Forsyth v Deputy Commissioner of Taxation

[2005] HCATrans 762

[2005] HCATrans 762

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S8 of 2005

B e t w e e n -

ROSS FORSYTH

Applicant

and

DEPUTY COMMISSIONER OF TAXATION

Respondent

Summons

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 14 SEPTEMBER 2005, AT 9.32 AM

Copyright in the High Court of Australia

MS J.E. RICHARDS:   If your Honour pleases, I appear for the applicant.  (instructed by Paul Bard Lawyers)

MR A. ROBERTSON, SC:   May it please the Court, I appear with my learned friend, MS M.N. ALLARS, for the respondent.   (instructed by Australian Government Solicitor)

HIS HONOUR:   Yes, Ms Richards.

MS RICHARDS:   Your Honour, we expected to take between 25 and 30 minutes.  It is an application for reinstatement – to reinstate an application for special leave.

HIS HONOUR:   Yes, yes, I have had a look at it.  We will proceed with it now.  This bankruptcy notice in July seems to have stimulated some activity.  What was that based on? 

MS RICHARDS:   It is based on the judgment in the District Court, your Honour.

HIS HONOUR:   I see.

MS RICHARDS:   As your Honour will have read, the error in approach was due to a misunderstanding of one of the Rules.  The rule relating to giving one month’s notice, if no step is taken in a proceeding for 12 months, was incorrectly interpreted as meaning that the applicant had in fact 12 months to make the application.  Your Honour, I intend to read three affidavits.  There are three affidavits sworn by Mr ‑ ‑ ‑

HIS HONOUR:   Wait a minute.  You move on a summons filed 18 August, is that right?

MS RICHARDS:   Yes, your Honour.

HIS HONOUR:   And you seek an order pursuant to rule 41.10.4?

MS RICHARDS:   Yes. 

HIS HONOUR:   And you rely on which affidavits?

MS RICHARDS:   If I could hand to your Honour a list of the affidavits on which I rely.  They are each affidavits sworn by the applicant.

HIS HONOUR:   Yes.

MS RICHARDS:   The first one is sworn 17 August 2005.  I read the entire affidavit save for paragraphs 21 and 23.

HIS HONOUR:   Yes.

MS RICHARDS:   That affidavit explains the circumstances in which the applicant failed to comply with the time as set out in the Rules.  The second affidavit I read is that of the same deponent sworn on 12 September.  I read the entirety of that affidavit although my learned friends have foreshadowed an objection to paragraph 3.b.

HIS HONOUR:   Just a minute.  This is the affidavit sworn 12 September?

MS RICHARDS:   Yes, it is, your Honour.

HIS HONOUR:   And there was objection as to?

MS RICHARDS:   Paragraph 3.b.  That paragraph is not intended to go as to the truth of the matter, only to the deponent’s belief of the matters set forth in that paragraph.

HIS HONOUR:   Yes.

MS RICHARDS:   I do not know if the objection is still pressed.

HIS HONOUR:   What is the answer, Mr Robertson?

MR ROBERTSON:   It is, your Honour.  It is unsatisfactory…..former co‑director was or indeed what it was that he said.

HIS HONOUR:   Yes, well, how can you sustain that.

MS RICHARDS:   The third affidavit, your Honour, is ‑ ‑ ‑

HIS HONOUR:   Paragraph 3.b. of the affidavit of the applicant sworn 12 September is rejected, yes.

MS RICHARDS:   The third affidavit, that is sworn on 13 September 2005.  This is the affidavit, your Honour, in which the applicant sets out certain things that he has expressed a willingness to do which will not only preserve the respondent’s position in its entirety in terms of the judgment debt itself and costs, but where it thought that there was any risk to any other creditors Mr Forsyth is, in effect, offering to preserve his present position.

HIS HONOUR:   Yes, I understand that.  Now, what was the scope of the initial delay?

MS RICHARDS:   The scope of the initial delay was - the deadline was 3 February this year.

HIS HONOUR:   Yes.

MS RICHARDS:   Documents were being faxed and emailed and the applicant received notification from his counsel at the time.  After 4 pm he read the email that said that the High Court Registry had closed at 4 pm that day, and he well knew that that was the last day on which to file his draft notice of appeal and argument.  At 9.45 on 4 February the applicant attempted to file both documents and they were rejected by the Registry.  From that time ‑ ‑ ‑

HIS HONOUR:   Then there is the six‑month delay.

