Nugawela and Commissioner of Taxation (Taxation)
[2021] AATA 1636
•8 June 2021
Nugawela and Commissioner of Taxation (Taxation) [2021] AATA 1636 (8 June 2021)
Division:TAXATION AND COMMERCIAL DIVISION
File Numbers: 2016/0648, 2016/0649, 2017/3323, 2017/3324, 2017/3325, 2017/3326
Re:Patrick Allan Nugawela
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:Deputy President Boyle
Date:8 June 2021
Place:Perth
(a)The Respondent’s application for dismissal of the applications for review in these proceedings is not to be held in abeyance pending the outcome of WAD 528/2017; and
(b)The applications for review the subject of these proceedings are dismissed pursuant to s 42B(1) of the Administrative Appeals Tribunal Act 1975 (Cth).
...[SGD]..................................................................
Deputy President Boyle
CATCHWORDS
PRACTICE AND PROCEDURE – application for dismissal of proceedings under s 42B of the AAT Act – decision of the AAT set aside and remitted for further consideration – matter remitted to the Tribunal to consider a “limited question” – whether a determination of the application for dismissal should be held in abeyance pending the outcome of the Applicant’s challenge to Trustee’s abandonment of proceeding – Bankruptcy Act s 60 – whether Applicant’s applications for review should be dismissed – Applicant has failed to advance the Federal Court proceedings for over three years – Tribunal’s objective under ss 2A and 33(1) of the AAT Act – expeditious procedure of Tribunal – application for dismissal should not be held in abeyance – applications for review dismissed
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) – ss 2A, 18B, 33, 33(1), 40(1)(c), 42B, 42B(1)
Bankruptcy Act 1966 (Cth) ss 54(1), s 60, 60(2), 60(3)
Crimes Act 1914 (Cth) – s 19B
Taxation Administration Act 1953 (Cth) – pt IVC
CASES
Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
Haset Sali v SPC Ltd (1993) 116 ALR 625
Meriton Apartments Pty Ltd v Industrial Court of New South Wales and Another (2008) 171 FCR 380
Minister for Immigration and Citizenship v Li &Anor (2013) 249 CLR 332
Nugawela and Commissioner of Taxation [2018] AATA 979
Nugawela v Commissioner of Taxation [2018] FCA 1458
Nugawela v Commissioner of Taxation [2019] FCA 512
Nugawela v Commissioner of Taxation [2019] FCAFC 206
Nugawela v Commissioner of Taxation (No 4) [2020] FCA 1128
SECONDARY MATERIALS
Administrative Appeals Tribunal, ‘General Practice Direction’ (28 February 2019) – paras 4.38, 4.39, 4.40, 4.41, 4.42, 4.43
REASONS FOR DECISION
Deputy President Boyle
8 June 2021
BACKGROUND
In the six applications the subject of these proceedings, the Applicant seeks review of decisions of the Respondent relating to the Applicant’s tax liability for the years ended 30 June 2005 to 30 June 2010.
The background to the issuing of the assessments by the Respondent for the years ended 30 June 2005 to 30 June 2010, the objections to those assessments and the objection decisions made in respect of those objections, are set out in the Tribunal’s decision in Nugawela and Commissioner of Taxation[1] (AAT No 1).
[1] [2018] AATA 979 (AAT No 1).
The proceedings in the Tribunal which lead up to the decision in AAT No 1 and what flowed from that decision, are relevantly set out Colvin J’s judgment in Nugawela v Commissioner of Taxation (No 4)[2] (Nugawela No 4). By that judgment, the decision in AAT No 1 was “set aside and the matter remitted to the Tribunal for further determination in light of the reasons of [that] Court”.[3] At [1]–[10] of Nugawela No 4 his Honour summarised the relevant events as follows:
[2] [2020] FCA 1128 (Nugawela No 4).
[3] Nugawela No 4 at [51].
1. Dr Patrick Nugawela is seeking to dispute six income tax assessments issued by the Commissioner of Taxation in respect of taxation years ending 30 June 2005 to 2010 (Assessments). In February 2016 and June 2017 he commenced proceedings in the Administrative Appeals Tribunal in which he sought to review the Assessments. However, in February 2017 on the application of the Commissioner a sequestration order was made in respect of his estate. The sequestration order was stayed until 9 August 2017 when the order was confirmed. An appeal against the making of the sequestration order was dismissed and special leave to appeal to the High Court was refused.
2. In the meantime, in September 2017, the Commissioner applied to the Tribunal to dismiss the applications to review the Assessments. The Commissioner's application was heard by the Tribunal on 18 December 2017. By the time of the hearing, the trustee had abandoned two of the applications and confirmed to the Tribunal that it was not his intention to proceed with the others.
3. Dr Nugawela objected to the trustee's approach. When the trustee first abandoned two of the applications in August 2017, Dr Nugawela commenced an application in this Court to review the trustee's decision to allow those applications to be abandoned. His position before the Tribunal included that he wished to challenge the decision by his trustee in bankruptcy not to proceed with the challenges to all of the Assessments. Those proceedings against the trustee are still on foot, but have been stayed until certain steps have been taken by Dr Nugawela in those proceedings.
4. Dr Nugawela also maintained before the Tribunal that the six applications should be adjourned until the end of his bankruptcy so that he could maintain the objections to the Assessments.
