Hutchins, Peter Graeme v Deputy Commissioner of Taxation [1996] FCA 201

As I have noted, counsel for the respondent submitted that if authority to decide to vote as a creditor at the meeting of creditors under Part X of the Bankruptcy Act 1966 was not conferred expressly by s.8, it was impliedly conferred by ss. 208 and 209 but he submitted that the conferral of implied authority in this way did not mean that a decision within the authority so conferred was a decision "under" the Income Tax Assessment Act. The recovery of income tax is a vital function of the Commissioner and it can readily be accepted that s.8 in combination with s.208 of the Act impliedly authorises the Commissioner to do what is reasonably necessary to recover the income tax that is a debt due to the Commonwealth and payable to the Commissioner. The authorisation is very general and the acts so authorised will necessarily include decisions to recover tax by proving in the estates of bankrupt taxpayers and decisions made to attend and vote at meetings of creditors where tax is owed by the debtor. In my view, however, the combination of ss.8 and 208, although authorising the decision in question, does not "make provision" for it in the sense in which that expression was used by Mason CJ in Bond. The relationship between the text of the sections, even in combination, and the decision that is said to have been made "under" them is, in my opinion, too remote and non-specific for it to be said that provision is made for such a decision by the Income Tax Assessment Act. Approaching the question in accordance with what was said in General Newspapers Pty Ltd v. Telstra Corporation, the same conclusion is reached, for the decision was not given statutory effect by the sections relied upon. I agree with the submission of counsel for the respondent that there was no sufficient connection between the Income Tax Assessment Act and Part X of the Bankruptcy Act such that the possible statutory consequence arising under the Bankruptcy Act once a vote is cast, or not cast, can be treated as having arisen under the Income Tax Assessment Act. I do not consider that adding s.209 to the combination assists the appellant, for the relationship between the text of the section and the decision said to have been made "under" it is, in my view, even more remote and non-specific than the relationship between s.208 and the decision. I therefore agree with the conclusion of the learned primary judge that the decision to vote against the proposed composition is not subject to review under the ADJR Act. The decision was not a decision "under an enactment" within the meaning of that expression in s.3(1) of the ADJR Act and is therefore not a decision to which the Act applies. I also agree with the conclusion of the learned primary judge that the decision is not reviewable under the ADJR Act because it was not of a substantive nature. In Bond Mason CJ said (at 337): "Another essential quality of a reviewable decision is that it be a substantive determination". The decision to vote did not, of itself, determine anything. It was in the nature of a step along the way to the resolution of the body of creditors who attended the meeting in person, by attorney or by proxy. Indeed, it is hard to see how a decision to reject a proposal to compromise existing rights could ever be a substantive determination: see Strictly Stainless Pty Ltd v. Deputy Commissioner of Taxation (unreported, 5 November 1993), in which Davies J rejected an argument that the Commissioner's refusal to agree to certain settlement proposals in respect of the applicant's tax liabilities was a decision to which the ADJR Act applied. I would dismiss the appeal with costs. I certify that this and the preceding 9 pages are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Black. Associate: Date:

IN THE FEDERAL COURT OF AUSTRALIA) ) VICTORIAN DISTRICT REGISTRY ) No. VG 247 of 1994 ) GENERAL DIVISION ) ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: PETER GRAEME HUTCHINS Appellant AND: KENNETH HOWARD COLLINS DEPUTY COMMISSIONER OF TAXATION Respondent

COURT: Black C.J., Lockhart and Spender JJ. DATE: 27 March 1996 REASONS FOR JUDGMENT LOCKHART J. This is an appeal from the judgment of a judge of the Court (Jenkinson J.) who upheld an objection by the respondent, the Deputy Commissioner of Taxation, to the competency of an application under the Administrative Decisions (Judicial Review) Act 1977 ('the ADJR Act'), and dismissed the proceeding with costs. The application sought review of the respondent's decision to vote against the appellant's proposed compromise at a meeting of creditors convened under Part X of the Bankruptcy Act 1966 ('the Bankruptcy Act'), and held on 16 August 1993 ('the respondent's decision'). The objection was that the respondent's decision was not 'a decision of an administrative character made under an enactment' as defined in s. 3(1) of the ADJR Act.

