Commissioner of Taxation v Bosanac (No 3) [2017] FCA 141

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Bosanac (No 3) [2017] FCA 141 File number: WAD 291 of 2015

Judge: MCKERRACHER J

Date of judgment: 17 February 2017

Legislation: Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 5(1), 15, 15(1)(a) Judiciary Act 1902 (Cth) s 39B Taxation Administration Act 1953 (Cth) s 260-5 Federal Court Rules 2011 (Cth) rr 1.34, 31.01, 31.11

Date of hearing: 17 February 2017

Registry: Western Australia

Division: General Division

National Practice Area: Taxation

Category: No Catchwords

Number of paragraphs: 16

Counsel for the Applicant: Mr TP Burrows

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the Respondents: Mr JW Fickling

Solicitor for the Respondents: Cove Legal

ORDERS WAD 291 of 2015

BETWEEN: COMMISSIONER OF TAXATION Applicant

AND: VLADO BOSANAC First Respondent

BERNADETTE BOSANAC Second Respondent

JUDGE: MCKERRACHER J DATE OF ORDER: 17 February 2017

1. The decision made pursuant to s 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) and the notice issued by an officer of the Commissioner of Taxation and directed to Myfiziq Limited on 8 February 2017, and further amended on 14 February 2017, be suspended until close of business on Thursday, 23 February 2017. 2. Costs of today be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT REVISED FROM THE TRANSCRIPT

