Caporale v Deputy Commissioner of Taxation
[2014] FCCA 120
•28 January 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CAPORALE v DEPUTY COMMISSIONER OF TAXATION | [2014] FCCA 120 |
| Catchwords: BANKRUPTCY – Application to set aside bankruptcy notice – no grounds established. |
| Legislation: Bankruptcy Act 1966, ss.40, 41. Income Tax Assessment Act 1936, s.177 Taxation Administration Act 1953, s.14ZZM |
| Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 Caporale v Commissioner of Taxation [2012] FCA 86 Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346 Caporale v Deputy Commissioner of Taxation [2014] FCCA 69 Caporale v Deputy Commissioner of Taxation [2013] FCA 427 Caporale v Deputy Commissioner of Taxation (No 2) [2013] FCA 473 Saliv SPC Ltd (1993) 76 ALJR 841 Seller v Deputy Commissioner of Taxation [2011] FCA 865 |
| Applicant: | TOMMASO CAPORALE |
| Respondent: | DEPUTY COMMISSIONER OF TAXATION |
| File Number: | SYG 174 of 2013 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 22 October 2013 |
| Date of Last Submission: | 22 October 2013 |
| Delivered at: | Sydney |
| Delivered on: | 28 January 2014 |
REPRESENTATION
| The Applicant in person |
| Counsel for the Respondent: | Mr O’Brien |
| Solicitors for the Respondent: | Australian Taxation Office |
ORDERS
Application filed 31 January 2013 is dismissed.
Applicant to pay the respondent’s costs as agreed or as assessed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 174 of 2013
| TOMMASO CAPORALE |
Applicant
And
| DEPUTY COMMISSIONER OF TAXATION |
Respondent
REASONS FOR JUDGMENT
Introduction
By way of an application filed 31 January 2013, Tomasso Caporale, the applicant, asks the Court to set aside a bankruptcy notice number BN76-11 which was served on him on 11 January 2013. The Deputy Commissioner of Taxation, the respondent, opposes the application. The time to comply with the notice has been extended to 21 days after the date of delivery of these reasons for judgment. These reasons explain why the Court has declined to set aside the notice.
Background
The Bankruptcy notice in question was issued on 21 November 2012. The total debt claimed is $81,811.45. The debt is based on a judgment of the District Court of New South Wales made 31 August 2012, entered 3 September 2012. It was a judgment made at hearing. The judgment debt appears to relate to unpaid income tax for the year of income ended 30 June 2009.
On 13 February 2012, the applicant lodged a notice of objection in respect of tax years 1997-2010, including the assessment for 2009. The objection also sought an extension of time to make the objection. On 24 April 2012, the objection was refused by the Commissioner. On 1 May 2012, the applicant lodged an application to review the decision with the Administrative Appeals Tribunal. On 25 October 2012, the Administrative Appeals tribunal granted an extension of time for the applicant to lodge an objection with respect to the year ended 30 June 2009. However, on 14 December 2012 the Commissioner disallowed the said objection with respect to the notice of assessment for year ending 30 June 2009. On 9 January 2013, the applicant sought a review of the Commissioner’s decision of 14 December 2012.
It is common ground that the applicant’s application for review to the Administrative Appeals Tribunal is listed for hearing in March 2014. It is common ground that the effect of s.177 of the Income Tax Assessment Act 1936 is that only the Administrative Appeals Tribunal can go behind the said assessment.
The respondent submitted that, given the history of this matter, the bankruptcy notice ought not be set aside as it does not result in any inhibition to the applicant pursuing his claim in the Administrative Appeals Tribunal. On behalf of the respondent, it was contended that it was only if a creditor’s petition is filed that there is any prejudice to the applicant. The applicant nonetheless contends that the notice should be set aside for a number of reasons, which include that the tax debt was not in fact due, that the applicant had various set offs to which he was entitled, and a number of other reasons.
The Evidence
The following documents were read and relied on in the applicant’s case:
(1)Application filed 31 January 2013
(2)Affidavit of Tomasso Caporale affirmed 30 January 2013, filed 31 January 2013
(3)Affidavit of Rosa Caporale affirmed 23 June 2013, filed in court 24 June 2013
(4)Affidavit of Rosa Caporale affirmed 18 October 2013, filed in court that date.