MS RICHARDS:   There is a six‑month delay, your Honour, and the only basis on which it can be explained is as set forth in the second of the affidavits of Mr Forsyth, that is, his lack of understanding of the operation of the Rules.

HIS HONOUR:   Yes.

MS RICHARDS:   And, yes, he is a solicitor, but he specialises in corporation and commercial transaction matters, as he deposes in paragraph 4 of his second affidavit.

HIS HONOUR:   Well, one should never act for oneself, should one?

MS RICHARDS:   Indeed, indeed, this is a case in point.  A little knowledge is a dangerous thing, your Honour, as this case exemplifies.  That is the long and short of the cause of the delay.

HIS HONOUR:   Yes.  What is the current position with the bankruptcy notice?

MS RICHARDS:   The bankruptcy notice is being challenged, as I understand it, in the Federal Magistrates Court and hearings – yes, I am instructed that is the case.  No substantive hearings have yet taken place.

HIS HONOUR:   What steps are required to get the application ready?

MS RICHARDS:   The draft notice of appeal needs to be filed and served, as does the summary of argument, and those documents are exhibited to

Mr Forsyth’s first affidavit.  Your Honour will see that Mr Forsyth has now instructed solicitors and he has indicated in his affidavit that he intends to continue to instruct them and to prosecute the application for special leave, should this application be granted, diligently. 

HIS HONOUR:   Yes, well, if I were minded to accede to the application, I direct that the leave application be ready so that it can be listed in the hearings in Sydney on Friday, 18 November.  Regardless of the ins and outs of this particular history, there is an important interest for the Commissioner in knowing whether the New South Wales institutions have managed to get their inter‑jurisdictional arrangements in a clear form, that they can receive this important federal jurisdiction.  I will hear what Mr Robertson says.

MS RICHARDS:   Thank you, your Honour.

MR ROBERTSON:   There is some evidence that I wish to tender, your Honour.  Before I do that, the third affidavit that my learned friend referred to, which was the affidavit sworn – we received it yesterday, late yesterday afternoon.

HIS HONOUR:   Yes.

MR ROBERTSON:   That is sworn the 13^th, your Honour.  I just wish to say this, that it is largely worthless, if your Honour looks at paragraph 5 of it, because it is conditional on something that is not before your Honour, that is:

If this Honourable Court were to ‑ ‑ ‑

HIS HONOUR:   I would not be minded to stay the execution of the District Court judgment in any circumstances.

MR ROBERTSON:   It is not before your Honour at all.  There is no such application.  What the applicant offers, without explanation, particularly in light of the bankruptcy notice, is some sort of security over a house in respect of which he is a joint tenant, which does not seem to be of any value relevantly.  Having said that, your Honour, there is an affidavit of David William Morris sworn 29 August 2005.

HIS HONOUR:   Yes, I have that.

MR ROBERTSON:   I would seek to read.  The significance of it is only this, your Honour, that if you turn to DWM1 which annexes a couple of letters, one is from the applicant on 9 February 2004.

HIS HONOUR:   Just a minute.  Yes, I have it.

MR ROBERTSON:   Your Honour will see that letter to the Australian Government Solicitor said, quite rightly, and this belies a lot of what the applicant now says, the last line and a half:

I am writing to advise that I anticipate shortly filing and serving A Summons seeking an extension of the time -

which, of course, if he had done no doubt we would not be here certainly arguing six months.  So the point is that if my learned friend says that the applicant’s best point is that he did not know what the Rules said and he was looking at a different rule, it is really undermined by this letter he wrote at the time.

The only other piece of evidence is this, your Honour, that the applicant says that he has never practised in litigious matters and I would seek to tender an initiating process in the Federal Court in 1999 showing Mr Forsyth as solicitor on the record in a matter brought by Premium Technology Pty Limited, so that we will ultimately be submitting, shortly submitting, that Mr Forsyth overstates his lack of involvement when he says in paragraph 4 of his second affidavit:

I have no experience in litigious matters.

Obviously he has some experience in litigious matters.

HIS HONOUR:   Federal Court application N3053 of 1999 tendered by the respondent will be Exhibit 1.

EXHIBIT 1:          Federal Court application N3053 of 1999.

MR ROBERTSON:   Thank you, your Honour.  That is the evidence for the respondent.

HIS HONOUR:   Yes.

MS RICHARDS:   Your Honour, in relation to what has just been handed up, could I just inform the Court that Premium Technology is the company in relation to which he was a director in respect of which the notices here were served. 

HIS HONOUR:   Yes, I have read the written submissions.  What do you want to say, Mr Robertson?

