The burden of showing that an objection should be sustained lies with the taxpayer making the objection

9. One purpose of section 101(3) is to place a burden on the taxpayer to establish his/her/its case because the taxpayer would have the better knowledge of his/her/its affairs.
10. Perhaps another consideration is the fact that consideration by the Commissioner of an objection does not involve adversarial proceedings. In such circumstances the Commissioner would not have the benefit of a contravenor and so it seems logical to place some requirement on the objector to bring forth sufficient evidence of relevant facts to sustain an objection based on the applicable law.
11. Equally, the Commissioner, in such circumstances, is not a contradictor. The Commissioner is an inquisitor obliged to be fair.[4] The Commissioner is not an adversarial cross-examiner, has no client and has no case to put against a taxpayer.
12. So much seems to have been contemplated in the Explanatory Statement to the Taxation Administration Bill 1998. In relation to clause 101 of that Bill the Explanatory Statement said:

Clause 101 - Grounds for objection - sets the requirements for objections generally and limits the grounds for objection against a reassessment to the reassessment itself, not the original assessment Also provides that on objection or appeal the burden of establishing the taxpayer's case by evidence rests with the taxpayer. This is because the taxpayer has the best knowledge of his or her own affairs > > [Emphasis added.]

13. Division 10.2 of the TAA (ACT) concerns reviews to the Tribunal.
14. Section 108B is headed "Grounds of review" and is a rough analogue of section 101. Section 108B contains two requirements for reviews. First, the applicant's and respondent's cases on a review are not limited to the grounds of the objection. Second, if the objection was to a reassessment, the grounds of the review are limited to the extent of the reassessment.
15. What is being reviewed is, of course, the Commissioner's decision on an objection lodged by a taxpayer. The grounds for an objection may be enlarged on a review, and it would seem incongruous not to apply the same burden of proof to those enlarged grounds that applied to the grounds advanced before the Commissioner. Just as there is no contravenor when the Commissioner is determining an objection, so there is no contravenor (in the traditional sense) on a review notwithstanding the fact that the Commissioner is a party to the proceedings.
16. I shall return to that matter shortly.
17. Applying the same burden of proof in reviews would be consistent with the Explanatory Statement referred to above which said that the burden of proof applied on appeals (which were later called reviews when the Duties Act was amended).
18. Ordinarily, and absent a statutory provision to the contrary, there is no burden of proof in merit review tribunals: Comcare v Power [2015] FCA 1502 at [58].
19. One central authority in this area is McDonald v Director-General of Social Security (1984) 1 FCR 354 (McDonald). McDonald was an appeal from a decision of the Administrative Appeals Tribunal to the Federal Court. The Tribunal had affirmed a decision of a delegate of the Director-General of Social Security to cancel an invalid pension which had previously been awarded to the applicant. The appeal lay to the Federal Court pursuant to section 44 of the AAT Act and was limited to questions of law. One question determined was whether either party bore any onus of proof in the Tribunal. The relevant legislation did not contain any similar provision to section 101(3) of the TAA (ACT) and the Full Court considered the question of burden of proof before merit review tribunals.
20. At 357 Woodward J considered the position where legislation did contain a burden of proof section. His Honour said:

It is possible to imagine a case where the act which the administrator is applying places a requirement or onus on one or other of the parties to an issue to establish a particular state of facts on which the administrator's decision would be based. If that were so, the same requirement or onus would apply before the AAT. > > [Emphasis added.]

21. Although matters might have been made more clear by the inclusion of a sub-section in section 108B to the same effect as that found in section 101(3), I think it is tolerably clear that the purpose of the relevant provisions was to have a consistent system where a taxpayer bore a burden of proof both before the Commissioner determining an objection or a Tribunal undertaking a merits review of that determination, especially when one considers that neither are adversarial proceedings: see McDonald at 366.
22. Other decisions in the Tribunal have come to the same conclusion but by a different route, namely by drawing an analogy between section 101(3) of the TAA (ACT) and section 14ZZK of the Taxation Administration Act 1953 (Cth) (the TAA (Cth).
23. However, I do not agree that the sections are analogous.
24. For example, in Planet Red Pty Ltd v Commissioner of ACT Revenue [2017] ACAT 18 the Tribunal appeared to hold at [13] - [26] that the onus of proof set out in section 101(3) of the TAA (ACT) applied to a review in the Tribunal. I cannot see in the reasons any textual or contextual analysis of the section, nor can I find any reference to any extrinsic materials.
25. Rather, the Tribunal in that case referred to section 14ZZK of the Taxation Administration Act 1953 (Cth) (the TAA (Cth)), it being described as "the material equivalent of section 101(3) of the" TAA (ACT), and a small number of cases on that Commonwealth section.
26. With great respect, I do not regard s 14ZZK of the TAA (Cth) as being materially equivalent to section 101 of the TAA (ACT). There is a very great difference in the wording of the two sections, not least being the fact that s 14ZZK expressly said that it applied to reviews in the relevant tribunal, something section 101(3) of the TAA (ACT) does not do.[5]
27. At the time of the cases referred to in Planet Red section 14ZZK said:

