Deputy Commissioner of Taxation v Palmer (No 3)
[2023] VCC 432
•24 March 2023
| IN THE COUNTY COURT OF VICTORIA AT Melbourne commercial DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-18-02619
| DEPUTY COMMISSIONER OF TAXATION | Plaintiff |
| v | |
| MICHAEL GARETH PALMER | Defendant |
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JUDGE: | HIS HONOUR JUDGE COSGRAVE | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 14 March 2023 | |
DATE OF RULING: | 24 March 2023 | |
CASE MAY BE CITED AS: | Deputy Commissioner of Taxation v Palmer (No 3) | |
MEDIUM NEUTRAL CITATION: | [2023] VCC 432 | |
REASONS FOR RULING
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Subject: APPLICATION FOR STAY OF EXECUTION
Catchwords: Jurisdiction of County Court – inadmissible evidence – substantial onus not discharged by applicant – no obvious or sufficiently arguable error in judgment – garnishee notice
Legislation Cited: Administrative Decisions (Judicial Review) Act 1977 (Cth); County Court Act 1958; Income Tax Assessment Act 1997 (Cth); Judiciary Act 1903 (Cth); Taxation Administration Act 1953 (Cth)
Cases Cited:Commissioner of Taxation v Official Receiver (1956) 95 CLR 300; DCT v MWB Accountants Pty Ltd [2019] VCC 1516; Deputy Commissioner of Taxation (NSW) v Mackey (1982) 13 ATR 547; Deputy Commissioner of Taxation v Gergis (1991) 22 ATR 1; Snow v Deputy Commissioner of Taxation (1987) 14 FCR 119; Southgate Investment Funds Limited v Deputy Commissioner of Taxation (2013) 211 FCR 274
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms A Wilson | Australian Government Solicitor |
| For the Defendant | Self-represented |
HIS HONOUR:
Nature of the application
1By summons filed 16 February 2023, the defendant (“Palmer”) made an application for orders that:
(a) there be a stay of execution of the General Form of Order dated 27 January 2023, pursuant to Regulation 66.16 of the County Court Civil Procedure Rules 2018 (“the Rules”).
(b) PayPal Australia Pty Ltd release all funds that have been unlawfully withheld and/or transferred to the plaintiff from accounts not in the name of the defendant since 23 November 2022.
(c) costs be awarded to the defendant.
Background
2In a detailed judgment delivered on 22 November 2022, Judge Macnamara set out the background to this litigation. I gratefully adopt His Honour’s description of the position as summarised early his judgment.
3By a writ dated 19 June 2018, the plaintiff described as “Deputy Commissioner of Taxation” sought judgment for debts said to be outstanding under various Commonwealth tax enactments in the sum of $1,587,646.19. These debts were said to be payable as at 19 June 2018, together with further interest accruing thereafter under the terms of the Income Tax Assessment Act 1997 (Cth) and the Taxation Administration Act 1953 (Cth). The statement of claim was subscribed with a facsimile signature apparently of “Robert John Ravanello … a Deputy Commissioner of Taxation of the Commonwealth of Australia”.[1]
[1]Court Book at 710, [2]
4The statement of claim sought recovery of amounts which were said to represent income tax assessments due for the financial years 30 June 2008 to 30 June 2018. The plaintiff sought interest accruing as at a series of dates, the first of which was for the year ending 30 June 2008 and for all subsequent years. These assessments were apparently default assessments – that is, they were made by the Commissioner based upon his own judgment and investigations and without the advantage of, or reference to, income tax returns lodged by or on behalf of Palmer.[2] There were also claims for certain administrative penalties.
[2] Palmer apparently lodged no returns for this period.
