Lucas v Commissioner of Taxation [2015] FCA 598 | Case summary

REASONS FOR JUDGMENT 1 The applicants, Mr and Mrs Lucas, seek judicial review of answers given by the Administrative Appeals Tribunal on 19 December 2014 to preliminary questions. The answers were given in a proceeding commenced in the Tribunal by Mr and Mrs Lucas under Part IVC ("the Part IVC proceeding") of the Taxation Administration Act 1953 (Cth) ("the Administration Act"). The application by Mr and Mrs Lucas to this Court for judicial review of the Tribunal's answers to the preliminary questions is not brought as an appeal under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") because the Part IVC proceedings are not yet concluded. The Tribunal's preliminary answers can be the subject of challenge under s 44 of the AAT Act once the Part IVC proceedings are concluded in the Tribunal, but Mr and Mrs Lucas have sought to challenge the Tribunal's preliminary answers in this Court by way of judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act") and, in the alternative, in the Court's original jurisdiction under s 39B of the Judiciary Act 1903 (Cth) rather than to wait until the conclusion of the Part IVC proceeding. Mr and Mrs Lucas contend that the Tribunal's preliminary answers were erroneous and seek declarations by way of judicial review which, in effect, would overturn the conclusions of the Tribunal. They also seek orders quashing or setting aside the preliminary answers and remitting the matter to the Tribunal for further consideration. The Commissioner opposes the orders sought by Mr and Mrs Lucas contending that the Tribunal's answers to the preliminary questions are correct and, in addition, that the judicial review proceeding in this Court should be stayed, or that relief should not be granted, pending the conclusion of the Part IVC proceeding which Mr and Mrs Lucas had elected to bring in the Tribunal. 2 The underlying issues in dispute in the Part IVC proceedings concern the taxable consequences arising from the sale in 2007 by Asten Pty Ltd ("Asten") of a hotel and restaurant business known as the Botanical Hotel ("the Botanical business"). Asten had purchased the Botanical business in its capacity as trustee of the Botanical Unit Trust. The units in the Botanical Unit Trust were all held by Kolley Pty Ltd ("Kolley") in its capacity as trustee of a discretionary trust called the Lucas Family Trust. Asten and Kolley were both incorporated in August 2002 and Mr Lucas is the sole director and shareholder of both. Mr and Mrs Lucas are beneficiaries of the discretionary trust. Asten, as trustee of the Botanical Unit Trust, entered into an agreement on 30 July 2002, which was completed on 30 September 2002, to purchase the Botanical business for $2,600,000. Kolley purchased the premises from which the Botanical business was conducted for $2 million. 3 Asten subsequently sold the Botanical business to Cornerstone Pty Ltd ("Cornerstone") for the sum of $16,485,000 which the Commissioner has assessed as a capital gain in the 2007 year of income. The main issue in dispute between the taxpayers and the Commissioner concerns the time at which Asten disposed of the Botanical business for the purposes of assessing any taxable capital gain arising from the sale. The taxpayers principally contend, in summary, that CGT event B1 occurred in the 2008 year of income by operation of s 104-15 of the Income Tax Assessment Act 1997 (Cth) ("the 1997 Act") on the terms upon which the Botanical business was sold and that CGT event B1 is the more specific provision to be applied in assessing the capital gain for the purposes of s 102-25, whilst the Commissioner contends that Asten's disposal of the Botanical business is to be assessed as CGT event A1 which occurred in the 2007 year of income by operation of s 104-10 of the 1997 Act upon the terms of the sale. Another of the issues in dispute between the parties is whether the conditions of subdivision 152A of the 1997 Act were met to qualify for the small business concession to reduce the taxable capital gain. 4 The taxpayers had lodged returns on the basis that any taxable capital gain from the sale of the Botanical business by Asten was made in the 2008 year of income, and that the circumstances satisfied the conditions to qualify for the small business concessions to reduce any tax payable on the gain. Asten's return for the 2007 year of income thus showed no capital gain from the sale of the Botanical business, but its return for the 2008 year of income included an amount as a capital gain in that year of income from the sale. Mr and Mrs Lucas each lodged tax returns for both the 2007 and 2008 years, but neither returned any income from trusts or any capital gain in the 2007 income year. Each returned losses from trusts together with a net capital gain in the 2008 income year. 5 The Commissioner subsequently conducted an audit covering the sale of the Botanical business and concluded that Asten had incorrectly applied the small business concessions to the capital gain and had done so in the incorrect year. The Commissioner concluded that the taxpayers were not eligible for the capital gains tax small business concessions because the maximum net asset value test had not been met, and that, in any event, the correct year of assessment for the capital gain was the 2007 income year and not the 2008 income year. The Commissioner therefore issued an amended assessment to Asten for the 2007 year which included a net amount of $5,924,646 as a capital gain from the sale of the Botanical business in Asten's assessable income pursuant to s 99A of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act"). The Commissioner also issued alternative amended assessments to Mr and Mrs Lucas which included half of the capital gain made upon the net amount from sale (namely $2,962,323) in each of their assessable incomes for the 2007 year. The net capital gains which Mr and Mrs Lucas had returned in the 2008 income year were reduced to zero and other adjustments were made to their incomes for that year. The Commissioner also imposed on Mr Lucas a shortfall penalty of $273,786.40 for the 2007 income year which, on 26 August 2011, was reduced to $70,583.60. The Commissioner did not impose a penalty on Mrs Lucas because he did not regard her as primarily responsible for the shortfall amount. 