Parr and Commissioner of Taxation (Taxation)
[2021] AATA 2240
•7 July 2021
Parr and Commissioner of Taxation (Taxation) [2021] AATA 2240 (7 July 2021)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2019/8423;
2019/8728;
2020/0734-7;
Re:Ronald Parr
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:Deputy President Bernard J McCabe
Date:7 July 2021
Place:Perth
1.The application for reinstatement is refused.
..........................SGD.............................
Deputy President Bernard J McCabe
Catchwords
Application for reinstatement – where applications were dismissed under s 42A(2) for failure to appear – whether discretion to reinstate should be exercised under s 42A(9) – where the applicant has been in non-compliance on multiple occasions – where the material provided by the applicant indicates little prospect of success in the substantive matters – application for reinstatement refused.
Legislation
Administrative Appeals Tribunal Act 1975
Taxation Administration Act 1953
Cases
Buchanan v Administrative Appeals Tribunal [2013] FCA 1099
Parr and Commissioner of Taxation [2021] AATA 2038
REASONS FOR DECISION
Deputy President Bernard J McCabe
The proceedings in this case were dismissed pursuant to s 42A(2) of the Administrative Appeals Tribunal Act 1975 (the AAT Act) after the taxpayer’s legal representative failed to appear at a listed event. The event in question had been listed to discuss the taxpayer’s failure to comply with directions that had been made in January this year. Those directions were made when the Tribunal agreed not to dismiss the proceedings under s 42A(5) of the AAT Act in the face of an earlier example of non-compliance.
The taxpayer has now asked for the proceedings to be reinstated pursuant to s 42A(9) of the AAT Act. I have decided it is not appropriate to reinstate the proceedings. I explain my reasons below.
What happened?
Mr Ronald Parr commenced proceedings in the Tribunal in 2019 seeking review of objections decisions in relation to the 2009 to 2014 income years. The proceedings were attended by considerable delay, most obviously because Mr Parr was (and is) incarcerated in a gaol outside Perth. Mr Parr was represented by lawyers acting on a pro bono basis. Even so, he failed to comply with directions – directions that were made after taking into account the fact Mr Parr was in gaol, the complications that arose out of the pandemic, the circumstances of his representation, and his involvement in other litigation.
The history of non-compliance prompted an application to dismiss the proceedings pursuant to s 42A(5) of the AAT Act at the end of 2020. I declined to exercise the discretion on that occasion. In my reasons for decision dated 21 January 2021, I set out the delays and the explanations provided by the applicant and said:[1]
I have decided to allow Mr Parr a further opportunity to provide a statement of facts, issues and contentions and the material he intends relying upon at a hearing. He must provide all that by 6 March 2021. It almost goes without saying that further extensions are unlikely and that, in the event of further non-compliance, the Tribunal might revisit the question of dismissal or simply list the matter for hearing, whether the applicant is ready or not.
[1] Parr and Commissioner of Taxation [2021] AATA 2038 at [20]
While Mr Parr was effectively given another chance at the dismissal hearing, he subsequently failed to comply with the directions I made on that occasion. In due course, a directions hearing was listed for 27 April 2021 to discuss what to do. A listing notice was sent to the applicant’s representative, but the representative did not appear at the listed hearing. I decided to dismiss the proceedings pursuant to s 42A(2) of the AAT Act after satisfying myself the applicant’s representative had been informed of the hearing.
Mr Parr’s solicitor, Mr Walt, contacted the Tribunal shortly after the hearing concluded. He said he had only just learned of the listed event: apparently there was a problem with the firm’s email system that might have resulted in the Tribunal’s listing notice being diverted into the ‘junk mail’ folder. A COVID-related lockdown in Perth may also have been a factor in the disruption. Unfortunately for Mr Parr, the decision to dismiss had already been made. Mr Walt was advised of the applicant’s right to seek reinstatement.
