Waterhouse & Anor v. Deputy Federal Commissioner of Taxation.

Judges:
Fox J

Court:
Federal Court

Judgment date: Judgment handed down 16 September 1986.

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Fox J.

Robert William Waterhouse and William Stanley Waterhouse have each made two applications which are before me. The material relating to the situation of the two persons is identical. It is only necessary to discuss one in order to dispose of both. So far as necessary I will refer to the material in the case of Robert William Waterhouse.

The first applications were to extend the time in which the applicants could apply for statements under sec. 13 of the Administrative Decisions (Judicial Review) Act 1977 with reference to the notices hereinafter referred to. There is no provision in that Act for the extension of time for applications to be made under sec. 13, and it was agreed that the applications had to fail. It was said by counsel

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that the application had been made on the basis that at a hearing, assuming proceedings for review went ahead, the fact that a statement under the section had been sought was relevant. I say nothing as to this proposition except to point out that it relates to evidence and does not justify substantive applications such as the present. I therefore dismiss the applications to extend the time in which a statement under sec. 13 may be sought.

The more substantial matter concerns the review of a decision of the respondent made on 22 April 1985 notified by a formal notice of that date, given under sec. 264 of the Income Tax Assessment Act 1936. The matter comes before the Court, however, not by way of an application to extend the time in which an application for review of that decision may be made but on an application by the respondent to dismiss the applicants' application as incompetent.

So far as the documents are concerned, the application for review (I take the case of Robert Waterhouse), which was filed on 11 June 1986, plainly is incompetent, in the sense that it is well out of time. However, counsel for the applicants has orally applied today, before me, for an extension of the time in which the application may be made for review.

The application for review which has been filed lacks detail but it is my understanding that the substantial ground sought to be argued is that the time given in the notice issued on 22 April 1985 was unreasonably short. It sought a very wide range of information to be supplied on or before 29 May 1985.

This was indeed a short time, but the evidence does not enable me to say that it was so unreasonable that the notice should be regarded as invalid, or, although the matter was not put this way, that there is a good arguable case that it is invalid. The case has not been presented on the footing that further evidence is to be addressed, but rather on the footing that the existing material proves the unreasonableness.

An important factor is that the respondent sought the same information both orally and by a written communication in February 1985.

The evidence in support of the applicants' case is to be found in the affidavit of Mr Potts who was a tax agent who acted for both applicants. So far as appears they left the whole situation in his hands and in his affidavit he has pointed out the difficulties he had so far as the availability of his time was concerned in acquiring the necessary information and answering the request. This is somewhat inconclusive. He mentions the possibility of employing someone else to assist but disposes of that proposition rather summarily. In a letter to the respondent dated 29 May he concludes by saying that he is going away for several weeks' leave. What could have been done had a wholehearted attempt been made to obtain the information, so that nearly all of it or all of it could have been provided within time, is not a matter upon which my conclusion at this stage can safely be reached.

It seems to me therefore that the main essence of the applicants' case in regard to this matter must fail; at least I cannot be satisfied that there is a sufficiently sound case that it could succeed.

There are other important considerations. I have mentioned that the notice was issued on 22 April 1985 and that the application for review was made on 11 June 1986, and no application for extension of time to file that application was made until the matter came before the Court today.

There is no explanation as to why the application for review was out of time or being out of time why an application was not made for extension of time. Counsel for the applicants proffers an explanation (not appearing from the evidence) which he says is that it was only in the course of proceedings in the Magistrates Court, relating to the applicants' default under the notice, that it was realised that that Court could not deal with the validity or otherwise of the notice. With respect, this does not seem to me to be helpful to this case, or to account for the failure to apply many months ago for an extension of time. If the notice was to be challenged, there was legislation now relied upon as enabling this to be done. The time to do it was when the notice was received, or, at least within a short time thereafter. To rely upon a belief that a Court before which a penalty was sought would not enforce it was to turn one's back on the legislation in question, and to disclose ignorance of sec. 9 of the Act.

The evidence indicates that the applicants were frequently asked to provide the

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information. In the course of the proceeding in the Local Court an undertaking was given by senior counsel that a substantial amount of material in answer to the notice would be provided within 28 days. All we know about that is that it was not provided. There is no evidence that the notice has to this date been satisfied.

The question of prejudice to the parties was debated. The prejudice to the applicants if the present application fails will be that the proceedings in the Local Court can continue in that regard and a fine, imprisonment or both can be imposed. What course the Court might take is of course a matter for it and it may be influenced by whether or not the information sought has been furnished.

The prejudice to the respondent is rather that of an authority which has the responsibility for collecting tax and to this end obtaining relevant information from taxpayers. The present applicants have apparently already occupied a considerable part of the time of the taxation authorities and it can be said that the public through them has suffered some prejudice by their failure to comply with the notice. I say this because it can be too readily thought that a public authority does not really suffer ``prejudice'' in the relevant sense. I think that is wrong, at least in a case such as the present.

I am afraid that my present conclusion on the facts would be that there is a lack of genuineness in the application made. It appears to me that there is not a real concern about the notice, or the time it allowed. It is recognised that the respondent is entitled to have the information, and promises have from time to time been made to provide it, or part of it. What is sought is to impede action by the respondent to get it, or get all of it. If it had all been supplied by now, there would be little if any point in the present application. Seemingly, the applicants are indulging in delaying or attrition tactics. They let the application for an order of review rest in the file until action was taken by the respondent. At the last minute application is made for an extension of time of over a year.

I order that the applications in relation to sec. 13 be dismissed, with costs; that the oral applications made by counsel be dismissed, with costs; and it be declared that the applications are not competent, again with costs.

[Discussion then ensued.]

I think that is what I will do. Instead of making any order about lack of competence I will just dismiss the applications. I will dismiss them with costs, and the costs are to include the costs of the applications based on lack of competence.

THE COURT ORDERS THAT:

1. The applicants' motion dated 27 August 1986 be dismissed.

2. The applicants pay the respondent's costs of the motion.

3. The applicants' oral applications for an extension of time to file an application for an order of review be dismissed.

4. The applications for an order of review dated 11 June 1986 be dismissed.

5. The applicants pay the respondent's costs of applications (3) and (4) the costs to include the respondent's objection to competency dated 2 July 1986.