Deputy Commissioner Of Taxation v Cutts (No.4) [2019] FCCA 2866

After a series of adjournments dating back 16 months to 2 February 2016, the applicant in Deputy Commissioner of Taxation v Cutts [2017] FCCA 1760, the Deputy Commissioner of Taxation, sought orders that the application of the respondent, Maurice James Cutts, for review of a decision by a Registrar to make a sequestration order against Mr Cutts’ estate be dismissed by reason of default, with no order as to costs. The respondent did not appear. The Deputy Commissioner’s application to dismiss Mr Cutts’ Review Application for default based on non-compliance failed because the alleged non-compliance by Mr Cutts had not been made out. The proceedings in Deputy Commissioner of Taxation v Cutts (No.2) [2017] FCCA 2480 concerned the application for review of a sequestration order made by a Registrar of this Court on 13 September 2016, but the respondent again did not appear. The court noted:

“There comes a point in all litigation where it is necessary for the matter to be heard and resolved. This matter, which involves Mr Cutts’ own Review Application, has reached that stage. The Deputy Commissioner has had the benefit of a Sequestration Order made by a Registrar of this Court since 13 September 2016. In circumstances where Mr Cutts has been given the opportunity to file and serve detailed medical evidence in support of any adjournment application, and has failed to file both an application in a case for an adjournment and the relevant medical evidence as ordered by the Court, the Deputy Commissioner is entitled to have the Review Application dealt with in order to finally determine the litigation. That necessitates the final hearing of the matter proceeding on Monday, 16 October 2017.”

The proceedings in Deputy Commissioner of Taxation v Cutts (No.3) [2017] FCCA 2762 also concerned the application for review of a sequestration order made by a Registrar of this Court on 13 September 2016, but again the respondent did not appear. The matter was again adjourned. Finally, in Deputy Commissioner Of Taxation v Cutts (No.4) [2019] FCCA 2866 the application that was filed on 4 October 2016 was heard. Mr Cutts seeks that “all the ORDERS be set aside, until the applicant has sought all available, lawful rights”. The submissions were quite extensive, but they were all rejected. The Court concluded that the application to review the exercise of the power to sequestrate the estate of Mr Cutts should be dismissed and the orders of the Registrar should be confirmed.  Here are a few notable points:

(From 92) “Mr Cutts asserts that as the Australian Taxation Office (“ATO”) is not a legal and lawful entity, it has no legal rights. This ground is similar to ground 6 of the Notice of Objection before the Registrar which sought supply of “certified copies of evidence that establish the Australian Taxation Office giving the Australian Taxation Office the right to lawfully exist”, and is dealt with at [44]-[50] above. Mr Cutts also asserts: Cutts 2017 Affidavit at [2], that the Commonwealth of Australia is listed on the United States Securities and Exchange Commission as a “for-profit” organisation and likewise all government departments and agencies are “for profit”. It is not apparent what the point of this assertion is, and it suffices to observe that even if it is correct, it does not affect the statutory regime in Australia in relation to bankruptcy or the task of this Court on this application. Mr Cutts asserts that, if he owes tax, he must have entered into a contract to pay the ATO tax, but that he is not aware of his doing so, and if so he wished to stop. As is otherwise evident liability for tax is ultimately imposed pursuant statute not contract, and this assertion does not affect this Court’s role on this application.

In Webb v Deputy Commissioner of Taxation[2017] FCA 1520 (“Webb Appeal”) the Federal Court dismissed an appeal against the judgment of this Court in Webb FCCA whereby the applicant had raised the same grounds as Mr Cutts. In dispensing with the ground this Court stated as follows in Webb FCCA at [59]-[64] per Judge Wilson: “This argument I accept. But the argument is irrelevant to this case because the petitioning creditor was the Deputy Commissioner of Taxation and not the ATO. The status of the ATO as a legal entity has been the subject of a number of authoritative pronouncements. In Levick, Hill J said that the ATO does not exist for legal purposes. In the High Court, Callinan J held in Dooney that the ATO is not a legal personality. In the Supreme Court of South Australia, David J in Daniels held that the ATO was not a legal entity. .. To my mind, this ground missed the point because the current party with statutory authority to sue in fact brought the proceeding in the County Court. That party also petitioned this court for the sequestration order of Mr Webb’s estate. The status of the ATO as a separate legal entity had nothing to do with this case.”

(From 96) “The second case referred to by Mr Cutts was a judgment in the Supreme Court of the United States: Penhallow v Doane’s Administrators(1795) 3 U.S. 54; (1795)1 L. Ed. 507; (1795) 3 Dall. 54 (“Penhallow”), to which judgment was attributed the following specific quote:

“Inasmuch as every government is an artificial person, an abstraction, and a creature of the mind only, a government can interface only with other artificial persons. The imaginary, having neither actuality nor substance, is foreclosed from creating and attaining parity with the tangible. The legal manifestation of this is that no government, as well as any law, agency, aspect, court, etc. can concern itself with anything other than corporate, artificial persons and the contracts between them.”

The specific quote attributed to Penhallow does not appear in the text of the judgment in Penhallow at any point: a fact confirmed in United States v. Heijnen, 375 F. Supp. 2d 1229, 1231 n.1 (D.N.M. 2005) and United States v. Mooney, 2017 WL 2352002; 119 A.F.T.R.2d 2017-2052, and the Court notes positive treatment of this judgment in the United States is based upon principles derived in respect of foreign admiralty law, and any use of the case as Mr Cutts has sought to do in the present proceeding has been denied. Insofar as Mr Cutts refers to this as evidence, the Court does not consider it as such.

Before concluding on this ground, it is to be observed in Cutts Second Affidavit at [4] the Deputy Commissioner is said to be sitting ‘unlawfully and fraudulently,’ and as stated at ground 7 of the Notice of Objection before the Registrar that the Deputy Commissioner must personally provide evidence verifying “every aspect of the matter”. The Court refers to s.15 of the 1953 TA Act validly allows the Deputy Commissioner to be represented by a person, as opposed to personally attending to proceedings and actions. One can easily see the policy reasons, and common sense of allowing representatives to appear on their behalf. The Court considers this ground is without merit and it fails accordingly.”

(From 126) “Throughout the proceedings Mr Cutts appeared to adopt a form of legal argument referred to as ‘strawman theory’ or ‘Organised Pseudo-legal Commercial Argument.’ A comprehensive and exhaustive description of this concept can be found in Meads v Meads (2012) ABQB 571 (“Meads”), a 188 page judgment of Rooke ACJ, whereby the many types of arguments of pseudo-legal litigants was traversed. In Casley at [15] per Le Miere J the strawman theory was succinctly described as follows:  “The theory holds that an individual has two personas, one of himself as a real flesh and blood human being and the other, a separate legal personality who is the straw man. The idea is that an individual’s debts, liabilities, taxes and legal responsibilities belong to the straw man rather than the physical individual who incurred those obligations, conveniently allowing one to escape their debts and responsibilities.”  The Court observes each of Mr Cutts’ affidavits filed in these proceedings, and his conduct at the hearings of this matter, carries notable characteristics of the “strawman theory” arguments.

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