5. Therefore, the precise purpose of the request for an adjournment was somewhat unclear. It may have been to enable Dr Nugawela to proceed with his complaint against the trustee that the applications should not be abandoned. Alternatively, it may have been to enable Dr Nugawela to himself pursue the applications. If the latter, then it is difficult to see why it could have provided any basis for an adjournment. If Dr Nugawela had sufficient standing himself to pursue the applications then he could make that claim to the Tribunal. It is difficult to see how he may only acquire standing after the period of his bankruptcy has come to an end.
6. In any event, as to Dr Nugawela's standing, I have since determined that the Tribunal was correct to find, on the basis of the materials before the Tribunal, that Dr Nugawela lacked standing to challenge the Assessments himself: Nugawela v Commissioner of Taxation [2018] FCA 1458 at [17]‑[27]. Also, in the course of the present appeal hearing, Dr Nugawela confirmed that he did not seek to proceed with the six applications himself but rather sought to achieve a result whereby the trustee was required to pursue them. Therefore, for present purposes, it is the claim that there should be an adjournment of six applications pending Dr Nugawela's challenge to the trustee's approach that is relevant.
7. The main basis for the application by the Commissioner for the dismissal of the six applications was that Dr Nugawela lacked standing as a bankrupt to advance them.
8. The Tribunal upheld the application by the Commissioner and dismissed the application to review the assessments on the basis that they were frivolous or vexatious, had no reasonable prospects of success, were an abuse of process of the Tribunal or were all those things.
9. Dr Nugawela then brought an appeal by way of review under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). The appeal as originally framed raised a number of grounds. However, all grounds except one were struck out: Nugawela v Commissioner of Taxation [2018] FCA 1458; and Nugawela v Commissioner of Taxation (No 2) [2019] FCA 512 affirmed on appeal in Nugawela v Commissioner of Taxation [2019] FCAFC 206.
10. The remaining ground of appeal concerns whether the Tribunal erred in failing to consider a contention raised by Dr Nugawela before the Tribunal that the application for review should be adjourned or held in abeyance pending the determination of his application concerning the decision of the trustee to take no action in respect of the six applications. The appeal ground is expressed in the following terms:
Jurisdictional error in dismissing six applications when there was an appeal against a Trustee Review on foot in the Federal Court to determine the Trustee elections under s 60(3) of the Bankruptcy Act 1966 (Cth).
(Original emphasis.)
As his Honour sets out above, the Applicant was successful in the appeal against the decision in AAT No 1 on one ground only, namely, that the Tribunal failed to consider the Applicant’s argument that the Respondent’s applications for dismissal of the six applications should be held in abeyance. At [45] of Nugawela No 4 his Honour held:
Therefore, the appeal should be allowed and the matter remitted to the Tribunal for consideration of the limited question whether a determination of the application by the Commissioner should be held in abeyance pending the outcome of Dr Nugawela's challenge to the approach by his trustee.
THE ISSUES
While [45] of Colvin J’s judgment directs that the matter is remitted to the Tribunal for the consideration of the identified “limited question”, the Tribunal’s decision in AAT No 1 was set aside. Accordingly, there is no extant decision in relation to the Respondent’s applications for dismissal of the applications for review.
Accordingly, the consequential issue which must be determined by the Tribunal is, if it is found that the Respondent’s application to dismiss the six applications for review should not be held in abeyance pending the outcome of the Applicant's challenge to the approach by the Applicant’s trustee in bankruptcy (Trustee),[4] should the Respondent’s application to dismiss the six applications for review be allowed?
[4] The Tribunal assumes that the reference to the “approach by the Applicant’s trustee” to be the Trustee’s abandonment of the tribunal proceedings.
The situation in the present case is a little unusual in that the second, or consequential issue, has, in effect, been agitated and determined. Not only was it determined in the Respondent’s favour in AAT No 1, but the Tribunal’s decision to dismiss the six applications has been the subject of judicial consideration by Colvin J in Nugawela v Commissioner of Taxation[5] (Nugawela No 1), Nugawela v Commissioner of Taxation[6] (Nugawela No 2), Nugawela No 4 and by the Full Court of the Federal Court in Nugawela v Commissioner of Taxation[7] (Nugawela No 3). In all of these cases the Tribunal’s bases for dismissing the applications for review were found to be sound. The only issue in relation to which the Courts found there to be an error was the Tribunal’s failure to consider whether the application to dismiss the proceedings should have been “held in abeyance.”
[5] [2018] FCA 1458 (Nugawela No 1).
[6] [2019] FCA 512 (Nugawela No 2).
[7] [2019] FCAFC 206 (Nugawela No 3).
Accordingly, the issues to be determined by the Tribunal are:
Issue 1: Should determination of the Respondent’s applications for dismissal of the applications for review be held in abeyance pending the outcome of the Applicant's challenge to the approach by the Trustee?
Issue 2: If the answer to Issue 1 is no, should the applications for review be dismissed?
THE EVIDENCE
Following the remittal of this matter to the Tribunal, directions were made on 5 November 2020 for the parties and the Trustee to file evidence and submissions. The Tribunal further ordered that the Trustee was, no later than one week prior to the hearing, to file an affidavit advising of the status of the Federal Court proceedings by which the Applicant challenges the approach of the Trustee referred to at [45] of the judgment of Colvin J in Nugawela No 4 (See [4] above).
The following evidence was filed:
(a)Affidavit of Jessica Minh Tran sworn on 9 December 2020 stating that:
(i)She is an AGS lawyer and has carriage of this matter on behalf of the Respondent.
