Weston and Inspector-General in Bankruptcy
[2022] AATA 1135
•12 May 2022
Weston and Inspector-General in Bankruptcy [2022] AATA 1135 (12 May 2022)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2021/0705
Re:Paul Weston
APPLICANT
AndInspector-General in Bankruptcy
RESPONDENT
AndSalim Mehajer
OTHER PARTY
DECISION
Tribunal:Mrs J C Kelly, Senior Member
Date:12 May 2022
Place:Sydney
The Other Party’s application to reopen this matter is refused.
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Mrs J C Kelly, Senior Member
CATCHWORDS
PRACTICE AND PROCEDURE – Request to reopen the hearing – Substantive matter in relation to an objection to discharge from bankruptcy – Public interest in finality of review applications – Four classes of cases recognised by the courts – Application to reopen the hearing refused
LEGISLATION
Administrative Appeals Tribunal Act 1975 (Cth) s 33
Bankruptcy Act 1966 (Cth) ss 139ZG, 149D, 149N
CASES
Ashton Coal Operations Pty Ltd v Director-General, Dept of Environment, Climate Change and Water (No 2) [2011] NSWLEC 116
Australian Securities and Investments Commission v Rich [2006] NSWSC 826
Citigold Corporation Ltd v Chief Executive, Department of Environment, & Heritage Protection (No 3) [2016] QLC 21
EB v CT (No. 2) [2008] QSC 306
Inspector-General in Bankruptcy v Bradshaw [2006] FAA 22
Re Confidential and Commissioner of Taxation [2013] AATA 382
Reid v Brett [2005] VSC 18
Teoh v Hunters Hill Council & Anor (No 3) [2009] NSWLEC 121
SECONDARY MATERIALS
Law Handbook: Your Practical Guide to the Law in New South Wales, Redfern Legal Centre Publishing. Redfern, NSW, 2019 (15th Edition).
REASONS FOR DECISION
Mrs J C Kelly, Senior Member
12 May 2022
Introduction
The substantive proceedings were heard on 24 November 2021 and the decision reserved. In a letter dated 9 December 2021, Mr Salim Mehajer (the Other Party who is the bankrupt) wrote to the Tribunal requesting that the hearing be reopened “in the interest of justice and to save from any future application to appeal”. This is the decision in respect of that application. He was unrepresented during both the substantive proceedings and this application.
The nature of the substantive proceedings
The substantive proceedings were brought by the Applicant, the trustee in bankruptcy, who lodged an objection to discharge from bankruptcy on 11 November 2020 (Objection) under the grounds specified in paragraphs 149D(1)(f) and 149D(1)(d) of the BankruptcyAct 1966 (Cth) (the Act).
The ground in paragraph 149D(1)(f) is that the bankrupt failed to pay to the trustee an amount that the bankrupt was liable to pay under s 139ZG of the Act. The ground in paragraph 149D(1)(d) was that the bankrupt, when requested in writing by the trustee to provide written information about the bankrupt’s property, income or expected income, failed to comply with the request.
On 13 November 2020, the Other Party applied to the Respondent, the Inspector-General in Bankruptcy, requesting a review of the Applicant’s decision to lodge the Objection on all grounds.[1] On 12 January 2021, a delegate of the Respondent decided to confirm the ground of objection contained in paragraph 149D(1)(f) (the confirmed ground) and to cancel the ground of objection in paragraph 149D(1)(d) (the cancelled ground).
[1] T5.
There is however only one decision in the reviewable decision of 12 January 2021 – the Respondent’s decision under subsection 149N(3) of the Act to confirm the Applicant’s decision to file the Objection.
The Applicant applied to the Tribunal for a review of the decision, specifically because of the cancelled ground.
The Other Party applied to the Tribunal to be made a party to the proceedings to contest the confirmed ground.
The Other Party had also requested that the Respondent review the Applicant’s income contribution assessment in late September 2020 but no decision had been made at the time of the hearing of the substantive matter and the matter was not before the Tribunal.
The documents considered
In addition to the Other Party’s document requesting that the hearing be reopened (application to reopen), the following documents were provided by the parties and have been considered:
·The Respondent’s submissions in relation to whether the matter should be reopened dated 18 February 2022.
