Burnett and Commissioner of Taxation
[2009] AATA 138
•5 March 2009
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2009] AATA 138
ADMINISTRATIVE APPEALS TRIBUNAL )
) No WT200101026-027
TAXATION APPEALS DIVISION ) Re MICHAEL BURNETT Applicant
And
COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal Mr A Sweidan, Senior Member Date5 March 2009
PlacePerth
Decision The Tribunal orders that the above applications be re-instated pursuant to s.42A(10) of the Administrative Appeals Tribunal Act 1975.
...(sgd) Mr A Sweidan........
Senior Member
CATCHWORDS
Practice and procedure - application for re-instatement on grounds that application dismissed in error - finding of error - re-instatement granted
LEGISLATION
Administrative Appeals Tribunal Act 1975 ss 42A(5)(7) and (10)
CASES
Goldie v Minister for Immigration and Multicultural Affairs (2002) 121 FCR 383; (2003) 72 ALD 652
Brehoi v Minister for Immigration and Multicultural Affairs (1999) 58 ALD 385
Guse v Comcare (1997) 49 ALD 288
Re Greening and Repatriation Commission (1998) 52 ALD 110
Beard v Telstra Corp Ltd (1999) 57 ALD 376; [1999] FCA 999
Re Schramm and Repatriation Commission (1998) 53 ALD 755
AAT Case 12,330 (1997) 37 ATR 1120; 97 ATC 470
Myers and Commissioner of Taxation (2004) 85 ALD 453; (2004) 58 ATR 1109
Re Mulheron and Australian Telecommunications Corporation (1991) 23 ALD 309
SZLIO v Administrative Appeals Tribunal [2008] FCA 124REASONS FOR DECISION
5 March 2009 Mr A Sweidan, Senior Member Background and History
1. On 21 February 2007 the Tribunal dismissed applications WT2001/1026 & 1027 of the applicant ("the applications") under s42(5) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act") for failure to comply with directions made by the Tribunal on 11 October 2006.
2. The applications had previously been dismissed by the Tribunal under s42A(2) of the AAT Act on 21 August 2006 for failure to appear at a directions hearing but were re-instated by the Tribunal on 11 October 2006.
3. On 11 July 2008, the applicant's solicitors wrote to the Tribunal seeking reinstatement of the applications on the grounds set out in s42A(10) of the AAT Act, namely that the applications were dismissed in error.
4. The respondent contends that, on the material before the Tribunal it should find:
4.1The applications were not dismissed in error within the terms of s42A(10) of the AAT Act; and
4.2Even if the applications were dismissed in error, in all of the circumstances, and in particular with regard to the history of this matter, the Tribunal should not exercise its discretion to reinstate the applications.
Respondent’s Contentions
5. The respondent asserts that the facts set out in the letter from the applicant's solicitors of 11 July 2008 are neither a complete nor an accurate statement of all the relevant facts leading up to the dismissal of the application on 21 February 2007 and should not be relied upon. For reasons which follow it is not necessary for the Tribunal to make any finding in that regard.
6. The respondent relies upon a chronology of relevant events set out in an annexure to the affidavit of Mr Michael Vincent a Senior Litigator of the Australian Taxation Office sworn 16 September 2008.
7. In particular, the respondent says that the Tribunal should have regard to the following:
7.1The applicant's solicitors' letter seeks to rely upon what is described as "a very substantial Index of Documents" said to have been lodged on behalf of the applicant (a copy of which is also enclosed with the letter). This is incorrect. The documents enclosed with the letter are the individual s37 documents filed by the respondent in WT2001/1027 in July 2005. The applicant never lodged any documents with the Tribunal in either application.
7.2The requirement on the applicant to file a statement of facts and contentions with the Tribunal and what this document was required to contain had been the express subject of discussion with the applicant on a number of occasions prior to February 2007. The respondent contends that there could not have been any doubt on the part of the applicant that the Tribunal's direction of 11 October 2006 required him to file a further document setting out the nature of his case and that the earlier objection sent to the respondent and included in the s37 documents was not sufficient for this purpose.