5Palmer filed a document styled “Conditional Defence of Defendant” dated 23 October 2019. This document included Palmer’s email address. It described Palmer as being “a de jure solemn et naturale” and as being “a subject of the Crown of the United Kingdom of Great Britain and Ireland (pursuant to section 117 of the Commonwealth Constitution) and that Crown is defined as ‘a body of law’ that has been established through proper due process …”. It also described Palmer as a “living, breathing man,” stating that he was acting “for and on behalf of the Defendant as the Person’s Personal Representative of person Michael Gareth Palmer, and as the beneficiary of that constructive trust …”. According to the “Conditional Defence”, Ravanello, the plaintiff, was not “a lawfully appointed Deputy Commissioner of Taxation – at best he was a Second Commissioner of Taxation who had purportedly been ‘assigned’ the duties of a Deputy Commissioner of Taxation – and did not, in fact, have the right to enforce the taxation laws within the Commonwealth of Australia.” The defence denied the lawfulness of the assessments of taxation made against Palmer, alleging that Ravanello “unlawfully accessed private foundation accounts … of which the Defendant was merely a participant (not the sole beneficiary of) – without a lawful warrant …” The defence said that the Taxation Administration Act 1953 (Cth), as referred to in the statement of claim, “has not been lawfully amended and there exists no valid proclamation certificate for the sections referred to in the Statement of Claim.” The defence denied the various allegations in the statement of claim. Palmer also denied the jurisdiction of this court to entertain the plaintiff’s claim. It was for this reason that Palmer filed a conditional defence. The document concluded:
“The Defendant requires the matter to be struck out, with prejudice, on the grounds that it is frivolous, vexatious and an abuse of process, and the proceeding is, in its entirety, a legal nonsense.
The Defendant claims costs and damages.”
6The defendant’s application for summary dismissal or strike-out came on for hearing before Judicial Registrar Tran, as her Honour then was, on 27 May 2019. The Judicial Registrar published a reserved written ruling dated 3 September 2019[3] in which she considered an assertion, inter alia, that she had not been validly appointed as a judicial registrar.
[3] DCT v Palmer [2019] VCC 1401
7For reasons not entirely apparent, though perhaps associated with the COVID‑19 pandemic and the complexity of the matters being urged by Palmer, matters rested there until the proceeding came on for hearing before Judge Macnamara. His Honour was to hear the trial and also deal with an application by Palmer for a review under Order 84 of the decision of Judicial Registrar Tran.
8These two matters were fixed for hearing on 14 November 2022 by order of Judicial Registrar Muller. The court set aside four days for the trial.
9Palmer began by raising matters which he said constituted a challenge to jurisdiction, calling upon Judge Macnamara in effect to establish that the court had jurisdiction, and also to determine his review application prior to dealing with the plaintiff’s claims at trial. It seems that, broadly, the same issues were raised in support of the review application and to controvert the plaintiff’s claim at trial. Palmer said that logically, the court should deal with the review application first in light of the history of the matter and the fact that the same considerations raised by Palmer seemed to be relied upon. On the review application and at trial, it seemed to Judge Macnamara convenient that Palmer advance all of his arguments and evidence at the outset, leaving it to plaintiff’s counsel, Ms Wilson, to respond but giving Palmer a right of reply.
10Ultimately Judge Macnamara dismissed Palmer’s application for review of the decision of Judicial Registrar Tran. His Honour found that the various matters urged by Palmer were not well-founded and his arguments failed. In relation to the plaintiff’s claim, His Honour found that judgment should be given in favour of the plaintiff for the total of the amounts certified as due and payable by the defendant at 11 November 2022, namely, $2,241,339.76.
Application
11Palmer filed affidavit material and submissions in support of his application.[4] The written and oral submissions were somewhat confusing and raised issues which I regard as legal nonsense. Dealing with such matters is difficult because it is challenging to frame the propositions advanced in a coherent manner and respond to them.
[4]On 16 March 2023, after the conclusion of the hearing, Palmer sent a further email to the Court regarding PayPal. I have not taken this email into account in determining the merits of the application.
12Palmer began by arguing that the stay should be granted because,
(a) the reasons of Judge Macnamara and his order were invalid
(b) the Deputy Commissioner’s notice to PayPal sent pursuant to section 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) required PayPal to pay money to the plaintiff due to the garnishee.
(c) it was unjust and unfair that, in response to his garnishee notice, PayPal made available funds beyond those held solely by, or on behalf, of Palmer.
13Palmer argued that Judge Macnamara’s reasons for judgment faced a fundamental problem - specifically, that he had not established in his reasons that the County Court or he as a judge of that court, had jurisdiction to deal with the matter before him.
