FEDERAL COURT OF AUSTRALIA Deputy Commissioner of Taxation v Levick [1999] FCA 1580 PRACTICE AND PROCEDURE – motion for indemnity costs against solicitor –jurisdiction of Court to award indemnity costs – whether abuse of process is necessary for such a costs order – whether arguments so spurious as to suggest ulterior motive – whether Australian Taxation Office exists for legal purposes – whether delegate of Commissioner of Taxation authorised to file creditor's petition – whether Income Tax Assessment Act invalid. Constitution 1901 (Cth) s 58 Federal Court of Australia Act 1976 (Cth) s 43 Income Tax Assessment Act 1936 (Cth) ss 208, 209 Succession to the Crown Act 1707 (UK) Demise of the Crown Act 1901 (UK) s 1 Joosse v Australian Securities Investment Commission (1998) 73 ALJR 232 followed Sue v Hill (1999) 163 ALR 648 cited Caboolture Park Shopping Centre Pty Ltd (in liquidation) v White Industries (QLD) Pty Ltd (No 1) (1993) 45 FCR 224 followed Knight v FP Special Assets Ltd (1992) 174 CLR 178 followed Oasis Hotel Ltd v Zurich Insurance Co [1981] 124 DLR (3d) 455 cited White Industries (QLD) Pty Ltd v Flower & Hart (No 2) (1998) 156 ALR 169 followed De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544 referred to Edwards v Edwards [1958] 2 All ER 179 cited Hutchinson v Greenwood (1854) 4 El & Bl 324 cited Helljay Investments Pty Ltd v Deputy Commissioner of Taxation [1999] HCA 56 followed O'Reilly v Commissioners of the State Bank of Victoria (1983) 152 CLR 1 followed Carltona Ltd v Commissioner of Works [1943] 2 All ER 560 followed Calvin's Case (1608) 7 Co. Rep 1a at 10b followed Walsh v Professional Nominees Pty Ltd [1998] QCA 296 cited DEPUTY COMMISSIONER OF TAXATION v WAYNE R LEVICK N 7261 OF 1999 HILL J 1 DECEMBER 1999 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7261 OF 1999 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: WAYNE R LEVICK Respondent JUDGE: HILL J DATE OF ORDER: 1 DECEMBER 1999 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Wayne Levick be joined as a respondent to the proceedings. 2. Wayne Levick pay so much of the costs of the Deputy Commissioner of Taxation on the bankruptcy petition as related to the arguments to which reference is made in the reasons delivered today as were proposed to be raised on behalf of Mr Quinn, such costs to be calculated on a solicitor and client basis. 3. Wayne Levick pay the costs of the Deputy Commissioner of Taxation's motion, such costs to be calculated on a party and party basis. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 7261 OF 1999 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Applicant AND: WAYNE R LEVICK Respondent JUDGE: HILL J DATE: 1 DECEMBER 1999 PLACE: SYDNEY REASONS FOR JUDGMENT Introduction 1 On 5 March 1999 the Deputy Commissioner of Taxation ("the Deputy Commissioner") filed with the Court a creditor's petition against Paul Quinn in the New South Wales District Registry of the Court. The petition was based upon a failure by Mr Quinn on or before 25 November 1998 to comply with the requirements of a bankruptcy notice which had been served on Mr Quinn on 4 November 1998. The bankruptcy notice in turn was founded on a final judgment obtained by the Deputy Commissioner in the District Court of New South Wales in the sum $46,173.30. 2 On 4 August 1999 Mr Levick, the respondent to the present application and acting as solicitor for Mr Quinn, filed with the Court a notice of Mr Quinn's intention to oppose the petition. That notice contained seven grounds. Three alleged that Mr Quinn had suffered physical and psychiatric illness as a result of an assault and had not been able to understand the significance of the Court proceedings. It may be noted that no attempt was made to file any evidence covering the alleged assault, or the physical or psychiatric illness to which these three grounds referred. It may thus be inferred that a decision was made to abandon these grounds. The remaining four grounds were as follows: "1. The Applicant having found by reason of responses to applications under the Freedom of Information Act 1982 that the legal steps necessary to establish the Australian Taxation Office as an arm of the Commonwealth Government were not completed and gazetted. Therefore the Applicant challenges the delegation of power by officers of the Australian Taxation Office who are prevented by law from delegating such powers. 2. The Applicant says that the delegation of powers by officers of the Australian Taxation Office does not exist in law. 3. Further the Applicant seeks to challenge the appointment of the Commissioner of Taxation on constitutional grounds arising from the findings of this Honourable Court in Sue v Hill HCA 30 of 1999. 4. The demands upon which the judgement was obtained against me in the District Court of New South Wales at Newcastle in matter Plaint Number: 5026 of 1998 had no basis in law." 3 Subsequently on 27 August 1999 Mr Levick filed with the Court a document headed "Notice of Constitutional Matter". The document was also forwarded to the Attorney-General of the Commonwealth and the Attorneys-General for the States and Territories. That document is a little peculiar in that in part it suggests that the present proceedings were pending in the Supreme Court of New South Wales. The document claimed that questions would arise involving the Constitution and its interpretation. It alleges that questions of conflict arose between the Constitution on the one hand and the following Acts or instruments, namely: "a. The Treaty of Peace Act 1919 