The reinstatement hearing was listed for 29 June 2021. Mr Parr’s representative provided written submissions in support of the reinstatement application in advance of the hearing. The representatives also filed the long-awaited statement of facts, issues and contentions together with a statement from a specialist accountant who has been assisting Mr Parr. The accountant’s statement addressed the delays that occurred in the past. The submissions addressed the reasons for the failure to appear at the earlier hearing.
The Commissioner indicated in advance of the interlocutory that he did not oppose the application for reinstatement. By the time the interlocutory hearing had concluded, counsel for the respondent, Mr Scovell, adopted a more robust view: he said there were good reasons for refusing the application for reinstatement.
The discretion to reinstate
The power to reinstate contained in s 42A(9) of the AAT Act is discretionary. The power will be exercised when the Tribunal is satisfied it is appropriate to do so. The reasons proffered for the failure to appear would ordinarily be at the forefront of the Tribunal’s deliberations, but other considerations may be relevant: see, generally, Buchanan v Administrative Appeals Tribunal [2013] FCA 1099. In a case like this, the Tribunal might look for a credible assurance that the proceedings will not be delayed by further acts of non-compliance. The Tribunal will also consider the prejudice to the respondent if the matter is reinstated, and the potential prejudice to the applicant if it is not. The Tribunal might also have regard to the prospects of success in the substantive matter. If the Tribunal is not satisfied the applicant’s case has merit, that will weigh against the exercise of the discretion to reinstate. The prospects of success might be a particularly important consideration in tax cases because the applicant bears an onus of proof at the substantive hearing. The Tribunal will hesitate to exercise the discretion where it has reason to doubt the applicant plans to put on evidence and refer to arguments that would enable the applicant to discharge its evidentiary burden.
Mr Walt, for the taxpayer, explained the non-appearance in written submissions. (I do not make anything of the fact the explanation was set out in submissions, although one would usually expect an explanation to be provided in the form of a statement.) He said the failure to attend the hearing on 27 April 2021 was the product of a miscommunication that was complicated by a COVID-related lockdown. While that is not an especially compelling excuse, I have some sympathy for Mr Walt: COVID has been disruptive, and we have all been required to be flexible.
What of the other considerations I have mentioned? The taxpayer provided a statement by Ms Morgan, an accountant and tax advisor who coordinates the tax clinic at Curtin University. The Curtin clinic is a welcome initiative designed to assist otherwise unrepresented taxpayers, the clinic has been providing assistance to the taxpayer on a pro bono basis. Ms Morgan pointed out there were some delays in the past that were attributable to her personal circumstances. I do not need to rehearse those matters here. It is enough to note those complicating factors are unlikely to be an issue going forward, so I do not need to consider them any further. But Ms Morgan also pointed to an ongoing source of delay: the fact of Mr Parr’s incarceration. His ability to participate in the proceedings effectively turns on the cooperation of the prison authorities. The job of the prison authorities has been complicated immensely by COVID. Prisoners held in correctional facilities are especially vulnerable in the pandemic so access to prisons is necessarily limited.
Mr Walt said his client should not be at a disadvantage because he is in prison. The Tribunal is always conscious of an individual’s personal circumstances and it will take reasonable steps to accommodate any applicant’s special needs. In these proceedings, as I explained in my earlier reasons for decision, the Tribunal has been flexible with the timetabling and done what it properly could to facilitate Mr Parr accessing pro bono assistance. I acknowledge the potential for further delay remains. Indeed, one should expect further delays given the strictures under which Mr Parr and the Western Australian authorities operate.
The prospect of further delay does not weigh decisively against the exercise of the discretion given the circumstances. The more pressing concern is in relation to the prospects of success.
Mr Scovell pointed out Mr Walt did not put on any evidence or make submissions about the applicant’s prospects of success in the substantive review. The Commissioner’s concern is fair enough in circumstances where the taxpayer did not file the material he intended relying upon at the final hearing in accordance with the directions. Mr Walt said the taxpayer did not propose filing any further evidence: Mr Walt said the taxpayer intended to rely on the material contained in the documents provided by the Commissioner pursuant to s 37 of the AAT Act (the ‘T documents’). Mr Walt said the taxpayer’s Statement of Facts, Issues and Contentions would enable the Tribunal to make sense of those documents and decide the case in Mr Parr’s failure.
