Fayad and Commissioner of Taxation (Practice and procedure) - [2024] ARTA 328

Fayad and Commissioner of Taxation (Practice and procedure) [2024] ARTA 328 (9 December 2024)
Applicant/s:  Sam Fayad
Respondent:  Commissioner of Taxation
Tribunal Number:                2023/7010-20 & 2023/7022-30

Tribunal:General Member M Stratos
Place:Melbourne
Date:9 December 2024

Decision:The Tribunal finds the Applicant, by reason of being an undischarged bankrupt at the date application for review was made, is not a person dissatisfied with the Respondent’s objection decision. The application is dismissed pursuant to s. 101(1)(a) of the Administrative Review Tribunal Act 2024 (Cth).

.........................[SGD]...............................................
General Member M Stratos
Catchwords
PRACTICE AND PROCEDURE – income tax assessment and penalty decisions – whether an undischarged bankrupt has standing to seek review – whether bankrupt applicant is a person dissatisfied with reviewable objection decision – application dismissed
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Administrative Review Tribunal Act 2024 (Cth)
Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth)
Bankruptcy Act 1966 (Cth)
Corporations Act 2001 (Cth)
Taxation Administration Act 1953 (Cth)
Cases
Commissioner of Taxation v Tomaras (2018) 265 CLR 434
Cummings v Claremont Petroleum NL [1996] HCA 19
Deputy Commissioner of Taxation v Fayad [2024] FedCFamC2G 625
McCallum v Commissioner of Taxation [1997] 75 FCR 458
Pitman and Commissioner of Taxation [2020] AATA 5308
Pitman v Federal Commissioner of Taxation [2021] FCAFC 230
Robertson v Deputy Commissioner of Taxation [2003] FCA 944
Statement of Reasons

On 28 July 2023, the Commissioner of Taxation (the Respondent) issued a decision in relation to Mr Sam Fayad’s (the Applicant) income tax assessment for years 2002 to 2003 and 2006 to 2014 and penalty assessments for 2002 to 2003 and 2006 to 2012.
On 14 September 2023 a Registrar of the Federal Circuit and Family Court of Australia made orders regarding the sequestration of the estate of the Applicant under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act).[1]
[1] Those orders were affirmed by decision dated 17 July 2024.
On 25 September 2023 the Applicant lodged with the Administrative Appeals Tribunal (the AAT) an application for review of the objection decision dated 28 July 2023.
The Respondent challenges the Applicant’s standing to apply for review of the objection decision on the basis that the Applicant was an undischarged bankrupt at the time he lodged his application.
An Interlocutory Hearing to determine the issue of the Applicant’s standing was held by telephone on 8 October 2024. The Applicant was represented by Mr Tristan Cleary of counsel, instructed by Mr James Pope of Pope & Spinks Solicitors. The Respondent was represented by Ms Elizabeth Bishop SC and Ms Lucy McGovern of counsel, instructed by Ms Suzannah Auld of Corrs Chambers Westgarth and Mr Amrit Singh of the Australian Taxation Office. The AAT had before it the documents filed pursuant to s.37 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), the Respondent’s Submissions, the Applicant’s Submissions, Affidavit of the Applicant, the Respondent’s Submissions in reply and an email from the Trustee dated 7 March 2024.
After the date this hearing was held, the AAT became the Administrative Review Tribunal (the Tribunal). Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth) (the Transitional Act), applications for review to the AAT that were not finalised before 14 October 2024 are taken to be applications for review to the Tribunal. The Transitional Act gives the Tribunal the authority to continue and finalise any aspect of the review not already completed by the AAT. This decision and statement of reasons is made by the Tribunal.
ISSUE
The issue for consideration by the Tribunal is whether the Applicant, as an undischarged bankrupt, has standing as a person dissatisfied with an objection decision to seek review of the objection decision of the Respondent.
LEGISLATION
When this interlocutory application was argued, the relevant legislation in force was s.27 of the AAT Act, which stated an application may be made by or on behalf of any person whose interests are affected by a reviewable decision. Section17 of the Administrative Review Tribunal 2024 (Cth) (ART Act) similarly provides that a person whose interests are affected by a reviewable decision may apply to the Tribunal for review of the decision.
