mo ae (925 Administ ce aS fu tive Lay - Adminittrative Decisicne 'Judicial Review) Act - Income Tax Assessment Act - registration of applicant as group employer - escort agency - application for extension of time to lodge application for judicial review - whether there exists a serious matter to be tried - whether delay excusable - whether extension will prejudice the parties - delay of solicitors considered. Income Tax Assessment Act 1936 sub-ss.221A and 221F(3); s.264 Taxation Administration Act 1953 s.8C Administrative Decisions (Judicial Review) Act 1977 933s.11 and 15 Cases: Hickey and Others v. Austvalian Telecommunications Commission (1982-1983) 47 ALR 517 Lucic v. Nolan and Others (1982-1983) 45 ALR 411 Duff and Others v. Freijah and Others (1982) 43 ALR 479 Wedesweiller and Others v. Cole and Others (1982-1983) 47 ALR 528 Sophron v. Nominal Defendant (1957) 96 CLR 469 Davies v. Pagett (Federal Court - unreported - 10 April 1986 - NT G18 OF 1985 SUSANNE DEVEREAUX v. THE DEPUTY COMMISSIONER OF TAXATION No. WA G26 of 1986 MUIRHEAD J. PERTH 6 JUNE 1986 IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA G26 of 1986 weve rwwr BETWEEN: SUSANNE DEVEREAUX Applicant and THE DEPUTY COMMISSIONER OF TAXATION Respondent MINUTE OF ORDER JUDGE MAKING ORDER: MUIRHEAD J. DATE OF ORDER: 6 June 1986 WHERE MADE: Perth THE COURT ORDERS THAT: The time for lodging of the application for review shall be extended until 3 April 1986, the date the application was filed. There be a stay of proceedings and suspension of the operation of the decision or decisions. The applicant must pay her own costs of and incidental to this application. The question as to the respondent's entitlement to his costs of this application from the applicant be reserved for consideration by the court which determines the review. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA G26 of 1986 weve vw BETWEEN: SUSANNE DEVEREAUX Applicant and THE DEPUTY COMMISSIONER OF TAXATION Respondent CORAM: MUIRHEAD J. 6 June 1986 REASONS FOR JUDGMENT This is an application for extension of time to lodge an application for judicial review of a decision of the respondent. On about 19 April 1985 an officer of the respondent directed that the applicant be registered as a group employer under the provisions of sub-3.221F(3) of the Income Tax Assessment Act 1936. At or about the same time the officer directed that notices should be issued to the applicant pursuant to s.264 of the Act requiring her to remit tax instalment deductions in respect of the months of February and March 1985 and thereafter that such notices should be issued each month. It was further directed that the applicant's failure to comply should result in prosecution pursuant to 3.8C of the Taxation Administration Act 1953. Primarily it is the decision as to registration of the applicant as a qroup émplover of which review is sought. although the other directions and some of the consequences which have followed may be reviewable decisions. At this stage it suffices to state that the respondent has implemented the decision with some vigour. The applicant's failure to comply with the notices resulted in three separate convictions upon ex parte hearings in the Court of Petty Sessions in Perth in May 1985 when substantial fines were imposed. Other complaints have been laid and currently await hearing. Further complaints are under consideration. The application for an order of review was not lodged by the applicant's solicitors until 3 April 1986, over eleven months from the date of the decision. Section 11 of the Administrative Decisions (Judicial Review) Act 1977 sets out the manner of making applications and sub-s8.3 requires that it shall be lodged "within the prescribed period or within such further time as the Court (whether before or after the expiration of the prescribed period) allows". Here there was no request for reasons for decision or other material under 3.13 of that Act. Accordingly as a prerequisite to review the application for review was required by statute to be lodged by at least the 20 May 1985. It is well out of time. Upon the hearing of the application many affidavits were tendered and most, if not all of the deponents were cross-examined. In fact, the evidence I heard went at least in some measure to matters which would be the subject of inquiry upon review itself. I heard detailed evidence from the applicant herself, from persons who were involved with her in her activities. from solicitors and from various officers from the Australian Taxation Office. Factually there was much common around and credibility is not much in issue. The evidence was called by the applicant's counsel not only by way of historv but in large measure to demonstrate "merit" in the application for review itself, undoubtedly a matter of some relevance. The evidence adduced by the respondent tended to show that neither the applicant nor her solicitors had approached the review with energy. To use the words of Lockhart J. in Hickey v. Australian Telecommunications Commission (1982-1983) 47 ALR 517 at 524 there was "a very leisured approach to litigation". The lack of precise or positive correspondence or early action on the part of the applicant's solicitors undoubtedly caused some confusion in the minds of departmental officers and has made my task no easier. Be that as it may as I have decided to