14I am satisfied that the County Court has jurisdiction to hear claims made by the Australian Taxation Office seeking to recover amounts sued for as unpaid tax, penalties and interest. The court has heard and determined such cases for many years. Moreover, if Palmer contended that the County Court had no jurisdiction, I query why he asked a judge of that court to review the decision of Judicial Registrar Tran. If this court lacked jurisdiction, surely Palmer had to seek redress elsewhere.
15Palmer said that the reasons for judgment did not constitute a decision or judgment of Judge Macnamara. He contended that His Honour gave reasons which reflected his opinion and beliefs but they had no substantive effect – there was no judgment or order made. Palmer argued that Judge Macnamara’s reasons, including the final paragraph of his reasons, did not constitute a judgment.
16Palmer took exception to the delay between the handing down of Judge Macnamara’s reasons and the provision of the authenticated order which was not produced until 27 January 2023. Palmer regarded it as sinister and suspicious that the Deputy Commissioner sought to serve a garnishee notice on PayPal on or about 23 November 2022 when there was no court order in existence.
17On 2 February 2023 Palmer emailed the Deputy Commissioner’s solicitor, Vincent Tavolaro, alleging that the judgment or order was irregular because it was issued two months after the hearing. Further, he said that the order was not issued under the court’s motion, but pursuant to a request by the Deputy Commissioner after the court admitted that there was no order to authenticate and the Deputy Commissioner’s original request for an authenticated order was rejected. Palmer argued that the wording of the order was inconsistent with Judge Macnamara’s reasons for judgment. Paragraph 100 of the reasons merely stated that judgment “should” be given not that it is or was given. Palmer submitted that this indicated that the order was based solely on the judge’s opinion and was not a final judgment.
18I regard the above contentions as without substance. Judge Macnamara’s reasons were a rational justification for the conclusions he reached. Although a court would normally produce an order or judgment shortly after handing down reasons, this does not invariably happen. For example, a court might hand down reasons for judgment which necessitate the conduct of further proceedings to determine if, and to what extent, penalties should be applied to a defendant found to have breached civil penalty provisions of the Fair Work Act 2009 (Cth). Ultimately, final orders could not be made until this question and the question of costs had been finally determined. The precise cause of the delay in the present case was not obvious from the evidence. But I am satisfied that the order made on 27 January 2023 is valid and effective, at least until it is successfully appealed.
19Moreover, as the Deputy Commissioner later pointed out, the plaintiff is authorised to serve a garnishee notice on a person without having first obtained a judgment in court. To that extent, Palmer’s argument about the lag between the delivery of reasons and the production of the formal order is irrelevant.
20Palmer also argued that the garnishee process involving PayPal was legally defective because the Deputy Commissioner did not serve him with a copy of the notice as required by section 260-5(6) of Schedule 1 to the Taxation Administration Act 1953 (Cth). Palmer complained that the Deputy Commissioner of Taxation had served the notice at 388 Beach Road, Beaumaris, despite knowing that Palmer had not lived at that address for some years. Palmer said that he had no fixed address and moved between various residences. However, he did admit that there was a mail redirection order in place in relation to the Beaumaris property so that mail addressed there was sent to a post office box to which he had access.
21The gist of Palmer’s complaint was that he did not receive the notice until after the expiry of the 28 day period within which he could review the notice.
22The plaintiff’s difficulty was that, because Palmer failed to lodge tax returns between about 2008 and 2018, the only address on the tax office files was the Beaumaris address.
23Palmer also drew attention to the discrepancy between the notice bearing at its top a reference to the Australian Government and the Australian Taxation Office, neither of which was said to be a legal entity known to law. The notice itself required payment to “us” or the Commissioner of Taxation. Not only did this refer to entities without a legal existence but the money was not paid into a Consolidated Revenue Fund as required by section 81 of the Commonwealth Constitution.
