Can Barz Pty Ltd v Commissioner of State Revenue

[2016] QCA 142

[2016] QCA 142

COURT OF APPEAL

GOTTERSON JA

Appeal No 3732 of 2016
SC No 8965 of 2015

CAN BARZ PTY LTD
ACN 137 754 379
AS CUSTODIAN OF THE DECLARATION
OF CUSTODY TRUST FOR THE
MEWCASTLE SUPERANNUATION FUND  First Applicant

CHERYL BIRD & STEVEN SCOTT
AS TRUSTEES OF THE MEWCASTLE
SUPERANNUATION FUND  Second Applicant

v

COMMISSIONER OF STATE REVENUE  Respondent

BRISBANE

MONDAY, 6 JUNE 2016

JUDGMENT

GOTTERSON JA:  The applicants for relief today are Can Barz Pty Ltd as custodian of the Declaration of Custody Trust for the Mewcastle Superannuation Fund as first applicant, and Cheryl Bird and Steven Scott as trustees of the Mewcastle Superannuation Fund as second applicant.

These parties had applied by way of a proceeding commenced in the trial division for declaratory relief against the Commissioner of State Revenue as first respondent and others. The Attorney-General of Queensland intervened in those proceedings in response to a notice given under s 78B of the Judiciary Act 1903 (Cth).

The relief sought in the proceeding, which was granted on the 21st of March 2016, was that certain garnishee notices issued by the Commissioner were invalid, and ineffective to impose obligations to pay moneys to the Commissioner, and that the applicants and others were not obliged to pay the Commissioner the proceeds of sale of a property at Bulimba.

On the 12th of April 2016, the Commissioner filed a notice of appeal against that decision.  Can Barz and Ms Bird and Mr Scott in their respective trustee capacities are first and second respondents to the appeal.  They filed today’s application on the 19th of May 2016, as first applicant and second applicants respectively.  The named first respondent to the application is the appellant Commissioner.

Relief is sought in respect of two discrete matters. One is that this appeal be stayed until the Commissioner obtains leave to the extent necessary under s 58(3)(b) of the Bankruptcy Act 1966 (Cth) to commence and further prosecute the appeal. Such leave, if necessary, would have to be obtained from the Federal Circuit Court, and could be granted nunc pro tunc.

The second matter is that of the grant of an extension of time required by r 757(3)(a) of the Uniform Civil Procedure Rules for the filing by today’s applicants of a notice of contention. The proposed notice of contention seeks to revive an issue concerning the constitutional validity of s 50 of the Taxation Administration Act 2001 (Qld). It is the same issue for which the Attorney-General intervened below; however, it was an issue which the learned primary judge found unnecessary to determine in light of the construction of s 50 which he favoured.

I should say at once that in my view the extension of time sought should be granted.  The delay is short.  It is explained.  Neither the Commissioner nor the Attorney-General has been prejudiced by it.  I will in due course make the order, and appropriate directions to cater for it.

I now turn to the first matter. The true question posed by it is whether leave under s 58(3)(b) is required by the Commissioner to commence and further prosecute the appeal against Ms Bird and Mr Scott as trustees of the Mewcastle Superannuation Fund. The question arises because they individually became bankrupts on the 8th of April 2016, and after judgment was given below.

Section 58(3)(b) relevantly provides that it is not competent for a creditor, except with leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding. The provision, therefore, has application only to the commencement of any legal proceeding by a creditor that is in respect of a provable debt, or the taking of any fresh step in such a proceeding.

Here, the proceeding at first instance was commenced by the applicants and not by the Commissioner. It, and any step taken in it, is therefore not one to which s 58(3)(b) applies. Thus, if the filing of the notice of appeal is properly characterised – I should say, as a step in the original proceeding – then leave under the provision is not required.

It is, however, open to characterise filing of the notice of appeal as the commencement of a legal proceeding separate from the original proceeding.  For present purposes I shall assume that it is.  The question then arises whether the appeal is in respect of a provable debt.  In my view it is not.  The following factors influence me to this view.

First, the appeal is against Ms Bird and Mr Scott in their capacity as trustees.  It is not against them in any other capacity.

Secondly, the appeal, if successful, will result in the setting aside of declarations made with respect to garnishee notices and the proceeds of sale of the Bulimba property.  No relief will be granted in respect of any debt provable in the bankruptcies of Ms Bird and Mr Scott.

Thirdly, as the learned primary judge noted in the first paragraph of his reasons, the liability of Can Barz Pty Ltd, and of Ms Bird and Mr Scott, in the respective capacities as trustees to the Commissioner, was not challenged in the proceeding before him.  In those circumstances such a liability could not become a contested issue in an appeal from a judgment in litigation conducted on that basis.

It follows that the Commissioner does not require leave under s 58(3)(b) to file the notice of appeal or to take further steps in the appeal. The stay sought is not justified. The application for it must be refused.

The orders of the Court will be:

1.The time for filing a notice of contention by the first respondent and the second respondents to the appeal be extended to the 13th of June 2016.

2.The first respondent and the second respondents to the appeal file and serve an outline of argument on the constitutional issues raised by the notice of contention on or before 4 pm on the 13th of June 2016.

3.The appellant and the intervenor each file and serve an outline of argument on such issues on or before 4 pm on the 20th of June 2016.

4.The application is otherwise refused.

5.The costs of the application are reserved.

MR HORTON QC:  Would your Honour make – I’m sorry.  Would your Honour make one more order ‑ ‑ ‑

GOTTERSON JA:  Yes.

MR HORTON QC:  ‑ ‑ ‑ and that is, to remove the third and fourth respondents as parties to the appeal?  Those parties have written directly to the Court.  I have a copy of the letters here if required.

GOTTERSON JA:  Is there any opposition to that order?

MR BICKFORD:  No, your Honour.

GOTTERSON JA:  Mr Keyes?

MR KEYES:  None, your Honour.

GOTTERSON JA:  There will be, therefore, a further order that the – now, Mr Horton, they are named as – what?

MR HORTON QC:  Yes.  They’re named as the third and fourth respondents.

GOTTERSON JA:  To the appeal?

MR HORTON QC:  In the appeal.

GOTTERSON JA:  Yes.

MR HORTON QC:  And their names are Rebecca Warren and Robert Boyd Warren, and EB Sales Proprietary Limited.

GOTTERSON JA:  The order, then, is that the third and fourth respondents, Rebecca Warren and Robert Boyd Warren and EB Sales Proprietary Limited, be removed as parties to the appeal.

MR HORTON QC:  Thank you, your Honour.

GOTTERSON JA:  Thank you.

MR HORTON QC:  And your Honour, finally there’s the 78B notices to issue.  We’ve prepared that ‑ ‑ ‑

GOTTERSON JA:  Yes.

MR HORTON QC:  ‑ ‑ ‑ and my client will have those issued forthwith.

GOTTERSON JA:  Yes.  No order is required with respect to them?

MR HORTON QC:  No order required.  We’ll do so within about 24 hours.

GOTTERSON JA:  Yes.  I think that disposes of everything ‑ ‑ ‑

MR BICKFORD:  Yes, your Honour.

GOTTERSON JA:  Yes.

MR BICKFORD:  Thank you, your Honour.

GOTTERSON JA:  Thank you for your assistance.  Adjourn the Court.