Taylor, Stephen v The Australian Taxation Office

[1998] FCA 1527

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY – Powers of Registrar to make sequestration orders – whether Commonwealth has power to confer on Registrar, power to make sequestration orders on contested applications – whether such a delegation within constitutional competency of Commonwealth.

Judiciary Act 1903 (Cth) s 78B
Federal Court of Australia Act 1976 (Cth) s 35A

Bankruptcy Act 1966 (Cth) s 30

Federal Court Rules O 77 r 7

Harris v Caladine (1990-91) 172 CLR 84
Cheesman v Waters (1997) 148 ALR 21

Taylor v Australian Taxation Office
QG 7121 of 1998

Dowsett J
Brisbane
29 October 1998

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7121  of   1998

BETWEEN:	STEPHEN TAYLOR AND GLENDA TAYLOR APPLICANTS
AND:	THE AUSTRALIAN TAXATION OFFICE RESPONDENT
JUDGE:		DOWSETT J
DATE OF ORDER:		29 OCTOBER 1998
WHERE MADE:		BRISBANE

THE COURT ORDERS THAT:

1. The application for an extension of time for compliance with the bankruptcy notice is refused.

1. The application for an extension of time in which to apply for a review of Registrar’s decision is allowed.

1. The application to have review of Registrar’s decision determined by a jury is refused.

1. The application for review of Registrar’s decision is refused.

1. The applicants are to pay the respondent’s costs of these proceedings.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7121 of 1998

BETWEEN:	STEPHEN TAYLOR AND GLENDA TAYLOR APPLICANTS
AND:	THE AUSTRALIAN TAXATION OFFICE RESPONDENT

JUDGE:	DOWSETT J
DATE:	29 OCTOBER 1998
PLACE:	BRISBANE

REASONS FOR JUDGMENT

On 19 March 1998 at Townsville the applicants, Stephen Taylor and Glenda Taylor, were declared bankrupt upon the petition of the Deputy Commissioner of Taxation.  Mr and Mrs Taylor were in court on that occasion.  Although it does not appear from the material, it seems that they opposed the petition, although they do not seem to have objected to the jurisdiction of the Registrar who constituted the court.

Shortly thereafter, they applied for numerous orders, including an extension of time for compliance with the bankruptcy notice upon which the petition was based, prohibition directed to the petitioning creditor and the Registrar preventing them from acting upon the sequestration order and for an order that the sequestration order be brought up to the Federal Court and quashed and damages.

The matter came on before me some time ago, and it became obvious from what Mr Taylor said on behalf of the applicants that his primary point was that there could be no valid conferment of the power to make a sequestration order upon the Registrar. I, at that stage, formed the view that a constitutional question arose of the kind contemplated by s 78B of the Judiciary Act 1903, and I adjourned the matter to enable appropriate notices to be given.

Unfortunately, because the Taylors are unrepresented, the form of the notice which was given to the Attorneys and the evidence as to the giving of the notice, is a little unsatisfactory.  However it seems probable that all of the Attorneys have received appropriate notices, that most of them have understood the point to be raised and that none wishes to intervene.

Although I may be a little generous in my view of the extent to which s 78B has been complied with, no good point will be served by further delaying the resolution of these proceedings. In view of the nature of the question raised and the state of the authorities, it seems unlikely that any of the Attorneys would want to intervene. In any event, if they wish to do so, they can do so at a later stage.

Before me today, Mr Taylor has narrowed the constitutional point. He does not now seek to assert that the court could not validly delegate to the Registrar the power to decide, in an uncontested matter, that a sequestration order should be made. He rather submits that to the extent that s 35A of the Federal Court of Australia Act 1976 purports to confer a power to delegate in contested matters, the legislation is ultra vires the power of the Commonwealth because it is not within the constitutional competency of the Commonwealth to confer judicial power upon anybody other than a Chapter 3 judge.

Interesting and difficult as this question may be, it seems to have been disposed of by authority clearly binding upon me.  The High Court decided in Harris v Caladine (1990-91) 172 CLR 84, that subject to certain safeguards, it was valid for a court to delegate to an officer of the court the power to exercise some part of the jurisdiction of the court. Although the Parliament may restrict the power of delegation and may not itself compel the court to delegate, the thrust of that decision is that the Parliament may, by legislation, permit such delegation, subject to certain conditions.

In Cheesman v Waters (1997) 148 ALR 21 the Full Court of this court considered the matter in connection with the Bankruptcy Act 1966 (Cth). At first instance, Merkel J held that a provision in the Bankruptcy Act 1966 allowing such delegation in the case of uncontested orders was valid, subject to the various restrictions prescribed by the High Court in Harris v Caladine.  At the time at which his Honour decided the case, the restriction of the delegation to uncontested matters was about to be removed, and his Honour indicated that he did not consider that such amendment would affect the validity of the delegation.   The Full Court upheld his Honour's decision, and although it did not specifically refer to the question of contested or uncontested orders, the remarks made at page 28 clearly contemplate the power of the Registrar being exercised in contested as well as uncontested matters.

Thus the one relevant distinction between the legislation as it was at the time of Cheesman v Waters, and as it is now, disappears or is not relevant for present purposes.  There is nothing in either Harris  v Caladine, or in Cheesman v Waters, which would lead to the conclusion that the constitutional efficacy of a delegation of power to a non-judicial officer depends upon the delegation relating to uncontested as opposed to contested matters.

There has been no suggestion that the method of delegation which has been used in the Bankruptcy Act, supported by the Federal Court Rules and by a relevant instrument of delegation, in any way offends the safeguards prescribed by the High Court in Harris v Caladine.  For the purposes of the record, I should record the exact mechanism of the delegation.

The power is initially to be found in s 35A of the Federal Court of Australia Act 1976. That is to be read in conjunction with O 77, r 7 of the Rules of Court, and the schedule there referred to. There is an instrument of delegation of the kind contemplated. It is exhibit 1. It is signed by Spender J, and directed to the Registrar in question, Mr Ramsey, who was the Registrar who heard the matter with which I am presently concerned. The point has been resolved in a way which I consider to be binding upon me. I am of the view that on the current state of authorities, the delegation to Mr Ramsey, pursuant to which he exercised the power to make the sequestration orders, was valid. In those circumstances, the relief sought in paragraph 2 of the application must be refused.

Pursuant to s 35A(5) of the Federal Court of Australia Act 1976, I have extended time in which the applicants may apply for a review of the exercise of the power to make sequestration orders against them. Initially, the applicants sought an order, pursuant to s 30 of the Bankruptcy Act 1966, that certain facts be decided by a jury. The so-called issues are these: firstly, that the Commissioner of Taxation refused to extend time for them to pay and that, in so doing, he failed in his duty to taxpayers generally and to these taxpayers; secondly that the Commissioner did not advise them of their right to apply for relief against payment of the tax; thirdly that they had made a reasonable offer of settlement.

It is quite clear that none of these grounds would be a basis for declining to make a sequestration order.  In those circumstances, no question of fact arises for determination by a jury.  That application is refused.  None of the grounds raised on behalf of the applicants are relevant to the exercise of the power to make a sequestration order.  In those circumstances, the application to review the decision of the Registrar will be dismissed.

I order the applicants to pay the respondent's costs of these proceedings. 

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:             30 November 1998

Mr Taylor appeared on behalf of the Applicants.
Counsel for the Respondent:	Mrs Mullins
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	29 October 1998
Date of Judgment:	29 October 1998