Miller v Carmody & Ors

[2002] HCATrans 2

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M71 of 2001

B e t w e e n -

LANCE STEWART MILLER,
ROBYN DIANE CONINGHAM and
IAN SIDNEY HENKE

Plaintiffs

and

MICHAEL JOSEPH CARMODY

First Defendant

STEPHEN CHAPMAN

Second Defendant

NEIL MANN

Third Defendant

BRUCE CARTER

Fourth Defendant

Application to strike out

GAUDRON J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 22 APRIL 2002, AT 9.32 AM

Copyright in the High Court of Australia

__________________

MR P.V. SLATTERY:   May it please the Court, I appear with MS G.L. EBBECK, for the applicant on the application and for the first, second and third defendants.  (instructed by the Australian Government Solicitor)

MR M.J. MILLER:   May it please the Court, I appear for the fourth defendant, who is also an applicant in this matter.  (instructed by Finlaysons)

MR D.C. FITZGIBBON:   I appear, your Honour, together with my learned friend, MR J. PRYS‑BUTWILOWICZ.  (instructed by Waters Timms)

HER HONOUR:   I have received submissions but I have not been able to digest them fully.

MR SLATTERY:   What I might do is take your Honour through the pleadings as they exist on our application.

HER HONOUR:   Yes, thank you.

MR SLATTERY:   Could I ask your Honour to turn to the ‑ ‑ ‑

HER HONOUR:   Do you wish to say something, Mr Fitzgibbon?

MR FITZGIBBON:   Yes.  I am sorry, your Honour, there is a matter that I think needs to be dealt with prior to that.  My solicitor sought to file the parts of the material that your Honour does not have.  Some, apparently, was faxed through to the Court and in Melbourne they were told that they would be able to file them in Sydney.  They sought to file them this morning and we were refused.  So the original documents I have here and I believe your Honour would need them to make sense of the totality of what I say.

HER HONOUR:   Yes, very well.  Have you copies for everyone?

MR FITZGIBBON:   Yes, I have, your Honour.

HER HONOUR:   There will be filing fees associated with these, will there not?  Is there a copy for the – there is a notice of motion ‑ ‑ ‑

MR FITZGIBBON:   Yes, I did ‑ ‑ ‑

HER HONOUR:   No, wait, Mr Fitzgibbon, just take all these back at this stage.

MR FITZGIBBON:   Yes.

HER HONOUR:   We are dealing only with M71 at this stage.  If I could just have the documents for M71.

MR FITZGIBBON:   Thank you.

HER HONOUR:   No, I have given them back to you and I am waiting for you now to sort them out and give me the documents for M71.

MR FITZGIBBON:   Yes, your Honour, they all relate to M71.

HER HONOUR:   All right.  I saw something there that said M108.

MR FITZGIBBON:   I am sorry.

HER HONOUR:   I will have another look.  The second document I have in this bundle says M108.  The first one says M71.  The third one says M71.  The fourth one says M71.  I do not know what these documents are but there is one here that says M108, which is a notice of motion.

MR FITZGIBBON:   Yes, I seek that that document stand aside, your Honour, thank you.  All the other documents are, in fact, M71.

HER HONOUR:   I will give that back to you.  Mr Fitzgibbon, do you give an undertaking to file these in the Registry in due course, during the course of the day?

MR FITZGIBBON:   I will give that undertaking, your Honour.

HER HONOUR:   I will accept them and proceed on them as though filed.

MR FITZGIBBON:   Yes, thank you.

HER HONOUR:   Very well.  You have not seen these documents which we will have to ‑ ‑ ‑

MR SLATTERY:   They were faxed through to my chambers late on Friday evening, your Honour, and I have had one chance to have a quick glimpse through them.  Your Honour, I think probably what we could do is deal with it in a brief manner by saying, I think, nothing is really raised afresh on that application that is not really, in some way, subsumed into these applications.  I think we could probably deal with it that way.

HER HONOUR:   Yes, very well.  Do not assume I am familiar with these matters.

MR SLATTERY:   No.  Your Honour, could I, perhaps, as a matter of housekeeping, just confirm that your Honour should have received from my instructing solicitors a volume entitled “Authorities & Legislation”, in a folder?

HER HONOUR:   No – have I?  No.  We are dealing with M71, are we not?

MR SLATTERY:   M71, yes.

HER HONOUR:   Yes.  I have some submissions that I see were filed on 19 April and an affidavit of Mark James Miller filed today.

MR SLATTERY:   Yes, that is the affidavit of service, your Honour.

HER HONOUR:   Yes, thank you.

MR SLATTERY:   What I will do, I will simply take you through in the tab numbers, your Honour, in that document.  Can I take your Honour, then, to the statement of claim in M71, please.  Can I tell your Honour this, that my clients are, as we set out in paragraph 3 of our submissions, my clients, the first, second and third defendants, are a Commissioner of Taxation, Mr Carmody, a Deputy Commissioner, Mr Mann, and a former Deputy Commissioner, Mr Chapman. 

Can I tell your Honour that Mr Bruce Carter, who is the fourth defendant, is the liquidator of the company Institute of Taxation Research Pty Limited, in liquidation.  The plaintiffs are three of the former directors of that company.  Your Honour may remember that – I think your Honour heard a matter in Canberra recently in relation to ‑ ‑ ‑

HER HONOUR:   I am sorry, just say that again.  Three of the four directors?

MR SLATTERY:   Three of the four directors ‑ ‑ ‑

HER HONOUR:   Former directors?

MR SLATTERY:   Former directors, yes, of that company, now in liquidation, of which Mr Carter is the liquidator.

HER HONOUR:   Yes.

MR SLATTERY:   This is one in a line of pieces of litigation which have been commenced by these individuals against my clients and others over a period of time. Your Honour, I will take you to those in due course. Looking at the statement of claim, it purports to make a claim under section 75(v) of the Constitution in respect of acts of my clients as officers of the Commonwealth. In paragraph 1 it suggests that those three persons, my clients, have “sought to pervert the course of justice”. Secondly, in paragraph 2, that they have acted “maliciously” by ordering “that action be taken by officers under their control” – and I will come to the detail of that in a moment. Thirdly, they:

have co‑ordinated unlawful attacks designed to prevent the three Plaintiffs . . . from exercising their rights at law.

Fourthly, and notwithstanding, your Honour, of course, that the company is in liquidation and there has never been an application under section 471A of the Corporations Act which is that provision under which a person, formerly an officer of the company, may apply to take an action in the name of the company.  It is alleged in paragraph 4 that my clients have:

sought to pervert the course of justice in relation to proceedings against the company –

those proceedings not being identified.  Fifthly:

that the third defendant acting expressly as a delegate of the first Defendant has issued a Departure Prohibition Order against one of the plaintiffs –

Mr Lance Stewart Miller. Can I then take your Honour to the particulars because that will – perhaps before I go on with that, your Honour will immediately identify that it is extremely doubtful that any of these matters are justiciable under the original jurisdiction of the High Court in any event, except in so far as section 75(v) might be involved.

HER HONOUR:   Proceedings against the Commonwealth or a person being sued on behalf of the Commonwealth.  They are within jurisdiction.

MR SLATTERY:   Yes.

HER HONOUR:   Whether there are causes of action or matters pleaded that would entitle to relief is a different question.

MR SLATTERY:   Yes.  Our application is to strike out the action and, therefore, our application is to be decided on the matters on the face of the pleadings under the usual authorities and, secondly, in so far as it is necessary, any ancillary affidavit material which may elucidate what is on the face of the pleadings.  The particulars then complain that the first defendant, in paragraph 6, procured:

unlawful actions for the purpose of bringing into public disrepute the three Plaintiffs.

Your Honour, that is in the nature of a defamation allegation.  There is no further particularity in relation to that.  Then, more to the gist of the matter, in paragraph 7 it suggests that a number of search warrants have been unlawfully issued.  Paragraph 8 suggests multiple defects in those warrants.  Paragraph 9 suggests that, for some reason, because of something going on in a proceeding in the Supreme Court of New South Wales, the persons who issued the warrants:

were fully aware that all of the persons on whom the warrants were served had been acting strictly in accordance with advice given . . . by Mr C.J. Stevens, QC –

That advice is sought to be produced under the Rules of the High Court but has not been produced. 

