which I have reproduced as relevant:
"Senior Member Barbour telephoned me and said words to the following effect:
'I have received a message saying that the applicants would not be attending. That is not acceptable to the Tribunal. I will call Mr Fitzsimons for the applicants and call you back.'
Shortly thereafter Senior Member Barbour telephoned me and said he had Mr Fitzsimons on the line. I said that Mr Gormly, Mr Martin, and Mr Keevers from the Australian Taxation Office were present with me and that I had the telephone on speaker phone so they could hear the directions hearing.
Senior Member Barbour said words to the following effect:'The matters were listed for directions hearing because the timetable set had not been complied with.'
Mr Fitzsimons said words to the following effect:
'I have had problems getting instructions from Mr Bell. He is was (sic) involved in another matter with the Tax Office in Melbourne.'
Senior Member Barbour said words to the following effect:
'The matters have been with the Tribunal since 31 May 1999 and eight months had elapsed with nothing happening. There has been an adequate opportunity for your client to provide you with instructions.'
Mr Fitzsimons said words to the following effect:
'Mr Bell has been asked to give us facts and paper work. He has not been able to put that down in writing.'
Senior Member Barbour said words to the following effect:
'I do not accept that John Bell's involvement in another matter is a sufficient excuse. The Tribunal and the tax office should indulge the applicants no further.'
I said words to the following effect:
'Mr Fitzsimons, what is the matter which was occupying Mr Bell's time in Melbourne.'
Mr Fitzsimons said words to the following effect:
'It is a matter involving the Cooma Community Investment Limited Partnership.'
…
Senior Member Barbour said words to the following effect:'Nothing has occurred following the December 1999 telephone conference and the Tribunal had noted that if no steps were taken by 17 January 2000 then a directions hearing would be set down.'
Mr Fitzsimons said words to the following effect:
'I misunderstood the December telephone conference.'
Senior Member Barbour said words to the following effect:
'The conference in December would have had no purpose.'
Mr Fitzsimons said words to the following effect:
'My lack of understanding – I am not a solicitor.'
Senior Member Barbour said words to the following effect:
'The conference in December was about timetabling and doing things in a certain timeframe.'
Mr Fitzsimons said words to the following effect:
'I was not aware until yesterday [1 February 2000] that a directions hearing was set down and that when I found out no extension of time would be granted I attempted to contact legal advisers but had been unable to obtain advice.
Mr Barbour said words to the following effect:
'Formal notification was sent out on 17 January 2000 and my associate had contacted Mr Fitzsimon's office on 27 January 2000, he did not receive a response and made a further contact on 31 January 2000 at which time you were informed of the directions hearing and its purpose.'
Mr Fitzsimons said words to the following effect:
'I had not received the letter from the Tribunal and I have been out of the office for the last week and a half. I ask that I be provided with a short time frame to get a Statement of Facts and Contentions filed noting that I understood that if that direction was not met then the applications may be struck out.'
Senior Member Barbour said words to the following effect:
'I had an inclination to strike the matters out but I will issue a formal direction that the applicants file and serve by Friday, 11 February 2000 a detailed Statement of Facts and Contentions setting out relevant issues, and all evidence including affidavits from Mr and Mrs Bell. If those directions were not complied with by close of business 11 February 2000 the Tribunal would proceed to dismiss the matters. I am making the position very clear to you that unless that was done the matters would be struck out.'"
I noted this submission, mindful of the principles enunciated, noting that in the present case the dismissal was not for want of prosecution of the case, which may have resulted in a dismissal pursuant to section 42A(5)(a) of the AAT Act rather than as actually occurred, a dismissal pursuant to section 42A(5)(b) for failing to comply with a direction of the Tribunal in relation to the application. I was mindful that the directions arose out of delays occasioned by the Applicants in following Tribunal procedures and timetables agreed at conferences.
Mr Young submitted that nowhere in the proceedings had the Bells provided a satisfactory explanation for the delay in producing documents or prosecuting their case before the Tribunal.
In opposing reinstatement, Mr Young in his written submission of 19 July 2000, stated that the reasons given by the Applicant for the delays in complying with timetables and directions of the Tribunal were all unacceptable to the Respondent. Amongst others, these appeared to be that the Applicants were involved in another Tribunal matter, and that funds had not been made available to the legal representatives to prosecute the matter before the Tribunal. Mr Young submitted that a further consideration raised by the Applicants in their written submissions had given a further reason for the delay being that the legal representatives had neglected to follow "proper instructions for the due carriage of their Applications".
