Barsoum v Chief Commissioner of State Revenue

Barsoum v Chief Commissioner of State Revenue - [2021] NSWCATAP 266 - NSWCATAP 2021 case summary — Zoe

[4]

Liability and "foreign person"

The substantive legislative provisions which impose liability for surcharge land tax are found in the Land Tax Act. The provisions relevant to Mr Barsoum's liability for the 2017 tax year are those contained in section 5A. Under s 5A(1): Land tax is payable under this section in respect of residential land owned by a foreign person (surcharge land tax).
In the substantive proceedings, there was no dispute that the property the subject of assessment for surcharge land tax was residential property situated in Sydney and owned at all relevant times by Mr Barsoum.
The definition which is key to determining liability for surcharge land tax is that of "foreign person". The Land Tax Act as in force during the 2017 tax year, by s 5A(1) imposed surcharge land tax on land owned by a "foreign person" and, by s 5A(6), defined "foreign person" to have the same meaning as in Chapter 2A of the Duties Act 1997 (NSW). In turn, s 104J(1) of that Act, which is within Division 2A, provided that a "foreign person": " means a foreign person within the meaning of the Foreign Acquisitions and Takeovers Act 1975 of the Commonwealth, as modified by this section." (Emphasis added)
Under section 4 of the Foreign Acquisitions and Takeovers Act 1975 (Cth), a "foreign person" is an individual not "ordinarily resident" in Australia. Section 5 provides that an individual who is not an Australian citizen is ordinarily resident in Australia at a particular time (and so is not foreign person at that time) if and only if: 1. they had "actually been in Australia" during 200 or more days in the period of 12 months immediately preceding that particular time (which we have referred to as "the 200 days Test"); and 2. at that particular time, either: 1. they were in Australia and their continued presence here was not subject to any time limitation imposed by law, or 2. they were not in Australia, but immediately before their most recent departure from Australia, their continued presence here was not subject to any time limitation imposed by law.

[6]

The substantive decision

Mr Barsoum claimed that he was not a foreign person and was not liable for the surcharge land tax for the 2017 land tax year, as assessed. Those contentions were based on the "200 days Test", which we have described at [9] above. To be treated as being "ordinarily resident" in Australia and therefore not liable to 2017 surcharge land tax, Mr Barsoum had to demonstrate that he had "actually been in Australia" during 200 or more days during calendar 2016.
In summary, Mr Barsoum claimed that the Chief Commissioner was mistaken as to the number of days which he had been absent from Australia during calendar 2016. If he was not mistaken, then being physically present in Australia for 173 days, rather than 200 days is "substantial compliance" with the 200-day test. The Tribunal concluded that there was no basis for that submission.
Mr Barsoum made what were described as "voluminous" submissions in relation to the number of days he had actually been in Australia during 2016. He contended that the relevant legislation did not require physical presence in Australia. However, the Tribunal concluded at [42]-[44] of the substantive decision, that: 1. contrary to Mr Barsoum's contention in this regard, the expression "actually been in Australia" meant, in its statutory context, physically present in Australia: see Gao v Chief Commissioner of State Revenue [2020] NSWCATAD 216 at [58]-[59] ("Gao"); 2. it could not be satisfied on the balance of probabilities that Mr Barsoum had actually been in Australia during 200 or more days during calendar 2016; and 3. accordingly Mr Barsoum had not satisfied the requirements of s 5 (1) of the Foreign Acquisitions and Takeovers Act and was not a person who was ordinarily resident in Australia for the purpose of section 4 of that Act with respect to the 2017 land tax year: see the substantive reasons at [65]- [66].
As to the interpretation of the relevant statutory provisions, Mr Barsoum submitted to the Tribunal in the substantive proceedings that the Chief Commissioner has a discretion to waive liability for surcharge land tax if there were exceptional circumstances. The exceptional circumstances Mr Barsoum put forward were: exceptional work related circumstances; financial hardship, the corona virus economic crisis and unforeseen circumstances. The Tribunal decided that no such discretion was available to the Chief Commissioner and that the "undefined discretion relied on by Mr Barsoum in reliance on the case of O'Sullivan v Farrer(1989) 168 CLR 210 was not applicable.