The appellant is indebted to the Commonwealth in the sum of $954,105.06, for income tax and other liabilities due under income tax legislation. The appellant authorized a registered trustee to call a meeting of his creditors under Part X of the Bankruptcy Act. The meeting of the appellant's creditors was called, and a special resolution was put to the vote, namely, that the creditors accept a composition of the appellant's debts. The respondent decided that the Commonwealth would vote against the motion, and the vote of the Commonwealth was cast accordingly. The motion was not carried by the majority required by s. 204(1)(c) of the Bankruptcy Act, namely, a (simple) majority in number and at least three-fourths in value of the creditors' present, personally, by attorney, or by proxy, at a meeting of creditors voting on the resolution (see the definition of 'special resolution' in s. 5 of the Bankruptcy Act). Nineteen creditors who attended the meeting with debts to a value of $4,944,704.36, voted in favour of the special resolution. Eleven creditors, with combined debts to a value of $1,797,091.91, voted against the resolution. Although there was a majority in number of creditors supporting the special resolution, three-fourths in value was not obtained. Thus the resolution was defeated. If the Commonwealth had voted in favour of the motion, or abstained from voting, the motion would have been passed as a special resolution. The appellant commenced this proceeding to challenge the respondent's decision to vote against the motion. The learned primary Judge held that the respondent's decision was not a decision of an 'administrative character made under an enactment' within the meaning of those words of the ADJR Act, and therefore was not a reviewable decision. To the contrary, counsel for the appellant submitted that the respondent's decision was made under ss. 8, 208 and 209 of the Income Tax Assessment Act 1936 ('the Assessment Act'). It was agreed between the parties, both before the primary Judge and on appeal, that the only sections of the Assessment Act which could constitute an 'enactment', for the purposes of this proceeding, were those three sections. Section 8 provides: 'The Commissioner shall have the general administration of this Act.'

His Honour held that s. 8 could not be understood to make provision for any of the many decisions made by the Commissioner when exercising the authority which the section conferred. Although the section contemplated the respondent making decisions, his Honour held that it did not make provision for any of them in the sense required by Mason C.J.'s statement in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 337: 'a reviewable "decision" is one for which provision is made by or under a statute.'

His Honour said that the function of s. 8 is merely to nominate the person by whom decisions of the general character described in the section are to be made. Section 208 and 209 provide as follows: '208(1) Income tax when it becomes due and payable shall be a debt due to the Commonwealth, and payable to the Commissioner in the manner and at the place prescribed. 208(2) In subsection (1), "income tax" includes interest under section 170AA or 207A and additional tax under section 207 or Part VII. ... 209(1) Any tax unpaid may be sued for and recovered in any Court of competent jurisdiction by the Commissioner or a Deputy Commissioner suing in his official name. 209(2) In subsection (1), "tax" includes interest under section 170AA or 207A and additional tax under section 207 or Part VII.'