In that connection, Mr Young drew my attention to Mr Bell's statement dated 4 July 2000, and submitted that Mr Bell's instructions regarding carriage of the matter were clearly set out in paragraphs 18-22:
"18.In or about mid October I had a telephone conversation with Steve Fitzsimmons (sic) to the effect of;
SF:"We need to get on with this, we need to prepare affidavits and prepare the case."
ME:"Yes but the Cooma argument is a lot further advanced than this. I have been told that there is a test case running and a hearing date has been set. Why can't this wait, let the Cooma one run first."
SF:"Alright, I'll get back to you as soon as possible."
19.On or about 16 September 1999 I received a Memorandum of Fees from Spencer Steer for Mr Peter Fraser.
20.On or about 20 September 1999 I received a Fee Memorandum from Spencer Steer.
21.After the telephone conversation with Steve Fitzsimmons (sic) neither Steve Davidson nor any representative of Spencer Steer asked me to provide any further information on behalf of my wife or myself in relation to the Proceedings.
22.I verily believed that Steve Davidson and Spencer Steer Accountants were diligently pursuing the proceedings before the AAT."
I was mindful of the evidence Mr Bell gave at the hearing, which demonstrated a complete contradiction with regard to what the Applicant knew, as compared to what he said that he thought his advisors were doing for him in regard to the applications at the Tribunal. They could either have been "diligently pursuing the proceedings before the AAT" or caused delay because they had neglected to follow "proper instructions for the due carriage of their Applications", but not both. The following account of oral evidence given at the Tribunal puts the matter in further perspective. Mr Bell said:
"… I was unaware and not advised that third parties needed to be retained for the purposes of the application of my wife and me."
Mr Young suggested that the statement was wrong and that Mr Bell knew that solicitors and barristers needed to be retained. Mr Bell insisted it was correct and said:
"What I'm saying in paragraph 18, is that I was unaware and I wasn't advised that additional people had to be obtained other than those we were already talking to, which would have been Spencer Steer, Mr Bunting and the gentleman he was talking to at the time, who was Peter Fraser."
I noted that there were a number of undated handwritten file notes on Spencer Steer letterhead produced under a summons issued to them, apparently from Mr Fitzsimons to Mr Bell, amongst them at folios 65, 68,77 of the Young file. Mr Young had asked Mr Bell:
Mr Young: "Could I put it to you, that you had a conversation with Mr Fitzsimons on or about Friday, 18 February 2000, where you said words to the effect to Mr Fitzsimons, that the sum of $50,000. had been telegraphically transferred to Spencer Steer's accounts to cover costs and Mr Fitzsimons said to you words to the effect that he would need to check that the funds were cleared before he would engage third parties and in the event it was probably too late for purposes of the Tribunal. I put it to you that that conversation took place, Mr Bell?"
Mr Bell: "No, I definitely never said that I put $50,000. into anyone's trust account."
…
Mr Young: "Do you recall having a conversation with Mr Fitzsimons after 21 February 2000 where Mr Fitzsimons told you that your Tribunal case had been dismissed because the information was not ready. Do you recall that?"
Mr Bell: "I recall I rang Mr Fitzsimons."Other file notes of Mr Fitzsimons (B5, B6, B7,) were drawn to Mr Bell's attention:
"Told Bell about hearing and short timeframe to now respond to request for information. We cannot do the job on promised funds. …
Spoken to John re urgency of the matter still is trying to obtain more time to get funds …Spoke to J Bell, case dismissed because info not ready. This was indicated to John and has now happened."
Mr Young continued with cross-examination of Mr Bell as follows:
Mr Young: "So you're aware that you were required to remit funds before the work would proceed, are you aware of that?"
Mr Bell: "I'm aware that they requested funds before they were going to do too much."
…
Mr Young: "You were aware that again a considerable amount of time involved in the taking of Narelle's statement of both solicitors and barristers?"
Mr Bell: "Can I get a definition of aware like when I'm saying I'm aware am I saying that I agree that that is the case? Because I don't agree."
Mr Young: "I'm not asking you to agree Mr Bell, I'm asking you if you had knowledge if you were aware of the requirement in this document?"
Mr Bell: "Yes I was." [I noted this was at 20 September 1999]I have already found, as discussed above, that the three errors the Tribunal was alleged to have made in the dismissal of the Bells' applications have not been made out. Even if I am wrong and Senior Member Barbour was in error in assuming that the applications had all been before the Tribunal since May 1999, there is no automatic reinstatement possible pursuant to the Act. I have considered a general discretion as to whether the applications should be reinstated.