6 Asten, Mr Lucas and Mrs Lucas each objected to their respective amended assessments but the objections were disallowed by the Commissioner in July 2012. Each then elected to apply to the Tribunal for a review of the Commissioner's adverse decision on their respective objections. Each of them had the choice under s 14ZZ of the Administration Act to have their objection decision considered and determined either by the Tribunal or by this Court. Section 14ZZ(1) provides: (1) If the person is dissatisfied with the Commissioner's objection decision (including a decision under paragraph 14ZY(1A)(b) to make a different private ruling), the person may: (a) if the decision is a reviewable objection decision - either: (i) apply to the Tribunal for review of the decision; or (ii) appeal to the Federal Court against the decision; or (b) otherwise - appeal to the Federal Court against the decision. Asten, Mr Lucas and Mrs Lucas each chose to apply under s 14ZZ(1)(a)(i) (in Part IVC of the Administration Act) for review by the Tribunal of the Commissioner's objection decision against them rather than to appeal under s 14ZZ(1)(a)(ii) to this Court. 7 The Tribunal listed the three Part IVC proceedings on 27 May 2014 for hearing on 18 August 2014 on an estimate of 5 days. A total of 11 expert reports and three witness statements had been filed by the parties before 18 August 2014. On 8 August 2014 Mr Halperin, the solicitor for the taxpayers, sought an adjournment of the hearing which, at the time, was scheduled to start on 18 August. The basis for seeking an adjournment was explained by Mr Halperin in an affidavit in the proceedings in this Court for judicial review to be that he would not have had sufficient time before the start of the hearing from the time when he had been able to inspect valuation reports which had been produced to the Tribunal pursuant to a summons issued by the Tribunal on 15 July 2014 to Westpac Bank on the application of the Commissioner. The valuation reports in question had been prepared in August and October 2006 by, respectively, Charter Keck Cramer and TJ Board & Sons Pty Ltd in the context of an application by Asten for a commercial bill facility from Westpac in connection with the Botanical business. The application for an adjournment was declined in a telephone directions held on 14 August 2014 in which Mr Halperin participated for the taxpayers. The Tribunal decided, however, that the proceedings which had been scheduled for 18 August were to proceed by hearing submissions on two preliminary questions which Mr Halperin had successfully urged upon the Tribunal as a course that might save time and resources. 8 The valuation reports which had been produced by Westpac had been produced pursuant to a summons issued on the application of the Commissioner, but their existence had been revealed from correspondence disclosed to the Commissioner by Mr Halperin attached to a letter from Mr Halperin dated 28 February 2013 which referred to a commercial bill facility of $3,535,000 granted by Westpac to Asten in respect of the Botanical business. Valuation of the Botanical business was an important aspect of the dispute in the Part IVC proceedings and Mr Halperin had previously sent other valuations to the Commissioner under cover of a letter dated 30 November 2012 but the Westpac valuations had not been disclosed until inferred from the correspondence attached to Mr Halperin's letter to the Commissioner in February 2013. The Commissioner, on 25 June 2014, then sought from Mr Halperin a copy of any valuation which had been prepared for Westpac in connection with the commercial bill facility granted to Asten in connection with the Botanical business. The Commissioner later applied to the Tribunal for a summons (which was issued on 15 July 2014) to Westpac for the production of the valuation reports. Bairbre Molloy, an officer of the Commissioner, swore an affidavit in these proceedings for judicial review explaining that the application for the summons to Westpac for production of the valuations was made because Mr Halperin had not addressed the Commissioner's earlier request. Westpac thereafter produced the valuation reports in answer to the summons and Mr Halperin subsequently attended the Tribunal on 1 August 2014 to inspect the valuation reports which had been produced. Mr Halperin informed the Commissioner on 8 August 2014 that the valuation reports which had been produced by Westpac had been sent to the taxpayers' expert witnesses and that "supplementary expert opinions might be required to be prepared by them". That was expected to take some time and was the basis upon which Mr Halperin had sought an adjournment. 9 The Tribunal did not grant the adjournment but was persuaded by Mr Halperin to split the Part IVC proceeding by conducting the hearing on 18 August 2014 to determine separate questions arising in the proceeding and to defer the hearing of the balance of the proceedings. The reason for the Tribunal taking that course (which had been opposed by the Commissioner) was explained by Mr Halperin in his affidavit to be that the Tribunal member had been persuaded that the determination of those questions might avoid the bulk of a five day hearing and the need to consider any valuation evidence. The Tribunal's orders to give effect to that course, including the identification of the separate questions to be considered, were that: 1. The hearings of these three applications be conducted concurrently and evidence in each application will be given once only and stand as evidence in all applications unless the Tribunal makes any order to the contrary. 2. The hearing scheduled for this day shall proceed on the following questions: (a) whether any capital gain from the sale of the Botanical Hotel by Asten Pty Ltd (as trustee of the Botanical Unit Trust) ("Asten") was assessable in the year of income ended 30 June 2007, or in the year of income ended 30 June 2008? (b) in proceeding 2012/3562 (in which Asten is the applicant), whether the assessment issued to Asten was excessive and should be withdrawn because Asten was not assessable under s 99A(4) of the Income Tax Assessment Act 1936 ("the ITAA 1936")? (c) in proceeding 2012/3562 (in which Asten is the applicant, if Asten was assessable under s 99A(4) of the ITAA 1936 in the year of income ending 30 June 2007, what is the correct or preferable decision as to the amount to which it should have been assessed? (d) in proceedings 2012/3559 (in which Mr Christopher Lucas is the applicant) and 2012/3561 (in which Mrs Tracey Lucas is the applicant), whether the assessments issued to Mr and Mrs Lucas were excessive and should be withdrawn by reason of the fact that no part of the net income of the trust estate of the Botanical Unit Trust was included in the assessable income of a beneficiary of the trust estate in pursuance of s 97 of the ITAA 1936, in relation to the year of income ended 30 June 2007? 3. Any further hearing shall occur on a date to be fixed, if necessary. The correctness of the Tribunal's decision to split the hearing as it did is not in issue, and it may be assumed, as Mr Halperin deposed, that the Tribunal was persuaded in the circumstances confronting the Tribunal that it was desirable to adopt a course that might avoid a five day hearing and the need to consider any valuation evidence. 