Sultmann and Commissioner of Taxation (Taxation)

[2017] AATA 1089

Sultmann and Commissioner of Taxation (Taxation) [2017] AATA 1089 (14 July 2017)

Division:TAXATION & COMMERCIAL DIVISION

File Numbers:         2016/6322-24

Re:Michaela Sultmann

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J McCabe

Date:14 July 2017

Place:Brisbane

The Tribunal refuses the Extension of Time request.

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Deputy President Bernard J McCabe

TAXATION – PRACTICE AND PROCEDURE - extension of time application - relevant principles – previous extension of time granted by Tribunal – no application for review filed – further extension of time sought – significant delay – unsatisfactory reasons for delay – extension of time refused

LEGISLATION

Administrative Appeals Tribunal Act 1975, s 29(7)

Taxation Administration Act 1953, s 14ZZC, 14ZZK

CASES

Zizza v Federal Commissioner of Taxation (1999) 99 ATC 4711

REASONS FOR DECISION

Deputy President Bernard J McCabe

14 July 2017

1. These proceedings were commenced in response to objection decisions made in relation to the years of income ending 30 June 2005, 30 June 2006 and 30 June 2007. The taxpayer is the applicant, Ms Michaela Sultmann. Ms Sultmann’s former spouse, Mr Michael Lobodarz, is behind the proceedings in the sense that his taxation affairs will be affected by the outcome. Mr Lobodarz originally sought to commence the proceedings in his own name but the Tribunal decided on 8 March 2017 that he did not have standing. The Tribunal concluded Ms Sultmann was the proper applicant.

2. There have been a number of directions hearings and a good deal of correspondence with and between the parties and Mr Lobodarz. The applicant and Mr Lobodarz are estranged from each other and they have a difficult relationship.  That is a problem in circumstances where the applicant and her former husband must cooperate to run the proceedings.

3. Having identified the correct applicant, the next order of business is the extension of time application. The objection decision in question was made on 25 March 2014. In the ordinary course, a taxpayer in receipt of an adverse decision has 60 days to commence proceedings in the Tribunal: s 14ZZC of the Taxation Administration Act 1953 (the Administration Act). On 23 May 2014, the applicant asked the Tribunal for an extension of time to lodge an application for review. An extension of time was granted until 4 July 2014. The application for review was not forthcoming by the extended deadline.

4. Mr Lobodarz lodged a further extension of time application on 30 November 2016. By that time, the applicant was substantially out of time. After the question of standing was resolved, Mr Lobodarz was invited to prepare submissions on various issues. He was instructed to obtain the consent of Ms Sultmann in whose name the application had been commenced. The applicant complained about those submissions and about the conduct of Mr Lobodarz. In her letter to the Tribunal dated 20 April 2017, for example, the applicant said her former spouse was not keeping her properly informed about his negotiations with the Commissioner of Taxation. There has also been a dispute over who would pay the professional costs the applicant incurred in making the application: see, for example, the letter from the applicant’s family lawyer dated 12 June 2014 and provided to the Tribunal on 29 May 2017.  

   Should an extension of time be granted?

5. The power to extend time is found in s 29(7) of the Administrative Appeals Tribunal Act 1975. The usual principles which govern applications to extend time are well known. They have been discussed in cases like Zizza v Federal Commissioner of Taxation (1999) 99 ATC 4711.

6. I asked Ms Sultmann and Mr Lobodarz to prepare joint submissions on the issue. Mr Lobodarz duly prepared a draft letter for Ms Sultmann’s signature but she declined to sign it. She wrote under separate cover to the Tribunal and said the submissions contained factual errors. Her reluctance to join in the positive case that was being advanced on her behalf points to what seems to be an insuperable difficulty in granting the extension of time. Having said that, I will attempt to deal with the application on the basis of submissions advanced by Mr Lobodarz.

7. The first issue to consider is the explanation for the delay in lodging the application for review. This consideration is complicated by the fact the applicant approached the Tribunal in a timely way in 2014 and sought an extension of time – but then failed to lodge the application for review. The written submissions say the failure to progress the earlier application and the subsequent delay was attributable to the exigencies of the family law litigation between the applicant and Mr Lobodarz. I note the Federal Circuit Court made consent orders on 16 November 2015 to facilitate the application, but those orders do not of themselves explain why an application was not made until 12 months later. The submissions suggest the applicant and Mr Lobodarz had not been idle during this period; they say the applicant was ‘hamstrung by issues associated with our family law litigation.’

8. Assuming for the moment that the submissions are soundly based, notwithstanding Ms Sultmann’s unwillingness to endorse them, they do not disclose a good and convincing explanation for the substantial delay in commencing the proceedings after an extension of time had already been given. That delay cannot be attributed to the Commissioner. Indeed, the Commissioner had good reason to assume the dispute with the applicant had been concluded after the applicant failed to file an application for review when given an extended opportunity to do so in 2014.

9. The applicant (or, perhaps, Mr Lobodarz) may be prejudiced if the application does not proceed. But there may also be prejudice to the respondent if the extension of time is granted. It has now been 11-12 years since the occurrence of the facts and circumstances at the heart of the objection decision. It is likely that memories of witnesses will have dimmed. Key documents may have been lost. While the burden of any shortcomings in the evidence will fall most heavily on the applicant given the provisions of s 14ZZK of the Administration Act, the Commissioner is likely to experience inconvenience and uncertainty in the conduct of his case.

10. The merits of the claim are unclear. The applicant is obliged to establish the assessment was wrong but she must also identify an outcome that is correct, or more nearly correct. The material filed on behalf of the applicant thus far would not discharge that burden. There are few source documents in evidence, for example. It may be that additional material would be forthcoming, but at this stage I am not in a position to say the application has merit.

11. There is also a related question over the extent of any impediments to the review process. I have already pointed out the applicant and Mr Lobodarz need to cooperate in order to bring this application. They have shown no evidence of their genuine willingness to do so. They have squabbled throughout the interlocutory steps in a way which suggests the review is likely to become bogged down. That may lead to needless delay and expense.

12. It is also necessary to consider the public interest. There is a public interest in the finality of administrative decisions. That interest in sound administration is of particular relevance in Tribunal proceedings given the Tribunal’s role in promoting good government. But there is also a public interest in ensuring taxpayers pay the correct amount of tax. The public interest and the cause of sound administration will not be served by the inflexible application of deadlines if other considerations weigh in favour of granting an extension. In all the circumstances, the public interest in finality is likely to carry greater weight in this case.

13. The ultimate question is what the justice of the case requires in all the circumstances. The applicant has already had one extension of time to file an application for review. She did not take advantage of that opportunity. Her case is not so compelling that I would be justified in setting aside my concerns over the length of the delay and the likely difficulties associated with taking the matter to a hearing. I am not satisfied the justice of the case suggests the applicant should be granted the extension.

    Conclusion

14. In all the circumstances, I am not satisfied the extension of time should be granted.

I certify that the preceding 14 (fourteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

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Administrative Assistant - Legal

Dated: 14 July 2017

Dates of hearing:	20 April 2017 & 13 June 2017
Date final submissions received:	23 June 2017
Advocate for the Applicant:	Michael Lobodarz
Solicitors for the Respondent:	Alice Liang