Tax Practitioners Board v Stroe

Case [2022] FCA 482

FEDERAL COURT OF AUSTRALIA

Tax Practitioners Board v Stroe [2022] FCA 482

File number: WAD 179 of 2021
Judgment of: BANKS-SMITH J
Date of judgment: 3 May 2022
Catchwords:

PRACTICE AND PROCEDURE - application for default judgment pursuant to r 5.23(2)(c) of the Federal Court Rules 2011 (Cth) - where respondent took no meaningful part in the proceeding - where respondent in default - where respondent taken to have admitted infringing conduct - application allowed

TAXATION - where applicant sought declaration and injunction for alleged contraventions of s 50-5(1) of the Tax Agent Services Act 2009 (Cth) by way of default judgment - contraventions established - relief granted
Legislation:

Federal Court of Australia Act 1976 (Cth) s 21

Tax Agent Services Act 2009 (Cth) ss 2-10, 50-5, 50-35, 60‑5, 70-5, 90-5

Federal Court Rules 2011 (Cth) rr 5.02, 5.22, 5.23
Cases cited:

Australian Communications and Media Authority v Getaway Escapes Pty Ltd [2016] FCA 795

Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427

Australian Competition and Consumer Commission v EDirect Pty Ltd (in liq) [2012] FCA 976; (2012) 206 FCR 160

Chamberlain Group Inc v Giant Alarm System Co Ltd (No 2) [2019] FCA 1606

Clarence City Council v Commonwealth of Australia [2020] FCAFC 134; (2020) 280 FCR 265

Fair Work Ombudsman v IE Enterprises Pty Ltd [2020] FCA 848

Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421

Geneva Laboratories Ltd v Prestige Premium Deals Pty Ltd(No 4) [2016] FCA 867

Hobart International Airport Pty Ltd v Clarence City Council [2022] HCA 5

Nasib Baik Pty Ltd v Sydney Ridelender Pty Ltd [2022] FCA 301

Phonographic Performance Ltd v Maitra [1998] 2 All ER 638

Professional Administration Service Centres Pty Ltd v Commissioner of Taxation [2012] FCAFC 180

Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227
Division: General Division
Registry: Western Australia
National Practice Area: Administrative and Constitutional Law and Human Rights
Number of paragraphs: 68
Date of hearing: 28 April 2022
Counsel for the Applicant: Mr MJ Follett
Solicitor for the Applicant: MinterEllison
Counsel for the Respondent: The Respondent did not appear

ORDERS

WAD 179 of 2021
BETWEEN:

TAX PRACTITIONERS BOARD

Applicant
AND:

JESSA VAN STROE (ALSO KNOWN AS JESSA LAYOLA)

Respondent

ORDER MADE BY:

BANKS-SMITH J

DATE OF ORDER:

3 MAY 2022

TO:  JESSA VAN STROE (ALSO KNOWN AS JESSA LAYOLA)

TAKE NOTICE THAT, PURSUANT TO ORDER 41.06 OF THE FEDERAL COURT RULES 2011 (CTH):

You are liable to imprisonment, sequestration of property or other punishment for contempt if you:

(a)       refuse or neglect to do the things that this order requires you to do; or

(b)       do the things that this order requires you to abstain from doing, or you otherwise disobey this order.

THE COURT DECLARES THAT:

1.Upon admissions which the respondent is taken to have made consequent upon defaults under the Federal Court Rules 2011 (Cth), on each occasion specified in Appendix A to these orders, the respondent contravened s 50-5(1) of the Tax…

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Tax Practitioners Board v Stroe [2022] FCA 482
Case
[2022] FCA 482
Decision Date

CaseChat Overview and Summary

The Tax Practitioners Board brought proceedings against Stroe seeking a declaration, injunction, and pecuniary penalty for alleged contraventions of the Tax Agent Services Act 2009 (Cth). Stroe failed to engage with the proceedings in a meaningful way, resulting in a number of defaults. The Board applied for a default judgment, which Stroe opposed. The court had to decide whether it was appropriate to enter a default judgment in the circumstances of this case. The court found that Stroe had not engaged in the proceedings, had not responded to communications from the Board's solicitors, and had failed to file a defence. The court found that the Board had established the respondent's contraventions and that the Board was entitled to the relief claimed. The court exercised its discretion to enter a default judgment, permanently restraining Stroe from providing tax agent services for a fee or other reward while not a registered tax agent, and listing the matter for a hearing to determine the quantum of any pecuniary penalties to be imposed. Costs were reserved.