·The Respondent’s authorities in relation to whether the matter should be reopened.
·The Applicant’s submissions in relation to whether the matter should be reopened dated 22 February 2022.
·The Other Party’s submissions in reply dated 4 March 2022 and cover letter dated 15 March 2022 which were filed by email on 24 March 2022.
·The Other Party’s letter dated 1 April 2022 attaching an extract from Chapter 6 of the Law Handbook (NSW) (15th edition).[2]
·Relevant documents filed in the substantive proceedings.
[2] The Law Handbook: Your Practical Guide to the Law in New South Wales, Redfern Legal Centre Publishing. Redfern, NSW, 2019 (15th Edition).
The hearing of this application was very brief because the parties said that their positions were set out fully in the documents provided. The Applicant adopted the Respondent’s submissions.
Legal principles for reopening a hearing
It is helpful to set out the Respondent’s comprehensive exposition of the legal principles for reopening a case, in a slightly amended form.[3]
[3] Respondent’s submissions in relation to whether the matter should be reopened at [20] to [23.5].
The various factors relevant to a consideration of whether to permit the reopening of a case were conveniently summarised by Austin J in Australian Securities and Investments Commission v Rich [2006] NSWSC 826 at [18] as follows:
(a)the nature of the proceeding;
(b)whether the occasion for calling the further evidence ought reasonably to have been foreseen;
(c)the consideration of fairness that the defendant is entitled to know all of the evidence he has to meet in taking forensic decisions as to cross-examination and the nature and extent of the evidence he will himself adduce on the matters in question;
(d)the extent to which the plaintiff has embarked upon calling evidence on the issue in question in its case in chief;
(e)the importance of the issue on which the further evidence is sought to be adduced to the pleaded issues in the case;
(f)the degree of relevance and probative value of the further evidence sought to be adduced and its potential to involve an undue waste of time;
(g)the prejudice to the defendant in terms of delay in the completion of the proceedings and the consequential costs;
(h)the public interest in the timely conclusion of litigation; and
(i)what explanation is offered by the plaintiff for not having called the evidence in chief.
As noted by Member P A Smith in Citigold Corporation Ltd v Chief Executive, Department of Environment, & Heritage Protection (No 3) [2016] QLC 021 (‘Citigold’) at [11], the considerations relevant to determining whether to permit the reopening of a case where the hearing has concluded but judgment is pending, cited with approval by Appelgarth J in EB v CT (No 2)[4], are dealt with in the case of Reid v Brett[5] as follows:
The criteria governing the exercise of the discretionary power to re-open a case to admit further evidence where the hearing has concluded but judgment has not been delivered have been said to be as follows:
(a) the further evidence is so material that the interests of justice require its admission;
(b) the further evidence, if accepted, would most probably affect the result of the case;
(c) the further evidence could not by reasonable diligence have been discovered earlier; and
(d) no prejudice would ensue to the other party by reason of the late admission of the further evidence.
[4] [2008] QSC 306 at [4].
[5] [2005] VSC 18 at [41].
The statement of Sheahan J in Teoh v Hunters Hill Council & Anor (No 3) [2009] NSWLEC 121 (‘Teoh’), as cited in Ashton Coal Operations Pty Ltd v Director-General, Dept of Environment, Climate Change and Water (No 2) [2011] NSWLEC 116 at [33] is worth noting. After referring to a useful collection of cases which outlined the principles to be applied when considering whether to reopen a case, Sheahan J said in Teoh at [45]:
Any power to reopen has been held to be a “limited, special, and wholly exceptional jurisdiction”, “not lightly to be exercised”, and there must be shown to be “exceptional circumstances”, often in the nature of some “unfinished business”. The courts will not simply respond to some “undefined feeling that an injustice has occurred which the court must correct”.
See also Re Confidential and Commissioner of Taxation [2013] AATA 382, in particular at [127]-[129] and [132]-[133] where SM Fice noted the following:
·The four classes of cases recognised by the courts where a court may grant leave to reopen a case.[6]
·While the Tribunal may have more flexibility than a court in the conduct of its hearing because it is not bound by the rules of evidence, it should not result in the Tribunal coming to a decision any different from that of the court.