[8]

The law as to costs in Tribunal proceedings

Orders for costs in Tribunal proceedings are dealt with in section 60 of the NCAT Act. For convenience, the text of that section is set out in full in the Appendix to these reasons. What may be regarded as the starting point is that each party to proceedings is to pay its own costs. That general rule is subject subsection (2), which allows the Tribunal to award costs, but only if it is satisfied that there are "special circumstances" warranting such an award.
"Special circumstances" are not exhaustively defined in the NCAT Act. When determining whether special circumstances exist, s 60 (3) allows the Tribunal to have regard to the matters set out in paragraphs (a) to (f) of that subsection and, under paragraph (g), to "any other matter that the Tribunal considers relevant". The matters to which the Tribunal may have regard include the relative strengths of the claims made by each of the parties, including whether a party has made a claim which has no tenable basis in fact or law (paragraph (c)) and whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance (paragraph (e)).
Subsection 60(4) provides that if the Tribunal does award costs, it may determine by whom and to what extent they are to be paid and may order that the cost be assessed in accordance with legal costs legislation pursuant to the Legal Profession Uniform Law Application Act 2004 or that they may be assessed on any other basis.
The case of Cripps & Anor v G & M Dawson Pty Ltd & Anor [2006] NSWCA 81 ("Cripps") involved an application for costs before the Administrative Decisions Tribunal (one of the predecessor bodies to NCAT) and its Appeal Panel. The costs provisions at that time were relevantly identical to s 60 of the NCAT Act. The Court of Appeal made the following observation about the meaning of "special circumstances" at [60]: ".. It suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional".
In Fitzpatrick Investments Pty Limited v Chief Commissioner of State Revenue [2015] NSWCATAD 103, the Tribunal referred to Cripps and noted that the expression "special circumstances" is also found in other legislation and a similar interpretation has been suggested.
In Groth v Secretary, Department of Social Security [1995] FCA 1708, Keifel J (as her Honour then was) agreed that the phrase "special circumstances", although imprecise, is sufficiently understood so as not to require judicial gloss and that for the purposes of the appeal before her Honour, the only enquiry to be undertaken was whether there were special circumstances to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case.

[11]

Application for leave to appeal

The principles governing an application for leave to appeal under the NCAT Act are well-established and are repeated in many decisions of the Appeal Panel, often quoting Collins v Urban [2014] NSWCATAP 17("Collins v Urban"). They are similar to the principles applied by the courts when determining whether to grant leave to appeal from an interlocutory decision. In Secretary, Department of Family and Community Services v Smith [2017] NSWCA 206, the Court of Appeal said at [28] (citations omitted): "Only if the decision is attended with sufficient doubt to warrant its reconsideration on appeal will leave be granted. Ordinarily, it is only appropriate to grant leave where there is an issue of principle, a question of general public importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable. It is well established that it is not sufficient merely to show that the trial judge was arguably wrong."
It is clear, from Collins v Urban, BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45], that in order to be granted leave to appeal the applicant must demonstrate something more than that the decision was arguably wrong or that there is some bona fide challenge available to an issue of fact. In Collins v Urban, the Appeal Panel confirmed at [84] that ordinarily, it is appropriate to grant leave only in matters that involve: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact-finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.

[17]

The Tribunal erred in failing to recognise that the making of a costs order was dependent upon the substantive proceedings being of a complex nature

