Michael McPhee and Inspector General in Bankruptcy
[2012] AATA 628
•18 September 2012
[2012] AATA 628
Division GENERAL ADMINISTRATIVE DIVISION File Number(s)
2011/0997 & 2011/2961
Re
Michael McPhee
APPLICANT
And
Inspector General in Bankruptcy
RESPONDENT
DECISION
Tribunal Mr S Penglis, Senior Member
Date 18 September 2012 Place Perth
Decision Summary
The respondent’s applications pursuant to Section 42B of the Administrative Appeals Tribunal Act (1975) (Cth), are hereby dismissed.
...(sgd) S Penglis...............
Mr S Penglis, Senior Member
Catchwords
Practice and Procedure –power of Tribunal to dismiss application for review where it seeks to agitate the same legal issue as agitated in prior proceedings before the Tribunal and between the same parties
Effect of the decision of the Full Federal Court of Australia in LVR (WA) Pty Ltd v Administrative Appeals Tribunal [2012]FCAFC90
Legislation
Administrative Appeals Tribunal Act 1975, Section 42B
Cases
Commissioner of Taxation v Everett [1980] 143 CLR 440
LVR (WA) Pty Ltd v Administrative Appeals Tribunal[ 2012] FCAFC90
McPhee and Inspector-General of Bankruptcy [2011] AATA 322
Theo and Secretary, Department of Family and Community Services [2005] AATA 699
REASONS FOR DECISION
Mr S Penglis, Senior Member
18 September 2012
BACKGROUND
The applicant is a legal practitioner who carried on legal practice in partnership with others until April 1988 when the last of his partners, Mr Barter, retired from practice as a consequence of ill health.
Thereafter, the applicant continued to practice law as a sole practitioner.
By a Deed of Assignment dated 26 June 1980, the practitioner assigned to his wife, Johanne Mary McPhee, 50% of his interest in the partnership “McPhee and Myer”. Such an arrangement is known as an “Everett” assignment: in Commissioner of Taxation v Everett [1980] 143 CLR 440 the High Court of Australia held that a partner’s interest in a partnership was a presently existing chose in action which could thus be assigned.
The applicant was declared bankrupt on 30 April 2008.
On 22 June 2009, the applicant’s Trustee in Bankruptcy (“Trustee”) assessed the applicant with an income contribution liability of $32, 277.40 for the contribution assessment period from 30 April 2008 to 29 April 2009. The contribution was calculated on a gross income of $175,000 from the applicant’s legal practice as a sole practitioner.
The applicant contended that his income contribution for that period should be calculated on a gross income of $87,500 by asserting that 50% of his income was his wife’s by reason of the operation of the Deed of Assignment.
The matter ultimately came before this Tribunal constituted by Mr A Sweidan, Senior Member. The Tribunal dismissed each of the applicant’s contentions: McPhee and Inspector-General in Bankruptcy [2011] AATA 322 (“Decision”).
The applicant was subsequently assessed by his Trustee for contributions in respect of the period from 30 April 2009 to 29 April 2010 ($28,095.34) and for the period from 30 April 2010 to 29 April 2011 ($62,190.91).
At the request of the applicant, the respondent reviewed the Trustee’s assessments and, applying the Decision, affirmed them (being the reviewable decisions the subject of these applications to the Tribunal).
The respondent has made an application to the Tribunal pursuant to Section 42B of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”) alleging that, in light of the Decision, both applications are frivolous or vexatious and should be summarily dismissed.
THE POWER TO DISMISS A PROCEEDING ON THE BASIS THAT IT IS ‘FRIVOLOUS OR VEXATIOUS’.
Section 42B of the AAT Act provides as follows:
(1) Where an application is made to the Tribunal for the review of a decision, the Tribunal may, at any stage of the proceeding, if it is satisfied that the applications is frivolous or vexatious:
(a)dismiss the application; and
(b)if the Tribunal considers it appropriate, on the application of a party to the proceedings, direct that the person who made the application must not, without leave of the Tribunal, make a subsequent application to the Tribunal of a kind or kinds specified in the direction.
(2)A direction given by the Tribunal under paragraph (1)(b) has effect despite any other provision of this Act or a provision of any other Act.
(3)The Tribunal may discharge or vary such a direction.
The relevant principles to be applied by the Tribunal on an application under Section 42B of the AAT Act are conveniently set out in Theo and Secretary, Department of Family and Community Services [2005] AATA 699 (at [38]) as follows:
A.The jurisprudence on summary or peremptory dismissal of proceedings that applies in the courts is applicable to the Tribunal: Re Williams and Australian Electoral Commission (1995) 21 AAR 467 at 473-474.
B.The power contained in section 42B (couched as a discretionary power) to dismiss an application on the basis it is either frivolous or vexatious is a power to be exercised judicially and not automatically if there is an alternative means of review (including judicial review) cf Duncan v Fayle [2004] FCA 723 at [26].
C.The discretion contained in section 42B is a judicial discretion meaning that it is not to be exercised at large but having regard to the purpose for which the discretion exists. Relevant considerations must be taken into account and given appropriate weight having regard to the competing considerations and interests of the parties, the evidence adduced and the circumstances of the particular case. Irrelevant considerations must be excised: cf McKenna v McKenna [1984] VR 665 at 674 per McGarvie J.
