NQ Fitness Pty Ltd and Commissioner of Taxation (Taxation)

[2024] AATA 978

NQ Fitness Pty Ltd and Commissioner of Taxation (Taxation) [2024] AATA 978 (7 May 2024)

Division:SMALL BUSINESS TAXATION DIVISION

File Number(s):      2023/4955-6

Re:NQ Fitness Pty Ltd

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:7  May 2024

Place:Sydney

The application for reinstatement is refused.

................................[SGD]........................................

Deputy President Bernard J McCabe

Catchwords

PRACTICE AND PROCEDURE – reinstatement of application for review – where application dismissed for non-payment of prescribed fee – whether application for review dismissed in error – reinstatement refused.

Legislation

Administrative Appeals Tribunal Act 1975 (Cth)

Administrative Appeals Tribunal Regulations 2015 (Cth)

Cases

Goldie v Minister for Immigration and Multicultural Affairs [2002] FCAFC 367

Brehoi v Minister for Immigration and Multicultural Affairs [1999] FCA 772

REASONS FOR DECISION

Deputy President Bernard J McCabe

7 May 2024

1. NQ Fitness Pty Ltd has been involved in a long-running dispute with the Commissioner of Taxation over the payment of superannuation entitlements to its employees, and perhaps in relation to other matters. The company has commenced review proceedings on several occasions that relate (as I understand it) to various aspects of the dispute, but those proceedings have never made it to a final hearing.

2. These reasons deal with two applications for review lodged early in 2023. The applications were dismissed under s 69C of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) after the applicant failed to pay the application fees. The applicant has asked for those two applications to be reinstated.

3. The applicant asks the Tribunal to exercise the discretion in s 42A(10) of the AAT Act. That power is available where the proceedings in question were dismissed in error. The more generous discretion referred to in s 42A(9) is not available in a case like this: it is limited to situations described in ss 42A(8) and (8A). But there is a question over whether s 42A(10) is available where the dismissal occurred under s 69C.

4. After hearing from the parties at a reinstatement hearing on 22 November 2023, I began drafting my reasons but it occurred to me that the parties had not squarely addressed the question of whether s 42A(10) was available even if I was satisfied the dismissal was attended by error. My associate wrote to the parties and directed them to the observations of the Full Federal Court in Goldie v Minister for Immigration and Multicultural Affairs [2002] FCAFC 367 in this regard. I allowed each party time to make further submissions on the issue. That process took much longer than expected. While the Commissioner replied in a timely way, the applicant did not provide submissions. After numerous delays, the applicant was directed to provide the further submissions by 9 April 2024. The directions made clear the Tribunal would proceed to decide the matter without further reference to the parties after that date. The applicant’s submissions were not forthcoming.

5. There is a potentially difficult question over whether there was an error in the relevant sense in this case. Unfortunately for the applicant, the resolution of that question makes no difference to the outcome of the application for reinstatement. I am not satisfied the discretion to reinstate in s 42A(10) is available where the applications for review were dismissed under s 69C, even if that dismissal was attended by error. I explain my reasons below.

   The background

6. The applicant ceased trading in 2017. It remains under the control of its director, but the company was represented in these proceedings (and in all its dealings with the Commissioner and the Tribunal, I was told) by the director’s brother, Mr Kellahan.

7. The applications for review under consideration here have their genesis in audits completed in 2017 and 2020. The first audit led to the issue of superannuation guarantee charge assessments and amended SGC assessments in relation to the periods ended 31 March 2013 to 31 March 2017. The objections were allowed in part in December 2022. (I understand the delay in finalising the objection was at least partly attributable to the disruption brought by the Covid pandemic). The second audit related to the period ended 30 June 2017 to 31 December 2017. The objection was disallowed in January 2021.

8. The objection decisions conclude the applicant owes a substantial amount – around $400,000 – in respect of unpaid entitlements. The applicant also owes interest on the entitlements, administration fees and Part 7 penalties. There is also a component in respect of the general interest charge. I was told the total amount owed by the applicant is currently over $1 million.