(ii)She has reviewed the Commonwealth Court Portal (CCP) and believes that on 9 October 2017 the Applicant, applied to the Federal Court of Australia (proceeding number WAD 528/2017) to review the decision of the Trustee, Gregory Bruce Dudley, to abandon these AAT proceedings.
(iii)Her review of the CCP in relation to WAD 528/2017 indicates that:
A.on 29 May 2018, Colvin J made orders to stay the proceedings until the Applicant complied with orders 1 and 2 of the orders dated 12 April 2018 and order 2 of the orders dated 2 May 2018;
B.on 6 February 2020 the Applicant filed an interlocutory application for injunctive relief;
C.on 11 February 2020 McKerracher J made orders dismissing the interlocutory application which sought to restrain a possible sale of property in Greenwood;
D.the Court has not made any orders since 11 February 2020; and
E.no documents have been filed since 12 February 2020.
(iv)On 13 October 2020 she sent a letter to the Trustee requesting information in relation to the Applicant’s Statement of affairs, WAD 528/2017, the administration of the Applicant's estate and other matters.
(v)On 21 October 2020 the Trustee responded to her letter of 13 October 2020 advising that:
A.the Applicant had not filed a statement of affairs with the Official Receiver and that the Commonwealth Director of Public Prosecutions (CDPP) had filed a prosecution against the Applicant for such failure;
B.since orders were made by Colvin J of 29 May 2018, no substantive correspondence had been received from the Applicant advising of the basis upon which the proceedings in WAD 528/2017 are taken against the Trustee;
C.the Applicant has generally failed to comply with the obligations of a bankrupt and that, as a result, the Trustee has little knowledge of the Applicant’s assets;
D.the known unsecured creditors of the Applicant’s estate total $3,211,571 and at that time the Trustee held cash of $2,044.08; and
E.the Trustee’s participation in the Tribunal proceedings and the other proceedings brought by the Applicant has been limited due to the Applicant’s failure to cooperate or provide information.
(vi)On 1 December 2020 Ms Tran sought an update from the Trustee.
(vii)On 1 December 2020 Ms Tran received an email from the Trustee which said that the CDPP had advised that the prosecution of the Applicant had been adjourned because the magistrate was sick;
(viii)Ms Tran requested a further update on 8 December 2020 and received an email from the Trustee on 9 December 2020. From that email she believes that on 8 December 2020 the Magistrates Court delivered a decision in the prosecution proceedings against the Applicant finding him guilty of failing to file a statement of affairs contrary to s 54(1) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) recording a non−conviction order under section 19B of the Crimes Act 1914 (Cth).
(b)Affidavit of the Trustee affirmed on 9 December 2020 stating that:
(i)He is not a party to the Tribunal proceedings and played no part in commencing the proceedings, that he has no intention of advancing the proceedings to a hearing and that he does not currently intend to play any part in the proceedings.
(ii)He attached two affidavits in WAD 528/2017 sworn by him, one on 14 December 2017 and the other on 15 February 2018.
(iii)In WAD 528/2017 that Applicant had, on 12 April 2018, been ordered to file an affidavit by 27 April 2018 setting out the facts on which his prayer for relief in that action is based.
(iv)The Trustee has made an application for security of costs in WAD 528/2017 and he believes that Colvin J wants to review the Applicant’s affidavit referred to in (iii) above before programming the application for security of costs.
(v)WAD 528/2017 has been dormant since 27 April 2018.
(c)Affidavit of Jessica Minh Tran sworn on 8 April 2021 which attached screenshots of the CCP for WAD 528/2017. The screenshots indicate that the last document filed in WAD 528/2017 was an affidavit of the Applicant filed on 12 February 2020. The Tribunal does not have a copy of that affidavit, but observes that the screenshots of the CCP show that on 6 February 2020 an interlocutory application and an affidavit of the Applicant were filed and that on 11 February 2020 the Commonwealth Bank of Australia filed an affidavit. On 11 February 2020 McKerracher J delivered a judgment on the interlocutory application and on 14 February 2020 published reasons for his judgment. By the interlocutory application, the Applicant had sought an injunction restraining the sale of a property in Greenwood by the Commonwealth Bank of Australia exercising its mortgagee’s powers of sale. The Tribunal assumes that these are the interlocutory proceedings referred to in Ms Tran’s affidavit sworn 9 December 2020 (see [10(a)(iii)] above).
There was no affidavit evidence filed by the Applicant subsequent to the directions made by the Tribunal on 5 November 2020.
SUBMISSSIONS
The Applicant
As noted at [11] above, the Applicant did not file any affidavit evidence following the directions issued on 5 November 2020. He did, however, file documents, variously headed, which would most appropriately be described as submissions. These were as follows:
(a)Document headed “Statement to the Administrative Appeals Tribunal” received by the Tribunal on 9 December 2020. In that document the Applicant sets out what he sees as being the effect of Nugawela No 4 and says that his “position remains, unchanged” from his position in 2017, which the Tribunal takes to be his position at the time of the hearing of the Respondent’s applications for dismissal of the proceedings under s 42B of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act).
(b)A document headed “Further Statement to the Administrative Appeals Tribunal” received by the Tribunal on 1 February 2021. By that document the Applicant makes the following submissions:
(i)The Part IVC reviews were “stymied because the Commissioner prematurely initiated sequestration action…”.