24The last main issue raised by Palmer on this aspect of the case was the fact that, having received the notice, PayPal made available to the Deputy Commissioner of Taxation funds from accounts which were not wholly and solely in Palmer’s name. Palmer referred to Libra Consulting Services Pty Ltd, Know Your Rights Inc, and the BSR Foundation. Palmer contended that funds from these accounts were not lawfully paid because:
§there was no notice issued in the names of these three entities;
§the funds were not exclusively available to Palmer; and
§the funds were not transferred into a Consolidated Revenue Fund as required by section 81 of the Commonwealth Constitution.
25The plaintiff submitted that the County Court:
(a) had no jurisdiction to review the notice or its validity. Counsel submitted that Palmer had two options – either an application to the Federal Court of Australia under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“ADJR Act”) for review of the decision to issue the notice or issuing proceedings under section 39B of the Judiciary Act 1903 (Cth).
(b) under section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth), the plaintiff can serve a notice if an amount of a tax related liability is payable to the Commonwealth by an entity (whether or not the debt has become due and payable). It is not a condition precedent to issuing the notice that there be an order.
26In short, I am satisfied that the submissions of the plaintiff in paragraph 25 above are correct. The plaintiff enjoys substantial benefits in comparison with other litigants when engaged in proceedings to recover taxation monies allegedly owed to the Commonwealth. Various legislative provisions have created presumptions which advantage the plaintiff and have limited the way in which taxpayers can challenge the plaintiff’s recovery efforts.
27Further, I consider that there is no substance in the points made by Palmer. On the evidence, it is unclear whether or not Palmer received a copy of the garnishee notice served on PayPal. However, the plaintiff is entitled to rely upon its records. It sent the garnishee notice to the address which it had. In any event, if a redirection authority exists for that address, then the plaintiff is not responsible if Australia Post fails to forward the notice to the post office box or another person with access to the post office box takes the notice.
28Insofar as PayPal has responded to the garnishee notice from the plaintiff, I was told by Palmer at the hearing that PayPal had paid the plaintiff almost $16,000. I have no reason to believe that this money has been paid into an account which is not authorised by the Commonwealth in some way to hold funds representing consolidated revenue of the Commonwealth.
29If Palmer considers that PayPal has provided to the plaintiff funds which do not fall within the legitimate scope of the garnishee notice, then he should pursue his rights against PayPal as he threatened in his emails to PayPal dated 6 January and 16 January 2023.
Stay of execution
30Palmer sought a stay of execution under Order 66.16 of the Rules on the operation of Judge Macnamara’s order made on 27 January 2023. The material filed in support of the application appears to be at paragraphs 1 to 29 inclusive of Palmer’s affidavit sworn on 16 February 2023.
31The affidavit raised issues such as:
· the court’s lack of jurisdiction to hear the dispute because there was no proper basis to say the court was entitled to operate under the purported title of the King of Australia and there was no valid instrument establishing this state of affairs;
· the problem of the irregular order made on 27 January 2023, given that the hearing before Judge Macnamara took place in November 2022; and
· the purported January order did not specify where the funds were to be paid – a payment was invalid if not made into a Consolidated Revenue Fund specified under section 81 of the Commonwealth Constitution.
32These issues appear to be substantially the same as, or similar to, issues raised before Judicial Registrar Tran and Judge Macnamara. The later has addressed them, at least to some degree, in his judgment.
33In the court hearing before me, Palmer spoke of the practical inconvenience he was suffering because his business interests operated through PayPal and because PayPal had provided funds to the plaintiff in response to the garnishee notice. Palmer said that he was unable to pay bona fide creditors to whom he, or the businesses with which he was associated, owed money. He said that this situation applied not only to Libra Consulting Services Pty Ltd but also to the two foundations, Know Your Rights Inc and BSR Foundation. There was no admissible evidence about the precise details of the hardship suffered or the bills which were said to be due for payment.
34The plaintiff commenced its written submissions with comments about Palmer’s affidavits dated 16 February 2023 and 9 March 2023 noting why they were irregular and, therefore, not strictly admissible. The plaintiff correctly observed that:
· the affidavits were not made in the first person, contrary to rule 43.01(1);
· the affidavits did not state the deponent’s place of residence and occupation or that he had no place of residence or occupation, contrary to rule 43.01(2);
· they were not signed by the deponent, contrary to rule 43.01(5); and
· the person before whom each affidavit was sworn did not sign every page, contrary to rule 43.01(6).
