Neffati and Inspector-General in Bankruptcy
[2016] AATA 941
•25 November 2016
Neffati and Inspector-General in Bankruptcy [2016] AATA 941 (25 November 2016)
Division
TAXATION & COMMERCIAL DIVISION
File Number
2016/2868
Re
Moncef Neffati
APPLICANT
And
Inspector-General in Bankruptcy
RESPONDENT
DECISION
Tribunal Senior Member J F Toohey
Date 25 November 2016 Place Sydney For the reasons set out in this decision, the answer to the preliminary question is “No”.
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Senior Member J F Toohey
CATCHWORDS
PRACTICE AND PROCEDURE – jurisdiction – bankruptcy – decision refusing to review trustees’ objection to discharge – scope of Tribunal’s power on review – powers and discretions conferred on the decision maker – whether in setting aside and substituting a decision the Tribunal can conduct review of the trustees’ decision – Tribunal has jurisdiction to review decision not to conduct a review – no jurisdiction to conduct the review
LEGISLATION
Administrative Appeals Tribunal Act 1975, ss 2A, 25(1), 43(1)
Bankruptcy Act 1966, ss 149A, 149B, 149K, 149N, 149Q
CASES
Lavin and Inspector-General in Bankruptcy [2016] AATA 798
MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154
Phillips and Inspector-General in Bankruptcy [2012] AATA 788
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355Woodman and Inspector-General in Bankruptcy [1996] AATA 115
SECONDARY MATERIALS
Explanatory Memorandum, Bankruptcy Legislation Amendment Bill 2002 (Cth)
REASONS FOR DECISION
Senior Member J F Toohey
25 November 2016
Background
A preliminary question has arisen in an application for review of a decision by the respondent under the Bankruptcy Act 1966. The question concerns the scope of Tribunal’s power, in particular when setting aside a decision under review and making a decision in substitution for that decision.
In February 2013, the applicant became bankrupt on a Debtor’s Petition and a trustee of his estate was appointed. In October 2015, joint trustees were appointed.
On 12 January 2016, the trustees filed a notice under s 149B(1) of the Bankruptcy Act 1966 objecting to the applicant’s discharge. The effect of such notice, unless it is cancelled or withdrawn, is to extend the period of bankruptcy: s 149A(1). In the applicant’s case, the effect was to extend the period by five years to eight years.
By s 149K(1) of the Bankruptcy Act 1966, the respondent may review a trustee’s decision to file a notice of objection on his or her own initiative, or if requested by a bankrupt for reasons that appear sufficient to justify such a review.
On 11 March 2016, the applicant requested the respondent to review the trustees’ decision to file the notice of objection.
Section 149K(5) provides:
Within 60 days after the request is received, the [respondent] must:
(a)decide whether to review the decision; and
(b)if the [respondent] decides to review the decision – make his or her decision on the review.
On 10 May 2016, the respondent decided to refuse to review the decision.
The application for Tribunal review
Section 149Q of the Bankruptcy Act 1966 provides:
An application may be made to the Administrative Appeals Tribunal for the review of:
(a)a decision of the Inspector-General on the review of a decision of the trustee to file a notice of objection; or
(b)a decision of the Inspector-General refusing a request to review a decision of the trustee to file a notice of objection.
On 31 May 2016, the applicant sought review by the Tribunal of the respondent’s decision.
The preliminary question
There is no dispute that the subject of the application now before the Tribunal is the respondent’s decision not to review the trustees’ decision. There is no dispute that the Tribunal has jurisdiction to review that decision (or that it would have jurisdiction to review the decision had it been to conduct a review).
The preliminary question concerns the scope of the Tribunal’s power when reviewing the decision. As framed by the parties, the question is:
Where a bankrupt has requested the Inspector-General in Bankruptcy (“the IG”) to review a decision of a trustee in bankruptcy to file a notice of objection to discharge (“the trustee’s objection”), within the meaning of section 149K(1)(b) of the Bankruptcy Act 1966 (Cth) (“the Act”), but the IG has decided not to review the trustee’s decision within the meaning of section 149K(5) of the Act (“the IG’s decision”), if the Tribunal determines to review that decision and set it aside does the Tribunal have the jurisdiction and power on the hearing of the application to conduct a review of the trustee’s objection?
For the reasons that follow, the answer to that question is “No”.
