Lavin and Inspector-General in Bankruptcy
[2016] AATA 798
•12 October 2016
Lavin and Inspector-General in Bankruptcy [2016] AATA 798 (12 October 2016)
Division
TAXATION AND COMMERCIAL DIVISION
File Number(s)
2016/3297
Re
Dolores Lavin
APPLICANT
And
Inspector-General in Bankruptcy
RESPONDENT
DECISION
Tribunal Mrs J C Kelly, Senior Member
Date 12 October 2016 Place Sydney The answer to the two preliminary questions is “no”. The reviewable decision is the delegate’s decision to refuse to review a decision of a trustee to make an assessment.
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Mrs J C Kelly, Senior Member
CATCHWORDS
BANKRUPTCY – jurisdiction – preliminary questions – Inspector-General’s refusal to review decision of trustee in bankruptcy to make an “assessment” – whether the tribunal has power to review the trustee’s decision – characterisation of the decision – whether in this case the decision to refuse was a decision to review the original decision – where Inspector-General refuses to review trustee’s decision, tribunal does not have power to review trustees decision – the Inspector-General’s decision was a decision to refuse to review the trustee’s decision
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth), s 43
Bankruptcy Act 1966 (Cth), s 139Y, 139ZA(1), 139ZA(5), 139ZD, s 149K(1), 149K(5), 149Q
Bankruptcy Act 1966 (Cth), s 149K(1), 149K(5), 149Q superseded by amendments up to Act No. 131 of 2002
CASES
Commonwealth Bank Officers Superannuation Corporation Pty Ltd v Commissioner of Taxation [2005] FCAFC 244
Jonathon Durrant Woodman and Inspector-General in Bankruptcy [1996] AATA 115
SECONDARY MATERIALS
Bankruptcy Legislation Amendment Bill 2002, Explanatory Memorandum
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
12 October 2016
Introduction
Dolores Lavin (the applicant) is a bankrupt. She was dissatisfied with the decision her Trustee in Bankruptcy made on 15 March 2016 to assess her under s.139Y of the Bankruptcy Act 1966 (Cth) (the Act) as earning an annual income of $154,739. She sought an internal review of that decision by the Inspector-General in Bankruptcy (the IG). The applicant is dissatisfied with the decision made by the IG’s delegate dated 27 May 2016. The delegate refused to conduct a review of the Trustee’s decision.
The applicant has lodged an amended application for review in this Tribunal. The terms of the amended application are:
The applicant seeks that the Tribunal review:
1. The decision of the Inspector-General, on review of the decision of the Bankruptcy Trustee, to confirm the decision under s 139ZD(a) of the Bankruptcy Act 1966; and
2. In the alternative, the decision of the Inspector-General not to review the decision of the Bankruptcy Trustee under s 139ZA(5)(a) of the Bankruptcy Act 1966.
It is the applicant’s position that the attached letter from the Inspector-General to the applicant dated 27 May 2016 is evidence of the decision made by the Inspector-General the subject of this application for review.
Two preliminary issues have been argued before the Tribunal:
1. Where a bankrupt has requested the Inspector-General in Bankruptcy (“the IG”) to review a decision of a trustee in bankruptcy to make an “assessment” within the meaning of 139ZA(1)(b) Bankruptcy Act 1966 (Cth) (“the trustee’s decision”), but the IG has decided not to review the trustee’s decision within the meaning of section 139ZA(5) (“the IG’s decision”), does the Tribunal nevertheless have jurisdiction to carry out a review of the trustee’s decision if it were to determine that the IG’ S decision should be ‘set aside’ as sought in the Applicant’s application?
2. Where the IG’s delegate (“the delegate”) has stated on 27 May 2016, that he has made a “decision to refuse to conduct review”, such that the delegate decided not to review the trustee’s decision within the meaning of section 139ZA(5) Bankruptcy Act 1966 (Cth), does the Tribunal have the jurisdiction and power to determine that as a matter of fact, the delegate made a different decision to that stated by the delegate, as asserted by the applicant in this case?
Section 139ZA of the Bankruptcy Act 1966 (Cth) (the Act) is entitled “Internal review of assessment”. Relevantly it provides:
(1) The Inspector‑General may review a decision of a trustee to make an assessment:
(a)on the Inspector‑General’s own initiative; or
(b)requested to do so by the bankrupt for reasons that appear to the
Inspector‑General to be sufficient to justify such a review.
…
(5) Within 60 days after the request is received, the Inspector‑General must:
(a)decide whether to review the decision; and
(b)if the Inspector‑General decides to review the decision—make his or her decision on the review.