b. The Charter of the United Nations Act 1945 c. The Taxation Administration Act 1953 d. The Income Tax Assessment Act 1936 (as amended) e. The Public Service Act 1922 f. The Acts Administrations Act g. The Human Rights and Equal Opportunity Act h. The Australia Act 1985 (Cth) i. The Australia Act 1986 (UK) j. The Corporations Law (Cth) k. The Corporations Law (NSW)" 4 The notice averted to some at least of the questions raised in the notice of opposition. It referred to a decision of Hayne J in Joosse v the Australian Securities Investment Commission (1998) 73 ALJR 232, a decision of the High Court in Sue v Hill (1999) 163 ALR 648 and perhaps suggested some conflict between those cases. The document then continued: "A ruling is therefore requested from this Honourable Court that the passing of the Treaty of Peace Act 1919 and the Charter of the United Nations Act 1945 complied with the ruling of Hayne J and if Covering clause 5 is held to be valid and unaltered then the aforementioned Acts make the Treaty of Versailles, including the League of Nations Covenant, and the Charter of the United Nations, including the declaration of the preamble agreeing to uphold international law, binding on the courts of the states and the Commonwealth. 3. In addition the Queen of the United Kingdom referred to in Covering Clause 2 is redefined as a foreign monarch who by definition under domestic United Kingdom law (namely the Act of Settlement 1701), is an inseparable part of the legislature of the United Kingdom. Further by self declaration the Monarch, in the Accession Declaration prescribed by the Accession Declaration Act 1910 UK, delivered at the first State sitting of the Westminster Parliament following the Coronation, states as follows: "I, (here insert the name of the Sovereign) do solemnly and sincerely in the presence of God profess and declare that I am a faithful Protestant, and that I will, according to the true intent of the enactments which secure the Protestant succession to the Throne of my Realm, uphold and maintain the said enactments to the best of my power according to law." and thereby acknowledges subjugation to the above mentioned Act of Settlement as a condition of holding the Throne in the Protestant line of succession and is therefore an integral part of the legislature with the Commons and the Lords which by the judgement of this Honourable Court can play no part in the governmental structures of the Commonwealth and the States. It is therefore respectfully submitted that Her Majesty as Queen cannot be separated from the legislature of the United Kingdom in any respect since separation would remove the Right of Succession to hold the Throne and therefore Royal Assent granted under the terms of S58, 59 and 60 of the Constitution is in fact the Assent of the legislature of a foreign power as defined by this Honourable Court rendering any Act so Assented to invalid. 4. In the alternative, if the Sections of a British domestic law being Clauses 1 to 8 of the Commonwealth of Australia Constitution Act 1900 (UK) are held to be valid and unchanged then by reason of Order 1b of this Honourable Court in Sue v Hill then such law cannot apply unchanged to Australian citizens who are excluded from any entitlements under British domestic law by reason of the Immigration and Asylum Act 1971 (UK) as amended in 1972 and 1973. 5. Further since the Governors of every State, notwithstanding the Australia Acts 1986, are appointed under Letters Patent issued in 1986 by the Queen of the United Kingdom and signed by the then Permanent Secretary of the Lord Chancellor's Office then the resultant interference in the governmental structures of the States is by ruling of this Honourable Court unlawful and all and Appointments made or Royal Assent granted to bills of the state parliaments under such Letters Patent are null and void ab initio including the Corporations Law (NSW). 6. It is respectfully submitted to this Honourable Court that the defining event of independence said by Callinan J in Sue v Hill at 291 to be unascertained and unascertainable is in fact clearly defined in the formal declaration of the Imperial Conference 1921, reported in a Prime Ministerial statement recorded in the official record of the House of Representatives on 30th September 1921, when the Conference under the Presidency of the Prime Minister of the United Kingdom, Mr Lloyd George, formally and officially set its seal on his declaration opening the said conference that the Dominions had now 'joined the comity of nation … they have achieved full national status'. 7. In evidence of this change Canada then negotiated the Halibut Fisheries Treaty 1922 with the United State of America without involvement at any level of the Imperial Government. 8. It is therefore respectfully submitted that there is overwhelming evidence recorded in the Hansard of the Parliament during the Treaty of Peace Act debate 1919, in the cables between the Australian and Imperial Government in 1919 and in the debates relating to the other Peace Treaties and the Accession by Australian to membership in the League of Nations that the United Kingdom Government was translated into a foreign power not later than 1921 as defined under the seal of the Imperial Conference. 9. It is therefore also respectfully submitted that the Public Service Act 1922 could not receive Royal Assent that in any manner involved the Parliament of the United Kingdom in the governmental structures of the Commonwealth and the states as defined by the Full Court and that any appointments made under that Act are therefore null and void, in particular the appointment of the Commissioner of Taxation. 