In addition, the applicant relied on several volumes of documents referred to in her affidavits.
Ms Rosa Caporale, the applicant’s sister, appeared on his behalf as she had done in several other applications involving her brother and other members of the family.
The material relied on in the respondent’s case comprised of:
(1) Affidavit of Claudio Casanato, affirmed 28 March 2013, filed 3 April 2013
(2) Affidavit of Jason Green affirmed 12 August 2013, filed in court by leave 15 August 2013.
The respondent was represented by Mr O’Brien.
Related Judgment
The present application by Tomasso Caporale was heard at the same time as a similar application by his brother, Giuseppe Caporale. The court has today delivered reasons for judgment and made orders dismissing Mr Giuseppe Caporale’s application. That judgment has been published as Caporale v Deputy Commissioner of Taxation [2014] FCCA 69. Because of the similarity of the arguments raised by Ms Caporale in both matters, it is not proposed in these reasons for judgment to repeat the submissions made and findings made, but rather to incorporate them by way of reference.
Applicable Law
In this matter the relevant act of bankruptcy is said to have been committed by virtue of not complying with a bankruptcy notice based on a judgment debt. In this regards s.40(1)(g) states:
(1) A debtor commits an act of bankruptcy in each of the following cases:
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia--within the time specified in the notice; or
(ii) where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
The court has power to set aside the notice. Both ss.40(1)(g) and 41(7) refer to counter-claim, set-off or cross-demand. The applicant’s case is, in substance, and doing the best the court can to discern the same, based on the existence of this counter-claim, set-off or cross demand.
Chronology
I incorporate into these reasons for judgment the chronology as set out in the matter of Giuseppe Caporale, but edited so that it only refers to the present applicant.
| Date | Event |
| 28 October 2009 | Notice of Assessment for the year ended 30 June 2009 issued to Tommaso Caporale |
| 29 July 2011 | Deputy Commissioner of Taxation (“DCT”) filed Statement of Claim against the Applicant |
| 13 February 2012 | Applicant lodged application for extension of time to object against the assessment |
| 24 April 2012 | DCT refused the application for an extension of time to object with respect to the Applicant |
| 1 May 2012 | The Applicant lodged applications for review of the DCT’s decision with the Administrative Appeals Tribunal |
| 31 August 2012 | Judgment entered in favour of the DCT against the Applicant |
| 26 September 2012 | Applicant file motion seeking a stay of execution of the judgments |
| 19 October 2012 | Applicant motions dismissed with costs |
| 25 October 2012 | The Tribunal granted an extension of time for Tommaso Caporale to object to the assessment for the year ended 30 June 2009 |
| 11 January 2013 | Bankruptcy notice served on the applicant |
| 30 January 2013 | Applicant files motion seeking to set aside the judgment |
| 31 January 2013 | Applicant files application to set aside the bankruptcy notice |
| 26 July 2013 | Applicant’s motions to set aside the judgment dismissed by the District Court (Gibbs J) with costs |
The Applicant’s Contentions
I incorporate into these reasons for judgment the applicant’s contentions as set out in my reasons for judgment in the matter of Giuseppe Caporale.
The applicant’s contentions are contained in the affidavit of Rosa Caporale affirmed 18 October 2013. She is the applicant’s sister and is authorised by him to act on his behalf. She is clearly a highly intelligent and articulate woman with extensive experience of litigating matters on her own behalf, as well as her family, in taxation matters. Despite that it was difficult at times to understand what the legal arguments were on behalf of the applicant. The court will do the best it can to identify and deal with the matters contended.
On behalf of the applicant an adjournment was sought as he was incapacitated due to health reasons. Accepting that this was so, the adjournment was sought due to the lengthy history of the matter, but principally because Ms Caporale was speaking on the applicant’s behalf in the context of proceedings that did not involve the giving of evidence. Thus there was no prejudice to the applicant that exceeded the prejudice the respondent would experience if the case were adjourned.
An adjournment was also sought on the basis that proceedings were listed on the AAT on 21-23 July 2014, relating to the assessment. The adjournment was declined because the prejudice suffered by the respondent if the adjournment were granted exceeded the prejudice suffered by the applicant if it were not granted.