D.The power for peremptory dismissal of proceedings is to be exercised cautiously and sparingly; Re Williams and Australian Electoral Commission (1995) 21 AAR 467 at 473-474; Cooper v Comcare (2002) 118 FCR 175 at [20].
E.Given proposition D, it is going too far to say that the peremptory dismissal power should never be exercised under section 42B : Zografakis and Telstra Corporation Ltd (AAT, No. 96/456, 4 September 1996) at [5] (particularly where an application cannot succeed or would give a result which is of no practical effect).
F.The power to dismiss an application on the basis that it is vexatious or frivolous may be exercised if the application is otherwise devoid of utility: Re Williams and Australian Electoral Commission at [34]; Cerebros and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 213 at [32].
G.The practical outcome of a decision that is being reviewed may also be considered in the context of section 42B: Cerebros and Minister for Immigration and Multicultural and Indigenous Affairs [2002] AATA 213 at [34].
H.The policy underpinning a provision in the nature of section 42B is to promote the proper dispatch of the business of the Tribunal and to ensure that from a resource perspective, the personnel and time of the Tribunal are devoted to substantive cases: Zografakis and Telstra Corporation Ltd (AAT, No. 96/456, 4 September 1996) at [5].”
THE DECISION
In the Decision, the Tribunal held as follows:
(1)on the evidence, the Deed of Assignment did not continue to apply to any partnership of which the applicant was a member after about June 1980;
(2)on the evidence, the Deed of Assignment had been abandoned in about July 1992;
(3)even if, contrary to the Tribunal’s conclusions in (a) and (b), the Deed of Assignment had not been abandoned and had applied to the partnership between the applicant and Mr Barter, the assignment came to an end on the dissolution of the partnership between the applicant and Mr Barter and thus did not apply to income thereafter earned by the applicant as a sole practitioner (“Legal Issue”).
THE PARTIES’ SUBMISSIONS AT THE HEARING
The general principles to be applied by the Tribunal in determining an application pursuant to Section 42B of the AAT Act were not in dispute.
Counsel for the respondent, Ms Price, accepted that if the applications for review proceeded to a final hearing, the applicant may adduce additional evidence which could result in the Tribunal making findings of fact different to those made in the Decision. The respondent submitted, however, that those findings of fact have no bearing on the determination of the Legal Issue and that the resolution of the Legal Issue in the Decision is manifestly correct.
Ms Price also accepted that in respect of the Legal Issue, if the Tribunal was satisfied that there was an arguable prospect of the Tribunal differently constituted concluding that it should not follow the Decision, then the respondent’s application pursuant to section 42B of the AAT Act ought be dismissed.
Appearing for himself, the applicant first placed great emphasis on the fact that, properly analysed, the Decision turned on the facts. He submitted that additional evidence could be adduced by the applicant (without stating what it might be) that may result in the Tribunal making findings of fact favourable to the applicant’s case where the Tribunal did not do so in the Decision.
The applicant further submitted that the Legal Issue was determined incorrectly in the Decision.
It is true that issues of fact that were determined against the applicant in the Decision may be resolved differently if these applications for review were to proceed to a hearing. That, however, does not provide to the applicant a complete answer to the respondent’s application because the Legal Issue was determined by the Tribunal assuming such facts in favour of the applicant for the purpose of analysis.
So, after the hearing, the crisp question for the determination was this: was the applicant’s contention that the Legal Issue was determined incorrectly in the Decision at least arguable?
FURTHER SUBMISSIONS AFTER HEARING
Subsequent to the hearing, the solicitors for the respondent wrote to the Tribunal (with a copy to the applicant), noting the recent decision of the Full Federal Court of Australia in LVR (WA) Pty Ltd v Administrative Appeals Tribunal [2012] FCAFC 90 (LVR). A hearing was then convened at which directions were made for the filing of written submissions as to the effect, if any, of LVR on the proper disposition of the respondent’s application pursuant to s42B of the AAT Act. The parties both confirmed that they did not require an opportunity to make oral submissions in addition to the written submissions to be provided.
The respondent’s written submissions
The respondent’s written submissions as to the impact of LVR on the respondent’s application are dated 22 August 2012. The essence of those submissions are as follows:
·In LVR, the Court was concerned with a decision of this Tribunal where “approximately 95% of the paragraphs of the reasons were so taken from the Commissioner’s written submissions filed in the Tribunal…” and “without attribution from the written submissions filed in the Tribunal on behalf of the Commissioner”. At [5], the Court said “Of themselves, these circumstances will give rise to serious concern that the Tribunal had failed to bring its own mind to bear on the issues before it and thus it had constructively failed to exercise its jurisdiction…The position in the present case is not, however, left at that level of generality because of an additional fact. This we do not need to decide and do not decide whether or not there has been a constructive failure to exercise jurisdiction”.