However, s.14ZZB of the Taxation Administration Act 1953 (Cth) (TA Act) modifies the operation of the ART Act (in accordance with the Transitional Act) to make clear that s.17 of the ART Act does not apply in relation to a reviewable objection decision. Prior to the Transitional Act coming into force, s.14ZZB of the TA Act similarly modified s.27 of the AAT Act. It provides:
(1) If the person is dissatisfied with the Commissioner's objection decision (including a decision under paragraph 14ZY(1A)(b) to make a different private ruling), the person may:
(a)if the decision is a reviewable objection decision--either:
(i)apply to the Tribunal for review of the decision; or
(ii)appeal to the Federal Court against the decision; or
(b)otherwise--appeal to the Federal Court against the decision.
CASE AUTHORITIES
There has been much judicial and Tribunal consideration of whether a bankrupt has standing to institute or continue proceedings. In the High Court decision of Cummings v Claremont Petroleum NL [1996] HCA 19 (Cummings) the majority explained at 13-14:
...the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts ... A bankrupt’s contingent interest in a surplus does not give him an interest which would allow him to sue to enforce proprietary rights and, that being so, it cannot give him an interest to appeal to minimise liabilities ...
… the trustee is authorised to "bring, institute or defend any action or other legal proceeding relating to the administration of the estate". That is an ample power to permit the trustee to institute an appeal against a judgment entered against a bankrupt that affects the administration of the estate. But if the judgment against which a bankrupt wishes to appeal reflects on his personal or professional character (as the present judgment does), it seems unjust to leave the institution of an appeal to the discretion of a trustee whose interests do not extend, or do not necessarily extend, to the preservation of the bankrupt's personal or professional character.
These principles have been followed, most relevantly for the present application, in McCallum v Commissioner of Taxation [1997] 75 FCR 458 (McCallum). That decision was concerned with whether a taxpayer, who has objected to an assessment, is entitled to challenge the disallowance of that objection in the Tribunal where, subsequent to the objection, the taxpayer becomes a bankrupt. Although there were differences in the opinion of the judges of the Full Court, the majority found that consistent with the decision in Cummings, a Trustee has standing to apply for review of an objection decision. As explained by Lehane J at 475 -
… in my opinion the decision in Cummings is applicable to this case, with the result that Mr McCallum is likely to lack standing to apply to the AAT for a review of the objection decision. I use the phrase "is likely to" deliberately: he will not have standing merely because, for example, a successful challenge to the objection decision may result in a surplus in his bankrupt estate or because of any effect that the assessments and the objection decision may have upon his reputation. It is conceivable, however, that there may be some other footing in which he could claim standing: for example, it may be that an objection decision in relation to a particular assessment will have consequences in relation to tax payable, perhaps in years following discharge from bankruptcy, for which Mr McCallum will be personally liable. Such a possibility was not canvassed in argument, and I express no opinion about it. There seems to be no difficulty in principle, in such a case, in according standing concurrently to a bankrupt and to the bankrupt's trustee in bankruptcy:
The dissenting judgment of Hill J at 469 in McCallum outlined a concern with this approach:
The Commissioner issues an assessment. The taxpayer objects to it. The assessment may be recovered as a debt. The Commissioner proceeds to do so. The taxpayer seeks a stay, but on the principles enunciated by the Court of Appeal in Deputy Commissioner of Taxation (Cth) v Mackey (1982) 64 FLR 432 the stay is refused. The Commissioner proceeds to judgment and then issues a bankruptcy notice. That notice cannot be challenged because if one sought to go behind the judgment debt one is met by an assessment unchallengeable under s 177: Clyne v Deputy Commissioner of Taxation (Cth) (1982) 82 ATC 4510; Clyne v Deputy Commissioner of Taxation (Cth) (1983) 83 ATC 4532. On the same basis, the taxpayer is made bankrupt. He is insolvent as a result of the tax debt. There may or may not be other creditors.
The Commissioner appoints a trustee in bankruptcy or perhaps the Official Receiver becomes trustee. In either case the trustee has no interest in fighting the objection in the Administrative Appeals Tribunal. It is immaterial to the trustee. And the trustee has no funds to do so. Hence the taxpayer loses the right to appeal and is made bankrupt without ever having a right to challenge the assessment. It could not happen, could it?
In my view, the Court should adopt an interpretation of s 14ZZ which ensures that taxpayers will always have a right to challenge assessments made against them. An interpretation conferring the right of appeal upon a trustee in bankruptcy without funds so to do may conduce to confer upon the Commissioner an absolute power...