10 Of the four questions posed for separate consideration, the only questions that are relevant to this application for judicial review are those posed in the Tribunal's orders numbered 2(a) and (d) above. That is because on 2 October 2014 (after the hearing which had taken place on 18 August 2014) Asten withdrew its Part IVC proceeding in accordance with s 42(1A) of the AAT Act. The withdrawal of Asten's Part IVC proceeding gave rise to other questions that were dealt with by subsequent written submissions to the Tribunal. It is the Tribunal's answers to questions 2(a) and (d) which the applicants challenge in the judicial review application to this Court. 11 On 19 December 2014 the Tribunal published its decision, and its reasons, in relation to its answers to questions 2(a) and (d). The Tribunal's preliminary decision on those two questions was: Decision: The Tribunal finds: (1) that a CGT event A1 has happened in the 2007 income year; and (2) the applicants have not proved that the net income of the [Botanical] Unit Trust is not assessable income to which they have a present entitlement; and decides to adjourn further consideration. The Tribunal concluded, in other words, on the contested evidence and submissions before it, (a) that CGT event A1 had happened in the 2007 income year and (b) that Mr and Mrs Lucas had not discharged the burden on them to prove that they did not have a present entitlement to the income of the Botanical Unit Trust in the 2007 year of income. Its conclusions on those matters, however, did not dispose of the proceedings by Mr and Mrs Lucas under Part IVC. The Tribunal said at [22] in the context of the issues which had been identified for preliminary determination: Resolution of these issues will not necessarily lead to resolution of the two applications and other issues may arise for consideration at a later time. Depending on whether the sale of the [Botanical] business is regarded as a CGT event A1 or B1, an issue will remain as to whether the sale exceeded the maximum net asset value test under Subdivision 152A of ITAA97. In order to be eligible for small business concessions and, in particular, the 50% active asset reduction in the relevant financial year, the capital gain must meet the maximum net asset value test of $5 million in the 2007 income year or $6 million in the 2008 income year. In so far as [Mr Lucas] is concerned, issues relating to the imposition of shortfall penalties arise under ss 284-75 and 284-90 of Schedule 1 of the TAA as does their remission, in full or in part, under s 298-20. Finally, issues arise under s 280-160 in relation to the full or partial remission of any shortfall interest charge that may be imposed on either or both of them. The Part IVC proceedings by each of Mr and Mrs Lucas thus remain pending in the Tribunal and are listed for hearing in July on the balance of the matters needed to dispose of the matters within the jurisdiction of the Tribunal under Part IVC. 12 Mr and Mrs Lucas are not yet able to institute an appeal under s 44 of the AAT Act (see Director-General of Social Services v Chaney (1980) 31 ALR 571, 592-3) from the Tribunal's answers to the questions it posed for its preliminary determination but seek what is in effect an appeal from those answers in judicial review proceedings in this Court. The application for review to this Court under the ADJR Act depends in part upon whether the Tribunal's answers on 19 December 2014 are a decision of an administrative character made under an enactment within the meaning of s 3(1) of the ADJR Act. The applicants pleaded in their statement of claim that the Tribunal's answers to the preliminary questions were decisions within the meaning of that section and the Commissioner did not submit to the contrary although his defence did not admit the plea. The alternative basis for seeking judicial review, namely s 39B of the Judiciary Act, is not conditioned upon the Tribunal having made a decision of an administrative character under an enactment. In any event, no challenge was made to the application for judicial review on the basis that it could not be brought under one or other of those provisions. 13 The fundamental contentions which Mr and Mrs Lucas seek to maintain in the judicial review proceedings are that the Tribunal erred in the basis upon which it concluded that a capital gain arose in the 2007 year rather than in the 2008 year, and, therefore, that the Tribunal erred in concluding that any assessable income of the relevant trust or trusts was income to which Mr and Mrs Lucas were beneficially entitled in the 2007 year. Those contentions are, of course, contrary to those which the Commissioner had adopted following the audit and which had been advanced by the Commissioner at the Tribunal. They were amongst the issues which Mr and Mrs Lucas (and also Asten until it withdrew) had elected to have determined by the Tribunal rather than by the Court. The case advanced for Mr and Mrs Lucas at the Tribunal had been that the capital gain had been assessed in the wrong year but in the proceeding to this Court for judicial review they also seek to challenge the Tribunal's decision on an additional basis, namely, that they were not properly assessable upon the proper operation of the terms of the trusts if the Commissioner was correct to have concluded that the capital gain was assessable in the 2007 year. The Commissioner had made submissions to the Tribunal about the basis, on the evidence available, upon which Mr and Mrs Lucas were to be assessed in 2007 as beneficiaries through the Botanical Unit Trust and the Lucas Family Trust, and the Tribunal made findings based upon the Commissioner's submissions on the evidence before the Tribunal. The argument Mr and Mrs Lucas now wish to put against the Tribunal's conclusion that Mr and Mrs Lucas were presently entitled in the 2007 income year, however, had not been put on their behalf to the Tribunal. 