extend time and bearing in mind the wide discretions and powers available to this court upon review itself I have decided that in these reasons I should not set out my views upon the evidence in much detail. I will deal with the law and facts only in a manner sufficient to explain my reasons for exercising my discretion in favour of the applicant. The background is a little unusual. The applicant at times material carried on business, and continues todo s0 as proprietor of an escort agency which trades under the style of Stardust Elegant Companions. It is probably only in recent years that such operations have been broadly acceptable, although the applicant's evidence suggests that she is not free from the attention of law enforcement authorities. Be that as it may the businezs is registered and the availability of women associated with 1ts activities is openly advertised. It is the applicant's contention that she 1s not and never has been an employer of these women within the meaning of the law relating to master and servant, principal or agent or within the meaning of 'employer' ag defined in sub-s.221A of the Income Tax Assessment Act. She maintains that she has not paid salary or wages to them as defined in sub-s.221A and that the decision to reqister her as an employer is inappropriate and wrong in law. She relies not only upon her own evidence in establishing these facts. Two other women associated with the agency also gave evidence. I see no reason at this stage to reject the evidence which was led relating to the operation of the agency or the applicant's testimony as to her relationship and arrangements with the 'working girls' concerned. Tt seems to me there is a very live issue of law to be determined. As I have pointed out the consequences of the decision and her liability to prosecution thereunder are very live matters. It is not a case such as in Hickey's case (above) where the decision and its consequences were very much things of the past and where there was really little to be achieved in re-examining the issues which surrounded it. T am satisfied the application for review has merit in that there is substantial matter for review or to use a phrase more appropriate to injunctive relief, a serious matter to be tried. The decision has undoubted and continuing importance to the applicant and perhaps to the respondent. If the registration was wrong in law the applicant has suffered and continues to suffer injustice, under circumstances where relief in any other forum is problematical. I also observe at this stage that I do not find that the respondent will be prejudiced in an appreciable mn measure by the delay which occurred prior to the lodaqing of the application. The araqument will be largely a question of law and the respondent's files will suffice to enable his counsel to adequately deal with factual matters. which from the affidavits filed appear to be pretty well documented. I conclude this aspect by observing that if the applicant's evidence as to her past relationship with her 'working girls' is correct it may be impossible for her to comply with the requirements the decision places upon her and thus her vulnerability to prosecution is perpetuated. It is simple to say that such a business should be abandoned, but as a matter of justice it is desirable that the applicant should have the opportunity of seeking a review by this court of a decision which has already resulted in three quasi criminal convictions, the imposition of serious penalties and pursuant to which she remains at risk save by abandonment of her activities which the law rightly or wrongly appears to countenance. I turn now to the question of delay which has indeed been serious. In April 1985 the applicant received notice from the respondent that she had been registered as a group employer in accordance with the provisions of sub-s.221F(3) of the Income Tax Assessment Act effective from February 1985 and this was followed by regular final notices requiring remittance of tax instalments deducted from the salary or wages of employees and the furnishing of written information. The applicant did not comply with the notices. Her case is that she could not do so as_ the women working under the auspices of the service were not employees, were paid neither salary nor wages and in some cases were not known to her gave by a farst name 'often false) anda telephone number through which appointments with men were arranged. The applicant had previously been served with such notices in connection with her association with her previous escort service 'Peppers', Complaints were later laid. as I have said, charging her with offences under s.8C of the Taxation Administration Act in respect of her failure to comply with the respondent's requirements. A table of final notices and prosecutions is exhibited to the affidavit of Mr Sydney Jenkins, an officer of the department filed in this matter (Exhibit STJ~-2). The applicant has sworn that she "did not know that I had a defence of any sort, nor that there was any means of setting aside the determination" of the respondent. IT am satisfied that the applicant had sought advice and had in fact conferred with the respondent concerning other tax matters. She seems to have taken the view there was nothing she could do about her registration as a group employer and its consequences as she had