Interhealth Energies Pty Ltd as Trustee of the Interhealth Superannuation Fund v Commissioner of Taxation

Federal Court of Australia (Full Court)|2012-12-17|Before: Katzmann JJ

The appeal is dismissed.
The appellant pay the costs of the respondents, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 187 of 2012

BETWEEN: INTERHEALTH ENERGIES PTY LTD ACN 003 104 505 AS TRUSTEE OF THE INTERHEALTH SUPERANNUATION FUND

JUDGES: GREENWOOD, MCKERRACHER AND KATZMANN JJ DATE: 17 DECEMBER 2012 PLACE: BRISBANE

INTRODUCTION 1 The appellant (Interhealth) appeals from a judgment of this Court in which the primary judge declared that Interhealth had breached an enforceable undertaking given to the first respondent (the Commissioner). His Honour ordered Interhealth to make payments to Mr Patrick Shaun Wilson who intervened in the proceeding. Mr Wilson is now bankrupt. The second respondents are trustees of the bankrupt estate. 2 As noted by the primary judge in the first of his substantive decisions, Commissioner of Taxation v Interhealth Energies Pty Ltd as Trustee of the Interhealth Superannuation Fund [2012] FCA 120 (Interhealth No 1), Interhealth is the Trustee of a fund created under a superannuation trust deed settled on 23 June 1993. That trust was comprehensively varied by a further deed on 25 November 1994. The variation brought the trust into line with the requirements of the Superannuation Industry (Supervision) Act 1993 (Cth) (the SIS Act). The trust, known as the Interhealth Superannuation Fund (the ISF), is essentially a superannuation trust. 3 There were two controllers and two members of the ISF, namely, Ms Joanna Hambrook and Mr Wilson. As a result of what the primary judge described as being a "palpable, mutual and enduring" antipathy between Ms Hambrook and Mr Wilson, following a relationship break down, there was not only personal animosity but also commercial altercation of considerable magnitude. Mr Wilson ostensibly ceased to be a director of Interhealth on 7 October 2004. Thereafter it was controlled by Ms Hambrook. 4 His Honour found (at [6]) of his reasons) that there had been a comprehensive failure by Ms Hambrook to understand and therefore ensure that Interhealth discharged its duties as the trustee of a self-managed superannuation fund (SMSF) both under the general law and under the SIS Act. 5 The proceeding was initiated by the Commissioner as a regulator under the SIS Act. The primary judge concluded (at [6]) that the Commissioner had acted in good faith, carrying out his duties as regulator under that Act. He rejected alternative submissions advanced by Interhealth as to the nature of the Commissioner's actions. In the way that the appeal was conducted, it is unnecessary to traverse in detail the breaches of the undertaking as found. The challenge before the primary judge was to the effect that the Commissioner as regulator had not adopted an even-handed approach to his administration of the SIS Act. By instituting a proceeding contending breaches, it was argued that the Commissioner had favoured Mr Wilson over Ms Hambrook. That contention was comprehensively rejected by the primary judge who concluded that the treatment by Ms Hambrook of Mr Wilson fell short of several duties which she held. In reaching those conclusions, his Honour was satisfied that Interhealth had breached one or more of the requirements of the undertaking which had been given to the Commissioner as "Regulator". 6 The main contention on the appeal, raised for the first time, is that as a matter of proper statutory construction and application of the "agreed facts", the Commissioner was not at material times the statutory regulator and had no power to commence the proceeding below. It follows, according to Interhealth, that the Commissioner was not entitled to the relief given or any other form of relief. 7 In Commissioner of Taxation v Interhealth Energies Pty Ltd as Trustee of the Interhealth Superannuation Fund (No 2) [2012] FCA 516 (Interhealth No 2) the primary judge made various ancillary orders concerning the appointment of a receiver to facilitate the making of payments to Mr Wilson. These followed the making of declaratory orders in Interhealth No 1 as to the breaches committed. In Interhealth No 2, his Honour also granted a stay of the operation of the appointment of the receiver until determination of this appeal. 8 As the appeal is to be dismissed for the reasons which follow, the stay granted in order 9 of the primary judge's orders in Interhealth No 2 will lapse without further order.

