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[2007] HCA 8
High Court of Australia
2007-03-01
Isaacs J, Dixon J, Gleeson CJ, Crennan JJ
Original judgment source is linked above.
GUMMOW, KIRBY, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ
Forsyth v Deputy Commissioner of Taxation [2007] HCA 8
On appeal from the Supreme Court of New South Wales
R L Hamilton SC with R L Seiden for the appellant (instructed by Paul Bard Lawyers)
D M J Bennett QC, Solicitor-General of the Commonwealth with R S Quinn for the respondent (instructed by Australian Government Solicitor)
M G Sexton SC, Solicitor-General for the State of New South Wales with R A Pepper intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor for New South Wales)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
Courts and judges - Federal jurisdiction in State courts - Whether s 39(2) of the Judiciary Act 1903 (Cth) conferred jurisdiction on the District Court of New South Wales to hear and determine an action to recover a penalty under the Income Tax Assessment Act 1936 (Cth).
Federal jurisdiction in State courts - Limitations on the jurisdiction of State courts - Whether s 44(1)(a) of the District Court Act 1973 (NSW) was a limit on the jurisdiction of the District Court of New South Wales within the meaning of the Judiciary Act 1903 (Cth).
Federal jurisdiction in State courts - Statutory interpretation - s 44(1)(a) of the District Court Act 1973 (NSW) gave the District Court of New South Wales jurisdiction to hear and dispose of certain classes of actions - Whether s 44(1)(a) should be given an ambulatory or fixed time construction.
Statutory interpretation - Subsequent regulatory change - s 44(1)(a) of the District Court Act 1973 (NSW) defined the jurisdiction of the District Court of New South Wales by reference to the allocation of work between the Divisions of the Supreme Court of New South Wales - Whether a subsequent reallocation of work between the Divisions of the Supreme Court of New South Wales alters the jurisdiction of the District Court of New South Wales.
Words and phrases - "ambulatory", "amount payable", "court of competent jurisdiction", "penalty".
Income Tax Assessment Act 1936 (Cth), Pt VI, Div 9, subdiv B; Pt VI, Div 2.
Courts Legislation Further Amendment Act 1998 (NSW).
"The several Courts of the States shall within the limits of their several jurisdictions, whether such limits are as to locality, subject-matter, or otherwise, be invested with federal jurisdiction, in all matters in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it".
"The limits of jurisdiction of any court so invested found their source in State law and, I presume, any change made by the State in those limits would, under the terms of s 39(2), ipso facto make an identical change in its Federal jurisdiction."
"Penalty for directors in office on or before due date
222AOC. If section 222AOB is not complied with on or before the due date, each person who was a director of the company at any time during the period beginning on the first deduction day and ending on the due date is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company's liability under a remittance provision in respect of deductions:
(a) that the company has made for the purposes of [Divisions requiring remittance][[12]], as the case may be; and
(a) after the due date, a person becomes, or again becomes, a director of the company at a time when section 222AOB has not yet been complied with; and
(b) at the end of 14 days after the person becomes a director, that section has still not been complied with;
the person is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the liability referred to in section 222AOC."
Both of these provisions applied in the case of the appellant, who had been a director of the company from 10 October 1994 to 21 December 1998, and after ceasing to be a director for a few weeks was appointed again from 1 February 1999.
"The Commissioner is not entitled to recover from a person a penalty payable under this Subdivision until the end of 14 days after the Commissioner gives to the person a notice that:
(a) sets out details of the unpaid amount of the liability referred to in section 222AOC; and
(b) states that the person is liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount, but that the penalty will be remitted if, at the end of 14 days after the notice is given:
(ii) an agreement relating to the liability is in force under section 222ALA; or
(iii) the company is under administration within the meaning of the Corporations Law; or
The Deputy Commissioner issued penalty notices to the appellant on 27 October 1998 and 15 June 1999. None of the actions referred to in s 222AOE(b) was taken. Therefore the effect of s 222AOE was that the penalties became due and payable 14 days after the penalty notices were issued. The "unpaid amount" was ultimately assessed at $414,326.45.
"(1) The purpose of this Division is to ensure that a company either meets its obligations under [Divisions including the PAYE remittance obligations], or goes promptly into voluntary administration under Part 5.3A of the Corporations Law or into liquidation.
