FEDERAL COURT OF AUSTRALIA La Rosa v Commissioner of Taxation [2004] FCA 1799 PRACTICE AND PROCEDURE – application for leave to file and serve notice of cross appeal out of time – where cross appeal had been determined and judgment entered. Income Tax Assessment Act 1936 (Cth), s 167 Monroe Schneider Associates (Inc) v No. 1 Raberem Pty Ltd (1992) 37 FCR 234 cited CDJ v VAJ (1998) 197 CLR 172 cited DJL v The Central Authority (2000) 201 CLR 226 cited FRANCESCO DOMENICO LA ROSA v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA W81 of 2004 LEE J 2 DECEMBER 2004 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W81 OF 2004 BETWEEN: FRANCESCO DOMENICO LA ROSA APPLICANT AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT JUDGE: LEE J DATE OF ORDER: 2 DECEMBER 2004 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the respondent's costs of the application. 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 W81 OF 2004 BETWEEN: FRANCESCO DOMENICO LA ROSA APPLICANT AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT JUDGE: LEE J DATE: 2 DECEMBER 2004 PLACE: PERTH REASONS FOR JUDGMENT 1 This is an application for an extension of time to file and serve a notice of cross-appeal from a judgment of a judge of this Court (Nicholson J) given on 21 August 2002. 2 The relevant facts are as follows. 3 On 3 April 1996 the applicant pleaded guilty to a number of State and Commonwealth offences concerning the importation and supply of prohibited substances including heroin. Information relating to the applicant's financial affairs came to the attention of the respondent ("the Commissioner") as a result of the prosecution of the applicant for those offences. The Commissioner made "default assessments" pursuant to s 167 of the Income Tax Assessment Act 1936 (Cth) in respect of the seven years of income between 30 June 1990 and 30 June 1996, the applicant having failed to file income tax returns for those years. The applicant objected to the assessments on the basis that they overstated his taxable income. In particular, the applicant contended that for the year of income ending 30 June 1995 the assessable income attributed to the applicant should have been reduced by a sum of $220,000. 4 The Commissioner disallowed the applicant's objections to the assessments and the applicant sought review of those decisions in the Administrative Appeals Tribunal ("the Tribunal"). The Tribunal held, inter alia, that the applicant had been carrying on business as a dealer in drugs and that a sum of $220,000 stolen from the applicant in May 1995 in the course of a drug deal, had been a loss sustained by the applicant in the course of conducting the business of drug dealing activities. The applicant had contended that the stolen sum of $220,000 had been given to him by law enforcement authorities for use in a "controlled" drug deal. The Tribunal held, however, that the stolen monies were the applicant's funds being part of the proceeds obtained by the applicant from his business activities and that the applicant had lost the sum in the course of carrying on that business, to wit, in attempting to acquire trading stock. The Tribunal held that the sum lost by the applicant was a deductible expense for the year of income ending 30 June 1995. The Commissioner "appealed" to this Court from the Tribunal's decision. The applicant "cross-appealed" contending that he was only a bailee of the stolen sum of $220,000 and that that amount should not have been included in his assessable income for the year of income ending 30 June 1995. 5 The learned trial judge dismissed the Commissioner's "appeal" and the applicant's "cross-appeal". On 5 June 2003 an appeal and cross-appeal from his Honour's judgment were dismissed by a Full Court of this Court. The judgment of the Full Court was extracted on 7 July 2003. The applicant was represented by pro bono counsel at first instance and before the Full Court. On 27 October 2004 the High Court refused an application by the Commissioner for special leave to appeal from the judgment of the Full Court. 6 On 23 April 2004 the applicant filed an application seeking an extension of time to file and serve "a notice of cross-appeal" from the judgment of Nicholson J on the ground that, contrary to instructions given to pro bono counsel by the applicant, certain grounds of the "cross-appeal" had been abandoned during the course of the hearing before Nicholson J and had not been included as grounds of the cross-appeal to the Full Court. 7 Both the applicant and the Commissioner were represented by senior counsel on the hearing of the application. Having heard the arguments of counsel and having read the respective written submissions, I have concluded that the application cannot succeed. Judgment has been entered on an appeal and the appeal proceeding has been terminated. The rights of appeal and cross-appeal have been exercised and exhausted. There is no power to extend time to file a cross-appeal or an amended cross-appeal in such a completed proceeding. 8 Whether the judgment on appeal may be set aside in a fresh proceeding seeking such an order is unnecessary to consider. It is enough to say that the grounds on which a proceeding may be commenced to set aside a judgment are limited. The relevant authorities do not include the absence of natural justice or lack of procedural fairness in the conduct of the hearing as a ground for such a proceeding, no doubt because such a circumstance would have been a ground of appeal or cross-appeal. In any event, in so far as any attempt may be made to set aside a judgment that has been entered after an appeal, it will not be a proceeding able to be supported by grounds wider than those available for setting aside a judgment at first instance. (See: Monroe Schneider Associates (Inc) v No. 1 Raberem Pty Ltd (1992) 37 FCR 234 at 238-240; CDJ v VAJ (1998) 197 CLR 172 per McHugh, Gummow and Callinan JJ at 197; DJL v The Central Authority (2000) 201 CLR 226 per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ at 243-245). 9 At the hearings at first instance the foregoing authorities concerned judicial determination of the rights of parties to the litigation. The instant case at first instance involved application for review of an administrative decision. Whether in principle further proceedings for review of administrative decisions may be brought on different grounds notwithstanding the completion of an earlier review proceeding is unnecessary to consider. 10 It follows that the application must be dismissed. With regard to the costs of the application, the Commissioner gave notice to the applicant shortly before the date of hearing that indemnity costs would be sought if the application were dismissed. The Commissioner did not apply at any time to have the application dismissed as incompetent or struck out as an abuse of the Court's process. Although in effect I have determined that at all times the applicant's application was doomed to fail, in the circumstances I am not persuaded that it is appropriate to order indemnity costs against the applicant, given that the applicant did not receive timely advice of the respondent's intention to seek indemnity costs and did not have adequate opportunity to consider his position in that regard. The usual order will be made that the application be dismissed and the applicant pay the Commissioner's costs of the application. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee. Associate: Dated: 22 June 2006 Counsel for the Applicant: R K O'Connor QC Solicitor for the Applicant: Laurie Levy & Associates Counsel for the Respondent: G T Pagone QC; L B Price Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 2 December 2004 Date of Judgment: 2 December 2004