Woods v Australian Taxation Office & Ors [2016] QDC 198

The Australian Taxation Office submitted that Sonia Woods had tax liabilities owing of $77,521.21. In her correspondence with the Australian Taxation Office from August 2015, she raised various issues concerning her debt including the alleged operation of the Bills of Exchange Act 1909 (Cth). On 3 December 2015, she gave the Australian Taxation Office a number of documents:

(a) a “notice of tender of payment”;
(b) a “promissory note” quoting the amount of $21,600 “redeemable on demand at 85 Spencer Road, Nerang, Queensland…on the third day of December 2015”;
(c) an attached marked-up running balance of account notice (i.e. the Australian Taxation Office notice to her, amended by handwriting) dated 31 October 2015 with the following features:

  • (i) the words, “acknowledged statement of the transaction giving rise to payment and acknowledged offer of contract between the parties and the suppliers” written on the notice
  • (ii) Sonya Woods’ signature written above the words “accepted as endorsed”;
  • (iii) various references to an “acknowledged” party against the defendants who were referred to in the statement;

(d) a “default and liability clause and notice” with a stamp duty stamp attached;
(e) a second “promissory note” in the amount of $54,000, also “redeemable on demand at 85 Spencer Road, Nerang, Queensland… on the third day of December 2015”, i.e five minutes after the first promissory note was redeemable;
(f) another marked-up RBA notice with the words “acknowledged statement of the transaction giving rise to payment and acknowledged offer of contract between the parties disclosed” written on the notice and various references to an “acknowledged” party against the Australian Taxation Office; and
(g) another “default and liability clause and notice” with a stamp duty stamp.

These documents were accompanied by a letter. The letter asserts, inter alia:

  • (a) a promissory note is as good as cash and must be treated as such;
  • (b) a three day limit was placed on any challenge to the promissory notes; and
  • (c) unless the promissory notes were accepted at the time, date and place stipulated in the notes they were to be accepted as sufficient consideration to discharge liabilities to the ATO.

Further, it was asserted (unilaterally, without any acceptance by the Australian Taxation Office) that, failing these arrangements, the Australian Taxation Office would be in “commercial default of the contracts”.  By reason of the defaults, the defendants became liable to pay “a sum certain” to the applicant under the documented terms and conditions.  In the case of the promissory note for $21,600, the sum to be paid was stated to be $86,400; and in the case of the promissory note for $54,000, $216,000.

Unsurprisingly, the Australian Taxation Office took the position that payment by promissory note was not a sufficient discharge of the tax liabilities.  It issued garnishee notices for recovery purposes.

It is for the liquidated amounts of $86,400 and $216,000 that Sonia Woods sued the Australian Taxation Office in Woods v Australian Taxation Office & Ors [2016] QDC 198, with interest thereon and costs.  

Click to access woods-v-australian-taxation-office-ors-2016-qdc-198.pdf

His Honour was of the view that the two promissory notes were not truly promissory notes within the meaning of the Bills of Exchange Act 1909 (Cth).  They were not payable on demand; nor was it pleaded, or proved by evidence, that they were given to the ATO prior to 10.45 am or 10.50 am on 3 December 2015, such as to have made them payable at a fixed future time.  Additionally, his Honour did not accept that, as a matter of law, a unilateral delivery of a promissory note was a means of payment of a tax debt within the scope of regulation 18 of the Taxation Administration Regulations 1976 (Cth). The Deputy Commissioner did not agree to accept payment “in this eccentric way”; nor could he have done so consistently with regulation 18. 

In Woods v Australian Taxation Office [2017] QCA 28, the applicant’s notice of appeal sets out the following grounds of appeal:

  • “1. The District Court of Queensland lacks jurisdiction to hear matters of fact and law concerning interpretation of Commonwealth Acts, and
  • 2. The Bills of Exchange Act 1909 (Cth), being the principle (sic) Act of the Commonwealth of Australia (“the Commonwealth”) and still in force within the Commonwealth, permits the use of promissory notes and bills of exchange within the Commonwealth, whether the Commissioner of Taxation or any other legal tax entity disputes the fact or not,
  • 3. The Appellant intends to lodge a Section 78b (sic) Judiciary Act 1903 Notice regarding the Constitutional issues regarding Bills of Exchange,
  • 4. Errors of law, errors of interpretation and misinterpretation of Acts, law and facts, interpretation and misinterpretation of documents by the Judge of the Primary Court
  • 5. Misapplication of case law to this case.”