In doing so, I noted further submissions of the parties. Mr Young submitted that the principles as enunciated in Paczalski v Comcare [1999] FCA 366 were relevant and that Finn J in that case considered that the factors to be taken into account were any explanation given for delay, actions of the Applicant in otherwise contesting the decision under review, prejudice to the Commissioner and the merits of the application.
He submitted that the reasons given on behalf of Mr and Mrs Bell, namely that Mr Bell was involved in other litigation, and that funds were not provided in time to the legal representatives to prepare their cases did not constitute a proper explanation for the failure to comply with the Tribunal's directions. As to whether the Bells' representatives had been following instructions diligently, Mr Young submitted the Tribunal was not the right forum to agitate the issue as to whether there had been a failure in communications in the following of proper instructions between the parties and their representatives.
As to prejudice to the Commissioner; Mr Young submitted that out of the $1,200,000. outstanding in tax, none had been paid, and recovery was not being pursued while the matters were on foot before the Tribunal. He also submitted that the capacity to pay may have been diminished because of delays.
As to the merits of the applications; Mr Young submitted that it was not necessarily appropriate to have regard to the merits because without the appropriate documents, namely the Statements of Facts and Contentions, it was not possible to ascertain the merits of the applications for review.
I have considered again the evidence given by the witnesses in this case, and the Bells' situation. I was satisfied from the evidence given that Mr Bell was at all times advised and either had actual or constructive knowledge of fixtures before the Tribunal. He was at all times represented either by his accountant Mr Davidson, or more frequently in regard to the tax matters before the Tribunal, by Mr Fitzsimons. I find from his oral evidence that Mr Bell often spoke to Mr Davidson. I also find that notices of the conferences and directions hearings at the Tribunal were sent to the Applicants on 2 June 1999 (care of Mr Frazer), 19 October 1999 (care of Mr Fitzsimons), 5 November 1999 (care of Mr Fitzsimons); 17 January 2000 (care of Mr Fitzsimons) and 17 February 2000 (care of Mr Fitzsimons), and that Mr Bell was aware of each conference and each directions hearing before the Tribunal. He contradicted himself several times before the Tribunal when giving his evidence and when referred to his statements at Exhibits A18, A19 and A25. I found him to be evasive and unhelpful to the Tribunal, and informed him of that at the Hearing.
I was satisfied that Mr Bell had various telephone calls and written notices from Mr Fitzsimons advising him of the need to deposit monies before further action would be taken to prepare documents as required by the Tribunal so that the Bells' cases could go to Hearing. The dates of these are in both the Poulos statements (parts of which are cited above), and also given by Mr Fitzsimons in his evidence. I have not repeated them here. I was satisfied that it was due to Mr Bell's lack of attention to paying his advisors, and his view that the "Cooma" case took priority which led to the fact that documents for the Tribunal were not prepared, and the cases were ultimately dismissed.
I accepted in full the Respondent's submissions detailed above which dealt with the principles enunciated by Finn J in Paczalski (supra) which in fact are very similar to those in Hunter Valley (supra) as discussed below.
Given the evidence and findings made above, I am not minded to exercise any general discretion which I may have to reinstate Mr and Mrs Bells' applications, although it will be clear that I have considered reinstatement pursuant to sections 42A(9) and (10) of the AAT Act.
WHETHER THE DISCRETION PURSUANT TO SECTION 29(7) OF THE AAT ACT CAN BE EXERCISED TO ALLOW AN EXTENSION OF TIME TO THE BELLS TO LODGE FRESH APPLICATIONS FOR REVIEWI noted that there was no dispute the applications for review had been lodged within the time specified pursuant to section 29 of the AAT Act read in conjunction with section 14ZZC(d) the TAA Act. For the sake of completeness, and for the reasons discussed above, I noted that the applications were dismissed by the Tribunal on 21 February 2000, and that the Applicants filed their reinstatement applications on 11 March 2000, and extension of time applications on 9 August 2000.
Section 29(7) of the AAT Act states:
"29 Manner for applying for review
…
(7)The Tribunal may, upon application in writing by a person, extend the time for the making by that person of an application to the Tribunal for review of a decision (including a decision made before the commencement of this section).