10. It is also respectfully submitted that the Taxation Administration Act 1953 suffers from the same basic defect and therefore any purported delegation under Section 8 of that Act is ultra vires. 11. In the alternative if the Taxation Administration Act 1953 is found by this Honourable Court to be valid then a ruling is requested that any purported delegation of powers by the Deputy Commissioner of Taxation pursuant to S8 of the above Act is defective at law since S8(1) specifically declares that the Deputy Commissioner possesses all the powers of the Commissioner except the power of delegation." 5 Prior to the hearing of the petition, Mr Levick filed with the Court written submissions. The written submissions proclaimed that they had been prepared by counsel, Mr Fitzgibbon. The submissions were in the following terms: "1. The Respondent having found by reason of responses to applications under the Freedom of Information Act 1982 that the legal steps necessary to establish the Australian Taxation Office as an arm of the Commonwealth Government were not completed nor gazetted and neither was the Act promulgated according to law. The Respondent will rely upon the affidavits filed in court of Peter Batten and David Lamont. In addition 15 volumes of the Official Government Gazette for the years 1972, 1973 and 1974. 2. The Applicant says that the delegation of powers to the Commissioner of Taxation allows them to delegate his powers and functions to Deputy Commissioners and other officers by reason of Section 8 of the Taxation Administration Act 1953. The Respondent submits that the Commissioner of Taxation is not empowered under the Australian Constitution Act 1900 to delegate his powers and functions to Deputy Commissioners and other officers of the Australian Taxation Office and to so delegate his powers and functions is to breach the limited powers of delegation contained in O'Reilly and Ors v The Commissioners of the State Bank of Victoria and Ors 1983 153 CLR 1. 3. That the Respondent says that all demands made in this matter were made under the name of the Australian Taxation Office which is in the Respondent's submission a non-existent entity in law and in the alternative the powers of delegation claimed by the Commissioner of Taxation exceed the limits set out by Chief Justice Gibbs of the High Court in the matter of O'Reilly 1983 153 CLR 1. 4. That the Income Tax Assessment Act of 1936 was not validly assented to according to law in June of 1936 by the then Australian Governor General Lord Gowrie and we seek declarations from the court on the following issues: (a) Is it a fact that the Commonwealth of Australia Constitution Act 1900 (Imp) contains no aspect of sovereignty other than section 8 which defines the Commonwealth as a 'self governing colony'? (b) If the answer to question one is 'yes', are the authors Quick and Garran correct in 'The Annotated Constitution of the Australian Commonwealth 1901' at page 367 when they state 'under the Crown' to include 'The Commonwealth … is constitutionally a subordinate and not an independent sovereign, community or state'? (c) Does the Commonwealth of Australia Constitution Act 1900 (Imp) by section 3 and section 58 establish the role of the Governor General as the appointee of the Monarch of the United Kingdom of Great Britain and Ireland when Lord Gowrie was appointed by letters patent by King George V on or about 2nd of November 1934? (d) If the answer to question three is 'yes', did the power to grant royal assent by the Governor General emanate from the Letters Patent: that is, the Commission of Appointment and the instructions to the Governor by the monarch of the day, George V when he granted Letters Patent to Lord Gowrie? (e) If the answer to question four is 'yes', is the Income Tax Assessment Act 1936, said to be the basis of the judgment in this matter, a valid enactment of the Commonwealth of Australia in that Lord Gowrie, the Governor General of Australia purported to give assent to the Act on 2nd of June 1936, when the letters patent were extinguished in January 1936 when King George V died and new letters patent did not issue until 10th of January 1938 after George VI ascended to the throne of the United Kingdom? (f) Further, in the High Court of Australia decision of Sue v Hill (HCA 23/06/1999) concerning section 1 of the Australia Act 1986 (UK and Cth) at paragraph 65 it was stated that: 'It follows that, at least since 1986 with respect to the exercise of legislative power, the United Kingdom is to be classified as a foreign power.' This statement is consistent with the fact that Australia in 1936 had not adopted the Statute of Westminster and did not do so until 1942 and therefore Australia remained a federated colony of the United Kingdom. Consequently, in the absence of any convention which permitted the Governor General to assent to the Income Tax Assessment Act 1936 (Cth), upon which section of the Commonwealth of Australia Constitution Act 1900 (Imp) or upon which power did the Governor General rely to purportedly assent to the Income Tax Assessment Act in 1936? (g) Further in Sue v Hill at paragraph 74 it is stated that 'the same is true of the exercise of the power vested by section 4 of the Constitution in the monarch to appoint a person to administer the government of the Commonwealth and the power given to the monarch by section 126 to authorise the Governor General to appoint deputies within any part of the Commonwealth'. With the death of the Monarch, in January 1936 by virtue of the Bill of Rights 1689 and the Act of Settlement 1701, all writs of the Sovereign, including Letters Patent died with the Sovereign. As such, was the purported assent to the Income Tax Assessment Act 1936 (Cth) in the name of a deceased Sovereign, and in the absence of a reigning Monarch, without authority and therefore was the entry of judgment against the applicant pursuant to the provisions of that Act null and void and the subsequent orders of sequestration without lawful authority? 