9. The applications for review of both objection decisions were filed in the Tribunal on 6 July 2023. The applicant did not pay the applicable fees at the time of filing.

10. The applicant needed an extension of time to proceed in each matter because the proceedings were otherwise out of time. The Commissioner was informed and invited to consider whether he consented to the extensions of time. That consent was forthcoming in August 2023, and orders were made to that effect on 14 and 15 August 2023.

11. The invitation to the Commissioner to address the extension of time was unusual in this respect: ordinarily, the Tribunal would not take any step in the review until the fee was paid. That point was made to the applicant on 15 August when the Tribunal’s registry wrote to the applicant to confirm the application fee was due. The letter warned the Tribunal would not commence its review until the fee was paid. The letter also told the applicant what was involved in applying to pay a reduced fee of $100. After receiving information supplied by Mr Kellahan, the Tribunal wrote to the applicant again on 13 September 2023 to confirm the applicant was eligible to pay the reduced fee of $100, and that it had 14 days to do so. The letter went on to say:

    ·The Tribunal would not commence the review until the (reduced) fee was paid;

    ·The matter could be dismissed if the fee was not paid; and

    ·The fee could be paid by sending a cheque or money order, or by telephoning the registry on a ‘1-800’ number to provide credit card details.

12. Mr Kellahan wrote to the Tribunal on 28 September to ask for the phone number he needed to call to pay the application fee using his credit card. (It is not clear why he needed that information given the letter of 13 September included the ‘1-800’ number. But that is what he did.) The Tribunal Officer responsible for dealing with the Small Business Taxation Division replied on the same day. The Tribunal Officer provided their direct number so Mr Kellahan could call and deal with the outstanding fees.

13. At the reinstatement hearing, Mr Kellahan confirmed on oath that he remembered calling the number he was given by the officer on two occasions in the days that followed. To the best of his recollection – a recollection based on his contemporaneous diary notes that were delivered to the Tribunal – he called on 29 September and then again on 3 October to make the payment. He said the call rang out on each occasion.

14. There is no record of Mr Kellahan leaving a message or attempting to make contact by alternative means – for example, by sending a follow-up email. The phone system within the Tribunal’s registry is also programmed so that calls are ordinarily forwarded to a general number when there is no message service available. But he has sworn that he made the effort and says he cannot be held responsible for the failure to pay a fee when nobody answered the phone. I acknowledge there is at least a possibility that the Tribunal’s telephone system did not operate as intended so that the call was not directed or redirected appropriately.

15. In any event, the fee remained unpaid. The applications were dismissed on 5 October 2023 under s 69C. Notice of the dismissal was sent out that day. Mr Kellahan (coincidentally, he suggested) contacted the Tribunal on 5 October. He got through on this occasion and was told of the dismissal. He said he was ready to pay on that occasion as well, but the Tribunal officer told him it was no longer possible to accept payment because the matter had been dismissed.

16. The applicant applied for reinstatement of both proceedings, and the reinstatement hearing was held on 22 November 2023. I heard submissions and subsequently asked for clarification of the reach of s 42A(10), as I have explained.

    The power to dismiss

17. There is no question that proceedings may be dismissed under s 69C of the AAT Act in the event the fee is not paid within six weeks of the application being lodged: see Regulation 24 of the Administrative Appeals Tribunal Regulations 2015 (Cth). There is no dispute that the fee was not paid within that period, and that it remained unpaid at the time the dismissal order was made. The applicant was asked on several occasions to pay the fee and it was warned the proceedings might be dismissed if payment was not forthcoming. In particular, the applicant was told on 13 September (when the Tribunal wrote to advise the applicant it could pay a reduced fee) that the applicant had 14 days to pay. But Mr Kellahan only contacted the Tribunal on 28 September to ask for a phone number that had already been provided 15 days before. There can be no doubt the applicant did not attend to its obligation to make the payment in a timely way. The discretion to dismiss was enlivened in this case because the fee remained unpaid.