14 The Tribunal identified the following issues as relevant to the preliminary questions which set for its consideration relating to the assessments issued to Mr and Mrs Lucas: (1) [I]n determining whether any capital gain arising from the sale of the [Botanical] business by [Asten] (as trustee of the [Botanical] Unit Trust) was assessable income in the 2007 income year or in the 2008 income year, was the sale: (a) a CGT event A1 in accordance with s 104-10 of the Income Tax Assessment Act 1997 (ITAA97) in the 2007 income year; or (b) a CGT event B1 in accordance with s 104-15 of ITAA97 in the 2008 income year; (2) [W]ere the assessments issued to each of [Mr Lucas] and [Mrs Lucas] excessive and so: (a) was that income assessable in the hands of [Asten], as trustee of the [Botanical] Unit Trust, under s 99A of the Income Tax Assessment Act 1936 (ITAA36); (i) If [Asten] were assessable, it would be on the basis that no part of the net income of the [Botanical] Unit Trust was included in the assessable income of a beneficiary under s 97 of the ITAA36; or (b) were [Mr Lucas] and [Mrs Lucas] each presently entitled to a share of the income of the [Botanical] Unit Trust under s 97 of ITAA36 so that it was assessable in their hands? (i) If [Mr Lucas] and [Mrs Lucas] were assessable, it would be on the basis that [Kolley], as trustee of the [Lucas] Family Trust, was presently entitled to all of the distributable income of the [Botanical] Unit Trust and [Mr Lucas] and [Mrs Lucas] were, in turn, entitled to the income of the [Lucas] Family Trust that was referable to capital. (ii) The Commissioner accepts that, if there was income of the [Lucas] Family Trust: • [Kolley] was presently entitled to it by virtue of the resolution dated 28 June 2007 distributing its net income; • [Kolley] itself would not be assessable in view of the resolution made on 28 June 2007 that the net income of the [Lucas] Family Trust referable to capital be distributed to [Mr Lucas] and [Mrs Lucas] in equal shares; and • [Kolley] would have made a capital gain under s 115-215(3)(b) equal to twice the amount of the capital gain made by the [Botanical] Unit Trust. The Tribunal concluded at [108] that CGT event A1 happened because Asten had disposed of the Botanical business. The Tribunal found at [134] that the timing of event A1 occurred in the 2007 income year upon Asten's entering a contract for the sale of the Botanical business on 3 May 2007. The Tribunal also considered (from [109]) whether it was also satisfied that CGT event B1 happened. It concluded on that question at [128] that CGT event B1 had not happened because the Tribunal found that there was not a single agreement entered into by Asten with Cornerstone. Section 104-15(1) provides that CGT event B1 happens if: …you enter into an agreement with another entity under which: (a) the right to the use and enjoyment of a *CGT asset you own passes to the other entity; and (b) title in the asset will or may pass to the other entity at or before the end of the agreement. The Tribunal's conclusion that CGT event B1 did not happen depended upon its construction of the provision as requiring that there be a single agreement under which the right to the use and enjoyment of a CGT asset passed, and upon the Tribunal's construction of the terms and effect of the agreements entered into between the parties. It was therefore not necessary for the Tribunal to consider whether CGT event A1 or CGT event B1 was the more specific for the purposes of s 102-25 but for completeness at [133] concluded that CGT event A1 was the most specific CGT event. 15 Mr and Mrs Lucas contended, and seek to maintain, that the Tribunal erred both in its construction of the provision and in its construction of the terms upon which the use and enjoyment of the Botanical business passed to Cornerstone. At [128] the Tribunal said: In view of my finding that there is no single agreement, I find that CGT event B1 has not happened. The right to the use and enjoyment of the [Botanical] business passed to [Cornerstone] under the Deed of Licence. The title in the [Botanical] business would or might pass (and in fact did pass) under the Contract. They were separate agreements meaning that the criteria in ss 104-15(1)(a) and (b) cannot be met. The conclusion that a CGT event occurred in the 2007 year of income meant that there was a taxable capital gain in the Botanical Unit Trust of which Kolley owned all units in its capacity as trustee of the Lucas Family Trust. It was therefore necessary for the Tribunal to consider who amongst the potential taxpayers was to be taxed upon the capital gain which the Tribunal had determined had occurred in the Botanical Unit Trust in the 2007 year upon the evidence as led. In that regard the Tribunal concluded that Mr and Mrs Lucas had not discharged their burden of proving that the assessments which the Commissioner had made were excessive. The formulation of the Tribunal's conclusion in such terms accords with the relevant statutory provision but is significant in this case because none of Asten, Mr Lucas or Mrs Lucas had sought to lead evidence to rebut the basis upon which the Commissioner had assessed Mr and Mrs Lucas as beneficiaries through the trusts in the 2007 year. It had, indeed, been the affirmative case for all three taxpayers in the hearing which took place on 18 August 2014 that Asten had not made a taxable capital gain in the 2007 year of income and, therefore, that there was no income in the Botanical Unit Trust in that year of income to assess to Asten or anyone else. 16 The Commissioner had assessed Mr and Mrs Lucas on the basis that, and had argued before the Tribunal that, the capital gain of the Botanical Unit Trust was part of the net income of the trust estate of Kolley to which Mr and Mrs Lucas were presently entitled. At [183] the Tribunal expressed its conclusions as follows: In the absence of a determination, cl 10.5 of the [Botanical Unit Trust] Deed comes into play to provide that the net income of the trust is determined in accordance with s 95 of ITAA36. That means that the capital gains from the sale of the [Botanical] business are part of that net income in the 2007 income year as I have found that CGT event A1 happened in that year. [Mr Lucas] and [Mrs Lucas] have not led any evidence to suggest that the manner of distribution assumed by the Commissioner is otherwise than to [Kolley] and then to them. Therefore, I am satisfied that [Mr Lucas] and [Mrs Lucas] have not satisfied their burden of proof to establish that the assessments issued to them are excessive. The Tribunal reached this conclusion after analysing the terms of the deeds of the two trusts, considering the status of unsigned resolutions, taking into account the testimony of those who gave evidence and considering the submissions which had been made. The Commissioner had submitted that Mr and Mrs Lucas were assessable as beneficiaries of the discretionary trust in the 2007 year of income on the gain made in the Botanical Unit Trust upon the evidence, the terms of the trusts, the absence of a determination by the relevant trustee and the existence and effect of an unsigned resolution. 