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High Court of Australia Transcripts |
Last Updated: 15 February 2011
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S247 of 2010
B e t w e e n -
PRE-PAID PROFESSIONALS ADMINISTRATION LIMITED
Plaintiff
and
COMMISSIONER OF TAXATION
First Defendant
THE FEDERAL COURT OF AUSTRALIA
Second Defendant
Application for order to show cause
HEYDON J
TRANSCRIPT OF PROCEEDINGS
AT SYDNEY ON MONDAY, 14 FEBRUARY 2011, AT 10.27 AM
Copyright in the High Court of Australia
MR J.O. HMELNITSKY: May it please the Court, your Honour, I appear for the first defendant. (instructed by Australian Government Solicitor)
MR N. PETROULIAS: May it please the Court, I appear on behalf of the plaintiff.
HIS HONOUR: Now, Mr Petroulias, you are relying on your affidavit which was filed on 26 October 2010?
MR PETROULIAS: That is correct, your Honour, and, in particular, at the back in relation to the steps taken to try to get a recall of the judgment at the Federal Court level.
HIS HONOUR: When you say that, you are talking about paragraph 20 onwards?
MR PETROULIAS: In particular, that may have some reference today. I am hoping that it would save a lot of time because Mr Susanto’s affidavit is a lot more succinct that mine and it pretty much gets to the same point, if you have not read that.
HIS HONOUR: Yes. So just getting things sorted out, apart from your own affidavit, you rely on Mr Susanto’s affidavit of 11 February 2011 and filed on that day?
MR PETROULIAS: That is correct, yes.
HIS HONOUR: Is there any objection you have to anything in those affidavits?
MR HMELNITSKY: I do have two short objections, your Honour. In paragraph 18 of Mr Petroulias’ affidavit he gives some evidence on information and belief of things told to him by Mr Susanto and in view of the latter affidavit that has been filed from Mr Susanto, I object to paragraph 18.
HIS HONOUR: When you say “in view of Mr Susanto’s affidavit”, what in particular are you - - -
MR HMELNITSKY: Your Honour, in paragraph 18 of Mr Petroulias’ affidavit he says what he is told by Mr Susanto as to what Mr Susanto believed as to certain matters concerning the application before Justice Rares and my objection to that is that it is hearsay, but in view of the fact that Mr Susanto now gives his own evidence in slightly different terms of those same matters in the 10 February affidavit - - -
HIS HONOUR: Yes, but which paragraphs of the 10 February affidavit do you have in mind?
MR HMELNITSKY: Yes, your Honour. Paragraphs 9, 10, 11 and 12 and, in fact, 13 and following as well.
HIS HONOUR: So it is really 13 to 16 as well as 9 to 12?
MR HMELNITSKY: Yes. Subject to the second objection that I have which is to part of paragraph 10 of Mr Susanto’s affidavit where he says, “It was understood and agreed by me and Mr Jackson”. Mr Jackson is the solicitor on the record, your Honour, and I object to the evidence from Mr Susanto.....save for those matters, your Honour.
HIS HONOUR: So you would happy with paragraph 10 if it said “It was understood by me that Mr Petroulias”? Right. Now, what do you say those two objections?
MR PETROULIAS: To that paragraph 10, nothing, that is quite acceptable. To the broader proposition though, in paragraph 18, I mean, is it not just commonplace that two people have different – I mean, I think they are saying exactly the same thing but with slightly different emphasis, I guess, but so what? Is that not normal that two people have slightly different recollections of what was said?
HIS HONOUR: Does it matter if, given that Mr Susanto’s affidavit is coming in - - -
MR PETROULIAS: Well, ultimately I do not think it is going to make much difference, no.
HIS HONOUR: We can play this several ways. Do you withdraw paragraph 18 or do you not read paragraph 18?
MR PETROULIAS: Your Honour, I would like to leave it there, but I do not think it is going to make a difference. I do not want to argue over something that is not significant.
HIS HONOUR: You are probably correct. The first defendant objects to the first line of paragraph 10 of Mr Susanto’s affidavit. The plaintiff is content if the words “and agreed” and the words “and Mr Jackson” were not read in the first line of paragraph 10 and I think the objection can be met by treating those words as not read. The other objection made by the first defendant is that paragraph 18 of the plaintiff’s affidavit contains an account of dealings amongst lawyers on the first defendant’s side of the record which is given on information and belief by Mr Susanto. Mr Susanto has now provided direct evidence of that material in paragraphs 9 to 16. I think that, strictly speaking, paragraph 18 is admissible.
MR HMELNITSKY: I think in those circumstances, your Honour, I do not press the objection.
HIS HONOUR: Very well. It is now indicated by the first defendant that the objection is not pressed. So those two affidavits are your evidence, Mr Petroulias?
MR PETROULIAS: That is correct, your Honour.
HIS HONOUR: Mr Hmelnitsky, do you have any evidence you want to rely on?
MR HMELNITSKY: There is an affidavit from Ms Emma Whan, sworn 8 February.
HIS HONOUR: Yes, Emma Elizabeth Whan, which was affirmed on 8 February and filed on the 10th. What does it prove of interest?
MR HMELNITSKY: Your Honour, it does little more than to put into evidence the notice of appearance, which is Exhibit EW1, the signed consent order dated 9 December 2009, which is Exhibit EW2, and a letter from the plaintiff’s solicitor to the Australian Government Solicitor dated 21 December 2009, which is Exhibit EW4. That is the letter of 21 December 2009 advising that the motion that had previously been filed for Mr Petroulias to represent the plaintiff is no longer pressed.
HIS HONOUR: Do you have any objection to that affidavit, Mr Petroulias?
MR PETROULIAS: It does not say that at all. It simply says that on the issue of the solicitor on the record, not the issue about notice of motion not being represented. But anyway, that is a matter for argument, your Honour, I am sorry.
HIS HONOUR: You do not object to the affidavit?
MR PETROULIAS: No.
HIS HONOUR: Just excuse me one moment. Yes, all right. Now, Mr Petroulias, we have your submissions. They were filed on 18 November 2010.
MR PETROULIAS: Yes, but it is more the reply submissions that address what is really - - -
HIS HONOUR: The reply submissions. I will just get them. Yes. Now, what do you want to add to those two sets of submissions?