The appeal court found that no arguable error, or misapplication, of law on the part of the learned primary judge with regard to that finding is identified in the applicant’s written submissions.  Moreover, his Honour’s finding is consistent with decisions of the Full Court of the Federal Court of Australia in Atkinson & Anor v Commissioner of Taxation [2015] FCAFC 18 and Wilmink v Westpac Banking Corporation [2015] FCAFC 17 with respect to comparable documentation.  As these decisions illustrate, the notion that, upon delivery of the documents to the ATO, there arose a legally binding contract or contracts between the applicant and any of the defendants containing the terms and conditions alleged, is without any legal merit.  It is truly fanciful.

Click to access woods-v-australian-taxation-office-2017-qca-28.pdf

Deputy Commissioner of Taxation v Woods [2018] FCCA 1815 was an application to review a decision of a registrar of this court who, on 17 May, 2018 ordered the sequestration of the estate of the respondent, Sonya Woods, in bankruptcy. The order was made on the usual basis, namely that the respondent had failed to comply with the terms of a bankruptcy notice that had been served upon her which, on her own material, occurred on 7 February 2018. The bankruptcy notice was based upon a judgment given against the respondent in the Magistrates Court at Southport for the sum of a little over $63,700 inclusive of costs. Three notices of grounds of opposition to the application filed by the respondent. She says:

The Bankruptcy Notice received was a fraudulent documents pursuant to the four corners rule, whereby every word, phrase, paragraph or number within a box is effectively from another source. 

The Bankruptcy Notice contains within it no less than thirty five (35) boxes on the first two (2) pages and is a document designed for the sole purpose of deceiving any uneducated recipient.

Her affidavit then deals with various aspects of the bankruptcy notice. The court was satisfied that the respondent has committed an act of bankruptcy, as alleged by the creditor’s petition, that she has been served with both the bankruptcy notice and the creditor’s petition, and that the debt remains due and owing and that all of the formal requirements necessary to be proved pursuant to s.52 of the Bankruptcy Act have been proved.

“The respondent’s principal argument is that she has discharged the debt. She keeps referring to having paid the debt but there is no evidence before me that it has been paid by the transfer of money. The suggestion is that it has been discharged by the provision of a negotiable instrument of some description to the petitioning creditor. Her affidavit of 16 May sets out the argument in full. I am not going to repeat it. It commences however with the proposition that the Commonwealth of Australia is domiciled in the District of Columbia, United States of America and that by reason of the uniform commercial code of the District of Columbia the Commonwealth of Australia is a corporation and is governed by the Uniform Commercial Code and that it falls into the category of a “US person” as defined in that code. It is asserted in her affidavit that “the COMMONWEALTH OF AUSTRALIA is a Corporation operating in Bankruptcy under a ‘Chapter 11 US Bankruptcy reorganisation’ ”and it is suggested that “Its only asset being the Stock / Birth Certificates of the people, as evidenced in the Inscribed Stock Act 1911 (Cth)”.

These are all fascinating suggestions, but they are all wrong. There is nothing at all of any substance in those arguments. To the extent that the applicant suggests that the debt has been discharged, she argues that at some stage (the date is not entirely clearly to me, but it is not necessary to be precise about the date) she has discharged the relevant debt by sending “payment” to the United States Treasury and the Internal Revenue Service as “is the beneficiary’s lawful right to do so”.

She claims that the petitioning creditor is deprived of the right to bring these proceedings because the discharge that she has sent to the United States Treasury has been received and signed for by, or on behalf of, the petitioning creditor, and that occurred within the 21 days limited in the bankruptcy notice for payment or compromise of the debt. However, those arguments too, are wrong. They have never been accepted in a Court in Australia and I do not propose to accept them now.