AN OVERVIEW OF THE ISSUES 9 There are no challenges to the factual findings of the primary judge other than in an indirect sense by challenging for the first time that the Commissioner, to whom the breached undertakings were given, was the regulator duly appointed under statute. 10 The legislation is set out in greater detail below under the heading "Statutory Framework" but for present purposes it is helpful to know that s 262A of the SIS Act permits a regulator to accept a written undertaking given by a person in connection with a matter in relation to which that regulator has a function or power under the SIS Act. At all times in the conduct of the proceeding below, it was accepted that the Commissioner was the regulator for the purpose of the application of the SIS Act to SMSFs. Section 17A of the SIS Act defines what constitutes a SMSF. Such a fund is required to have fewer than five members. Where its trustee is a body corporate, as in the case of Interhealth, each director of the body corporate trustee must also be a member of the fund. 11 When Ms Hambrook and Mr Wilson fell out personally and commercially, Ms Hambrook continued as a director of Interhealth. The parties proceeded below on the basis that Mr Wilson ceased to be a director of that company on 7 October 2004. Although that was an assumed fact, the Commissioner points out that the cessation of directorship was something which was not tested at trial as there was no challenge to the position of the Commissioner as regulator. The Commissioner submits that there might well have been exploration by the Commissioner as to the status of Mr Wilson had the new argument now advanced on appeal been ventilated below. 12 There is a significant tax consequence of compliance with the provisions of the SIS Act so as to be a compliant superannuation fund. A complying SMSF has the benefit of concessional rates of taxation. A non-compliant SMSF is taxed at the top marginal rate now by virtue of Div 285 of the Income Tax Assessment Act 1997 (Cth) and for the income years prior to the 2007-2008 year, Pt IX of the Income Tax Assessment Act 1936 (Cth). All those matters were common ground before the primary judge and are reflected in his Honour's reasons.

GROUNDS OF APPEAL 13 In essence, there are only two matters argued on the appeal. The first is whether there should be leave to raise this new ground for the first time on appeal and the second is the substantive merit of the new ground. 14 Notwithstanding this, and for completeness, the grounds of appeal are set out in full below although they all address, in substance, the regulator argument: 1. The primary judge erred in finding that the effect of Patrick Shaun Wilson (Mr Wilson) ceasing to be a director of the Appellant was that the Interhealth Superannuation Fund (ISF) ceased to comply with a regulatory provision of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act), and that, in turn, meant that the ISF could only meet the "compliance test" in section 42A of the SIS Act so as to constitute a complying superannuation fund if the First Respondent, as "Regulator", having regard to the matters specified in section 42A(5)(b) of the SIS Act "thinks that a notice should nonetheless be given stating that the entity is a complying superannuation fund in relation to the year of income concerned" (Reasons at [3]). 2. The primary judge erred in finding that, as a consequence of Mr Wilson ceasing to be a director of the Appellant, the First Respondent continued to be the "Regulator" of the ISF after the expiry of 6 months from the date on which Mr Wilson ceased to be a director of the Appellant (Reasons at [3]). 3. The primary judge erred in finding that the undertaking given to the First Respondent by the Appellant as trustee of the ISF on 28 February 2008 (Purported Undertaking) was an undertaking to which the provisions of section 262A of the SIS Act applied (Reasons at [2]). 4. The primary judge should have held: a. On the facts as found at paragraph [3] of his Honour's reasons for judgment, that the ISF ceased to be a self managed superannuation fund (SMSF) (as defined by section 17A of the SIS Act) by 8 April 2005, being the date which is no less than 6 months after the time Mr Wilson ceased to be a Director of the Appellant; b. By virtue of the definition of "Regulator" in section 10 of the SIS Act, and the assignment of the administration of Part 25 of that Act by section 6 in the case of a fund which is not a SMSF - that as of 8 April 2005 and onward, the "Regulator", in terms of section 262A of the SIS Act, in respect of the ISF, was the Australian Prudential Regulation Authority (APRA) and not the First Respondent; c. that the First Respondent had no authority to accept the Purported Undertaking as an enforceable undertaking under section 262A of the SIS Act; d. that the Purported Undertaking was not given in connection with a matter in relation to which the First Respondent then had any function or power under the SIS Act, in terms of section 262A of the SIS Act; e. that the First Respondent had no power, and no standing, to seek any order of the Court under section 262A(3) of the SIS Act; and f. that the First Respondent has no jurisdiction to issue a notice of non-compliance to the ISF under section 40 of the SIS Act and that section 42A of the SIS Act did not apply to the ISF on or after 8 April 2005.