MR PETROULIAS: Well, your Honour, if I can just put it in context. The reason why we are here today is because I tried to file documents that were not accepted by the Federal Court to review the decision of Justice Rares which have the effect of denying the applicant, myself, a hearing by mistake and the mistake was that in adjourning the proceedings for his Honour’s convenience, he forgot to make the usual order previously made that I attend from custody to present the case.
The reason why we are here is, I have had on previous occasions recalled judgments of the Court of Appeal of New South Wales or the High Court of New Zealand when there is some factual flaw and, of course, have modified their judgments accordingly. There does not appear to be this recall provision in the Federal Court or if there is, there is an unwillingness to recognise it.
The mistake here is both the judge, because he accepts it in the transcript, and the solicitor in communication with his associate thought that the order that was supposed to bring me from custody was made when in fact it was not made. Maybe they thought that the orders rolled over and they followed the adjournment, but the fact of the matters is – I mean, I am just saying it is a simple mistake because it is an unusual situation where you have a solicitor in custody who is running a tax proceeding.
HIS HONOUR: Just so I get this precisely straight, the mistaken order, as it were, was the order of 9 December 2009?
MR PETROULIAS: Let me give you the context. In my first affidavit under NNP 3 is what I call the usual order.
HIS HONOUR: Just a moment. The pages are not numbered. NNP 3? Yes, I see, NNP 3 is - - -
MR PETROULIAS: And if you can see on 8:
The superintendent . . . shall have Nikytas Nicholas Petroulias, a prisoner, before this Court to be present during the hearing –
Now, some version of that order had always been made along the way to have me present. Somehow Mr Susanto believed that was made, so did his Honour, but it was not when he adjourned the – those very proceedings that I was supposed to attend were adjourned, but that order was not attached to it. As a consequence, I could not leave physically.
HIS HONOUR: The precise order – you mentioned failure to make the usual order, that that failure took place on 9 December?
MR PETROULIAS: Yes.
HIS HONOUR: That is EW2 to Ms Whan’s affidavit?
MR PETROULIAS: Well, it actually is not in the – I mean, the closest we can – I mean, I do not know what happened in chambers, your Honour, but in paragraph 7 of Mr Susanto’s affidavit he says he was talking to his Honour’s associate who had a desire that the 11 December hearing – this is the one that I had to attend, for which the order was made for me to attend, be adjourned. Okay. Then he says that his Honour – the associate, whatever came of that conversation, they were all under the impression that the order for me to come had been made when in fact it did not. That is the mistake. That is the only mistake.
HIS HONOUR: Let me just look at that transcript.
MR PETROULIAS: Certainly. I am sorry, it is page 21, not page 2. I think it is a typo.
HIS HONOUR: Yes. I just note for the record that in paragraph 7 of Mr Susanto’s affidavit filed on 11 February 2011, line 3, there is a reference to “page 2, Line 45”. That should be a reference to page 21, line 45. Just pausing there, I am not sure that page 21, line 45 supports - - -
MR PETROULIAS: No, I am sorry, there is a......on page 2 he is correct. On page 2, line 45 it is correct. He says, “I thought I made an order that he be brought here.” No, he is right and I am wrong.
HIS HONOUR: That correction I made to line 3 of paragraph 7 of Mr Susanto’s affidavit should be ignored. The affidavit is correct as it stands. I understand that point now.
MR PETROULIAS: So the issue today, your Honour, is whether there is a right to a hearing of a corporate taxpayer which includes as a matter of natural justice, as a last resort, using its sole shareholder and whether it is an answer to say that, you know, to depriving someone access to justice, as the opponent says, and wins by – windfall by default to say, well, it does not really matter. We have not heard what case he is going to put on, but it probably was not much good anyway and whether that is a satisfactory answer.
Now, as to the right of the hearing, I say natural justice requires a hearing from me in the circumstances for four distinct reasons. The first is, there is no other person who the company could use. The applicant is forced to come to this Court because of the way the tax system works. It receives a default assessment out of the blue, by a fax, without notice, without an audit, without an opportunity to give input. Simultaneously, with a default assessment comes a garnishee notice confiscating its assets. Its assets were at the time money held in a trust account by its lawyers to conduct litigation currently on foot, therefore, the confiscated funds were funds in a solicitor’s trust account.
The respondent will not recognise the solicitor’s lien, pre-existing lien, sue us if you like. So the net result of that is that there is no money for lawyers because the respondent has taken the money. So the only way for the applicant to bring its case is through itself, its own resources, its shareholder. The second distinct reason is that there was a transfer of the jurisdiction from Melbourne to Sydney on application specifically by myself and, as I said in my application, I am the sole shareholder. I am forced to run this litigation because the company has no money. I am in Goulburn Gaol and I cannot travel to Melbourne, but, look, there are transport trucks that will take me to Sydney, so can we transfer the case to Sydney? The respondent consented to that. So that creates another specific legitimate expectation that I myself was going bring the case.
The third ground is that order that you just saw where I am specifically required to attend the 11 December hearing. The only thing is that 11 December hearing was adjourned and it was adjourned at the judge’s convenience, which is fine, but I was ready to present the case on 11 December and part of that judgment was I had to personally show cause why I would not be liable for costs. That meant that I had to be there, at least for my own sake, if not for the company. That is a third specific legitimate expectation.
The fourth one is the mere fact that there is a specific procedure for leave to represent the company to be applied for. I mean, there is a process for seeking leave for me to represent the company and there is a body of case law as to how that leave should be exercised. So that procedure alone gives me an entitlement to be heard on that procedure. Then the next question is, can the case be taken away – can that natural justice right be taken away because those who have not heard your case do not think much of it? Well, I am putting it in that way because it is clearly nonsensical. If you have not heard the case, you cannot access its merits, but let us have a little peek into the merits.
The respondent says, “Well, look, the judge has seen your case, he has taken a glance at it.” He says, “Look, the agent was entitled to a fee anyway under the administration agreement”, so he can be taxed on the money that it received and paid to the principal as well; sort of a potential double tax scenario. Now, on its face there is a million problems with that. We take the familiar analogy, client pays specific money to his solicitor for counsel fees and the solicitor pays the barrister. The ATO says to the solicitor, “Well, we are going to tax you as well because under various fee agreements you have got with the client you are entitled to that sort of money anyway. You did not charge, but you are entitled to it.” There is something wrong with that. There is merit in challenging that.