5. As a consequence of the findings of the High Court of Australia in Sue v Hill HCA 30 of 1999judgment given 23rd June 1999 the applicant says that the appointment of the Commissioner of Taxation is not valid on constitutional grounds arising from the decision and therefore any claimed power to act pursuant to the Public Service Act of 1922 to enable the Commissioner to collect tax is invalid in law. 6. By reason of the above submissions the Respondent says that the demands made upon him and the judgment which was obtained in the District Court of New South Wales at Newcastle in Plaint Number 5026 of 1998 have no legitimate foundation in law." 6 On 12 October 1999 Mr Levick wrote to the Australian Government Solicitor advising that he would be raising the above arguments at the hearing set down for 20 October 1999. 7 On 13 October 1999 shortly before the petition was listed for hearing the Deputy Commissioner filed a notice of motion addressed to Mr Levick seeking orders, inter alia, that Mr Levick, as solicitor for Mr Quinn be joined as a party and that he pay the Deputy Commissioner's costs on an indemnity basis in respect of the issues in the notice of intention to oppose the petition (other than the issues that related to Mr Quinn's health.) 8 When the petition was called on for hearing Mr Fitzgibbon who appeared for Mr Quinn asked that the Court rule on the indemnity costs motion before proceeding with the hearing. He indicated that Mr Levick would "withdraw" if faced with a costs order. I refused to make such a ruling. I said it was impossible to deal with the question of costs payable by the solicitor until the argument which was raised on Mr Quinn's behalf had been put and ruled upon. Thereupon Mr Fitzgibbon announced that his instructions to appear for Mr Quinn had been withdrawn. I then asked whether Mr Quinn was in court. He was not. I noted that Mr Quinn was still represented by Mr Levick and that Mr Quinn was aware the matter was to be heard. I noted also that Mr Levick did not have leave to withdraw. Mr Levick then requested that he be given leave. I indicated that was a matter for him but gave no leave. I asked him for submissions as to why a sequestration order should not be made. Mr Levick replied that he wished to withdraw and did not wish to put anything. Since a solicitor could not withdraw, at least ethically, without advising his client that he wished to withdraw, or seeking an adjournment, I assumed that he continued to represent Mr Quinn. Counsel for the Deputy Commissioner then proceeded to prove the matters relating to the petition. No submissions were made in opposition to the petition and I accordingly made a sequestration order. The following reasons relate only to the application made by the Deputy Commissioner for costs to be ordered against the solicitor. The Court's power to order costs against a solicitor 9 The fact that the Court has power to order costs against a solicitor not being a party to the proceedings before it was authoritatively determined by a full Court of this Court in the Caboolture Park Shopping Centre Pty Ltd (in liquidation) v White Industries (QLD) Pty Ltd (No 1) (1993) 45 FCR 224. The source of the Court's power to award costs against a third party is s 43 of the Federal Court of Australia Act 1976 (Cth) which section complements the jurisdiction conferred upon the Court as a court of equity. The Court's jurisdiction is not narrowly defined save that the costs order must relate to proceedings before the Court, and the Court may "make such orders for the payment of costs as may be required for the just disposal of all proceedings brought before it": White Industries (No 1) at 229. 10 There is, however, an important difference between the question whether the Court has jurisdiction to order a stranger to the litigation to pay costs and the exercise of that jurisdiction: Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 186 per Mason CJ and Deane J. The discretion which the Court has is one to be exercised judicially, it is not an unfettered discretion: Knight at 192. It may be that Courts of equity recognised certain long established categories of case where such a cost order could be made: cf Oasis Hotel Ltd v Zurich Insurance Co [1981] 124 DLR (3d) 455 at 458-9, referred to in Knight at 192. But that is not to say that the categories are therefore closed. 11 The jurisdiction is, I think, one that must be exercised sparingly, having regard to all the circumstances of the particular case. It is clear enough that a litigant is entitled to representation to vindicate a particular legal right, or to maintain a legal defence. Should it turn out that the litigation is decided adversely to the litigant it does not follow that costs should, in consequence, be ordered against the legal adviser, be he or she a solicitor or a barrister. Were that the case those seeking to advance legitimate claims, or to pursue legitimate defences might well be deprived of legal representation and access to justice, in consequence, would be impeded. 