In the tenth paragraph officers of the Australian Federal Police trespassed upon premises, detained property and imprisoned a person, the person not named.  Paragraph 11 alleges the purported basis of the warrants.  Paragraph 12 is an allegation of fact of the information that would suggest the warrants would be of no effect because of the factual circumstances, that is, that there were no assets that could be stripped and therefore asset‑stripping, which was suspected, would be an impossibility.  Paragraph 13, it is alleged that my clients and their delegates – and those delegates are not named:

concealed from the Director of Public Prosecutions, the Australian Federal Police and the judicial officers asked to issue the warrants that a series of monetary transfers which are used to give rise to the asset stripping claim had been examined by His Honour Mr Justice O’Keefe . . . in the matter of the Law Society v Levick. 

Mr Levick is a former practitioner of the Supreme Court of New South Wales and a person who was intimately involved in the affairs as a solicitor for Institute of Taxation Research Pty Limited. Your Honour may be aware of that company. That company was involved in what would loosely be called constitutional arguments to avoid the payment of taxation, that is, that the payment of taxation in Australia was optional because either the invalidity of our Constitution, the incapacity of our Parliament to pass laws or the difficulties because of the appointment, in an interregnum period, of the Governor‑General, Lord Gowrie, and also because it is alleged that our nation achieved nationhood by the Treaty of Versailles in 1919 and therefore the incremental development of our nationhood is a principle that should be unknown to the law.

Paragraph 14 alleges, as a matter of fact, that it appears to be understood that there was no reason to issue the warrants because the Law Society of New South Wales “had already traced the sources of the various funds” and those funds appear to have been borrowed externally from Australia.  Paragraph 15 alleges that my clients concealed that interest payments to financial institutions were not made from funds of the named companies alleged to have been the asset‑stripped companies.  Paragraph 16, that it concealed that withholding tax at the rate of 10 per cent had been deducted and paid to the Australian Taxation Office in respect of payments made.

Paragraph 17, that we withheld that the companies were no longer under the control of those persons who had authorised the borrowings.  Paragraph 18, it was concealed by my clients “that none of the companies possessed material assets when disposed of” and, therefore, had no assets to strip.  Paragraph 19 is really a summary that we were, therefore, fully aware from our own investigations and other sources that the criminal activity alleged could not have taken place.

Paragraph 20, that at the end of the searches the questioning made by the persons who executed upon the searches, that is, the relevant officers of the Australian Federal Police and any persons assisting them as constables, identified the main purpose of the warrants:

was to find evidence connecting the Institute of Taxation Research P/L and its former directors to the fictional “asset stripping”.

Then, in paragraph 21, there is a change in that it is then alleged:

That the first and second Defendants have unlawfully provided funding to the fourth defendant –

the liquidator –

contrary to the provisions of the Corporations Law.

But no particularity of any description is given in relation to that.  That then allegations are made against the fourth defendant which suggest that he went on a fishing expedition solely for the purposes of harassing the plaintiffs, and motivated by mala fides of the first, second and third defendants.  The whole object of the activities “was to misuse both the criminal and civil provisions of the law”, in paragraph 23.  In paragraph 24, your Honour:

The actions of the first second and third named Defendants and their delegates were designed to impact upon the Plaintiffs in their pursuit of proceedings M31 of 2001 –

Can I tell your Honour this, that M31 of 2001 was an action which was heard before Justice Hayne in the High Court in Melbourne.  Can I ask your Honour to go to that volume which I have just given to your Honour and go to tab 8.  Tab 8 is the judgment of Justice Hayne in that matter but I ask your Honour to go to page 17 of 26.

HER HONOUR:   Yes.

MR SLATTERY:   From page 17 of 26 through to the top of page 23 of 26 is the judgment of his Honour Justice Hayne.  His Honour found that M31 was an action in the nature of an abuse of process.  Can I take you to the bottom of page 22 of 26.  His Honour found that, in effect, what the challenge in M31 was was a challenge to the winding up of ITR.  Can I, perhaps, call the company in liquidation ITR because that is the commonly used expression?  It was a collateral challenge to that.  It was, therefore, an abuse of process and orders were then made for indemnity costs against those persons who brought the application.  your Honour will recognise their names, Miller, Conningham and Henke, that is the same three persons who bring this application.

Your Honour, the orders that are then sought are set out below paragraph 24 of the statement of claim.  They are that my clients:

be personally brought before this Honourable Court to explain why the Departure Prohibition Order . . . is not in contempt of court.

2.   That the Departure Prohibition Order . . . be permanently set aside.

3.   That all documents seized in the various raids –

and perhaps I will just stop there for the moment.  Your Honour, in an action in the South Australian Registry of the Federal Court orders have been made in two respects.  Orders were made for examination of the directors of ITR and for the production of documents in the possession of those directors.  There was a disregard, entirely, of the orders made by the court by those directors, a refusal to answer those summonses, and subsequently his Honour Justice O’Loughlin issued an Anton Piller order against the former premises, and of the company, and against the homes of the directors. 

The seizure that took place that has been referred to here is the seizure made under that Anton Piller order at the application of the liquidator of ITR.  So, it is asked that all of those documents be placed in the safekeeping of this Court.  Fourthly:

That orders be made requiring the discovery of all instructions, diaries, notes –

in relation to the Australian Federal Police concerning:

the issue of the warrants including all communications with the Law Society of New South Wales.

5.   That prohibition orders be issued –

and this is a prohibition in the nature of an order declaring that we are a vexatious litigant, that we not be able to initiate or further any action without the express permission of this Court, and damages.

I am sorry, your Honour, it is pretty much a thumbnail sketch but hopefully your Honour has some idea now of that with which we are dealing with.  It seems to me, your Honour, if I could condense it, the issues are these, that there are challenges in relation to the search warrants that have been issued; challenges in relation to the departure order that has been issued; and, thirdly, what I will call ancillary matters, which fall into this question of prohibition, and damages.

Could I ask your Honour then to take up the written submissions that we have filed.  Your Honour, as we say in paragraph 1, we are seeking that the whole proceedings be dismissed or, alternatively, stayed permanently on the grounds of not disclosure of a reasonable cause of action, frivolous or vexatious, or an abuse of process.  It is to inform your Honour that that is precisely the approach we took in M31.  Can I tell your Honour as well, that in M31 leave to appeal was sought against his Honour Justice Hayne’s decision in that matter.  The essential grounds of that leave was that Justice Hayne had not disclosed that his wife, Ms Michelle Gordon, acted as counsel on occasions for the Commonwealth and that there was a conflict of interest which he should have declared.  Leave to appeal was refused in that matter.

Your Honour, can I go to paragraph 5 of our submissions and ask your Honour to take up, please, the affidavits which I will read and I will identify those affidavits now, if I might, your Honour.  The affidavits which we read in support of the application are the affidavit of Stephen Antony Linden of 19 December 2001.

HER HONOUR:   Yes, I have that.

MR SLATTERY:   Thank you.  The next document, hopefully, your Honour, would be the affidavit of Dusan Uglesic also of 19 December 2001.

HER HONOUR:   Uglesic I have.  Is there another?

MR SLATTERY:   No, that is the second one.  The third one is – and it will be later in your Honour’s file – the affidavit of Martin Brian Telley of 7 January 2002, which is the affidavit of service of the applications.  Bearing in mind my friends are here, I do not know that that is in dispute, your Honour.

HER HONOUR:   No, but the file may not have everything that you ‑ ‑ ‑

MR SLATTERY:   I do not know that your Honour needs to find that for the purposes of these submissions.

HER HONOUR:   Well, perhaps I do.  Kate Leanne Scammell I have.  Donna Maree Galea, Uglesic.  Then there is a very large affidavit which says Linden, but unless that has other things – it has many things attached.

MR SLATTERY:   Yes.  No, that is an affidavit that I will be taking your Honour to.  Your Honour, I apologise, I have misled your Honour.

HER HONOUR:   Thank you.

MR SLATTERY:   I was just instructed that Mr Telley’s affidavit has not been filed as yet.  It is a large affidavit, your Honour.  Can I, perhaps, show that to my friend first.

MR FITZGIBBON:   I am sorry, your Honour, to take the time but I have not seen it before this and I am just trying to facilitate, if I might ‑ ‑ ‑

HER HONOUR:   No, that is fine.

MR FITZGIBBON:   I am sorry, your Honour.  I have no objection to that in that form.

HER HONOUR:   Yes.  I think that is your copy – have you a copy?

MR SLATTERY:   That is the copy to be filed.

HER HONOUR:   Yes.  Has Mr Fitzgibbon a copy?

MR SLATTERY:   No, he does not.  I will give him a copy, if we can, of the affidavit of service itself, so that – I do not know that, actually, there would be any doubt about service, bearing in mind my friend is here in answer to the application.

HER HONOUR:   I will accept that and it can be filed in the Registry later in the day.