Section 139ZD of the Act provides that on a review of a decision, the Inspector‑General has all the powers of the trustee and may either:
(a)confirm the decision; or
(b)set aside the decision and make a fresh assessment under subsection 139W(2).
Section 139ZF of the Act provides:
An application may be made to the Administrative Appeals Tribunal for the review of:
(a)a decision of the Inspector‑General on the review of a decision by a trustee to make an assessment; or
(b)a decision by the Inspector‑General refusing a request to review a decision by a trustee to make an assessment.
The parties provided to the Tribunal an Agreed Statement of Preliminary Issues and a Statement of Agreed Issues, Facts and Contentions on the Preliminary Questions. Where the Tribunal refers to agreed matters in this decision, it will indicate them by enclosing them in single quotation marks. Both parties provided to the Tribunal written and oral submissions. The documents provided pursuant to s.37 of the Administrative Appeals Tribunal Act (Cth) 1975 (the AAT Act), were also before the Tribunal.
Preliminary question 1
‘Notwithstanding that the delegate refused to conduct a review of the Trustee’s decision, the applicant contends that the Tribunal has jurisdiction and power to carry out a review of the Trustee’s decision (as distinct from the IG’s decision).’
‘The respondent contends that in the circumstances where the delegate has refused to conduct a review within the meaning of s139ZA(5) the Tribunal does not have jurisdiction and therefore does not have power to review the Trustee’s decision (as distinct from the IG’s decision).’
The applicant relied on the decision in Jonathon Durrant Woodman and Inspector-General in Bankruptcy [1996] AATA 115 (27 March 1996)(“Woodman”). In that case, there was “an application for review by [the bankrupt] of a decision by an officer authorised by the [Inspector General] … to refuse to conduct a review of a decision by the applicant’s trustee in bankruptcy”. The trustee had filed a notice of objection to the applicant’s discharge from bankruptcy.
The applicant submitted that in Woodman, the Tribunal interpreted the language of s. 43 of the AAT Act, and ss 149K(1) and 149K(5)(b) of the Act which are identical to the relevant sub-sections within s.139ZA.
Section 43 of the AAT Act provides that the Tribunal “may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing” affirming, varying or setting aside the decision under review.
When Woodman was decided, s.149K provided, relevantly:
Internal review objection
(1) The Inspector-General may review a decision of the trustee or Official Receiver to file a notice of objection:
(a)On the Inspector-General’s own initiative; or
(b)If requested to do so by the bankrupt for reasons that appear to the Inspector-General to be sufficient to justify such a review.
…
(5) Within 60 days after the request is lodged, the Inspector-General must:
(a)decide whether to review the decision; and
(b)if the Inspector-General decides to review the decision – make his or her decision on the review.
The applicant relied in particular on paragraph 20 of Woodman where the Tribunal said:
Should this Tribunal be of the view that there are reasons sufficient to justify such a review, then the provisions of s.149K(1) of the Act clearly provide for such a review. If this Tribunal, sitting as it does in the shoes of the Inspector-General, is of the view that there are sufficient reasons to justify such a review then we are likewise empowered to undertake such a review. (See s.149K(5)(b) of the Act and s.43 of the Administrative Appeals Tribunal Act 1975.)
The applicant submitted that there is no difference in the review process envisaged by s.149K and s.139ZA and both allow for the IG to refuse to review a decision on the basis of the reasons being insufficient, for example frivolous, vexatious or embarrassing. Those sections also allow the Tribunal to do the same thing, acting in the shoes of the IG, as the Tribunal is empowered to do under s.43 of the AAT Act.
The applicant submitted that, as a matter of principle, “so long as the exercise of powers and discretions by the Tribunal is for the purpose of reviewing a decision, all of the powers and discretions conferred by any relevant enactment on the decision-maker who made the decision, can be exercised by the Tribunal”; (emphasis added) Commonwealth Bank Officers Superannuation Corporation Pty Ltd v Commissioner of Taxation [2005] FCAFC 244 (30 November 2005) at [30].
In Woodman, the Tribunal decided that there were sufficient reasons to justify the Tribunal “in the shoes of the Inspector-General” reviewing the trustee’s decision to file the notice of objection. The Tribunal concluded that the reasons for the objection no longer existed, set aside the IG’s decision, and cancelled the notice of objection to the discharge of the applicant from bankruptcy.
The applicant in this case concluded that it must follow that the Tribunal has jurisdiction to carry out a review of the Trustee’s decision, if it were to determine that the IG’s decision should be set aside as sought in the applicant’s application.