(ii)The Tribunal changed the heading of the Part IVC proceedings to “Patrick Nugawela, Bankrupt v. Commissioner of Taxation, Respondent and immediately recognised the Trustee … as the applicant standing in my shoes.”
(iii)“The duet between the Commissioner and the trustee he nominated … commenced six months prior to sequestration”. The adjournments of the Tribunal applications were agreed between the Trustee and the Respondent without recourse to the Applicant.
(iv)When served with the Bankruptcy Act s 60 notice the Trustee “declined to do so” and directed the Applicant “to withdraw the notice”.
(v)When the Respondent made the applications for dismissal he went “directly to the designated ‘Trustee Applicant’” and served a s 60 notice and the Trustee “obediently acquiesced and chose to abandon the 6 Part IVC reviews”.
(vi)The Tribunal invited the Applicant to make submissions in respect of the dismissal applications notwithstanding that the Applicant had no standing, however, he was “not offered any clarification of [his] status in making these submissions nor any cautions of the implications or consequences in so doing”.
(vii)The Tribunal conflated the dismissal application with the Part IVC reviews by dismissing them as frivolous, vexatious or otherwise an abuse of process under s 42B of the AAT Act. He brought the applications in good faith.
(viii)His position and status in these proceedings has yet to be clarified. He is asked to respond as a “non-party”. “There is a very real prospect that the same decision would be brought as before, and I am not disposed to risk the finding a second time given that the commissioner continues to press, rather that withdraw its previous dismissal application”.
(c)On 12 April 2021 the Applicant filed with the Tribunal the Applicant’s submissions in WAD 134/2018 prior to the judgment in Nugawela No 4, and the transcript of a hearing before Kenneth Martin J in the Supreme Court of Western Australia on 19 August 2015 in the matter of Deputy Commissioner of Taxation v Patrick Allan Nugawela CIV 2686 of 2014. In a covering letter attached to the email by which those documents were filed, the Applicant advised:
I enclose for the benefit of the Tribunal a copy of my submission to the Federal Court and a copy of the transcript of the primary court’s hearing (Martin J, Supreme Court) in 2015.
I send my apologies for my inability to attend or participate in the hearing tomorrow because of the evident uncertainty of my standing. I request that this be noted in the judgment. In 2018, my apologies were not recorded and it was stated that the Tribunal tried to reach me, but was unsuccessful. There would be no point trying to reach me for the meeting because I am tendering my apologies for my absence.
It should be noted that Mr Dudley attended all directions hearings of the AAT to adjourn the matter, in accordance with the wishes of the Commissioner.
(d)On 13 April 2021 the Applicant filed with the Tribunal a copy of an email of that date which he had sent to the Respondent’s lawyer Ms Tran. This email repeats the allegations of collusion between the Trustee and the Respondent and asserts that the Respondent is blocking the hearing of the Part IVC issues. The Tribunal assumes that the Applicant’s references to Part IVC that appear throughout his submissions are references to Part IVC of the Taxation Administration Act 1953 (Cth).
The Respondent
In accordance with the directions referred to in [9] above, on 15 March 2021 the Respondent filed submissions. Those submissions are to the following effect:
(a)The Respondent cites [45] and the last sentence of [2] of Nugawela No 4 (see, respectively, [4] and [3] above).
(b)Notwithstanding ample time to do so, that Applicant has not progressed his action against the Trustee and the inference should be that he will not, or cannot, do so, or do so within a period that is reasonable.
Standing
(c)The Applicant, as a bankrupt, lacks standing to challenge the assessments the subject of these proceedings himself.[8] Leave to appeal decisions following from that conclusion were refused.[9]
[8] Citing Nugawela No 1 at [17]–[27].
[9] Citing NugawelaNo 3 at [27].
(d)The person who had standing to progress these proceedings was the Trustee.
(e)The approach on remittal is to receive into evidence the transcript from the earlier hearing, together with the evidence tendered at that hearing, and then to receive such further evidence as would provide an update for the events in the interim. The earlier evidence need not be recited again and may be adopted and reviewed for the purposes of determining the limited issue remitted.
Principles: Legislation
(f)Sections 60(2) and 60(3) of the Bankruptcy Act provide:
(2) An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action.
(3) If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action.
(g)Section 2A of the AAT Act provides for the Tribunal’s objective in its review:
In carrying out its functions, the Tribunal must pursue the objective of
providing a mechanism of review that:
(a)is accessible; and
(b)is fair, just, economical, informal and quick; and
(c)is proportionate to the importance and complexity of the matter; and
(d)promotes public trust and confidence in the decision-making of the Tribunal.
(h)Section 33 of the AAT Act relevantly provides for the procedure of the Tribunal:
(1) In a proceeding before the Tribunal:
…
(b)the proceeding shall be conducted with as little formality and technicality, and with as much expedition, as the requirements of this Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit; …
(i)Section 40(1)(c) of the AAT Act provides that for the purpose of reviewing a decision, the Tribunal may adjourn the proceeding from time to time.
(j)The Administrative Appeals Tribunal, ‘General Practice Direction’ (28 February 2019) (Tribunal General Practice Direction), made under s 18B of the AAT Act, provides some guidance on adjournments in paragraphs 4.38–4.43. In particular:
(i)paragraph 4.38 emphasises the requirement of “good reasons” to adjourn; and
(ii)paragraph 4.42 emphasises the Tribunal usually expects to “re-list the case as soon as possible”.