MR SLATTERY:   Yes, thank you, your Honour.  That completes the description of those affidavits which I read in support of the application.  Your Honour, as I have said ‑ ‑ ‑

HER HONOUR:   Perhaps I can find out, is service in issue, any of these?  No, service is not in issue.

MR FITZGIBBON:   No.  Just to say, your Honour, I have not received them, of course, but having looked through them, I have no difficulty at all.

HER HONOUR:   You have not received the copies, whatever they are.  Yes.

MR SLATTERY:   Thank you.  Can I then take your Honour, please, to paragraph 5 of our submissions.  The first issue which I address is the question of the search warrants and they are in a series of exhibits to the affidavit of Mr Linden.  Could I take your Honour, please, to exhibit SAL‑6A.

HER HONOUR:   Yes, I have that.

MR SLATTERY:   Your Honour will see that that is a search warrant issued to a David Moore, a constable, by a Mr Peter Hasted, acting in accordance with section 3C(1) of the Crimes Act, that his Honour was:

satisfied by information on oath that there are reasonable grounds for suspecting that there is at premises –

and those premises are named.  Two paragraphs down:

evidential material, as defined in the Crimes Act 1914, which satisfies ALL of the following THREE conditions –

His Honour then sets out the first condition – and I will not read those out to your Honour – and that condition continues for a number of pages.  The second condition is then set out on the bottom of the fourth page of the document.  Your Honour sees there is a fax number at the bottom right‑hand corner, 004.

HER HONOUR:   Yes.

MR SLATTERY:   That is the second condition:

Things which relate to any one or more of the following –

and the schedule is “Companies facilitating company asset stripping arrangement”.  Schedule 2, over the page, “Companies subject to asset stripping arrangement with International Equity Acquisitions (Aust) Pty Ltd”.  Next page, “Companies subject to asset stripping arrangement with Assets Acquisitions and Management Pty Ltd”.  Schedule 4, “Directors of companies immediately prior to asset stripping arrangement”.  Over the page, Schedule 5, “Other persons facilitating company asset stripping arrangement”.  Then the next page is the third condition:

Things as to which there are reasonable grounds for suspecting that they will afford evidence as to the commission of the following offences against the laws of the Commonwealth namely an offence contrary to Section 7(1)(b) of the Crimes (Taxation Offences) Act 1980 as it applied to income tax related offences by virtue of Section 13 of that Act –

and the warrant is then issued and the authority under the warrant is then contained in the next page, which is the ninth page of the document: 

THIS WARRANT AUTHORISES the executing officer or a constable assisting to conduct an ordinary search of any person who is at or near the premises –

and to seize items, and a note in relation to legal professional privilege is then set out on the bottom of the page.  The last page of the document signed by the learned Magistrate in Queensland is:

THIS WARRANT MAY BE EXECUTED BETWEEN THE HOURS –

there set out, within seven days of the date of issue.  Your Honour will see that, first of all, the warrant is issued to a David Moore, who was a constable.  Can I take your Honour back to our submissions to paragraph 9.  Can I tell your Honour that the next three exhibits, that is, SAL‑6B, 6C and 6D, are all in the form of warrants that were issued which appear to be the subject of the challenge in this matter.  I will use the first warrant as the example, your Honour.

The warrant is issued pursuant to section 3E(1) of the Crimes Act.  Can I ask your Honour to go to tab 4 of your Honour’s booklet.

HER HONOUR:   Yes, I have that, thank you.

MR SLATTERY: Section 3E(1):

An issuing officer may issue a warrant to search premises if the officer is satisfied by information on oath that there are reasonable grounds for suspecting . . . any evidential material at the premises.

An “issuing officer” is defined in section 3C(1), which is in tab 3, right at the bottom of that page, 3C(1), an

issuing officer . . . means:

(a)  a magistrate –

and “evidential material”, which your Honour would have seen, is also defined in section 3C(1) as – it is right at about point 5 of the page, your Honour:

a thing relevant to an indictable offence –

and, of course, these offences are indictable offences, as we say in our submissions, allegedly so, your Honour –

or a thing relevant to a summary offence –

and they are to be executed by an executing officer, and “executing officer” is just defined below “evidential material”.  It includes: 

the constable named in the warrant by the issuing officer as being responsible for executing the warrant –

that constable is, of course, in this instance, Constable David Moore.  That person, that is, the constable, is the executing officer, and if that person does not intend to be present, that person may nominate another person to execute as the constable. 

As we say in our submissions – I am now at page 3 of our submissions, just above paragraph 11, “constable” is defined in section 3(1), which is in tab 2 – and I am sorry to go backwards, your Honour – down the very bottom of the second page: 

a member or special member of the Australian Federal Police or a member of the police force or police service of a State or Territory. 

So that, your Honour, this warrant is issued on application by the constable to the magistrate, having provided to the magistrate sufficient information to satisfy the magistrate on oath that there are grounds for the issue of the warrant. 

My clients are neither an applicant for, nor are they an executing officer of, for the purposes of the Crimes Act, the warrant.  As we say in paragraphs 12 and 13, the offences against the Crimes (Taxation Offences) Act are, as well, not prosecuted by my clients, nor, should it be said, by any employee of the Australian Taxation Office.  They are prosecuted by  the Commonwealth Director of Public Prosecutions, and if there is to be any attack in relation to the laying of any charges, then it would be in respect of the charges laid by the Director of Public Prosecutions.  We therefore say, as we set out in paragraph 14 of our submissions, the action is wholly misguided and here is not the proper place to issue these proceedings. 

If there is to be a review of the search warrant, then, under the Administrative Decisions (Judicial Review) Act a review application could have been brought for a review of the decision, and that could have been either in respect of the decision to submit the information to the magistrate in respect of the application for the warrant or, alternatively, the decision of the magistrate who issued the warrant. 

The only time, as we would understand the laws, and under section 9A of the AD(JR) Act, the only time that that review could not take place was where there existed what is called “a related criminal justice process decision”.  That is where a criminal proceeding has commenced in relation to that decision, and in those circumstances, as we say in paragraph 19 of our submissions, then the only place to challenge the warrant would be in those criminal proceedings. 

Your Honour, that, we say, disposes of any issue concerning the warrants.  Turning, then, to the departure prohibition order, in paragraph 20 of our submission, paragraph 5 of the statement of claim complains that my client, the third defendant, acted “as a delegate of the first Defendant” to issue the departure prohibition order against Mr Miller.  Because, it is said, that is in contempt of proceedings already brought before the Court, and the action being motivated by mala fides. 

Can I tell your Honour, all of the proceedings before the Court, bar two, that is, the two you have before you today, have been struck out, except one which was withdrawn, which was the matter before your Honour that Mr Fitzgibbon was in, in relation to a prohibition order.  We then go to ‑ ‑ ‑

HER HONOUR:   I know about M31 and I know about the one that was withdrawn.  Is there anything else? 

MR SLATTERY:   M100. 

HER HONOUR:   M100. 

MR SLATTERY:   M100 was the leave to appeal application against the order of Justice Hayne. 

HER HONOUR:   Thank you. 

MR SLATTERY:   And to our knowledge, M112 – the refusal decision of the High Court is at tab 12 of your Honour’s book.  I do not ask your Honour to read that. 

HER HONOUR:   No. 

MR SLATTERY:   Paragraph 20 of our submissions takes up the question of the departure order. The departure order is made under section 14S(1) of the Taxation Administration Act.  That is at tab 7 of your Honour’s booklet.  Under that provision, the Commissioner may prohibit a person from departure from Australia where: 

(a)  a person is subject to a tax liability; and
(b)  the Commissioner believes on reasonable grounds that it is desirable to do so for the purpose of ensuring that the person does not depart from Australia for a foreign country without: 
(i)  wholly discharging the tax liability; or –

making satisfactory arrangements for its payment.  That is an order that has been made against Mr Miller in the matter.  The Taxation Administration Act provides, under section 14V, that a person aggrieved might appeal.  Section 14V is the fourth page of that bundle, at tab 7: 

A person aggrieved . . . may appeal to the Federal Court of Australia or the Supreme Court of a State or Territory against the making of the departure prohibition order. 

Not only that, your Honour, under section ‑ ‑ ‑

HER HONOUR:   Sorry, section 14 ‑ ‑ ‑

MR SLATTERY:   Section 14V, your Honour. 

HER HONOUR:   Thank you. 

MR SLATTERY:   Does your Honour have that now? 

HER HONOUR:   Yes, thank you. 

