The Full Federal Court dismissed the taxpayer’s appeal from a decision of the Federal Court to dismiss his appeal (from an AAT decision) for want of prosecution. The Taxpayer was (and still is) a member of the Victorian Bar.
The events were as follows:
- In 1986, the Taxpayer entered into a partnership to purchase an agricultural station, partly with money borrowed from Macquarie Bank. The venture did not go well and eventually Macquarie sought to be repaid, ultimately by legal action.
- The Commissioner issued assessments and disallowed the Taxpayer claims for for interest deductions under s8-1, and losses under Div 36 of the ITAA97 relating to the wash up of the failed agricultural venture.
- The Taxpayer applied to the AAT for review of the Commissioner’s objection decision and failed.  AATA 1024.
- The Taxpayer appealed this decision to the Federal Court but had a long list of failed attempt so comply with various procedural directions of the Perram J of the Federal Court (see below, for that list).
- Perram J eventually struck the taxpayer’s appeal out for want of prosecution under r35.32 of the Federal Court Rules 2011 (“A respondent to an application … may apply to the Court for an order that the application be dismissed: (d) for want of prosecution“). These orders were dated 16 May 2017.  FCA 526
- The Taxpayer appealed this order to the Full Federal Court.
The Full Federal Court dismissed the Taxpayer’s appeal, leaving his original appeal (from the AAT decision) struck out for want of prosecution. It agreed with Perram J – finding that the Taxpayer had repeatedly failed to comply with orders made by the Court, as to the filing of his submissions and, as to timetabling of the appeal, “more or less since he commenced the appeal”.
The Taxpayer also told the Federal Court that, whilst all this had been happening, the Commissioner had obtained judgment, on the underlying unpaid tax, the subject of the appeal, and had issued 2 bankruptcy notices in relation to his judgement for that debt.
20 January 2018.
[FJM; LTN 10, 16/1/18; Tax Month January 2018]
Study questions (answers* below)
- Was it interest, and loss, deduction claims, that the Taxpayer disputed?
- Did the Taxpayer appeal, directly to the Federal Court, against the Commissioner’s objection decision?
- Was it 16 times that the the Taxpayer failed to comply with orders of the Federal Court?
- Was it under r35.32(d) that the application was struck out?
- Had the Commissioner issued as many as 2 bankruptcy notices whilst all this was going on?
2017 Federal Court decision – scope note
PRACTICE AND PROCEDURE – appeal from decision of Administrative Appeals Tribunal – whether application dismissed for want of prosecution on initiative of Court – consideration of r 35.32 of Federal Court Rules 2011 (Cth) – repeated failure to comply with orders of Court – where Applicant is practising barrister
2015 AAT case – scope note
TAXATION – income tax – deductions – settlement of proceedings concerning loans made to partnership and related company – equitable assignment of lenders’ rights against taxpayer partner to company not at arm’s length to taxpayer – whether interest on loans “incurred” for purposes of s 8-1 of Income Tax Assessment Act 1997 (Cth) (ITAA97) in subsequent years of income – whether deductions allowable for tax losses of earlier income years under Div 36 – whether onus of proof discharged for purposes of Pt IVC of Taxation Administration Act 1953 (Cth) (TAA)
Federal Court’s list of events (Perram J)
|11 February 2016||
|19 April 2016||2. Matter fixed for a hearing of 1 day on a date to be fixed. Mr Sandbach directed to submit a draft index of Part A to the Registrar by 2 May 2016.|
|2 May 2016||3. No draft index prepared for Appeal Book. Appeal fixed for hearing on 26 October 2016.|
|9 September 2016||4. Still no draft index prepared. Court seeks to list matter for directions the following week.|
|10 September 2016||5. Mr Sandbach informs my associate that he is overseas and will not return until 17 October 2017.|
|12 September 2016||6. Direction made that Mr Sandbach file an affidavit by 22 September 2016 explaining why he had not complied with the earlier orders. Matter listed for directions on 24 October 2016.|
|22 September 2016||7. Mr Sandbach seeks extension of time to file affidavit. Extension to 20 October 2016 granted.|
|21 October 2016||8. Affidavit filed. Mr Sandbach indicates that he had lodged the draft index on 19 April 2016. He says he did not receive a response from the Registrar until 5 August 2016. The situation was in fact more complex than this. He otherwise says he was too busy in various trials to attend to the matter and then went overseas.|
|24 October 2016||9. Directions hearing. Orders made vacating hearing on 26 October 2016. Mr Sandbach again ordered to file draft index by 31 October 2016. He is also ordered to pay costs of directions hearing on an indemnity basis. Matter listed for further directions on 2 November 2016 to consider whether earlier orders complied with and whether, if not, the proceeding should be dismissed.|
|14 February 2017||10. Appeal index still not settled.|
|9 March 2017||11. Directions. Orders made that parties attend before Registrar by 16 March 2017 to settle draft index. Mr Sandbach to file appeal books and submissions by 13 April 2017.|
|4 May 2017||12. Mr Sandbach indicates his submissions will be ready by next day. In fact, he is trying to get a lawyer to act for him and there is no prospect of his submissions being ready on 5 May 2017.|
|5 May 2017||13. Orders by consent that Mr Sandbach serve his submissions by 5 May 2017 together with Parts A and B of appeal book.|
|12 May 2017||14. Matter relisted for 15 May 2017. There are still no submissions filed.|
|15 May 2017||15. Directions.|
|8 June 2017||16. Current hearing date for appeal.|