(k)The Tribunal has obligations to afford parties procedural fairness before final decisions.[10]
[10] Citing Minister for Immigration and Citizenship v Li &Anor (2013) 249 CLR 332 at [18] per French CJ.
(l)It is the apparent policy of ss 60(2) and 60(3) of the Bankruptcy Act to provide better certainty about the status of proceedings where a bankrupt is a party to existing proceedings.[11] The Trustee has abandoned or indicated an intention not to progress these AAT proceedings. It would appear contrary to the policy of the Bankruptcy Act to perpetuate the possibility of these Tribunal proceedings in the face of the Trustee’s abandonment or decision not to progress them.
[11] Citing Meriton Apartments Pty Ltd v Industrial Court of New South Wales and Another (2008) 171 FCR 380; [2008] FCAFC 172, at [197].
(m)If these Tribunal proceedings are to be perpetuated it can only be on the basis of an assessment of the strength of the challenge to the decision of the Trustee – being the strength of the case articulated in WAD 528/2017.
(n)These Tribunal proceedings cannot be held in a state of perpetual limbo when there has been no substantive progress with WAD 528/2017.
(o)The Applicant commenced WAD 528/2017 to review, among other things, the Trustee’s decision to abandon the present Tribunal proceedings. Since commencing WAD 528/2017 and, notwithstanding the apparent encouragement of the Federal Court to articulate his case, the Applicant has not provided any substantive information. WAD 528/2017 has now been on foot for 3 years and 5 months (at the time the submissions were filed). It has been stayed for 2 years and 10 months (the Tribunal notes that that is now over three years).
(p)The steps that the Applicant was required to take to progress WAD 528/2017 pursuant to the orders dated 12 April 2018 and 2 May 2018 were as follows:
(i)by 27 April 2018 file a chronological list of main events and circumstances to support the claims he seeks to advance in the proceedings with a verifying affidavit; and
(ii)by 22 May 2018 file and serve any affidavit explaining his failure to attend a hearing on 2 May 2018 and failure to comply with Court orders made on 12 April 2018.
(q)On 29 May 2018 Colvin J made orders to stay WAD 528/2017 until the Applicant complies with the orders in [13(p)] above. The Applicant has not filed the documents required by those orders.
(r)There is no evidence before the Tribunal which demonstrates that the Applicant has taken steps to progress WAD 528/2017, nor is there any explanation as to why he was not able to progress WAD 528/2017.
(s)There is no evidence on which to assess the strength of WAD 528/2017 or the time period in which it will be determined. The Tribunal is being asked to adjourn the proceedings without fixing any defined date for a hearing. There is no suggestion that if the present AAT proceedings are adjourned that the Applicant can “re-list the case as soon as possible” as required by the Tribunal General Practice Direction.
(t)The absence of information about the basis for WAD 528/2017 makes it impossible for the Tribunal to assess whether the review will be determined at any time in the near future, let alone whether it will be successful.
(u)The Tribunal heard argument at the hearing on 18 December 2017, and the Federal Court considered similar argument on appeal, that dismissing the applications was not a catastrophic prejudice to the Applicant. That view was based on the proposition that the Trustee, if required to do so by orders of the Federal Court after determination of WAD 528/2017, could seek leave to extend the time for the commencement of fresh applications. In that regard, Colvin J at [42] of Nugawela No 4 observed:
Plainly, there is prejudice in the sense that a trustee bringing proceedings if required to do so after a review of the trustee's approach in abandoning the proceedings, would face difficulties that would not arise if the applications were still on foot and had simply been held in abeyance pending the challenge by [the Applicant] to the trustee's approach to the assessments.
(v)The Trustee already faces those difficulties as he has expressly abandoned two applications and confirmed he had no intention of progressing the other applications.
(w)The Respondent refers to s 2A of the AAT Act and submits that it was made clear by the High Court of Australia that speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings.[12]
(x)To adjourn the proceedings without holding a belief that the proceedings will progress to a hearing is to perpetuate these proceedings without “good reason”. Adjourning with no fixed date, and no basis to expect a fixed date is likely in the future, is not an expeditious determination of the proceedings within the meaning of s 33(1) of the AAT Act. The failure to be in a position to list the proceedings for further hearing “as soon as possible” would appear to be contrary to the policy expressed in the Tribunal General Practice Direction as well as the principles of case management, efficient and cost effective administration of justice, and maintenance of public confidence in the judicial process. It is not in the public interest to stay Tribunal proceedings indefinitely.
(y)The absence of any indication as to when WAD 528/2017 will resolve and the fact that there has been no substantive progress with that action for a considerable period of time should lead the Tribunal to conclude that the Applicant cannot or will not conclude WAD 528/2017 such that these Tribunal proceedings can be determined. The Tribunal cannot have any confidence that the Applicant will progress WAD 528/2017 where there has been a delay of 2 years and 10 months (which is ongoing) arising out of his non-compliance with Colvin J’s orders dated 12 April 2018 and 2 May 2018.
(z)Even excluding the Respondent’s debt challenged in these proceedings, it is apparent that the Applicant’s estate’s value is overwhelmed by the amount owed to other unsecured creditors.
[12] Citing Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27(Aon) at [98].
