Nugawela, Bankrupt and Commissioner of Taxation

The Administrative Appeals Tribunal (AAT) considered applications made by the Applicant to review objection decisions of the Commissioner of Taxation. The Commissioner sought the dismissal of these applications on the grounds that the Applicant was bankrupt, lacked standing to progress the applications, and would be unable to do so even after discharge from bankruptcy. The Applicant had failed to lodge income tax returns for several years, leading to default assessments and subsequent court proceedings where judgment was obtained against him. The Applicant subsequently lodged objections and applied to the AAT for a review of the objection decisions.

The primary legal issues before the Tribunal were whether the Applicant, as a bankrupt, had the legal standing to continue prosecuting the applications before the AAT, and whether the applications should be dismissed as frivolous, vexatious, or an abuse of process. The Tribunal also considered the effect of section 60(3) of the *Bankruptcy Act 1966* (Cth), which requires a trustee in bankruptcy to elect whether to progress or abandon proceedings commenced by a bankrupt.

The Tribunal reasoned that upon sequestration, a bankrupt is divested of their property and liability for provable debts, meaning they generally lack the legal interest or *locus standi* to appeal judgments or pursue proceedings that would affect the bankrupt estate. Citing High Court authority, the Tribunal held that a bankrupt's contingent interest in a surplus does not confer standing to sue or appeal to minimise liabilities. Furthermore, the Applicant's trustee in bankruptcy had confirmed that he would not elect to proceed with the applications, and had not received a Statement of Affairs from the Applicant, indicating a lack of cooperation. The Tribunal found that the applications had been deemed abandoned by operation of section 60(3) of the *Bankruptcy Act* and, based on the Applicant's lack of standing and the trustee's decision not to proceed, concluded that the applications were frivolous or vexatious, had no reasonable prospects of success, or were otherwise an abuse of the Tribunal's process.

Accordingly, the Tribunal ordered that the applications be dismissed under section 42B(1) of the *Administrative Appeals Tribunal Act 1975* (Cth).