previously advised the department that she was not an employer. Early in August 1985 Mrs Whitney took over the running of Stardust Elegant Companions and she received similar notices from the respondent. In August 1985 both Mrs Whitney and the applicant sought advice from the applicant's solicitors and a decision seems to have been arrived at that as Mrs Whitney was actually running the agency at the time steps should first be taken on her behalf. By a comprehensive letter dated 30 August and written on behalf of Mrs Whitney their solicitors wrote to the respondent setting out in some detail the basis of their argument. The letter concluded "In the circumstance we ask that you reconsider your decision to register our client as a group employer and we ask that you cancel that registration forthwith. Should vou decline fo effect cancellation as requested we shall advise our client of the legal remedies available to her". I am satisfied that the solicitors decided to await a response to that letter before taking further steps on behalf of either the applicant or Mrs Whitney. This was perhaps understandable. It was a reasoned letter and included submissions which called for consideration and reply. Be that as it may, assuming those solicitors had in mind judicial review as one of the legal remedies. prudence required that at least a preliminary application for review and extension of time should have been filed forthwith. This was not done and primary responsibility for the subsequent delay must be attributed to the applicant's advisers. Unfortunately the respondent did not reply to the letter which apparently was under consideration in the department for a long time. Later there were telephone conversations between the solicitors and officers of the department, most of whom appear to have been members of the prosecution section, relating to the final notices and complaints. I do not propose to detail the evidence as to those conversations. References were made to the Federal Court, but due, I helieve, to a lack of precision on the part of the solicitors the officers concerned believed they had in mind appeals to this court from the Court of Petty Sessions which are not of course authorised by law. This added to the confusion. By letter dated 10 October the solicitors again wrote to the respondent in the following terms: "Dear Sir. GAIL J WHITNEY TRADING AS STARDUST ELEGANT COMPANTONS GROUP EMPLOYER REGISTRATION NO. 33376634 We refer to recent discussions between Mr Price and Mr Fletcher of this office wherein it was suggested that while vou are deliberating on the submission made to vou on 30 August 1985 bv ourselves in connection with your registration of our client as a group employer, she should in the meantime comply with the requirements imposed upon a group employer and in Particular should commence to make deductions of tax instalments to be remitted to the Commissioner. It was pointed out to us that failure to do so would render her liable to prosecution under Section 221 EAA. We wish to advise that our client is quite simply not in any position to make such deductions as she does not have employees and consequently pays no salary or wages from which deductions could be made. Notwithstanding the erroneous registration of her as a group employer she is not, in fact, an employer. Neither Section 221 C nor 221 EAA or indeed any part of the division two has any application to our client. Accordingly any prosecution for failure to comply with your requirements would be vigorously defended." In the meantime the applicant had been advised to await the respondent's response, the same agency and modus operandi being concerned, and it was not until October 1985 that the applicant was informed she should consider an application for review to this court. Another member of the firm took over the handling of the matter on behalf of the applicant and in January 1986 he spoke to an officer of the department when a further adjournment of charges against the applicant was agreed. On 7 January the applicant and Mrs Whitney attended their solicitors and the applicant was advised to take further steps, primarily to obtain corroboration of her instructions concerning the relationship between the agency and the women concerned in its activities. Again there was a serious delay, exacerbated by the killing of a person who worked dane we te hee at wh Dette seo a. ha A = ch ri under the auspices of the agency: but the circumstances cannot really excuse the continuing failure to lodge the application. In the background of this matter I take into account that during 1985 and the early part of 1986 the applicant experienced many worries. Her affairs which appear complicated (the escort agency being only one of her apparent businesses) were in the hands of a trustee in bankruptcy, she had other litigation to attend to and obviously her personal taxation affairs were complicated. She had some domestic and health problems; possibly the price of engaging in the business of an escort agency, but nevertheless reali problems. It will only be in rare circumstances that a delay of the nature here experienced will be excused by the granting of an extension of time. The discretion vested in this court to extend time is untramelled by the statute, there are no criteria such as special reasons or circumstances, but nevertheless the discretion must be exercised judicially, not arbitrarily, with a steady eye on the very precise provisions of the legislation as to time for lodging an application and the obvious policy matters that require prompt review of administrative decisions. With those matters in mind I. turn briefly to the authorities. In Lucic v. Nolan (1982-1983) 45 ALR 411 Fitzgerald J. dealt with the issues in detail and his judgment has frequently been cited with approval in subsequent judgments of this court. His Honour stated (at p.416): "The legislation contains various mechanisms to allow these different policy considerations to be balanced. 