Orders

Orders of the court

2. Pursuant to s 47B of the Federal Court of Australia Act 1976 (Cth), counsel be permitted to deliver oral submissions at the hearing by way of internet connection.

3. Pursuant to s 70-5(1) of the TAS Act, the respondent be permanently restrained from providing tax agent services (as defined in the TAS Act) for a fee or other reward, whilst not a registered tax agent within the meaning of the TAS Act.

4. The matter be listed for hearing on a date to be fixed for the purposes of determining the quantum of any pecuniary penalties to be imposed upon the respondent in respect of her declared contraventions of the TAS Act.

5. Costs reserved.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Accordingly, the Board alleges, the respondent contravened s 50‑5(1) of the TAS Act.Procedural background This proceeding was commenced by originating application on 12 August 2021. On 23 August 2021 McKerracher J ordered that until the hearing and determination of the originating application or further order, the respondent be restrained from preparing and lodging income tax returns for taxpayers, for a fee or other reward, whilst not a registered tax agent within the meaning of the TAS Act. The Board evinced affidavit evidence as to personal service on the respondent of the originating application and supporting affidavits filed for the purpose of the hearing before McKerracher J. The respondent did not appear at the hearing. The Board's solicitor (relevantly Patrick Long of MinterEllison) has affirmed a number of affidavits that depose to his communications and attempted communications with the respondent. On 30 August 2021 the respondent sent an email to MinterEllison which attached a signed standard form Federal Circuit Court of Australia 'Notice of Address for Service', which disclosed a physical address for service, a mobile phone number and an email address, and identified that the respondent was acting in person. The respondent did not file a notice of address for service in this Court, despite Mr Long emailing her to inform her that she was required to file such notice, and providing the contact details of the Western Australian Registry of the Court. On 3 September 2021 Mr Long emailed the respondent at the email address she had identified for service with respect to an interlocutory application that the Board filed relating to the redaction of confidential information in an affidavit that had been filed on the Boards' behalf. No response was received. On 28 September 2021 I made orders providing for a redacted version of the relevant affidavit to be filed, with the unredacted version to be removed from the Court file. On the same day Mr Long emailed the respondent providing a copy of the orders and the redacted affidavit. On 30 September 2021 the respondent emailed Mr Long apologising for the failure to respond to communications, indicating she had been sick with the flu and due to pregnancy, and stating that she would respond to emails as soon as she became well. On 1 November 2021 I conducted a case management hearing. The Board's counsel participated by Microsoft Teams link but it was open to the respondent to appear in person or by Microsoft Teams link. The respondent was called at the hearing but did not appear. I am satisfied that she had notice of the hearing by way of communications from my chambers to the email address that had been identified and used to communicate with Mr Long. Orders were made at the hearing programming the filing of a notice of address for service, pleadings and submission for the purpose of a hearing. I am satisfied on the basis of Mr Long's evidence that the respondent was served with a copy of the orders.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The respondent was called at the hearing but did not appear.Default judgmentPrinciples In order to be satisfied that an applicant is entitled to the relief sought in r 5.23(2)(c) of the Federal Court Rules 2011 (Cth), the Court must be satisfied that a respondent has been served with the relevant documents and that the Court has jurisdiction to grant the relief: Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [18] (Flick J). The principles applicable to the power to enter default judgment were usefully collected by Yates J in Chamberlain Group Inc v Giant Alarm System Co Ltd (No 2) [2019] FCA 1606 as follows:[13]The power to give judgment against a defaulting party is undoubtedly discretionary. The discretion must be exercised cautiously. Where the defaulting party is a respondent to a pleaded claim, the giving of judgment for final relief on the application will deliver complete success to the applicant without investigation of the merits of the pleaded claim: ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]. There is no requirement that the act or acts of default be intentional or amount to contumelious conduct. There is no requirement that the act or acts of default result in inordinate or inexcusable delay. That said, such features, if present, will be relevant to the exercise of the Court's discretion. So too will conduct that persuades the Court that the defaulting party is manifesting an inability or unwillingness to cooperate with the Court and the other party or parties to the proceeding.[14]Rule 5.23(2)(c) requires the Court to be satisfied that the applicant is entitled to the relief claimed in the statement of claim. This requirement has been interpreted as meaning that the Court must be satisfied that 'on the face of the statement of claim' the applicant is entitled to the relief that is claimed. It is not a requirement that the applicant prove its claim by way of evidence. Put another way, the facts alleged in the statement of claim are taken to have been admitted: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2007] FCAFC 146; 161 FCR 513 at [42]. If, on inspection of the statement of claim, the Court is satisfied that the applicant would be entitled to the relief sought then this requirement of r 5.23(2)(c) will be met: CNIP Pty Ltd v Chan & Naylor Norwest Pty Ltd (No 2) [2011] FCA 1170 at [18] - [19]; Speedo Holdings B.V. v Evans (No 2) [2011] FCA 1227 at [23]. The Court may permit further evidence to be adduced, but not evidence that would alter the pleaded case: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd [2006] FCA 1427; 236 ALR 665 at [45], [48] - [50]; United Broadcasting International Pty Ltd v Turkplus Pty Ltd (No 2) [2010] FCA 1413 at [42] - [44]; Australian Competition and Consumer Commission v Yellow Page Marketing BV (No 2) [2011] FCA 352; 195 FCR 1 at [62] - [63]. There are a number of authorities where the Court has entered default judgment in circumstances where the applicant has sought civil penalties and declarations: for example, Australian Competition and Consumer Commission v EDirect Pty Ltd (in liq) [2012] FCA 976; (2012) 206 FCR 160 (Reeves J); Australian Communications and Media Authority v Getaway Escapes Pty Ltd [2016] FCA 795 (Rangiah J); Geneva Laboratories Ltd v Prestige Premium Deals Pty Ltd(No 4) [2016] FCA 867 (Bromwich J); Fair Work Ombudsman v IE Enterprises Pty Ltd [2020] FCA 848 (Anderson J); and Nasib Baik Pty Ltd v Sydney Ridelender Pty Ltd [2022] FCA 301 (Markovic J).