Now, this administration agreement, if I said to you that the administration agreement that is said to give rise to an entitlement to fees was never executed, would that not cause you an argument? What if I told you that it was never intended to be executed? What if I told you that the services that were supposed to be entitled to be performed were never actually done and never intended to be done? So on the merits point, there is an argument there. You cannot tax an agent for money it has paid to its principal and, two, you cannot deem someone to be entitled to money that they are simply not entitled to.
For me to present this case, I needed to present it in the context of the four years of litigation that took place before his Honour Graham Hill in 2002 to 2005. I need to explain why the agreements were drafted the way they were in the context of this litigation and I say I am entitled to present this case. Now, I filed my material on time and I was ready to attend on 11 December as ordered. Okay. His Honour adjourned that, as he says, because of some problem in the registry for which he apologises, okay, but forgot to issue the substituted order for me to attend. Okay, it is a mistake, so let us fix it. Now, do you mind if we look at Mr Susanto’s affidavit – he is the solicitor – only because he gives a better review of the facts? Do you mind if I read it or - - -
HIS HONOUR: Well, which bit do you want to rely on?
MR PETROULIAS: William Susanto, the solicitor.
HIS HONOUR: Yes, I have that.
MR PETROULIAS: Yes, which I think is a nice little summary.
HIS HONOUR: All right, I will read it. You want me to read the whole - - -
MR PETROULIAS: Yes, if you do not mind.
HIS HONOUR: Yes, I have read Mr Susanto’s affidavit again.
MR PETROULIAS: Thank you, your Honour. The point I am trying to make there is – then what happens is there is an attempt to sort of like muddy the waters as to what is a pretty crystal clear proposition. You have an entitlement to present your case even if it is just to seek leave. The usual order for getting me there, that was – the adjournment of the hearing that I was supposed to attend to make that presentation did not include me attending the adjourned date, and was by a mistake.
Now, the muddying of that very simple proposition comes from the presence of this Mr McMillan – there is two, two muddying. One is that letter, EW4, that we will look at in a second and the second is this issue about this Mr McMillan attending on they day. Quite frankly, the man obviously seems to have attended out of goodwill. He recognised on the first – if you see the opening salvo of the transcript, he understood there was an inconsistency with him being there to represent the company if I have got an application on foot that I represent the company. He does not actually purport to do that. He seeks to withdraw once he realises that I am not there and that creates a bit of a confusion for him and everyone else throughout this case. He does not know the case, he says so. He does not know much about the case at all and he says so.
Now, his presence is not necessarily inconsistent. Dr Robertson, a friend of mine, if you like – it is a bit of a loose call, I am sure he does not want to be called a friend – but Dr Robertson has obviously asked him to attend and help me out. Of itself that is not inconsistent. He can help with procedural points. I do not have access to law reports and things in custody, so having him there is fine and in the end of the day, if leave for me to appear with the company was denied, then someone would have to take over, so there was no reason why – I mean, so it was quite wise to have someone there to step in in that event.
Now, what he has got, he is confronted with the situation that I am not there and they are all running around trying to find out where I am. So my point is there is no inconsistency with Mr McMillan there. Mr Susanto explains that his letter to the AGS, which again is ex post the mistake – I mean, had the normal order been made and I attended to make the presentation, this would not have arisen.
HIS HONOUR: No, just one moment. Mr Susanto’s letter to the AGS, that is EW4, is it?
MR PETROULIAS: Sorry, your Honour, yes, that he refers to in paragraph 11. Well, that is much relied upon by the respondent to say, “Well, here you are. You said you are representing Petroulias now.” Well, he does not say that. What he is saying is – we address the solicitor on the record point because there is two separate objections. One was that you cannot bring proceedings in the first place unless there is a solicitor on the record and the second is the appearance point, and he was addressing the solicitor on the record point. Well, we do not have to argue about that any more because now there is a solicitor on the record. That retrospectively fixes the problem. At no point did he go to the next step because he could not, he did not have the expertise, and I never gave him instructions to, to say that - - -
HIS HONOUR: Just hang on a moment. You say that fourth paragraph of that letter of 21 December 2009 simply means, in effect, you have said that the company is unable to instruct solicitors?
MR PETROULIAS: Well, counsel in this case.
HIS HONOUR: It says, “seek leave to proceed without a solicitor”.
MR PETROULIAS: Yes, “seek leave to proceed without a solicitor” on the record for the purposes of actually – that is what he calls the order – sorry, in paragraph 2(b)(i) and he distinguishes between the two sets of Federal Court Rules that were objected to by the ATO. The first was the - - -
HIS HONOUR: Sorry, I am not with you. Are we looking at the letter of 21 December 2009?
MR PETROULIAS: I am, and I am comparing it against paragraph 2 of Mr Susanto’s affidavit, which is on page 2, lines 8 to 12.
HIS HONOUR: So paragraph 2(b)(i) is the solicitor on the record point?
MR PETROULIAS: Yes, and the second one is the appearance one. He is saying I have only addressed the solicitor on the record point and I am saying there is no inconsistency with that because there is a notice of motion for me seeking leave to represent the company. That was never abandoned. That was before the court.
HIS HONOUR: Okay. Where do we go from there?
MR PETROULIAS: Okay. So what I am trying to clarify is the error was very simply not renewing my attendance in the court. That correspondence after the event could not have fixed that error in any event, so the attempt to make that letter stand for more than it actually does would not have fixed the letter. Had I attended, the matter would have proceeded on the day. There is a case to be brought and I want to bring it. There is a suggestion by the respondent that, hold on, there has been a delay here, I really need that idea quashed very quickly by reference to - - -
HIS HONOUR: Are you talking about the delay in this Court?
MR PETROULIAS: The delay in this Court, yes.
HIS HONOUR: Yes, I understand.
MR PETROULIAS: What you will see under NNP 8, correspondence with the registry on my first affidavit, is a series of letters - - -
HIS HONOUR: Just a moment. Yes, I have the beginning of that. That is a series of letters either between - - -
MR PETROULIAS: A series of letters where - - -
HIS HONOUR: - - - Bakis and the registry or you and the registry.
MR PETROULIAS: Exactly. So she turns up to file within a week – well, it is actually asking for a recall of the judgment, and they refused to accept this correspondence with the Chief Justice and so forth until they work out what the problem is. Mr Jackson weighs in at the end and explains that he never briefed Mr McMillan and was not represented. Now, what that means is – that takes us to May. So if you allow a month for the registry to reply, I am in this Court in four months.