35In relation to the stay application, the plaintiff contended that:
· the court had a broad discretion to grant the stay;[5] and
· a taxpayer has a substantial onus to prove that special circumstances exist to justify a stay.[6] The power to grant a stay is, therefore, exercised only sparingly.[7]
[5] Deputy Commissioner of Taxation (NSW) v Mackey (1982) 13 ATR 547 at 551
[6]Deputy Commissioner of Taxation v Gergis (1991) 22 ATR 1 at 3; Southgate Investment Funds Limited v Deputy Commissioner of Taxation (2013) 211 FCR 274 at [77]
[7]Snow v Deputy Commissioner of Taxation (1987) 14 FCR 119 at 139; Deputy Commissioner of Taxation (NSW) v Mackey (1982) 13 ATR 547 at 552; Southgate Investment Funds Ltd v Deputy Commissioner of Taxation (2013) 211 FCR 274 at [77]
36In the present case, Palmer is not able to provide the court with the cogent and admissible evidence it requires to warrant the grant of a stay. Mere assertion from a party in the courtroom is not sufficient.
37The plaintiff argued that (assuming the court overlooked the irregular affidavit material) there were two main points to consider in deciding whether to grant a stay pending a hearing of Palmer’s foreshadowed judicial review application:
(a) does the review application show merit in the sense of an arguable ground of appeal or a ground which suggests that the judge’s decision is likely attended by error;
(b) whether the balance of convenience favours the grant of a stay. Here, the court can consider whether:
(i)an applicant has displaced the presumption that a plaintiff is entitled to the fruits of its judgment;
(ii)there is a real risk that, if the judgment is executed and the judicial review application later succeeds, it is not possible to restore the defendant to his previous position; and
(iii)the defendant would be unable to pursue the judicial review application if the stay were not granted.
38As to the question of merit, the affidavit material does not evince an arguable case that the court lacked jurisdiction or that Judge Macnamara’s order was irregular. The taxation legislation enables the plaintiff to recover taxation revenue notwithstanding that a taxpayer has proceedings on foot to challenge the plaintiff’s assessment. The plaintiff enjoys a position of special advantage under Commonwealth legislation whereby this is possible. I note here that Palmer had appeared to have no proceedings on foot at the time of the hearing in any event. Further, I do not consider that the order must, in terms, specify a fund which can incontrovertibly hold funds for consolidated revenue.
39In paragraph 50 of his affidavit sworn 16 February 2023, Palmer said that, by enforcing the 27 January 2023 order as it has, the plaintiff has placed him and numerous other unrelated parties in significant financial hardship. As noted above, there was no evidence of any details to support this assertion. Ultimately, Palmer cannot blame the plaintiff for the response by PayPal to the garnishee notice. The plaintiff is entitled by law to send the notice. PayPal itself determines its response to the notice.
40It is clear from the case law that the mere obligation to pay income tax does not of itself impose extreme hardship.[8] Generally, the probability that a taxpayer might be bankrupted does not of itself constitute extreme hardship.[9]
[8] Southgate Investment Funds Ltd v Deputy Commissioner of Taxation (2013) 211 FCR 274
[9] Ibid
41In circumstances where:
· Judge Macnamara had jurisdiction to deal with the matters before him and his judgment is valid;
· the plaintiff is entitled to the fruits of its judgment;
· Palmer has failed to discharge his substantial onus to prove by admissible evidence a basis to justify a stay;
· Palmer has not identified any obvious or sufficiently arguable ground of error attaching to Judge Macnamara’s judgment;
· if, ultimately, a court determines that the plaintiff should not have obtained judgment and enforced that judgment against Palmer, then the plaintiff has the resources to repay Palmer whatever entitlement he is found to have; and
· there is no evidence that Palmer would be unable to pursue his judicial review application if the stay is not granted
I consider that I should not grant a stay of execution.
PayPal
42In relation to PayPal, while the parties made submissions at the hearing, I granted each leave to file a further short written submission about the court’s jurisdiction to grant the relief sought in paragraph 2 of Palmer’s summons.