Nor did his Honour find that s. 208 or s. 209 assisted the appellant. Section 208 makes income tax due to the Commonwealth payable to the Commissioner. And his Honour said that s. 209 simply entitled the Commissioner to sue for unpaid tax in a court of competent jurisdiction. His Honour found that the decision whether or not to exercise the right to vote at a creditors' meeting, and the further decision whether to vote for or against a particular motion, were not decisions 'under', that is 'in pursuance of' or 'under the authority of' s. 208 or s. 209. The primary Judge also held that the respondent's decision could not be seen to confer any benefit, or to impose any disadvantage, when it was made. The disadvantageous consequences of the decision arose only when the votes of all the creditors were cast at the meeting, and the disadvantage was caused by the cumulative effect of all the negative votes. It was not argued by the respondent before the primary Judge, or on appeal, that the respondent's decision amounted to exercise of the Executive power of the Commonwealth under s. 61 of the Constitution. The first question for determination is whether the respondent's decision was a decision of an administrative character made under an enactment for the purposes of the ADJR Act. I should say at this point that the inclusion of the words 'of an administrative character' in s. 3 of the ADJR Act is doubtless because Parliament sought to distinguish decisions of an administrative kind, which are reviewable under the ADJR Act, from decisions of a legislative or judicial character, which are not. In my opinion s. 8 of the Assessment Act was not, by itself, the source of the respondent's decision. Section 8 is a section of the most general kind, authorizing the Commissioner of Taxation's general administration of the Assessment Act. In the course of administering the Assessment Act, the Commissioner makes numerous decisions of many kinds. Now a decision is not made under an enactment, for the purposes of the ADJR Act, unless the relevant enactment makes provision for the making of the decision: as mentioned earlier, in Bond, Mason C.J. said at 337 that 'a reviewable "decision" is one for which provision is made by or under a statute'. No express provision is made by s. 8, s. 208, s. 209 or by any other section of the Assessment Act, for the Commissioner's decision to vote or not to vote at meetings of creditors, or for the nature of that decision. However, decisions may be expressly, or impliedly, required or authorized by an enactment: see Bond per Toohey and Gaudron JJ. at 377; Minister for Immigration and Ethnic Affairs v Mayer (1985) 157 CLR 290 at 302-3; and Chan Yee Kin v Minister for Immigration and Ethnic Affairs (1989) 169 CLR 379 at 404-6. A decision of the respondent in the course of his duties to cast a vote at a meeting of creditors in a particular way, does not in my view answer the description of a decision made under s. 8 of the Assessment Act. Alternatively, does a combination of ss. 8 and 208, and perhaps s. 209, allow the conclusion that the respondent's decision was made under an enactment? Income tax when it becomes due and payable is a debt due to the Commonwealth and payable to the Commissioner of Taxation (s. 208). The Assessment Act reposes in the Commissioner the task of suing for and recovering tax, in courts of competent jurisdiction (s. 209). Decisions of many kinds will be made by the Commissioner with respect to the recovery of tax. Among those decisions will be decisions to institute proceedings against taxpayers to recover tax. Recovery of tax is a key function of the Commissioner, and it is of great importance to the Commonwealth, since taxation is the source of most of the Commonwealth's revenue. The Commissioner's powers to recover tax in courts of competent jurisdiction necessarily extend to all matters incidental to suing for the tax, including decisions to institute proceedings, to compromise them, and to recover tax by extra-curial means such as proving in the estates of bankrupt taxpayers. Attendance and voting at meetings of creditors of bankrupts, or of persons whose affairs are being administered or proposed to be administered under the provisions of Part X of the Bankruptcy Act, are also within the Commissioner's powers. These capacities are derived from the Commissioner's power to administer the Assessment Act (s. 8), in combination with the fact that income tax, when due and payable, is a debt due to the Commonwealth and payable to the Commissioner (s. 208). Perhaps s. 209 may be added to ss. 8 and 208 as a source of this power; but I prefer to base my findings on the two lastmentioned sections alone. Section 208, when read in conjunction with s. 8, impliedly authorizes the Commissioner to do all things that are reasonably necessary to recover tax due to the Commonwealth and payable to the Commissioner. Among those things authorized are decisions of the kind with which this case is concerned. In my opinion, the respondent's decision answers the description of a decision of an administrative character made under an enactment. The Assessment Act thus provides for the making of the respondent's decision. It does not follow, however, that the respondent's decision is reviewable: see Bond especially per Mason C.J. at 337; Australian National University v Burns (1982) 64 FLR 166 at 178-179; General Newspapers Pty Limited v Telstra Corporation (1993) 45 FCR 164 at 169, 170, 172; and Right to Life Association (NSW) Inc v Secretary, Department of Human Services and Health (1995) 128 ALR 238. Critical to whether the respondent's decision is reviewable is the question on which the case turns, namely, whether the respondent's decision 'is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration': Bond per Mason C.J. at 337. In my opinion there was nothing final, or operative, or determinative, about the respondent's decision. Of itself, the decision neither conferred nor denied any benefit to the appellant, or to anybody else. It was simply a step taken by the respondent in the course of the execution of his duties to recover the tax owing by the appellant to the Commonwealth. Quite apart from this, the decision to accept or reject the composition, was a decision made by the creditors who attended the meeting of creditors, in person, by attorney, or by proxy. Only the creditors that actually attended and voted at the meeting (whether in person, or by attorney, or by proxy), are relevant. And one would not know in advance which creditors would or would not attend the meeting. Further, it was not until the motion was put to the vote that it was known which creditors supported and which creditors opposed the resolution, and so, whether the requisite majority in number or in value had been obtained for the passing of the special resolution. The result of the vote was uncertain until it was counted. Thus, I agree with the primary Judge that the decision to cast the respondent's vote against the resolution could not be seen to confer any benefit or impose any disadvantage when it was made, and that the 'disadvantageous consequences of the decision arose only when the votes of all the creditors were cast and the disadvantage was caused by the cumulative effect of all the negative votes'. I assume his Honour's reference to 'all the creditors' is to all the creditors attending and voting at the meeting. Finally, it should be noted that an officer of the Department of Taxation was appointed by the relevant Deputy Commissioner of Taxation to be the attorney of the Deputy Commissioner, and to do on behalf of the Deputy Commissioner 'at or in relation to or for the purposes of any creditors' meeting held pursuant to Part X of the Bankruptcy Act 1966, all things that [the Deputy Commissioner] may lawfully do as a Deputy Commissioner of Taxation acting on behalf of the Commonwealth of Australia' as creditor. The power of attorney referred to s. 200 of the Bankruptcy Act - a section which provides that '[a] creditor may vote either in person or by his attorney or by a proxy appointed in writing by the creditor or his attorney' at Part X meetings (s. 200(1)). Section 200(1) is not, of course, itself a source of the respondent's power to appoint an attorney. That must be found elsewhere. It is simply a provision that entitles creditors to vote by attorney, assuming one has been validly appointed.