When Woodman was decided, s. 149Q of the Act provided that applications may be made to the Tribunal for the review of:
(a)A decision of the trustee or Official Receiver to file a notice of objection; or
(b)A decision of the Inspector-General on review of such a decision; or
(c)A decision of the Inspector-General refusing a request to review an objection.
Similarly, when Woodman was decided, s.139ZF(a) mirrored s.149Q(a), in respect of a review of a decision by a trustee to make an assessment. The Tribunal in Woodman did not refer to the then s.149Q(a) specifically in support of the Tribunal having the power to review the trustee’s decision to file the notice of objection. It did set out s.149Q in full at paragraph 15 of the decision.
That is, when Woodman was decided, the Tribunal had jurisdiction to review a decision of a trustee as well as a decision of the IG on review, in respect of filing a notice of objection and making an assessment. The Tribunal no longer has that jurisdiction. The relevant provisions were revoked and substituted by Act No. 131 of 2002. In respect of s.139ZF, clause 155 of the Explanatory Memorandum (EM) said that effect was to require bankrupts “to utilise the internal mechanism, ie, review by the Inspector-General, before seeking AAT review of the trustee’s contribution assessment”. Similarly, paragraph 179 of the EM referred to the repeal and substitution of section 149Q,
to make clear that applications to the (AAT) can only be made for a review of a decision of the Inspector-General on the decision of a trustee to file an objection or a decision of the Inspector-General refusing a request to review a decision of the trustee to file a notice of objection. This measure ensures that a bankrupt dissatisfied with such a decision must first seek review of it by the Inspector-General rather than seeking initial review of it is by the (AAT).
In effect, the former s. 149Q(a) was revoked.
The consideration of the Tribunal’s jurisdiction must begin with the statutory provision conferring that jurisdiction. While not specifically considered by the Tribunal in Woodman, at that time the Tribunal had jurisdiction to consider an application for review of a decision of a trustee pursuant to s. 149Q (and s.139ZF) of the Act. The Tribunal no longer has that jurisdiction. The Tribunal accepts the respondent’s submission that it does not have the jurisdiction and therefore does not have the power to review the trustee’s decision (as distinct from the IG’s decision). The Tribunal does not accept the applicant’s submission that the Tribunal may exercise the power of the IG to review the trustee’s decision if it sets aside the IG’s decision refusing to conduct a review of the trustee’s decision.
Preliminary question 2
‘Notwithstanding that the delegate, on the face of the IG’s decision, refused to conduct a review of the Trustee’s decision the applicant contends that:
(a)The terms of the IG’s decision did, in truth, constitute
i.a review of the Trustee’s decision pursuant to section 139ZA(5)(a) of the Act; and
ii.a decision on the review pursuant to section139ZA(5)(b) and 139ZD(a) of the Act to confirm the Trustee’s decision; and
(b)The Tribunal has jurisdiction and power to make such a finding.’
‘The respondent contends that in the circumstance where the delegate has refused a request to conduct a review within the meaning of s139ZA(5), the Tribunal does not have jurisdiction to determine that as a matter of fact the delegate made a different decision or decisions to that stated by the delegate, as asserted by the applicant in this case.’
On its face, the reviewable decision is a decision to refuse to conduct a review within the meaning of s.139ZA(5). The applicant contended that it cannot be the case that if the delegate of the IG used particular language in its communication, that defines what was done. The applicant argued that the Tribunal should give the words of the “decision” their natural meaning. Counsel for the applicant took the Tribunal to specific aspects of the delegate’s reasons for decision in support of the argument that the delegate had conducted a review of the trustee’s decision. The reasons for decision are not the decision.
The applicant also argued that the delegate had given no reasons for the decision the delegate purported to make, that is, not to review the decision. The applicant argued that the Tribunal must decide what the decision under review is.
The Tribunal accepts that there may be cases where the reviewable decision is unclear and the Tribunal may have to determine what the decision under review is, but that is not this case. It is not necessary in this case, to consider the extent of the Tribunal’s power to determine what the decision under review is.
The decision under review in this case is the delegate’s decision to refuse to review a decision of a trustee to make an assessment.
For the reasons given above, the answer to each of the preliminary questions is “No”.
I certify that the preceding 30 (thirty) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member .....................[sgd]...................................................
Associate
Dated 12 October 2016
Date(s) of hearing 23 September 2016 Counsel for the Applicant Mr G McDonald Solicitors for the Applicant Gavin Parsons & Associates Counsel for the Respondent Mr M Heath Solicitors for the Respondent Matthews Folbigg Lawyers
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