In making this contention, Mr Barsoum apparently relied upon observations of the Appeal Panel in The Owners, Strata Plan No 55773 v Roden (Costs) [2020] NSWCATAP 197 at [46]. Referring to a first instances costs decision, the Appeal Panel held that: Having found the Proceedings were complex and that "special circumstances" exist to warrant an award of costs, the Tribunal has a general discretion in respect of costs. In these circumstances costs are compensatory and the starting position is that costs should follow the event.
We understood this paragraph to reflect the two-stage process referred to by the Appeal Panel of the Tribunal in Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38. A finding that one or more of the "special circumstance" factors set out in s 60 (3) have been made out does not necessarily mean that there are special circumstances warranting an award of costs. It remains necessary for the Tribunal to consider whether those circumstances are sufficient to amount to "special circumstances" that justify a departure from the ordinary rule that each party bear its own costs.
On our reading of this paragraph in context, the Appeal Panel was not intending to state that the making of a costs order was dependent upon the substantive proceedings being of a complex nature. Rather, pursuant to s 60(3)(d) of the NCAT Act, "the nature and complexity of the proceedings" was a factor to which the Tribunal at first instance had regard in deciding whether there were special circumstances warranting an award of costs. Having made that finding, the Tribunal went on to determine that "special circumstances" exist. It appears that Mr Barsoum has misunderstood what the Appeal Panel was saying in The Owners, Strata Plan No 55773 v Roden (Costs) [2020] NSWCATAP 197 at [46]. This ground of appeal was misconceived.

[20]

The Tribunal erred in finding that the substantive proceedings were misconceived and lacking in substance, within the meaning of s 60 (3) (e) of the NCAT Act

This ground was introduced by Mr Barsoum in his oral submissions. In the reasons for the costs decision at [36] to [42] the Tribunal provided detailed reasons for rejecting Mr Barsoum's submissions that his case was not misconceived or lacking in substance. The Tribunal said, in part: "[41] I rejected Mr Barsoum's submissions for several reasons. Overall, they provided no legal or factual basis to satisfy his onus; the number of days his business records dated he was in Australia during the relevant period did not add up accurately; some substantial submissions such as those relating to indemnity costs.. were irrelevant to the proceedings as indemnity costs were neither applied for nor awarded; Mr Barsoum submitted at [18] that the Tribunal had not taken into consideration "established practices at Australian airports" without providing either adequate probative evidence as to such practices or any supporting authority; Mr Barsoum's claim that [22(a)] that there was no evidence that his proceedings were frivolous, vexatious, misconceived or lacking substance, disregards numerous specific findings in the (reasons for the substantive decision) to the effect that he bore the onus of supporting his submissions with probative evidence and had not provided either probative evidence or relevant authorities."
In the substantive decision, the Tribunal decided that Mr Barsoum's application was lacking in merit, both factually and legally. As we have said, Mr Barsoum sought to re-agitate several of these findings and conclusions when appealing from the costs decision. As he did not appeal from the substantive decision, he could not on appeal contend that the Tribunal made an error in those reasons for decision. Based on the findings and conclusions in the substantive proceedings, the Tribunal's conclusion that Mr Barsoum's application was misconceived and lacking in substance was open to it.

[21]

The Tribunal erred in taking into account the Chief Commissioner's statements to Mr Barsoum, which were alleged to have alerted him to the possibility of an application for costs

By submitting that the Tribunal took into account certain matters that it was bound not to take into account, Mr Barsoum may have intended to rely on one of the so-called "relevancy grounds" of appeal. When determining whether to make a costs order under s 60 of the NCAT Act, a decision maker must take into account mandatory considerations, that is considerations that he or she is " bound to take into account in making that decision": Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39. Conversely, a decision maker must not take into account forbidden considerations. If the decision maker does either of those things, the decision will be invalid.
As we understood it, Mr Barsoum's contention was that the Tribunal erred in taking into account certain statements made to him by the legal representative of the Chief Commissioner in the course of negotiation or discussion during the substantive proceedings. We understood Mr Barsoum to assert that these constituted warnings that the Chief Commissioner would seek costs against him should he proceed with the substantive proceedings. We did not understand the Chief Commissioner to dispute that such discussions occurred or that they were taken into account, but to dispute that they constituted any sort of "warning" in the nature of a threat.
In our view, the Tribunal was not in error in taking the discussions into account. Under s 60 (3)(g) of the NCAT Act, the Tribunal may determine that there are "special circumstances" by having regard to "any other matter that the Tribunal considers relevant". The fact that Mr Barsoum was on notice of the Commissioner's view that his application lacked substance, was a relevant consideration when exercising the costs discretion. It was one of several matters that the Tribunal took into account. There is no statutory or other basis for characterising it as a forbidden consideration.

At a glance

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Judgment (31 paragraphs)

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Legislation Cited (6)

Cases Cited (23)

Cited By (1)