Glennan v Commissioner of Taxation S85/1999 [2000] HCATrans 277 (26 May 2000)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney Nos S56, S57, S58 and S85 of 1999

B e t w e e n -

MICHAEL JOHN GLENNAN

Applicant

and

COMMISSIONER OF TAXATION

Respondent

Applications for special leave to appeal

GAUDRON J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 26 MAY 2000, AT 2.49 PM

Copyright in the High Court of Australia

MR M.J. GLENNAN appeared in person.

MR D.B. McGOVERN: If the Court pleases, I appear for the respondent Commissioner. (instructed by the Australian Government Solicitor)

GAUDRON J: Mr Glennan, these four applications all seem to relate, essentially, to the one issue, do they not?

MR GLENNAN: In broad terms, I would respectfully agree with that. It arises out of one cause in the Federal Court.

GAUDRON J: Yes. Well, you do not need more than the normal 20 minutes just because there are four applications.

MR GLENNAN: I have made no such application.

GAUDRON J: No, well, that is good, thank you.

MR GLENNAN: The matter, the time, at this stage, is 20 minutes as far as I am concerned.

GAUDRON J: Thank you. Good.

MR GLENNAN: The Court may wish otherwise, but it is 20 minutes at this stage. May I proceed, your Honour?

GAUDRON J: Yes, please do.

KIRBY J: I should say that I knew Mr Glennan when we were at law school together a long, long while ago, but I do not feel that that disqualifies me from sitting in the matter and I would intend to sit. I did not know you in any adverse circumstance at all.

MR GLENNAN: Certainly not, and there is no objection - - -

KIRBY J: In fact, I rather liked you at the law school, and I have not really had anything to do with you ever since.

MR GLENNAN: Thank you.

MR McGOVERN: Perhaps I should take some instructions, your Honour.

GAUDRON J: Do you wish to?

MR GLENNAN: I, with the Court's permission and indulgence, wish to move instanter two alternative motions. One, an order nisi for prohibition, mandamus and certiorari, which has been filed in Court this day. Alternatively, I am seeking an order that the order nisi filed today be directed to be heard by a Full Court - - -

GAUDRON J: Now, Mr Glennan - - -

MR GLENNAN: May I finish the motion please? By a Full Court - - -

GAUDRON J: We have not even got the papers.

MR GLENNAN: By a Full Court, jointly, with the special leave applications today. The papers are in Court and - - -

GAUDRON J: Yes, but we have not had a chance to - - -

MR GLENNAN: I am fully aware of the fact that the Court is not siezed with the papers, other than the fact that they have been filed in the Registry office. That is why I have moved the second motion which I would like to just repeat the terms thereof. That the order nisi filed in Court today be directed to be heard by a Full Court jointly with the present four cognate special leave applications at a later date convenient to the Court. Now, these motions arise out of - first of all, they are based on section 32 of the Judiciary Act 1997 which, with the Court's permission, I would read, if I can just find my copy of it:

The High Court in the exercise of its original jurisdiction in any cause or matter pending before it, whether originated in the High Court or removed into it from another Court, shall have power to grant, and shall grant, either absolutely or on such terms and conditions as are just, all such remedies whatsoever as any of the parties thereto are entitled to in respect of any legal or equitable claim properly brought forward by them respectively in the cause or matter; so that as far as possible all matters in controversy between the parties regarding the cause of action, or arising out of or connected with the cause of action, may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters may be avoided.

GAUDRON J: You seem to have done well with generating a multiplicity of legal proceedings so far.

MR GLENNAN: I have been innocent to that, your Honour.

GAUDRON J: Four applications for special leave; application for prerogative relief; two alternative motions today - - -

MR GLENNAN: I hold the respondent entirely responsible for that.

GAUDRON J: You had better tell us how you say the order nisi, which we do not have, bears on the question of the special leave application.

MR GLENNAN: May I say this - - -

GAUDRON J: You can be confident that we cannot deal with the application for the order nisi.