HIS HONOUR: I think the point though is, whatever stress and difficulties you were under you had enough energy in late February for a month or two to deal either directly or through others with the Federal Court. The point being made is, therefore you had enough energy to file your certiorari and prohibition - - -
MR PETROULIAS: In this Court?
HIS HONOUR: Yes.
MR PETROULIAS: Yes, but it would be unwise to do that because it looked like the registry was accepting that it had mistakenly not considered the application filed by Ms Bakis and we were hopeful to have it resolved that way.
HIS HONOUR: All right. Just show me how that plays out. We have 24 February, Ms Bakis says, “I was not allowed to file some documents in the registry” and she wanted a statement of reasons.
MR PETROULIAS: Yes.
HIS HONOUR: Then you, on 12 March - - -
MR PETROULIAS: Write to the Chief Justice to the same effect.
HIS HONOUR: Wrote to the registrar, I think.
MR PETROULIAS: Yes.
HIS HONOUR: You attached your letter of complaint to the Chief Justice?
MR PETROULIAS: Yes.
HIS HONOUR: That was, in effect, an application, was it, for a further hearing by Justice Rares?
MR PETROULIAS: That is right, a recall, what I just.....as a shorthand. That is how understand it, if you do not mind. Then on 24 March 2010, she again writes to the registry, Mr Segal:
Your letter addresses only 1 of the 2 notices of motion in the PPPA matter.
This is this matter -
It does not address the application for review for want of hearing.
Then he replies on 31 March saying, well – essentially what he is saying is, “What I saw was the appeal document, but if there was other documents you want to apply” – we get the reasons for decision on 3 March and then on 23 April, fourth paragraph, they are saying, well, it is still possible to file - - -
HIS HONOUR: Fifth paragraph I think, it is still possible for some documents to be presented to the registry.
MR PETROULIAS: Then under NNP 9 is Jackson Lalic writing to the registry putting the position of the firm. So basically what I am saying is that if there is a time line it ought to start. It ought to start from a reasonable period after allowing a reasonable – and we have not got a response from this letter, the 13 March – it ought to start from then because there was some prospect that it was unclear what exactly I was seeking and that we should try again. Mr Jackson tries to improve on the situation and it is only after a reasonable period of time after that that I come to this Court. If you have got May, June, July, August, September, October, so allow a month to reply, I am in this Court in four months, so that is certainly well within time.
HIS HONOUR: I just want to get this exactly right. An application for an order by way of mandamus had to be made within two months of Justice Rares’ judgment.
MR PETROULIAS: Well, really, this is a certiorari – the others are consequential, if you like. The issue here is there has not been a hearing; we want to have a hearing.
HIS HONOUR: Right. Anything else you want to say?
MR PETROULIAS: In NNP 10 I explain the mental health problems as to exacerbating the issues. So the time should not be held against me. That is all, your Honour. Thank you.
HIS HONOUR: Mr Hmelnitsky, this does seem to have some problems. Correct me if I am wrong, but there seems to have been a common assumption that what Mr Petroulias has been calling the “usual order”, permitting him to be brought to the court to represent the company, or at least at the minimum to put arguments why he should be allowed to represent the company, it was thought had been made although it had not actually been made. Then we have Mr McMillan, who does not seem very enthusiastic to represent the company and may not have been instructed to do so, at the hearing in February 2010. What is wrong with Mr Petroulias’ argument that whatever his case is he was deprived of an opportunity to present it?
MR HMELNITSKY: Two things, your Honour. The first is that, in my submission, the order that the plaintiff fixes on, namely, the consent order dated 9 December 2009, was not, as the plaintiff now seeks to characterise, a mistake. It was, your Honour, in my submission, very clearly an order that was made by consent and was made - - -
HIS HONOUR: Consent can be brought about by a mistake, though.
MR HMELNITSKY: That may be so, your Honour, but the features of the order that I point to are that it was made – and if your Honour perhaps turns it up – it was clearly made by Mr Susanto in circumstances where his firm was on the record. That is the first aspect of it that I draw attention to. The second, your Honour, is that it was made against the background of an application that had previously been made, that is the notice of motion filed 15 November 2009 which your Honour will find as exhibit NNP 4 to Mr Petroulias’ affidavit.
HIS HONOUR: Let me just get that. Yes.
MR HMELNITSKY: So to highlight the chronology, your Honour, the first step was that the proceedings had been commenced by Mr Petroulias without a solicitor. During the course of those proceedings, on 15 November, he filed this notice of motion which sought relief in the terms that your Honour sees and that is specifically that Mr Petroulias be granted leave to appear to represent the applicant. Subsequent to that there was, perhaps unsurprisingly, difficulty in conducting the litigation because Mr Petroulias was in full-time custody and there were difficulties associated with getting documents to him.
That is described in paragraph 14 of Mr Petroulias’ affidavit and, as Mr Petroulias characterises it, it was at that point that he sought solicitors to represent him in the proceedings a post box. The reference to post box is at paragraph 14 of his affidavit. Then having been so appointed, your Honour, or so engaged, the solicitors entered into or signed the consent order that your Honour is seeing at exhibit EW2. So to come back to your Honour’s original point to me that there may be circumstances in which a consent order is procured by mistake or made in circumstances where there has been some mistake, there is no evidence to suggest that that was the situation here.
The next step in the chronology, your Honour, is that there was a letter dated 10 December 2009, so the day after this consent order was made – that is exhibit EW3 – in which the Australian Government Solicitor noted in paragraph one that solicitors were now acting on behalf of the applicant. In paragraph three attention is drawn to the “unsigned notice of motion dated 15 November 2009” and to the affidavits in support of that. I do not think there is any contest. That, your Honour, is a reference to the 15 November notice of motion I just took your Honour to. But then in the second last paragraph of that letter the Australian Government Solicitor said:
Further, in respect of the notice of motion dated 15 November 2009, would you please advise whether or not the motion is to be pressed and, if not, would you please identify those parts of the material which relate to the motion and are no longer relied upon.