14ZZK Grounds of objection and burden of proof > > On an application for review of a reviewable objection decision:

(a) the applicant is, unless the Tribunal orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates; and

(b) the applicant has the burden of proving that:

(i) if the taxation decision concerned is an assessment (other than a franking assessment) - the assessment is excessive; or

(ii) if the taxation decision concerned is a franking assessment - the assessment is incorrect; or

(iii) in any other case - the taxation decision concerned should not have been made or should have been made differently.

1. As is clear, section 14ZZK was expressly rereferring to a review in the Administrative Decisions Tribunal, now the Administrative Review Tribunal (the present section 14ZZK is not, in substance, materially different to the older section).
2. Nevertheless, for the reasons I have given earlier, I am of the view that section 101(3) of the TAA (ACT) does apply to merit review proceedings in the Tribunal.

No error in the application of s 101(3) of the TAA (ACT)

1. The Original Tribunal said that the burden of showing that the taxpayers' objections should be sustained rested with the taxpayers, citing section 101(3) of the TAA (ACT).
2. The Original Tribunal said that when conducting a review, the ACAT stood in the shoes of the Commissioner and the ACAT's role was to make its own decision based on the material before it. The Original Tribunal said that it was well recognised that "[t]here is no presumption that the administrator's decision is correct", citing Comcare v Power [2015] FCA 1502 at [58].
3. The Original Tribunal then referred to section 68(3) of the ACT Civil and Administrative Tribunal Act 2008 which provides that, after a merits review, the ACAT must confirm, vary or set aside the reviewable decision, and, if the reviewable decision was set aside, to make a substitute decision or remit the matter to the decision maker in accordance with any direction or recommendation of the ACAT.
4. The Commissioner submitted that section 101(3) operated as a "gateway". That is, a tribunal would first determine whether a taxpayer had satisfied the burden of showing that its objection should be sustained. Then, and only if so satisfied, a tribunal would then turn to the question of what the correct or preferable decision should be.
5. Put another way, the Commissioner submitted:

... if the authorising law requires a particular set of circumstances to exist before a decision may be made, the Tribunal must be satisfied that those circumstances exist before it can make that decision. Subsection 101(3) is precisely such a burden in an authorising law.

6. In summary, the Commissioner submitted that the gateway issue had to be addressed and decided first and separately from any other issue, and that the Original Tribunal erred in that it did not address this "gateway" first before proceeding to determine what the correct and preferable decision should have been.
7. The Commissioner submitted that this erroneous approach infected the totality of the Original Tribunal's decision. He submitted that:

Had the primary Tribunal properly applied this threshold, it would have held that the Respondents had not provided sufficient evidence to demonstrate that the transactions should not be aggregated, nor had they supplied sufficient evidence to demonstrate that the valuations adopted by the Appellant were excessive. It is an error which affects the entirety of the decision.

8. In support of this submission made to the Original Tribunal, and repeated on appeal, the Commissioner cited Planet Red at [18]. However, that passage does not support the submission. All that the Tribunal said at [18] in Planet Red was:

Section 101(3) of the TAA modifies that position in relation to an objection to a reviewable tax decision by requiring the applicant to sustain its objection, meaning in this case to establish that the valuations are too high.

9. The Commissioner also cited [24]-[26] of Planet Red wherein the Tribunal said:

1. To the extent that the Tribunal considers (and has considered in this case) what the valuations ought to be, it is done to establish as a reference point whether the applicant has discharged its onus. If and only if the onus is discharged may the Tribunal proceed - but need not do so - to decide the extent to which the valuations are too high and substitute different valuations. 2. In Rawson Finances Jagot J put it this way:

The two tasks (on the one hand, being satisfied on the facts as found that the applicant has proved that the assessment is excessive and, on the other hand, being satisfied on the facts as found as to the amount of the liability in the impugned decision) are conceptually different. The statute consigns the first task only to the Tribunal. It may be accepted that, in performing the first task, the Tribunal may consider and/or resolve the second task. No doubt in a case where the Tribunal can satisfy itself, in accordance with the second task, that the facts as found by the Tribunal give rise to the amount of the liability in the impugned decision the Tribunal can also discharge the first task with a high degree of confidence and conclude that the applicant has not proved that the assessment was excessive. Provided the Tribunal's consideration of the second task does not distract it from the task which the statute requires to be performed there will be no question of law capable of vitiating the Tribunal's decision. But the second task cannot be substituted for the first task.