THE HEARING
This matter was heard on 14 April 2021. The Respondent was represented by Mr C Slater instructed by the Australian Government Solicitor. There was no appearance by the Applicant (see [12(c)] above) or the Trustee. The Trustee’s legal representative advised the Tribunal before the hearing that he would be available by telephone if needed. In the end there was, in the Tribunal’s assessment, no need to hear from the Trustee. His position had been made clear in the documents filed (see [10(a)(v), 10(a)(viii) and 10(b)] above)
CONSIDERATION
As is apparent from the above, these proceedings have a long history. The most recent chapter in this matter is the judgment in Nugawela No 4 by which the decision of the Tribunal in AAT No 1 was set aside and the matter was remitted to the Tribunal for “further determination in light of the reasons of this Court” (see [3] above).
The Tribunal takes the direction in his Honour’s judgment for the Tribunal to make a further determination “in light of the reasons of this Court”, as primarily, a direction to the Tribunal to determine the issue identified in [45] of his Honour’s judgment, namely “… the limited question whether a determination of the application by the Commissioner should be held in abeyance pending the outcome of Dr Nugawela's challenge to the approach by his trustee” (see [4] above). It is that issue, and the consequential issue identified in [8] above, that this Tribunal now determines.
Issue 1: Should the determination of the applications by the Respondent be held in abeyance pending the outcome of the Applicant's challenge to the approach by the Trustee?
The issue to be determined by the Tribunal in these proceedings was clearly spelt out by his Honour in Nugawela No 4 at [45]).
With [45] of Nugawela No 4 in mind, on 5 November 2020 the Tribunal made directions for the filing of any further evidence and submissions, and also directed that:
By no earlier than two weeks and no later than one week prior to the hearing Mr Dudley to provide an affidavit advising of the status of the Federal Court proceedings by which Dr Nugawela challenges the approach of his trustee referred to at [45] of the judgement of Colvin J in Nugawela v Commissioner of Taxation (No 4) [2020] FCA 1128.
The Trustee did not file an affidavit in accordance with the direction made on 5 November 2020 (on 10 February 2021 the Tribunal received an email from the Trustee’s lawyer stating that, as the Trustee was not a party to the proceedings, he was not bound to provide the material directed). However, the affidavit of Ms Tran referred to in [10(c)] above provided the relevant advice as to the status of WAG 528/2017. The Applicant has not contested the accuracy of Ms Tran’s affidavit.
The Applicant has done nothing to advance WAD 528/2017 since the orders were made by Colvin J on 12 April 2018 (see [10(a)(iii)] above). Pursuant to the order made by Colvin J on 29 May 2018, WAD 528/2017 is stayed.[13] While there was an interlocutory application made by the Applicant in February 2020,[14] that did not form part of the substantive progression of WAD 528/2017 (see [10(c)] above).
[13] Nugawela No 4 at [3]; see para [3] above.
[14] An application by the Applicant for an injunction to restrain the sale of a property, which was dismissed by McKerracher J on 11 February 2020 with reasons published on 14 February 2020.
Not only has the Applicant failed to progress his claim against the Trustee in WAD 528/2017, he has, in breach of Colvin J’s order of 12 April 2018, failed to file an affidavit setting out the facts on which his prayer for relief in that action is based. This Tribunal has not been provided with a copy of the Applicant’s application in WAD 528/2017 or any of the documents which, according to the CCP have been filed in those proceedings.[15]
[15] Annexure JMT-8 to the affidavit of Ms Tran sworn 8 April 2021.
There is nothing before the Tribunal, certainly nothing presented by the Applicant, which would allow any assessment of the strength, or even the basis, of the Applicant’s case in WAD 528/2017. There is nothing before the Tribunal to even indicate whether the Applicant intends proceeding with WAD 528/2017, let alone when it is likely that that matter will be determined.
The submissions made by the Applicant in the documents identified in [12] above do not address the basis upon which the Applicant brings WAD 528/2017 or even if the Applicant intends proceeding with that matter. There is no explanation as to why the has failed to engage with those proceedings in any relevant way for over three years. It is not clear how the documents filed by the Applicant address the issues to be determined by this Tribunal as identified in Nugawela No 4. No explanation is provided by the Applicant as to how the documents that he has filed address the issues identified in Nugawela No 4, and he again chose not to appear at the hearing of the applications to explain his position. The Tribunal is left to review the documents that the Applicant has filed to glean some argument that goes to the issue of whether the Respondent’s applications for dismissal should be held in abeyance until WAD 528/2017 is determined and, presumably, if the answer to that question is no, whether the applications for review should be dismissed.
As best as the Tribunal can infer from the documents that the Applicant has filed, the Applicant’s argument appears to go more to the issue of whether the substantive applications, the applications for the review of the Respondent’s objection decisions, should be dismissed under s 42B of the AAT Act. This inference arises from the general thrust of the Applicant’s submissions, and more particularly the submissions identified in [12(b)(v), 12(b)(vii) and 12(b)(viii)], and the document identified in [12(c)] and [12(d)] above. It is also to be inferred from the fact that the Applicant appears not to have addressed the question identified in [45] of Nugawela No 4.
The arguments that the Applicant appears to raise in the document dated 1 February 2021 referred to in [12(b)] are difficult to follow, but are largely irrelevant to the present issues and not supported by evidence. In this document, as well as other documents filed by the Applicant, he complains of what he sees as some conspiracy, or as he puts it, a “duet” between the Respondent and the Trustee pursuant to which the Trustee acts at the direction of the Respondent or in the Respondent’s interests. There is no evidence to support that allegation and it is not borne out by the Trustee’s or the Respondent’s actions in the proceedings in the Tribunal. The Tribunal does not accept that the Respondent or the Trustee have acted inappropriately.