…"
Mr Connor relied, on behalf of the Applicant, on Re Mulheron and Australian Telecommunications Corporation (1991) 23 ALD 309 and Comcare v Grimes (1994) 50 FCR 60, submitting that in those cases their Honours specifically held that the Tribunal had power to entertain further applications and to extend time pursuant to section 29(7) of the AAT Act to do so. Mr Connor cited Mulheron (supra) indicating O'Connor J had approved of the following passage from the decision of Deputy President Forgie in Re Nicholson and Secretary Department of Social Security (1990) 21 ALD 537 at 544 where it had been held as follows:
"It follows that the Tribunal may have exercised all of its powers in relation to a particular application when it dismisses it but it does not follow that it has exercised all of its powers in relation to review of a decision. It follows that the applicant may bring a fresh application to review that decision."
I was mindful that as to Mulheron (supra), and the application of section 29(7) of the AAT Act there to extend time for re-application to the Tribunal, her Honour Justice O'Connor concluded at 314:
"As in this case, where an application is dismissed and a second application is brought the second application will generally be lodged after the prescribed time have elapsed. Accordingly, the Tribunal will have a discretion as to whether to extend the time for making an application …"
Mr Young submitted that Mulheron (supra) be treated with some caution because it was not a decision dealing with the interaction of the AAT Act with the TAA Act, in particular considering the imperative language of section 14ZZC(d) of the TAA Act, and the legislative amendments which subsequently took place in the passing of the Administrative Appeals Tribunal Amendment Act 1993, and addition of powers pursuant to sections 42A(3) to (10) the AAT Act. I noted that in Mulheron (supra) the Applicant had had his application dismissed for failing to appear at a preliminary conference, and further, that at the time Mulheron (supra) was decided, there were no powers of reinstatement available to the Tribunal.
Mr Young referring to the decision Brehoi (supra), also submitted that Mulheron (supra) was now inconsistent in view of the provisions of section 42A(6) of the AAT Act, which provides that where an application is dismissed, the proceeding is concluded unless the application is reinstated, that is, pursuant to sections 42A(9) or (10). With reinstatement available, Mr Young submitted, the effect of the dismissal was concluded unless reinstatement, or an appeal to the Federal Court pursuant to section 44(1) took place, but that the matter could not be lodged as a new application with extension of time. Mr Young submitted that section 42A(6) of the AAT Act dovetailed with section 14ZZL of the TAA Act in ensuring matters were finalised or concluded, and that by implication section 42A(5) could be applied similarly.
As relevant, section 14ZZL of the TAA Act provides as follows:
"14ZZL Implementation of Tribunal decisions
(1) When the decision of the Tribunal on the review of a reviewable objection decision or an extension of time refusal decision becomes final, the Commissioner must, within 60 days, take such action, including amending any assessment or determination concerned, as is necessary to give effect to the decision.
(2) For the purposes of subsection (1), if no appeal is lodged against the Tribunal's decision within the period for lodging an appeal, the decision becomes final at the end of the period."
Mr Connor however cited Wilcox J in Grimes (supra) as follows:
"Section 29(7) does not impose any express limitation upon the making of applications for extension of time, either in relation to the number of applications that a person may make or the circumstances under which applications may be made. The policy adopted by Parliament was that these matters should be left to the Tribunal. Particularly against that background, it would be wrong, in my opinion, for the courts to extend a doctrine developed to cope with a different problem in order to limit the Tribunal's powers."
Mr Young submitted that Grimes (supra) needed to be "read in context". I was mindful of his submission which was that Grimes (supra) did not involve a dismissal pursuant to section 42A of the AAT Act and neither the review of a taxation objection decision.
The Respondent's submission was that it was not open to the Tribunal to extend the time for the making of a second application for review of a reviewable taxation objection decision because an original application for review had been lodged within time pursuant to section 14ZZC of the TAA, and dismissed pursuant to section 42A of the AAT Act. Mr Young submitted that section 29(7) of the AAT Act was available for extending the time for the making of an application whereas in the present case, a valid application within time had been made to the Tribunal.
Mr Young in his written submissions of 22 February 2001 made submissions regarding Lighthouse Philatelics Pty Ltd v Commissioner of Taxation (1991) 32 FCR 148. The sections of legislation relevant in that case have now been repealed, but, submitted Mr Young, the decision provided authority that it was not open to a taxpayer under section 188 of the Income Tax Assessment Act 1936 as it then was, or the present section 14ZW(2) of the TAA, to apply to extend time so as to lodge a second or subsequent objection if the original application had been lodged within time. Accordingly Mr Young submitted, pursuant to sections 14ZZC of the TAA and 29(7) of the AAT Act, it was similarly not possible to lodge a second or subsequent application to the Tribunal to review the Commissioner's objection decisions if the original applications to review had been lodged in time as in the Bells' case.