18. The applicant argued before me that the Tribunal was somehow estopped or precluded from exercising the discretion to dismiss because it had already effectively allowed extensions of time. If I understand the argument correctly, the applicant says it was lulled into the mistaken assumption that the Tribunal would not enforce the time limit in the regulations because – while issuing warnings about the consequences about non-payment and issuing deadlines – the Tribunal officer apparently remained open to accepting payment after the due date. That is unfair. The correspondence from the Tribunal made clear the matter would not proceed if the fee was not paid, and it confirmed the proceedings could be dismissed if the fee was not forthcoming. I accept the applicant had been pressing for a reduced fee, which might explain why the registry did not bring about the dismissal when the occasion to do so first arose. The fact the registry officers sought to facilitate the applicant belatedly complying with the rules is evidence of nothing more than their commitment to good customer service. There is no estoppel, not least because the evidence suggested the Tribunal clearly communicated the consequences that would follow if the fee was not paid.

19. I am more troubled by the claim that Mr Kellahan attempted to make a payment (albeit belatedly) but was unable to effectively do so because of communication difficulties. If the Tribunal proceeded to dismiss an application for non-payment of a fee without realising that fee had already been tendered (or a genuine attempt had been made to tender it), that might give rise to an argument that the application was dismissed in error as that expression has been interpreted in cases like Goldie. Of course, there may yet be a question of whether it would be appropriate to reinstate notwithstanding the error, assuming the power to do so was available.

    The power to reinstate

20. The Tribunal’s only power to order reinstatement of proceedings is found in s 42A of the AAT Act. The heading to that section refers to ‘Discontinuance, dismissal, reinstatement, etc of application’. The section identifies several different bases on which a matter be dismissed – most obviously, where:

    ·a party fails to appear at a listed event (s 42A(2));

    ·the Tribunal is satisfied the decision is unreviewable (s 42A(4)); or

    ·the Tribunal is satisfied the applicant failed within a reasonable time to comply with a direction or proceed with the application (s 42A(5)(a) and (b)).

21. The power to reinstate is also contained within that section but, as I have already pointed out, the power to reinstate is carefully defined. The power to reinstate in s 42A(9) “if it considers appropriate to do so” is only available in limited circumstances which do not arise here. The only other power of reinstatement is found in s 42A(10).

22. While s 42A is the only provision of the AAT Act which deals with reinstatement, it is not the only provision which empowers the Tribunal to dismiss without proceeding to a hearing. Section 69C is an example of another summary dismissal power. Section 42B also permits the Tribunal to summarily dismiss proceedings. (Section 42B creates a power to dismiss where the proceedings are frivolous or vexatious.) The language of the Full Federal Court in Brehoi v Minister for Immigration and Multicultural Affairs [1999] FCA 772 (at [24]) suggests on its face the power in s 42A(10) might only be available in dismissals that occurred under s 42A. The same point was made even more clearly in Goldie at [31] where Wilcox and Downes JJ referred to “…the fact that s.42A(10) only covers default dismissals under s42A, not dismissals after a hearing on the merits.”

23. The parties were unable to refer me to other authorities where this conclusion was central to the outcome of the application for reinstatement. While that is surprising, it tends to confirm there is no reason to venture beyond the plain language of s 42A. The section does not refer to dismissal under other provisions. There are good reasons of policy why the power to reinstate is limited: the administrative review process is expensive to maintain, and parties are expected to pursue their review rights deliberately. That policy is apparent in the Tribunal’s objective in s 2A.

    Conclusion

24. While I accept the applicant might have an argument that his dismissal was attended by error, there is no relevant power to reinstate. The application for reinstatement must fail.

25.     I certify that the preceding 24 (twenty-four) paragraphs are a true copy of the reasons for the decision herein of

26.      

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Associate

Dated:  7 May 2024

Date(s) of hearing:     19 March 2024

Representative for the Applicant: Drew Kellahan     

Solicitors for the Respondent: Morgan Stewart