12 What is submitted in the present case on behalf of the Commissioner is that a cost order should be made against a solicitor where the case advanced is one which has substantially no chance of success: cf per Goldberg J at first instance in White Industries (QLD) Pty Ltd v Flower & Hart (No 2) (1998) 156 ALR 169 at 236 and per French J in De Sousa v Minister for Immigration, Local Government and Ethnic Affairs (1993) 41 FCR 544 at 548, where his Honour ordered costs against a solicitor where there was a failure to give reasonable attention to the relevant law and fact, such as to amount to a serious dereliction of duty. 13 In Edwards v Edwards [1958] 2 All ER 179 at 186, Sachs J said: "It is, of course, axiomatic, but none the less something which in the present case should be mentioned, that the mere fact that the litigation fails is no reason for invoking the jurisdiction; nor is an error of judgment; nor is even an error merely because it is of an order which constitutes or is equivalent to negligence. There must be something that amounts, in the words of Lord Maugham … to 'a serious dereliction of duty', something which justifies according to other speeches in that case, the use of the word gross. It is not, however, normally necessary to establish mala fides or other obliquity on the part of the solicitors, though it may be that if mala fides is established that might turn the scale in a particular case." 14 Many of the older English cases, and this includes Edwards, appear to proceed on the basis that the foundation of the jurisdiction is the inherent power which a Court may have over solicitors who are officers of the Court. However, as appears from Knight at 188 it is artificial to attribute the jurisdiction to order costs against solicitors to the exercise of a disciplinary power over officers of the Court. It is, as Mason CJ and Deane J comment, founded on the exercise of a jurisdiction to award costs of the proceedings, and see too White Industries (No 1) at 231-3. Solicitors are not, as such, officers of this Court, although the jurisdiction of the Court to supervise the duty which solicitors owe to it is not doubted. 15 In the past, where orders of costs have been made against solicitors, it has been common for reference to be made that the conduct of the solicitor was such as to constitute an abuse of the Court's process. cf Hutchinson v Greenwood (1854), 4 El & Bl 324 at 326, 119 ER 125 at 126, although, as pointed out in Knight, at 190, the concept of "abuse of process" for this purpose was to be broadly understood. It is interesting to note that the Rules of the Supreme Court of New South Wales now relevantly limit the jurisdiction to make cost orders against strangers to cases of contempt of court or abuse of process (see Part 52A Rules 4(2) and (5)). This is not surprising. Where the foundation for a third party cost order is said to be the case which has been advanced on behalf of the client by the solicitor, it is necessary, as suggested above, to draw the line between an argument which does not succeed and one that justifies a third party cost order. That line can most readily be found in the concept of abuse of the Court's process. A case which is advanced, not to vindicate the legal rights of an applicant, but for an ulterior purpose such as the production of gross delay will clearly enliven the jurisdiction of the Court to make an order against the solicitor: Flower & Hart v White Industries Ltd (1999) (No 2), 163 ALR 744. Likewise the advancing of a defence where none is available, not to contest the claim of the Applicant who brought the proceedings, but to delay the enforcement of a claim which legitimately exists would likewise constitute an abuse of process. And it will be no answer for a solicitor to claim that counsel has been briefed, or that counsel had advised upon the bringing of the claim, or the maintaining of the defence: White Industries (No 2) at 756-7. Indeed I see no reason to doubt that in an appropriate case a cost order could likewise be made against counsel. 16 The White Industries litigation was, perhaps, unusual, in that documentary material became available to White Industries Ltd from the liquidator of Caboolture Park Pty Ltd, which company owed considerable funds to White Industries Ltd. The material indicated quite clearly that the solicitor in that case had commenced proceedings on behalf of Caboolture Park Pty Ltd and claimed fraud in those proceedings to delay the collection of monies by White Industries Ltd. In the normal case all that will be known is that a case has been advanced which has failed. However, where the case advanced is so hopeless that it can have no real chance of success there is, in the broad sense an abuse of process and this will be so because it can then readily be inferred that the case was not put forward for the purposes of vindicating any right or making out any defence, but for some other ulterior purpose, such as, in the case of a person against whom a petition has been filed in bankruptcy, delaying the making of a sequestration order the making of which would, otherwise, be inevitable. 