10. For the applicant to sustain its objection (in this case that the valuations are too high) does not imply that it must prove on the balance of probabilities that its view about the UV of each subject block is 'correct' or require the Tribunal to accept the applicant's viewpoint. The Tribunal therefore rejects Dr Jarvis' submission in this respect. Discharge of the onus is not a 'black or white' exercise. The Valuation of Land Act 1916 (NSW), section 40(2), similarly places an onus on an appellant to prove its case on appeal to the Land and Environment Court, but proving its case permits the Court to conclude on the evidence what it considers to be the appropriate value of improvements and thus the consequential UV of the land.
11. The best exposition of the point the Commissioner was putting was in Planet Red at [25], namely the first sentence in the quote from Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26.
12. But as that quote reveals, Jagot J made the point that the two tasks may be undertaken concurrently. That passage is no support for the Commissioner's gateway argument, and I see no error in the Original Tribunal's reasoning process. It seems to me that the Original Tribunal satisfied itself in accordance with the second task (to adopt Jagot J's language) that the facts as found also discharged the first task with a high degree of confidence and concluded that the taxpayers had proved that their objections should be sustained.

Ground 2: failing to consider the appellant's submissions on "associated persons"

1. The Commissioner submitted that it had put forward two alternative arguments why the taxpayers were associate persons within the meaning of section 24 of the Duties Act.
2. The first argument was that the beneficiaries of the two trusts were the beneficial owners of the two Lyell St properties, relying upon section 82 of the Duties Act. In response, the taxpayers relied on Cypjayne and submitted, correctly, that the beneficiaries of the Doublebar and Bloodfinch Trusts were not beneficiaries caught by section 82.
3. The second argument, put as an alternative to the first, was that if the beneficiaries of the two Trusts were not the owners of the land, then the taxpayers were the legal and equitable owners of the two properties at the time of the transfers. If that were correct, the Commissioner submitted, the taxpayers were associated people because Mr Morvillo was the sole director and shareholder of both taxpayers.
4. The Commissioner contended that the Original Tribunal had failed to consider the second argument.
5. How the second argument fell within the terms of s 24 of the Duties Act was not clearly explained and I had difficulty understanding what the Commissioner's precise case was. No part of section 24 raises for consideration whether trustee companies are "associated persons" because the companies are the beneficial owners of land (assuming that latter statement was accurate).
6. As put to the Original Tribunal in written submissions, the Commissioner submitted that, assuming the taxpayers were the beneficial owners of the land, the taxpayers were "associated persons" because, per (a)(iii) of the definition. The submission was:

By reason of the common shareholding and directorship of those companies at the time of the transfer, being Mr Morvillo in all instances, those companies were properly "associated persons" for the purposes of section 24.

7. That of course was the ultimate submission, but how the Commissioner said that those particular facts fell within section 24 was difficult for me to understand.
8. Be that as it may, the question whether the taxpayers held a beneficial interest in the two properties was a red herring.
9. As best I understood the Commissioner's submissions, the question, per (a)(iii) of the definition of "associated person", was simply whether Mr Morvillo (who was the common shareholder in each taxpayer) had a "significant interest" in each taxpayer.
10. The word "interest" is defined in the Duties Act as:

(a) for this Act generally - includes an estate, an interest under a lease or a sublease, a proprietary right and a beneficial interest; and

(b) in a landholder, for part 3.2 (Acquisition of interests in certain landholders) - see section 83.

1. The words "significant interest" are defined in the Duties Act as:

significant interest, in a landholder - see section 83.