·While the Tribunal is not bound by the principles applied by the courts in determining whether to allow parties to reopen a case, those principles provide a useful guide because, broadly, they are founded in the notion of fairness or natural justice
·It is not the Tribunal’s duty to tell applicants how they should go about presenting their case or what evidence they should call.
·There is a public interest that there should be finality, not only in litigation, but also in applications for review by this Tribunal. If that were not so, then it is foreseeable that where a hearing has not gone as well as may have been planned, there is a very high risk that one or other of the parties will make an application to reopen a hearing following its conclusion. That would make the work of this Tribunal impossible. As the Supreme Court of Victoria said, such a course should only be taken in exceptional circumstances.
[6] (i) the evidence which would be given would be fresh evidence, unavailable or not reasonably discoverable prior to the commencement of the substantive hearing; (ii) there is evidence of an inadvertent error; (iii) there is evidence of a mistaken apprehension of the facts or the law; (iv) there is evidence regarding whether it would be hard to define and difficult to protect the boundaries of reopened issues. See also Citigold at [9] citing Inspector-General v Bradshaw [2006] FCA 22 at [24].
The Other Party’s grounds for reopening the case
The first ground the Other Party relied upon for reopening the case was that at the hearing on 24 November 2021, without notice to the Other Party, the Respondent did not defend its decision in relation to the cancelled ground when the Other Party had at all times believed that it would. He believed the Respondent was “on his side”. Because of his belief, he did not make submissions or provide authorities to “elucidate” that he had established a reasonable excuse, pursuant to the Act.
The second ground related to the confirmed ground and was based on various pieces of correspondence. The Other Party claimed, first, that he was encouraged to have the income assessment reviewed by the Respondent and secondly, there is no evidence to suggest that he knew that he was still required to pay any liability. He was misled and believed that he did not have to make the payments.
Secondly, the Other Party claimed that his diagnosis of Bipolar II disorder by Dr Henderson, psychiatrist[7] shows there is a reasonable possibility that the Other Party’s judgment was significantly impaired such that there is a reasonable possibility that the condition accounts for his belief that he could have his payable income assessment reviewed.
Consideration
[7] Report of Dr Anthony Henderson (Consultant Forensic Psychiatrist) dated 9 September 2020. Exhibit OP2.
First ground – the Respondent’s change of position at the hearing
The following is the background to the Other Party’s first ground for seeking reopening of the case.
The reviewable decision provided detailed consideration and reasons for cancelling the paragraph 149D(1)(d) ground and confirming the paragraph 149D(1)(f) ground.
The Respondent’s Statement of Facts Issues and Contentions (SoFIC) in the substantive proceedings was dated 5 July 2021. It includes the Other Party as a party the proceedings. It set out a detailed argument, including reference to authorities, supporting its confirmation of the paragraph 149D(1)(f) ground and cancellation of the paragraph 149D(1)(d) ground.
The cancelled ground was the only ground that was in dispute between the Respondent and Applicant in the substantive proceedings. The Applicant set out in detail in its SoFIC dated 19 July 2021 why the Respondent’s decision to cancel the ground should be set aside.
In the substantive proceedings, the Other Party provided The Other Party’s Outline of Contentions[8] (Outline) which explicitly stated that the Tribunal had to review both grounds of objection and addressed each in detail. He concluded that he sought to have the cancelled ground remain unchanged and the confirmed ground cancelled.
[8] Filed under cover of a letter dated 9 August 2021.
In relation to the application to reopen, the Respondent accepted that it took a different position from that set out in its SoFIC during the hearing of the substantive matter on 24 November 2021. It argued that its task as the decision-maker is not to adjudicate whether it was able to defend the decision but to assist the Tribunal to reach the correct or preferable decision. It referred to subsection 33(1AA) of the Administrative Appeals Tribunal Act 1975 (Cth) and various authorities to that effect.
The “different position” taken by the Respondent at the substantive hearing was this. Mr Hutchins, who appeared for the Respondent, stated near the beginning of the hearing that in accordance with the Respondent’s duty, having a better understanding of the issue in respect of the cancelled ground, and certain material having come to light, it may not have had reasons for cancelling that ground.
I do not criticise the Respondent for taking the position it did at the substantive hearing. However, the question is whether its change of position requires the hearing to be reopened.