Ratio Decidendi

Legal Principle Established

Whilst acknowledging that those matters were referred to in the context of summary dismissal under r 5.23, their potential relevance in the context of default judgment under the same rule is readily apparent.Consideration I am satisfied that the respondent was personally served in accordance with the Rules with the originating process and affidavits in support. The respondent was obliged to file a notice of address for service as required by r 5.02 of the Rules, and failed to do so, despite the Board informing her of her obligation. The respondent is in continuing default pursuant to r 5.22(b) of the Rules. I am satisfied that the respondent was on notice of each of the first return of the originating application before McKerracher J on 23 August 2021, the case management hearing before me on 1 November 2021, and the case management hearing before me on 17 March 2022. The respondent failed to attend the hearings and is accordingly in default pursuant to r 5.22(c) of the Rules. Order 4 of the 1 November 2021 orders required the respondent to file a defence. She has not done so. The respondent is accordingly in default pursuant to r 5.22(b) of the Rules. Given those defaults, the Court is empowered to make orders pursuant to r 5.23(2)(c) of the Rules, but there remains a discretion as to whether or not that power should be exercised. It is apparent from the chronology relayed above that the respondent has not engaged in these proceedings. She has evinced no intention to defend the proceedings or proffered any explanation for the various defaults. Apart from the two occasions identified, she has not responded to communications from the Board's solicitors. I note that: the respondent's defaults have been ongoing since the proceedings were commenced; the Board's solicitors have continued to make diligent attempts to contact the respondent and ensure she is on notice of her obligations and the orders of the Court; the respondent has given the appearance of an absence of interest in the proceedings; and the Board has undertaken all reasonable preliminary steps so that the proceeding is otherwise ready for hearing and determination. I am satisfied that on the face of the statement of claim the Board is entitled to the relief that is claimed. The elements of the claimed contraventions are pleaded. Whilst noting that default judgment should not be entered lightly, in the circumstances of this case I am satisfied that it is appropriate to enter judgment in default under r 5.23(2)(c).Relief sought by the BoardDeclaratory relief By her failure to file a defence, and pursuant to the principles cited at [43] and [44] above, the respondent is taken to have admitted the facts pleaded against her in the statement of claim, but not the entitlement to relief flowing from those facts. Accordingly, the respondent is taken to have admitted that she provided tax agent services within the meaning of the legislation on 531 occasions for fee or reward, whilst not a registered tax agent. She is also taken to have admitted that on each occasion when she provided those services she knew or ought to have known that they bore the characteristics of tax agent services as defined. It follows that the Board has established the respondent's contraventions.