19. Thus. for example, one of the features of the Administrative Decistons '(Tudicial Review) Act is that 1t contains limitations with respect to the time for the commencement of proceedinas. Where specific periods are fixed, thev are quite short. That carries obvious implications. However. the time limitations are not absolute. In this. as in other matters arising under the Act, eg in respect of the relief which may be granted under s 16, the court is given a discretion. None the less, it must. in my opinion, be accepted that 1t has deliberately been made the prima facie rule that proceedings not commenced in time should not he entertained. In this respect, there is an obvious contrast between the terms of sub-s.11(3) which provides a pre-emptive fixed period subject to a discretionary power of extension, and the provisions like that of s.11(4) which do not fix any particular period but refer merely to what is in the court's opinion "reasonable". I do not think that the court, in exercising its power to make exceptions in appropriate cases, should confine its attention to the consequences to the applicant of a refusal to extend time. Justice, as the ultimate object to be obtained by the exercise of the discretion, seems to me to require that regard be had to broader considerations than merely the interests of the applicant. Further, whilst there will be some matters which are relevant to the question whether time should be extended (in ordinary litigation inter partes) which are also relevant in this context, it seems to me likely that the overlap is only partial and that different emphasis is appropriate to some of the common factors. It may be that exceptional circumstances need not always be shown before time can be extended. However, I consider that an applicant for an extension of time maintains thoughout the burden of showing why, in all the circumstances, the extension of time should be granted. I do not think that, given proof of certain matters by an applicant, eg an explanation for his delay in making application, an evidentiary onus shifts to the respondents to establish that prejudice will result if the extension is granted; nor, in my opinion, if the delay is explained and there will be no personal prejudice to the named respondents, should an extension always be granted. All else aside, there will often be no question of prejudice to a respondent decision-maker." In Hickey (supra) Lockhart J. referred to earlier authorities of this court pointing out "that differences of approach are discernable in those cases, generally being differences as to the emphasis which should be placed on various Ll. matters in deciding whether to allow an extension of time ina particular case". I respectfully agree with these observations which apply generally to those matters where the discretionary exercise of indulgence depends not on fixed criteria but upon variable circumstances which must be applied to the provisions and intent of the legislation. After expressing agreement with the approach of Fitzgerald J. in Lucic v. Nolan (above) His Honour observed: "Although s.11 does not in terms place an onus on an applicant seeking an allowance for further time within which to lodge an application for an order of review, it is nevertheless incumbent upon him to satisfy the court that an extension of time should be granted. It is not for the decision-maker to establish that the applicant does not have a case for an extension of time. The applicant seeks an indulgence. It is for him to prove that he is entitled to it. But the court should not surround the exercise of its discretion with unnecessary constraints such as a requirement that there be special circumstances or considerations of that kind. The statute does not require then. Nor should the courts. It is best left to the good sense of the judge hearing each case to determine whether, on the evidence before him, the court's discretion should be exercised in favour of granting an enlargement of time to bring an application for an order of review." I have been particularly concerned in this matter by the delay experienced between August 1985, when the applicant put the matter inthe hands of her solicitors and April 1986 when the application was lodged. I accept they awaited in good faith a reply from the respondent to their letter of 30 August, perhaps hoping for resolution by discussion and anxious to avoid litigation pending such possible resolution. But the legislation speaks cogently of the dangers of such delay and they should have realised their client's interests required an immediate application to be lodged. In Dutf v. Fretiah (1982) 43 ALR 479, a case in which the delay of an association not a solicitor was under consideration, Northrop