Inglis, Kathleen Isobel v Carmody, Michael, Commissioner of Taxation

[1998] FCA 454

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACT G 103  of   1997

BETWEEN:

KATHLEEN ISOBEL INGLIS
APPLICANT

AND:

MICHAEL CARMODY
COMMISSIONER OF TAXATION
FIRST RESPONDENT

STEVE CHAPMAN
DEPUTY COMMISSIONER OF TAXATION
SECOND RESPONDENT

JUDGE:

FINN J

DATE OF ORDER:

6 MAY 1998

WHERE MADE:

CANBERRA

THE COURT ORDERS THAT:

1         The application be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACT G 103 of 1997

BETWEEN:

KATHLEEN ISOBEL INGLIS
APPLICANT

AND:

MICHAEL CARMODY
COMMISSIONER OF TAXATION
FIRST RESPONDENT

STEVE CHAPMAN
DEPUTY COMMISSIONER OF TAXATION
SECOND RESPONDENT

JUDGE:	FINN J
DATE:	6 MAY 1998
PLACE:	CANBERRA

REASONS FOR JUDGMENT

The motion in this proceeding is to have the application brought by Kathleen Isobel Inglis dismissed under O 20 r 2 of the Federal Court Rules on the grounds (a) that it discloses no reasonable cause of action;  (b) that it is futile;  and (c) that it is an abuse of the court’s processes.  The moving parties are the first and second respondents, Michael Carmody and Steve Chapman.  They are, respectively, the Commissioner of Taxation and the Deputy Commissioner of Taxation.

The principles to be applied on such an application are well settled.  They include the following.  A summary order should be made only in a very clear case:  Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91. Where no reasonable cause of action is alleged it must be demonstrated that the applicant’s case is so clearly untenable that it cannot possibly succeed: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130. Where the order sought would be futile in the circumstances, it would be an abuse of process to allow the application to proceed: see eg Orison Pty Ltd v Strategic Minerals Corporation (1988) 81 ALR 183.

Mrs Inglis has represented herself in this matter.  She has stated that she has a law degree though she has not been admitted to practice.  Nonetheless I have considered it appropriate to treat her as a layperson and to approach a motion of this type with the caution noted by McLelland J in Tardy v Secretary of the Department of Community Services and Health, SC of NSW, unreported 9 October 1990.  While not conferring on the party in person advantages he or she would not have if represented I should be careful to ensure that, because of lack of legal skill, Mrs Inglis has not failed to claim rights or to put forward arguments which otherwise might have been claimed or put forward.

The Background Circumstances

Mrs Inglis was a registered person under Part 6 of the Sales Tax Assessment Act 1992 (Cth) (“the Act”), that registration being based on her carrying out “a primary production activity” in “the course of a primary production business”: see the Act Schedule 1, Ch 1, Item 2 and the Act s 78(1)(d).

Section 80 of the Act, insofar as presently relevant, provides:

“80(1) [Commissioner may cancel registration]  The Commissioner may cancel a person’s registration if:

(a)       the person no longer satisfies any registration ground;  or

...

80(3)  [Person may object to cancellation decision]  A person who is affected by a cancellation decision and is dissatisfied with the decision may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953.”

On 24 November 1997 Mr Chapman wrote a letter to Mrs Inglis the following parts of which require note: 

“CANCELLATION - SALES TAX REGISTRATION

Following a review of your primary production activities it was determined that you were not carrying on a business of primary production.

As you are not carrying on a business of primary production you are not entitled to your sales tax registration number unless you have other business operations that satisfy a sales tax registration ground.

We will cancel your sales tax registration number with effect from 12 December 1997, in accordance with Section 80(1)(a) of the Sales Tax Assessment Act 1992.

...

If you are dissatisfied with the decision to cancel your sales tax registration number, you may object against the decision in the manner set out in Part IVC of the Taxation Administration Act 1953. You should lodge an objection with the Commissioner in writing, within 60 days from the date of this letter stating fully and in detail, the grounds that you rely on.” (Emphases in the original)

Understandably dismayed by this communication for reasons noted below, Mrs Inglis wrote the following to Mr Chapman on 9 December 1997 (formal parts are omitted):

“Cancellation - Sales Tax Registration.

I refer to your letter dated 24th November 1997 I received yesterday by registered mail forwarded to me in Tasmania where I am carrying on a business of primary production which, I pause here to say, I have been doing for some 47 nearly 48 years.

You will note:  (I) I am dissatisfied with the wider determination I am not carrying on a business of primary production;

(2) I am dissatisfied with your decision to cancel my sales tax registration number with effect from 12 December 1997.