I was also mindful of Mr Connor's submission, on the other hand, that reliance on Lighthouse Philatelics (supra) was not appropriate in that it was not a case concerned with similar facts, neither was section 29(7) of the AAT Act there considered.
I was mindful of the interaction of sections 14ZZC of the TAA and section 29(7) of the AAT Act and the operation of the 1993 amendments to the AAT Act which inserted subsections 42A(3) to (10). It is likely that the effect of the above preclude the operation of section 29(7) of the AAT Act in the present circumstances where there has been an application lodged within time and dismissed pursuant to section 42A(5)(b). However even if I am wrong, the discretion in section 29(7) of the AAT Act can only be exercised following the consideration of certain principles, very authoritatively put in Hunter Valley (supra) and discussed extensively in Brown v Commissioner of Taxation [1999] FCA563. The principles to be considered, amongst others would be:
1) The prescribed period is not be ignored; an explanation for any delay is required;
2) Whether the applicants rested on their rights or made it known that they contested the matters in question;
3) Any prejudice to the Respondent including any prejudice in defending the proceedings; the mere absence of prejudice is not enough to justify the grant of an extension;
4) The merits of the substantive applications are properly to be taken into account;
5) Considerations of fairness as between the applicants and other persons otherwise in a like position are relevant.In considering whether the Applicants had rested on their rights, I noted discussion by Hill J in Brown (supra) of the prima facie time limits to be observed. I was mindful also of Mr Connor's submissions that the Applicants had at all times intended to prosecute their cases before the AAT, and of the length of time the Commissioner had taken to issue his 'Notice of Decision on Objections'. I was mindful also of the circumstances leading up to the dismissal of Mr and Mrs Bell's applications, and the findings I have made above, based on the evidence before me. That included Mr Bell's view that the Cooma case should come first and the finding that monies had not been made available so that the Bells' representatives could prepare documents in time for the Tribunal's deadlines. I accepted that the Bells wanted to prosecute their cases before the Tribunal, but had not done so in a timely way by neglecting to attend Tribunal fixtures of which they knew, and by not paying their advisors in a timely fashion so that their cases could be diligently prosecuted. In that sense they had rested on their rights. As to any dissatisfaction with advisors; there are other avenues in which any argument they have with the performance of their advisors and representatives can be dealt with.
As to whether there would be prejudice to the Respondent if an extension of time were granted for the Applicants to lodge fresh applications; Mr Connor submitted that the fact the Respondent had stayed its activities as far as recovering tax from the Applicants could not be considered a situation of prejudice to the Commissioner. Mr Young, on the other hand, submitted that the Commissioner was owed $1.200,000. which he could not recover while proceedings were on foot before the Tribunal. He expressed concern regarding the diminution of funds eventually available to pay taxation bills. I considered there was no prejudice to the Respondent as to the gathering of evidence, but certainly to the public purse through the non-payment of tax.
Mr Connor submitted that there was prejudice to the Bells, because there had been delay in the provision of T-documents until just prior to the 3 November 1999 conference, and that the Respondent took 29 months to issue objections. I was mindful also of Mr Connor's submission that the T-documents were incomplete and had thus disadvantaged the Bells. Mr Young submitted that the amended requirements for T-documents arose out of section 14ZZF(a)(ii)(v) of the TAA Act , which I noted stipulated as follows:
"14ZZF Modification of section 37 of the AAT Act
(1) Section 37 of the AAT Act applies in relation to an application for review of a reviewable objection decision as if:
(a) the requirement in subsection (1) of that section to lodge with the Tribunal such numbers of copies as is prescribed of statements or other documents were instead a requirement to lodge with the Tribunal such numbers of copies as is prescribed of:
(i) a statement giving the reasons for the decision; and
(ii) the notice of the taxation decision concerned; and
(iii) the taxation objection concerned; and
(iv) the notice of the objection decision; and
(v) every other document that is in the Commissioner's possession or under the Commissioner's control and is considered by the Commissioner to be necessary to the review of the objection decision concerned; and
(vi)a list of the documents (if any) being lodged under subparagraph (v); and
(b) the power of the Tribunal under subsection (2) of that section to cause a notice to be served containing a statement and imposing a requirement on a person were instead:
(i) a power to make such a statement and impose such a requirement orally at a conference held in accordance with subsection 34(1) of the AAT Act; and
(ii) a power, by such a notice, to make such a statement and impose a requirement that the person lodge with the Tribunal, within the time specified in the notice, the prescribed number of copies of each of those other documents that is in the person's possession or under the person's control; and
(iii) a power, by such a notice, to make such a statement and impose a requirement that the person lodge with the Tribunal, within the time specified in the notice, the prescribed number of copies of a list of the documents in the person's possession or under the person's control considered by the person to be relevant to the review of the objection decision concerned.