STATUTORY FRAMEWORK 15 Certain key provisions fall for consideration in the arguments raised on the appeal. They are summarised as follows. Section 10(1) of the SIS Act defines "Regulator" to mean, unless contrary intention appears within the Act: … (a) APRA if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by APRA; and (b) ASIC if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by ASIC; and (c) the Commissioner of Taxation if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by the Commissioner of Taxation; and … (emphasis added) 16 Section 17A of the SIS Act defines a SMSF that has more than one member. It provides that a SMSF must (a) have fewer than five members; (b) if the trustees of the fund are individuals, each individual trustee of the fund is a member of the fund; (c) if the trustee of the fund is a body corporate, each director of the body corporate is a member of the fund; and (d) each member of the fund is a trustee of the fund or if the trustee of the fund is a body corporate, each member of the fund is a director of the company. 17 Subsection 17A(4) of the SIS Act sets out circumstances in which an entity that does not satisfy basic conditions remains a SMSF. Subsection 17A(4)(b) relevantly provides that if subs (5) applies, the superannuation funds does not cease to be a SMSF until six months after it would cease to be a SMSF. 18 Section 42A of the SIS Act sets out the requirements for a compliant superannuation fund that has been a SMSF at any time during the year: Entity that was a self managed superannuation fund throughout a year of income (1) An entity that was a self managed superannuation fund at all times during a year of income is a complying superannuation fund in relation to that year of income for the purposes of this Division if: (a) either: (i) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence; or (ii) the entity was a resident regulated superannuation fund at all times during the year of income when the entity was in existence other than a time, before it became a resident regulated superannuation fund, when the entity was a resident approved deposit fund; and (b) the entity passes the test in subsection (5) in relation to the year of income. … Circumstances in which entity passes the test in this subsection (5) An entity passes the test in this subsection in relation to a year of income or part of a year of income if: (a) no trustee of the entity contravened any of the regulatory provisions in relation to the entity during the year of income or the part of the year of income; or (b) if a trustee of the entity contravened one or more of the regulatory provisions in relation to the entity during the year of income or the part of the year of income, the Regulator, after considering: (i) the taxation consequences that would arise if the entity were to be treated as a non-complying superannuation fund for the purposes of the Income Tax Assessment Act 1997 in relation to the year of income concerned; and (ii) the seriousness of the contravention or contraventions; and (iii) all other relevant circumstances; thinks that a notice should nevertheless be given stating that the entity is a complying superannuation fund in relation to the year of income concerned. Determining whether contravention (6) In determining for the purposes of this section whether any of the regulatory provisions were contravened in respect of the entity in respect of the pre-lodgment period or the rectification period, the regulatory provisions are taken to have applied in relation to the entity in respect of that period as if the entity were a resident regulated superannuation fund during that period. … 19 Finally, s 262A provides for the acceptance and enforcement of undertakings as follows: … (1) The Regulator may accept a written undertaking given by a person in connection with a matter in relation to which the Regulator has a function or power under this Act, the regulations or the prudential standards. (2) The person may withdraw or vary the undertaking at any time, but only with the Regulator's consent. (3) If the Regulator considers that the person who gave the undertaking has breached any of its terms, the Regulator may apply to the Court for an order under subsection (4). (4) If the Court is satisfied that the person has breached a term of the undertaking, the Court may make all or any of the following orders: (a) an order directing the person to comply with that term of the undertaking; (b) an order directing the person to pay to the Commonwealth an amount up to the amount of any financial benefit that the person has obtained directly or indirectly and that is reasonably attributable to the breach; (c) any order that the Court considers appropriate directing the person to compensate any other person who has suffered loss or damage as a result of the breach; (d) any other order that the Court considers appropriate. 20 It is the specific role of s 17A and the passage of six months after the agreed cessation date of Mr Wilson's directorship that gives rise to Interhealth's contention that ISF ceased to be a SMSF six months after the directorship cessation date. As a result, Interhealth argues that the Commissioner ceased to be the relevant regulator of it. 21 The operation of these provisions has been explained by both the Commissioner and Interhealth broadly in the following manner. Under the SIS Act the responsibility for the general administration of the SIS Act is divided between four regulators. These are the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA), the Commissioner or, in some cases, the Chief Executive of Medicare. The definition of regulator is provided in s 10 of the SIS Act extracted above. Generally speaking the administration of the bulk of the Act is vested by s 6 of the Act in APRA. Notwithstanding s 6, various aspects of the administration are, as the Commissioner says, "carved out" and vested in other regulators. 22 The Commissioner notes that the expression "self managed superannuation fund" is expressly widened for the purposes of this section from the meaning of that expression elsewhere in the SIS Act. 23 By s 10, the expression "Regulator" is defined and means, amongst other things, the Commissioner if the provision in which it occurs is, or is being applied for the purposes of, a provision that is administered by the Commissioner. 24 Section 10(4) extends the meaning of SMSF for the purposes of, amongst other provisions, s 6. It provides that a superannuation fund is to be treated as a SMSF for the purposes of ss 6, 42 and 42A if: (a) it has ceased being a self managed superannuation fund for the purposes of the rest of this Act; and (b) the trustee of the fund is not an RSE licensee. 25 There was no suggestion on the evidence that Interhealth was a RSE licensee. A RSE licensee is an entity which holds a licence issued under s 29D of the SIS Act. A RSE licensee is a constitutional corporation, body corporate or group of individual trustees that holds a RSE licence granted under s 29D. A RSE licensee, in substance, is a professional superannuation trustee who falls under the regulation and control of APRA. (APRA issues licences and deals with the regulation involving the investigation into the fitness and propriety of entities who apply for such licences. There are requirements of minimum net tangible assets and other prerequisites.)