17 The question which arises for my decision in the present case, is, therefore, whether the case advanced on behalf of Mr Quinn was such that it had no chance or perhaps no real chance of success. An alternative way of putting it is whether the case advanced was untenable (cf per Hayne J in Helljay Investments Pty Ltd v Deputy Commissioner of Taxation [1999] HCA 56 at 11, a case where a third party cost order was made, albeit not against a solicitor, in circumstances to which reference will later be made). A consideration of the arguments advanced 18 As will already have been noted from the material reproduced emanating from Mr Levick many of the arguments which were to be advanced were, to say the least, confusingly expressed. Counsel for Mr Levick ultimately summarised the arguments as involving three propositions, these being: · that demands for the payment of tax were made on the letter head of the Australian Taxation Office, but in fact the name Australian Taxation Office had not been gazetted, and in consequence the Australian Taxation Office did not exist. · That the officer of the Australian Taxation Office person who made the decision to file with the Court the bankruptcy petition did not have authority to do so. · That the Income Tax Assessment Act 1936 was invalid when enacted because the Royal Assent was given by Lord Gowrie who had been appointed as Governor-General by King George V. However, so the submission would have it, King George V died on 20 January 1936 and although as a matter of succession he was replaced by the then Prince of Wales, (Edward VI), the latter although King, was never crowned and at the time Lord Gowrie gave assent to the Income Tax Assessment Act, purporting to do so on behalf of the sovereign, on 2 June 1936 Lord Gowrie had not been reappointed Governor-General by a new King, with the consequence that his Commission had lapsed. 19 It will be observed that the matters dealt with in the Notice under s 78B of the Judiciary Act 1903 and in the correspondence to which I have earlier referred were not all referred to as arguments by counsel for Mr Levick. It can perhaps be assumed that the failure to mention them arose from an acceptance that they were indeed hopeless. To the extent that they are intelligible at all they echo the arguments put by the same counsel, instructed by the same solicitor Mr Levick in Helljay Investments Pty Ltd v Deputy Commissioner of Taxation which Hayne J referred to as being unarguable and "obviously untenable" confusing as they did questions of political sovereignty with "identifying the supreme legislative authority recognised in this legal system and the rules for recognising its valid laws" (per Hayne J at 8). These arguments had previously been rejected by his Honour in Joosse v Australian Securities and Investments Commission. 20 If these additional arguments were different at all, it was because, it was said, Sue v Hill had established that at some point of time, as yet undefined by the majority of the High Court at least, Australia had proceeded to nationhood. However, the situation was said to have been in 1936, at least, that Australia was but a "federation of colonies". Precisely where the submission was supposed to take the Court was never made clear to me. 21 None of the three submissions which were elaborated upon had any greater merit than Hayne J afforded to the submissions which were put to him in Joosse. 22 First, let it be assumed that the Australian Taxation Office does not exist for legal purposes. Certainly, it is common ground that there was no notice of gazettal published which related to any change of name of a department giving rise to the Australian Taxation Office. One may say of this submission, as one may say of all the others, so what? Under the Income Tax Assessment Act 1936 income tax as levied under the relevant rating act is, when assessed and the assessment is notified to a taxpayer, a debt which is due to the Commonwealth, and payable to the Commissioner of Taxation: s 208. It is not payable to the Australian Taxation Office, whatever that may be. It is to be sued for and recovered by either the Commissioner or Deputy Commissioner: s 209. That is what happened here. 23 The Deputy Commissioner commenced proceedings in the District Court for recovery of tax which had presumably been assessed. He obtained judgment. That judgment formed the foundation of the bankruptcy notice and non-compliance with that notice led to the petition. The argument advanced is somewhat like aiming a pistol at right angles to the target. 24 The second submission likewise misses the point. The creditor's petition, in the name of the relevant Deputy Commissioner of Taxation, appears on its face to have been signed on his behalf by a Ms O'Donaghoe, an Administrative Service Officer Class 6, who purported to do so as a "duly authorised officer for the Deputy Commissioner of Taxation". No evidence as to authorisation or lack of it was filed on behalf of Mr Quinn. According to evidence which was filed by the Commissioner (although of course not read because the argument was not required to be met on the petition in the events which happened) showed that the Deputy Commissioner had authorised persons holding the position of Administrative Service Officers Class 3 and above to, among other things, institute proceedings or take action for recovery of tax. The Deputy Commissioner had a direct delegation of function under s 8 of the Taxation Administration Act 1953 from the Commissioner. In so far as the argument was at all intelligible it appears to have been that in some way the authority or delegation contravened what Gibbs CJ had said in O'Reilly v Commissioners of State Bank of Victoria (1983) 153 CLR 1. 