MCKERRACHER J: 1 On 14 February 2017, the first respondent, Mr Vlado Bosanac filed an urgent interlocutory application seeking the following relief: 1. If the garnishee notice issued on 8 February 2017 in relation to the stayed judgment of debt of [Mr Bosanac] not be withdrawn within 24 hours of these orders then: a. The [Commissioner] personally make and cause to be filed and served an affidavit within 24 hours of these orders setting out: i. How it came to pass that notwithstanding the issuance of a stay of enforcement order of this Court on 12 August 2016 as to the judgment of debt of [Mr Bosanac] where the [Commissioner] had general liberty to apply for variation, a subordinate officer of the [Commissioner] purportedly issued a garnishee notice in respect of the entire amount of that debt on 8 February 2017 referred to in the accompanying affidavit filed by [Mr Bosanac] on 14 February 2017 ("the Garnishee Notice"), 40 days from trial in relation to that debt pursuant to Part IVC of the Taxation Administration Act 1953?; and ii. Why this Court should not regard the issuance of the Garnishee Notice as an act of contempt of this Court. 2 Emails from Mr Bosanac's lawyers foreshadowed further amendments to the application, and Mr Bosanac now seeks to amend the application to claim the following relief: A. Application for relief On the grounds stated below, the accompanying affidavits and or any other document prescribed by the Rules, [Mr Bosanac] applies for the following relief under section 39B of the Judiciary Act 1903 (Cth) ("Judiciary Act") and s. 75(v) of the Constitution by way of s. 39B(1) and (1A) of the Judiciary Act: 1. A declaration from the Honourable Court that the purported decision of an officer of the Applicant, the Commissioner of Taxation ("the Commissioner'') purportedly made pursuant to section 260-5 of Schedule 1 of the Taxation Administration Act 1975 (Cth) ("TAA") resulting in the purported issue of the purported garnishee notice on 8 February 2017 and purportedly revised on 14 February 2017 ("the Garnishee Notice") ("the Decision"): a. Was infected with jurisdictional error and therefore not a decision at all [Plaintiff S157/2002 v Commonwealth [2003] HCA 2; 211 CLR 476 at [76]] and in consequence the Garnishee Notice is void and of no effect. Particulars One or more of the following types of jurisdictional error arise, or a form of jurisdictional error arises that has not been specifically particularised: i. The Decision did not take into account required considerations. ii. The Decision did not take into account relevant considerations. iii. The Decision did not apply the practice statement of the Commissioner that is a necessary consideration for his subordinate officers (including, without limitation paragraphs [108] and [112] of PS LA 2011/18). iv. The Decision was an improper exercise of power. v. The Decision was illogical. vi. The Decision was jurisdictionally unreasonable. Interlocutory orders sought 2. If the garnishee notice issued on 8 February 2017 in relation to the stayed judgment of debt of [Mr Bosanac] not be withdrawn within 24 hours of these orders then: a. The [Commissioner] personally make and cause to be filed and served an affidavit within 24 hours of these orders setting out: i. How it came to pass that notwithstanding the issuance of a stay of enforcement order of this Court on 12 August 2016 as to the judgment of debt of [Mr Bosanac] where the [Commissioner] had general liberty to apply for variation, a subordinate officer of the [Commissioner] purportedly issued a garnishee notice in respect of the entire amount of that debt on 8 February 2017 referred to in the accompanying affidavit filed by [Mr Bosanac] on 14 February 2017 ("the Garnishee Notice"), 40 days from trial in relation to that debt pursuant to Part IVC of the Taxation Administration Act 1953? 3. An order in the nature of a writ of certiorari directed to the Commissioner quashing the Decision and the Garnishee Notice. 4. An order in the nature of injunction and or writ of prohibition [issued on an urgent basis] directed to the Commissioner and the recipient of the Garnishee Notice restraining the Commissioner and the recipient of the Garnishee Notice from acting and or relying upon the Garnishee Notice. 5. An order in the nature of injunction and or writ of prohibition directed to the Commissioner restraining the Commissioner from issuing any further purported garnishee notice in relation to the debt of [Mr Bosanac] without the leave of the Court until further order of the Court [such further order anticipated to occur after the trial of the matter in WAD349/2016). 6. An ancillary order requiring any monies paid under the Garnishee Notice to be refunded to the recipient of the Garnishee Notice or [Mr Bosanac]. 7. Such further or other orders as this Honourable Court considers appropriate. 8. There be liberty to apply. 9. Costs. Procedural Orders 10. That the interlocutory application be amended in the form provided. 11. That the requirements of FCR 31.2 that a s39B application be brought pursuant to an original application be dispensed with pursuant to FCR 1.34. Application for review pursuant to the AD(JR) Act Further to the Judiciary Act application. [Mr Bosanac] applies to the Court to review the Decision of the Commissioner purportedly made under s. 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) ("the TAA") on 8 February 2017 and purportedly altered on 14 February 2017 and the Garnishee Notice which was issued in consequence thereof. Details of Claim [Mr Bosanac] is a person aggrieved because [Mr Bosanac's] financial interest has been affected by the purported decision. Grounds of Application 1. As particularised in respect of the Judiciary Act application a subordinate officer of the Commissioner rendered the purported decision and purportedly issued a Garnishee Notice. 2. The Decision is a decision to which the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the AD(JR) Act") applies. 3. The Decision is subject to review pursuant to one or more of section 5(1) of the AD(JR) Act having regard to one or more of (a) that a breach of the rules of natural justice occurred in connection with making the Decision, (b) that procedures that were required by law to be observed in connection with the making of the Decision were not observed, (c) that the person who purported to make the Decision did not have jurisdiction to make the Decision, (e) that the making of the Decision was an improper exercise of power conferred the enactment in pursuance of which it was purported to be made, (f) that the Decision involved an error of law, (h) that there was no evidence or other material to justify the making of the Decision and or (i) that the Decision was otherwise contrary to law. Particulars One or more of the following types of reviewable error arise, or a form of reviewable error arises that has not been specifically particularised: i. The Decision did not take into account required considerations. ii. The Decision did not take into account relevant considerations. iii. The Decision did not apply the practice statement of the Commissioner that is a necessary consideration for his subordinate officers (including, without limitation paragraphs [108] and [112] of PS LA 2011/18). iv. The Decision was an improper exercise of power. v. The Decision was illogical. vi. The Decision was jurisdictionally unreasonable. Orders Sought under the AD(JR) Act 1. An order quashing or setting aside the Decision. 