MR GLENNAN: Today.

GAUDRON J: Today.

MR GLENNAN: I am totally - - -

GAUDRON J: Now, your next thing - - -

MR GLENNAN: I am totally confident in that. There is no argument from me on that point.

GAUDRON J: Yes. Order nisi to be heard jointly with the special leave application.

MR GLENNAN: Yes, at a later date convenient to the Court.

GAUDRON J: Even if you were to succeed on that, it would not be at a very much later date. But let me ask, how does it bear on it?

MR GLENNAN: Full co-operation would be provided to expedite the matter on my part. How does it bear? The problem, and the reason - well, one of the reasons, not necessarily the sole reason, but one of the reasons, and certainly a very important reason - for the order nisi application being lodged today, is this. Unwittingly, in application S85, the applicant has sown seeds of his own destruction.

GAUDRON J: That is you.

MR GLENNAN: Forensic destruction. Yes. The reason for that is this, that in S85, it has been - I use the term "pleaded" in a very loose sense - it has been formally pleaded that the Federal Court, in its original jurisdiction, became functus officio, and there was no further appeal under the Commonwealth relevant statute law to the same court, however constituted. In addition, in S85, it has been pleaded that the proceedings before the Full Court, which principally consisted of two appellate matters filed and heard on behalf of the respondent today, the Commissioner of Taxation, were statute barred; statute barred, based on section 14ZZQ of the taxation administration Act.

I would like to say immediately that the argument that those proceedings were completely and totally statute barred is argued in quite explicit terms in the relevant passage in the CCH, discussing section 14ZZQ. CCH, the learned authors of that publication, whose views under that section I respectfully adopt, state that where the time set out in any rule or Act for appealing by the Commissioner of Taxation, not by anyone else, but by the - it specifically refers to the Commissioner of Taxation only - that the relevant judgment or judgments are final, and the CCH says that means there is no discretion to extend the time for appealing. That is my submission today.

I would hasten to add, and this has been pleaded in my summary of argument, that I was totally ignorant of the existence of section 14ZZQ when the appeals were being heard. I had briefed learned counsel, senior counsel. I, myself, had conducted fairly extensive research. I had solicitors acting for me. We were totally ignorant of this provision. Of course, had we been ignorant, the position might have turned out quite differently.

GAUDRON J: What does section 14ZZQ say, in terms, please?

MR GLENNAN: Certainly. If your Honour would just pardon me one moment. Here we are - 14ZZQ, and fortunately I am now reading from the Australian Federal Tax Reporter, published by CCH. It is at paragraph 973-330, and is as follows. First of all, the heading, apparently taken from the statute is "Implementation of court orders", but the actual text is as follows:

14ZZQ(1) When the order of the Federal Court in relation to the decision becomes final, the Commissioner must, within -

must - m-u-s-t -

60 days, take such action, including amending any assessment or determination concerned, as is necessary to give effect to the decision.

Subsection (2) is as follows - I quote:

For the purposes of subsection (1):

(a) if the order is made by the Federal Court constituted by a single Judge and no appeal is lodged against the order within the period for lodging an appeal - the order becomes final at the end of the period; and

(b) if the order is made by the Full Court of the Federal Court and no application for special leave to appeal to the High Court against the order is made within the period of 30 days after the order is made - the order becomes final at the end of the period.

That is the sum total of section 14ZZQ. The learned editors, or whoever their authors are, and I am quoting from page 872,441 - they say as follows, if I may just read this short passage quote:

For these purposes, a court order becomes final (sec 14ZZQ(2)):

which I have just read. Bullet point one:

if the order is made by a single judge of the court and no appeal is lodged against the order within the period allowed for lodging an appeal (21 days: see |P973-020) - at the end of that period (for these purposes, the period allowed for lodging an appeal cannot logically include any further period which, in its discretion, the court may allow and must be restricted to that 21-day period);

Bullet point two:

if the order is made by the Full Federal Court and no application for special leave to appeal to the High Court against the order is made within 30 days after the order is made - at the end of that period.