17 Submissions had been made by Mr Halperin on the operation of the trusts in the 2007 year but the taxpayers' case was, and remains, primarily that the relevant CGT event gave rise to a gain in the 2008 year and not the 2007 year. They did not advance a case in the Tribunal that Mr and Mrs Lucas were otherwise not presently entitled in the 2007 year of income. The case for Mr and Mrs Lucas by way of judicial review is that the Tribunal erred in concluding that the gain was made in the 2007 year because they contend that the Tribunal had misconstrued the effect of the Heads of Agreement and the Deed of Licence on the original contract of sale, and that the Tribunal wrongly construed CGT event B1 as occurring only if there was a single agreement granting use and enjoyment under which title might pass. However, they now also seek to contend that they were not presently entitled to the income of the Botanical Unit Trust on or before 30 June 2007. Their case before the Tribunal had been that there was no income to which Asten, Mr Lucas or Mrs Lucas could have been assessed in the 2007 year because the relevant CGT event had occurred in the 2008 year. On that basis, if correct, there could have been no income of the trust estate for the purpose of s 97 of the 1936 Act in relation to the Botanical Unit Trust in the 2007 year and, therefore, none could have flowed through from Kolley to Mr and Mrs Lucas. 18 The Commissioner contends that the Tribunal was correct in its conclusions and that Mr and Mrs Lucas cannot in judicial review proceedings establish that the Tribunal made an error by relying upon a matter that had not been put to the Tribunal (see Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex Parte Applicants S134/2002 (2003) 211 CLR 441, 457; SZBZJ v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 771, [18]; Luu v Renevier (1989) 91 ALR 39, 46; Batchelor v Federal Commissioner of Taxation [2014] FCAFC 41, [8]). The Commissioner contends, however, that, in any event, the Tribunal should conclude its hearing of the Part IVC proceeding before any challenge to the Tribunal's preliminary decision. The Commissioner pleaded in paragraph [14] of the defence that the judicial review proceeding in this Court "should be stayed pending the further hearing and determination of the Applicants' proceedings in the Tribunal". An issue which thus arose was whether the Court should first consider whether the judicial review proceeding should be stayed or otherwise dismissed before consideration of the substantive issues raised for judicial review. The hearing of the application for judicial review, however, proceeded with the parties having made submissions on all issues, including whether it was appropriate to consider first whether to stay the proceeding or otherwise in the court's discretion refuse to grant the application without dealing with the substantive issues in the application for judicial review. 19 Much of the argument for Mr and Mrs Lucas about whether the Court should consider the substantive matters in their application for judicial review was directed to whether relief should be granted rather than to whether the application for judicial review should be stayed until the determination of the Part IVC proceeding by the Tribunal or should otherwise in the court's discretion not be granted by reason of the Part IVC proceedings. Whether, and if so what, relief should be granted as a matter of discretion after hearing an application for judicial review is a different question from whether the application should be stayed or should not be entertained or determined on discretionary grounds. The court's power to grant a stay of an application for judicial review is not limited to those circumstances in which relief might be refused in the exercise of the Court's discretion after consideration of an application. In Lamb v Moss (1983) 76 FLR 296 the Court observed at 319 that "the court will exercise control over the circumstances in which and the stage at which judicial review will be embarked upon" (emphasis added) in the exercise of the Court's discretion to grant or to refuse relief in a particular case. The discretion given to the Court by s 10(2)(b)(ii) to refuse to grant an application for the reason that adequate provision for review is made by laws other than the ADJR Act is not restricted to, nor conditioned by, the court having heard, considered or determined the merits of the application for judicial review. 20 The discretion in s 10(2) is expressed in wide terms and, as French J (as his Honour then was) said in Duncan v Fayle (2004) 138 FCR 510 at 519, the discretion "is not to be fettered by judge made rules". The exercise of the discretion which is conferred upon the court requires the "consideration of all relevant matters" (Duncan, 519; Cremona v Administrative Appeals Tribunal [2015] FCAFC 72, [47]) bearing upon the exercise of the discretion which, in this case, includes the fact and nature of the Part IVC proceedings that were instituted by Mr and Mrs Lucas and the relief available to them in those proceedings. The existence of the provisions in Part IVC of the Administration Act, and of those in the AAT Act, may not automatically preclude recourse to judicial review, nor may they create a presumption against recourse to judicial review to be rebutted only by the need to show "special circumstances" (see Cremona, [46]), but a relevant factor to consider in the exercise of the discretion, and the time at which it should be exercised, is the provisions otherwise available to an applicant to seek a review of a decision. In that context it is relevant to bear in mind the legislative policy of preserving the integrity of the other proceedings as is evident by the condition to the exercise of the discretion in the terms found in s 10(2)(b)(ii). It will be relevant to consider also in that context whether an application for judicial review may undermine the other process provided for by, for example, fragmenting an ongoing proceeding. 21 It was contended for Mr and Mrs Lucas that the only circumstances in which relief had not been granted by a court in the exercise of the discretion in s 10(2)(b) of the ADJR Act without fully considering the merits were cases "in response to a notice of motion by the Respondent seeking dismissal of the application". The place of a notice of motion seeking dismissal of an application in this proceeding is filled by the Commissioner's pleading in paragraph 14 of his Defence that the "proceeding should be stayed pending the further hearing and determination of the Applicants' proceedings in the Tribunal" and by the Commissioner's submissions relying upon the provision. There is, however, no such precondition to the exercise of the discretion conferred by s 10(2)(b) as was submitted for Mr and Mrs Lucas. The Court's discretion under s 10(2)(b) of the ADJR Act may in appropriate cases be exercised before considering the substantive or underlying merits of the application for judicial review: Lamb v Moss (1983) 76 FLR 296, 319. In Bragg v Secretary, Department of Employment, Education and Training (1995) 59 FCR 31 Davies J said at 34: It has been said in a number of reported cases that the burden lies upon a respondent to show that the Court should not exercise the jurisdiction conferred upon it: Kelly v Coates (1981) 35 ALR 93; Beck v Thornett; Mercantile Credits Ltd v Commissioner of Taxation (No 1) (1985) 8 FCR 510; Convery v Ziino (1985) 70 ALR 383; A E Bishop & Associates Pty Ltd v Trade Practices Commission [1989] ATPR 50-741; Inglis