25 In O'Reilly a challenge was made to the giving of a notice under s 264 of the Income Tax Assessment Act 1936. The argument was that the notice had to be signed personally by the Commissioner. The argument was rejected. Gibbs J pointed out that practical necessity required that powers conferred upon the Commissioner be exercised by persons authorised, ie a "properly authorised officer". The signature of the Deputy Commissioner in that case was affixed by an officer with the same kind of authority as Ms O'Donaghoe had in the present case. As his Honour pointed out in that case, Carltona Ltd v Commissioner of Works [1943] 2 All ER 560 is authority for the proposition that generally, administrative functions with which a Minister is entrusted may be done by an authorised officer because having regard to the multifarious activities of government no other alternative is practical. Although Ministers of government have a special constitutional position which differs from the Commissioner of Taxation, the principle is similar. There is nothing in O'Reilly which suggests other than that the petition in the present case was brought with the appropriate authority. Indeed O'Reilly's case stands firmly as authority against the submission. 26 The third argument may be thought to be bizarre. Under the Constitution and by force of covering section 2 references to the Queen extend to the heirs and successors in sovereignty of the United Kingdom. Section 3 provides that the Queen may appoint a Governor-General. Under Chapter 1 of the Constitution, section 2 a Governor-General appointed by the Queen is to be Her Majesty's representative to exercise in the Commonwealth during her Majesty's pleasure, but subject to the Constitution such powers and functions of the Queen as Her Majesty may be pleased to assign. The provisions of the Constitution, so far as they relate to the Governor-General apply to the Governor-General for the time being. 27 The office of Governor-General was constituted by Letters Patent of Queen Victoria dated 29 October 1900. They are to be found, as revised in 1904 in Statutory Rules 1901-1927, Vol IV, p 3622. Clause 7 of the Letters Patent was amended in 1911 and again in 1921. The amendment is not of present relevance. Under the Letters Patent which are stated to be intended to be "permanent" and not to be replaced each time a new Governor-General is appointed, Her Majesty declared that there should be a Governor-General to be appointed by Commission. The Letters Patent provided that they could be revoked or amended by a successor to her Majesty, that is to say the office itself survived the death of the sovereign. Individual Governors-General have since the first appointment by her Majesty been appointed from time to time by Commission. Each Governor-General was appointed to the office as constituted by the letters patent by a Commission. Examples are likewise to be found in the Statutory Rules. 28 Under s 58 of the Constitution the Governor-General is to declare, when a Bill is presented to him for consent, that he assents "in the Queen's name", or otherwise withholds assent or reserves the law for the Queen's assent. The executive power of the Commonwealth is exercisable by the Governor-General: s 61. 29 Counsel for Mr Levick in written submissions suggested that Lord Gowrie was appointed in 1934. Counsel for the Commissioner says that he was appointed by Commission on 20 December 1935. The conflict does not matter, although as one might expect, counsel for the Commissioner was correct – see Government Gazette, 21 January 1936 at 105 which contains the notification of the Commission. He assumed office on that day, having taken the required oath. No attempt was made, if any were necessary, to renew Lord Gowrie'scommission on the death of King George V, that is to say, no attempt was made to reappoint him Governor-General when King George V died but a few days after appointing Lord Gowrie on 20 January 1936 and but two days before Lord Gowrie took up his commission. Although the written submissions handed up at the hearing suggested that each Governor-General was appointed by letters patent that does not seem to be the case. Each was appointed by Commission – the letters patent governing the office continue, as I have sought to explain, notwithstanding either the retirement, removal or death of a Governor-General or the death of the sovereign. 30 Although the submissions are far from lucid one reading of them seems to suggest that the Commission of a Governor-General expires on the death of a sovereign. If that is so, it would be the case each time a sovereign died and has nothing to do with the fact that between the death of King George V and the ascension to the throne of King George VI, there was a period where there was a King who was not crowned. An alternative reading of the submission is that it mattered that there was a king who was not crowned in the period which the submissions refer to as the "interregnum", meaning thereby the period between the death of King George V and the accession of King George VI. Indeed at one point the submission asserts that as at 2 June 1936 when Lord Gowrie assented to the Income Tax Assessment Act 1936 he was, in fact, validly appointed, but suggests that as at that date "there was no sovereign vested with the Executive Power under s 61 in whose name he could give Royal Assent to the Bill placed before him". This is suggested to be the case because King Edward VIII, as uncrowned King, had not "fully assumed the office of sovereign". 