(2) The Division imposes a duty on the directors to cause the company to do so. The duty is enforced by penalties. However, a penalty can be recovered only if the Commissioner gives written notice to the person concerned. The penalty is automatically remitted if the company meets its obligations, or goes into voluntary administration or liquidation, within 14 days after the notice is given.
(3) A penalty recovered under this Division is applied towards meeting the company's obligations under the relevant Division. Conversely, amounts paid by the company reduce the amount of a penalty."
What was referred to in sub‑s (3) of s 222ANA is the feature that the liability of a director to the penalty and the liability of the company under the relevant remittance provisions were "parallel liabilities", such that payment in discharge of either liability operated pro tanto to discharge the other (s 222AOH).
"An amount payable to the Commissioner under the provisions of this Division shall be a debt due to the Commonwealth and payable to the Commissioner, and may be sued for and recovered in any court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his official name."
Section 221R(1AA)(d) stated that "a penalty payable under Subdivision B of Division 9 in relation to a company's liability under this Division" was an "amount payable" under Div 2 of Pt VI. The penalty, in so far as it was in respect of amounts deducted prior to 1 July 1998, was, therefore, recoverable in "any court of competent jurisdiction" by the Deputy Commissioner as a debt pursuant to s 221R.
"Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions:
(i) which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court, and
(ii) in which the amount claimed does not exceed $750,000, whether on a balance of account or after an admitted set‑off or otherwise,
other than an action referred to in paragraph (d) or (e)".
Paragraphs (d) and (e) made specific provision for there to be no monetary jurisdictional limit in certain kinds of actions, and are not presently relevant. It may be noted that the introduction of s 44(1)(a) in the form it took after enactment of the 1997 Amendment Act represented a departure from the previous versions of s 44(1)(a)[15]. These had all been expressed in terms of "any personal action at law". This criterion had imported a different set of ideas, a matter explored by Priestley JA in Vale v TMH Haulage Pty Ltd[16].
The provisions governing the assignment of business within the Supreme Court
"Subject to the rules, there shall be assigned to the Common Law Division all proceedings not assigned to another Division by the foregoing provisions of this section."
Section 53 was expressed to be "[s]ubject to the rules". Further provision was made in Pt 12 of the Supreme Court Rules 1970 (NSW) ("the Rules") then in force for the assignment of business. Part 12 r 4 conferred jurisdiction on the Common Law Division under certain statutes. However, as a general rule, the Common Law Division had assigned to it the residue of the general business of the Court not specifically assigned elsewhere.
"The rules may make provision for or with respect to the assignment of proceedings to the Court of Appeal or a Division. The assignment by the rules of any proceedings to the Court of Appeal or any Division has effect despite any contrary provision of this or any other Act or law."
The assignment of business provisions and taxation claims
"In any Act or instrument, a reference to some other Act or instrument extends to the other Act or instrument, as in force for the time being."
The appellant submitted that, while there is no express reference in s 44(1)(a)(i) to another enactment, such a reference is implicit. This is so because the Supreme Court Act and the Rules determine which actions would be assigned to the Common Law Division of the Supreme Court. This submission cannot be accepted; there is no "reference to some other Act" within the meaning of s 68. Section 44(1)(a) of the District Court Act refers not to another statute, but to a state of the law as at some particular time; the issue in this case is what is that time.
(1) The ambulatory or fixed time meaning issue: Whether, in the context of its application to the ascertainment of the limit of the jurisdiction of the District Court for the purposes of s 39(2) of the Judiciary Act, s 44(1)(a)(i) of the District Court Act is to be given an ambulatory construction, so that it speaks from time to time (relevantly, to the time at which the respondent commenced his proceedings against the appellant). Or whether s 44(1)(a)(i) is to be given a "fixed time" meaning so that it speaks only to the time at which it was enacted. It is not contested that an action of the kind brought by the respondent against the appellant at the time s 44(1)(a)(i) was enacted was one "which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court". Hence, if the correct construction of s 44(1)(a)(i) is that it should be given a "fixed time" meaning, the respondent's action was within the jurisdiction of the District Court when the respondent engaged that jurisdiction by filing his process against the appellant; and
(2) The levying of the tax, fee, duty or other impost issue: By a notice of contention, the respondent raised defensively an argument to support the orders of the Court of Appeal on an additional ground favoured only by Gzell J in that Court[52]. That ground presents the issue whether, in terms of the applicable provisions of the federal tax legislation giving rise to the propounded obligation of the appellant to the respondent[53], such proceedings were ones by which a "tax, fee, duty or other impost is levied, collected or administered". If, properly characterised, the proceedings do not engage such a description, such proceedings would not have been assigned to the Equity Division of the Supreme Court even if an ambulatory meaning were given to the Rules of the Supreme Court of New South Wales applicable when the respondent's proceedings were commenced in the District Court. They would therefore have remained in the Common Law Division. Hence, they would have qualified under the District Court Act, s 44(1)(a)(i), to enliven the jurisdiction of the District Court "to hear and dispose of" such an action and to do so under federal law in this case.