The Amending Act 26 The extended definition of SMSF in s 10(4) was enacted as part of Sch 5 of the Tax Laws Amendment (Simplified Superannuation) Act 2007 (Cth) (Amendment Act) and commenced on 15 March 2007. Item 36 of Sch 5 to the Amendment Act is also relevant, providing that amendments made by Sch 5 apply to the 2007-2008 income year and later years. 27 Schedule 5 of the Amendment Act and, indeed, the whole Amendment Act made amendments to a wide range of legislation, mostly concerning the effect of taxation on superannuation. 28 The Commissioner says that from a reading of the Amendment Act as a whole, the SIS Act (and Sch 5 in the Amendment Act) was to be applied to the 2007-2008 income year and the following years from 1 July 2007. The Commissioner in this regard also draws upon the Explanatory Memorandum which was directed to a suite of taxation amendments. In the Second Reading Speech of the Treasurer on 7 December 2006, the Amendment Act was described as part of the reforms to the taxation of superannuation in Australia.

Compliance and notices 29 Section 42 and s 42A of the SIS Act are directed to notices in relation to the status of complying funds. The express object of Pt 5 is to provide a system of notices about a fund's status in relation to a year of income. These notices are to be used for the purpose of determining the status of a fund for taxation purposes. In this regard a regulator may give to the trustee of a fund a notice about whether or not the fund is a complying fund pursuant to s 40 of the SIS Act. The notice given to the superannuation fund for the relevant year of income has consequences for the taxation treatment of the fund as discussed above. The Commissioner submits that the extended definition of "self managed superannuation fund" in s 10(4) applies to these sections as well. 30 Section 42 specifies the circumstances in which a superannuation fund will be a "complying fund" in respect of a year of income. The definitions exclude those funds which were SMSFs at any time in the relevant income year. Section 42A is directed to complying SMSFs. It imposes requirements which have to be met for the SMSF to be a "complying" fund. Subsection 42A(5) imposes terms that must be satisfied for a SMSF to be a "complying fund". A trustee may pass the test in subs (5) even where the regulatory requirements are not satisfied if the regulator, after consideration of the nature and extent of the non-compliance, and all other relevant circumstances, forms a view that a notice should issue stating that the entity is a complying fund. 31 Part 24B of the SIS Act contains provisions relating to the administration by APRA and the Commissioner of superannuation funds which have fewer than five members. The regulators have powers to monitor such funds by requiring the trustees provide information to them. 32 Pursuant to s 262A, the regulator may accept a written undertaking from a person in relation to the regulation of the fund and enforce that undertaking. That enforcement aspect was the subject of the decision under appeal.