I took the opportunity to go through aspects of the Statement of Facts, Issues and Contentions with Mr Walt at the interlocutory hearing. I pointed out the assessments in question were made in the first place because the Commissioner suspected Mr Parr had not properly accounted for his income. I noted the Statement of Facts, Issues and Contentions included assertions of fact that one would expect to be supported by evidence – perhaps a statement from Mr Parr, and an expert report from the likes of Ms Morgan.
It would not ordinarily be sufficient for an applicant in a substantiation case to tender a bundle of source documents like bank statements and make submissions through counsel from the bar table about what the documents mean. If an applicant is to discharge its burden under s 14ZZK of the Taxation Administration Act 1953 in such a case, it is likely that evidence will be required about the underlying transactions. That evidence would ordinarily be given on oath by a witness with first-hand knowledge, such as Mr Parr. In any event, a statement setting out that evidence – or at least an outline - should be provided in advance of the hearing. It would also be expected that such a witness would be available for cross-examination at the hearing. Where the case turns on the accounting treatment of certain expenditures, it would ordinarily be appropriate to lead evidence from an accountant. Once again, a report outlining that evidence should be provided in advance of the hearing so the other party is not taken by surprise.
I made my expectations clear to Mr Walt. He expressed surprise that evidence of this kind would be necessary but conceded he might be able to obtain a statement from Mr Parr if given sufficient time. It was apparent he had not anticipated the need to call Mr Parr or anybody else to give evidence at the hearing. He also said he would obtain a statement from Ms Morgan if that were required. I pointed out it was not so much a matter of me requiring a taxpayer to provide evidence: Mr Parr was the one that bore the burden of proof. It was up to him to present his case. Having said that, the absence of evidence was relevant to the exercise of the discretion to reinstate.
While Mr Walt reluctantly agreed he could obtain a statement from Mr Parr in particular, it was unclear whether Mr Walt accepted Mr Parr would need to give evidence in detail about the underlying transactions – as opposed to merely providing a conduit for the introduction of the evidence in the T documents. It was also unclear how long it would take Ms Morgan to provide the sort of expert opinion that would be helpful given her other commitments.
I considered allowing a further adjournment to permit Mr Walt to gather appropriate evidence, but he was unable to confidently say when that evidence would be available. He suggested at least a month would be required, but indicated that may not be enough. While I acknowledge the potential delay was likely the product of Mr Parr’s incarceration compounded by COVID-related restrictions, the fact remains Mr Parr has already been provided with the opportunity to provide appropriate evidence when I made the directions earlier this year. At a minimum, I would have expected Mr Walt to come to the reinstatement hearing prepared to address obvious concerns about the merits of the case. It was not apparent that he understood the challenge his client faced in discharging the burden of proof.
My concerns about the state of Mr Parr’s case and the uncertainty over his prospects of success weigh heavily against the exercise of the discretion to reinstate. I am conscious that Mr Parr will be deprived of the opportunity to contest the Commissioner’s decisions, which will presumably have serious financial implications for him and his family, but he has already been extended ample opportunities to present his case. The Commissioner has already been put to significant expense and delay in these proceedings as the Tribunal has endeavoured to accommodate the applicant’s (admittedly difficult) circumstances. It would be unfair to require the Commissioner to expend further resources where the applicant’s prospects are, at best, unclear.
I am not satisfied it is appropriate to reinstate the application for review.
I certify that the preceding 21 (twenty) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe
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Associate
Dated: 7 July 2021
Date(s) of hearing: 29 June 2021 Applicant’s Representative: Mr Frederick Walt Solicitors for the Applicant: Cooper Web Lawyers Counsel for the Respondent: Mr James Scovell Solicitors for the Respondent: Australian Government Solicitor
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