The applicant then contended that there were several reasons to set aside the notice including that:
a)The tax was already paid
b)The respondent’s officers had engaged in illegal or improper conduct
c)The tax was not in fact payable
d)It was in the public interest to do so
e)There was maladministration by the respondent or its officers
f)The respondent had acted unlawfully
It is possible that there are other contended bases for the application.
The only relevant difference between the matter of Giuseppe Caporale, and Tomasso Caporale, is that in the present application, the issue of the 2009 assessment is listed for hearing in the Administrative Appeals Tribunal on 21 – 23 July 2014.
The Respondent’s Contentions
I incorporate into these reasons for judgment the section entitled Respondent’s Contentions in my reasons for judgment in Caporale v Deputy Commissioner of Taxation [2014] FCCA 69.
On behalf of the respondent a number of key submissions are made. The respondent relies on s.177 of the Income Tax Assessment Act 1936 to conclusively prove the debt in question. Thus the applicant cannot challenge the validity of the assessment of this court.
In any event the respondent contends that the mere fact that the AAT is again considering the assessment does not prevent the respondent from proceeding. Reliance was placed on s.14ZZM of the Taxation Administration Act 1953 which states:
The fact that a review is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no review were pending.
Further reliance was placed on the High Court’s decision of Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 at [55] and [57]:
The source of the debt is to be located in the statutory consequences given to an assessment (and a GST declaration) formerly by ss 208 and 209 of the Assessment Act, now by s 255-5 in Sch 1 to the Administration Act. Neither the AAT nor the Federal Court is empowered by Pt IVC to vary assessments. That is for the Commissioner who is charged by ss 14ZZL and 14ZZQ respectively to amend assessments (and determinations) to give effect to decisions of the AAT and the Federal Court.
…Nothing turns upon the attribution to a s 459G application of the character of a proceeding in which … a tax debt may be disputed by the applicant taxpayer. Section 459G applications by taxpayers are not Pt IVC proceedings and production by the Commissioner of the notices of assessment and of the GST declarations conclusively demonstrates that the amounts and particulars in the assessments and declarations are correct.
Thus the mere fact that there is a review does not provide the court with a basis to prevent the respondent seeking recovery. In relation to the maladministration and other claims, the respondent submitted that they lacked specificity, were ill-informed both factually and at law, and were in any event arguments raised and rejected in other litigation by members of the Caporale family.
In short, the respondent’s contention is that the combined effect of s.177 of the Income Tax Assessment Act 1936, and s.14ZZM of the Taxation Administration Act 1953, is that the debt remains due and payable until such time as the Administrative Appeals Tribunal directs the respondent to give effect to its determination. In the circumstances, the respondent submits, it is entitled to issue the bankruptcy notice.
Discussion
I incorporate into these reasons my discussion of the matter Giuseppe Caporale, given that there is such a high degree of similarity in terms of the arguments raised.
Many matters appear to have been raised on behalf of the applicant that are irrelevant to the present proceedings, or are issues raised in other litigation but resoundingly rejected in those courts.
In order to satisfy this court that the notice should be set aside the applicant needs to demonstrate that he has a counter claim, set-off or cross-demand that could not have been set up in the action or proceeding in which the judgment was ordered or made. There is no evidence at all going to the issue of why these matters could not have been raised in the District Court proceedings. In any event the court must be satisfied that the debtor “has a prima facie case”: Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346, a matter which he has failed to do. Indeed the impression formed about the applicant’s arguments are that they are spurious and intended to delay and obfuscate.
Even if there were some residual discretion to set aside the bankruptcy, no grounds for doing so are established by the evidence. The existence of the debt is rendered conclusive by virtue of the provisions of s.177. The AAT has declined to revisit the debt. This court lacks the ability to go behind this judgment debt, even if there were evidence to cause some doubt about it, which there is not.