7.3 In support of this submission the respondent relies upon the following relevant matters:
7.3.1On 7 February 2006 the applicant was directed to file a statement of facts and contentions by a Senior Member (following the telephone directions hearing which the applicant had attended the previous day);
7.3.2On 28 February 2006 the applicant sought a one month extension of time for filing his statement of facts and contentions (which was not opposed);
7.3.3On 15 June 2006 the applicant wrote to the Tribunal seeking a further extension of time to file his statement (having failed to appear at the telephone directions hearing on 15 May 2006);
7.3.4On 5 July 2006 the Tribunal wrote to the applicant advising what was required to be included in a statement of facts and contentions and asking how much further time the applicant required for his statement (a copy of this letter is attached to the applicant’s solicitors letter of 11 July 2008);
7.3.5On 14 August 2006 the applicant failed to appear at a telephone directions hearing, leading to the dismissal of the application on 21 August 2008;
7.3.6On 11 October 2006 the applicant's application to reinstate the application was heard. The Senior Member again advised the applicant what was required to be included in a statement of facts and contentions. The applicant said he could file his statement within 14 days. In the light of this the Senior Member agreed to reinstate the application and directed that the applicant's statement of facts and contentions be filed by 25 October 2008. He also advised the applicant that there was a "good probability" that the application would be dismissed for failure to comply with the Tribunal's direction if the statement was not filed within the 14 days allowed. This was expressly stated in direction 5 of the directions made on that day.
7.3.7On 21 October 2006 the applicant wrote to the Tribunal advising that he had no further documents to submit to the Tribunal.
7.3.8On 15 November 2006 the respondent's solicitor wrote to the Tribunal, with a copy sent to the applicant on the same day, pointing out that under the directions made on 11 October 2006 there was a requirement on the applicant to file a statement of facts and contentions by reason of the Tribunal's directions and the applicant had failed to comply with that requirement. The respondent sought dismissal of the application because of the applicant's failure to comply with the direction. (A copy of this letter is attached to the applicant’s solicitors letter of 11 July 2008).
7.3.9On 18 January 2007 the applicant appeared by telephone at a conference with a Conference Registrar. The Tribunal notes that the chronology annexed to Mr Vincent’s affidavit referred to in paragraph 6 above records the following in relation to this conference:
Telephone conference before Conference Registrar Margaret Jordan. The applicant and Timothy Burrows appeared by telephone. The applicant conceded he had not filed an SFIC as required but said he didn’t understand what was required for this. Conference Registrar explained what was required. The applicant asked for a further 10 days to file his SFIC. The respondent opposed any extension of time and pressed for dismissal of application. However the Conference Registrar decided to refer the matter back to Senior Member Pascoe to determine what action should be taken regarding the outstanding direction of 11 October 2006 as the Conference Registrar did not have the power to vary Senior Member Pascoe’s direction of 11 October 2006.
7.3.10 On 20 February 2007 the applicant failed to appear at the dismissal hearing which had been listed before the Senior Member and the application was dismissed by an order in the following terms:
WHEREAS by Direction dated 11 October 2006 the applicant was required to file and serve a statement of facts, issues and contentions
By 25 October 2006, and
WHEREAS the applicant failed to comply with such Direction, and
WHEREAS the applicant failed to appear at a hearing listed on 20 February 2007 to consider whether the application should be dismissed for failure to comply with a direction and failure to proceed with the application.
Decision: THE TRIBUNAL DECIDES to dismiss the application pursuant to section 42A(5) of the Administrative Appeals Tribunal Act 1975 without proceeding to review the decision to which the application refers.
Applicant’s Contentions
8. It does not appear to have been the case that the Tribunal published any Reasons for the Decision recorded in the Order. The applications were dismissed under s.42A(5) only. The terms of the Order indicate the Tribunal acted under paragraph 42A(5)(a) in respect to a “failure to proceed with the application” and also under paragraph 42A(5)(b) in respect to a failure to comply with the Direction “to file and serve a statement of facts, issues and contentions by 25 October 2006”.
9. Pursuant to s.42A(10) the Tribunal may reinstate an application that the Tribunal has “dismissed in error” under s.42A(5): Goldie v Minister for Immigration and Multicultural Affairs (2002) 121 FCR 383; (2003) 72 ALD 652 at [29-35], [73]; Brehoi v Minister for Immigration and Multicultural Affairs (1999) 58 ALD 385.
10. It is contended that the applications were “dismissed in error” within the meaning of s.42A(10) in that-
·the applicant was not forewarned that the applications might be dismissed under s.42A(5)(a) or that s.42A(5)(a) would be an issue at the 20 February 2007 telephone hearing;
·there had not been any failure to proceed within the meaning of s.42A(5)(a);
·the Tribunal proceeded on the ex parte assertion of the respondent regarding a non-compliance;
·the applicant was not afforded the opportunity to explain why there had been a non-compliance.