Now, the situation here is that the first judgment of the court, at first instance, his Honour Mr Justice Foster, was handed down or published on 17 October 1997. The first application to - - -

GAUDRON J: When was the order taken out?

MR GLENNAN: Some considerable time later. I will just have to check that. The order was taken out - this is in the appeal book at page 87. It is entered on 10 November 1998.

GAUDRON J: Yes, well, that is the date for which the 21 days for the appeal runs.

KIRBY J: Is it 21 or 30?

MR GLENNAN: It says:

If the order is made by the Federal Court constituted by a single Judge and no appeal is lodged against the order within the period for lodging an appeal - the order becomes final at the end of the period;

GAUDRON J: What is the period for lodging an appeal?

MR GLENNAN: The period, as I understand it, is 21 days.

GAUDRON J: From the taking out of the order.

MR GLENNAN: Yes.

GAUDRON J: Yes, 21 days. That takes you, what, to 31 November, does it? Are there 31 days in November?

KIRBY J: Thirty days has September, April, June and November - 30.

GAUDRON J: It takes you to 1 December 1998, does it?

KIRBY J: '98.

MR GLENNAN: With respect, I would submit that is not correct.

GAUDRON J: What do you say is correct?

MR GLENNAN: I say that, according to the rules of court, the period runs from the date the judgment is published which is 17 October 1997.

KIRBY J: Had you brought an appeal before 1 December 1998?

GAUDRON J: When was the appeal brought? Or it was the Commissioner's appeal.

MR GLENNAN: The Commissioner's appeal was filed on 30 September 1998.

GAUDRON J: But the judgment was published on 17 October, you told me.

MR GLENNAN:, and I am arguing and submitting that that is the date that the rules of court providing for appeal operate from. I have no authority for that, but that is my argument and contention in this matter.

KIRBY J: Is this a view that is supported by the Commissioner, do you know, given that he brought his appeal outside that interval?

MR GLENNAN: The problem is that we were not aware of the - you see, the provision in section 14ZZQ says that:

When the order of the Federal Court in relation to the decision becomes final, the Commissioner must, within 60 days, take such action -

GAUDRON J: Yes, but there is no order to become final until the order is taken out.

MR GLENNAN: Well, your Honour, with respect, there was an intervening application by me, a motion, in fact, to have one of the orders rescinded, and that matter was heard by the same judge in 1998 and he delivered a second judgment.

KIRBY J: We know all this. We have read the papers.

MR GLENNAN: Now, the judge specifically brought down his second judgment on the basis, he said in his judgment, that there had been no appeal. He certainly proceeded on the basis that the time for appealing had expired, which it had, and that is my contention. My contention is that section 14ZZQ operates from the date of the Federal Court order and, in fact, in the judgment of - - -

GAUDRON J: From the date of the Federal Court order.

MR GLENNAN: Well, I have here, on page 50 of the application book, the minutes of the order and they are dated 17 October 1997, on page 50 of the application book.

GAUDRON J: Yes.

MR GLENNAN: I am respectfully contending that any party, whether it be me - - -

GAUDRON J: But thereafter that - - -

MR GLENNAN: Whether it be me or the Commissioner, if we wish to appeal within time, the clock - - -

GAUDRON J: This is a double edged sword, I think, is it not, if you are right? In this sense, though, was there anything for - you did not appeal either.

MR GLENNAN: I did eventually.

GAUDRON J: Yes, but - - -

MR GLENNAN: First of all, I did not appeal against this judgment, no.

GAUDRON J: Just wait a minute, yes. What would 14ZZQ say to your subsequent application which resulted in Justice Foster amending his order?

MR GLENNAN: I am sorry. I did not hear or understand the question.

GAUDRON J: What would section 14ZZQ say, or how would it operate, in relation to your subsequent application to Justice Foster to amend his order?