MR ROBERTSON:   Thank you, your Honour.  I shall not be long.  I wanted to correct three misstatements, perhaps, in our outline of submissions, if I could take your Honour to that briefly.  Those submissions were filed before Mr Forsyth’s second and third affidavit so they have been overtaken by events to some extent.  There are three errors, if I could ask your Honour to note them.  In paragraph 2.1 – does your Honour have the respondent’s submissions?

HIS HONOUR:   Yes.

MR ROBERTSON:   Paragraph 2.1 wrongly says, “the applicant, who is a solicitor representing himself” should say, “who was a solicitor representing himself”.  Paragraph 3.1 misstates the effect of the Rules.  It should read, “The Registrar’s letter”.  He did not deem the application abandoned.  Of course the Rules had that effect.  Does your Honour see 3.1, “The Registry’s letter”.  It should read “notified the applicant that the application was deemed abandoned”.  Paragraph 3.6, there is an extra “not” crept in, if your Honour would delete in 3.6 the second “not”. 

Turning to the applicant’s outline of submissions, your Honour, in paragraph 1, the fourth line – this is not of any huge significance but I would ask your Honour to note it – the relevant rule is not 41.13 – 41.13 deals with deemed abandonment when the applicant is represented.  As my learned friend correctly stated five minutes ago, the relevant rule is 41.10.4. 

But, more importantly, we part company with what is put in paragraph 4 of the applicant’s submissions in two respects.  One is that the evidence does not support the proposition that the applicant was made aware on 24 January that his draft notice of appeal and written case must be filed by 3 February.  Certainly, that is when he says he opened the letter from the Registry telling him that but he certainly does not say he did not know otherwise.

More importantly, in part because my learned friend has touched on it this morning, there is no evidence to support the proposition that the applicant was told at 4.15 on 3 February that the Court’s Registry closed at 4 pm.  The evidence is no more, taking it at its highest, that he was at his computer doing something else even though he knew that the time for filing the document was 3 February and one gets that from his first affidavit, paragraph 15.

So in short, perhaps it is not of any great significance in the scheme of things, but my learned friend did mention it and, in our respectful submission, it is just not right.

HIS HONOUR:   I cannot see at the moment any satisfactory explanation for the six‑month delay.

MR ROBERTSON:   No, that is the material point.  The high point of the applicant’s case seems to be that Mr Forsyth, in some really unexplained way, misread rule 4.03 which has absolutely nothing to do with the case.

HIS HONOUR:   There used to be a provision in the old Rules that consequences follow if, in the original jurisdiction, no step is taken within a year.

MR ROBERTSON:   And you had to apply in order to have permission to take a step.

HIS HONOUR:   Yes, that is right.

MR ROBERTSON:   And there were some decided cases on that and 4.03 is the restatement of that, but it has nothing to do with whether or not you should promptly seek to reinstate a special leave application.  In my respectful submission, your Honour, that excuse, if that is what it is, is not a reasonable excuse.  It just does not ring true in any satisfactory way when the position is, as Mr Forsyth himself says, and it is all rather cryptic and less than forthcoming, in my respectful submission, but it is quite clear that at the very time this mistake was said to be operative – I am looking at paragraph 3 of his second affidavit – he says:

During the second and third weeks of February 2005 I started to prepare, in consultation with Counsel, my application for reinstatement -

In my respectful submission, it is really unthinkable in light of the Registry having told him that he was out of time and that he is in consultation with his counsel preparing the document, that rule 4.03 could have had any operative effect, so, in our respectful submission, there is no satisfactory explanation for the delay.  Mr Forsyth, on his own evidence, is really not taking the Rules seriously.  He does not say that he did not know ‑ ‑ ‑

HIS HONOUR:   I think he is now.

MR ROBERTSON:   Exactly so, your Honour. 

HIS HONOUR:   I think the bankruptcy notice stimulated some activity.

MR ROBERTSON:   That is the obvious inference, I think, your Honour. 

HIS HONOUR:   But let me tell you what is on my mind, Mr Robertson, and it is this.  I see what you are saying in point 2.6 of your submissions.  What worries me is the public element in all of this, namely, it ought to be clear what the jurisdictional arrangements are in New South Wales so that this important recovery jurisdiction can go to the right court. 

MR ROBERTSON:   Could I say two things about that, your Honour.  One is that your Honour’s indication that if the application were reinstated it could be dealt with in November removes a part of what concerns the respondent.  In other words, if the matter was still going to be ‑ ‑ ‑

HIS HONOUR:   Someone else will take this point and it will find its way here sooner or later.

