Harding v Deputy Commissioner of Taxation

• Jurisdiction: Australia Federal only
• Judgment Date: 15 September 2008
• Neutral Citation: [2008] FCA 1403
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Harding v Deputy Commissioner of Taxation [2008] FCA 1403

BANKRUPTCY – application to set aside Bankruptcy Notice – motion seeking trial with jury – no entitlement to jury – discretion – normal mode of trial without jury – no substantial reason to depart from normal mode of trial

Commonwealth of Australia Constitution Act, s 80

Bankruptcy Act 1966 (Cth), ss 30, 31, 40, 41, 52

Federal Court of Australia Act 1976 (Cth), ss 39, 40

Judiciary Act 1903 (Cth), ss 78AA, 78B

Federal Court Rules 1979 (Cth), O 31

Brown v The Queen (1985) 160 CLR 171 followed

Caledonian Collieries Ltd v Fenwick (1959) 76 WN (NSW) 482 considered

Cheng v The Queen [2000] HCA 53, 203 CLR 248 followed

Commonwealth Bank of Australia v Heinrich [2000] FCA 1255 followed

Commonwealth Bank of Australia v Rigg [2001] FCA 590 followed

Dinnison v Commonwealth [2000] FCA 1841, 106 FCR 418 cited

Draper v Official Receiver [2004] FCA 1379 considered

Gargan v Commonwealth Bank of Australia [2004] FCA 641 followed

Haritopoulos Pty Ltd v Deputy Commissioner of Taxation [2007] FCA 394, 66 ATR 225 considered

Hubner v ANZ Banking Group Ltd [2000] FCA 140, 101 FCR 71 followed

Hubner v Australia and New Zealand Banking Group Ltd [1999] FCA 385, 88 FCR 445 followed

Insurance Commissioner v Australian Associated Motor Insurers Ltd (1982) 65 FLR 172followed

Kingswell v The Queen (1985) 159 CLR 264 followed

Li Chia Hsing v Rankin (1978) 141 CLR 182, 23 ALR 151 followed

McDermott v Collien (1953) 87 CLR 154 followed

R v Federal Court of Bankruptcy; Ex parte Lowenstein (1937) 59 CLR 556 considered

R v Snow (1915) 20 CLR 315 followed

Ray v Perrett [2007] FCA 1672 followed

Re Aird; Ex parte Alpert [2004] HCA 44, 220 CLR 308 considered

Re Allen (1905) 5 SR (NSW) 55 considered

Re Shields; Ex parte Australia and New Zealand Banking Group Ltd (1994) 51 FCR 308 followed

Salfinger v Niugini Mining (Australia) Pty Ltd (No 4) [2007] FCA 1594 followed

SBBS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 361, 194 ALR 749 considered

SCAS v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCAFC 397 considered

Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537 followed

Spratt v Hermes (1965) 114 CLR 226 followed

Stapleton v Brady [1952] QWN 15 followed

Taylor v Deputy Commissioner of Taxation [1999] FCA 195, 99 ATC 4268 followed

Thurecht v Deputy Commissioner of Taxation (1984) 3 FCR 570; 84 ATC 4480; 15 ATR 822 considered

Vink v Tuckwell (No 3) [2008] VSC 316 followed

Weininger v The Queen[2003] HCA 14, 212 CLR 629 followed

Wilson v Deputy Commissioner of Taxation [2003] HCA Trans 403 considered

Commonwealth, Parliamentary Debates, House of Representatives, 21 September 1983

Kirby M, ‘The High Court of Australia and the Supreme Court of the United States — A Centenary Reflection’ (2003) 31 UWAL Rev 171

Henchman P, ‘The New South Wales Jury of Four Persons’ (1959) 33 ALJ 235

ROBERT HARDING v DEPUTY COMMISSIONER OF TAXATION

NSD 2054 of 2007

FLICK J

15 SEPTEMBER 2008

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY	NSD 2054 of 2007

BETWEEN:	ROBERT HARDING Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	FLICK J
DATE OF ORDER:	15 SEPTEMBER 2008
WHERE MADE:	SYDNEY

THE ORDERS OF THE COURT ARE:

1. The Notice of Motion as filed on 8 September 2008 be dismissed.

2. The Applicant is to pay the costs of the Respondent, those costs incurred prior to 8 August 2008 to be paid on an indemnity basis.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NSW DISTRICT REGISTRY	NSD 2054 of 2007

BETWEEN:	ROBERT HARDING Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	FLICK J
DATE:	15 SEPTEMBER 2008
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 On 9 November 2006 the District Court of New South Wales entered judgment in favour of the Deputy Commissioner of Taxation against the Applicant presently before this Court. Judgment was entered for the principal sum of $373,772.47.