v Bateson. Nevertheless, the general practice of the Court is not to consider, in the first instance, a dispute for the resolution of which a satisfactory administrative remedy has been provided. This practice has been followed even with respect to appeals lying under s 76Z of the Public Service Act, the ambit of which, though not entirely unrestricted, is nevertheless wider insofar as the circumstances of the dispute are concerned than is the jurisdiction of this Court. This Court is too busy and its processes are too costly for it generally to be appropriate for an applicant to come to the Court when there is an informal and expeditious administrative tribunal established to resolve the dispute. In my opinion, this is a clear case where the administrative remedy should be availed of before the Court is asked to rule upon matters such as natural justice and relevant and irrelevant considerations. In Hagedorn v Department of Social Security (1996) 44 ALD 274 Mansfield J said at 281: Clearly the power of the court under s 10(2) is discretionary, and according to Neaves J there is an onus on those seeking to persuade the court that it should not exercise the jurisdiction conferred on it: Convery v Ziino (1985) 70 ALR 383 at 387. The discretion has been exercised from time to time: Brell v Willmot (1988) 17 ALD 462; AE Bishop & Associates Pty Ltd v Trade Practices Commission (1989) ATPR 50-741. As with any judicial discretion, it is neither possible to list all matters which will be relevant to its exercise for every case nor appropriate to attempt to do so. The category of material factors is never closed and will vary from case to case and the weight to be given to any one factor will depend upon the particular circumstances. It is relevant, generally speaking, to have regard to any unnecessary delay and any increased expense if the alternative suggested remedy is pursued: Mercantile Credits Ltd v FCT (1985) 8 FCR 510; 61 ALR 331. Indeed, any hardship involved in pursuing the alternative remedy will generally be relevant: Du Pont (Australia) Ltd v Comptroller-General of Customs (1993) 30 ALD 829. Consequently, there will be cases where there is clearly involved a matter of law, and where the court will determine to resolve that matter of law despite adequate alternative review procedures: Kelly v Coats (1981) 35 ALR 93; AB Scaniainventor v Commissioner of Patents (1981) 36 ALR 101; 54 FLR 367. It will generally also be relevant to have regard to the court's need to provide properly for speedy resolution of matters before it where no other avenue of recourse is available: Bragg v Secretary, Department of Employment, Education & Training (1995) 38 ALD 251. A construction of the discretion conferred by s 10(2)(b)(ii) which would confine its exercise in all cases only after embarking upon the hearing of the substantive merits of an application is inconsistent with the purpose of the provision which is to preserve the integrity of the process provided by other provisions in which relief could be sought. That is not to say that an applicant has an obligation to establish special circumstances but that the Court's power to exercise the discretion conferred by s 10(2)(b) is broad enough to be exercised where the Court considers that an applicant for judicial review should be required to seek the review provided for by other provisions rather than that provided for in the ADJR Act. 22 It was submitted for Mr and Mrs Lucas, however, that there was no provision made by any law, other than the ADJR Act, under which Mr and Mrs Lucas could seek review within the meaning of s 10(2)(b)(ii) and, therefore, that the condition necessary for the exercise of any discretion in s 10(2)(b)(ii) did not exist. The submission for Mr and Mrs Lucas in that connection was that the Tribunal's decision of 19 December 2014 could not be the subject of an appeal under s 44(1) of the AAT Act at the time of the application for judicial review. A similar issue was submitted to have been considered by the Full Court in Kamha v Australian Prudential Regulation Authority (2005) 147 FCR 516 where Mr Kamha had sought to challenge a decision of a delegate of the Australian Prudential Regulation Authority ("APRA") of it being satisfied that Mr Kamha was not a fit and proper person within the meaning of s 25A of the Insurance Act 1973 (Cth) and to disqualify him from holding certain positions. 23 The section in question in Kamha provided that APRA might disqualify a person if it were satisfied that a person was not a fit and proper person, but in that case Mr Kamha had not yet been disqualified. Thus the "separate juristic act" of disqualification to give effect to the decision to disqualify had not yet occurred at the time when Mr Kamha had sought judicial review under the ADJR Act. It was in those circumstances that the Full Court found that there was no provision, other than the ADJR Act, within the meaning of s 10(2)(b)(ii), at the time of commencement of the judicial review proceedings for Mr Kamha to review the decision which preceded the possible subsequent disqualification. A disqualification would have been reviewable under a provision for its review but the disqualification had not yet occurred. At [83] the Court said: Whatever the position may be, at the time of commencement of the proceeding, there was no provision made by any law, other than the ADJR Act, under which Mr Kamha could seek review, within the meaning of s 10(2)(b)(ii), of either the satisfaction decision or the discretionary decision. On the other hand, a right to seek such a review would have arisen the moment that Dr Roberts gave effect to his decision to disqualify, by manifesting disqualification in some fashion. The only reason why no disqualification was "made" is that Mr Kamha commenced this proceeding, having previously obtained the order from Madgwick J that APRA give two clear working days' notice of any intention to disqualify. It is in that context that one must examine the question of whether the primary judge had a discretion to decline relief and, if so, whether he exercised that discretion properly. It was said on behalf of Mr and Mrs Lucas in this case that there is similarly no provision made by any law other than the ADJR Act to enliven the discretion in s 10(2)(b)(ii) because, until the conclusion of the Part IVC proceedings, they could not seek a review by the Court of the Tribunal's decision made on 19 December 2014 under s 44(1) of the AAT Act. Kamha, however, does not provide the analogy which Mr and Mrs Lucas seek to draw. The jurisdiction to embark upon the review of the disqualification in Kamha required the "separate juristic act" of disqualification: see [82]. The decision which Mr and Mrs Lucas seek to challenge, unlike the decision in Kamha, namely, to take a step which had not yet been taken, is a decision taken in proceedings