The Tribunal’s decision on review
An enactment may provide that applications may be made to the Tribunal for review of decisions made in the exercise of powers conferred by that enactment or by another enactment having effect under that enactment: s 25(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act).
Section 43(1) of the AAT Act provides:
For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing:
(a)affirming the decision under review;
(b)varying the decision under review; or
(c)setting aside the decision under review and:
(i) making a decision in substitution for the decision so set aside; or
(ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.
The applicant’s contentions can be summarised as follows:
(i)the Tribunal has all the powers and discretions conferred on the respondent in making the decision under review;
(ii)as it was within the respondent’s power to decide to review the trustees’ decision, the Tribunal also has that power;
(iii)if (as the applicant says it should) the Tribunal sets aside the decision under review, it can, and should, proceed to review the trustees’ decision;
(iv)on reviewing the trustees’ decision, the Tribunal can substitute its own decision upholding or cancelling the trustees’ decision.
The applicant submits that, not only is this reading of s 43(1) of the AAT Act correct in law, it would achieve “the overriding purpose of the entire review process and minimise delay and inconvenience to the parties”.
Consideration
In deciding whether or not to conduct a review, the question for the respondent is, essentially, whether there appear to be reasons “sufficient to justify such a review”: s 149K(1). Only if the respondent determines there are sufficient reasons, does he or she proceed to conduct the review in which case different considerations arise. If satisfied of any of the matters in s 149N(1), the respondent must cancel the objection (and must not cancel the objection if the provisions of s 149N(1A) apply).
The distinct decisions available to the respondent, which in turn are reviewable by the Tribunal, are reflected in s 149Q which provides for an application for review of one or the other.
In this case, the respondent determined there were not sufficient reasons to justify a review. That is the decision of which review by the Tribunal is sought, and which the Tribunal has power to review. The respondent decided not to conduct a review and did not make a decision under s 149N of the Bankruptcy Act 1966.
Although the Tribunal is commonly said to “stand in the shoes” of the original decision-maker, its power remains one of review. It has “all the powers and discretions conferred on the person who made the decision” (emphasis added). The fact that the respondent could have decided to conduct a review does not give the Tribunal power to do so.
The applicant submits that the Tribunal should come to the same conclusion as was reached in Woodman and Inspector-General in Bankruptcy [1996] AATA 115. In that case, the Tribunal decided there were sufficient reasons to justify it reviewing the trustee’s decision to file the notice of objection. It set aside the Inspector-General’s decision to refuse a request for review and substituted a decision cancelling the notice of objection to discharge.
At the time of the decision in Woodman, s 149Q provided:
An application may be made to the Administrative Appeals Tribunal for the review of:
(a)a decision of the trustee or Official Receiver to file a notice of objection; or
(b)a decision of the Inspector-General on the review of such a decision; or
(c)a decision of the Inspector-General refusing a request to review an objection.
Section 149Q allowed application direct to the Tribunal for review of a trustee’s decision. It was amended with effect from 5 May 2003 to remove that right of review.
According to the Explanatory Memorandum to the Bankruptcy Legislation Amendment Bill 2002, it would make a number of “significant changes” to bankruptcy law and would “address concerns at the bankruptcy system is biased towards the debtor”. Its objects included to “strengthen the objection-to-discharge provisions of the Bankruptcy Act 1966 by making it easier for trustees to lodge objections to a person’s discharge from bankruptcy and harder for bankrupts to sustain challenges to objections” and to “abolish a bankrupt’s direct access to an external tribunal for review of trustee decisions, eg, those about income contributions and objections to discharge”.
The removal of the right to apply direct to the Tribunal for review of a trustee’s decision to file a notice of objection was one of the objects of the amending legislation. If the interpretation contended for by the applicant is correct, it would in effect apply the legislation as it existed at the time of Woodman. Moreover, it would render the respondent’s power to decide not to review a trustee’s decision pointless.
In Lavin and Inspector General in Bankruptcy [2016] AATA 798, a preliminary question in what were, for all practical purposes, identical terms, arose. The applicant sought review by the Inspector-General in Bankruptcy of a decision by her trustee concerning her annual income. Section 139ZF of the Bankruptcy Act 1966 relevantly mirrored s 149Q as it now stands.
The Tribunal in Lavin rejected the applicant’s argument that it had the power to review the trustee’s decision regarding an assessment. It concluded it did not have the power, if it set aside the Inspector-General’s decision, to refuse to conduct a review, to exercise the power of the Inspector-General to review the trustee’s decision. In my view, that is the correct approach consistent with s 43(1) of the AAT Act.