ISSUE 1 - SHOULD INTERHEALTH BE PERMITTED TO ARGUE THE "REGULATOR ISSUE" FOR THE FIRST TIME? 33 Interhealth argues that the primary judge must necessarily have found the following three matters: The Commissioner continued to be the regulator of the ISF after the fund ceased to comply with s 17A of the SIS Act on the expiry of six months from the date on which Mr Wilson ceased to be a director of Interhealth (7 October 2004); and that the undertaking provided to the Commissioner by Interhealth as trustee of the ISF on 28 February 2008 was an undertaking to which s 262A of the SIS Act applied; and the Commissioner was entitled to have regard to the matters in s 42A(5)(b) of the SIS Act when determining if the ISF could meet the "compliance test" in s 42A of the SIS Act to constitute a compliant superannuation fund. 34 Interhealth contends that by reason of s 17A(4) of the SIS Act, as in force at the time, the ISF on 8 April 2005 ceased to be a SMSF as defined in s 17A(1). This was the date not less than six months after the time Mr Wilson ceased to be a director of Interhealth, as no approved trustee or RSE licensee was appointed to the ISF during that period of time. Therefore Interhealth argues that as ISF ceased to satisfy the definition of SMSF in s 17A, the Commissioner was no longer the regulator of the ISF. It follows that the Commissioner did not have authority to administer certain provisions of the SIS Act, including s 262A in relation to superannuation funds that were not SMSFs as defined in s 17A of the SIS Act. 35 It follows, Interhealth maintains, that the regulator of the fund changed from the Commissioner to APRA on 8 April 2005 on which date the ISF ceased to be a SMSF. 36 In written submissions in chief, Interhealth did not address the question considered at length by the Commissioner namely, whether such a new argument could be advanced for the first time only in the course of the appeal. The Commissioner opposed the new ground being raised. 37 The Commissioner referred to the evidence and finding of the primary judge of a "prolonged internecine disputation" between Ms Hambrook and Mr Wilson. Mr Wilson commenced proceedings in this Court in August 2007 (QUD 271 of 2007). In those proceedings, he sought from Interhealth the payment of his superannuation entitlements (reasons at [29]). In that proceeding the Commissioner was joined as a party on the basis that he was the regulator under the SIS Act. There was no opposition raised to his joinder. Mr Wilson and Ms Hambrook and the companies which she controlled entered into a deed of settlement in relation to that action, which included an obligation for Interhealth to pay to Mr Wilson his superannuation entitlements (reasons at [30]). The deed of settlement also required that Interhealth enter the enforceable undertaking (EU) with the Commissioner (reasons at [31]). That EU was prepared and entered into on 28 February 2008. 38 The Commissioner points to the fact, and it is not disputed, that it was Interhealth, through its solicitors, which actually proposed the EU to the Commissioner and expressly contended that it was said to be given pursuant to s 262A of the SIS Act. That is also reflected in the terms of the EU. 39 No question was advanced for Interhealth before or during the trial that the ISF was not a SMSF as defined in the SIS Act and therefore not subject to the control of the Commissioner when it entered into the EU. The Commissioner also proceeded on the basis that he was the regulator. The Commissioner firmly submits that he was the regulator at all times, and consistent with that, at no time has the Commissioner elected to issue a notice treating the ISF as a non-complying fund thereby denying it preferential taxation status. 40 Interhealth, however, argues that the issue raised on appeal is narrow. It argues that no factual inquiry would have been necessary below to alter the basis upon which the appeal is now advanced by fresh counsel. It should be clarified that senior counsel who argued the appeal before the Full Court appeared at a very late stage in the first instance proceeding.