Carr J explained succinctly in Robertson v Deputy Commissioner of Taxation [2003] FCA 944 (Robertson) at [23]:
It is quite clear from the High Court’s decision in Cummings and the majority judgments in McCallum that the reason why the bankrupt loses standing is because the debt concerned is payable solely out of the bankrupt’s estate, and is no longer otherwise recoverable from the debtor.
At [37] Carr J observed of the factors relied upon by the Applicant to maintain his status as a person dissatisfied, such as concerns about obtaining credit and serving as a director, that they were ‘…in reality dissatisfactions with his status as a bankrupt…’.
The case of Pitman v Federal Commissioner of Taxation [2021] FCAFC 230 (Pitman FFC) concerned an appeal from a decision of the Tribunal that found an undischarged bankrupt was not a person dissatisfied with an objection decision, as any successful outcome would not have any relevance in the hearing of the separate criminal charges said to arise as a consequence of the findings of the objection decision. Despite the Applicant’s urging that the Court follow the interpretation outlined in the dissenting judgment of Hill J in McCallum, the Court was not prepared to find the majority in McCallum were plainly wrong so as to undertake a reconsideration of such decision (at 296).
Although Allsop J at 289 noted there was no error of law in the way the Tribunal had dealt with the limited evidence and submissions put before it, it may well be, in a different set of circumstances, with further evidence, a bankrupt taxpayer could be ‘dissatisfied’ within the meaning of the legislation.
The relevant authorities offer few examples of those kinds of cases where a bankrupt would have standing to seek or continue a review of the objection decision. The Applicant in the present case does not claim to seek review of the objection decision for any purpose associated with his tax liability in future years, such as the example given by Lehane J in McCallum. That example, however, cannot be considered exhaustive of those circumstances that could constitute ‘some other footing’ on which to find a person is dissatisfied within the meaning of the TA Act.
Deputy President Forgie in the decision of the Tribunal at first instance in Pitman and Commissioner of Taxation [2020] AATA 5308 (Pitman AAT) outlined the principles to be drawn from the relevant authorities, and considered at 157:
(i)examples of circumstances in which a person does have an interest and so does have standing to lodge an application arise if the application for review concerns:
oan entitlement or licence to undertake an activity;
oan entitlement to payment of an amount, such as a social security payment, that is inalienable and cannot form part of a bankrupt’s divisible property;
othe amount sought to be recovered is not a provable debt eg certain student loans under Student Assistance Act 1973.
(ii)examples of circumstances in which a person does not have an interest and so does not have standing to lodge an application arise if the application for review concerns:
oa decision to recover an amount that is a provable debt in the bankruptcy eg tax debts and overpayments of many, but not all, amounts paid under social security legislation;
owould affect the amount of property vested in the trustee under s 58(1) and divisible among creditors.
APPLICANT’S SUBMISSIONS
The Applicant asserts the application to the Tribunal is competent because the decision he seeks to review was made about his own taxation affairs, and he is the only person who may be a person dissatisfied with the Respondent’s objection decision. The Applicant relies on the decision of Commissioner of Taxation v Tomaras (2018) 265 CLR 434 for this proposition. There is no presumption that an Applicant loses their standing simply by virtue of being bankrupt and it is open to the Applicant to establish he remains a person dissatisfied even if he is an undischarged bankrupt.
The Applicant accepts a Trustee could bring such an application for review or be substituted for a bankrupt Applicant as a person dissatisfied by the objection decision. In this case, the Trustee is noted, in an email provided to the Tribunal dated 7 March 2024, to have consented to the Applicant proceeding with this application. The Applicant, through counsel, advised at the Interlocutory Hearing that the Trustee was not funded to pursue this review and no such application to continue proceedings had been made by the Trustee.
The Applicant notes the main authority in relation to a bankrupt’s standing to bring proceedings is McCallum, although it was highlighted this was not a unanimous decision. Lehane J in that judgment at 475 raised that although the bankrupt taxpayer in that matter was likely to lack standing, ‘…it is conceivable, however, that there may be some other footing in which he could claim standing….’
The Applicant contends there are other reasons why he has standing as a person dissatisfied with the Respondent’s decision, as he faces serious consequences beyond the ordinary consequences of bankruptcy, separately from the question of whether he is directly liable to repay the relevant amounts assessed.