which are the subject of rights of appeal. The decision by the Tribunal in the course of the continuing conduct of Part IVC proceedings is amenable to review in accordance with the terms of the AAT Act. There was "no provision made by any law" (other than the ADJR Act) for Mr Kamha to seek to review the decision to disqualify him unless and until he was disqualified, but the Tribunal's preliminary decision made in the course of Part IVC proceedings in the case of Mr and Mrs Lucas are able to be reviewed pursuant to, and in accordance with, the provisions of the AAT Act. The entitlement of Mr and Mrs Lucas to seek review of the Tribunal's decision is not contingent upon an event which might not occur. The exercise of the right of review provided for by the AAT Act may need to await the conclusion of the Part IVC proceedings, but the entitlement to do so at that time has accrued. The relevant condition to the exercise of the discretion in s 10(2)(b) is: (ii) that adequate provision is made by any law other than this Act under which the applicant is entitled to seek a review by the court, by another court, or by another tribunal, authority or person, of that decision, conduct or failure. The applicants in this case, unlike Mr Kamha, are entitled to seek review of the Tribunal's decision in the provisions of the AAT Act. That right is to be exercised in accordance with the provisions of the AAT Act, including the ongoing processes of the Tribunal, but the entitlement to seek review in accordance with the provisions made in the AAT Act requires no other juristic act to occur. 24 It is therefore unnecessary to consider whether s 16 also gives the Court a discretion to dispose of an application without determining the substantive merits where there is an alternative remedy available (in contrast to refusing to grant relief after considering the merits of the application). Section 16 confers upon the Court broad powers in respect of application for judicial review in addition to those conferred by s 10(2)(b). In Kamha the court said at [87]: The grant of relief under the ADJR Act is discretionary. That is consistent with the principles concerning the grant of relief under the prerogative writs. There was a discretion for a court to refuse prerogative relief where an alternative remedy was available. That principle is also the origin of the express discretion conferred by s 10(2)(b). Nevertheless, that express discretion does not derogate from the general discretion arising under s 16. Section 16 undoubtedly reserves a discretion to the Court as to whether to grant relief in a particular case. While s 10(2)(b) is directed to the specific circumstance where adequate provision is made by another law for an applicant to seek review of a decision and giving rise to an express discretion to refuse relief, the absence of engagement of that provision does not preclude the exercise of the residual discretion conferred on the Court by s 16. In Commissioner of Taxation v Beddoe (1996) 68 FCR 446 Spender J expressed the view that the Court ought to decline to consider the grant of relief in the exercise of the discretion conferred by s 16 of the ADJR Act where to do so would fragment the process contemplated by the AAT Act. His Honour said at 453: If I be wrong in that conclusion, it seems to me that this is a case where in any event the Court ought to decline to consider the grant of relief pursuant to the ADJR Act, exercising the discretion which s 16 of that Act confers. It is in my opinion wholly undesirable that the process contemplated by the AAT Act should be fragmented by applications seeking to challenge intermediate directions or determinations made along the way to reaching an ultimate determination of the issue before the Tribunal, in the same way that this Court should be reluctant to fragment the criminal process by entertaining applications under the ADJR Act in relation to committal proceedings and, in particular, intermediate rulings or determinations made in the course of committal proceedings rather than the ultimate decision to commit. The Court also has a general discretion to grant a stay of its proceedings in the exercise of the Court's power to control its own proceedings: Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346; Sterling Pharmaceuticals Pty Ltd v Boots Co (Aust) Pty Ltd (1992) 34 FCR 287; Australian Competition and Consumer Commission v Original Mama's Pizza and Ribs Pty Ltd [2006] FCA 302; Plantagenet Wines Pty Ltd v Lion Nathan Wine Group Australia Ltd [2006] FCA 247; Suzlon Energy Ltd v Bangad (No 3) [2012] FCA 123. It was not submitted that the application could not be stayed or otherwise declined in the exercise of the Court's discretion to the extent that it was brought under s 39B of the Judiciary Act 1903 (Cth). In Federal Commissioner of Taxation v Futuris Corp Ltd (2008) 237 CLR 146 the majority of the High Court said in a joint judgment at 162 [48] that "the pendency of a proceeding by [the taxpayer] Pt IVC [of the Administration Act] should have led the Full Court to refuse declaratory relief". In Glennan v Commissioner of Taxation (2003) 198 ALR 250 the High Court observed at [17] that relief comparable to that sought under s 39B does not "lie as of right", and that one of the matters to take into account in the exercise of the jurisdiction is that Pt IVC of the Administration Act provides a jurisdiction, including rights of appeal through related legislation, in which the matters agitated by way of judicial review can be brought. 25 In deciding whether to exercise the discretion under s 10(2)(b)(ii) (or, if necessary, s 16) of the ADJR Act, and in deciding whether to stay the judicial review proceedings under s 39B, it is, of course, necessary to consider the adequacy of the alternative remedy available to Mr and Mrs Lucas. The alternative remedy in the instant case is that provided in s 44(1) of the AAT Act in the context of an ongoing Part IVC proceeding in the AAT. Section 44(1) entitles a party to appeal from any decision of the Tribunal on a question of law: A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding. The questions which Mr and Mrs Lucas seek to raise by way of judicial review are questions that come within that provision. The written submissions for Mr and Mrs Lucas specifically characterise the subject of the application for judicial review as legal errors said to "turn on two narrow points: the construction of s 104-15 [of the 1997 Act] and the construction of [clause] 10 of the trust deed of the [Botanical Unit Trust]". The Commissioner correctly concedes that issues of that kind are amenable to appeal under s 44(1) of the AAT Act. It is clear that the principal contentions which Mr and Mrs Lucas seek to raise against the Tribunal's decision are capable of formulation as questions of law: namely, a challenge to the Tribunal's construction of the statutory provision concerning CGT event B1 and a challenge to the legal effect of the contractual terms by which the Botanical business was sold. The contentions Mr and Mrs Lucas seek to raise in support of the Tribunal's conclusion that they were otherwise not presently entitled in the 2007 year for reasons which were not advanced before the Tribunal may be a different matter and will be considered below later, but it is clear that the principal contentions Mr and Mrs Lucas seek to rely upon are apt to come within the right of appeal conferred by s 44(1) and it has not been suggested otherwise. 