43The plaintiff contended that the relief sought by Palmer in paragraph 2 of his summons was misconceived. This was said to arise partly from PayPal not being a party to the proceeding and partly because the court lacked jurisdiction to deal with the application.
44The plaintiff contended that section 37(1)(a) of the County Court Act 1958 (“the Act”) gave the court jurisdiction to hear and determine all applications which are not, by the Act or any other legislation, excluded from its jurisdiction. Section 49 of the Act empowers the court to make any order in relation to civil proceedings which could be made by the Supreme Court. Also, the court is invested with federal jurisdiction due to section 39(2) of the Judiciary Act 1903 (Cth) in matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it.
45Section 9 of the ADJR Act provides that a state court does not have jurisdiction to review a decision to which the ADJR Act applies nor conduct that has been, is being, or is proposed to be engaged in for the purpose of making a decision to which the ADJR Act applies.
46The decision to issue the garnishee notice is reviewable under the ADJR Act.[10] Accordingly, the County Court has no jurisdiction in the matter and cannot require the plaintiff to take any action regarding the garnishee notice. Any claim to recover monies paid under a garnishee notice would need to be brought against the Commonwealth.[11]
[10]DCT v MWB Accountants Pty Ltd [2019] VCC 1516 at [134]-[135]
[11]Ibid at [136] which refers to Commissioner of Taxation v Official Receiver (1956) 95 CLR 300 at 310-12, 324
47As best as I can understand his contentions, Palmer argued that the plaintiff could not have served the notice upon PayPal without Judge Macnamara’s reasons for judgment. These reasons could only be valid if the court had federal jurisdiction. If the court considered it could properly exercise federal jurisdiction to deliver those reasons for judgment in 2022, the court must also have the jurisdiction to review the garnishee notice given to PayPal.
48Alternatively, Palmer argued that the court can simply make an order that PayPal is to remit to the plaintiff only funds which are wholly and solely in the defendant’s name.
49Further, in the interests of natural justice, the court has jurisdiction to rectify the injustice caused by PayPal remitting to the plaintiff funds to which other people and entities are entitled.
50In my opinion, the submissions advanced by the plaintiff on this point are a more accurate reflection of the law than those advanced by Palmer. The latter’s statements of law are simply incorrect. As noted earlier, the debts pursued by the plaintiff in this matter were tax related liabilities which were due and payable. Accordingly, the plaintiff was entitled under section 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) to issue a garnishee order for the debts. There was no need for the proceedings to be on foot or for a judgment to have been entered against the defendant. The ADJR Act is clear about which courts have jurisdiction to review Commonwealth decisions and the County Court is not such a court. Accordingly, this court cannot review or examine the decision to issue a garnishee notice. Thus, I do not make the order sought in paragraph 2 of the summons.
Conclusion
51In summary, I consider that:
(a) the affidavits filed by Palmer are not admissible and do not comply with the rules of court.
(b) even if the affidavits were admissible, the evidence in support of a stay is weak. It is too insubstantial and unpersuasive to justify the unusual course of preventing the plaintiff from enjoying the fruits of its judgment.
(c) the foreshadowed judicial review sounds weak in that there is no strong ground identified in the material filed to confer obvious merit on the appeal.
(d) if the judicial review application were to succeed, the plaintiff will be in a position to repay to Palmer whatever money it is found to owe him.
(e) there was no admissible evidence to show that Palmer could not conduct the judicial review application unless a stay was granted.
(f) this court lacks jurisdiction to review the plaintiff’s decision to issue a garnishee notice against Palmer.
52For these reasons, Palmer’s summons should be dismissed.
53I direct the parties to confer about the form of final orders and costs in an effort to agree upon orders giving effect to this judgment. If they cannot agree, then by 4.00pm on 29 March 2023, each party is to file with my chambers and serve a written submission setting out the orders sought and the reasons therefor. The submissions are not to exceed three A4 pages, a minimum 12 point typeface, and 40mm margins on both sides of the page. Unless I consider it desirable or the parties require it, I propose to determine the question of final orders and costs on the papers without an oral hearing.
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