MR GLENNAN: It was not relevant. It had no relevance whatsoever because the order had not been passed and entered, and under the rules of court I had a perfect opportunity to come back, as I did, and ask his Honour to revoke an order that had not been passed and entered, and his Honour passed - - -

GAUDRON J: Where do you say time was running for the appeal?

MR GLENNAN: Yes, I do. I do so argue because of the minutes of this order that is dated, and published, and issued by his Honour. It was personally handed down to me in court on that date and it is at page 50 of the appeal book. I am submitting that each party knew that the clock started ticking on that day and if they wanted to appeal, they had to do so within the relevant prescribed period, from the date his Honour handed down these minutes. It was part of his judgment. If that contention is correct, the Commissioner's appeal was statute barred, and I am arguing on the basis of these minutes, it was clearly statute barred.

But that is not the end of the matter because whilst I - if your Honours wish me to continue on this point, there is a second point in my argument in S85 that there was no right of appeal anyway. Whether the appeal was statute barred, leave that to one side, there was no right of appeal. The court was functus officio and I explain in detail in - - -

GAUDRON J: Both of these matters, though, are raised, are they, in your application for prerogative relief?

MR GLENNAN: Fully and in detail. The document is some 30 pages long - - -

GAUDRON J: Well, do not intimidate us with the length of the document. It is not helping your argument if it is 30 pages long.

MR GLENNAN: Well, I withdraw that. But, yes, in the document I refer in detail to the four cognate applications and I argue, as the grounds for prerogative relief, the following. That if - - -

KIRBY J: Who are named as the parties to the prerogative relief?

MR GLENNAN: I am named as the applicant prosecutor.

KIRBY J: And who are the respondents to the writ?

MR GLENNAN: The first respondent is the Deputy Commissioner of Taxation and the second respondents are the Judges of the Federal Court. Now, if my legal contentions, as unwittingly stated, but not withdrawn in S85, were upheld, it would be open to the High Court, on the hearing of the appeal, to come to the conclusion, as a matter of law, that the whole of the proceedings in front of the Full Court were null and void and, therefore, had no legal consequences and, therefore, there was no avenue of appeal to the High Court - - -

KIRBY J: This is an order of a superior court.

MR GLENNAN: Yes, unfortunately, and if that argument - - -

KIRBY J: Normally is not null and void until set aside. That is the nature of an order of a superior court.

MR GLENNAN: Well, the High Court might - let us take it to its nth degree and assume that the High Court set aside the Full Court decisions. That would leave, on this hypothesis, the judgments of his Honour Mr Justice Foster, standing, and the Federal Court Act provides that I have no right of appeal to the High Court from a single judge of the Federal Court. Then, therefore, I could effectively get my arguments upheld; the Full Court proceedings declared a nullity; and, perhaps, let us assume, set aside, for arguments sake. But I am still left with no remedy because I cannot appeal out of time. Even if the High Court wanted to grant me leave to appeal out of time, I could not appeal from the judgments, or, actually, not the judgment, the order, the remittal orders, made by his Honour Mr Justice Foster.

KIRBY J: Do you understand that to be the position of the Commissioner?

MR GLENNAN: I do not know what the Commissioner's position is on these matters at all. The matter that - - -

GAUDRON J: You are really seeking an adjournment of today's special leave.

MR GLENNAN: Yes, I am.

KIRBY J: I think we understand that.

GAUDRON J: We understand that. We had better hear what the Commissioner says about that.

MR McGOVERN: Well, your Honours, the argument that my friend has advanced has not been entirely clearly delineated in the materials with which we have been served. But having said that, this application for special leave has already been the subject of one aborted attempt for it to proceed and my instructions were that the application for special leave today should proceed.

KIRBY J: We understand that, but we are now informed that there was filed today this process for constitutional relief and, one way or the other, the Court is going to have to deal with that.

MR McGOVERN: Certainly.

KIRBY J: There is a normal principle, and we have been read a statutory provision anyway, that says you should try to deal with everything altogether and that normally is more efficient. This is, therefore, before us today but we have the prospect of something which is related coming before us at a later time. You probably have not had time to take instructions on the type of considerations that are raised by the application for constitutional writs and, therefore, you are not, really, I would think, in a position to really help us on that matter today.