Clearly, your Honour, in my submission, attention has been drawn to the 15 November application for Mr Petroulias to appear and the solicitors who are now on the record are invited to respond to it and the response is now exhibit EW4. Your Honour’s attention has already been taken to that paragraph that begins, “Also, we trust”. A previous point that had been taken by the first defendant was that Mr Petroulias was not even in a position to instruct representatives to act for the company. That is a separate issue, your Honour. Mr Susanto says:
And there is now, obviously, no need at this stage of the proceedings for our client to seek leave to proceed without a solicitor.
That, in my submission, unambiguously, is a reference to the fate of the 15 November notice of motion. Your Honour, I make that submission because that is what the Australian Government Solicitor had invited Mr Susanto to respond to. If there were any doubt about that, your Honour, in the very final paragraph of that 21 December letter Mr Susanto writes:
If this is the case, then we will only be reading the material filed that is relevant to the issue in the proceedings, namely the issue of the extension of time to appeal to the Full Federal Court.
So having clarified what is to happen in the proceedings, Mr Susanto makes clear that we, that is we the solicitors now acting, will be taking a particular course in relation to the litigation.
HIS HONOUR: Just capturing your submission at this point, once Jackson Lalic said, “You do not dispute Mr Petroulias’ capacity to instruct us to act and we are acting”, then the issue of Mr Petroulias having an order made permitting him to come to court had gone because the solicitor, or the solicitor instructed, would be doing the work on behalf of the company that Mr Petroulias would otherwise be doing?
MR HMELNITSKY: Yes, your Honour, and that is why in my written submissions I submitted that in the circumstances it was not any mistake at all. It was to be expected in those circumstances that the litigation would thereafter be conducted by the solicitors.
HIS HONOUR: Just excuse me one moment. There may not have been a mistake operative, as it were, between the plaintiff and the first defendant, but does not paragraph 10 of Mr Susanto’s affidavit suggest that there was a mistake operating at least between him and Mr Petroulias, or operating, on his mind, because he understood that Mr Petroulias would be attending the court because of his knowledge?
MR HMELNITSKY: Yes, he may have been under the apprehension that Mr Petroulias would be there, but it has not been shown that – and this second submission that I make in response to what Mr Petroulias has said – it has not been shown, your Honour, on the evidence and, in my submission, it cannot be shown that Mr Petroulias being there on that day would have made any difference at all because, your Honour, by that stage the applicant was represented - - -
HIS HONOUR: Just go back one step. Do you say paragraph 10 simply means Mr Susanto may have thought that Mr Petroulias would be attending so as to instruct whoever was running the case, but it does not mean that he would be representing. See, it does say:
It was understood and agreed by me and Mr Jackson that Mr Petroulias would be representing the plaintiff - - -
MR HMELNITSKY: What it rather suggests is that Mr Susanto thought that his firm was just a post box and that although he was on the record and although he had told the Australian Government Solicitor that the firm would be acting and presenting the argument, it appears that he at some point thought that the firm was just a post box.
HIS HONOUR: Let me just try and put this in context. The background, of course, is this. It is not possible for anyone to get special leave to appeal from Justice Rares’ decision because of the provision in the Federal Court Rules to that effect.
MR HMELNITSKY: Section 31A.
HIS HONOUR: Therefore the only avenue open to Mr Petroulias is by constitutional writs. It is incontestably the case that Mr Petroulias was not there. Mr Susanto seems to be saying that his understanding was that Mr Petroulias would not only be there, but be actually representing the plaintiff. It is not really a satisfactory state of affairs, is it, whatever the cause, that a litigant has had his case go by default?
MR HMELNITSKY: But, your Honour, in my respectful submission, it did not go by default because all of the material that had been filed in support of the application was read by counsel who appeared for the plaintiff. The argument was presented, and I draw particular attention to this, your Honour, that once the application for the solicitors to withdraw was rejected, counsel for the applicant pressed on and addressed the substance of the motion. For example, at page 8 of the transcript, after there had been some debate about the motion to withdraw, at line 19, counsel said:
MR McMILLAN: Your Honour, in light of what is in this material –
that is, the material that I have just taken your Honour to in relation to the motion of being pressed, counsel says –
I don’t think I can take the application any further.
HIS HONOUR: No.
MR McMILLAN: We will proceed, if your Honour pleases.
The application was then revived, and at page 11 at line 17, your Honour sees what is said there, and particularly at lines 19 and 20:
I will press it and your Honour will say, “Well, I reject the application,” and that’s fine.
HIS HONOUR: I reject the application.
MR McMILLAN: If your Honour pleases.
. . .
where do I start?
He then proceeds to deal with all the of affidavit material.
HIS HONOUR: But with all respect to Mr McMillan, and I say this is a quite unfamed way, he does seem to be a bit lost in relation to the particular application. In other words, he did not have the grip on it that you would expect someone to have if they really were there prosecuting an application.
MR HMELNITSKY: It may be so, your Honour. I do not think there is anything I can say about that. But what this rather highlights, in my submission, is that the error, if there was one, in all of this was not a denial of natural justice because, after all, the applicant was on notice that the circumstances in which Mr Petroulias was not there was not something that had been brought about by any mistake. The error, if there as one, and I do not, your Honour, accept that there was or submit that there was, was something that was entirely within his Honour’s jurisdiction, that is, in refusing the application to withdraw. That seems to be at the heart of the complaint, that his Honour should have allowed the solicitors to withdraw and should have allowed Mr Petroulias to present the argument on behalf of the company without a solicitor, but, as I say, your Honour, they are matters entirely within his jurisdiction and - - -
HIS HONOUR: Yes, but something that is outside jurisdiction, breach of the rules of natural justice.
MR HMELNITSKY: Yes. That is why I put it that way, your Honour, that the heart of this complaint is not about any breach of the rules of natural justice. The only way one could characterise this as a breach of the rules of natural justice is if one accepts the proposition inherent in Mr Petroulias’ case that the content of those rules varies according to whether or not one engages a solicitor properly or whether one engages a solicitor as a post box. That seems to be Mr Petroulias’ best point, that he had complied with the rules to the extent of getting a solicitor involved, but because, as between him and his solicitor, he – one does not know what Mr Petroulias communicated with his solicitor, but we see he characterises the relationship as being that of post box.
HIS HONOUR: Just to get one basic background fact straight. Mr Petroulias was still in gaol in February. When did he leave?
MR HMELNITSKY: The end of June, your Honour. So, your Honour, my submission is that what happened on 16 February would have happened whether Mr Petroulias was sitting in the back of the court or not because there was an application made to his Honour without any evidence to withdraw and in those circumstances what his Honour did, in my submission, cannot be characterised as a breach of the rules of natural justice.