MR FITZGIBBON:   I am not hastened to interrupt my friend, your Honour, but I do not have any of the material that he is relying on in that folder which your Honour has been provided with.  I do not mind flying, but I hate flying in the dark. 

MR SLATTERY:   Well, if my friend had read the submissions, I am sure my friend ‑ ‑ ‑

MR FITZGIBBON:   I have read the submissions, but not the material that accompanies it. 

MR SLATTERY:   Your Honour, set out in my submissions plainly are the provisions that I am referring ‑ ‑ ‑

HER HONOUR:   What I have, Mr Fitzgibbon, are extracts of the statutes referred to and decisions ‑ ‑ ‑

MR FITZGIBBON:   Yes, I realise that, your Honour, and that is what I do not have. 

HER HONOUR:   Yes. 

MR SLATTERY:   For the purpose of today, I am happy to give my instructing solicitor’s clean copy to my friend, so he can follow it. 

HER HONOUR:   Yes, thank you. 

MR FITZGIBBON:   Thank you. 

MR SLATTERY:   I think I had taken your Honour to section 14V of the Taxation Administration Act.  Also, under section 14T, that order, that is, the departure order, may be varied or revoked by the Commissioner on his own motion or upon application.  That is the second page of that bundle.  That is in practical circumstances under subparagraph (a), where the taxation liabilities have been “wholly discharged” and ‑ ‑ ‑

HER HONOUR:   Now, one thing I need to know in this area is, 14S says that “the Commissioner”.  Is “Commissioner” defined somewhere to include the third defendant?  Because I thought you told me that it was the third defendant who ordered it. 

MR SLATTERY:   The departure prohibition order? No, I think that ‑ yes. Your Honour may be familiar with – there is the possibility of delegation of that power under section 8 of the Taxation Administration Act.  I am not entirely sure of that to inform your Honour, but I think that we can find that out fairly quickly.  But I would understand that it is ‑ ‑ ‑

GAUDRON J:   But it was the third defendant, you said, who issued the ‑ well, according to the statement of claim.  Am I correct? 

MR SLATTERY:   The statement of claim would say that.  I would have thought it would only be the third defendant acting under the delegation of the second defendant, the Commissioner, Mr Carmody.  Mr Chapman, who is the first defendant, was the former Deputy Commissioner.  He is no longer a member of the Australian Taxation Office. 

HER HONOUR:   Yes.  Well, you may need to attend to that. 

MR SLATTERY:   Yes.  Under section 14T, as I said, in the practical sense, the order can be discharged where the tax liability has been discharged, or the Commissioner is satisfied that it has been:

(i)  wholly discharged; or
(ii)  completely irrecoverable; or
 . . . the tax liabilities to which the person is subject are completely irrecoverable.

And the person the subject of the order may make an application to the Commissioner to revoke the order. Now, there is, in respect of that provision, as we say in paragraph 23 of our submissions, under section 14Y of the Act, which is the last page of that bundle, that is, where the person under section 14T goes to the Commissioner and says, “I have either discharged, or I have sufficiently discharged, or I have absolutely no capacity to discharge this debt. Please revoke your order”, and there was a refusal, under section 14Y, a refusal is a reviewable decision and the Administrative Appeals Tribunal, under the Administrative Appeals Tribunal Act, may review that decision.  No review has been commenced in relation to those matters, your Honour.  As we say in paragraph 24, Mr Miller had a number of places he could go to seek review of the decisions and has not done so.  All that has been done is the filing of the statement of claim in this action. 

Your Honour, I dealt very briefly with the question of contempt.  I nominated those proceedings in respect of which there may be contempt and we set out in paragraph 26 of our submissions that we can identify only that the other proceeding before your Honour today, that is, M108, is the only proceeding in respect of which there could be contempt.  All of the other proceedings have been struck out or withdrawn.  We would say it is impossible, for the reasons which will become clear to your Honour in relation to that, for the proceeding in M108 to have any effect, or for anything done by my client in this action to be in contempt in relation to that action.  That action concerns, as will become clear, the activities of the liquidator of the Institute of Taxation Research Pty Limited, and other matters which are concerned with that matter.  So we are simply unable to identify any possibility of there being contempt. 

Turning, then, to the orders which are sought by the plaintiffs in this action, there is no basis, we would say, under section 75(v) of the Constitution for a writ of prohibition to be issued against any of my clients. There is simply no action in respect of which prohibition could issue. Nothing has been done by my clients which has been identified. The first order relates to the departure prohibition order. I have already dealt with those matters. Mr Miller is in the wrong place; he is suing the wrong people in the wrong place; and he should be seeking review, if he is a person aggrieved.

Paragraphs 3 and 4 are completely out of left field, your Honour, in relation to documents seized and the various raids, as they are called.  There is no reason, obvious on the face, why this Court should either make an order or supervise the continuation of that order.  Paragraph 5, as I have described it, is in the nature of having us declared a vexatious litigant.  Your Honour, we have not commenced these proceedings.  We are responding, continually, to these types of proceedings.  The shoe is really on the other foot.  But, in any event, no basis is made out for that.  And 6, damages are sought, and no basis for damages is set out, as we describe in paragraph 32 of our submissions. 

Your Honour, as identified right from the start, our application is for this matter to be dismissed on the basis that it is an abuse of process, or it is frivolous or vexatious.  The principles in respect of an application being declared an abuse of process or vexatious under the inherent jurisdiction of the Court are well understood.  If your Honour goes, please, to tab 9 of the book, your Honour will see the decision of the High Court in Walton v Gardiner (1992-1993) 177 CLR 378. Can I take your Honour to page 392, the very bottom line of page 392. I read down to about point 7 on that page, to the end of the quote from the speech of Lord Diplock in Hunter v Chief Constable of the West Midlands Police, ending in “right-thinking people”.  I am not going to read that out to your Honour.  I imagine your Honour is well familiar with those principles.  I would only read them to your Honour if your Honour wished me to elucidate any aspect of them. 

HER HONOUR:   No. 

MR SLATTERY:   We would say these proceedings clearly fall within the categories which are identified there.  In particular, this Court is the clearly inappropriate forum to be addressing any of these issues.  They are foredoomed to fail, because they are in the wrong place, and for the wrong reasons, and they are issued against the wrong people.  Similarly, your Honour, we would submit that the application is frivolous or vexatious.  Your Honour would also be, I think, well familiar with the decision of Justice Dixon, as he then was, in Dey v Victorian Railways Commissioners (1949) 78 CLR 62, particularly at page 91. That is at tab 10 of the book. The relevant quote is in the second full paragraph, commencing:

The application is really made to the inherent jurisdiction of the court –

Again, I imagine your Honour is well familiar with those principles.  I am not going to take your Honour through them.  In paragraph 37 and 38, we give your Honour an idea of the activity of those who would stand behind, or those who were involved in, these proceedings.  Those activities concerned these so-called taxation defences, based upon constitutional grounds.  We have set out a list of those, which are matters of public record.  We say, in paragraph 38, that the institution of the action should be viewed against the background of that litigation.  We also finish our submissions in relation to the substantive point at paragraph 39, and I repeat, again, anything in respect of the Institute of  Taxation Research Pty Limited in

liquidation is a matter that can only go forward under section 471A of the Corporations Act. 

HER HONOUR:   Say that again.  Anything involving?

MR SLATTERY:   Anything involving the former directors of the Institute of Taxation Research Pty Limited purporting to continue to act in their role as directors of the company in liquidation can only occur under section ‑ ‑ ‑

HER HONOUR:   I see.  But they do not, do they?  They bring these proceedings in their own right, as I read them. 

MR SLATTERY:   They would purport to do so, under paragraph 4 of their summons but, again, paragraph 4 goes nowhere in the balance of the pleadings.  Your Honour, they are our submissions in relation to the substantive point. 

HER HONOUR:   Yes, thank you.  Yes, Mr Fitzgibbon. 

MR FITZGIBBON:   Thank you, your Honour. 

HER HONOUR:   You have a lot of papers in this one that I have not read. 

MR FITZGIBBON:   Yes, thank you, your Honour. 

HER HONOUR:   So you will need to take me to them.  Apart from the ones you handed up today, there was an affidavit of Mr Henke and a notice of motion, which may be the same as the one you have handed up today.  Is that correct? 

MR FITZGIBBON:   That is correct, your Honour. 

HER HONOUR:   Yes, thank you. 

MR FITZGIBBON:   There are, in fact, two notices of motion, your Honour ‑ ‑ ‑

HER HONOUR:   They are different, are they? 

MR FITZGIBBON:   Yes, there are two. 

HER HONOUR:   Has either been filed? 