2. An order quashing or setting aside the Decision and substituting a different decision in its place in accordance with the law. 3. An order staying the Decision pursuant to s. 15(1) until the further order of the Court. 4. Such further or other order as the Court deems fit. 5. That the FCR rules requiring an AD(JR) Act application be brought in an originating application be dispensed with. 6. An order for costs in this matter. 3 Mr Bosanac seeks today orders dispensing with application of the Federal Court Rules 2011 (Cth) in the interests of justice so that the proceedings can be amended and to seek the relief which he pursues. He gives an undertaking today to file a formal request to the Commissioner for reasons for issuing a garnishee notice which affects payments which would come to Mr Bosanac, such notice being issued on 8 February 2017 (for some $12 million) and altered on 14 February 2017 (to some $2 million). He seeks a stay of the decision to issue the notice against one of his two employers, Myfiziq Limited, pursuant to s 15 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) if leave is granted. Section 15 of the ADJR Act provides: 15 Stay of proceedings—Federal Court (1) The making of an application to the Federal Court under section 5 in relation to a decision does not affect the operation of the decision or prevent the taking of action to implement the decision but: (a) the Court or a Judge may, by order, on such conditions (if any) as it or he or she thinks fit, suspend the operation of the decision; and (b) the Court or a Judge may order, on such conditions (if any) as it or he or she thinks fit, a stay of all or any proceedings under the decision. (2) The Court or a Judge may make an order under subsection (1) of its or his or her own motion or on the application of the person who made the application under section 5. (3) In this section: the Court or a Judge has the same meaning as in the Federal Court of Australia Act 1976. 4 Mr Bosanac also seeks relief under s 39B of the Judiciary Act 1903 (Cth). 5 The Commissioner opposes the very late application to amend on a variety of grounds, not least of which is that these proceedings are the Commissioner's proceedings for recovery of a tax debt in which judgment has been given in favour of the Commissioner, but judgment stayed. The Commissioner says that there is nothing in these proceedings which could properly give rise to the commencement of a proceeding under the ADJR Act or the Judiciary Act seeking the stay relief which would be pursued. Equally the Commissioner opposes dispensation of the Rules in order to achieve those objectives for similar reasons. 6 In relation to each of those issues, I agree with the Commissioner's submission that this is not the appropriate vehicle in which to pursue ADJR Act review proceedings pursuant to s 5(1) of that Act, and that in any event the way in which the proceedings have been foreshadowed in the hastily prepared amendment would not be satisfactory for the ADJR Act issue to be resolved. 7 Counsel for Mr Bosanac has given an undertaking that proceedings will be commenced on Monday seeking review under the ADJR Act which will more precisely attempt to focus upon the complaint about the decision and which will also, amongst other things, seek a stay of the effect of the notice. The question of the request for the Commissioner's reasons is a matter for Mr Bosanac. 8 The real issue before me at present is the more urgent question of the effect of the Commissioner's decision to issue a notice on Myfiziq, one of two of Mr Bosanac's employers, which provides funds on which I infer that Mr Bosanac clearly relies, one way or another. Whether such reliance is imminent in the sense that Mr Bosanac would potentially suffer an irreversible prejudice if those payments were not made is not satisfactorily established on the evidence. But there is evidence before me at present, from which I infer, that payments may possibly already have been made under the notice, to the Commissioner rather than to Mr Bosanac, and if they have been paid, there is at least the possibility that Mr Bosanac will default on direct debit mortgage payments which would fall due for payment, I infer on the materials, shortly after the end of next week. 9 Matters are finely balanced, and if that were not the only matter for consideration, I would be hesitant about granting a stay. But I am particularly conscious that in this situation, without going into detail at present, the Commissioner does have the benefit of a freezing order in relation to the assets and liabilities of Mr Bosanac, which order is designed to protect the Commissioner's position concerning the default judgment obtained in this proceeding last year. 10 In the meantime, Mr Bosanac is attempting to prepare for the conduct of a complex appeal against the Commissioner's decision which is listed for hearing to commence in about a month's time. Unfortunately the effect of the garnishee proceeding has interfered to some extent with the process of preparation, and it is important as far as all parties are concerned that the appeal be able to proceed without undue delay. That preparation requires access to funds pursuant to the terms of the freezing orders. 11 The terms of the freezing orders, while settled by the Court, have been resolved by negotiations between the parties over a period of time. Without expressing any view at all on the power or propriety of issuing the notice while freezing orders were in place, the simple fact of the matter is that the notice does have a real capacity or potential to interfere with the preparation for the appeal and to prevent payment of living expenses, including mortgage payments, all of which were catered for under the freezing orders. Mr Bosanac contends that issuing the notice departed from the Commissioner's published practice as to enforcement of debts. 12 I am not at this stage satisfied one way or another in relation to Mr Bosanac's contentions attacking the propriety of the decision to issue the notice. That is a matter on which I will need to hear further argument. What I am concerned with is attempting to continue to preserve the status quo which the freezing orders had preserved, and to do so for only a short period of time until I can be satisfied one way or the other as to the strengths of Mr Bosanac's argument and the Commissioner's response. 13 It is not apparent to me that significant prejudice would be suffered by the Commissioner if the effect of staying the terms of the notice for a few days were made; but there does appear to be, as against that, a real risk – and putting it no higher than a risk – of substantial prejudice to Mr Bosanac. 14 So on the express undertaking by counsel for Mr Bosanac to issue the proceedings under the ADJR Act on Monday, I will today pursuant to s 15 of that Act, specifically s 15(1)(a), suspend the operation of the notice issued by the Commissioner pursuant to s 260-5 of Sch 1 of the Taxation Administration Act 1953 (Cth) on 8 February and amended on 14 February 2017 until close of business next Thursday 23 February 2017, by which stage the quality of the evidence for Mr Bosanac should be enhanced, as well as the quality of submissions. At that point I can consider whether it is appropriate to make any other orders, including the possibility of a stay beyond that date.