HIS HONOUR: I know what the Court said in Stead v State Government Insurance Commission, it has to be clear to a very high standard, let me put it that way, that if there had been a hearing, it would not have made a difference. Can we be sure to the necessary standard?
MR HMELNITSKY: In my submissions, yes, and I have addressed Stead in the written submissions from paragraph 25. There are two points that are made there that I draw your Honour’s attention to, but I can add a third in light of what has been said this morning.
HIS HONOUR: So the first two points, they are in paragraph 26, are they?
MR HMELNITSKY: Paragraph 26, yes, your Honour.
HIS HONOUR: Let us just tie this in with Justice Rares. Where is the best source for Justice Rares’ judgment?
MR HMELNITSKY: You mean the reasons for decision?
HIS HONOUR: Yes.
MR HMELNITSKY: They are annexed to Mr Petroulias’ affidavit as Exhibit NNP 7.
HIS HONOUR: Yes, I have them. Going back to your 3 to 5. Okay. We have the two reasons given in paragraph 26. You say there was a third one?
MR HMELNITSKY: The third relates to a matter that Mr Petroulias raised this morning and that was that he had an entitlement to be there on that day and there was a denial of natural justice on that day because a personal costs order was sought against him. It is true, your Honour, that on a previous occasion the first defendant had indicated that he would be seeking a personal costs order against Mr Petroulias, but, your Honour, at page 9 of the transcript that application was abandoned at lines 25 and 26. There was no injustice to Mr Petroulias insofar as that application was concerned.
HIS HONOUR: What do you say about what his Honour said in lines 39 onwards? He indicated he would like to see whether Mr Petroulias was stuck in the cells on the basis that if he were there, it would be desirable to allow him to be present and if he were not there, that did not matter. If it mattered if he were in the building, why did not matter if he were not in the building?
MR HMELNITSKY: Your Honour, I would put that the other way. I would respectfully submit that what his Honour was saying there was consistent with the submission that I have put, that it may well have been desirable for Mr Petroulias to be there. If he had been brought from Goulburn to the court for the purpose of being there, then it would be desirable that he were not stuck in the cells. But, your Honour, I would submit that what his Honour is saying is no more than what I had submitted, namely, that it would not have made any difference if he were, insofar as the disposition of the application was concerned.
HIS HONOUR: Yes, all right.
MR HMELNITSKY: If the Court pleases, those are my submissions.
HIS HONOUR: Thank you. Yes, Mr Petroulias.
MR PETROULIAS: Yes, your Honour, there is no room to reinterpret an event by ex post communication after the order had not been made to bring me there by referring to various letters and construing them in a way to ex post justify that. Now, for instance, as you can see in the context of the letter that Mr Jackson replied to, which is EW3, the complaint by the AGS was the fact that they received a whole lot of documents that did not have any court stamps on them and did not understand what the status of them were and it is in that context that he replies amongst their many objections. His Honour deals with that on page 21 of the transcript where Ms Harding, the counsel that - - -
HIS HONOUR: Just hang on, 21. Yes.
MR PETROULIAS: Yes. She has been complaining about the material having been arrived, and he says at page 21:
Well, I think the problem with that, as I have told you, Ms Harding, is that there was a problem in the registry. The registrar received this in a box -
did not know what to do with it, et cetera. He then picks it up again at line 45:
Something just went wrong in the registry and I have to apologise on behalf of the court for that.
What Ms Harding is talking about there is the same thing that the AGS is asking Mr Susanto about, which he responds to. There is nothing in this letter to elevate it beyond, “And, by the way, Petroulias is not turning up any more, so you can just ignore the notice of motion.” He does not say anything remotely like that, and nor does the AGS respond by saying, “Well, given that Petroulias is represented, then we will not be seeking the costs order that we were seeking a few moments ago.” There was still a costs order I was facing. I had to be there in any event and that is why the judge expected me to be there in any event.
We are not suggesting it is a matter of malice. It is just an honest mistake of the difficulty of dealing with a solicitor in custody that wants to run his own case – is forced to run his own case because there is no other choice, but the idea that, look, it does not matter that you did not get a hearing because, look, there is somebody there, he will do, he can run your case for you. The first words out of Mr McMillan’s mouth is he does not know anything about the case. To then give you reasons for decision - - -
HIS HONOUR: Do you say that the solicitors, Jackson Lalic, had no instructions to be there on 16 February?
MR PETROULIAS: No, they had instructions to be there to support me. They did not have instructions to – they were providing all the case material, everything that I needed, reference to bring the Federal Court Rules, all the civil procedure stuff that I simply did not have access to. That is what they were there to do because I was the one who was representing the company.
HIS HONOUR: In Mr Susanto’s letter of 21 December 2009, which is EW4:
We are instructed that our client filed all the evidence –
Now, who is “our client”? It says:
Pre-Paid Professionals Administration Limited v Deputy Commissioner of Taxation.
MR PETROULIAS: So “our client” is me acting for the company. I was the company at all points in time.
HIS HONOUR: One possibility is that the client is the company, another possibility is that you are separate from the company and you are the client. You do not - - -
MR PETROULIAS: Well, in the context - - -
HIS HONOUR: You do not need leave to proceed without a solicitor because the natural person - - -
MR PETROULIAS: That is right. It is the company that is - - -
HIS HONOUR: So the company is the client?
MR PETROULIAS: Yes. I mean, at no point does he say that the notice of motion for me to represent the company has been abandoned and there is nothing by the AGS writing back saying, “Well, in that case we withdraw our costs claim against Mr Petroulias personally.” There is no room to interpret that letter as meaning more than it is meaning. Mr Susanto makes it clear what it means. It meets one of the objections by the respondent, which was the objection that you cannot have a proceeding document in the court without the name of a solicitor on it. So he is meeting that, so we do not have to argue about that in front of Justice Rares. We can get on with the rest of it.
Look, I quite accept that there is a misunderstanding. The AGS have got a whole lot of documents, they are not stamped, and his Honour says, “Look, I keep telling you, there has been a mistake and that is why – something happened in the registry. I apologise for that.” We are not saying it malicious. We are saying it is just a genuine mistake. But it cannot be an answer to that say, okay, if there is prejudice suffered by the respondent turning up for the day, great. It can be met with a costs order at the end of the day when this matter is finally heard. It does not mean that they get a windfall or a million dollars because of some innocent mistake by the court.