MR FITZGIBBON:   No, that is my error.  One is under 108, and my friend has crossed across into 108, of course, and I will ‑ ‑ ‑

HER HONOUR:   Yes.  Can we just leave 108 aside, for the moment, because there is a lot of paper here that I have not ‑ ‑ ‑

MR FITZGIBBON:   Yes. 

HER HONOUR:   I see that one of your applications is to be joined. 

MR FITZGIBBON:   Yes. 

HER HONOUR:   Well, I am sorry, that they be heard jointly. 

MR FITZGIBBON:   Yes. 

HER HONOUR:   You do not mean that today, do you? 

MR FITZGIBBON:   I do believe, your Honour, I will need necessarily to go to 108, partly because my friend has crossed across into 108, but, secondly, there is a very important affidavit in 108 which, I suggest, will cause your Honour to consider a lot of the matters – and I will come to that very shortly.  I am having problems, of course, with paperwork – there is nothing new in that, your Honour knows that – but if it would be of assistance if your Honour were willing to take a short adjournment to read those papers ‑ ‑ ‑

HER HONOUR:   To read what, though? 

MR FITZGIBBON:   Well, read in particular the documents, of course, that have been filed and ‑ ‑ ‑

HER HONOUR:   No, I think we will go through them.  I have two notices of motion ‑ ‑ ‑

MR FITZGIBBON:   That is correct. 

HER HONOUR:   ‑ ‑ ‑ in M71, and they seem to be identical.  Now, I just mention that.  They seek, on the first page, four orders; page 2, another five orders; there are particulars.  Those documents appear to be identical.  So there is one notice of motion of which I somehow or other have a copy, and that is in M71. 

MR FITZGIBBON:   Yes. 

HER HONOUR:   There is an affidavit of Mr Henke, sworn 19 April. 

MR FITZGIBBON:   That is correct, your Honour, yes. 

HER HONOUR:   An affidavit of Mr Henke – it looks like it is a second copy of that.  Well, I think I will dispose of some of these.  Is it likely that I have duplicates, somehow or other?  It looks like it.  A “Certificate Identifying Exhibit”, yes, and these are all annexures, I take it, to Mr ‑ ‑ ‑

MR FITZGIBBON:   To Mr Henke’s affidavit, in particular. 

HER HONOUR:   Yes.  Well, we have that sorted out.  Now, you take me through the documents, I think, is ‑ ‑ ‑

MR FITZGIBBON:   Thank you, your Honour.  In preparation for this, I prepared a set of short notes, necessarily.  If I might tender those to the Court. 

HER HONOUR:   Yes, I will receive those.  Have you a copy for ‑ ‑ ‑

MR FITZGIBBON:   I have a restricted number of copies.  Your Honour, because some of the submissions by some of the defendants in fact cross across, as between 71 and 108, at certain points, I may have strayed from one to the other but ‑ ‑ ‑

HER HONOUR:   We will deal with that when it arises. 

MR FITZGIBBON:   Thank you.  If I might commence by taking your Honour to where we see is the gravamen of the case.  If I take your Honour to the exhibit which is attached to Mr Henke’s affidavit, and that is exhibit ISH5. 

HER HONOUR:   Yes, I have that. 

MR FITZGIBBON:   Yes, thank you, your Honour.  We say that is the secret agreement – and I will call it that, for want of a better word – which exists and is in fact – I said “I”, your Honour, but I really meant ISH1.  I apologise for that.

HER HONOUR:   Now, did you wish to take me through these affidavits, bearing in mind I have not seen them, rather than go direct to the exhibits? 

MR FITZGIBBON:   Yes, except that, as I see it, this is the gravamen of the case.  It is very important because ‑ ‑ ‑

HER HONOUR:   Well, what do you say this document is? 

MR FITZGIBBON:   This is a document that has, in fact, emerged out of the Supreme Court of South Australia, and the order approving the agreement is attached to that.  Indeed, the accompanying affidavit of Mr Carter then has attached to that a letter which, if I can use it as the smoking gun – that is a horrible Americanism, I suggest – but under BJC1. 

HER HONOUR:   Yes.  Now, what do you make of this? 

MR FITZGIBBON:   Yes, thank you.  Your Honour will realise, on reading that document, that contained therein are quite a number of matters which I will return to shortly.  But, in essence, we say that that agreement is such that Mr Carter, on behalf of the Commissioner of Taxation has in fact undertaken certain actions.

HER HONOUR:   The document does not say that.  Ultimately, it is an indemnity agreement. 

MR FITZGIBBON:   That may be the case.  Nevertheless, it goes beyond that, because if your Honour looks ‑ ‑ ‑

HER HONOUR:   If you have something you wish to direct my attention to, you must, because ‑ ‑ ‑

MR FITZGIBBON:   All right, thank you.  If your Honour looks at page 1 of the document dated 31 May 2001, your Honour will see under ‑ ‑ ‑

HER HONOUR:   Now, what document, precisely, is that? 

MR FITZGIBBON:   That is a document, your Honour, under the heading of “Finlaysons”. 

HER HONOUR:   Yes.  Now, it is all very well to hold it up like that.  My eyesight does not extend to such a distance.  Just tell me what it is.  I am having difficulty following this, partly because you did not take me to the affidavit.  You just jumped in at the exhibits.  So I am back at ISH1, which seems to have annexed to it an application of Mr Carter.  Then, it has annexed to that an order approving an agreement.  Right? 

MR FITZGIBBON:   Yes. 

HER HONOUR:   Then you have the order.  Then you have an affidavit of Mr Carter.  Here you are.  There is another affidavit of Mr Carter, which is a letter from Finlaysons.  Is that what you want me to see? 

MR FITZGIBBON:   That is the document I want your Honour to consider. 

HER HONOUR:   Yes.  Well, what do you want me to consider? 

MR FITZGIBBON:   If your Honour looks at the first paragraph in the letter, under “Institute of Taxation Research Pty Ltd (In Liquidation)”, your Honour will see that Finlaysons set out certain propositions.  They have been asked by Mr Carter: 

to set out in writing the terms and conditions under which he seeks an indemnity from the Commissioner of Taxation (the Commissioner) in order for him to pursue certain actions on behalf of the Commissioner in relation to the affairs of the Company. 

The scope of the indemnity is set out immediately under that, under 1, and what it says is: 

The Commissioner agrees, subject to this letter, to indemnify Mr Carter for his reasonable fees and costs, (including any reasonable legal costs) on and from 19 March 2001 in pursuing any reasonable necessary action, including public examinations in order to recover the assets of the Company.  Such indemnity to be limited to a maximum amount of $100,000.00 exclusive of GST. 

The second part of the paragraph says this: 

Mr Carter will be indemnified in respect of such other tasks as may be from time to time agreed by he and the Commissioner during the course of the liquidation of the Company. 

HER HONOUR:   It should be “by him”. 

MR FITZGIBBON:   Yes, but it is not there.  Now, under that, “Exclusions to the indemnity”, and this is, in my submission, important: 

The indemnity will not cover any of the following matters: 

2.1  any action taken by Mr Carter independently of the Commissioner without the prior consent of a duly authorised officer;

If your Honour goes on beyond that – if your Honour looks over the page, your Honour will find that there are very precise clauses, in fact, setting out the respective role of the parties.  If your Honour looks at “Liaison” on page 2: 

Mr Carter acknowledges that in the circumstances of this matter, it is appropriate that there be ongoing and regular liaison with the Commissioner, his duly authorised officers and his advisers concerning the liquidation of the Company.  For that purpose –

and then it sets out what Mr Carter will, in fact, do.  But at 3.5, on the next page:  

Mr Carter and the Commissioner acknowledge that Mr Carter will bear all proper consideration towards any request made by the Commissioner for certain action to be taken –

but then it goes on to qualify that, of course, as to Mr Carter’s position.  Then, in effect, it deals with the issue of the resolving of any disagreements.  Now, if your Honour comes to the “Costs and personnel” – this is the next page: 

The agreement of the Commissioner to indemnify Mr Carter is based on the following scale of fees –

and it sets out those fees.  Then, particularly, under “Lawyers”, under 5.2: 

Given the nature of the tasks confronting Mr Carter, the Commissioner acknowledges the need for him to retain specialist legal advice.  In particular, the Commissioner agrees to Mr Carter engaging Finlaysons to act in this matter on the basis that the nominated personnel of that firm available for the work to be performed in relation to the Company (together with their rates of remuneration exclusive of GST) are –

and then it sets out Mr Barrett, Mr Miller, and at approximately point 3: 

Further, the Commissioner requests that Mr Carter retain Mr Paul Slattery as counsel and agrees an hourly fee of $185 net of GST. 