·In the LVR, the Tribunal had “extensively copied the respondent’s written submissions, some text or changes without attribution”
·Unlike LVR, “although the Tribunal extensively copied the respondent’s submissions with some textual changes and additions and without attribution” nevertheless the extent of the unattributed copying in the Decision cannot reasonably lead to an inference that the Tribunal did not engage in a genuine intellectual exercise of identifying the material, issue and the material facts needed to reach the correct and preferable decision and thereby failed to exercise its jurisdiction”.
·Thus, “There is no error of law by a Tribunal in not separately addressing every particular submission of the parties in its reasons for decision, particularly where, as in the present case, the answer is clear. This is not a case where unattributed adopting of submissions has a consequence that the Tribunal has failed to perform its statutory task or disclose its reasoning”.
·Alternatively “if the Tribunal were to be satisfied that this is a rare case where its statutory power has not yet been exercised with respect to the first application it can now deal with the first application as if no earlier action had been taken by the Tribunal, then the respondent asks that the Tribunal extend the s 42B application to include the first application”.
The applicant’s written submissions
The applicant’s written submission as to the impact of the LVR on the respondent’s application are dated 4 September 2012. The essence of those submissions are as follows:
·If one were to compare the Decision “laid side by side” with the respondent’s written submissions, an “indelible impression” is created that the Tribunal “could not have applied (its) own reasoning process to the case…” and that “an informed and reasonable observer could not but be astonished by the virtual absence of consideration of the applicant’s arguments”.
·There is not one reference in the Decision to the submissions of the applicant. No case cited by the applicant is distinguished and there is no attempt to deal with those arguments.
·The Tribunal cannot therefore proceed with the confidence on the basis that the issues which the applicant seeks to agitate in these matters have been resolved by “an independent intellectual decision on the law”.
ANALYSIS
There is no doubt that, but for the potential application of the LVR case on the Decision, it is within the Tribunal’s power under s 42B of the AAT Act to dismiss these applications if the Tribunal were to conclude that the applicant’s contention that the Legal Issue was determined incorrectly in the Decision was not arguable.
In this regard the applicant has a statutory right to file both of these applications for review. However, his right to have those applications heard is subject to, amongst other things, the power given to the Tribunal by s 42B of the AAT Act.
Notwithstanding the desirability of consistency of decision making, the power afforded to the Tribunal pursuant to s 42B of the AAT Act should not be exercised against an applicant who wishes to maintain in subsequent proceedings a legal issue already determined against the applicant in earlier proceedings if the Tribunal is satisfied, either by reason of the complexity of the issues raised in the application or otherwise, that the applicant’s prospects of securing a different result is at least arguable.
The problem here is that there is at least a serious question to be determined as to whether or not LVR means that, in delivering the Decision, the Tribunal failed to exercise its jurisdiction by reason of the Tribunal having copied various paragraphs of the respondent’s submissions without attribution.
That is not a matter that ought be determined by this Tribunal, and particularly not in the context of an application pursuant to s 42B of the AAT Act.
As a consequence, it is least arguable that the platform upon which the respondent’s application pursuant to s 42B was based, is faulty.
On that basis, it cannot be said with sufficient certainty that these applications, which seek to re agitate the same legal point already decided against the applicant, are frivolous or vexatious, even if the Tribunal were to conclude that the applicant’s prospect of securing a different result is not arguable.
For this reason, the respondent’s primary contention must fail.
The respondent’s alternative submission was that these applications ought nevertheless be dismissed because, as a matter of law, they are bound to fail.
The flaw in that submission is that it is still partly based on the earlier proceedings: in these applications witness statements have not yet been filed. Accordingly, it is simply not possible based on the material presently filed in these applications, and without reference to the Decision, to conclude that this matter is so devoid of merit as to be frivolous or vexatious.
DISPOSITION OF APPLICATION
For the reasons given, the Tribunal is not presently persuaded that these applications are frivolous or vexatious within the meaning of s 42B of the AAT Act.
The Tribunal has given consideration to whether or not the respondent’s applications pursuant to s42B of the AAT Act ought be adjourned pending the applicant filing his witness statements. However, the Tribunal is not minded to do so. The Tribunal is of the view that, particularly given that there is some uncertainty as to whether or not this Tribunal has ever validly determined the issues arising in these applications, the respondent’s application should be dismissed and the substantive applications for review programmed to hearing as soon as possible.
The Tribunal’s decision in this regard is fortified by the fact that, in response to a request made by the Tribunal, the parties have advised the Tribunal that the substantive applications could be disposed of within no more than two days. The Tribunal is of the view that the more efficient and effective utilisation of its resources is to hear and determine the applications for review on their merits rather than to further entertain submissions in support of their summary dismissal.
It therefore follows that the respondent’s applications must be dismissed.
I certify that the preceding 37 (thirty seven) paragraphs are a true copy of the reasons for the decision herein of Mr S Penglis, Senior Member.
....(sgd) T Freeman.......
Associate
Dated 18 September 2012
Date(s) of hearing
Date of Respondent’s Written Submissions
Date of Applicant’s Written Submissions
30 July 2012
22 August 2012
4 September 2012
Applicant In person Counsel for the Respondent Ms L Price Solicitors for the Respondent Ms C Kovacevic
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