The arguments raised by the applicant are becoming more common. There is an erudite discussion of this voodoo in a case called Meads v Meads (2012) ABQB 571. There are some other cases and perhaps the seminal decision from which these arguments arise is referred to in a decision that I delivered called the Ennis v Credit Union Australia [2016] FCCA 1705. The arguments that the respondent wishes to the raise to the effect that the debt has been discharged are entirely without substance.”

Click to access deputy-commissioner-of-taxation-v-woods-2018-fcca-1815.pdf

On 4 July 2018, Sonya Woods filed a Notice of Appeal and a financial hardship concession application in this Court.  On 20 July 2018, Sonya was informed that she needed to seek an extension of time in which to appeal, given that the appeal had not been filed within the requisite time.  The application for extension of time was subsequently filed on or about 1 August 2018.  It is that application which was heard in Woods v Deputy Commissioner of Taxation [2018] FCA 1971. The court found that there was nothing in the merits of the proposed appeal which would warrant granting an extension of time in the interests of justice.  That being so the application for an extension of time was dismissed.

“In this case the manner in which the alleged tender of payment was made remains opaque.  It appears that what was done was that a Statement of Account issued by the Commissioner of Taxation on 6 February 2018 was marked up with handwritten text, together with a signature, and then delivered to the United States Treasury.  Some attempt has been made in the past to claim that this is some form of method of payment.  It was dealt with in this Court in Atkinson v Commissioner of Taxation [2014] FCA 1217, where Jagot J said at [37]:

“The statement of account is not a bill of exchange as defined in s 8 of the Act.  The first applicant was not authorised to do anything with the statement of account under the Act.  Writing and putting various stamps on the statement of account had no legal effect under the Act.  Nor did delivering that statement of account back to the ATO.  The Act is simply not engaged at all by the facts of this case.  The notion that a person who owes the ATO money for non-payment of tax can transform the ATO’s statement of account into a bill of exchange and then deliver the statement of account back to the ATO and, in so doing, discharge the person’s own indebtedness for some nominal amount ($1) and render the ATO liable to pay the original amount owed to the ATO plus interest and other charges is some form of fantasy, unconnected to the operation of the Act.”

That decision has been applied in other cases and, particularly, in the District Court of Queensland in Woods v Australian Taxation Office [2016] QDC 198, which coincidentally was a decision in relation to the applicant before the Court. That decision was upheld by the Queensland Court of Appeal in Woods v Australian Taxation Office [2017] QCA 28. There is no real need to go into the detail of those decisions, save to say that it was observed that the suggestion that the delivery of documents as described might create a legally binding contract, was without any legal merit and truly fanciful.

It appears that some further form of payment is also alleged, although again its nature is opaque.  As best as might be ascertained, it appears to be suggested that a person’s birth certificate is some form of security document or negotiable document which can be exchanged for a substantial amount of money.  Mr Evans, on behalf of Sonya, suggested that it could be exchanged for $5 million.  Again, there is no need to consider that allegation or submission in detail.  It is, likewise, fanciful.  But, moreover, the delivery of a Certificate of Title to the Commissioner of Taxation or anyone on behalf of the Commonwealth is not a method of payment of a tax-related liability provided for under the Taxation Administration Act or the Taxation Administration Regulations and cannot be used to discharge that liability.

Again, the grounds that appear to go to the merits are without any substance and would not warrant the granting of an extension of time in which to appeal the decision of the Federal Circuit Court.  In saying that, I also note that in the course of argument it was said by Mr Evans on behalf of Ms Woods, and with her apparent consent, that, amongst other things, there was no real money in Australia.  That is an argument which has been advanced over a long period of time by various ill-informed self-represented litigants, and has been completely debunked.

A further argument that was advanced was that the people of Australia are under the military occupation of the Federal Reserve Bank.  Again, that is an argument which has no attachment to reality.  It was also said that the taxation liabilities imposed upon Sonya were trumped up, but they were, as I identified, the foundation of a judgment of the Magistrates Court of Queensland.  It follows that there is nothing in the merits of the proposed appeal which would warrant granting an extension of time in the interests of justice.  That being so the application for an extension of time must be dismissed.”

Click to access woods-v-deputy-commissioner-of-taxation-2018-fca-1971.pdf