2. When I asked the Commissioner during oral submissions what was the Commissioner's case as put below in terms of how it was put that Mr Morvillo had a "significant interest" in the taxpayers, the Commissioner said he had relied upon both (a) and (b) of the definition of "interest".
3. However, I cannot find any submissions regarding (a) of the definition in either the written or oral submissions of the Commissioner put to the Original Tribunal.
4. In his written submissions on the appeal (at [28]) the Commissioner said that the "legal and factual analysis to support" his two alternative arguments were "spelled out in detail in the (Commissioner's) closing submissions at [15]-[38]".
5. However, those submissions are silent on how it was said that Mr Morvillo had a significant interest in both shareholders per (a) of the definition other than simply asserting this was because he was the sole shareholder of both companies.
6. In oral submissions to the Original Tribunal the Commissioner's only case on this point concerned (b) of the definition.
7. For example, at T 114 (AB 355) the Commissioner referred to (a)(iii) of the definition of "associated person", then referred to the definition of "significant interest" (which concerns a landholder), then referred to a distribution on winding up (the subject of section 83 of the Duties Act) followed by references to the deeming provisions of section 82 of the Duties Act.
8. I have set out section 83 earlier in these reasons. In short, it means that for Mr Morvillo to have had a significant interest in the taxpayers, he would need to have been entitled to at least 50% of any distribution of property on the winding up of the taxpayers.
9. The Commissioner submitted that on a winding up of a trustee of a discretionary trust, the sole director and shareholder of the trustee company could distribute the trust assets to himself. Self-evidently, that proposition is incorrect and would be a breach of trust and a breach of the trustee's fiduciary duties. It would be a breach of clause 4 of the Trust Deeds if this occurred on the vesting day. I could not find any power in the Trust Deeds to wind up the trusts before the Vesting Day and was not taken to any such clause by the Commissioner.
10. As I read the Commissioner's written and oral submissions put to the original Tribunal, and the Original Tribunal's reasons, the Tribunal did consider the argument the Commissioner says was not considered. It was dealt with at [65] of the Original Tribunal's reasons where the Original Tribunal said:

The (Commissioner) contended that if the Tribunal accepted that discretionary beneficiaries are not beneficiaries for the purposes of the associated person test in the Act, then the beneficial interest must rest with the applicant companies and, by reason of the common shareholding, this means they are associated. The Tribunal does not agree with the simplistic binary logic of the respondent's latter contention given it is inconsistent with significant bodies of case law, as the applicant submitted. In any case, common shareholding is not the test here, the test is whether Mr Morvillo had a "significant interest" in each of the applicants. On this issue, during the proceedings the respondent contended that Mr Morvillo had a "significant interest" in the applicant companies because he was the only shareholder of a landholding company and he would be entitled to 100% of any distribution under section 83 of the Act. The respondent contended that the latter was true even if the applicants were trustee companies, relying again on section 82(2) of the Act which the Tribunal finds does not apply.

11. In that paragraph the Original Tribunal expressly referred to the case put by the Commissioner and, like myself, came to the view that beneficial ownership of the land was irrelevant. What (a)(iii) of the definition of "associate person" directed attention to was whether Mr Morvillo had a significant interest (as defined) in the taxpayers.
12. The Original Tribunal then addressed that question on the submissions put to it, and rightly rejected it.
13. No case was put to the Original Tribunal that (a) of the definition of "interest" applied, and I would not allow it to be raised for the first time on appeal.
14. I should also note that the Original Tribunal found that the taxpayers were not "landholders" for the purposes of the Duties Act (at [66]), and consequently section 83 cannot apply. There was no appeal from that finding and thus this ground was bound to fail.

Ground 3: failing to find the transactions formed one arrangement

1. As the appeal fails because the Commissioner has failed to establish any error in the Original Tribunal's finding that the taxpayers were not "associated persons" as required by section 24(1)(b) of the Duties Act, this ground need not be determined.
2. However, as the matter was argued, I shall set out some brief reasons why this ground would also fail.
3. The Commissioner submitted that the Original Tribunal erred in failing to properly apply section 24 of the Duties Act. That is, the Original Tribunal failed to find that the dutiable transactions together formed, evidenced, gave effect to or arose from what was, substantially, one arrangement relating to all of the interests in the dutiable property: see section 24(1)(c) of the Duties Act.
4. It is important to note that the Commissioner did not challenge any of the Original Tribunal's findings of fact.
5. Rather, the Commissioner, on the appeal, directed attention to the facts set out at [39] of his written submissions put to the Original Tribunal (commencing at AB 1347) and then submitted:

Once those matters are considered, the Appellant submits that it is clear that the primary Tribunal erred in failing to hold that the transfers of the properties to the Respondents arose out of one arrangement.