Your Honour will need to consider all of the matters in the document, but at page 6, at the top, “Section 564 Application”: 

In the event the liquidator makes any recovery of assets of the Company, he indicates that he intends to apply to the Supreme Court of South Australia for an order pursuant to Section 564 of the Corporations Law, that after allowing for costs the proceeds of any recovery will be made available to the Deputy Commissioner of Taxation. 

Then there are acceptances attached to that.  What is important is this, that if your Honour has in front of you the documents related to M108 of 2001 ‑ ‑ ‑

HER HONOUR:   Well, I do not, because they seem to me to be discrete matters. 

MR FITZGIBBON:   In my submission, they are not.

HER HONOUR:   I understand your submission but I do not understand where this is going.  I would have thought you would have spoken to the application that the proceedings be summarily dismissed or stayed.  I just do not understand where it is going.  You have two discrete actions and what one is looking for in these proceedings is to see whether they are properly based.

MR FITZGIBBON:   No, your Honour, it is not quite as simple as that.  You see, what I have in front of me under M108 of 2001 is an affidavit sworn on 30th day of January 2002 and filed in 108 by Finlaysons of Rigby Cooke Lawyers acting as their agents.  On page 4 of that affidavit, at paragraph 15, the liquidator swears in relation to an allegation under paragraph 12 in the statement of claim of M108.  It says this:

In paragraph 12 of the statement of claim the plaintiff alleges I have “acted under the instructions of the first three Defendants in M71 and their legal representatives, Ross Burton –

Mr Burton is in Court –

Stephen Linden, Genevieve Ebbeck and Iain Anderson, all of whom are officers of the Commonwealth –

And he says this:

At no time have I taken such instructions.  I have fulfilled my statutory office as liquidator of the Company at all times appropriately, in accordance with the Act and independently.  The allegation that I have been directed by others outside of the statutory provisions is untrue and scandalous.

Now, your Honour, that is the only copy I have unfortunately.

HER HONOUR:   Yes.  I just do not understand where this is going.

MR FITZGIBBON:   Well, it simply goes to the issue that the basis and the continued basis of actions taken by the liquidator have been on the basis that, in fact, at no time, as he says ‑ ‑ ‑

HER HONOUR:   I am looking at M71. 

MR FITZGIBBON:   Yes.

HER HONOUR:   Well, I daresay you will come to it.  What do you say the causes of action are?  I mean, that has to be addressed.

MR FITZGIBBON:   Yes.

HER HONOUR:   You also have to address the question whether the relief sought can be granted.  Now, I would have thought they were the – and assuming you satisfy me of those two matters, then there may be a question whether the pleading is adequate in any event.

MR FITZGIBBON:   Yes.  Your Honour, I believe it goes beyond that, of course.

HER HONOUR:   I am sure you do, but I just do not understand where you are going.

MR FITZGIBBON:   Yes.  Well, what I say is this, that that paragraph in that affidavit filed in this Court is clearly in complete conflict to the secret agreement ‑ ‑ ‑

HER HONOUR:   Well, I would not have said that it was in complete conflict at all.  As I read it, it is an indemnity agreement, provisions for consultation and so forth and so on, and an assertion in the agreement by Mr Carter that he will act according to his own duties.  But, anyway, I do not see what that has to do with the cause of action or the relief or the pleading in M71.

MR FITZGIBBON:   Your Honour, the answer, quite simply, is this, that is why my clients have chosen to, in fact, bring a motion in both matters to join ASIC to this matter.

HER HONOUR:   Have you served ASIC?

MR FITZGIBBON:   At this point in time, no, because we could not ‑ ‑ ‑

HER HONOUR:   Well, let us put that aside.  I am not going to join ASIC without notice to them.

MR FITZGIBBON:   Yes.  Your Honour, the reason for that was simple, we were not able ‑ ‑ ‑

HER HONOUR:   There may be nothing to join them to.

MR FITZGIBBON:   Yes.  By explanation – I do not want your Honour to think I have been lax on this but, of course, we could not serve until we had stamped copies and we have only obtained those, as I say, this morning.  Although, you will find in Mr Henke’s affidavit there is very clear evidence of contact in relation to this matter.  What I say, your Honour, is really this:  bottom line, the position has been taken at all times and my friend took it this morning.  He said it was nothing to do with the warrants with the ATO.  That clearly is not correct, not on the basis of that indemnity document.  That indemnity document is such that it links together the actions of the liquidator, his solicitors, as they clearly knew that in the preparation of this affidavit that, in fact, of course there was in existence the indemnity – what your Honour would call an indemnity document and what I say goes beyond that, indeed it goes into the area one could describe as a prima facie, an untrue statement by the liquidator in the face of this Court.  It is a matter that – I put it prima facie.

HER HONOUR:   What do you say is the cause of action that you are asserting that I can find in M71?  Now, Mr Fitzgibbon, you have been around quite long enough to know that you have to have a cause of action.

MR FITZGIBBON:   Yes.  The cause of action, your Honour, is that, that the indemnity document itself – and I go into this in my submissions – is, in fact ‑ ‑ ‑

HER HONOUR:   You have to see it in the statement of claim.

MR FITZGIBBON:   All right.  It is clearly, your Honour, an unlawful conspiracy – nothing more, nothing less, and that is the position that I take, your Honour.  I then, in the documents, your Honour, go beyond that ‑ ‑ ‑

HER HONOUR:   But what is the cause of action?  You still have not told me – you can tell me an unlawful conspiracy.  That does not exactly answer my question.  What is the cause of action?  You can put grand tags on things all you like but I need a cause of action.

MR FITZGIBBON:   Yes.

HER HONOUR:   You seem to have somehow or other linked it to proceedings under 75(v) which I do not understand.

MR FITZGIBBON:   Yes, I have because what we have here is this:  we have officers of the Commonwealth having entered into an agreement and such agreement, I say, is not lawful under the Corporations Act.  It is not lawful, indeed, under either the operative taxation – the 1936 Taxation Act or the subsequent Taxation Administration Acts.  That is 53, 78 and I think there is one of 97.  Nowhere is there permitted in the absence of the voting of supply by Parliament, and the Taxation Act itself deals specifically with that as a proposition – in the Taxation Administration Act 1953, under section 16, entitled “Payments out of Consolidated Revenue Fund”:

16(1)  Where the Commissioner is required or permitted to pay an amount to a person by or under a provision of a taxation law other than:

(a)  a general administration provision; or
(b)  a provision prescribed for the purposes of this paragraph;

the amount is payable out of the Consolidated Revenue Fund, which is appropriated accordingly.

And the argument that my clients have is there has not been no such, in fact, appropriation and, therefore, the agreement of itself is illegal.  The actions taken under the agreement, if that is what it be, are illegal and therefore there has been both illegal warrants issued, we say, at the instigation of the Australian Taxation Commissioner because, under that, of course, reading that document, is an issuing of – no, I will withdraw it.  I will put it in a different way.

What I say is, it is very clearly that that indemnity applies when the Commissioner’s instructions are followed.  The word “instruction” does not appear in the document, but I say that is the broad reading of the document.  I go further than that.  I say as a result of what I believe to be, prima facie, an untrue statement in that document, the affidavit of Mr Carter, who, after all, is the liquidator, under M108 at paragraph 15 in reply to paragraph 12 of the statement of claim.  So, he answers that by saying, “I never have”.

HER HONOUR:   Yes.  That is M108?

MR FITZGIBBON:   That is in 108.

HER HONOUR:   Okay.  What is the cause of action in M71?

MR FITZGIBBON:   It still remains the same cause of action.  It is an unlawful conspiracy.

HER HONOUR:   Unlawful conspiracy, that is not pleaded, is it?

MR FITZGIBBON:   Yes.

HER HONOUR:   What do you say, unlawful conspiracy to do what?  I mean, you are talking, presumably about a civil action?

MR FITZGIBBON:   No, I do not believe – I believe it goes beyond that but ‑ ‑ ‑

HER HONOUR:   Well, cause of action, Mr Fitzgibbon.

MR FITZGIBBON:   Yes.

HER HONOUR:   Upon what wrong do your clients claim to seek relief in this Court and what relief do they seek?

MR FITZGIBBON:   The relief they seek is, in fact – your Honour, just can I move back from relief and put it this way.  All the four parties are acting together outside both the Corporations Law, which, I might add, is the only basis on which the liquidator may act, and the second part of the cause of action is such that they have spent public moneys outside the provisions of the Taxation Act, in particular, outside the provisions of the Taxation Administration Act 1953, section 16.

