The Trustee of the Mladenis Family Trust T/A Affinity Consulting Services and Commissioner of Taxation

[2005] AATA 1322

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1322

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No QT2004/226

TAXATION APPEALS DIVISION		)
Re		THE TRUSTEE OF THE MLADENIS FAMILY TRUST T/A AFFINITY CONSULTING SERVICES

Applicant

And COMMISSIONER OF TAXATION

Respondent

WRITTEN REASONS FOR ORAL DECISION

Tribunal Senior Member B J McCabe

Date27 October 2005

PlaceBrisbane

Decision The application for reinstatement is refused.

..............................................

SENIOR MEMBER

CATCHWORDS

PRACTICE AND PROCEDURE – application for reinstatement of Tribunal proceedings – application dismissed for non-appearance – excuse for non-appearance had no foundation – possible prejudice to Commissioner if matter not prosecuted expeditiously – applicant failed to identify substantial merits of the case

Administrative Appeals Tribunal Act 1975 s 42A(2), s 42A(9), s 42A(9)

Manoli and Secretary, Department of Social Security (1994) 35 ALD 133

WRITTEN REASONS FOR ORAL DECISION

13 April 2006 Senior Member B J McCabe         

introduction

1. The Trustee of the Mladenis Family Trust trading as Affinity Consulting Services is the applicant in these proceedings. The applicant asked the Tribunal to reinstate proceedings that were dismissed on 2 September 2005 under s 42A(2) of the Administrative Appeals Tribunal Act 1975. A hearing of reinstatement was held on 27 October 2005 but the Tribunal declined to reinstate the proceedings. The Tribunal gave oral reasons for its decision. The proceedings were not recorded. The applicant did not request written reasons for the decision until 3 April 2006.

2. The applicant originally applied to review a decision of the Commissioner of Taxation. It was represented at the time by Messrs Bourne and Romeo. The applicant failed to comply with directions dated 26 April 2005 and was asked to show cause why the matter should not be set down for a hearing of dismissal. A hearing was listed but Thiel Partners had taken over representation of the applicant in the meantime. The hearing of dismissal that was listed for 12 July 2005 was vacated and a telephone directions hearing was listed for 2 September 2005. The applicant’s new representatives were advised of the time and date of the hearing (see listing notice generated on 2 August 2005). No one appeared at the hearing on behalf of the applicant, and the Tribunal decided to dismiss the matter pursuant to s 42A(2) of the Act.

3.      The applicant applied for reinstatement. The applicant’s grounds for reinstatement were set out in a letter from its new solicitors, Tanya Cirkovic and Associates, dated 5 October 2005. The applicant asserted its belief that its application had merit. It sought to explain its failure to attend the hearing listed for 2 September 2005 on the basis that it had not received a listing notice.

4.      The hearing of reinstatement was set down for 27 October 2005. Listing notices were generated on 10 October 2005 and sent to the applicant and the respondent informing them of the time and date of the hearing.

5.      Mr Coulsen represented the applicant at the hearing. Ms Hopton represented the Commissioner. Ms Hopton filed written submissions outlining the Commissioner’s reasons for opposing the application for reinstatement.

the discretion to reinstate an application

6. Section 42A(8) of the Act says an applicant may seek reinstatement of an application dismissed pursuant to s 42A(2). Section 42A(9) says the Tribunal may make an order if the Tribunal “considers it appropriate to do so”. The criteria regulating the exercise of this discretion are well known. Cases like Manoli and Secretary, Department of Social Security (1994) 35 ALD 133 suggest (at 135-137) the Tribunal must consider the conduct of the applicant, any prejudice (most obviously prejudice to the respondent) and the merits of the substantive case. In considering these matters, the Tribunal must have regard to the overriding obligation to do that which is fair in the circumstances. I will apply that approach here.

(i) the applicant’s conduct

7.      I have already noted the applicant’s representative pointed out in written submissions lodged on 5 October 2005 that the applicant and its former representative had not been informed of the hearing listed for 2 September 2005. I do not accept that is so. Ms Hopton pointed out one of the respondent’s officers had contacted the applicant’s former representative, Mr Summerville, on 24 October 2005. Mr Summerville apparently agreed he received the listing notice in question. He sent the original copy to Ms Helen Dimitrijewski (an officer of the applicant company). He also forwarded an email message incorporating a copy of the listing notice to Ms Dimitrijewski’s email address. A copy of the email was produced at the hearing. Mr Coulsen indicated he was unaware of this information.

8.      I do not accept the applicant had a good excuse for failing to attend the original hearing of dismissal. The absence of a good excuse may not be fatal to the application, of course – but that is not the end of the story. The excuse the applicant did offer turns out to be without foundation. Mr Coulson was unable to explain the discrepancy between the contentions in the outline and the facts as they emerged at the hearing. That must count against the applicant. As Professor Pearce observed in Administrative Appeals Tribunal (LexisNexis Butterworths, Sydney, 2003) at p 122: “If the applicant appears to be treating the AAT with indifference, the chance of reinstatement is likely to be low.”

(ii) prejudice

9.      The respondent pointed out the applicant owed the Commissioner a substantial amount of money as a consequence of the objection decision. Recovery proceedings had not been commenced at that point. There had already been substantial delay in the case which prevented the Commissioner from finalising the matter; Ms Hopton suggested the applicant was merely using the Tribunal’s proceedings to delay the day of reckoning.

10.     I do not accept the Commissioner’s interests are prejudiced by the delay attending the orderly conduct of a review. The Commissioner may ultimately be prevented from recovering the money he says is outstanding. But I do accept some prejudice may accrue if the applicant’s claim is not prosecuted expeditiously. The applicant’s conduct in this case has led to delays which may affect the Commissioner’s prospects of recovering any debt that might be found to be payable. I accept the applicant’s interests will be prejudiced if I do not allow reinstatement because it will be unable to continue its challenge to the decision under review. The extent of the prejudice will of course depend on the merits of the original application.

(iii) merits of the case

11. The Commissioner’s outline identifies a number of concerns about the applicant’s case. The applicant was not in a position to offer evidence at the hearing to suggest it could discharge its obligation to show the objection decision was excessive, or should have been made differently: s 14ZZK(b) of the Taxation Administration Act 1953. The applicant’s submissions dated 5 October 2005 did no more than assert that it had good prospects of success. I was not disposed to grant an adjournment to allow the applicant to provide material given the delays that had already occurred. The applicant should have known the Tribunal would have considered the merits of the substantive case at the reinstatement hearing.

is it fair in all the circumstances to dismiss the application for reinstatement?

12.     The original application was dismissed after the applicant or its representative failed to attend a directions hearing. Its reinstatement application did not address one of the important issues before the Tribunal at the hearing (the merits of the case) and the excuse it offered for its earlier failure to attend turned out to be untrue. It is fair to all the parties in all the circumstances that the application for reinstatement be refused.

I certify that the 12 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe

Signed:         .....................................................................................
  Associate      Adam Ryan

Date of Hearing  27 October 2005
Date of Decision  27 October 2005
Date of Written Reasons          13 April 2006
The applicant was represented by Mr Coulsen of Counsel.
The respondent was represented by Ms Hopton.