The Applicant asserts if the application was successful, he is otherwise solvent and his bankruptcy would be set aside or otherwise ended. This would then have consequences in relation to deriving an income from his usual occupation, travelling overseas as is required for his work, and the ability to repay overseas borrowings. The severity of these consequences, the Applicant contends, renders his situation as unusual and ongoing, which is the kind of situation contemplated by Lehane J in McCallum at 475 as ‘some other footing’ in which to claim standing. The decision in Pitman FFC proposes with the provision of evidence a bankrupt could demonstrate this other footing to claim standing.
The Applicant filed an affidavit, dated 9 September 2024, with the Tribunal. Quoted below are those serious consequences the Applicant claims render his circumstances such as to demonstrate standing:
(a)That I have been made bankrupt on the basis of those taxation liabilities;
(b)That my bankruptcy has seriously impacted my ability to perform any of my usual work to generate income, where most of my work was as a director of multiple large-scale companies and I am presently not permitted to perform that function. Given my many decades of working in this type of role, at my age, I do not know what else I can do to earn an income;
(c)That my bankruptcy has seriously impacted my income earning capacity and this is likely to cause me to be unable to meet liabilities that I have to creditors which will not be discharged by my bankruptcy, as these liabilities arise in other jurisdictions such as Malaysia and the United Kingdom. Those liabilities will incur substantial interest during my bankruptcy which I would not have to pay if this Application were determined in my favour, and I could then return to work and make payments towards those liabilities;
(d)That my reputation as a businessman may be irreparably damaged, drastically reducing my ability to work in my industry in the years moving forward, even once my bankruptcy is discharged;
(e)I have had to surrender my passport, in circumstances where a lot of my work takes place overseas; and
(f)I do not believe that I ought to have to disclose to persons that I wish to engage in business with that I am presently an undischarged bankrupt. It is an unfortunate reality that there is a significant stigma attached to being an undischarged bankrupt in the business world, and having to disclose that fact significantly affects me and my reputation. I accept that if I was unable to validly challenge the taxation liability then this would be a reasonable and obvious consequence of the sequestration order. However, that is not the present situation.
The Applicant contends he is solvent, in the event his application for review is determined in his favour. Evidence as to this, and a final determination regarding solvency, would ultimately be a matter for the Federal Circuit and Family Court of Australia (the Court) in relation to the sequestration issue. The Applicant referred the Tribunal to paragraph 68 of the decision in Deputy Commissioner of Taxation v Fayad [2024] FedCFamC2G 625 (Fayad) as to his submissions in this regard:
(a)There are no creditors to whom liability is not disputed that are pressing for the repayment of any debts; that indicates Mr Fayad is able to meet any current and undisputed liabilities readily from the assets available to him.
(b)Although the DCT has pointed out that around $2.5 million in taxation liabilities are undisputed, those liabilities could be satisfied from the properties Mr Fayad identifies in his affidavit made on 28 September 2022, and, in any event, there is available a further $10 million in available equity in the Kellyville Property owned by Mr Fayad’s sons.
(c)The Court could be satisfied there is sufficient evidence of solvency to warrant declining to make a sequestration order, particularly having regard to the ongoing dispute as to the taxation liabilities.
The Applicant distinguishes his case from that of McCallum as the Applicant in that matter had not been made bankrupt by the Respondent, but by a third party. Even if the Applicant in McCallum had been successful in the review of the Respondent’s objection decision, he would have remained a bankrupt due to liabilities owing to the third party. In the present case, the Applicant contends if he were successful in his review, it is probable he would be discharged from bankruptcy. He was made a bankrupt by the Respondent as a result of the assessments the subject of this review, and will, in his view, unfairly remain so if the opportunity for those assessments to be externally reviewed is not provided.

The Applicant also distinguishes his case from Robertson. In that case the Applicant had placed himself in bankruptcy through a debtor’s petition and as such even upon a review in his favour at the Tribunal would have remained in bankruptcy. In the present case the Applicant asserts the consequences of bankruptcy (which the Applicant was placed in by the Respondent) are the consequences of the assessments made by the Respondent. The assessments are of a significant amount and have not had the opportunity to be the subject of any external review.
The Applicant notes that in the decision affirming the sequestration orders, the Court was prepared to accept the Applicant had standing to bring the application to the Tribunal. The Applicant has sought to appeal this decision. A hearing is scheduled in that appeal for April 2025.
RESPONDENT’S SUBMISSIONS
The analogous case of McCallum was said by the Respondent to be authority for the principle that a taxpayer who has become a bankrupt is no longer considered a ‘person dissatisfied’ to seek review of an objection decision by the Tribunal. The Respondent considers as the Applicant was an undischarged bankrupt at the time of lodging the application for review in September 2023, he lacked standing to seek review of the objection decision.