It is true in this case that the decision of the respondent was critical at the meeting of creditors under Part X of the Bankruptcy Act; but its eventual importance is not relevant, as it would not have been known until the votes were cast and the resolution declared to be lost. The decision of the respondent was preliminary to the success or failure of the resolution, and accordingly its import was uncertain. There was no nexus in law between the respondent's decision and the practical outcome of the meeting of creditors. The decision was not final, or operative, or determinative. In sum, the question whether the decision here is reviewable or not cannot be answered by the actual result of the creditors' meeting at which it was acted upon. I would dismiss the appeal with costs.

I certify that this and the preceding ten (10) pages are a true copy of the reasons for judgment herein of the Honourable Justice Lockhart. Associate Dated: 27 March 1996

IN THE FEDERAL COURT OF AUSTRALIA) VICTORIA DISTRICT REGISTRY ) No. VG 247 of 1994 GENERAL DIVISION ) BETWEEN : PETER GRAEME HUTCHINS Appellant AND : KENNETH HOWARD COLLINS, DEPUTY COMMISSIONER OF TAXATION Respondent

CORAM: Black CJ, Lockhart and Spender JJ PLACE: Melbourne DATE: 27 March 1996

REASONS FOR JUDGMENT SPENDER J: The question on this appeal is whether a decision of the Deputy Commissioner of Taxation to vote against a proposal of the appellant to compound his debts, which proposal was the subject of a vote at a meeting of the appellant's creditors convened pursuant to Part X of the Bankruptcy Act 1966, is a "decision of an administrative character made under an enactment", so as to be amenable for review under the Administrative Decisions (Judicial Review) Act 1977 ('the ADJR Act'). In my opinion the decision of the Deputy Commissioner was not a decision "made under an enactment". I agree with the reasons of the Chief Justice on this aspect of the matter. The proposal was that the appellant pay $20,000 in full settlement of his debts, which exceeded $6m. The appellant owed the sum of $954,105.06 to the Commonwealth for income tax and other liabilities, pursuant to s208 of the Income Tax Assessment Act 1936. Section 208 provides: " (1) Income tax when it becomes due and payable shall be a debt due to the Commonwealth, and payable to the Commissioner in the manner and at the place prescribed. (2) In sub-section (1), 'income tax' includes interest under section 170AA or 207A and additional tax under section 207 or Part VII. "