I shall lodge an objection against your decision to cancel my sales tax registration in the manner set out in Part IVC of the Taxation Administration Act 1953.

Would you, however, please inform me:  (I) how I may lodge an objection also to the said wider determination that I am not carrying on a business of primary production to which you refer in paragraph I of your letter;  (2) What is the meaning of your words ‘this work’ in the last two lines of your letter under reference, i.e. does it refer to your authority with respect to decisions on sales tax registration or does it refer to a wider authority to determine whether I am carrying on a business of primary production.

Your early reply, in the surrounding circumstances of this matter, is requested and would be appreciated.”

On the same day she wrote to Mr Carmody.  Though of no particular importance to this motion, that letter reveals that her principal concern was less with the cancellation of her sales tax number than with the “wider determination” that she was not carrying on a primary production business.  It appears to be this aspect of Mr Chapman’s letter that has caused her most concern.

On 11 December 1997 a letter was written in response to her letter to Mr Carmody indicating that her correspondence had been forwarded to an officer of the “Withholding Tax business line for examination”.  Then, on 22 December a letter was written to her by Mr Chapman in the following terms (formal parts omitted):

“SALES TAX:  NOTICE OF DECISION ON OBJECTION

We have considered your objection dated 9 December 1997 against the decision to cancel your registration that issued on 24 November 1997.

We acknowledge that a review of your primary production activities has not taken place and the letter dated 24 November 1997, advising of the impending cancellation of your sales tax registration, issued in error.

We wish to advise that we have allowed your objection in full and apologise for any inconvenience.  You may continue to use your registration number previously cancelled.

Should you have any further enquiries on this matter please contact Ian McMullan on [phone].”

This letter was not received by Mrs Inglis until 31 December 1997 although she was notified by telephone on 30 December that her sales tax registration number would not be cancelled.

On 24 December 1997 she filed her application in this court.

The Application

The application was for an order of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”). The conduct and decisions sought to be reviewed are as follows:

“1.      Application to review the conduct of the first respondent and the second respondent with respect to the allegation of the second respondent in his letter of 24 November, 1997 addressed to the applicant and delivered at the home of the applicant in Canberra on 5th December, 1997 that it was determined that the applicant was not carrying on a business of primary production.

2.       Application to review the decision of the first respondent not to clarify the position with respect to the allegation of the second respondent that it was determined that the applicant was not carrying on a business of primary production which the applicant had asked him to do in her letter dated 9 December, 1997.”

3.       An application to review the decision of the first respondent to deny the applicant her right to object to a determination, if any determination has been made, that the applicant is not carrying on a business of primary production.

4.       An application to review the decision of the second respondent not to reply to a letter from the applicant dated 9 December, 1997 with respect to his allegation that a determination had been made that the applicant was not carrying on a business of primary production.

5.       An application to review the decision of the second respondent to cancel the sales tax registration number of the applicant with effect from 12 December, 1998 based solely on the allegation a determination had been made that the applicant was not carrying on a business of primary production.”

It is unnecessary to particularise the various orders sought other than to note that three relate in differing ways to the determination that she “was not carrying on a business of primary production”.

I merely note in passing that on 23 January 1998 without the leave of the court - see O 13 r 2 of the Federal Court Rules - Mrs Inglis purported to amend her application so as to seek:

“An Order for exemplary damages for misrepresentation by the second respondent.”

At the hearing of this motion I refused leave to make this amendment for the reasons I then gave.

The Difficulties with the Application

There are obvious problems with the conduct and decisions the application seeks to have reviewed.  Those referred to in paragraphs 1, 2 and 4 for example do not, in all probability, relate to decisions that are ‘final or operative and determinative in a practical sense’ or to conduct engaged in for the purpose of making such a decision:  see Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321.

It clearly is the case that Mr Chapman, as stated in the letter cancelling Mrs Inglis’ sales tax registration number, was purporting to act under s 80(1)(a) of the Act. I emphasise this. He was not purporting to exercise any other statutory power contained in taxation legislation dealing with any other form of tax.

I have been asked by the respondents to accept that in the process of cancelling Mrs Inglis’ registration two decisions were required to be taken. The first was that she no longer satisfied any registration ground - which in her case meant that she no longer carried out a primary production activity in the course of a primary production business: the Act s 80(1)(a), s 78(1)(d) and Sched 1, Ch 1, Item 2(a). The second was the decision to cancel her registration: s 80(1)(a). The respondents conceded that the first of these was a “reviewable decision” for the purposes of s 5 of the ADJR Act and I am prepared to assume such is the case without at all entering upon the question whether para (a) of s 80(1) refers merely to an objective fact: cf Buck v Comcare (1996) 66 FCR 359. They have submitted, rather hopefully I would have thought, that the second was an exempted decision under para (a) of Schedule 1 to the ADJR Act. It is unnecessary to express a concluded view on this, given the conclusion at which I have arrived. I am prepared to proceed on the premise that both decisions were types of decision that were reviewable under the ADJR Act. I should add that, given the power purported to be exercised by Mr Chapman, these are the only decisions which, in the events that have happened, are possibly susceptible of review under the ADJR Act in this proceeding given its particular focus.