6. With respect, it is not sufficient on appeal to simply direct attention to a number of facts and then submit that it is therefore clear that the Original Tribunal erred. On an appeal error must be identified.
7. I think that the Commissioner's real appeal point was that the Tribunal had not referred to all of the evidence in its reasons i.e. an inadequacy of reasons ground.
8. But a Tribunal need not refer to all of the evidence in reasons. As was said by the majority in Whisprun Pty Ltd v Dixon [2003] HCA 48:

[62] A judge's reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge's failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party's case. > > [63] ... To suggest that a trial judge has not properly considered a party's case is a serious charge. Such a suggestion should be accepted only when the record of the trial or other evidence persuasively suggests that the judge failed to discharge that paramount judicial duty.

9. In Sweeney v He [2023] NSWCA 68 Ward P, with whom Brereton and Mitchelmore JJA agreed, said this:

[142] The litany of complaints by the appellant as to an inability to see that the primary judge had received and understood his submissions has the hallmarks of a formulaic complaint that there was appellable error in relation to each submission not separately recorded and addressed by the primary judge. His Honour made clear the basis on which he rejected the appellant's claim and it was not necessary in my opinion for his Honour to give a line by line account of the submissions made by the appellant in order to do so (though to pre-empt a similar such complaint I have set those out in some detail in these reasons). > > [143] I note that, in Baira v RHG Mortgage Corporation Ltd [2012] NSWCA 387; (2012) 297 ALR 416, at [173]-[175] this Court noted that it is insufficient to demonstrate (on appellate review of factual findings) that a primary judge has failed to deal with some evidence. The evidence in question must have the "quality which seriously calls into question the integrity of a finding of fact" (see also Lemongrove Services Pty Ltd v Rilroll Pty Ltd [2019] NSWCA 174 at [32] per Payne JA). > > [Emphasis added]

10. The Commissioner identified some matters not expressly recorded in the reasons of the Original Tribunal, but made no attempt to explain how those matters had the quality which seriously called into question the integrity of the Original Tribunal's finding that there was not one arrangement.
11. It seems to me that the Original Tribunal addressed its mind to the correct factual question and, in some detail, considered various facts. In evaluating all of those facts the Original Tribunal came to a view that there was not one arrangement, and it was not erroneous to fail to refer to every fact mentioned by the Commissioner.
12. I should also note that the Original Tribunal also found in favour of the taxpayers that the Commissioner should have been satisfied under section 24(2)(d) of the Duties Act that it would not be just and reasonable for the transactions to be aggregated.
13. There was no appeal from that conclusion and so the appeal from the finding that the transactions should not be aggregated would necessarily fail.

Ground 4: error in accepting the taxpayer's valuer's valuations

1. The Commissioner submitted that the Original Tribunal erred in accepting the taxpayers' valuer's expert opinion as to the market value of the two properties at the time of the transfers.
2. The Commissioner submitted that the "basis for this ground" was set out in his written submissions to the Original Tribunal. With respect, that submission was not helpful. Disturbing factual findings on an appeal is a different exercise to advocating for the preference of one witness over another at a hearing.
3. Be that as it may, no error was identified in the Commissioner's submissions. The submissions simply restated what was put below and that is not sufficient on an appeal. Error must be demonstrated, and none was.
4. Further, the Commissioner did not grapple with the entirety of the Tribunal's reasoning process. That is, the Original Tribunal set out in detail the reasons why it preferred Mr Wright's evidence over that of Mr Pilat, but the Commissioner did not address all of the matters relied on by the Tribunal.
5. Rather, the Commissioner, in substance, simply restated his submissions made to the Original Tribunal.
6. I see no error in the Original Tribunal's findings on the valuations.

[1] Done by the lenders purportedly exercising their powers under the terms of their loan agreements and/or mortgages.

[3] By describing the Commissioner's case I should not be seen as implying that the Commissioner bore any burden or onus of proof. It is simply recognition that it was the Commissioner who had determined that the transaction should be aggregated, and so it is necessary to understand the reasoning for that determination in order to also understand the taxpayers' submissions to the contrary.

[4] See Abebe v The Commonwealth (1999) 197 CLR 510 at 576 [187] per Gummow and Hayne JJ; Re Minister for Immigration and Multicultural Affairs; Ex parte Epeabaka [2001] HCA 23; (2001) 206 CLR 128 at 146 [52] per Kirby J; Re Ruddock; ex parte Applicant S154/2002 [2003] HCA 60 at [57] per Gummow and Heydon JJ.

[5] Section 14ZZK, at the time of the cases referred to, appeared in Division 4 of the TAA (Cth) which was headed "AAT review of objection decisions and extension of time refusal decisions".