The Respondent submits there is no other evidence to establish why the Applicant should be considered a person dissatisfied by the decision, and no evidence that places the Applicant outside the usual case to provide footing to bring these proceedings. Any complaints raised by the Applicant in his affidavit and as to the consequences of the sequestration order would be merely ‘dissatisfactions with his status as a bankrupt’ (per Carr J in Robertson) in the Respondent’s view.
The Respondent contends there is a lack of probative or corroborative evidence before the Tribunal regarding assertions made in the Applicant’s affidavit, with particular reference to the claim of solvency but for the liability the subject of the objection decision. Attention was drawn to Fayad at paragraphs 77 to 83 regarding the sequestration order, in which the Court held the evidence was insufficient to support a finding that he held sufficient assets to obtain funds to pay relevant debts or to evidence his solvency.
The Respondent considers the Applicant to have mischaracterised the finding in Fayad regarding the sequestration order. The Respondent notes the Court did not accept the Applicant had standing to pursue review at the Tribunal, rather it determined the issues before it on the assumption he had standing to pursue the Tribunal application.
The Respondent asserts that a bankrupt will be unable to show they are dissatisfied with the objection decision within the meaning of s.14ZZ of the TAA, as such a person will have been divested of liability for the taxation debt. It is a matter for the Applicant’s Trustee in bankruptcy to determine whether to bring an application for review to challenge the taxation assessment, and the Respondent notes this has not occurred in the present proceedings.
EFFECT OF ART ACT
Following the interlocutory hearing on 8 October 2024, parties were invited to provide further submissions regarding the impact, if any, of the new ART Act, with particular reference to s.84.
Section 84 of the ART Act provides:
If applicant dies or is bankrupt, wound up or in liquidation or administration
When this section applies
(1) This section applies in relation to a proceeding in the Tribunal in relation to an application (the substantive application) for review of a decision if:
(a) the applicant:
(i) dies; or
(ii) becomes bankrupt; or
(iii) is wound up or otherwise ceases to exist; or
(iv) becomes subject to any form of liquidation or administration (however described); and
(b) the Tribunal considers that the applicant cannot continue with the substantive application because of the event mentioned in paragraph (a).
Another person may apply to continue with substantive application
(2) The following persons may apply to the Tribunal to continue with the substantive application:
(a) a legal personal representative, executor, administrator, liquidator or trustee of the applicant for the substantive application;
(b) a person whose interests are affected by the decision.
(3) If a person applies to continue with the substantive application, the Tribunal may, on request or on its own initiative, give such orders as appear to the Tribunal to be appropriate in the circumstances.
Tribunal may dismiss substantive application
(4) The Tribunal may dismiss the substantive application if:
(a) the Tribunal considers that there is no person mentioned in subsection (2) who can continue with the substantive application; or
(b) no application to continue with the substantive application is made within 3 months after the Tribunal becomes aware of the event mentioned in paragraph (1)(a).
The Respondent submits the provisions of the new ART Act and the Transitional Act do not affect its previous submissions pertaining to the Applicant’s lack of standing in the current proceedings. Although accepting the Transitional Act requires the Tribunal as far as possible to continue proceedings under the ART Act, the Respondent submits s.84 of the ART Act does not apply in the present circumstances. This is because the Applicant was already bankrupt at the time of applying to the AAT for review, and s.84 of the ART Act applies to an Applicant who ‘’becomes’ bankrupt. Conversely, should s.84 of the ART Act apply, it would be open to the Tribunal to dismiss the application under s.84(4) for the reason the Applicant is not a person whose interests are affected by the decision to continue with the substantive application.
The Applicant did not provide any written submissions on this issue by the specified due date.
The Tribunal agrees that although it must, to the extent it is efficient and fair, continue these proceedings under the new Act, s.84 of the ART Act does not apply, as it relates to an applicant who ‘becomes bankrupt’. The Applicant in the current proceedings was a bankrupt at the time the application was made. He did not ‘become’ bankrupt during the life of this proceeding before the Tribunal.
Section 84 of the ART Act still provides the Tribunal with the discretion to consider whether an Applicant who becomes bankrupt can have standing to pursue review. Section 84(1)(a) and (b) work together in that if an Applicant becomes bankrupt, and the Tribunal considers they cannot continue with the substantive application because of the bankruptcy, the Tribunal may then substitute another person, or dismiss the application. This Tribunal considers even if this section affected the current proceedings, which it has held above it does not, the Tribunal would still be required to undertake the same exercise as is occurring in this current application, to consider whether the Applicant can continue the substantive application on the basis they remain a person dissatisfied with an objection decision.