The submissions also seem to attempt to argue matters that, as the Tribunal understands, were dealt with in various actions taken to set aside the sequestration order. Arguments which appear to go to the appropriateness or legitimacy of actions taken by the Trustee or the Respondent which have resulted in the Applicant being bankrupt, with the legal consequences that ensue as a result, are misconceived and irrelevant to the matters to be considered by the Tribunal in these proceedings. Similar arguments were raised before Colvin J.[16] As his Honour noted at [50] of Nugawela No 4, those issues have been dealt with in other proceedings before other courts. The legal reality is that a sequestration order was made, the Applicant is a bankrupt and all of his efforts to change that have been exhausted.
[16] Nugawela No 4 at [15] and [16]; Applicant’s submissions in WAD 134/2018 referred to at para [12(c)] above.
Insofar as the Applicant takes issue with the characterisation of the applications for review as being frivolous, vexatious, having no reasonable prospects of success or otherwise being an abuse of process because he “brought the applications in good faith”, as Colvin J noted at [10] of Nugawela No 1, the six applications were found to be frivolous or vexatious “in a technical sense” for the purposes of s 42B(1) of the AAT Act. The fact that the Applicant may have lodged the Applications for review in the Tribunal in 2016 and 2017 in good faith is not relevant. The issue was whether, at the time of the decision in AAT No 1 the six applications, which had been deemed to be abandoned by the Trustee, were frivolous, vexatious or otherwise an abuse of process in a technical sense and therefore should be dismissed under s 42B(1) of the AAT Act based on the circumstances current at that time.
Similarly, the second issue for the Tribunal to consider is whether, in the current circumstances, the six applications for review (having been deemed to be abandoned and the Applicant being a bankrupt), are frivolous, vexatious, have no reasonable prospects of success or are otherwise an abuse of process for the purposes of s 42B of the AAT Act. Again, the Applicant’s intention or motivation at the time of filing the applications is not relevant.
The Applicant and the Respondent have, in effect, made submissions in the present application for adjournment and, potentially, dismissal of the Tribunal proceedings, from different perspectives. The Respondent’s submissions concentrate on the Applicant’s failure to take any action to advance WAD 528/2017 for over three years which, according to the Respondent, renders it inappropriate to hold the applications for dismissal of the Tribunal proceedings in abeyance pending the outcome of WAD 528/2017. That approach more closely reflects the question posed in [45] of Nugawela No 4.
The Applicant, on the other hand, seems to argue that not adjourning the applications for dismissal of the Tribunal proceedings and proceeding to determine the Respondent’s dismissal applications would frustrate the determination of the core or important issue which is the review of the Respondent’s objection decisions. The Applicant does not, however, identify the event which would bring any adjournment or period of abeyance to an end and, perhaps for that reason, does not address how, when or whether he will progress WAD 528/2017. The Applicant also does not proffer any discernible answer to the “limited question” identified in [45] of Nugawela No 4 which specifically asks whether the dismissal applications should be held in abeyance until resolution of the Applicant’s challenge to the Trustee’s decision to abandon the Tribunal proceedings, that is resolution of WAD 528/2017.
The Tribunal General Practice Direction relevantly provides as follows:
4.38We will not adjourn a hearing date unless there are good reasons to justify the adjournment…
…
4.42If we grant an adjournment, we will re-list the case as soon as possible…
Section 2A of the AAT Act (see [13(g)] above) requires the Tribunal to carry out its functions by providing mechanisms that are, amongst other things, fair, just, economical and quick, which are proportionate to the importance and complexity of the matter and which promote public trust and confidence in the decision-making of the Tribunal.
Section 33 of the AAT Act (see [13(h)] above) requires the Tribunal to act with as much expedition, as the requirements of the AAT Act and of every other relevant enactment and a proper consideration of the matters before the Tribunal permit.
What is clear to the Tribunal is that the Applicant has done nothing to advance WAD 528/2017 for over three years and has provided no explanation for not proceeding. In these circumstances, is it appropriate for the Tribunal to adjourn the Respondent’s applications for dismissal of the six applications pending finalisation of WAD 528/2017? Would such a course render justice, be fair or otherwise consistent with the Tribunal’s obligations under ss 2A and 33 of the AAT Act?
While he does not specifically say so, it could be taken that the Applicant is seeking an adjournment of the applications to dismiss the applications for review until his claims in WAD 528/2017 are resolved. The Applicant has provided no advice to the Tribunal upon what basis he makes the claims apparently the subject of WAD 528/2017 or when that matter is likely to be finalised. Not only has the Applicant not provided advice to the Tribunal as to the basis upon which he makes the claims in WAD 528/2017, he has not even provided that advice to the Federal Court notwithstanding an order made over three years ago that he do so. Further, he has provided no explanation as to why he has failed to advance WAD 528/2017 for over three years. It is clear to the Tribunal that the Applicant has either no intention or, for some reason, no ability to proceed with WAD 528/2017.
In these circumstances it is inappropriate to adjourn the Respondent’s applications pending the determination of WAD 528/2017. To adjourn the Respondent’s application for dismissal in these circumstances would be contrary to objects of the Tribunal as identified in ss 2A and 33(1) of the AAT Act. It would also be contrary to the High Court’s directive on the need for speed and efficiency in Aon at [98]. To do so would also be contrary to good case management principles.[17]
[17] Haset Sali v SPC Ltd [1993] HCA 47; (1993) 116 ALR 625; (1993) ALJR 841.