MR McGOVERN: No, your Honours, obviously not. I must say I have had the briefest opportunity of looking at that material.

KIRBY J: Would it not be more efficient for the Court to deal with, as presently constituted, or - just excuse me for a moment.

GAUDRON J: Well, now, it would seem that this writ has to be dealt with, but what it seems to me - and I would be grateful for any help that might emanate from the Bar table - it seems to me that the writ has to be determined logically before the special leave application. Let me explain that. If the writ were to go and result in certiorari, the decision is quashed, there is nothing to appeal against.

MR GLENNAN: With respect, I agree with that.

GAUDRON J: Well, I was rather hoping you would not. But that seems to be right, does it not, Mr McGovern?

MR McGOVERN: It does sound very attractive, your Honours, in terms of - - -

GAUDRON J: It does not sound in the least bit attractive to me but I - - -

MR McGOVERN: As a consequence, your Honours.

KIRBY J: It is not a question of attraction, it is the question of logic. It is the logical thing to deal with first to see if there is a valid order which, when that order is challenged, the question then becomes whether or not the order nisi would be granted, and that, as Justice Gaudron pointed out to me, is normally dealt with by a single Justice, not by two.

GAUDRON J: It is not obvious to me, if I may say so, that that application has to be dealt with by the special leave Bench. The 14ZZQ point is - well, the prohibition point is a discrete point - it would seem to be, would they not?

KIRBY J: Do you have any immediate simple solution to it? Is there anything that you can put to the Court that indicates that there is nothing at all in the point? I am not asking you to argue the order nisi but is there something that - - -

MR McGOVERN: Well, your Honours, as I have quickly scanned the process that we have been served with today, the burden of the material seems to suggest that the assessment is bad because of the fact that the Commissioner was required to comply with the terms of a public ruling, the public ruling procedure being set in place by amendment to the statute in 1992 and it provides that in circumstances where an assessment would be raised in a way which is more beneficial to a taxpayer if the public ruling is complied with, then the Commissioner must comply with the public ruling as opposed to relying upon the assessment that has been arrived at.

GAUDRON J: That is in the order nisi, is it, as well as - - -

MR McGOVERN: Yes, your Honour.

GAUDRON J: Yes. Well, I see that point is running around in this case too, but again, logically, it seems it has to be dealt with on the writ application first.

MR McGOVERN: The only point that I would seek to pursue is this, that Justice Kirby said, "Is there an easy answer to that question?" The public ruling that my friend relies upon says that, in circumstances where there is an agglomeration of capital and income received pursuant to the terms of settlement of litigation, and it cannot be segregated out as to income or capital, that, in those circumstances, the amount received should be regarded as a capital receipt. The short answer to the argument that is advanced is that the public ruling regime applies only in respect of arrangements that occur after 1 July 1992.

The arrangement pursuant to which the terms of settlement gave rise to the payment of the amount in question in the circumstances of the present case occurred in 1988. So the public ruling regime would not have applied in any event. That is a matter that is dealt with in the materials that we sent up to the Court showing section 12, I think it is, of the amending Act in 1992 - - -

KIRBY J: This sounds to me as if it is a matter which would be the subject of submission and argument, and it is not as if it is self-evidently a completely erroneous application.

MR McGOVERN: It seemed to us that it was, though, your Honours.

KIRBY J: Yes, well it may be that on argument that can be demonstrated, but it is not the sort of thing one could knock out here and now.

MR McGOVERN: Yes. But it is the self same argument that is advanced in the applications.

KIRBY J: What about the time point?

MR McGOVERN: Your Honours, we would submit, and have submitted in our written submissions, that the Federal Court being seized of jurisdiction under section 44 of the Administrative Appeals Tribunal Act, that is the Federal Court being the appellate court as well as the single justice of the court, the Court has the power to extend the time for appeal.

