FEDERAL COURT OF AUSTRALIA
Garrett v Cahill [2015] FCA 664
Citation: Garrett v Cahill [2015] FCA 664 Parties: ANDREW MORTON GARRETT v FRANCIS MICHAEL CAHILL AND OTHERS NAMED IN THE SCHEDULE File number: VID 297 of 2015 Judge: KENNY J Date of judgment: 2 JULY 2015 Catchwords: PRACTICE AND PROCEDURE – Application to institute proceedings under s 37AR of Federal Court of Australia Act 1976 (Cth) – proposed extension of time application and proposed appeal against sequestration order – whether “vexatious proceeding” under Pt VAAA of Federal Court of Australia Act 1976 (Cth) – no reasonable likelihood of success Legislation: Federal Court of Australia Act 1976 (Cth)
Bankruptcy Act 1966 (Cth)
Federal Circuit Court of Australia Act 1999 (Cth)
Federal Court Rules 2011 (Cth)
Charter of Human Rights and Responsibilities Act 2006 (Vic)
Australian Human Rights Commission Act 1986 (Cth)
Human Rights and Equal Opportunity Commission Act 1986 (Cth)Cases cited: Garrett v Commissioner of Taxation [2015] FCA 485
Walton v Gardiner [1993] HCA 77; 177 CLR 378
Smits v Loel [2014] FCA 1341
Spain v Belcher [2014] FCA 663
SZQYP v Hannigan [2012] FCA 723
von Reisner v Commonwealth (2009) 177 FCR 531
Mehmood v Attorney-General (Cth) [2013] FCA 406; 141 ALD 339
Adam P Brown Male Fashions Pty v Philip Morris Inc [1981] HCA 39; 148 CLR 170
Wren v Mahony (1972) 126 CLR 212
Ling v Enrobook Pty Ltd [1997] FCA 226; 74 FCR 19
Australian & New Zealand Banking Group Pty Ltd v Foyster [2000] FCA 400Text cited: International Covenant on Civil and Political Rights. Opened for signature 19 December 1966. 999 UNTS 171. (entered into force 23 March 1976) Date of hearing: 19 June 2015 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 45 The Applicant appeared in person Solicitor for the First Respondent: F M Cahill of Altius Partners Counsel for the Second Respondent: P Hanks QC with M Baker Solicitor for the Second Respondent: Australian Government Solicitor Solicitor for the Third Respondent: N Abrams of Moray & Agnew Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 297 of 2015
BETWEEN: ANDREW MORTON GARRETT
ApplicantAND: FRANCIS MICHAEL CAHILL AND OTHERS NAMED IN THE SCHEDULE
First Respondent
JUDGE:
KENNY J
DATE OF ORDER:
2 JULY 2015
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The application under s 37AR of the Federal Court of Australia Act1976 (Cth) for leave to institute:
(a)an application for an extension of time within which to seek leave to appeal and for leave to appeal against interlocutory orders made by a judge of the Federal Circuit Court of Australia on 27 April 2015; and
(b)an appeal against a sequestration order made by a judge of the Federal Circuit Court of Australia on 15 May 2015 and against other claimed orders,
be refused.
2.The applicant pay the respondents’ costs of and incidental to the application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal…
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- AGLC
- Garrett v Cahill [2015] FCA 664
- Case
- [2015] FCA 664
- Decision Date
CaseChat Overview and Summary
Judge Riethmuller concluded that Mr Garrett's claims of conscious maladministration by the Australian Taxation Office (ATO) and collusion with Mr Cahill lacked basis and common sense. Mr Garrett had not pursued the processes ordinarily available to a taxpayer after the objection process, such as reviews in the Administrative Appeals Tribunal or the Federal Court of Australia. Additionally, Mr Garrett had not obtained any form of private ruling prior to entering into the transactions with the ATO. These factors, combined with the fact that Mr Garrett owed over $700,000 in tax debts, led the judge to conclude that there was no reasonable likelihood of success for Mr Garrett’s proposed appeal.
Accordingly, the court refused the application under s 37AR of the Federal Court of Australia Act 1976 (Cth) for leave to institute the proposed appeal. The court also ordered that Mr Garrett pay the respondents' costs of and incidental to the application. The decision was based on the lack of any arguable case of conscious maladministration by the ATO and the absence of a realistic basis for Mr Garrett's claims of solvency.
Orders
Orders of the court
1. The application under s 37AR of the Federal Court of Australia Act 1976 (Cth) for leave to institute:
(a) an application for an extension of time within which to seek leave to appeal and for leave to appeal against interlocutory orders made by a judge of the Federal Circuit Court of Australia on 27 April 2015; and
(b) an appeal against a sequestration order made by a judge of the Federal Circuit Court of Australia on 15 May 2015 and against other claimed orders,
be refused.