What is most disconcerting about the matters pursued on behalf of the applicant is that they are the same arguments raised unsuccessfully in proceedings by other family members in relation to bankruptcy over unpaid tax. The cases include: Caporale v Commissioner of Taxation [2012] FCA 86 (17 February 2012) Robertson J; Caporale v Deputy Commissioners of Taxation [2012] FMCA 1178 (19 November 2012) Raphael FM (as he then was); Deputy Commissioner of Taxation vCaporale [2013] FMCA 5 (4 February 2013) Driver FM (as he then was); Caporale v Deputy Commissioner of Taxation [2013] FCA 427 (9 May 2013) Robertson J; Caporale v Deputy Commissioner of Taxation (No 2) [2013] FCA 473 (23 May 2013) Robertson J. This is not a matter raised on behalf of the respondent at hand. It is a matter the court raises, not as something that is central, or indeed even peripheral, to the court’s decision but rather because this court must be able to control its own processes and prevent applicants, especially those representing themselves, from abusing the process of the court. Thus, for example, Ms Caporale was involved in Caporale v Commissioner of Taxation where Robertson J referred, at [76], to Sali SPC Ltd (1993) 76 ALJR 841 at 849 cited with approval in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [93] – [95] to support the proposition that the conduct of litigation is not merely a matter for parties and their interests, but there was an equally important public interest. When the present litigation is viewed in the broader context of all of the Caporale litigation, as well as by reference to its own facts, the inference to be drawn is that it is an abuse of process by parties seemingly obsessed with their own perceived rights and interests and oblivious to the broader interests of other litigants and the public generally. Before leaving the judgment of Robertson J one cannot help but note how paragraph 78 of His Honour’s reasons resonate with this court in it description of “the generality and vagueness with which the claim … was put” and the absence of “detail” and “coherence”.
Another example is the decision of Rahpael FM (as he then was) in Caporale v Deputy Commissioner of Taxation where Ms Caporale appeared for her father in an application to set aside his bankruptcy notice, unsuccessfully. In terms of abuse of process what is significant about this decision is the history with the Deputy Commissioner so similar to this case, the argumentative and irrelevant material relied on so similar to this case, the absence of any successful attempt to set aside the relevant judgment, the failed proceedings in the Administrative Appeals Tribunal, speculations about cross-claims for damages in respect of breach of duties allegedly owed. The parallels to this case are obvious, but somehow not to the applicant.
Yet another example demonstrating the lack of bona fides in the present application is FM Driver’s decision in Deputy Commissioner of Taxation v Caporale, a decision that Ms Caporale should be well familiar with because it resulted in her own estate being sequestrated. The arguments raised by her in that case are similar to those raised in the present case, e.g. to challenge the judgment debt as there was in reality no debt owed; to challenge the decisions and actions of the Australian Taxation Office; to seek to revisit decisions made by the AAT: to challenge the Deputy Commissioner’s bona fides. Her arguments were unsuccessful.
Before Robertson J in Caporale v Deputy Commissioner of Taxation Ms Caporale complained about the commissioner’s non-compliance with the model litigant provisions under Legal Services Directions, and that this gives rise to legal rights on her. Her claim was dismissed. She is deemed to be aware of the Commonwealth’s obligation to act as a model litigant, but is oblivious to any sense of obligation that she might have to, for example, not seek to raise issues or make submissions that have been dealt with in other courts and at other times without success.
Just a few weeks later Robertson dismissed Ms Caporale’s appeal from the sequestration order made against her. Her arguments about maladministration, public interest, bad faith, claims for damages etcetera were all rejected.
Of course, the pendency of the review in the Administrative Appeals Tribunal makes this case slightly different to that of Giuseppe Caporale. The conclusion is the same, however. The decision of Flick J in Seller v Deputy Commissioner of Taxation [2011] FCA 865 (3 August 2011) is instructive in this regard. It is neither an abuse of process, nor any other reason for setting aside the bankruptcy notice, that review proceedings are pending in the Administrative Appeals Tribunal. The situation could be, and indeed possibly would be different if the application before the court were to set aside a creditor’s petition, but it is only a bankruptcy notice, which invokes the jurisdiction of this court quite properly, and appropriately in the circumstances.
That same decision is also authority for dismissing the applicant’s alternative application, which is for an extension of time within which to comply with the bankruptcy notice. For the reasons set out by Flick J at paragraphs 36-52 inclusive in Seller, s.41(6A) Bankruptcy Act 1966 does not apply in a situation where there is a review of the assessment pending before the Administrative Appeals Tribunal, but there is otherwise no application to set aside the judgment that founds the bankruptcy notice.
Conclusion
The application filed 31 January 2013 is dismissed. There is no substance in the contentions made on behalf of the applicant. The applicant should pay the respondent’s costs as agreed or as assessed.
I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Associate:
Date: 28 January 2014
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