MedAid Pty Ltd and Commissioner of Taxation

[2017] AATA 2293

MedAid Pty Ltd and Commissioner of Taxation [2017] AATA 2293 (30 October 2017)

Division:TAXATION & COMMERCIAL DIVISION

File Number(s):      2012/4210; 2013/0002

Re:MedAid Pty Ltd

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:30 October 2017

Date of written reasons:        13 November 2017

Place:Sydney

1. Pursuant to subsection 42B(1)(b) of the Administrative Appeals Tribunal Act 1975 (Cth), the Application for review stands dismissed unless on or before 28 days from the date of this decision an application for joinder is made by Mr Steve Arnold.

2. If an application to join Mr Steve Arnold as a party to the proceedings is filed within 28 days, the order to dismiss the matter will not take effect unless or until further order.

..........................[sgd]..............................................

Deputy President Bernard J McCabe

CATCHWORDS

PRACTICE AND PROCEDURE – application for dismissal of application for review – where applicant has been deregistered as a company – consideration of the impact of deregistration – whether a former director and shareholder of the applicant may be joined as a party to the proceedings – application dismissed unless application for joinder is made within 28 days

LEGISLATION

Administrative Appeals Tribunal Act 1975, ss 30(1A), 42A & 42B

Corporations Act 2001 (Cth), s 601AD

CASES

Arnold v Australian Securities and Investments Commissioner [2017] FCA 936

REASONS FOR DECISION

Deputy President Bernard J McCabe

13 November 2017

1. Oral reasons were given at the conclusion of the hearing in this matter.  The written reasons that follow have been distilled from the transcript.

2. This is an application for dismissal of the proceedings before the Tribunal. While the Tribunal had jurisdiction to entertain the application for review at the time of lodgment, the subsequent deregistration of the applicant as a company means the proceedings, as they stand, cannot continue.  The technical means by which those proceedings may be dismissed are considered below. 

3. One alternative is to dismiss the proceedings under s 42A(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). This section provides for dismissal where a party fails to appear. The respondent says the applicant has failed to appear even though the company’s sole director prior to deregistration, Stephen Arnold, attended the hearing. I was told Mr Arnold was not able to appear on the applicant’s behalf because it is no longer a principal. This is because a company ceases to exist on deregistration: Corporations Act 2001 (Cth), s 601AD. Accordingly, the respondent says it is appropriate that the proceedings are dismissed under s 42A(2) of the AAT Act.

4. An alternative approach, suggested by the respondent, is for the proceedings to be dismissed under s 42A(5) of the AAT Act. Sub-section 42A(5) allows the Tribunal to dismiss proceedings where the applicant fails to proceed with the application or to comply with any directions within a reasonable time.

5. If I adopt that approach, I would need to be satisfied the applicant has failed within a reasonable time to proceed with the application.  That is complicated because I am asked to assume the applicant cannot proceed with the application in the future because it does not exist anymore.

6. There is a further basis on which the matter may be dismissed, which is under s 42B. Section 42B empowers the Tribunal to dismiss a proceeding where the application:

   (a)is frivolous, vexatious or lacking in substance; or

   (b)has no reasonable prospect of success; or

   (c)is otherwise an abuse of the process of the Tribunal.

   These proceedings are neither frivolous nor vexatious.  They may be misconceived, lacking in substance or, more realistically, have no reasonable prospect of success.  In the circumstances, I would be inclined to dismiss these proceedings under s 42B(1)(b).

7. However, there is an issue as to whether Mr Arnold would be entitled in a personal capacity to make an application for review and become a party to these proceedings, under s 30(1A) of the AAT Act. This sub-section provides:

   Where an application has been made by a person to the Tribunal for a review of a decision, any other person whose interests are affected by the decision may apply, in writing, to the Tribunal to be made a party to the proceeding, and the Tribunal may, in its discretion, by order, make that person a party to the proceeding. (Emphasis added)

8. Mr Arnold may be entitled to continue the proceedings even if the other party, being the applicant, has fallen away.  However, in order to have standing Mr Arnold would need to demonstrate that he has interests that are affected.  I was told if the substantive proceedings were successful the applicant company would ordinarily be entitled to the money and Mr Arnold as a shareholder would receive an amount by way of distribution.

9. However, the respondent says because the applicant has been deregistered it would not be in a position to distribute any money to shareholders.  Any money obtained would go to ASIC.  It is possible an application might be made to reregister the company at that point, provided the applicant is able to address the shortcomings identified in Arnold v Australian Securities and Investments Commissioner [2017] FCA 936. Those shortcomings include the lack of a resident Australian director. The problem here is that the affected interest appears very remote. There are a lot of “ifs” that would impact on the exercise of the discretion.

10. Out of an abundance of caution, I think it is appropriate to give Mr Arnold a period of time in which to file an application to be joined as a party.  He would need to clearly articulate the nature of the interest that he claims would be affected if these proceedings were to continue in his name, effectively in place of the company.  He would also need to explain whether there are any prospects of success of the substantive application and indicate any other reasons why he thinks it would be appropriate for him to be joined.  The respondent, in turn, can prepare his own submissions addressing whether the substantive proceedings can continue in the absence of the company if the applicant were joined.  The respondent should also make submissions on whether that joinder should be permitted.

11. The proceedings stand dismissed under s 42B(1)(b) unless on or before 28 days from the date of this decision an application for joinder is made by Mr Steve Arnold.  If an application for joinder is filed within that period, the dismissal will not take effect unless and until further order.

I certify that the preceding 11 (eleven) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe.

............................[sgd]............................................

Associate

Dated: 13 November 2017

Date of hearing:	30 October 2017
Applicant:	In person
Solicitors for the Respondent:	Australian Government Solicitor