31 As already noted the office of Governor-General, by the terms of his office as defined by the letters patent, survived the death of a sovereign. That is to say it was unnecessary for there to be a new appointment should the King or Queen making the appointment die. If this were not the case the problem would probably have been cured by the Demise of the Crown Act 1901 (UK) where it was provided in s 1(1) that within the Dominions the holding of any office under the Crown was not affected by the demise of the sovereign and that no fresh appointment was necessary consequent upon the death of the sovereign. It was only on the adoption of the Statute of Westminster in 1942 that the laws of the Parliament of the United Kingdom were expressed not to apply to Australia unless with the advice and consent of Australia (s 4), although whether that was in any event the situation without the adoption of the Statute of Westminster is not a matter upon which it is necessary to express an opinion. 32 Quite why it mattered to the question of the validity of the appointment of Lord Gowrie whether King Edward VIII was crowned or not, is not clear to me. Edward VIII was King. When s 58 of the Constitution requires the Governor-General to assent in the name of the sovereign (ie in the language of the Constitution "the Queen") that would, at the time the Income Tax Assessment Act 1936 was given the Royal assent have been King Edward VIII. The constitutional position in the United Kingdom is that there is no gap in sovereignty. The succession was assured by the Act of Settlement 1700. For Australian constitutional purposes the person who holds the office of King or Queen in the United Kingdom is the person to whom reference is made in the Constitution as "the Queen". For present purposes when s 58 in June 1936 spoke of the Queen, it referred to King Edward VIII, crowned or uncrowned. When one monarch dies the eldest child becomes king, "without any essential ceremony or act to be done ex post facto": Calvin's Case (1608) 7 Co. Rep la at 10b. 33 The argument that the Income Tax Assessment Act 1936 is invalid is quite without merit. It is unnecessary therefore to consider whether the enactment of the laws imposing taxation from time to time, which incorporate by reference the provisions of the Income Tax Assessment Act 1936 in the form that that Act would operate to overcome any problem of invalidity which the 1936 Act had at the time the Royal assent was given to it. Conclusion 34 The discussion of the arguments put (and the same would be true of the arguments raised before Hayne J in Joosse to the extent they were foreshadowed as intended to be raised in the present proceedings) demonstrates that they are untenable – indeed one might even say of them that they were nonsense. If it matters it can be inferred that both Mr Levick and Mr Fitzgibbon of counsel knew that this was so when the moment that a third party cost order was raised they immediately expressed the desire to withdraw, presumably so as to avoid the third party order. This hardly displayed any confidence in the arguability of the matters which they previously indicated they intended to advance. 35 It is not as if these arguments would have originated from the client. They clearly originated with the lawyers. It is obvious enough that they were intended to delay as long as possible the making of a sequestration order against Mr Quinn. But it is not necessary to go that far to justify the making of an order that the solicitor pay the costs of the Deputy Commissioner on an indemnity basis occasioned by the raising of these matters. There is, as well, an ethical question which arises where solicitor or counsel advise their clients to pursue spurious arguments before the Courts. The problem would be, to say the least, even more serious were a solicitor or barrister to participate in advertising to persons with potential income tax liabilities that advice was available how to escape those liabilities upon payment of a fee which then encouraged the making of arguments before courts which were bound to fail. That such advertising may have been undertaken (I do not suggest that Mr Levick did so, for I do not know whether he did or did not) emerges clearly enough from the judgment of the Court of the Supreme Court of Queensland in Professional Nominees Pty Ltd v Walsh [1998] QSC CA 253 and see Media Release dated 3 May 1999 issued by the Commissioner of Taxation: "You pay for wacky advice". 36 Although I do not think that it is necessary that Mr Levick be joined as a party for the Court to have power to make a costs order against him, I note that the High Court in Knight at 203 suggested that this might be a convenient course. I would accordingly make an order that he be joined as a party. I would order that Mr Levick pay so much of the costs of the Deputy Commissioner of Taxation on the bankruptcy petition as related to the arguments to which I have made reference in these reasons proposed to be raised on behalf of Mr Quinn, such costs to be calculated on a solicitor and client basis. Further, I would order Mr Levick to pay the costs of the Deputy Commissioner of Taxation's motion. In the circumstances, however, the costs of the motion should be calculated on a party and party basis, the course which was adopted in White Industries (No 2). I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill. Associate: Dated: 1 December 1999 Counsel for the Applicant: R Orr, Dr G Ebbeck Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: D Fitzgibbon Date of Hearing: 20 October 1999 Date of Judgment: 1 December 1999