Forewarning
11. The 11 October 2006 Directions required the applicant to file and serve a Statement of Facts, Issues and Contentions by 25 October 2006. The Directions do not in terms require the applicant to otherwise proceed with the application. The
applicant contends that the error was in the Tribunal not indicating to the applicant that the application might be dismissed under paragraph 42A(5)(a) at the hearing on 20 February 2007. See Guse v Comcare (1997) 49 ALD 288 at 291 per Burchett J; Re Greening and Repatriation Commission (1998) 52 ALD 110.No Failure To Proceed
12. The applicant also contends that it was not demonstrated that at 20 February 2007 the applicant was not prepared to proceed with the application: Beard v Telstra Corp Ltd (1999) 57 ALD 376; [1999] FCA 999 per Spender J.
Ex parte Assertion
13. In this regard applicant asserts the following:
By letter dated 15 November 2006 to the Tribunal the respondent submitted that the applications should be dismissed under s.42A(5). The letter submitted that the applicant had failed to comply with the 11 October direction asserting that the applicant in his fax letter dated 21 October 2006 to the Tribunal “indicates that he does not propose to submit a statement of facts and contentions relating to the matter.” That was not the case, according to the applicant.
14. An ex parte assertion takes no account of the possibility of there being “some supervening circumstance might have occurred to justify, or at least palliate, the eventual non-compliance”: Guse supra at 291.
15. The applicant’s 21 October 2006 letter, faxed to the Tribunal ahead of the 25 October deadline, refers to the request for a Statement of Facts and Contentions, and states:
I have no further documents to submit other than those already received by the Tribunal and the Respondent.
16. As set out in his Affidavit of 14 November 2008 the applicant considered that those items he believed to be the facts and contentions were contained in documents already filed, essentially the Notice of Objection. The applicant had not understood that the requirement to lodge a Statement of Facts and Contentions required of him a re-statement in a separate and new document facts and contentions already indicated in the Objection and other documents previously provided to the respondent, as opposed to him setting out in a Statement such further facts or contentions as he may wish to raise. Having nothing further to add, the applicant believed the documents already provided satisfied the requirement and so responded to the Tribunal in the terms adopted by the 21 October letter.
17. The applicant was not at that stage represented by professional legal or taxation advisers. The applicant explained the reason for seeking further extensions to lodge was also to enable further negotiation with the respondent. By October 2006 the applicant determined he did not wish to add to the matters set out in the Objection lodged on his behalf.
Opportunity
18. As set out in his Affidavit at all relevant times the applicant resided in Sydney but was regularly away from Sydney in the course of his employment. All hearings in the proceedings were conducted by telephone. The applicant’s telephone contact notified to the Tribunal was a mobile telephone phone via which he was contactable in Australia and overseas. The usual practice for those telephone hearings attended by the applicant was that the Tribunal rang the applicant rather than vice versa.
19. The applicant does not believe he received written notice of the 20 February 2007 hearing. The applicant did not receive a telephone call from the Tribunal on that date.
20. There is no onus on the applicant “to show that an opportunity to be heard would in fact have proved fruitful.” Guse supra
Section 42A(10) Discretion
21. The power to reinstate is discretionary and may be exercised if the Tribunal is satisfied reinstatement is appropriate in the circumstances of the particular case: Re Schramm and Repatriation Commission (1998) 53 ALD 755. The matters to be considered in exercising the discretion are not prescribed or limited by the terms of the power.
22. The s.42A(10) discretion has in, a case of dismissal under s.42A(5), been exercised having regard to principles developed in the context of applications for extension of time under s.29(7) of the AAT Act: see AAT Case 12,330 (1997) 37 ATR 1120; 97 ATC 470. In Myers and Commissioner of Taxation (2004) 85 ALD 453; (2004) 58 ATR 1109, a reinstatement following a dismissal under s.42A(1B) SM Lindsay said at [19], “The tribunal considers, therefore, that the guidelines in the authorities dealing with applications for extension of time to lodge an application for review (such as Re Mulheron and Australian Telecommunications Corporation (1991) 23 ALD 309) are relevant to deciding whether to exercise the discretion.” When applied to an application for reinstatement these principles are as set out in AAT Case 12,330 at [9], namely:
22.1 reinstatement will be granted if it is proper to do so;
22.2it is relevant whether the applicant rested on his rights or took action to make the decision-maker aware that the decision was being contested;
22.3any prejudice that would be caused by granting the extension of time [sic] is relevant;
22.4any wider prejudice to the general public in terms of disruption to established practices is relevant;
22.5 the merits of the substantial application are relevant;
22.6 fairness of granting reinstatement as between the applicant and other persons in a like position is relevant.