The decision is a decision of an administrative character. The contention of the appellant both below and on the appeal was that the decision was one made under one or more of ss8,208 and 209 of the Income Tax Assessment Act. Mason CJ (with whom Brennan and Deane JJ agreed) in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 337 said that "...a reviewable 'decision' is one for which provision is made by or under a statute", which means, in my opinion, that the decision must be one the making of which the statute either expressly authorises or permits, or one which the statute requires to be made. Further, the majority judgment of Mason, Deane and Dawson JJ in Minister for Immigration and Ethnic Affairs v Mayer (1985) 157 CLR 290 demonstrates that a statutory function of making a particular determination can sometimes be implied from express statutory provisions. The fact that a decision is made within power, i.e. is not ultra vires a particular statute, does not in my opinion necessarily mean that the decision is a decision made under that enactment. There is no identity between decisions made within power and decisions made under an enactment. I agree with the conclusions of the Chief Justice and Lockhart J that s8 of the Income Tax Assessment Act standing on its own gives no force or effect to the decision to vote at the meeting of creditors and is too general in its terms for it to be concluded that it makes provision for that decision. Nor in my opinion do the provisions of ss208 or 209 assist the appellant. I accept that s8, in combination with s208, provides a basis for the Commissioner to do what is reasonably necessary to recover income tax, but it does not follow that anything which the Commissioner decides to do to that end is something for which provision is made by or under the statute. Section 209 in terms does not refer to any general process of "recovery" of income tax, but expresses the conferring of power of the Commissioner to sue for and recover "in a court', unpaid tax. In my respectful opinion, that section does not confer power on the Commissioner to vote at a Part X meeting, or to prove in a bankrupt's estate, or to consider a settlement proposal by a taxpayer. I do not wish to add anything further to the reasons of the Chief Justice for his conclusion on this aspect of the matter. However, if, contrary to that conclusion, the decision to vote against the proposed composition at the meeting of the appellant's creditors is a decision made under an enactment, as Lockhart J concludes, then in my opinion, the decision does not cease to be reviewable on the basis that it is not "final or operative or determinative, at least in a practical sense, of the issue of fact falling for consideration", adopting the words of Mason CJ in Bond at 337. If, pursuant to s209 of the Income Tax Assessment Act, the Commissioner made a decision to sue for unpaid tax in a court, that decision in my opinion is a decision of an administrative character made under an enactment and is reviewable under the ADJR Act. In a sense, that decision is not final or determinative because the final determination and any orders are for the court to make. The decision to sue does not of itself determine anything. In a sense, it is in the nature of a step along the way to an order by a court, which then permits of various methods of getting the money in. Yet in my view the decision to sue is a decision which is expressly authorised under the Act, and thus a decision made under an enactment, and is a decision amenable to review.