CONSIDERATION
A taxpayer who has received an objection decision regarding their own taxation liabilities will ordinarily be a person who is dissatisfied as to enliven the ability to seek review by this Tribunal. Upon becoming a bankrupt, however, the Tribunal is required to consider whether they are or remain a person who is dissatisfied, in accordance with the TA Act, due to their lack of interest in the bankrupt estate.
Cummings, McCallum and the cases that follow make clear the reason why a bankrupt does not generally have standing is because the debt concerned is payable solely out of the bankrupt’s estate and is no longer otherwise recoverable from the debtor. An undischarged bankrupt no longer has an interest in the bankrupt estate, and as such is not a person who is ‘dissatisfied’ with the objection decision. Such cases also considered the Trustee in bankruptcy may have standing to apply for review or continue such an application in the place of the bankrupt Applicant.
It is agreed in the present case the Applicant is an undischarged bankrupt. It is agreed the application to the Tribunal was made by the Applicant personally at a time when he was an undischarged bankrupt. It is agreed no election has been made by the Trustee in bankruptcy to proceed with this application for review.
What is not agreed, however, and the question for this Tribunal, is whether the Applicant as an undischarged bankrupt is a person dissatisfied with the objection decision to pursue this application for review in accordance with s.14ZZ of the TA Act; or as Lehane J commented at 475 in McCallum, whether there is ‘some other footing’ upon which to consider the Applicant should have standing to institute the appeal.
Solvency
The Applicant asserts if the application for review were successful and the liability the subject of the assessment decision was reduced he would be otherwise solvent, which would either set aside or end the bankruptcy and resulting severe consequences. Hence, the ability to pursue review of the objection decision as a person dissatisfied is said to be inextricably tied to those consequences of bankruptcy, such bankruptcy being based on the assessment the subject of this application.
A successful review by the Applicant at the Tribunal does not necessarily lead to an annulment or discharge from bankruptcy. There are other liabilities owed to the Respondent not the subject of application for review at the Tribunal. The Applicant has not lodged objections to the amounts of income tax for which he was assessed under notices of assessment issued for the 2015 and 2016 income tax periods. There may be other debts to other creditors that remain outstanding.
This Tribunal makes no finding regarding the amount of other liabilities that may remain in the event the objection decision is successfully challenged either in part or in full by the Applicant, other than to say there is evidence that some liabilities would remain. Although evidence and submissions given by the Applicant in the sequestration proceedings indicated he would be in a position to pay such liabilities, this Tribunal is not able on the basis of the evidence before it to make any such finding.
Regardless, it makes no difference that success in any review might result in a surplus to the estate or an annulment of bankruptcy (with subsequent lessening of impacts upon the Applicant). As noted by Carr J in Robertson at 23, both these outcomes:
… have as their factual basis the contingency that success in the review proceedings may result in a surplus to the estate. It is quite clear from the High Court’s decision in Cummings and the majority judgments in McCallum that the reason why the bankrupt loses standing is because the debt concerned is payable solely out of the bankrupt’s estate and is no longer otherwise recoverable from the debtor.
The Tribunal finds in the present case, the Applicant’s situation falls squarely into this example of a circumstance in which a person does not have standing to lodge or pursue an application for review. As McCallum provides, he will not be a person dissatisfied merely because a successful challenge to the objection decision may result in a surplus in the bankrupt estate.[2]
[2] McCallum at 475.
Impacts of Bankruptcy
The Applicant contends he faces serious and significant ongoing consequences by reason of the assessments remaining on foot at excessive levels that go beyond the ordinary consequences of bankruptcy, such that those impacts would render the Applicant a person dissatisfied pursuant to s.14ZZ of the TA Act.
The Tribunal accepts the consequences of the Applicant’s bankruptcy are serious and have significant ongoing impacts upon the Applicant. Those impacts include the inability to perform his usual work to generate income, the resulting inability to pay off liabilities not the subject of the objection decision, the inability to travel overseas and the impost on his reputation.
However, the Tribunal does not accept these consequences are beyond the ordinary consequences of bankruptcy. On the contrary, the Tribunal finds these are the usual consequences of bankruptcy, in that they are sanctioned or required under the Bankruptcy Act or are the effects of becoming bankrupt.