MR ROBERTSON:   I am instructed that the same matter has been argued in the Court of Appeal by one other person.

HIS HONOUR:   The sooner one way or another it comes here and is dealt with one way or another the better.

MR ROBERTSON:   But could I make the second point, your Honour, which is this, that one of the matters that is relevant to your Honour’s discretion, not in any comprehensive way but, as it were, looking on the face of the special leave application – and I just wanted to say this, that the statutory provisions have now been amended.  It is a question of statutory construction just taking the applicant’s first point as his best point, perhaps his only point ‑ ‑ ‑

HIS HONOUR:   What is the effect of the amendment?

MR ROBERTSON:   The effect of the amendment is that it is now clear that debt recovery in the Supreme Court in relation to tax and related matters including federal tax is now assigned to the common law division so that if there were any doubt that doubt is being ‑ ‑ ‑

HIS HONOUR:   And advance to the District Court, is that the reasoning?

MR ROBERTSON:   No, the District Court provisions now on any view operate so that the District Court has the jurisdiction because the common law ‑ ‑ ‑

HIS HONOUR:   Yes, that is what I am saying.

MR ROBERTSON:   I am sorry, your Honour, I misunderstood.  Our submission, if I can just foreshadow it, in relation to the special leave application is that the special leave application and material really does not condescend to identify any question of general legal importance.  It is at its highest a question of statutory construction.  The Rules have now been amended so we are dealing on any view with a closed period ‑ ‑ ‑

HIS HONOUR:   Maybe quite a large class, though.  I do not know.

MR ROBERTSON:   I just do not have information about that.  The only other point that I would mention, your Honour, and perhaps again ‑ ‑ ‑

HIS HONOUR:   And it has the potential to disrupt a number of bankruptcy proceedings too with bankruptcy notices based on this. 

MR ROBERTSON:   That could be a consequence.  The only other thing I wanted to mention, your Honour would have seen in the Court of Appeal’s decision, and I really just wish to foreshadow this, that Justice Gzell says this may not be within the relevant potentially inconvenient rule anyway because it is a penalty provision and it might not fall within the words “tax or other impost”.

HIS HONOUR:   I saw that.

MR ROBERTSON:   That is something that I would not wish to abandon if the application for special leave were reinstated so that the argument would then be, of course, that the application is not a suitable vehicle because it does not cover the full range of the statutory provisions.

HIS HONOUR:   Any reinstatement would have to be on terms that I think costs of this summons would be on an indemnity basis and would be taxed forthwith.

MR ROBERTSON:   We would so submit, your Honour.  Your Honour will have noted in the summons that the applicant accepts that it would have to pay the costs of the summons but, we would respectfully submit, that what your Honour has indicated, that is ‑ ‑ ‑

HIS HONOUR:   I have not made many indemnity costs in my time but I think this is an occasion for one of them. 

MR ROBERTSON:   We would so submit, your Honour.  So, in short, no real explanation that would persuade your Honour the applicant has not condescended to any detail as to what he was doing or why he was doing it and, on a superficial basis, special leave application is a matter of statutory construction about repeal provisions, your Honour.  If the Court pleases.

HIS HONOUR:   Yes, thank you Mr Robertson.  Yes, Ms Richard.

MS RICHARDS:   Your Honour, yes it is true that in relation to taxation proceedings there has been a change.  However, the effect of the decision is not limited to taxation proceedings so if the decision is correct and section 44(1)(a) of the District Court Act should be read in terms of how it would have applied to proceedings on 2 February 1998, some seven and a half years ago, it applies across the board not just to these sorts of matters so it really does have a wide import.  I am instructed that the applicant would consent to an indemnity costs order, your Honour. 

HIS HONOUR:   Notwithstanding the deeply unsatisfactory delay in this matter, given the nature of the case in the circumstances which I have discussed with Mr Robertson in the course of his submissions, I think there is a public interest in reinstating the application on terms which appear from the following orders:

1.        I make order 1 of the summons filed 18 August 2005.

2.        I direct the parties to take all steps necessary for the readiness of the matter for inclusion in a special leave list in Sydney on 18 November 2005.

3.        I direct that the special leave application be added to that list if order 2 is complied with.

4.        The applicant is to pay the costs of the respondent of the summons on an indemnity basis, such costs to be taxed forthwith.

AT 10.03 AM THE MATTER WAS CONCLUDED