23. The respondent’s Submissions dated 16 September 2008 (paras 19-30) deal with 3 nominated considerations: delay, prejudice, merits of substantive application.
Delay
24. The delay submission is equated to compliance with limitation periods (para 17, 18). This is not per se relevant to a reinstatement. There is no time within which the application must be made. The proceedings have been on-going for some years.
Prejudice
25. Any prejudice to the respondent can be one competing factor for consideration. The prejudice (including incontestable liability) to the applicant in consequence of the application not being reinstated is far from insignificant.
26. Not reinstating the applications as with dismissing the applications under s,42A(5) “involves denying an applicant a hearing of the merits of his application. That should be done very sparingly, and only, I think, as a decision of last resort”: per Burchett J in Guse supra at 291.
Substantive merit
27. DP Burns in Re Schramm found that there was no onus upon the applicant for reinstatement to demonstrate that the application had substantive merit. In Re Greening and Repatriation Commission (1998) 52 ALD 110, SM Handley refused to comment at all upon the merits of application stating that this was a matter to be determined at the hearing. Referring to Burchett J’s comments in Guse SM Handley stated: “natural justice and the right to be heard does not place on him any onus to show that an opportunity to be heard would in fact have proved fruitful.”
28. The substantive proceedings concern deductions claimed in respect of the applicant’s investment in Australian Equity Exchange Match. It is clear from the respondent’s submissions that whether a deduction in respect of an investment in Australian Equity Exchange Match is properly allowable has not as yet been the subject of a determination of a court or the Tribunal.
Tribunal Findings
Dismissal in Error
29. Section 42A(10) of the AAT Act gives the Tribunal a discretion to reinstate an application that has been dismissed in error.
30. The Tribunal's discretion is conditional upon the application having been dismissed in error. The error need not be an administrative error on the part of the Tribunal: Goldie supra. However, unless the dismissal of the application can be shown to have been attended with error, the Tribunal has no power to reinstate an application under section 42A(10) of the AAT Act: Goldie at [41], [42], [77]; SZLIO v Administrative Appeals Tribunal [2008] FCA 124.
31. S42A(7) of the AAT Act provides that:
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.
32. As noted in paragraph 19 above the applicant says that “he does not believe” that he received notice of the 20 February 2007 hearing. He was not contacted by telephone and it therefore appears that he was not aware of the hearing.
33. It does not appear from the Order that the Tribunal considered the provisions of s42A(7) in deciding to dismiss the application. While the dismissal order was not made under s s42A(2) it is not clear whether the applicant’s failure to appear was a factor in the Tribunal’s decision to dismiss the applications, although the terms of the Order indicate that his non-appearance may have been a factor.
34. Prima facie having regard to the record of the telephone conference on 18 January 2007 as set out in para 7.3.9 above, the Tribunal is of the view that the applicant may have believed following that conference that he would be given an opportunity to explain his non-compliance and to seek a further extension of time when the matter was referred back to the Senior Member.
35. It is not clear whether at the dismissal hearing on 20 February 2007 the Senior Member was fully apprised of what had occurred at the conference on 18 January 2007.
36. Having regard to the matters set out above it appears that the applicant was not given an opportunity to explain his non-compliance with the Tribunal’s previous directions, or to seek a further extension of time, albeit that such extension may well not have been granted.
37. In the Tribunal’s view it is likely that some or all of the above circumstances led to error by the Tribunal, resulting in a denial of procedural fairness in accordance with the principles set out by the Federal Court in Guse supra.
38. The Tribunal is therefore of the view that it should exercise it’s discretion in favour of the applicant and does not consider it necessary to deal with the other contentions of the parties as to delay, prejudice and the merits of the substantive applications.
Decision
39. The Tribunal re-instates the applications pursuant to s.42A(10) of the AAT Act.
I certify that the 39 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member
Signed: ..(sgd) T Freeman.......
AssociateDate/s of Hearing 12 February 2009
Date of Decision 5 March 2009
Counsel for the Applicant Mr J MacLaurin
Solicitor for the Applicant Levitt Robinson Solicitors
Counsel for the Respondent Mr T Burrows
Solicitor for the Respondent Australian Government Solicitor
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