The Other Party claimed that because he had believed that the Respondent would maintain its argument that the cancelled ground should remain cancelled, the Other Party did not put forward any submissions and cases to establish a “reasonable excuse” in accordance with the Act. Thereafter, in his request to reopen, the Other Party quoted at length from the reasons for cancelling the paragraph 149D(1)(d) ground set out in the reviewable decision, including the reasons for finding that he had a reasonable excuse and various authorities supporting that position.
The Other Party did address the ground in his Other Party’s Outline in the substantive proceedings. There were four arguments:
(i)The Other Party had had made it clear to the Applicant that he had provided all the information that was available to him, including at the annulment application proceedings, and had made a noteworthy effort to reproduce all his books and records to the Applicant.
(ii)His applications for extensions of time were reasonable. He emphasised that the extensions of time were for the purpose of providing documents that he had previously provided to the Applicant.
(iii)“The forgoing goes some way to establishing a reasonable excuse”.
(iv)The Applicant has taken a harsh approach to extend the bankruptcy, apparently in retribution
He repeated those claims during the substantive hearing.The Other Party also made submissions that are not relevant to this issue, refuting claims the Applicant had made about the Other Party’s history of involvement with prohibited drugs, prescribed medications and staging a car accident.
Both the reviewable decision and the Respondent’s SoFIC dated 5 July 2021 set out detailed argument supporting its decision to cancel the paragraph 149D(1)(d) ground, including authorities. That is material the Tribunal will take into account.
The Other Party was on notice that the Applicant was disputing the Respondent’s decision to cancel the 149D(1)(d) ground and had the benefit of its SoFIC which was directed solely to that issue. He had the opportunity to address those submissions and did.
I am not persuaded that the Other Party has established a basis for reopening the hearing in respect of his first ground. Apart from being taken by surprise and being disappointed, he has not established that he has suffered any prejudice by the Respondent’s change of position at the substantive hearing. Despite his claims to the contrary, he has not demonstrated that he has any new evidence or a basis for new submissions in respect of the cancelled ground that are different from what is already before the Tribunal in the substantive proceedings in relation to that ground from himself and the Respondent before it changed its position at the hearing.
I reject the first ground for reopening the case.
Second ground
The Other Party’s argument on the second ground for reopening relates to the paragraph 149D(1)(f) confirmed ground of the Objection. The Other Party did not dispute that he had not paid the assessed contribution but argued that he had a reasonable excuse for not doing so pursuant to paragraph 149N(1A)(c) of the Act.
His argument for reopening was based on the Respondent sending him emails on 3 and 10 December 2020 while he was in custody. He claimed that he did not receive them.
The email dated 3 December 2020 was in evidence in the substantive proceedings.[9] There was also in the T documents an email dated 9 December 2020 from the delegate to the Other Party.
[9] T8.
The Other Party said that he did not have a copy of the 10 December 2020 email. There was no email from the Respondent dated 10 December 2020 in evidence in the substantive proceedings.
He set out a number of other emails between himself and the Respondent which were not in evidence in the substantive proceedings.
Those documents relate to the Other Party’s application for review by the Respondent of the assessed amount of the income contribution under section 139ZG of the Act. No decision has been made by the Respondent.[10] That matter is not before the Tribunal.
The Other Party was incarcerated on 27 November 2020. He argued that he was unable to respond to the Respondent’s emails sent on 3 and 10 December 2020 because he was in custody and that he had done all things possible to comply with the Applicant’s Assessed Income Contribution Notice and with the Respondent’s requests during the review process of that assessment, which the Other Party initiated in an email dated 23 September 2020. He quoted from that email in his submissions in reply. A copy of the email was not in evidence in the substantive proceedings. The Other Party sent the application for review of the assessed contribution to the Respondent on the same day that the Applicant wrote to him directing him to pay the arrears of $3,957.60 immediately.
At the substantive hearing, the Other Party argued in respect of the confirmed ground, that he was never advised that he was liable to pay the assessed income contribution and had a telephone conversation with someone from the Respondent’s office who said that he did not have to pay while the income contribution was being assessed. This argument was extended during the application to reopen to claim that the correspondence with the Respondent to which he referred, had caused confusion.