2. The applicant pay the respondents’ costs of and incidental to the application.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Judge Riethmuller set out Mr Garrett’s case about maladministration at [14]-[26], before his Honour said (at [27]-[30]):The situation is, therefore, that on the matters that have been raised it is difficult for me to see how it could be said that there is any arguable case of conscious maladministration by the ATO. Further, suggestions that perhaps the ATO is in some way in league with Mr Cahill don’t appear to me to have any basis on the material before me, and do not run with common sense. The further difficulties in this case for Mr Garrett are that he has not, it seems, pursued the processes that are ordinarily available to a taxpayer, after the objection process, to have reviews either in the Administrative Appeals Tribunal or the Federal Court of Australia with respect to assessments until such time as judgments were enter[ed], nor does it seem there was any step taken to obtain any form of private ruling prior to entering into these transactions from the ATO. These matters, as raised by Mr Garrett, were not able to satisfy Associate Justice Mukhtar that it was appropriate to set aside the default judgment in the Supreme Court of Victoria. In the circumstances, it seems to me that there is a debt due and owing to the ATO on the judgment of around $2 million and that the claims of conscious maladministration, on the material before me are not sufficient to show an arguable case, nor, indeed, even sufficient issues or material to justify a trial on the question of whether or not the debt is just and truly owing.(Emphasis added.) Judge Riethmuller also considered the allegations in Mr Garrett’s affidavit about other sums involved in transactions with the ATO, saying (at [31]-[33]): Importantly, even if he is correct about the Adelaide matters, they could potentially result in a credit of somewhere in the vicinity of $80,000.00 to $90,000.00. Mr Garrett annexes photocopies of a receipt of a further $81,860.55 said to have been paid to the ATO at paragraph 148 of his affidavit. He also sets out that between February 2004 and the date of his affidavit a further $406,475.10 has been paid to the ATO, and that a further $11,598.07 was taken from an account.The material before me does not enable me to make clear findings about whether all those payments were, in fact, paid to the Commissioner for taxation liabilities or not. For the purpose of today, however, it is sufficient to proceed on the argument that they all were payments and, if one totals them up, it comes to something in the vicinity of $600,000.00. Mr Garrett also raises from the bar table claims of a further $833,000.00 that he says should be accounted for with respect to the ATO. Even if those bar table claims were taken up, these matters come to $1.233 million: this is far less than the $2 million judgment in the Supreme Court of Victoria.Even on Mr Garrett[‘s] best case he owes over $700,000 in tax debts.(Emphasis added.) Judge Riethmuller noted (at [34]) that Mr Garrett claimed to be solvent “because he claims to have a good cause of action with respect to conduct of Mr Cahill who was involved in one of the transactions that Ms Barlow set out above. Mr Garrett also says that he also has considerable claims against another company, Treasury Wine Estates Vintners Limited, and a number of other claims”. Mr Garrett sought to document his claims by reference to what his Honour referred to as an ‘aide memoire’. His Honour rejected Mr Garrett’s case on solvency, however, saying (at [36]-[38]):The question of solvency relates to the ability of one to pay one’s debts as when they fall due, not simply an analysis of an overall asset position. This is the short answer to the claim that his assets exceed his debts as set out in the aide memoire. That is, even if the claims in the aide memoire were to be correct, they do not provide an answer to the current inability to pay debts that have clearly fallen due and are the subject of a judgment. Having said that, I make clear that in no way do I accept that the list in the aide memoire is a realistic list of moneys that may well be recoverable by Mr Garrett. Most of the figures appear to be significantly inflated, if they were to be recoverable at all. I also note that some of these claims have already been to various courts and have been dismissed, in any event. I also note that if a trustee in bankruptcy is appointed the trustee will assess any claims and may pursue claims on behalf of the estate.Mr Garrett develops the argument further though, and says that with respect to Treasury Wine Estates Vintners Limited there are a large number of actions in the Federal Court (VID158 of 2015 through to VID165 of 2015) which involve multiple millions of dollars. He says that he has issued Notices to Admit in these proceedings, the forms of which would result in him recovering millions of dollars from Treasury Wine Estates Vintners Limited. According to his aide memoire, [t]he amounts that he would recover exceed the amounts of the debts involved in the case with respect to the Commissioner of Taxation. The date for expiry of response to the Notices to Admit is today. On the material before me, I am not persuaded that there is any real likelihood that Treasury Wine Estates Vintners Limited would make those admissions and, in these circumstances, I am not persuaded that this is a factual basis upon which to show that there will be solvency in the very near future.(Emphasis added.)