In the same way, if the decision to vote in a particular way at a Part X meeting is a decision made under an enactment, it is determinative of that matter under the enactment. The fact that the decision may not be crucial, depending as it does on the number and amounts of the debts owed to other creditors and the way those other creditors exercise their vote at a creditors' meeting, does not in my opinion mean that the decision would not be a substantive determination or lacking in the qualities which Mason CJ said were necessary for a decision to be reviewable. In Lamb v Moss (1983) 76 FLR 296, the decision of the Magistrate to commit was a decision for which specific provision was made by the Justices Act 1902 (NSW). Again, in a sense, the decision was a decision along the way in the criminal process, but Lamb v Moss was not overruled in Bond, nor was there any suggestion made that the fact that the decision was simply one in the course of the criminal process meant that it could not be reviewed under the ADJR Act. In Mayer, s6A of the Migration Act 1958 provided that an entry permit was not to be granted to a "non-citizen" after his entry into Australia unless stipulated conditions were fulfilled. One condition was that the "non-citizen" held a current temporary entry permit "and the Minister has determined by instrument in writing that he has the status of refugee" within the meaning of the 1951 Convention Relating to the Status of Refugees and the 1967 Protocol thereto. It was argued for the applicant seeking refugee status that s6A, in recognising the Minister's power of determination, granted that power by implication, it having no other identifiable source. The majority of the High Court (Mason, Deane & Dawson JJ) held that the Act impliedly conferred on the Minister the function of determining whether an applicant under that section had the "status of refugee" and the Minister's determination was therefore made "under an enactment", so as to make the decision one to which the ADJR Act applied. Yet the fact was that the Minister's determination that a person had refugee status was simply one of a number of stipulated conditions that were necessary before an entry permit could be granted. In Bond itself, the High Court concluded that the decision whether a licensee was any longer a fit and proper person was a decision for which the Act made provision and was amenable to review. The fact was, however, that the finding that a licensee was no longer a fit and proper person was preliminary to the ultimate decision under the Broadcasting Act 1942 to revoke, suspend or impose conditions on a licence. The High Court concluded that, although the finding that a licensee was no longer a fit and proper person was an intermediate determination, it was a decision on a matter of substance for which the statute provided and was therefore reviewable. I respectfully agree with the decisions in Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation, (Davies J, 5 November 1993, unreported), that neither the decision to commence proceedings in the Supreme Court seeking an order for the winding up of Strictly Stainless Pty Ltd nor the decision of the Deputy Commissioner of Taxation to reject an arrangement to settle proceedings in the Supreme Court and not consider any further proceedings, was a "decision" for the purposes of the ADJR Act. It was argued in that case on behalf of the applicant that the first alleged decision was said to be a decision under s209 of the Income Tax Assessment Act1936 and s462 of the Corporations Law. Davies said: " I take it that the second alleged decision is said also to have been made under those enactments. " His Honour referred to the observations of Sir Anthony Mason in Bond, to which previous reference has been made, and Davies J concluded: " In my view there is nothing in the nature of an ultimate or operative determination or of a substantive determination in the step of issuing a summons, which is the first procedural step in the course of proceedings in a court. And there is nothing ultimate or determinative or substantive in the carrying on of negotiations for settlement. " In the view I take of the matter, however, neither of the decisions that were the subject of consideration in Stainless Steel were decisions "made under an enactment". If a particular decision is a decision of an administrative character made under an enactment (and so conforms to the requirement of s3(1) of the ADJR Act), in my opinion the court is obliged to entertain the application. However, s16 of the ADJR Act confers a discretionary power to refuse relief. The Full Court of the Federal Court in Lamb v Moss, after referring at 326 to the discretion to refuse relief said: " The power to make an order of review under the Act in respect of committal proceedings should be exercised only in most exceptional cases, especially in respect of a decision in the course of proceedings. " The discretion in s16 of the ADJR Act to grant or refuse relief by way of judicial review was referred to by Mason CJ in Bond at 338. His Honour there further said: " ...I agree that only in most exceptional circumstances would it be appropriate to grant relief in respect of a decision given by a magistrate in committal proceedings (1983) 76 FLR at 326. The delays consequent upon fragmentation of the criminal process are so disadvantageous that they should be avoided unless the grant of relief by way of judicial review can clearly be seen to produce a discernible benefit: Yates v Wilson (1989) 168 CLR 338. " So, too, in the present instance, if the decision to cast a vote in a certain way was a decision made under an enactment (contrary to my view) it would be amenable to review. But, if having regard to the extent of the Commonwealth debt and the number and amount of the other debts, the decision by the Commissioner to cast a vote in a particular way would not have had any material effect on the outcome of the creditors' resolution concerning the proposed composition (which is not the factual circumstance in this case), then it might be a sound exercise of discretion under s16 to decline to review the decision, because to do so would lack utility. Because in my view the decision in the present case was not a decision made under an enactment, I agree with the orders proposed that the appeal be dismissed with costs. I certify that this and the preceding eight (8) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender. Associate Date: Counsel for the appellant: N.Magee QC J.Nolan Solicitors for the appellant: Jeffrey P Salinger & Associates

Counsel for the repondent: K.Bell Solicitors for the respondent: Australian Government Solicitor

Date of hearing: 4 October 1995 Date judgment delivered: 27 March 1996