The Other Party argued in this application that I must be satisfied that he deliberately avoided complying with payment of the income contribution. He pointed to an email he sent to the Applicant on 13 November 2020 in which he stated that he understood the Respondent was reviewing his income assessment.[11]
[11] T3 p 31.
The Other Party continued to focus on his right to seek review of the income contribution assessment as though that right was disputed. It was not. That he had lodged a review application which has not been determined was not in dispute and was acknowledged in the substantive proceedings. The issue was his claim that he did not have to pay the assessed contribution while the review application was being considered.
He submitted a one-page extract from the Law Handbook (15th Edition) published by Redfern Legal Centre, which was entitled Effects of bankruptcy on income. He highlighted the first four lines (in bold) of the following:
Appeal
A bankrupt person can appeal to the Inspector-General in Bankruptcy if:
·They disagree with the calculation of their assessed income contribution; or
·They are unhappy with the trustee’s response to a hardship application.
If the person is not happy with the Inspector-General’s decision, they can appeal to the Administrative Appeals Tribunal.
The assessed contribution must continue to be paid until the appeal has been determined.
He did not highlight the last two lines which contradict his position.
The Other Party’s arguments were contested at the substantive hearing by the Applicant and Respondent who relied on the notification in the Assessed Income Contribution Notice that the Other Party’s liability to contribute the assessed amount was not affected by making an application for review by the Respondent of the assessed amount under section 139ZA of the Act. The Applicant also informed the Other Party in that document that non-payment of the Compulsory Contribution Liability was grounds for objection pursuant to paragraph 149(1)(f) of the Act.
The Respondent pointed out that the documents the Other Party referred to for the purpose of this application, post-dated the date he was required to make his first income contribution, 11 August 2020, and claimed that none of the correspondence, nor the Other Party’s incarceration on 27 November 2020, was capable of explaining why income contributions due on 11 August 2020 and 11 September 2020 were not paid.
As he did during the substantive hearing, the Other Party continues to entangle the requirement that he pay the income contribution assessed by the Applicant with the review process of that assessment by the Respondent, by maintaining that he was not aware that he had to pay the assessed contribution while the review process was under way. He claimed during the hearing on this interlocutory application that he had been misled and had made a genuine error.
The Objection was lodged on 11 November 2020. It referred to arrears of $5,936.40 which reflected non-payment of the contributions due on 11 August, 11 September and 11 October. Correspondence after that date cannot explain why he had not made the payments when due.
The Other Party referred to the following communications in his application to reopen. He did not provide copies of the documents.
·His application to the Respondent for review of the contribution assessment dated 23 September 2020 which appears to have been set out in full.
·A response from the Respondent dated 24 September 2020 advising him of the requirements for making such a review, including that it be in writing and accompanied by a notice of assessment and documents the bankrupt relies on in support of the request, with a hyperlink to the application form.
·On 28 September 2020 the Other Party responded, attaching a letter from the Applicant and the Other Party’s response, and stating that he was “on standby” to answer further questions and was working to collate supporting evidence.
·On 12 November 2020 at 2:02 pm, the day after the Applicant’s Objection was issued, the Other Party wrote to the Respondent apologising for having overlooked “your email dated 29.09.2020” and advising that he had sent the 28 September email “with my reasons to why I am not satisfied Pursuant to Section 139T(10) of the Act – which (sic) the trustee’s assessment. My reasons have not changed since 28.09.2020- however, I now lodge this information in the required form.” He attached a copy of the 28 September 2020 email.
·On 18 November 2020, the Respondent acknowledged “receipt of your application for a review of your trustee’s assessment dated 28 July 2020” and advised: “I will review your application and the trustee’s assessment along with the supporting evidence, and report back to you once I have done this”.
None of those communications say anything about not having to pay the assessed contribution when an application for review of that assessment has been made to the Respondent. In the email of 3 December 2020, the Respondent requested further information from the Other Party in respect of the contribution assessment review and stated:
A review will only be undertaken on the condition that the above requested material is provided.