I go beyond that and I say that the purpose – remember, your Honour, my clients have had to deal with a series of hearings and before your Honour you will see that there is, I think, four requests to keep the documents secret and one of the secret documents, of course, that we are relying on is that letter from Finlaysons attached to Mr Henke’s affidavit and, prima facie, we say that that document, of itself, is sufficient to cause the Court to consider that, in fact, there has been conduct which is – I will describe it as unlawful and probably illegal.

HER HONOUR:   I do not understand the difference between unlawful and illegal.

MR FITZGIBBON:   We can spend hours on that, I know, your Honour.

HER HONOUR:   Yes, but I still have not heard what wrong you say was done to your clients that is the subject of M71.  The Court does not having a roving commission.

MR FITZGIBBON:   No, I accept that, your Honour.  I am not suggesting a Royal Commission, although that may eventually emerge in another area.  What I am suggesting is this, that the two are interlinked to this extent, that clearly if this is an illegal agreement and ‑ ‑ ‑

HER HONOUR:   Mr Fitzgibbon, they were not linked when you brought them to this Court.  You brought separate proceedings.  You have separate statements of claims.  Now, you seemed, or somebody seemed to have something in his or her head when M71 was started and I just want to understand whether there is a cause of action in M71.

MR FITZGIBBON:   Yes.  What I tell your Honour is the interlinking, of course, comes in the actions which are the subject of the statement of claim.  In other words, the actions taken go back to the argument that these four parties are acting together outside the Corporations Law and therefore you have an illegal search, you have an illegal seizure, you have Mr Miller being held under – can I call it – he is not permitted, of course, to leave the country.  The answer to your Honour’s question is this:  at the time of filing 71 and 108 we did not have the secret agreement.  Indeed, we did not have it until last week.

Now, there is an addition to that, of course.  A number of other problems which I have alluded to, and I think it is important, there is in the evidence, and referred to in the affidavit of Mr Henke, a letter from the liquidator to Dr Francis Coningham.  It is exhibit ‑ ‑ ‑

HER HONOUR:   You have not taken me to that affidavit yet.

MR FITZGIBBON:   Yes, thank you.  For the purpose of that I do read that affidavit.  I am sorry, I should have ‑ ‑ ‑

HER HONOUR:   I thought that might have been the first step taken, but there you go.

MR FITZGIBBON:   Perhaps so.  I went too far too fast.  I wanted to lay the basis, your Honour, of why we say what we do.

HER HONOUR:   A lot of this is argumentative.  It is not proper affidavit material, Mr Fitzgibbon.

MR FITZGIBBON:   Yes.

HER HONOUR:   I have had occasion to speak to you before about the documents, however, I will read it.

MR SLATTERY:   Is your Honour reading the affidavit of Mr Henke?

HER HONOUR:   Yes.  Do you want to object?  It would just seem easier to read it, would it not?

MR SLATTERY:   I think it is, your Honour.

HER HONOUR:   Mr Fitzgibbon, this is the High Court of Australia, it is not the Court of Petty Sessions at Brewarrina.  I do not know if you know Brewarrina, but it is not the Court of Petty Sessions at Brewarrina and by and large we do expect a somewhat higher standard than is manifest in this affidavit to which you did not take me and I now understand why.  Is there anything in particular you wish to draw my attention to in this?

MR FITZGIBBON:   Just, your Honour, in relation to Dr Coningham, I raise the issue – I suppose one could describe it as an ancillary argument but, nevertheless, it is important – that on the basis of the exhibited letter by the liquidator one has a course of action here that on the face of it the liquidator has made an agreement with the Commissioner of Taxation.  He has completely ignored – there has never been a hearing, there has never been anything beyond, and certainly nothing of a public nature, and, in effect, on my instructions, Dr Francis Coningham is the largest creditor, a far larger creditor than the $70,000 said to be owed to the Taxation Commissioner, and it would seem on the evidence there are other potential ‑ ‑ ‑

HER HONOUR:   Dr Coningham is not a party to these proceedings.

MR FITZGIBBON:   No, true.

HER HONOUR:   I do not think you can ‑ ‑ ‑

MR FITZGIBBON:   I simply raise it on the basis that there are other creditors out there, quite clearly.

HER HONOUR:   Yes.  So, how does that bear on what is pleaded in the statement of claim and what do you say I should make of it?

MR FITZGIBBON:   Your Honour, my submission is the course of conduct here as between the liquidator and the ATO and then with the apparent approval of – no, I take that word out, “apparent” – the approval of the South Australian Supreme Court will have the effect of being a fraud on other creditors, because if your Honour goes to the last paragraph in this secret agreement, one finds that any moneys recovered will, in fact, go solely – “solely” is my word – to the Australian Taxation Office.  Now, I have also dealt with the issue of non‑compliance with the Corporations Act and I go further than that, but on the evidence established it seems to me that ‑ ‑ ‑

HER HONOUR:   I just do not follow were you are going, Mr Fitzgibbon.  Are you speaking to Mr Slattery’s notice of motion or are you speaking to your own?

MR FITZGIBBON:   No, your Honour.  I have probably crossed across into the second area but ‑ ‑ ‑

HER HONOUR:   Which second area?

MR FITZGIBBON:   The 108.  Well, two things, the application to join ASIC and, secondly, across to 108.

HER HONOUR:   Let us just start again.  You have not served ASIC?

MR FITZGIBBON:   No, we have not been able to.

HER HONOUR:   You have not been able to.

MR FITZGIBBON:   No, because we do not have stamped copies of the ‑ ‑ ‑

HER HONOUR:   Just wait a minute.

MR FITZGIBBON:   I am sorry.

HER HONOUR:   We are not even within cooee of the Magistrates Court at Brewarrina on the basis on which you are going.  What do you want to join ASIC to and do you have a document setting out what you claim against them?  No, you do not.  Mr Fitzgibbon, there are procedures.

MR FITZGIBBON:   What I say to your Honour is this ‑ ‑ ‑

HER HONOUR:   I mean, really.

MR FITZGIBBON:   Your Honour, the appropriate course may be – and my junior rightly suggests this – that I was going to consider asking your Honour to consolidate both actions but it may be more appropriate to ‑ ‑ ‑

HER HONOUR:   You have not asked for that.  You have asked for them to be heard jointly.  Now, whether or not the actions are heard jointly will depend on whether or not there are actions.  You see, you have not asked for them to be consolidated.  I do not know what you want to join ASIC to – well, on what basis you want to join ASIC, and I just do not understand what your submissions are directed to.

MR FITZGIBBON:   Your Honour, the secret agreement only emerged late last week and can I ‑ ‑ ‑

HER HONOUR:   Well, let us call it the indemnity agreement for a moment.

MR FITZGIBBON:   In which case, your Honour, it has not been possible to, in fact, seek to join ASIC.  So the instruction I have is to ask your Honour to kindly consider whether the matter might be adjourned to a further date in order that we may serve ASIC.  It is the functions – your Honour, one of the arguments is this ‑ ‑ ‑

HER HONOUR:   But I do not know what you are seeking to join them to.  You have an action which, as best I understand it, complains about search warrants, a prevention order of some sort – I do not know what it is called – and which seeks – let us go to your statement of claim.  The statement of claim.  Now, it says that:

they sought to pervert the course of justice before this Honourable Court.

Well, I mean, really.  I just do not understand what the cause of action is said to be.  I am not here to teach you law.  Let me go to the orders sought.  Let me start at the bottom, “The Plaintiffs seek damages”.  This is order 6.  For what?  Damages for what?  You do not just get damages at large.  You seek damages for what?

MR FITZGIBBON:   Yes, I take your Honour’s point.  What I believe may be the way of approaching the matter is this:  because of the emergence of that secret agreement and the fact that we have sought for at least 12 months to obtain that document.  The pleadings, of themselves, I agree, are not adequate and they do not really set out exactly what we seek, nor indeed does it place my friend on fair notice of what I say.

It may be appropriate, your Honour, subject to any costs order made, that your Honour may consider adjourning the matter and that would have served the purpose of, one, putting the documents in order and, two, serving formal documents on ASIC, because what we say is that the role of the liquidator is both outside the powers of the Corporations Act 2001 but it goes further than that. It shows, in my submission, that Mr Carter in fact is acting – may I use it this way – as a puppet of the ATO and, thirdly, relating to that, the position is such that we say that all of the actions stem from this secret agreement.

HER HONOUR:   I understand what you say but I do not understand you to be addressing your attention to the question whether M71, as is presently drawn, discloses any cause of action or any matter upon which this Court could give relief, as it is presently drawn.