Para 5 of Mrs Inglis’ application should be treated for present purposes as sufficient to challenge both such decisions if, in the circumstances, they are open to challenge.  And herein lies her difficulty.

It is not open to question that Mr Chapman purported to cancel Mrs Inglis’ registration number (the second decision) and on the basis that she did not satisfy a registration ground, this in her case being based upon her not being engaged in a primary production business (the first decision).

It equally is not open to question that that cancellation was made in error in that the Mr Chapman could not properly have concluded Mrs Inglis did not satisfy a registration ground as he had relied upon a “review” of her primary production activities which had not in fact been undertaken.

Nonetheless, a cancellation decision having been made, Mr Chapman sought to and did treat her justifiable remonstration in the letter of 9 December as an objection under Part IVC of the Taxation Administration Act 1953 (“the TA Act”) for the purpose of allowing her objection in full: see TA Act, s 14ZY(1); so restoring the original position.

It further is the case that Mrs Inglis did not in her 9 December 1997 letter to either Mr Chapman or to Mr Carmody make such an objection as is envisaged by s 14ZU of the TA Act. Rather she foreshadowed it. This notwithstanding, it was in my view properly open to Mr Chapman as matters both of fair dealing with Mrs Inglis: see Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 at 40-42; and of good administration: see Kelson v Forward (1995) 60 FCR 39 at 66; to obviate the need for a formal objection where a palpable error vitiating the decision to cancel had been detected and notice of intention to object had been given, by treating that notice as an objection for the purpose of allowing the objection and setting aside the decision made in error. I merely note that it may well have been open to Mr Chapman to have treated the cancellation decision as a nullity in any event: see Leung v Minister for Immigration and Multicultural Affairs (1997) 150 ALR 76 esp at 88ff. I should add that on the material before me I am prepared to infer that Mr Chapman acted as the Commissioner’s delegate in relation to the “objection”: see TA s 8(1).

Accordingly I conclude that the cancellation decision of 24 November 1997 has been rescinded lawfully. For this reason there is no subsisting cancellation decision that can or should be reviewed under the ADJR Act. And to make any order in relation to the decision of 24 November would clearly be futile.

A like conclusion must be reached in relation to the decision that Mrs Inglis did not satisfy any registration ground. The effect (a) of Mr Chapman’s concession in the letter of 22 December 1997 when read in light of that of 24 November and (b) of his rescinding the cancellation decision “on objection”, is that he did not properly conclude that Mrs Inglis did not satisfy a registration ground because the process relied upon to make out that satisfaction - ie a review of her primary production activities - had not occurred. In other words that decision was, in the circumstances, without foundation. The question whether or not she in fact carries on a business of primary production (one of the requirements of Item 2 of Sched 1, Ch 1 of the Act) has not been determined for the purposes of s 80 of the Act. And it is for this reason that the cancellation has been rescinded. Any order made in relation to that “decision” would clearly be futile in any event.

Mrs Inglis manifestly entertains a strong sense of grievance at what has occurred to her although I should add that an apology was given by Mr Chapman for any inconvenience his error occasioned. What Mrs Inglis cannot do is point to a reviewable decision now open to this court that it can or should review under the ADJR Act.

The only relevant decisions of an administrative character made under an enactment - cf ADJR Act s 3 - revealed in the factual material before me and challenged in the application are those Mr Chapman purported to make for the purposes of s 80 of the Act. As I have indicated neither is reviewable or should be reviewed in the circumstances. Accordingly no other conclusion is open to me than that the application is clearly an untenable one and must be dismissed under O 20 r 2.

I should, however, go on to make this additional comment.  Mrs Inglis’ prime concern appears to be that a decision may have been made that she does not carry on a primary production business and that this may be used against her for some other taxation purpose.  I can only say that there is nothing in the material before me to justify any such an apprehension.

I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn

Associate:

Dated:             6 May 1998

Applicant appeared in person
Counsel for the Respondent:	T Murphy
Solicitor for the Respondent:	Australian-Government Solicitor
Date of Hearing:	1 May 1998
Date of Judgment:	6 May 1998