2 There was a failure to satisfy the judgment and the Applicant was served with a Bankruptcy Notice on 17 August 2007. The proceeding commenced in this Court on 5 September 2007 seeks an order setting aside that Bankruptcy Notice.

3 Although it is difficult to discern the issues which the Applicant wished to agitate from the Application as filed, the Affidavits in support, or the written submissions as initially filed by the Applicant, it is understood that at one stage he wished to contend that:

(i) in the proceedings before the District Court he was entitled to the benefit of trial by jury;

(ii) in the proceedings before the District Court “he was given no chance to air … grievances, and a fraudulent deeming of taxation was rubber stamped” by a judge of the District Court; and

(iii) the District Court was improperly constituted.

4 The District Court, when entertaining the proceedings against the present Applicant for unpaid taxes, was said to be exercising federal jurisdiction. It is this exercise of federal jurisdiction that the Applicant apparently relied upon both in respect to his contention that he was entitled to a trial by jury and his contention as to the District Court being “improperly constituted”.

5 The “grievances” to which he previously referred are understood to be contentions that the Respondent had been improperly giving “multinational companies” tax breaks. The relevance of those “grievances” to the position confronting the Applicant remained elusive.

6 A Notice of a Constitutional Matter was filed in this Court on 16 April 2008. By reason of the issues sought then to be agitated, an order was made on 31 March 2008 requiring the service of notices in accordance with s 78B of the Judiciary Act 1903 (Cth). Those notices were apparently served upon the Attorneys-General of each of the States on or about 21 April 2008. No s 78B notice was apparently served upon the Attorney-General of the Commonwealth. Nor was there service upon the Attorneys-General of the Australian Capital Territory or the Northern Territory. Section 78AA of the 1903 Act defines the term “State” as including those two Territories. The Second Reading Speech in the House of Representatives makes it apparent that the purpose of s 78AA was to “put the Northern Territory on an equal footing with the States as regards receipt of such notices”: Parliamentary Debates, House of Representatives, 21 September 1983 at 1049. In such circumstances it is thus apparent that there has been non-compliance with the order requiring service of notices in accordance with s 78B.

7 The Applicant initially appeared before this Court unrepresented but has since 23 June 2008 been represented by a solicitor and Counsel.

8 The most recent Outline of Submissions filed on behalf of the Applicant is that dated 8 August 2008 and was prepared by Counsel. That written outline, not surprisingly, expressly withdraws “prior submissions”.

9 The proceeding was listed for hearing on 8 September 2008 and on that date a Notice of Motion was filed seeking an order that “the Court hear and determine the Applicant’s application for the trial of questions of fact herein with a jury and the trial of those questions”. That Motion thus sought an order that this Court direct a trial by jury of the Application to set aside the Bankruptcy Notice. Reservation may be expressed as to whether or not prior notice of any such Motion was provided to the Deputy Commissioner of Taxation. Whether or not such prior notice was given, Counsel appearing for the Deputy Commissioner did not oppose the Motion being filed and heard on that day.

10 On 8 September 2008 Counsel for the Applicant foreshadowed that the two bases upon which it would be contended that the Bankruptcy Notice should be set aside would be whether:

(i) the requirements of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) have been satisfied;

and whether:

(ii) the Applicant is “able to pay his or her debts” within the meaning of s 52(2) of the 1966 Act.

That Application, it was submitted, would involve the resolution of a series of questions of fact. A “Schedule of Questions of Fact and/or of Mixed Law and Fact” had been prepared on behalf of the Applicant and included questions as to whether representations were made that “the Applicant’s small business was an exempt entity”, whether the representations were “binding on the DCT”, and “[w]hether the Applicant relied on the representations”. As became apparent from submissions subsequently filed by the Applicant on 11 September 2008, some of the questions of fact as formulated in the Schedule were “not pressed”.

11 The Schedule as provided by the Applicant, it should be noted, is no substitute for compliance with O 31 r 1 of the Federal Court Rules. That rule requires a Notice of Motion to be “supported by an affidavit stating the particular facts and grounds upon which the application is based”. There was no such affidavit. The requirement of an affidavit, it is considered, provides a valuable safeguard to ensure that the “particular facts and grounds” are properly formulated.

12 One fundamental difficulty confronting the Applicant was the relevance of any of the asserted facts which he wished to have tried by jury to the Application to set aside the Bankruptcy Notice. The judgment upon which the Bankruptcy Notice was founded was a judgment of the District Court entered summarily against the now...