ACCC v Institute of Taxation Research Pty Ltd [2001] FCA 1366

FEDERAL COURT OF AUSTRALIA

ACCC v Institute of Taxation Research Pty Ltd [2001] FCA 1366

PRACTICE AND PROCEDURE – Application for final relief, on notice, on the basis that the respondents have no defence to the claim, in accordance with O 20 r 1 of the Federal Court Rules - failure to file defence – application that judgment be entered in default of delivery of defence in accordance with O 11 r 23 TRADE PRACTICES – Misleading or deceptive conduct – whether engaged in conduct that is misleading or deceptive, or likely to mislead or deceive pursuant to s 52 of the Trade Practices Act 1974 (Cth) – whether representation as to uses and benefits of services in contravention of s 53(c) of the Trade Practices Act

Federal Court Rules Trade Practices Act 1974 (Cth) ss 52, 53 AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v INSTITUTE OF TAXATION RESEARCH PTY LTD AND ANOR Q168 OF 2000

COOPER J 21 FEBRUARY 2001 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q168 OF 2000

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

APPLICANT

AND: INSTITUTE OF TAXATION RESEARCH PTY LTD

(ACN 086 352 329)

FIRST RESPONDENT

WAYNE RONALD LEVICK

SECOND RESPONDENT

JUDGE: COOPER J

DATE OF ORDER: 21 FEBRUARY 2001

WHERE MADE: BRISBANE

THE COURT DECLARES THAT:

1. The first respondent, by representing in trade or commerce since March 2000 until 15 December 2000, in connection with the supply or possible supply or the promotion of its taxation advice and consultancy services, to members of the public that the following conclusions of law are correct, namely: (a) that the Australian legal system has no basis in law; (b) that the Australian Constitution is invalid; (c) that there is no basis in law for the exercise of the legislative powers of the state and federal Parliaments; (d) that there is no basis in law for the exercise of the executive powers of Australian governments; and (e) that Australian taxation legislation is invalid; and that arguments leading to those conclusions can be successfully advanced and relied upon by persons who acquire its services to avoid payment of taxes, or to defend or challenge proceedings for the recovery of taxes imposed by a Commonwealth or State authority, without also informing those persons that: (i) none of the conclusions of law referred to above has been held to be correct by any Australian Court; (ii) in each of the cases listed in schedule 1 to these orders which had been decided by the time the representation was made, arguments made to establish those conclusions of law were unsuccessful and the persons advancing those arguments did not obtain the relief they sought and/or were unsuccessful in avoiding payment or recovery of the taxes; (iii) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (iv) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid; has engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, contrary to section 52 of the Trade Practices Act 1974 ("the Act"), and has represented that its services have uses or benefits they do not have, contrary to section 53(c) of the Act. 2. The first respondent, by representing in trade or commerce since March 2000 until 15 December 2000, in connection with the supply or possible supply or the promotion of its taxation advice and consultancy services, to members of the public, that its services will enable persons who acquire them to avoid payment of any Commonwealth or State imposed tax under the current taxation system by lawful means, without also informing those persons that: (i) none of the legal proceedings brought by the first respondent on behalf of its clients to avoid payment of tax has been successful; (ii) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (iii) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid; has engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, contrary to section 52 of the Act, and has represented that its services have uses or benefits they do not have, contrary to section 53(c) of the Act. 3. The second respondent, by representing via the internet in trade or commerce since 10 March 2000 until 18 December 2000, in connection with the supply or possible supply or the promotion of his taxation advice, consultancy and legal services, to members of the public that the following conclusions of law are correct, namely: (a) the Australian legal system has no basis in law; (b) the Australian Constitution is invalid; (c) there is no basis in law for the exercise of the legislative powers of the state and federal Parliaments; (d) there is no basis in law for the exercise of the executive powers of Australian governments; and (e) Australian taxation legislation is invalid; and that arguments leading to those conclusions can be successfully advanced and relied upon by persons who acquire his services to avoid payment of taxes, or to defend or challenge proceedings for the recovery of taxes imposed by a Commonwealth or State authority, without also informing those persons that: (i) none of the conclusions of law referred to above has been held to be correct by any Australian Court; (ii) in each of the cases listed in schedule 1 to these orders, arguments made to establish those conclusions of law were unsuccessful and the persons advancing those arguments did not obtain the relief they sought and/or were unsuccessful in avoiding payment or recovery of the taxes; (iii) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (iv) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid; or such of those matters as were known by him at the time the representation was made, has engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, contrary to section 52 of the Act, and has represented that his services have uses or benefits they do not have, contrary to section 53(c) of the Act. 4. The second respondent, by representing via the internet in trade or commerce since 10 March 2000 until 18 December 2000, in connection with the supply or possible supply or the promotion of his taxation advice, consultancy and legal services, to members of the public, that his services will enable customers to avoid payment of any Commonwealth or State imposed tax under the current taxation system by lawful means, without also informing those persons that: (i) none of the legal proceedings brought by the first or second respondent on behalf of their clients to avoid payment of tax has been successful; (ii) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (iii) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid; or such of those matters as were known by him at the time the representation was made, has engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, contrary to section 52 of the Act, and has represented that his services have uses or benefits they do not have, contrary to section 53(c) of the Act. 5. The second respondent, by representing via the internet in trade or commerce since 29 January 2000 until 18 December 2000, in connection with the supply or possible supply or the promotion of his taxation advice, consultancy and legal services, to members of the public, that a former Justice of the High Court of Australia endorses or agrees with the conclusion of law that the Australian legal system has no basis in law and/or that the Australian Constitution is invalid, whereas these representations are false, has engaged in conduct that is misleading or deceptive, or likely to mislead or deceive, contrary to section 52 of the Act. 6. The second respondent was knowingly concerned in or party to the contravention of the first respondent referred to in paragraph 2 above, such conduct occurring at a seminar on 22 August 2000, and being conduct of the kind referred to in section 75B of the Act. AND THE COURT ORDERS THAT: 7. The first respondent be restrained, whether by its directors, employees, agents, servants or otherwise, from making representations, in trade or commerce, to any person, expressly or by implication, including representations made via the internet, to the effect that the following conclusions of law are correct, namely: (a) that the Australian legal system has no basis in law; (b) that the Australian Constitution is invalid; (c) that there is no basis in law for the exercise of the legislative powers of the state and federal Parliaments; (d) that there is no basis in law for the exercise of the executive powers of Australian governments; and (e) that Australian taxation legislation is invalid; and that arguments leading to those conclusions can be successfully advanced and relied upon by persons who acquire its services to avoid payment of taxes, or to defend or challenge proceedings for the recovery of taxes imposed by a Commonwealth or State authority, unless at the same time and with at least equal prominence the person to whom the representation is made is specifically informed that: (i) none of the conclusions of law referred to above has been held to be correct by any Australian Court; (ii) in each of the cases listed in schedule 1 to these orders, arguments made to establish those conclusions of law were unsuccessful and the persons advancing those arguments did not obtain the relief they sought and/or were unsuccessful in avoiding payment or recovery of the taxes; (iii) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (iv) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid. 8. The first respondent be restrained, whether by its directors, employees, agents, servants or otherwise, from making representations in trade or commerce, to any person, expressly or by implication, including representations made via the internet, that its taxation advice and consultancy services will enable persons who acquire them to avoid payment of any Commonwealth or State imposed tax under the current taxation system by lawful means, unless at the same time and with at least equal prominence the person to whom the representation is made is specifically informed that: (a) none of the legal proceedings brought by the first respondent on behalf of its clients to avoid payment of tax has been successful; (b) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (c) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid. 9. The second respondent be restrained from making representations via the internet or for or on behalf of any corporation, in trade or commerce, to any person, expressly or by implication, to the effect that the following conclusions of law are correct, namely: (a) that the Australian legal system has no basis in law; (b) that the Australian Constitution is invalid; (c) that there is no basis in law for the exercise of the legislative powers of the state and federal Parliaments; (d) that there is no basis in law for the exercise of the executive powers of Australian governments; and (e) that Australian taxation legislation is invalid; and that arguments leading to those conclusions can be successfully advanced and relied upon by persons who acquire his services to avoid payment of taxes, or to defend or challenge proceedings for the recovery of taxes imposed by a Commonwealth or State authority, unless at the same time and with at least equal prominence the person to whom the representation is made is specifically informed that: (i) none of the conclusions of law referred to above has been held to be correct by any Australian Court; (ii) in each of the cases listed in schedule 1 to these orders, arguments made to establish those conclusions of law were unsuccessful and the persons advancing those arguments did not obtain the relief they sought and/or were unsuccessful in avoiding payment or recovery of the taxes; (iii) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (iv) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid. 10. The second respondent be restrained from making representations via the internet or for or on behalf of any corporation, in trade or commerce, to any person, expressly or by implication, that his taxation advice, consultancy and legal services will enable persons who acquire them to avoid payment of any Commonwealth or State imposed tax under the current taxation system by lawful means, unless at the same time and with at least equal prominence the person to whom the representation is made is specifically informed that: (a) none of the legal proceedings brought by the first or second respondent on behalf of their clients to avoid payment of tax has been successful; (b) individuals, companies and other entities who do not pay their tax liability when it is due and payable may be liable for additional charges under the Income Tax Assessment Act 1936; (c) the Commissioner of Taxation or Deputy Commissioner of Taxation has brought and will bring proceedings against persons who do not pay their tax liability when it is due and payable. The consequences of such proceedings may include liability to pay legal costs (in addition to penalties and interest) and may result in bankruptcy or winding up proceedings if the tax due remains unpaid. 11. The second respondent be restrained from making representations via the internet or for or on behalf of any corporation, in trade or commerce, to any person, expressly or by implication, to the effect that a former Justice of the High Court of Australia endorses or agrees with the conclusion of law that the Australian legal system has no basis in law and/or that the Australian Constitution is invalid. 12. Within 10 days of the date of service of this order on the first respondent, the first respondent shall forward to each person or corporation who has since 10 March 2000 agreed to acquire taxation advice or consultancy services where such advice or services is based on, or is referrable to, the representations contained in paragraphs 6, 7, 8, 9, 31 and 39 of the statement of claim, a letter in the form contained in schedule 2 to these orders. 13. Within 4 days of the dispatch of the last of the letters ordered to be sent in Order 12 above, the first respondent will provide to the applicant, by causing the same to be delivered to Level 3, 500 Queen Street, Brisbane, a list of all persons and/or corporations to who a letter was dispatched specifying the name to whom it was sent, the address to which the letter was sent, and the date of dispatch of the letter. 14. The first and second respondents pay the applicant's costs of and incidental to these proceedings, to be taxed if not agreed. 15. The parties have liberty to apply. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.