Under the Corporations Act 2001 (Cth), unless leave is given, an undischarged bankrupt is automatically disqualified from managing corporations. This is a product of bankruptcy. To be dissatisfied with the disqualification from managing corporations and its effects on the Applicant in relation to his ability to perform his regular work and generate income is to be dissatisfied with the usual and legal effects of bankruptcy. The Tribunal finds this cannot be said to be an unusual situation or beyond the ordinary consequence of bankruptcy as asserted by the Applicant, given it is a legal consequence of bankruptcy under the aforementioned Act.
The Applicant submits his inability to travel overseas curtails his ability to produce income from overseas work. Pursuant to s.77(1) of the Bankruptcy Act a person is required to surrender their passport to their trustee as a result of their status as a bankrupt. Although no evidence was lead other than that outlined in the Applicant’s affidavit, if the Applicant has been required to surrender his passport in this manner, this is a direct consequence of bankruptcy. The Tribunal finds this is not a situation outside the ordinary consequence of bankruptcy, but rather is a usual consequence of such an order pursuant to the Bankruptcy Act.
The Applicant submits his reputation may be irreparably damaged by the stigma of bankruptcy now and into the future and does not wish to disclose to those he engages in business with his status as an undischarged bankrupt. Again, the Tribunal is satisfied that, as unfortunate as it may be for the Applicant, this is one of the usual consequences for many who find themselves in the situation of being a bankrupt. It is a serious consequence, but not outside the ordinary consequence.
The Applicant sought to argue the severity of those consequences of bankruptcy would provide ‘some other footing’ to be considered a person dissatisfied to seek review of the objection decision. Particular reference in submissions was made to the severity of the effect in depriving him of his ability to generate income as a director, such being the only way he knows to earn an income, which was distinguishable from the usual effects of bankruptcy.
As the Tribunal has found these impacts upon the Applicant are part of the usual, albeit serious and ongoing, consequences of bankruptcy, it follows that these grounds are not sufficient to satisfy the Tribunal that the Applicant is a person dissatisfied so as to have standing to seek review of the objection decision. To quote Carr J in Robertson, these grounds are in reality dissatisfactions with his status as a bankrupt, and the severity of those consequences does not change the fact they remain dissatisfactions with the consequences of bankruptcy. ‘Some other footing’ to continue this application cannot, in this Tribunal’s view, amount to a dissatisfaction with one’s status as a bankrupt.[3]
[3] Robertson at [37]
Personal or Professional Character
An Applicant will not have standing merely because a successful challenge to an objection decision may have an effect upon their reputation.[4] But if the decision against which a bankrupt wishes to appeal reflects on their personal or professional character, it may be unjust to leave the institution of an appeal to a trustee, whose interests do not extend to preservation of such character.[5]
[4] McCallum at 475
[5] Cummings at 14
In the present proceedings, the objection decision is not a direct reflection of the Applicant’s personal or professional character. It is a reflection of his correct tax assessments. Any effect on his reputation is indirect and tangential. A successful review will not have an effect in preserving or restoring the Applicant’s reputation, as it will only make a finding as to the correct tax treatment for the relevant years in question.
Some other footing
Pitman (AAT) and McCallum reference the kinds of decisions a bankrupt Applicant may be able to institute or continue in the Tribunal, such as they relate to direct outcomes that are of no interest to a Trustee in bankruptcy. The decision for which review is sought in this application is not an entitlement or license to undertake an activity, recover an amount not the subject of a bankrupt’s divisible property, or to challenge an assessment of taxation liabilities for years falling outside the scope of the bankruptcy order.
Although these examples are certainly not exhaustive, the Tribunal considers they demonstrate the kinds of decisions where a bankrupt may be able to continue proceedings for review. These decisions relate to outcomes not in the interest of the Trustee of the bankrupt estate and are of direct relevance to the Applicant outside and separate to an interest in minimising liabilities.
The Tribunal finds the Applicant’s situation does not fall into one of those other categories of cases mentioned in McCallum and Pitman (AAT) to provide some other footing in which to claim standing. The Tribunal considers the current objection decision relates only to interests that are those of the Trustee and no longer the bankrupt Applicant.