"A recoverable amount may be sued for and recovered in a court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his or her official name."
"The view that has been tacitly accepted is that the expression 'within the limits of their several jurisdictions' refers to the limits imposed by the relevant State law in operation from time to time whether enacted before or after the commencement of the Judiciary Act".
"In any Act or instrument, a reference to some other Act or instrument extends to the other Act or instrument, as in force for the time being."
1998 Tax Amendment Act, s 3 and Sched 4. Schedule 4 commenced on 23 June 1998 and inserted a new Div 1AAA of Pt VI, entitled "Payment of RPS, PAYE and PPS deductions to Commissioner" (Sched 4, Item 1). The effect was to consolidate all the remittance provisions for the various types of deductions with effect from the 1998/1999 financial year. Consequential repeals and omissions were made to the 1936 Act relating to the former apparatus for the remittance of PAYE and other deductions (Sched 4, Items 6‑47). ↑
1998 Tax Amendment Act, s 3 and Sched 4, Items 63‑65. ↑
A New Tax System (Tax Administration) Act 1999 (Cth), s 3 and Sched 2. ↑
A New Tax System (Tax Administration) Act 1999 (Cth), s 3 and Sched 2, Item 2(1). ↑
In the case of amounts deducted prior to 1 July 1998, the obligation to remit was located in Div 2 of Pt VI of the 1936 Act. In the case of amounts deducted after 1 July 1998, the obligation to remit was located in Div 1AAA of Pt VI of the 1936 Act: 1998 Tax Amendment Act, s 3 and Sched 4, Item 60. Section 222AOB at all times reflected in its terms the precise source of the obligation to remit. ↑
Section 222AOC(a) was amended by the 1998 Tax Amendment Act, s 3 and Sched 4, Item 65. The Divisions referred to in par (a) before that amendment were "Division 1AA, 2, 3A, 3B or 4". The Divisions referred to after that amendment were "Division 1AAA, 3B or 4". The amendments were consequential on the creation of the new Div 1AAA of Pt VI, and the consolidation into that Division of the provisions relating to remittance of different types of deductions which had previously been located in Divs 1AA, 2 and 3A. ↑
1998 Amendment Act, s 3 and Sched 10, Items 1‑4; cf Supreme Court Act, Sched 4, Pt 8, in relation to pending proceedings which had already been assigned to one of the abolished Divisions at the time of commencement of the 1998 Amendment Act. ↑
New South Wales, Legislative Council, Parliamentary Debates (Hansard), 1 December 1998 at 10872. ↑
1998 Amendment Act, s 3 and Sched 10, Item 5. ↑
Although Pt 12 r 6(1) and Pt 2 of Sched H of the Rules assigned to the Administrative Law Division proceedings "in respect of decisions of a public body or public officer", defined to include persons such as the Deputy Commissioner, actions for the recovery of a taxation debt, or a penalty, were not such proceedings. They may be contrasted with references and appeals against assessments which for some years were dealt with in the Administrative Law Division: Practice Note No 3 [1973] 1 NSWLR 185, rescinded by Practice Note No 44 (1987) 15 NSWLR 29. ↑
cf Uniform Civil Procedure Rules 2005 (NSW), r 1.19(f). ↑
cf Uniform Civil Procedure Rules 2005 (NSW), r 1.18(a). ↑
Bennion, Statutory Interpretation, 4th ed (2002) at 762‑763. ↑
Victor Chandler International Ltd v Customs and Excise Commissioners [2000] 1 WLR 1296 at 1303‑1304; [2000] 2 All ER 315 at 322-323. ↑
See CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408. ↑
New South Wales, Legislative Assembly, Parliamentary Debates (Hansard), 12 November 1997 at 1602-1603. ↑
Explanatory Note to the Courts Legislation Further Amendment Bill 1997 at 4. ↑
News Ltd v South Sydney District Rugby League Football Club Ltd (2003) 215 CLR 563 at 580 [42] per McHugh J. ↑
As in this case, the Court of Appeal of New South Wales; the Special Leave Panel of this Court; and the Full Court. The point was not raised or determined in the District Court of New South Wales. ↑
Forsyth v Deputy Commissioner of Taxation (2004) 62 NSWLR 132. As is explained below at [109]-[111], Gzell J added an additional ground for dismissing the appeal. See at 146 [70]. ↑
Garcia v National Australia Bank Ltd (1998) 194 CLR 395 at 417-418 [56]. ↑
Forsyth (2004) 62 NSWLR 132 at 139-146 [36]-[66] (the validity of notices and an argument of abuse of process). A further argument raised before this Court concerning the validity of the appointment of Acting Judges to the District Court of New South Wales was abandoned following the decision of the Court in Forge v Australian Securities and Investments Commission (2006) 80 ALJR 1606; 229 ALR 223. ↑
See reasons of Gleeson CJ, Gummow, Hayne, Callinan, Heydon and Crennan JJ ("the joint reasons") at [8]-[13]. ↑
(vi) in relation to any provision in any Act or Commonwealth Act by which a tax, fee, duty or other impost is levied, collected or administered by or on behalf of the State or the Commonwealth".
It was accepted by the parties that this Rule was in force when these proceedings were commenced. ↑
In respect of the deductions made prior to 1 July 1998, s 221R of the 1936 Act applies. See joint reasons at [15]-[16]. ↑
Examples include the Industrial Court of New South Wales. For the history of that Court see Batterham v QSR Ltd (2006) 80 ALJR 995 at 1010-1011 [71]-[72]; 227 ALR 212 at 230-231. There are many other examples including the former Land and Valuation Court of New South Wales created by the Land and Valuation Court Act 1921 (NSW); the then Workers' Compensation Commission, created by the Workers' Compensation Act 1926 (NSW); and the former Compensation Court of New South Wales created by the Compensation Court Act 1984 (NSW). ↑
The history of the District Court of New South Wales and of its powers, dating from the first creation of such courts by the District Courts Act 1858 (NSW), is described in Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 473‑474 [118]-[119]. ↑
Minister of State for the Army v Parbury Henty & Co Pty Ltd (1945) 70 CLR 459 at 505. ↑
(1954) 90 CLR 13 at 20 per Dixon CJ, Kitto and Taylor JJ (emphasis added). ↑
Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 94-96 per Toohey J, 103 per Gaudron J, 115-118 per McHugh J, 137-139 per Gummow J. ↑
In this respect, it did not fall into the error evident in several earlier proceedings in this Court where the point was overlooked. See eg British American Tobacco Australia Ltd v Western Australia (2003) 217 CLR 30 at 69 [98]. ↑
The Commonwealth v The District Court of the Metropolitan District Holden at Sydney (1954) 90 CLR 13 at 22, see also at 20; Le Mesurier v Connor (1929) 42 CLR 481 at 503. ↑
Lane's Commentary on The Australian Constitution, 2nd ed (1997) at 633. See generally at 632‑634. ↑
Le Mesurier v Connor (1929) 42 CLR 481 at 496. But cf Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 545, 574, 592 noted in (1989) 63 Australian Law Journal 666. ↑