The first issue, the “limited question … remitted to the Tribunal for consideration” identified in [45] of Nugawela No 4 and identified as Issue 1 in [8] above, is answered in the negative. The Respondent’s applications to dismiss should not be held in abeyance pending the outcome of WAD 528/2017.
Issue 2: Should the Applicant’s applications for review be dismissed?
This question has already been answered. For the reasons set out in AAT No 1 the answer is yes. Those reasons were reviewed and found to be correct by Colvin J in Nugawela No 1, Nugawela No 2 and Nugawela No 4, and by the Full Court in Nugawela No 3.
In relation to the Tribunal’s findings in AAT No 1 as to the Applicant’s standing to maintain the applications for review, in Nugawela No 1 Colvin J found:
19.In reaching its conclusions as to standing, the Tribunal relied upon the decision in Robertson Jnr v Deputy Commissioner of Taxation [2004] FCAFC 46; (2004) 137 FCR 513 which applied the decisions in Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124 and McCallum v Federal Commissioner of Taxation [1997] FCA 533; (1997) 75 FCR 458…
…
27.The Tribunal was correct to find that Dr Nugawela lacked standing to proceed with his applications for review. The same authorities as those relied upon by the Tribunal in reaching that conclusion demonstrate that he has no standing to appeal the dismissal of the applications insofar as that decision concerned his ability to advance the applications.
Subsequently, in Nugawela No 2, Colvin J found:
2.… I found that to the extent that Dr Nugawela seeks to challenge those aspects of the decision by the Tribunal that concern taxation liabilities provable in his bankruptcy, and are not of a character that they may affect his ongoing tax position, that he lacks standing to raise the matters identified in his amended notice of appeal, which is dated 7 May 2018.
The Full Court in Nugawela No 3 described the effect of Nugawela No 1 and Nugawela No2 as follows:
5.On 9 April 2018, Dr Nugawela appealed the Tribunal’s decision under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). On 26 September 2018, the primary judge dismissed the Commissioner’s application for summary dismissal of the appeal for want of competency: Nugawela v Commissioner of Taxation [2018] FCA 1458 (Nugawela (No 1)). In Nugawela (No 1), the primary judge explained:
(1) Dr Nugawela lacked standing to progress the Tribunal applications and had no standing to appeal their dismissal insofar as that decision concerned his ability to advance the Tribunal applications. The Commissioner’s application for summary dismissal would have been upheld, but for one aspect of the appeal raised by one ground.
(2) The appeal ground which survived raised the argument that the Tribunal should have adjourned the Tribunal applications, or held them in abeyance, because Dr Nugawela’s application in this Court to review the decision of the trustee to abandon the Tribunal applications was still pending. The primary judge in Nugawela (No 1) concluded that such an argument could not be said to lack merit and therefore declined to summarily dismiss the proceedings.
(3) Directions should be made in a case management hearing to consider which grounds of appeal should be struck out.
6.No steps were taken by Dr Nugawela to progress his appeal before the primary judge or amend any grounds. The primary judge therefore recalled the parties for a case management hearing listed for 10 April 2019. Consistent with the reasons given in Nugawela (No 1), the primary judge struck out the grounds of appeal with the exception of that ground which challenged the refusal of the application to adjourn so as to preserve the Tribunal applications pending the review in this Court of the decision of the trustee to abandon the Tribunal applications (the adjournment ground). His Honour struck out those parts of the appeal where Dr Nugawela lacked competence, delivering reasons in Nugawela (No 2).
(Original emphasis.)
At [25] of Nugawela No 3, the Full Court noted that the Applicant:
… accepted, as he must on authority, that in respect of pursuit of challenges to those objections, he lacked standing.
The Full Court dismissed the Applicant’s appeal against Colvin J striking out the Applicant’s grounds of appeal in the Federal Court relating to the Tribunal’s dismissal of the applications for review in AAT No 1 on all but the “limited question” identified in [45] of Nugawela 4 (see [4] above). In other words, the grounds of appeal relating to the Tribunal’s dismissal of the applications for review under s 42B of the AAT Act were found to have been property struck out.
As noted above, the issue of whether the six applications for review should be dismissed under s 42B has been determined, initially in AAT No 1. The bases of that determination of the Respondent’s application to dismiss the applications were found to be correct in Nugawela No 1, Nugawela No 2 and Nugawela No 4 and confirmed to be correct by the Full Court in Nugawela No 3.
Accordingly, having found that it is not appropriate to adjourn the Respondent’s application to dismiss the applications for review or, to use the language of [45] of Nugawela No 4, to hold that application in abeyance, the Tribunal finds, as it found in AAT No 1, for the same reasons as in AAT No 1, that the applications for review should be dismissed under s 42B of the AAT Act.
DECISION
(a)The Respondent’s application for dismissal of the applications for review in these proceedings is not to be held in abeyance pending the outcome of WAD 528/2017; and
(b)The applications for review the subject of these proceedings are dismissed pursuant to s 42B(1) of the AAT Act.
I certify that the preceding 45 (forty-five) paragraphs are a true copy of the reasons for the decision herein of Deputy President Boyle
...[SGD].....................................................................
Associate
Dated: 8 June 2021
Date of hearing: 14 April 2021 Applicant: No appearance Counsel for the Respondent: Mr C Slater Solicitors for the Respondent: Australian Government Solicitor
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