Other Considerations
The Applicant sought to distinguish his case from those authorities referenced above on the ground that none of the Applicants in those cases were placed into bankruptcy by petition of the Respondent as a result of the assessment the subject of the objection decision. The Applicant in the present case has been made a bankrupt by virtue of the Respondent’s petition because of the liabilities that form part of the objection decision. To deny the opportunity to have external review of the significant liabilities assessed in the decision could amount to the kind of situation Hill J was concerned with in the dissenting judgment in McCallum.
Although the Tribunal has concern for a taxpayer’s ability to seek external review of what they claim to be excessive assessments in a situation where the petition of the Respondent has effectively denied them that review opportunity, this situation was squarely considered in McCallum. Lehane J in that case noted the cure for this concern is for the Trustee in bankruptcy to have standing to seek that review. In this Tribunal’s view, just because the Trustee does not seek to take over such proceedings, that will not mean the Applicant’s ability to seek review should be enlivened.
The case law does not appear to distinguish between how or why a person was put into bankruptcy. It is the fact of bankruptcy that is in issue, and whether an Applicant can be a person dissatisfied with the objection decision as a result, or whether there is some other footing to allow them to remain a person dissatisfied.
Effect of Non-compliance
The Respondent raises what it characterised as significant non-compliance by the Applicant in the course of these proceedings, to be taken into account in the Tribunal’s consideration of the exercise of its discretion regarding the Applicant’s standing. It was submitted the Applicant had been non-compliant with three directions of the Tribunal and proceedings initiated over a year ago have been delayed by the actions of the Applicant.
The Applicant, in response to this contention, highlighted the Respondent themselves had been non-compliant with the requirement to file documents pursuant to s.37 of the AAT Act within the statutory timeframe. Furthermore, these documents comprised over 3000 pages, and given the complexities of the assessments, required considerable time to review and to put on further evidence. Given the Applicant’s status as a bankrupt, a lack of funds rendered prompt action to put on appropriate evidence in a matter with voluminous documents difficult at times.

The Tribunal rejects this submission of the Respondent, as the Applicant rightly noted that non-compliance with the Tribunal’s directions or procedures do not appear in any of the authorities to account for any consideration of a person’s standing. Case law and authorities do not suggest an Applicant’s poor compliance history or lack of action to progress an application should interfere with a finding regarding whether they are a ‘person dissatisfied’. Non-compliance with a direction of the Tribunal is a consideration in the event a matter is to be dismissed pursuant to s.100 of the ART Act for a failure to proceed with an application or comply with an order. This was not an application to dismiss for want of prosecution and as such this ground is not made out.
CONCLUSION
The objection decision in this instance concerns the Applicant’s tax liabilities and penalties for various periods between 2002 to 2014. The objection decision will not directly determine his bankruptcy status, regardless of whether the review leads wholly or in part to a more favourable outcome for the Applicant.
It will not determine whether the Applicant can return to practice in his chosen profession, travel, repair his reputation or provide an ability to earn to pay outstanding liabilities. Any review by this Tribunal of the objection decision will not directly lead to a change in the severity of those consequences raised by the Applicant as reason to find him a person dissatisfied.
The only direct outcome of a review of this decision would be to confirm the correct assessments for the years in question. The amount of this tax liability is an interest of the Trustee, no longer the interest of the bankrupt. The objection decision will make no other finding that is outside the interests of the Trustee.
The Tribunal is satisfied there is no other footing in which the Applicant can claim standing to challenge the objection decision. For the above reasons, the Tribunal finds the Applicant, by reason of being an undischarged bankrupt at the date an application for review was made to the AAT, is not a person dissatisfied with the Respondent’s objection decision. Accordingly, this application is dismissed pursuant to s.101(1)(a) of the ART Act.

Date(s) of hearing: 8 October 2024

Counsel for the Applicant: Mr T Cleary

Solicitors for the Applicant: Mr J Pope, Pope & Spinks Solicitors

Counsel for the Respondent: Ms E Bishop SC & Ms L McGovern

Solicitors for the Respondent: Ms S Auld, Senior Associate Corrs Chambers Westgarth & Mr A Singh, Litigation Officer Australian Taxation Office

Date(s) of hearing:	8 October 2024
Counsel for the Applicant:	Mr T Cleary
Solicitors for the Applicant:	Mr J Pope, Pope & Spinks Solicitors
Counsel for the Respondent:	Ms E Bishop SC & Ms L McGovern
Solicitors for the Respondent:	Ms S Auld, Senior Associate Corrs Chambers Westgarth & Mr A Singh, Litigation Officer Australian Taxation Office