Consideration of the fresh ground issue 41 The Interhealth submission concerning the facts and evidence is of doubtful merit. As the Commissioner contends, it was always accepted by the parties that the Commissioner was the relevant regulator under the SIS Act. For that reason no evidence was called, nor was it necessary to decide the exact status of the ISF as at 30 June 2007. The parties formulated the issues on a certain basis and proceeded to the determination of those issues on that basis. As such there was no need to determine if and when the ISF ceased to satisfy all of requirements of s 17A(1). 42 If that question arose then it was relevant to inquire as to whether or not Mr Wilson remained a director of Interhealth as at 1 July 2007, despite the parties having proceeded on the assumption that he ceased to be so. As the Commissioner hypothesises, had the matter been investigated, it may have been that the purported earlier removal by Ms Hambrook of Mr Wilson as a director was ineffective at law. This issue is unnecessary to explore but it is to be noted that the primary judge concluded that a number of Ms Hambrook's actions were non-compliant with her duties under statute and general law. Further, a subsequent agreement between Ms Hambrook and Mr Wilson that he be reinstated as a director of Interhealth may well have been fulfilled even if the re-appointment was not registered with ASIC. The Commissioner argues it may well have been until all times up until November 2010, when the deed of settlement was executed, that Mr Wilson remained a director. 43 It is difficult, if not impossible, to know what the forensic exploration of these issues might have revealed at the hearing below. It is not correct to describe his Honour's recording of an agreed issue as to the cessation of the directorship as a "finding" by his Honour which would inevitably have been reached, had the issue been investigated. In accordance with the orders of the Court, the parties exchanged lists of issues prior to the trial. There was no suggestion in the list of issues advanced by Interhealth that the Commissioner was not the appropriate regulator under the SIS Act. Similarly, the Interhealth submissions, both before and after the hearing, sought to assert that the EU had been complied with. Again, the suggestion that the Commissioner was not the correct regulator was not raised in these submissions. 44 In Metwally v University of Wollongong (1985) 60 ALR 68 (Metwally) the High Court (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ) held (at 71): It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case has been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during a hearing when he had an opportunity to do so. 45 These principles have been applied on many occasions: see, for example, Water Board v Moustakas (1988) 180 CLR 491 per Mason CJ, Wilson, Brennan and Dawson JJ; Association of Quality Child Care Centres of New South Wales v Manefield [2012] NSWCA 123; and also recently by the Court of Appeal in Western Australia in Rizhao Steel Holding Group Co Ltd v Koolan Iron Ore Pty Ltd (2012) 287 ALR 315 where Martin CJ said (after noting the observations in Coulton v Holcombe (1986) 162 CLR 1 and Metwally, referred to Liftronic Pty Ltd v Unver (2001) 179 ALR 321 (at 331), per Gummow and Callinan JJ) (citations omitted): [52] It is significant to note that the High Court has twice described the circumstances in which a party will be allowed to raise a new point on appeal as "very exceptional". Such a course will only be permitted if two requirements are met. First, the interests of justice must require determination of the new point. Second, there must be no prejudice to the party against whom the new point is taken. [53] There are a number of cases which establish that these exceptional circumstances will not exist where the point, if taken below, might have resulted in additional or different evidence being led ... However, this does not mean that the mere fact that the new point does not involve any factual issue will result in the conclusion that it should be allowed to be raised for the first time on appeal. To the contrary, the requirements that the determination of the point must be required by the interests of justice, and that there be no prejudice to the party against whom the point is raised, must both be satisfied, even if the point would not, if taken below, have necessitated more or different evidence ... 46 This is not a case such as Hussain v Minister for Foreign Affairs (2008) 169 FCR 241 where their Honours (Weinberg, Bennett and Edmonds JJ) (at 256) approved an observation by Lindgren and Bennett JJ in Repatriation Commission v Warren (2008)167 FCR 511 (at [78]) that the Court will "more readily permit a matter to be raised for the first time on appeal from the Tribunal" where: (a) the matter is a pure question of law, such as a question as to the validity of a regulation: see Kuswardana 54 FLR at 343; 35 ALR at 195; Tefonu 44 FCR at 367; or a question as to whether the tribunal had applied the correct standard of proof on the true construction and application of legislation: Ferriday v Repatriation Commission (1996) 69 FCR 521 at 527-528 per Lee J; (b) the matter goes to a misapprehension that was shared by the parties before the tribunal and therefore by the tribunal itself: see Perpetual Trustee Company (Canberra) Ltd v Commissioner for Revenue (ACT) (1994) 50 FCR 405 at 418-419 per Wilcox J; such as a shared misapprehension as to the applicable law: cf Thomas v Repatriation Commission (1994) 50 FCR 112 at 120 per Beazley J; or (c) the matter goes to a condition precedent to the availability of a power, the exercise of which will have a serious impact on the individual: see Kuswardana 54 FLR 334; 35 ALR 186. 47 The very determination of whether the Commissioner was the regulator depended upon whether, in the circumstances of the quite unsatisfactory conduct of the affairs of Interhealth by Ms Hambrook, the cessation of Mr Wilson's directorship which she brought about was effective at law. If Interhealth had advanced the argument that the Commissioner was not the relevant regulator at an appropriate time, rather than long after the commencement of the disputation in which the Commissioner was involved, it is reasonable to infer that the Commissioner may have taken steps to explore this issue and to satisfy himself in relation to it to the best of his ability. Whether Mr Wilson had ceased or, indeed, been reinstated as a director are facts which the Commissioner has been deprived of the opportunity to explore by reason of the agreed issues. 48 To permit Interhealth to argue this issue now would be prejudicial not only to the Commissioner but also to the second respondents who are the trustees of the now bankrupt estate of Mr Wilson. Orders for payment were made in favour of Mr Wilson as the first intervener. The fact that he is now a bankrupt means that his estate would be deprived of the benefit of entitlement to such payments if the arguments which Interhealth seeks to advance were correct. Again, this would occur without either Mr Wilson or the respondent trustees having the opportunity to explore the issues which Interhealth now seeks to advance. The trustees have not taken an active role in the appeal proceedings, even though costs are sought against them if the appeal succeeds. That order in itself was ambitious given that the trustees were non-participants in the primary proceedings. 49 In the full range of pre-trial activities the parties proceeded upon the presumption that the Commissioner was the regulator. Given that Interhealth itself advanced the suggestion that the EU be given to the Commissioner as regulator and that the EU acknowledged the Commissioner was the relevant regulator, it is far too late to turn back the clock. 50 For the foregoing reasons Interhealth is not be granted leave to advance this ground of appeal, which was not raised before the primary judge. As it is the sole argument on appeal, the appeal is dismissed.

