Bobos v Deputy Commissioner of Taxation

[2018] NSWCA 221

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:	Bobos v Deputy Commissioner of Taxation [2018] NSWCA 221
Hearing dates:	21 September 2018
Decision date:	04 October 2018
Before:	Beazley P; Macfarlan JA
Decision:	(1) Application for an extension of time for leave to appeal dismissed with costs. (2) Application for leave to appeal dismissed with costs.
Catchwords:	APPEAL – application for leave to appeal against refusal to set aside default judgment – no issue of principle
Legislation Cited:	Taxation Administration Act 1953 (Cth), s 269-35(1) Uniform Civil Procedure Rules 2005 (NSW), r 50.12
Category:	Procedural and other rulings
Parties:	Nicholas Bobos (Applicant) Deputy Commissioner of Taxation (Respondent)
Representation:	Counsel: Self-represented Applicant N Swan (Respondent)   Solicitors: Self-represented Applicant Australian Taxation Office (Respondent)
File Number(s):	CA 2018/71531
Decision under appeal	Court or tribunal: District Court Jurisdiction: Civil Citation: [2018] NSWDC 34 Date of Decision: 5 February 2018 Before: Neilson DCJ File Number(s): 2014/214461

Judgment

1. THE COURT: This is an application by Mr Nicholas Bobos for leave to appeal from a judgment of Neilson DCJ of 5 February 2018 ([2018] NSWDC 34). By that judgment, his Honour dismissed Mr Bobos’ application to set aside a default judgment entered by the Deputy Commissioner of Taxation (the “ATO”) against him on 25 September 2014 in the amount of $421,727.09 inclusive of costs.

2. Mr Bobos requires an extension of time for leave to appeal to this Court as his Summons was not filed until approximately four months after the judgment below. It should have been filed within 28 days of the judgment (Uniform Civil Procedure Rules 2005 (NSW) r 50.12).

3. The default judgment related primarily to Mr Bobos’ liability as a director of Bobos Engineering Australia Pty Ltd in respect of income tax withheld by that company from its employees but not remitted to the Commissioner. The remainder related to personal income tax that Mr Bobos owed.

4. In his judgment the primary judge carefully considered, step by step, the dealings between Mr Bobos and the ATO. His Honour referred in detail to the extensive documentary evidence, principally in the form of letters, emails and file notes, of those dealings.

5. His Honour stated at [14] the following conclusions concerning the dealings that occurred prior to the entry of judgment:

“No agreement had been reached between the applicant and the ATO prior to the entry of judgment. There was never a protestation or averment by the applicant that he was not indebted as alleged by the ATO. In fact, there were admissions made by him that he was so indebted. On both 3 March 2014 and 27 August 2014 the applicant merely asked for further time in which to discharge his indebtedness. At no time did the ATO waive its entitlement to recover the outstanding debts. The mere sending of a letter to the ATO did not create any contract between the applicant and the ATO. The mere act of sending a letter to the ATO seeking some accommodation did not in any way create any form of estoppel because the ATO did nothing other than grant to the applicant the extension of time which he sought in order to pay the claim.”

6. In further response to Mr Bobos’ reliance upon his letters of 3 March and 27 August 2014, the primary judge concluded at [34]:

“In my findings as to the meaning of the applicant's letters of 3 March 2014 and 27 August 2014 and their effect, there is not any adequate explanation by the applicant for his failure to file a defence. Indeed, if he believed at the time that there was an agreement in place which required the ATO to forebear bringing proceedings against him and recovering judgment against him, he could have pleaded that at the time but he did not. That is further proof, as I have sought to point out earlier, that the applicant did not dispute his indebtedness to the ATO. As has been submitted by the ATO, there is no evidence showing that prior to the commencement of the current application on 18 May 2017, that the applicant disputed that he was liable to the ATO in the manner alleged in the statement of claim, or that he had any intention of seeking to set aside the default judgment after he was informed of it in late 2014. On the contrary, the applicant's affidavit evidence shows that after the entry of judgment, the applicant attempted to take steps that he considered would result in all of his and his company's debts to the ATO, including that resulting from the default judgment, being repaid.”

7. His Honour then examined the dealings that occurred after the entry of the default judgment. He concluded that “there [was] clearly no agreement whereby the ATO agreed to forego the debt which was owed to it by the applicant which forms the subject of the judgment entered in this Court, nor was there any estoppel” (at [31]).

8. As to Mr Bobos’ reliance upon communications in February 2015, his Honour concluded that “even if what occurred in February of 2015 could be construed in the manner argued by the applicant, that whole regime collapsed when the applicant defaulted in making the payment due on 5 April 2015, if not by failure to make the payment due on 23 February 2015 as argued by the ATO” (at [37]).

9. For these reasons, his Honour rejected Mr Bobos’ application to set aside the default judgment. He concluded that Mr Bobos had not established that he had any bona fide or arguable defence to the ATO’s proceedings, nor had he given any adequate explanation as to why it took him over two and a half years to apply to set aside the default judgment.

10. The principal points made by Mr Bobos in his submissions to this Court, and our observations in response, are as follows. Neither these nor any of the other points that Mr Bobos raised have any merit.

11. First, Mr Bobos relies again on communications in February 2015, in particular upon a letter (signed by him) that Bobos Engineering sent to the ATO on 12 February 2015 containing a proposal “to repay the ATO’s outstanding debt” as well as the ATO’s response of 16 February 2015 accepting “the payment plan put forward for Bobos Engineering Australia Pty Ltd”. The response continued:

“As discussed however, should the arrangement default due to a payment as per arrangement not being met and/or current lodgements are not lodged or paid in full, then I will continue with the security on those properties.”

12. Contrary to Mr Bobos’ submissions, this arrangement did not purport to affect his personal liability, as distinct from that of Bobos Engineering. In any event, as the primary judge pointed out, the arrangement ceased to have effect once Bobos Engineering defaulted in making the payments stipulated in the arrangement.

13. Secondly, Mr Bobos asserts in his submissions that he has suffered severe depression since 2002. Although regrettable, that condition does not provide any answer to the ATO’s claim. In particular, it would not have provided any defence under s 269-35(1) of the Taxation Administration Act 1953 (Cth) because, for illness to attract the operation of that provision, the illness has to have led to the director not taking part in the management of the company. Mr Bobos however clearly did participate in management at all relevant times.

14. Thirdly, Mr Bobos submitted, as he had below, that the ATO erred in its allocation of payments made to it by Mr Bobos or Bobos Engineering. For reasons given by the primary judge, the ATO was entitled to allocate payments as it thought appropriate.

15. Fourthly, Mr Bobos alleges, in general terms, that the ATO acted in such a way as to lead him to believe that it had agreed to “allow Bobos Engineering to complete the litigation with” a party to a construction contract with whom it was in dispute. As the primary judge found, in our view correctly, there was nothing in the dealings between Mr Bobos and the ATO to support that assertion.

16. In summary, we do not consider that Mr Bobos has demonstrated that he has any prospect of establishing error on the part of the primary judge. As a result, his application for an extension of time for leave to appeal and the application for leave to appeal, which he filed, should be dismissed with costs.

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Decision last updated: 04 October 2018