It also is not answer to say, well, look at Justice Rares’ judgment, he did the best he could. I am sure he did. That is not the point. The point is Mr McMillan did not know anything about the company, could not present the case, and I am sure he did the best he could, but, as you can see, his Honour’s judgment ultimately turned on this issue about this administration agreement and how this administration agreement created entitlement to fees in the agent anyway, so it did not matter that the agent collected money, they paid it to its principals, it is still liable somehow anyway.
Mr McMillan was not there to say, “Well, your Honour, actually the agreement you are talking about was not executed and was unenforceable.” That would have been pivotal. Mr McMillan cannot make that point, and it is an affront to natural justice to say, “No, we will just pick someone off the street and he can run your case for you, no matter how complicated it is.” It is not a good enough answer for the ATO to ex post justify a windfall simply because of, you know, as long as someone is there to run your case, it really does not mater whether they know anything about it or not.
HIS HONOUR: Yes. Anything further in reply?
MR PETROULIAS: That is all, your Honour. Thank you.
HIS HONOUR: I will adjourn for a short time just to consider this application.
AT 11.35 AM SHORT ADJOURNMENT
UPON RESUMING AT 12.28 PM:
HIS HONOUR: On 16 February 2010, the Federal Court of Australia refused the plaintiff’s application for an extension of time within which to file a notice of appeal against a decision of a judge of that court rejecting a challenge to the first defendant’s assessment of tax against the plaintiff. That rejection took place on 23 October 2008. The plaintiff now claims that it was denied natural justice on 16 February 2010 because the judge did not hear argument from Mr N.N. Petroulias on that day. On 26 October 2010, the plaintiff filed an application for an order to show cause why a writ of certiorari should not issue to quash the decision of the Federal Court of 16 February. An order by way of mandamus and an order by way of prohibition was also sought.
Rule 25.06 of the High Court Rules required that the application for certiorari be filed not later than six months after the Federal Court judgment. It was filed two months late. Rule 25.07 required that an application for an order by way of mandamus be made within two months of the judgment. The application for mandamus was filed six months late. On 18 November 2010 the plaintiff filed a summons for the hearing of its application.
The first issue is whether time for the filing of the application should be extended. Mr Petroulias seeks to explain the plaintiff’s delay on the basis that he is the sole shareholder of the plaintiff and he has had persistent mental health difficulties. The first defendant does not deny the existence of those difficulties and their existence is supported by the reports of two psychiatrists.
It is clear that Mr Petroulias was aware of the Federal Court’s orders of 16 February by 24 February 2010. On that day, a solicitor acting for the plaintiff began a chain of correspondence seeking to challenge the Federal Court’s decision. The plaintiff had been represented before the Federal Court by a solicitor, Mr P. Jackson of Jackson Lalic – represented in the sense that there had been a notice of appearance filed which had not been withdrawn.
On 11 March 2010 Mr Jackson urged Mr Petroulias to proceed with expedition in relation to any “appeal” from the Federal Court. In March 2010, Mr Petroulias sent letters to the Federal Court complaining about the decision of 16 February. In short, whatever Mr Petroulias’ health difficulties, they did not prevent him engaging in this correspondence and, hence, it may be inferred that he was not impeded on health grounds from filing the application within time.
In this regard, Mr Petroulias contended that time should not run against the plaintiff until 13 May 2010 when a letter was sent to the Registrar of the Federal Court setting out an updated version of Mr Petroulias’ complaints. But the Federal Court had been receiving Mr Petroulias’ complaints much earlier. Even allowing for the fact that Mr Petroulias did not leave gaol until June 2010, had proceedings in this Court been started in May, the mandamus application would still have been well out of time.
There is no time limit in relation to applications for prohibition. On the other hand, the application is inappropriate to the present circumstances. Even if it were framed as an application for an injunction, it would be inappropriate. There is no prejudice to the plaintiff in the first defendant “utilising” the funds referred to in the application for prohibition. Any monetary entitlement which the plaintiff has could be vindicated by a monetary order after that entitlement is established.
Pausing there, the position of the plaintiff, as put by Mr Petroulias, is not strong in relation to an explanation for the failure to proceed within time, but the first defendant goes beyond that and submits that the application is without merit. In summary, the Commissioner submits that the plaintiff was represented before the Federal Court by counsel at a time when a solicitor was on the record. The Commissioner submits that the Federal Court was under no obligation to hear from Mr Petroulias instead of or in addition to counsel.
In relation to one of Mr Petroulias’ points, which is that by oversight the Federal Court failed to make an order on 9 December 2009 permitting Mr Petroulias to attend despite his being in custody, the orders from which that order is absent were made by consent. Two key facts have to be stressed. One is that, as already indicated, Mr Petroulias was in gaol until June 2010. The other is that no solicitor was acting for the plaintiff or was being instructed by Mr Petroulias in the proceedings eventually heard on 16 February 2010 until about November 2009.
Mr Petroulias’ complaint centres on the fact that what he called “the usual order” was not made on 9 December 2009. He said that an example of the usual order was order 8 made by the Federal Court on 23 October 2009. Another example was an order made by the Federal Court on 1 October 2009 in the following form:
The Superintendent of Metropolitan Remand and Reception Centre, Silverwater, shall have Nikytas Nicholas Petroulias, a prisoner, before this Court to be present during the hearing of the proceeding concerning the applicant and duly returned to confinement.
That order went on to say that:
The first day on which it is required to have this prisoner before the Court is 23 October 2009.
Mr Petroulias pointed to a statement by the Federal Court judge hearing the application on 16 February 2009 indicating that he thought he had made the usual order securing Mr Petroulias’ attendance on that day.
The background to the consent orders of 9 December was this. On 15 November 2009, the plaintiff filed a notice of motion. That notice of motion sought only one order which was an order that Mr Petroulias be granted leave to appear to represent the plaintiff on the hearing of that motion and the notice of motion seeking leave to appeal to be heard on 11 December 2009 without a solicitor on certain grounds. The Federal Court had fixed 11 December as the day for hearing the plaintiff’s application for an extension of time within which to file a notice of appeal. That notice of motion of 15 November 2009 was filed by the plaintiff and the document gave Mr Petroulias’ address in gaol. Soon afterwards, however, solicitors began acting for the plaintiff.