ISSUE 2 - IS THE COMMISSIONER THE CORRECT REGULATOR? 51 Notwithstanding that the appeal is dismissed by virtue of the disposition of the first issue, the Commissioner argues in the alternative that at all times he was the correct regulator. The trustees have taken no position on this topic. 52 The argument for Interhealth is that the Amending Act, which received Royal Assent on 15 March 2007 and which introduced substantial reforms to the superannuation system, applied only from 1 July 2007. Interhealth points to the fact that item 36 of Sch 5 of the Amendment Act expressly provides to the amendments to s 10 of the SIS Act apply to the 2007-2008 year and later years. Therefore, Interhealth argues that on a plain reading of items 10 and 36 of Sch 5, s 10(4) only applies to those superannuation funds that ceased being a SMSF during the 2007-2008 or later years. For the section to apply, the fund must have already been a SMSF at the commencement of the 2007-2008 year. There would be no application to a fund that had ceased to be a SMSF. It is only in those circumstances that the Commissioner will be able to "continue" to be a regulator under s 10(4) if the SMSF had already ceased being a SMSF. As will be seen, this argument depends on the meaning of "continue". It follows that as ISF ceased being a SMSF on 8 April 2005, before the 2007-2008 year, s 10(4) cannot apply to ISF. 53 Were the position otherwise, Interhealth argues, the Amending Act would have retrospective effect in which case such effect must be expressed in clear terms: R v Kidman (1915) 20 CLR 425. 54 The question, however, is whether there would be any relevant retrospectivity effected.