(2) Paragraph (1)(b) does not affect any powers that the Tribunal has apart from that paragraph."
I am mindful of the requirements on the Respondent with regard to T-documents, but as this is a reinstatement application and an application to extend time rather than a substantive hearing on the merits, I have not investigated how complete the T-documents now appear. They have been before the Tribunal since the conference of 3 November 1999, ample time for the parties to have discussed any deficiencies.
Mr Connor also submitted that there had been no Statement of Issues filed by the Respondent. I was mindful the Tribunal's Practice Direction is in the following terms:
"Statement of Issues
A brief statement setting out the issue(s) that the applicant and respondent consider to be in dispute must be exchanged and lodged with the Tribunal at least one working day prior to the first conference. …"To date, neither party has lodged such Statement. I do not find that this precluded the Applicants from complying with the agreed timetables made at AAT conferences, noting that it was not raised as a difficulty by the Applicants or their representatives at any conference or directions hearing.
As to the merits; Mr Connor submitted I rely on Taxpayer v Commissioner of Taxation (AAT 12330, 22 October 1997) and argued reinstatement should be allowed so that the Applicants would be able to have their cases heard on the merits. Not to be allowed to, would be of great prejudice to them, Mr Connor submitted.
As to the merits of the substantive applications; Mr Connor drew to my attention Windshuttle v Deputy Federal Commissioner of Taxation (1993) 93 ATC 4992 and Brown (supra), submitting that in a decision regarding the extension of time a consideration of the merits of the case in full did not arise. Mr Young in submitting that the Respondent was not seeking for the Tribunal to review the case on the merits, submitted that I take into account that nowhere in the Applicants' case had there been a satisfactory explanation of delays and non-compliance with directions of the Tribunal or a timetable for production of documents. He said that these were matters where, without the preparation of adequate Statements of Facts and Contentions, (still not before the Tribunal), the case would be difficult to ascertain. I accepted Mr Young's submissions in that regard, whilst acknowledging that if neither reinstatement (pursuant to section 42A(10), nor re-application pursuant to section 29(7) of the AAT Act was allowed, the Applicants would lose their opportunity of having their matters heard on the merits. I was mindful of Hill J in Brown (supra) and von Doussa J in Windshuttle (supra) in that regard.
I next considered fairness in granting the extension of time as between the Applicants and other persons in a like position, noting that the applications for review date back to the 1992 and most recently the 1993/4 tax years, which in itself is an extension of time most citizens have, on the balance of probabilities, not enjoyed.
I was satisfied in considering the indicia in Hunter Valley (supra) and Hill J in Brown (supra), that even if section 29(7) of the AAT Act is applicable, no extension of time should be allowed for the Applicants to lodge fresh applications.
My decision is then that any discretion I may have pursuant to sections 42A(9) if applicable or 42A(10) of the AAT Act will not be exercised to reinstate the Bells' applications or if I am wrong and section 29(7) of the AAT Act applies, then I find applying the principles in Hunter Valley (supra) and Brown (supra) that no extension of time should be allowed for new applications to be lodged.
DECISIONThe Administrative Appeals Tribunal refuses to reinstate the applications of Mr John Bell and Mrs Narelle Bell pursuant to either sections 42A(9) or 42A(10) of the Administrative Appeals Tribunal Act 1975 or grant an extension of time to lodge an application for review pursuant to section 29(7) of the Administrative Appeals Tribunal Act 1975, following the dismissal of Mr and Mrs Bell's applications on 21 February 2001 pursuant to section 42A(5)(b) of the Administrative Appeals Tribunal Act 1975.
I certify that the 207 preceding paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger Senior Member
Signed: .....................................................................................
Ms Elizabeth Geddes
AssociateDate/s of Hearing 3 August 2000
18 December 2000
19 December 2000
7 March 2001
15 May 2001
Date of Decision 28 June 2001
Counsel for the Applicant Mr K Connor
Solicitor for the Applicant Ms M Kelly/Mr T Popper
Counsel for the Respondent Mr I Young
Solicitor for the Respondent Mr P Poulos/Mr D Stokes
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