The applicant has also referred to the decision of the Deputy President Forgie in Phillips and Inspector-General in Bankruptcy [2012] AATA 788. The decision concerned the Tribunal’s powers when reviewing the Inspector-General’s decision on the review, and not a decision whether or not there should be a review.
It is not clear to me how the decision in Phillips assists the applicant in this case. If anything, it supports the respondent’s position. The Tribunal said:
163. Unlike many other enactments which give the Tribunal power to review the full scope of the decision made by the original decision-maker, s 149Q confers only those powers that are conferred on the Inspector-General under s 149N when reviewing a trustee’s decision to file a notice of objection. It does this by providing that an application may be made to the Tribunal for review of “a decision of the Inspector-General on the review of a decision of the trustee to file a notice of objection”. The decision of the Inspector-General is made under s 149K(5)(b) and must be made within the parameters set by s 149N. Therefore, so must the decision that the Tribunal makes on review. (emphasis added)
164. The power given to the Tribunal under s 149Q(b) to review the Inspector General’s decision refusing a request to review is not a decision she makes under section 149N. It is a decision the Inspector General makes under s 149K(5)(a) and her powers are not qualified by s 149N.
In this case, there has been no decision on the outcome of a review. Nothing in s 43(1) of the AAT Act gives the Tribunal power to make such a decision itself.
The applicant submits that the Tribunal, standing in the shoes of the decision-maker, has all of powers of the decision-maker, and the words in s 43(1)(c)(i) of the AAT Act ought not to be confined to the refusal decision; rather, in effect, they permit a decision at large. The applicant submits that this proposition finds support in the decision of the High Court in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. In that case, the Court said at 381:
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute [See Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 213, per Barwick CJ.]. The meaning of the provision must be determined “by reference to the language of the instrument viewed as a whole” [Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320, per Mason and Wilson JJ. See also South West Water Authority v Rumble’s [1985] AC 609 at 617, per Lord Scarman, “in the context of the legislation read as a whole”]. In Commissioner for Railways (NSW) v Agalianos [(1955) 92 CLR 390 at 397], Dixon CJ pointed out that “the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed”. Thus, the process of construction must always begin by examining the context of the provision that is being construed [Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590 at 597; Minister for Lands (NSW) v Jeremias (1917) 23 CLR 322 at 332; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312, per Gibbs CJ; at 315, per Mason J; at 321, per Deane J.]
The applicant has drawn the Tribunal’s attention to the recent decision of the Full Federal Court in MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154 which concerned an application to set aside a statutory demand under s 459G of the Corporations Act 2001. Rares J (who was in the minority but not on this point) cited the passage above and said the construction of the Act was to be approached consistently with them.
I do not read this passage as assisting the applicant. The language and purpose of all the provisions of the AAT Act, and s 43(1) in particular, are concerned with the Tribunal’s power to review a reviewable decision. To view the legislation “as a whole” in construing s 43(1)(c)(ii) is not to say the Tribunal can proceed to substitute a decision for one which has never been made.
The Tribunal must pursue the objective in s 2A of the AAT Act of providing a mechanism of review that is accessible, fair, just, economical, informal and quick, but whether it may be more convenient, more efficient, less costly or less time-consuming for the Tribunal to decide to review the trustees’ decision in this case is not to the point. The Tribunal cannot assume jurisdiction it does not have, it can only pursue the objectives in s 2A within the limits of its jurisdiction. It is not, as the applicant submits, “in the spirit of the review process” to review a decision if there is no power to do so.
Conclusion
For these reasons, the Tribunal’s power is to review the respondent’s decision to refuse to conduct a review. If, ultimately, the Tribunal determines there are sufficient reasons to justify a review, it would set aside the respondent’s decision, and it would fall to the respondent to determine the question again in accordance with s 149K(1).
The answer to the preliminary question is “No”.
I certify that the preceding 36 (thirty -six) paragraphs are a true copy of the reasons for the decision herein of Senior Member J F Toohey ........................[sgd]................................................
Associate
Dated 25 November 2016
Date of hearing 18 November 2016 Date final submissions received 22 November 2016 Counsel for the Applicant Mr J T Johnson Solicitors for the Applicant Blackstone Waterhouse Lawyers Counsel for the Respondent Mr S Golledge Solicitors for the Respondent Matthews Folbigg Pty Limited Solicitors
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