In the 3 December 2020 email, the Respondent stated the following with respect to the objection review application, which is the subject of the substantive proceedings:
Objection Review Application
I note that one of the grounds relied on was the non-payment of contributions liability. This makes the objection review, to some extent, dependent on the outcome of the income review. It is practically preferable for the income review to be dealt with first, and the objection review to be dealt with second. To this end, I request that withdraw your application for review of the objection. If you are agreeable to this, I undertake to perform a review of the objection on the Inspector General’s own initiative. This approach will ensure that you are no worse off, and will allow me to arrange the sequencing of the work in a manner that is most advantageous to you. If you are agreeable to this approach, namely to withdraw your application for an objection review, could you please confirm this in writing by Monday, 7 December 2020? (Emphasis in original.)
The Other Party made the following submission in his application to reopen:
It is submitted that the other party was unable to respond to the 3 December 2020 email (or 10 December 2020 email), because he was in custody. In effect, the Trustee’s Assessed Income Contribution notice could not be accurately attended to by the other party, by no fault arising from his own.
It is submitted that the other party did all things possible to comply with Trustee’s Assessed Income Contribution notice, in accordance with all instructions that were before him, and no doubt showed a great deal of willingness to cooperate by liaising with the Inspector General’s office un (sic) until his date of incarcerate.
Accepting that the Other Party was unable to respond to the 3 December 2020 email or to the 10 December 2020 email which is not in evidence, his submission does not advance his case. He did not do what he was obliged to when he received the Assessed Income Contribution Notice – pay the sums assessed when due. The emails he did not receive cannot have provided a basis for his claimed belief that he did not have to pay while the Respondent was reviewing the assessment. In any event, the content of the 3 December 2020 email does not provide such a basis.
For completeness, the 9 December 2020 email from the Respondent to the Other Party requested an urgent response to the request made in the 3 December 2020 email set out at [52]. The Other Party’s reference to the email of 10 December 2020 may have been in error.
Finally, both those emails were in the T documents. He could have made this argument during the substantive hearing.
Subsection 149N(1B) of the Act requires that no notice be taken of any conduct of the bankrupt after the time when the ground concerned first commenced to exist, that is 11 November 2020. In any event, the correspondence before or after 11 November 2020 does not indicate that payment of the assessed contribution did not have to be made while the Respondent was conducting a review of that assessment. The new evidence the Other Party refers to does not advance his case.
Dr Henderson’s report was in evidence in the substantive proceedings. It is dated 9 September 2020. The Other Party annexed the report to his affidavit of 23 March 2021. He did not make the submission that he now makes in the substantive proceedings. It was open to him to do so.
The Other Party’s submission was:
There is often a nexus between Bi-Polar Disorder (II) and a person’s thinking pattern. It is submitted that an examination of the Other Party’s mental state as a whole, and not just the specific matters that the appellant brought Dr Henderson’s attention to in Section 2, it reinforces the likelihood of the opinion that Dr Henderson sets out in 6.4 is correct on the balance of probabilities, or at least that there is a reasonable possibility that the Other Party’s judgment (Emphasis in original) was significantly impaired by this mental illness of Bipolar Disorder (II). It is therefore submitted that there is a reasonable possibility that the Other Party’s diagnosis of Bipolar Disorder (II) accounts for his beliefs as to why he thought that he could have his payable income assessment reviewed (putting to one side the confusion paragraphs and email exchanges). (Emphasis added.) Therefore, any misstatements, exaggerations and/or misleading information that the Applicant or Respondent may perceive against the Other Party, can now be better understood by turning to the report of Dr Henderson.
The Other Party’s “beliefs as to why he thought he could have his payable income assessment reviewed” was not in issue. He could and did apply for review. No decision had been made at the time of the substantive hearing. This submission does not assist him. It does not address the issue in the proceedings which was whether he had a reasonable excuse for not paying the assessed income contribution.
The Other Party has not established a reason for reopening the hearing in respect of the second ground.
Conclusion
The Other Party has not established a ground for reopening the hearing in this matter.
Decision
The Other Party’s application to reopen this matter is refused.
I certify that the preceding 63 (sixty-three) paragraphs are a true copy of the reasons for the decision herein of Mrs J C Kelly, Senior Member
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Associate
Dated: 12 May 2022
Date of hearing: 5 April 2022 Applicant: By video Solicitors for the Respondent: C Hutchins. Australian Government Solicitor Other Party: By telephone
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