Jd. commented "It is well established that delays by a solicitor are visited upon the client when those delays are relevant to limitation periods or matters involving want of prosecution". In Wedesweiller v. Cole (1982-1983) 47 ALR 528 at 531 Sheppard J. commented upon this passage and observed "That is not, with great respect, a proposition which I would accept as having qageneral application. It will be so in some cases, but it may not be so in others". He referred to the observations of the High Court in Sophron v. Nominal Defendant (1957) 96 CLR 469 at p.475 which included the following "No one, of course, doubts that such a consideration as to the blamelessness of the claimant and the responsibility of his solicitor is very material. But every case must be determined on its own facts. Fixed formulae cannot be substituted for the wide words of the sub-section, ..... ", (See also Martin v The Nominal Defendant (1954) 74 WN(NSW) 121 per Walsh J. at 124. I refer in conclusion to the recent remarks of Morling, Beaumont and Wilcox JJ recently against a very different background in Davies v. Pagett (Federal Court - unreported - 10 April 1986 - NT G18 OF 1985). The primary judge had refused to set aside interlocutory judgments entered in default of defence. The default was due to the negligence of the defendant's solicitors which their Honours agreed was "gross and inexcusable". The appeal was allowed and the judgment was set aside. Their Honours stated: "It is, however, another question whether concern about the extent of delays. either ina particular case or generally, should, in the absence of prejudice in the particular case. be taken into account in exercising a discretion to set aside a default judgment. The fundamental duty of the Court is to do justice between the parties. It is, in turn, fundamental to that duty that the parties should each be allowed a _ proper opportunity to put their cases upon the merits of the matter. Any limitation upon that opportunity will generally be justified only by the necessity to avoid prejudice to the interests of some other party, occasioned by misconduct, in the case, of the party upon whom the limitation is sought to be imposed. The temptation to impose a limitation through motives of professional discipline or general deterrence is readily understandable; but, in our opinion it is an erroneous exercise of the relevant discretion to yield to that temptation." I do not suggest that the principles involved were the same but mention this only as illustrating the modern tendency in examination of discretionary issues to seek to obtain justice for an individual on the merits, a goal, when discretion is at large, which is not totally irrelevant. This case is not one where the solicitors sat back and did nothing. They may have erred but they promptly put Mrs Whitney's situation and comprehensive argument to the respondent. They would have been well advised to have done so specifically on behalf of the applicant, but there is evidence that the respondent was aware of the identification of the agencies and the issues which were precisely the same. The respondent was aware of those submissions, of their importance and of the arguments adduced in seeking withdrawal of the registration which applied to the agency. Iam persuaded that despite the overall delay I should exercise my discretion and extend time. I summarise my reasons: There 1s probably areal and an important issue to be considered. It is a live issue in the sense that its consequences continue to flow. The decision has involved and may continue to involve the applicant in quasi criminal proceedings involving substantial penalties. The prejudice to the respondent cannot be rated as other than minimal. The issues which will be involved upon review were put to the respondent in correspondence in August last. The prejudice suffered by the applicant if time is not extended may be substantial. In support of the application for extension the applicant tendered substantial evidence. Once initiated the application was presented with thoroughness - a contrast to the situation in some of the authorities cited where extensions have been denied. 6. It is in the interests of justice that the decision should be examined. Pursuant to s.11 there will be an order that the time for lodging of the application for review shall be extended until 3 April 1986, the date the application was filed. Pursuant to s.15 and upon the applicant, by her counsel, undertaking to take immediate steps to obtain from the Deputy Registrar of this Court an early date for the hearing of the substantive application I suspend the operation of the decision or decisions and order a stay of proceedings thereunder. In these reasons reference has been made to a decision or decisions and there has been no argument that whatever was determined by the respondent was not a decision to which the Act applies. I merely stress that I have made no determination on this issue. I also direct that the substantive application should be heard by another judge of this court. The applicant must pay her own costs of and incidental to this application. The respondent acted perfectly reasonably in opposing it. I reserve the question I certify that this and the fifteen preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Muirhead. lige eth Associate Dated: 6 June 1986