Consideration 55 Even if it is assumed that ISF did not comply with the definition in s 17A on 15 March or 30 June 2007, the effect of s 10(4) of the SIS Act was that ISF was to be "treated as" a SMSF for the purposes of the designating the general administration of the SIS Act in s 6. Section 10(4) of the SIS Act applies from the start of the 2007-2008 year. The effect of the amendment was that if a superannuation fund had the characteristics identified in s 10(4), then, for the purpose of s 6 and the distribution of the general administration of the SIS Act, it was to be "treated" as a SMSF. If a superannuation fund had ceased to be a SMSF for the purposes of the rest of the SIS Act and a trustee holding a RSE licence had not been appointed as trustee, then for the 2007-2008 income year and later years, the fund was to be "treated" as being a SMSF for the purposes of, amongst other things, s 6. The Commissioner therefore had general administration to the extent to which the provisions related to that particular fund. The ISF met the characteristics identified in s 10(4) and was therefore the Commissioner was the relevant regulator. 56 The scope of s 10(4) is not limited in its application to superannuation funds which ceased to be SMSFs for the purposes of s 17A after 1 July 2007. The purpose of the subsection is to make the Commissioner the regulator of a fund which ceased to be a SMSF and which did not have a trustee holding a RSE licence. That change was to apply from the start of the 2007-2008 year. Had the position been as asserted by Interhealth (that s 10(4) was only intended to apply to superannuation funds which first met the criteria of s 10(4) after the section took effect) it would have been easy for the legislature to have so stipulated. It did not do so. Interhealth's construction requires a gloss to be imposed on the clear words appearing in the subsection. 57 Interhealth's argument is reinforced, it says, by the Explanatory Memorandum where it is explained that the amendment would allow the Commissioner to "continue" to be the regulator of a former SMSF if a RSE licensee was not appointed as trustee of the fund. This is not so. First, it is unnecessary to resort to the Explanatory Memorandum. Second, Interhealth's argument depends on the meaning of the word "continue". Interhealth argues that "continue" in the Macquarie Dictionary Online (Macmillan Publishers Australia, 2012) means without any cessation, whereas one of the primary dictionary definitions given for the word "continue" is, in effect, to "resume" or "to go on after suspension or interruption": There is no reason to assume that the author of the Explanatory Memorandum used the word in the former sense rather than in all its relevant senses. 58 As to the argument against retrospectivity, there is no material retrospectivity in operation of the legislation. Section 10(4) commenced on 15 March 2007 and was effectively operative from 1 July 2007 as indicated above. The only consequence of its introduction was to include within the general administration by the Commissioner certain superannuation funds which, until then, had not been subject to regulation by the Commissioner. The provisions only apply to the facts as they existed at the latest from 1 July 2007. 59 There is no relevant impact upon existing rights or liabilities. The section merely made provision for the regulation of those matters for the future. In those circumstances, there is not a retrospective operation - see the discussion in Statutory Interpretation Australia by Pearce DC and Geddes RS (7th ed, LexisNexis, 2011) (at [10.3] and [10.4]) where the learned authors say: [10.3] All legislation impinges on existing rights and obligations. Conduct that could formerly be engaged in will have to be modified to fit in with the new law. (This statement was approved by the High Court: Chang v Laidley Shire Council (2007) 234 CLR 1 at 33; 237 ALR 482 at 507.) It cannot therefore be said that in this sense legislation is retrospective because this is true of all legislation. Legislation only operates retrospectively if it provides that rights and obligations are changed with effect prior to the commencement of the legislation. The statement of the law advanced by Dixon J in Maxwell v Murphy (see [10.1]) in referring to 'rights or liabilities which the law had defined by reference to the past events' confirms this view. … [10.4] Future operation based on past events … The Victorian Full Supreme Court put the matter succinctly in Robertson v City of Nunawading [1973] VR 819 at 824: '[The] principle is not concerned with the case where the enactment under consideration merely takes account of antecedent facts and circumstances as a basis for what it prescribes for the future, and it does no more than that'. 60 There would also be administrative inconvenience if the interpretation for which Interhealth contends were correct. Although this is a lesser consideration than construing the words in context on their face, there is force in the Commissioner's argument that the logical consequence of the interpretation contended for by Interhealth is that there would be an apportionment of regulatory control of superannuation funds that had previously qualified as SMSFs but subsequently ceased to be SMSFs. This apportionment would be between APRA on the one hand and the Commissioner on the other. Interhealth argues that the SIS Act operates such that a superannuation fund that ceased to comply with the requirements to be a SMSF on 29 June 2007 would fall under the regulatory control of APRA, even though up until that time it had been under the regulatory control of the Commissioner. A superannuation fund that ceased to comply with the requirements to be a SMSF on 2 July 2007 would still remain under the control of the Commissioner. It seems improbable that the Parliament would have intended that there be two regulators regulating the same type of superannuation fund with the only point of distinction being the date on which the fund ceased to comply with statutory requirements. Neither the language of the Act nor the Explanatory Memorandum invite such a conclusion. 61 Interhealth contends that the logical extension of the Commissioner's stance is that s 10(4) applies to every single superannuation fund that was a SMSF at some time in its existence, whether before or after the 2007-2008 year. If that were accurate, it says, there would have been a handover of all APRA regulated funds to the Commissioner at the start of that year, if such funds had at any time been a SMSF and did not have a RSE licensee. That in turn would have the effect of automatically subjecting those APRA regulated funds to a different compliance test in s 42A(5) applicable to SMSFs rather than to s 42(1A). But this argument, once again, rests on the narrow meaning of "continue" in para 6.71 of the Explanatory Memorandum and adds a gloss to the plain words of the statute.

CONCLUSION 62 It is unnecessary to resolve the second question by virtue of our refusal to permit the fresh ground to be raised. Nevertheless, Interhealth's contention that the Commissioner was not the appropriate regulator at the date in question cannot be accepted. 63 The appeal must be dismissed. Interhealth is to pay the costs of the Commissioner and the Trustees, to be taxed if not agreed. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Greenwood, McKerracher and Katzmann.

Tax Laws Amendment (Simplified Superannuation) Act 2007(Cth)

Superannuation Industry (Supervision) Act 1993(Cth)ss 6, 10, 17A, 40, 42, 42A, 262A

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