GAUDRON J: Well, that is the question, is it not?

MR McGOVERN: That is the question and that section - - -

GAUDRON J: That is the question that is raised by the prerogative application.

MR McGOVERN: Section 14ZZQ is merely a machinery provision that puts in place an assessment consequent upon the determination of an appeal which is not the subject of a further application. I accept that, your Honour, fully.

GAUDRON J: There is a construction point there, is there not?

MR McGOVERN: There is a construction point there which we have sought to answer in the materials that were placed before the Court on our summary of argument today.

GAUDRON J: Well now, I think, really, this application has to be stood over pending the outcome of the application for prerogative relief. You cannot really resist that, can you? But, what I think - - -

MR McGOVERN: We are just concerned, obviously, about time and - - -

GAUDRON J: Of course, is not everyone? It will be stood over. Justice Kirby and I will be able to take it at any time in Sydney upon the determination of the application for prerogative relief. However, there does not seem to be any reason why the application for prerogative relief should not be dealt with in the ordinary way, which is to say it will be dealt with by the duty judge, as in the normal course, and once that is dealt with then we can return to this matter.

MR GLENNAN: If the Court pleases.

GAUDRON J: But this application was made very late, Mr Glennan.

MR GLENNAN: I do apologise for that.

GAUDRON J: Well, it is not a question of apology, it is a question of how it bears on costs. It seems to me that in view of the way this has happened, but if you have some contrary submissions to make, please make them - - -

MR GLENNAN: Could I make a submission?

GAUDRON J: I was going to suggest that costs of today would be costs of the special leave application.

MR GLENNAN: I would respectfully consent to that.

MR McGOVERN: Your Honour, the costs have been entirely thrown away by reason of the late application. That is all I would submit.

GAUDRON J: Yes, but - - -

KIRBY J: You are asking that they be respondent's costs in the special leave application.

MR McGOVERN: Yes.

GAUDRON J: What do you say to that, Mr Glennan?

MR GLENNAN: I would have no objection to an order that they be the respondent's costs because, ultimately, that would depend on the final order, would it not?

GAUDRON J: Yes.

MR GLENNAN: I have no objection to that, your Honours, none at all.

KIRBY J: Yes, but if you were to succeed on the special leave application, you would have to pay the costs of today because of the fact that the respondent has been brought here unnecessarily. If you had acted earlier, then the orders that have been made could have been made in chambers.

MR GLENNAN: With respect, I would resist that. I would be respectfully submitting the appropriate order is that the respondent's costs today abide the outcome of the special leave application, and if that fails, he should get his full costs. If I win it, I should get whatever relief as to costs - - -

GAUDRON J: Well, the difficulty, of course, Mr Glennan, is this. If you are correct about the prerogative relief - - -

MR GLENNAN: It will be an academic issue, I suppose.

GAUDRON J: It will be an academic issue and that really would not be fair to the Commissioner, would it? He has been brought here - no, but in this sense, no, seriously, in this sense, because you have had months - - -

MR GLENNAN: If it does become an academic issue, then, yes, I would agree, then he probably is entitled to his costs in the event that I lose the order nisi and lose the special leave. Yes, I - - -

GAUDRON J: No, but if you won the order nisi, the special leave would become academic and you would - if you won on the order nisi, the special leave would have to be dismissed. So it would then be the Commissioner's costs. It would have to be dismissed because there would be - - -

MR GLENNAN: If your Honour feels that is the appropriate order, I do not oppose it.

GAUDRON J: I think it does work best, Mr McGovern, simply by saying that costs of today will be costs in the application.

MR McGOVERN: If your Honour please.

KIRBY J: I think the transcript of today's proceedings should be before the Justice who deals with the order nisi application.

GAUDRON J: Very well. The order is that the applications are stood over pending the outcome of the order nisi application. The costs of today to be costs of the special leave applications.

We will adjourn briefly to reconstitute for the final matter.

AT 3.25 PM THE MATTER WAS ADJOURNED

TO A DATE TO BE FIXED.