There then arose troubles in relation to the filing of documents in the Federal Court and their service. That problem was recorded by the Federal Court on page 21 of the transcript of the proceedings before it on 16 February 2010, particularly at lines 21 to 27 and 41 to 47. Immediately after those difficulties the Federal Court decided that the hearing of the plaintiff’s application for leave to appeal which had been scheduled for 11 December 2009 should be adjourned to 16 February 2010. The parties, on 9 December 2009, agreed to consent orders to that effect.
The consent order comprised three orders. One was an order adjourning the application to 16 February, the second was an order extending the time within which the Commissioner could file affidavits and its submissions in reply and the third was an order reserving costs. But there was no order to the effect of what Mr Petroulias called the “usual order”.
The next day, 10 December 2009, the Australian Government Solicitor wrote a letter making certain complaints and inquiries. That letter was addressed to a solicitor, Mr Susanto, of Jackson Lalic Lawyers, who by this time were acting for the plaintiff. The second last paragraph of that letter said this:
Further, in respect of the notice of motion dated 15 November 2009, would you please advise whether or not the motion is to be pressed, and, if not, would you please identify those parts of the material which relate to the motion and are no longer relied upon.
The notice of motion of 15 November was the notice of motion seeking a grant to Mr Petroulias of leave to appear to represent the plaintiff on the hearing of the motion to extend the time for filing a notice of appeal. The solicitors for the plaintiff replied to the letter from the Australian Government Solicitor, and in particular to the request in the second last paragraph, as follows:
Also, we trust that the issue you raised concerning our client’s capacity to instruct representatives to act for it has now gone. And there is now, obviously, no need at this stage of the proceedings for our client to seek leave to proceed without a solicitor.
If this is the case, then we will only be reading the material filed that is relevant to the issue in the proceedings, namely the issue of the extension of time to appeal to the Full Federal Court. If this is not the case, please advise what additional points will be taken, why, and what evidence will be relied on.
Mr Petroulias submits that that letter dealt only with the question whether the plaintiff had the capacity to instruct legal representatives and he submits that the letter did not abandon the relief requested in the notice of motion of 15 November 2009, namely, that he be permitted to attend the hearing to represent the plaintiff. That submission is unsound, given the last paragraph of the letter of 21 December which indicated that there was only one remaining issue between the parties, namely, the extension of time to appeal issue, as distinct from the issue in the notice of motion of 15 November.
No criticism can be made of the first defendant’s conduct in what ensued and Mr Petroulias certainly did not make any criticisms of it today. A key piece of evidence is that given by the solicitor for the plaintiff. In his affidavit of 10 February 2011, Mr Susanto said in paragraph 10, speaking of the hearing of 16 February 2010:
It was understood by me that Mr Petroulias would be representing the plaintiff as he had the necessary knowledge of the documents and the previous litigation in the Federal Court in 2004 and 2005 that gave rise to their drafting in the way they were. It is for that reason that his notice of motion seeking such leave was filed. The firm was not retained or briefed to conduct the proceedings, did not have the necessary instructions and did not have the resources or authority to do so.
There was no cross-examination on that evidence. The position then is this. Mr Susanto expected Mr Petroulias to be representing the plaintiff on 16 February 2010. In fact, however, counsel appeared for the solicitors for the plaintiff on that day seeking leave for them to withdraw. A considerable amount of confusion ensued. The Federal Court judge declined to permit the solicitors to withdraw. Matters proceeded in the presence of counsel, but without Mr Petroulias.
There is certainly a serious contradiction in the plaintiff’s position. On the one hand, on 16 February 2010, it had solicitors on the record. Ordinarily those solicitors would be expected to conduct the Federal Court proceedings. On the other hand, the principal of the plaintiff wanted to present argument and the solicitors for the plaintiff thought that that was going to happen. Much of the difficulty which the plaintiff and Mr Petroulias find themselves in appears to be the product of misunderstandings and indecision on the part of Mr Petroulias and the solicitors.
However, to permit proceedings to go against a party without that party being afforded a hearing and, in particular, without the person whom that party desired to present its case being afforded an opportunity to present that case is a serious thing. The plaintiff was represented but only by a lawyer instructed to apply to withdraw a solicitor’s notice of appearance, not a lawyer instructed to present the leave application itself. In my opinion, unfortunately, the Federal Court has unwittingly breached the rules of procedural fairness on 16 February 2010 when Mr Petroulias was not heard in relation to the plaintiff’s application.
The first defendant contended that a rehearing would be futile because the Federal Court’s conclusion that the proposed grounds of appeal underlying the plaintiff’s application to the Federal Court of Australia to extend time were hopeless was plainly correct. However, the question of the merits was not debated by Mr Petroulias in detail and, other than by reference to the Federal Court’s reasoning, was not debated by the first defendant at all. It has not been demonstrated that the questions underlying the proposed grounds of appeal must clearly be answered in favour of the first defendant; see Stead v State Government Insurance Commission [1986] HCA 54; (1988) 161 CLR 141 at 145.
Now, the question is, what orders should be made. Mr Hmelnitsky, I would not be minded to make – do you have the original application for prerogative relief? I would not be minded to make order 3. Do you have any problems with order 1 or order 2? There is a slight choice that has to be made in relation to order 2 “hear” or “rehear”. I think “rehear”, perhaps.
MR HMELNITSKY: It is, in substance, an application for an order by way of mandamus for the application to the Full Federal Court to be reheard. Perhaps this Court’s order should be in those terms.
HIS HONOUR: Yes, very well. So, are you content with the words “an order by way of mandamus for the Federal Court to rehear the leave application by the plaintiff”?
MR HMELNITSKY: I hesitate only while I wonder whether there is, in substance, any difference, but it is by way of rehearing, your Honour, so that should be the form of the order, if the Court pleases.
HIS HONOUR: Yes, very well. Are you content with those orders, Mr Petroulias?
MR PETROULIAS: Yes, your Honour.
HIS HONOUR: Do you want any other order? Do you make any further application, Mr Hmelnitsky, for costs?
MR HMELNITSKY: I do not, your Honour.
HIS HONOUR: Very well. I make the following orders:
I think that concludes our business.
MR HMELNITSKY: If the Court pleases.
HIS HONOUR: The Court will now adjourn.
AT 12.50 PM THE MATTER WAS CONCLUDED
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