MR FITZGIBBON:   As presently pleaded, no, your Honour.  I must agree with your Honour on that.

HER HONOUR:   Well, why do I not just strike it out?

MR FITZGIBBON:   Your Honour, no.  I would oppose that course, your Honour.

HER HONOUR:   If it does not disclose a cause of action and does not disclose any basis for relief of the kind you have sought, what else can I do but strike it out?

MR FITZGIBBON:   Your Honour, the problem is it is part of a series of actions undertaken by the parties, we say, here, and we say it is unlawful, as such.

HER HONOUR:   I know but ‑ ‑ ‑

MR FITZGIBBON:   Your Honour understands my argument.

HER HONOUR:   I understand that but ‑ ‑ ‑

MR FITZGIBBON:   I am pleased that – do not think I am arguing with your Honour on words.  What I am really saying is this that ‑ ‑ ‑

HER HONOUR:   I will tell you what I am prepared to do.  I am prepared to stand over your notice of motion to see if there is anything upon which it will operate.  But why do you not address yourself to Mr Slattery’s motion?

MR FITZGIBBON:   Yes.  Your Honour, the position I take as counsel is that I do seek that your Honour stand M78 down as well in order ‑ ‑ ‑

HER HONOUR:   M78?

MR FITZGIBBON:   I am sorry, M71.  Forgive me.  I ask that your Honour do adjourn it because I believe that properly pleaded it would give a cause of action.

HER HONOUR:   What about 108 – well, we have not looked at 108.

MR FITZGIBBON:   We technically have not looked at 108, as such, other than my friend’s reference to it and my reference, of course, to that crucial affidavit, or what I say is a crucial affidavit, but I am entirely in your Honour’s hands.

HER HONOUR:   No, you have sought an adjournment to replead, in essence.

MR FITZGIBBON:   Yes.

HER HONOUR:   What offer do you make with respect to costs?

MR FITZGIBBON:   Yes, I could not resist such an order.  I would be foolish to try.

HER HONOUR:   No, but is it – Mr Slattery, what do you – we are talking only M71, as to the adjournment application.

MR SLATTERY:   Your Honour, in the usual course, where there is a doubt arising on the face of the pleadings, one would ordinarily concede that if a party wished to replead to clarify those issues, then the ordinary discretion, that party should have that opportunity.  Your Honour would have to have confidence, however, that that is possible in these circumstances and that cannot actually ‑ ‑ ‑

HER HONOUR:   I am not confident that it cannot be, which is a different proposition, and, in particular ‑ ‑ ‑

MR SLATTERY:   It would have to be something brought within the original jurisdiction of this Court.

HER HONOUR:   No, do not worry about jurisdiction.  The minute you put your three clients in there as defendants we are within federal jurisdiction, are we not?  Whether it would stay in this Court is another matter, but the minute they are served – the minute they are named, really. 

MR SLATTERY:   Yes.

HER HONOUR:   It is not a question of jurisdiction, is it?

MR SLATTERY:   It is the question of the correct court.  Whether this matter should stay in this Court or go somewhere else is ‑ ‑ ‑

HER HONOUR:   That could be dealt with next, yes.

MR SLATTERY:   Yes.  But, your Honour, there has to be something.  If there is a light at the end of the tunnel, it has to be in respect of something.  I accept what your Honour has said to me, that it is possible that someone might go away with this action and come back with a completely new action.  It seems to me that is the only way in which this could be saved, otherwise it is a hopeless course.

HER HONOUR:   I am just not satisfied that it could not be pleaded, in which event ‑ ‑ ‑

MR SLATTERY:   Your Honour, I would only be repeating myself to say why it was that it could not be and your Honour would quite properly form

another view and, therefore, I do not think I can address that any further.  We formally oppose it but we understand why your Honour would be against us on that point.

HER HONOUR:   Yes, thank you.  Well, this is only M71 at this stage now.

MR SLATTERY:   Yes.  We would seek ‑ ‑ ‑

HER HONOUR:   Costs.

MR SLATTERY:    ‑ ‑ ‑ punitive cost orders, your Honour, in this matter, bearing in mind ‑ ‑ ‑

HER HONOUR:   Well, that will be at the end of the day, but certainly, you will have your costs of today and I will order that those costs be paid as a condition of repleading.

MR SLATTERY:   Yes, and we would seek those costs on an indemnity basis, your Honour.

HER HONOUR:   Whether or not you get costs on an indemnity basis depends at the end of the day but, certainly, I would order to pay today’s costs and that the costs be taxed and paid as a condition of repleading, if leave be granted to replead.

MR SLATTERY:   Yes, your Honour.  Would your Honour anticipate that you would see the next version before you would give that leave?

HER HONOUR:   Well, they will have to make an application to amend.

MR SLATTERY:   Yes.

HER HONOUR:   That is an application that has to be ‑ ‑ ‑

MR SLATTERY:   Yes.

HER HONOUR:   I would also be prepared to direct that no further step be taken in these proceedings until an application to amend is taken out.  Is that to your satisfaction?

MR SLATTERY:   Thank you, your Honour.

HER HONOUR:   Well, now, do you understand?  You do not understand?

MR FITZGIBBON:   Yes, I understand, your Honour, I do not offer any opposition to that.

HER HONOUR:   Well, the costs will be taxed and paid as a condition of the filing of any further pleading in this matter.

MR FITZGIBBON:   Thank you.

HER HONOUR:   You will have to make a proper application to amend your pleadings, annexing a statement of claim which conforms with the standard practices of procedures of this Court with respect to pleadings.  Until that is done, I order that no further step be taken in this action by the plaintiffs.  I would allow liberty to the defendants, however, to apply on 7 days notice, and I would certify for the attendance of counsel.  They are the orders in M71, but that leaves M108.

MR FITZGIBBON:   Yes.

HER HONOUR:   Do you want to do the same thing in M108?

MR FITZGIBBON:   Your Honour, I would give consideration to consolidating the actions as such.

HER HONOUR:   We will wait and see what ‑ ‑ ‑

MR FITZGIBBON:   Wait and see what emerges, yes.  So, I do make the same application, your Honour, thank you.

MR MILLER:    I would have the same submissions, your Honour.

HER HONOUR:   Yes.  I have not heard you yet, Mr Miller, I am sorry.

MR MILLER:   Your Honour, the fourth defendant supports the application filed by the first three defendants.  He has filed a separate application dated ‑ ‑ ‑

HER HONOUR:   That is in the second matter?  In the M108?

MR MILLER:   No, in M71, your Honour.

HER HONOUR:   I have made all those orders without hearing you.

MR MILLER:   I do not really have any great submissions.  There is a one‑page document filed stating that the fourth defendant adopts the whole of the submissions filed on behalf of the first, second and third defendants. 

HER HONOUR:   But you have a more significant role in the M108 matter, have you not?

MR MILLER:   Yes, M108 has totally different defendants, your Honour, and it may be easier to – for instance, the taxation officials are not defendants in M108.

HER HONOUR:   That is right. 

MR MILLER:   It is probably more appropriate to call that on separately.

HER HONOUR:   No.  Well, I have now called on M108, sorry.

MR MILLER:   I was actually just addressing you in relation to M71, your Honour.  I would inquire if your Honour would make an order formally striking out the statement of claim which is the basis of the current application of the defendants in M71.

HER HONOUR:   But Mr Fitzgibbon has asked for an adjournment to enable a repleading.  You oppose that?

MR MILLER:   No.  If that is your Honour’s orders, that is fine, thank you.

HER HONOUR:   Yes, thank you.  They are the orders in M71.  We will now deal with M108.  Perhaps it would be safer if we call it separately then.

AT 11.29 AM THE MATTER WAS ADJOURNED

UPON RESUMING AT 11.57 AM:

MR SLATTERY:   Your Honour has, I think, made an order for costs to be taxed ‑ ‑ ‑

HER HONOUR:   Or agreed, I will say.

MR SLATTERY:   Yes.  Could I ask for that to be costs of action because all of the costs – from what we anticipate and what we have heard, everything is going to be wasted until today.

HER HONOUR:   I think that is right.  Do you need me to remake those orders?

MR SLATTERY:   As long as it is on the transcript, your Honour, I think that is all that is necessary.

HER HONOUR:   Yes, very well.  In M71, I will note that the order will be the costs of the action and of the notice of motion to be taxed and/or agreed and paid before repleading occurs.

Very well, the Court will now adjourn.

AT 11.58 AM THE MATTER WAS ADJOURNED