See joint reasons at [35]. See also at [43]-[44]. ↑
Vale v TMH Haulage Pty Ltd (1993) 31 NSWLR 702 at 707. ↑
2 Co Inst 11. (A contemporaneous exposition is the best and most powerful in law, that is, the best way to construe a document is to read it as it would have been read when made.) See Burke (ed), Jowitt's Dictionary of English Law, 2nd ed (1977), vol 1 at 441. See also Broom's Legal Maxims, 10th ed (1939) at 463; Butterworths Australian Legal Dictionary, (1997) at 259; Corporate Affairs Commission (NSW) v Yuill (1991) 172 CLR 319 at 322‑323. ↑
See eg Coventry v Charter Pacific Corporation Ltd (2005) 80 ALJR 132 at 148 [76]-[77], 153 [113]; 222 ALR 202 at 220‑221, 227-228; Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509 at 1527‑1528 [77]-[84]; 229 ALR 1 at 21-23; Sons of Gwalia Ltd v Margaretic [2007] HCA 1 at [104]. ↑
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-382 [69]-[71]. ↑
Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 80 ALJR 1509 at 1528 [84], fn 64; 229 ALR 1 at 22‑23. ↑
For example, in India, the Supreme Court has declined to apply that approach. See Senior Electric Inspector v Laxminarayan Chopra AIR 1962 SC 159 at 162-163; Raja Ram Jaiswal v State of Bihar AIR 1964 SC 828 at 836; cf National and Grindlays Bank Ltd v Municipal Corporation for Greater Bombay AIR 1969 SC 1048; Singh, Principles of Statutory Interpretation, 9th ed (2004) at 296. ↑
Campbell College, Belfast (Governors) v Commissioner of Valuation for Northern Ireland [1964] 1 WLR 912 at 941‑942; [1964] 2 All ER 705 at 727 (HL). ↑
R (Daly) v Secretary of State for the Home Department [2001] 2 AC 532 at 548 [28] per Lord Steyn who stated that "[i]n law, context is everything". See also Al-Kateb v Godwin (2004) 219 CLR 562 at 624 [174]. ↑
Coleman v Power (2004) 220 CLR 1 at 95-96 [245]-[246] applying Ahmad v Inner London Education Authority [1978] QB 36 at 48 per Scarman LJ. See also Pearce and Geddes, Statutory Interpretation in Australia, 6th ed (2006) at 122‑124 [4.9]‑[4.10]; Bennion, Statutory Interpretation, 4th ed (2002) at 762‑763. ↑
See for example R v Gee (2003) 212 CLR 230 at 241 [7]. ↑
cf Electric Light and Power Supply Corporation Ltd v Electricity Commission of NSW (1956) 94 CLR 554 at 560. ↑
See for example Shergold v Tanner (2002) 209 CLR 126 at 136 [33]. ↑
Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 at 449 [43]‑[44], 460 [78], cf at 482‑483 [142]. ↑
Forge v Australian Securities and Investments Commission (2006) 80 ALJR 1606 at 1640 [140], 1650 [181(4)]; 229 ALR 223 at 262, 275. ↑
Commissioner of Stamp Duties v Permanent Trustee Co Ltd (1987) 9 NSWLR 719 at 722; Catto v Ampol Ltd (1989) 16 NSWLR 342 at 345‑346; Hore v Albury Radio Taxis Co‑operative Society Ltd (2002) 56 NSWLR 210 at 222 [39]. ↑
Forsyth
Deputy Commissioner of Taxation
(2004) 62 NSWLR 132
(1929) 42 CLR 481
(1945) 70 CLR 459
(2000) 199 CLR 370
(1999) 198 CLR 435
(1993) 31 NSWLR 702
(1987) 15 NSWLR 29
(1997) 187 CLR 384
(2003) 215 CLR 563
(1998) 194 CLR 395
(2006) 80 ALJR 1606
(1951) 83 CLR 1
(2003) 211 CLR 476
(1956) 94 CLR 254
(2002) 211 CLR 119
(2006) 80 ALJR 995
(1954) 90 CLR 13
(1996) 189 CLR 51
(2003) 217 CLR 30
(1989) 166 CLR 518
(1933) 48 CLR 171
(1957) 97 CLR 535
(1997) 74 FCR 205
(1992) 26 NSWLR 203
(2002) 56 NSWLR 210
(1991) 172 CLR 319
(2005) 80 ALJR 132
(2006) 80 ALJR 1509
(1998) 194 CLR 355
(2004) 219 CLR 562
(2004) 220 CLR 1
(2003) 212 CLR 230
(1956) 94 CLR 554
(2002) 209 CLR 126
(1987) 9 NSWLR 719
(1989) 16 NSWLR 342