26 What is said to impinge upon the adequacy of the alternative remedy available under s 44(1) of the AAT Act to Mr and Mrs Lucas, however, is the requirement to conclude the Part IVC proceedings in the Tribunal before the right of appeal is able to be exercised. It may be accepted that the time at which an alternative remedy can be pursued is a relevant circumstance to consider in determining whether it is adequate. In that context it is important to note that the standard to employ is one of "adequacy" of the other provisions and not some other standard such as that it better than, or more convenient than, or perhaps even as good as, that provided by the ADJR Act. Amongst the factors by which adequacy is to be evaluated will be the extent to which the other provisions are able to address what would otherwise be the reviewable errors in an application for judicial review and the extent of the relief available by the other provisions assuming that an applicant were otherwise successful. 27 In my view the provision available to Mr and Mrs Lucas for review under s 44(1) of the AAT Act is adequate for them to seek a review by the Court of the matters they seek to correct by application for judicial review. Mr and Mrs Lucas describe the matters they seek to have determined by judicial review as narrow and confined but, as previously mentioned, they are all capable of review and correction in a properly framed appeal under s 44(1) of the AAT Act. The fact that there may be a delay in their being able to exercise their right under s 44(1) does not mean that it is not an adequate provision. Furthermore, the benefits of a decision by way of judicial review on what are described as two narrow points may be more apparent than real. The probability of the judicial review proceedings resulting in an ultimate saving in costs and resources needs to take into account the likelihood of a determination at first instance in the judicial review proceedings finally disposing of the disputes between the parties. There was never any guarantee that splitting the hearing of the Part IVC proceeding as the Tribunal was persuaded to do would avoid the need for the Tribunal to hear the balance of the proceeding. A favourable outcome by the Tribunal for the taxpayers would only ever finally have disposed of the proceeding if the Commissioner abandoned any right of appeal, and an unfavourable outcome by the Tribunal for the taxpayers would only ever finally have disposed of the proceeding if the taxpayer agreed to abide by that decision on those issues. The parties did not confine their dispute to the preliminary questions the Tribunal answered and the Commissioner had opposed the course proposed by Mr Halperin on behalf of Mr and Mrs Lucas which was adopted by the Tribunal. In the event, Mr and Mrs Lucas did not succeed in persuading the Tribunal about the answers to the preliminary questions posed for separate determination and, it is probable that whichever party would be unsuccessful on the merits of the substantive application for judicial review would seek to appeal that decision to the Full Court and may thereafter apply for special leave to appeal to the High Court. There is nothing in the facts of this case, nor in the nature of the issues raised (even if they were confined to the issues of construction of the statute and the legal effect of the documents effecting the disposal) to make it likely that the judicial review proceedings would provide a quicker and less costly process than the resumption and conclusion of the Part IVC proceedings. The remedy available to Mr and Mrs Lucas under s 44 will, in contrast, if concluded, enable both they and the Commissioner to achieve more expeditiously the ultimate resolution of all of the issues in dispute between them. There is no suggestion that there is any issue on which Mr and Mrs Lucas seek relief by way of judicial review that cannot be the subject of an appeal under s 44 in accordance with the provisions of the AAT Act and the ongoing conduct of the Part IVC proceeding by the Tribunal. In contrast, there are substantial doubts about whether relief would be available to Mr and Mrs Lucas to the extent that they seek to rely upon an argument which was not put to the Tribunal concerning whether Mr and Mrs Lucas were presently entitled on the facts found as the case was conducted: Federal Commissioner of Taxation v Glennan (1999) 90 FCR 538, [82]; SZBZJ v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 771, [18]; Re Minister for Immigration & Multicultural & Indigenous Affair; Ex Parte Applicants S134/2002 (2003) 211 CLR 441, 457 [31]-[32]. There is also doubt about whether Mr and Mrs Lucas should be given leave to rely upon the additional matters upon which they seek to rely even assuming that it would be a sufficient basis to find reviewable error. It is true that the conclusion of the Part IVC proceedings in the Tribunal would appear to involve the hearing of additional evidence which is estimated to last between 3 and 5 days, but that additional time spent at this stage in the dispute between the parties will enable the whole of the dispute to be determined ultimately sooner with less cost and less delay. 28 It is also relevant to the exercise of the discretion, and to a consideration of the adequacy of the alternative provisions available to the applicants, that there may be prejudice to one or either of the parties in determining the application for judicial review before the conclusion of the Part IVC proceedings. In this case there is a risk of prejudice to the parties in the judicial review proceedings which can be avoided by the resumption and finalisation of the Part IVC proceedings. The risk of prejudice arises from the fact that Mr and Mrs Lucas seek to rely upon a matter which they had not relied upon before the Tribunal: to preclude them from doing so may occasion prejudice to them whilst to allow them to do so may occasion prejudice to the Commissioner. The point Mr and Mrs Lucas now seek to raise, as pleaded in paragraphs 12(e) to (h) in their further amended statement of claim, is expressed as follows: (e) Properly construed, cll 10.3 and 10.7 permitted, but did not require, the trustee to determine to distribute part or all of the net income of the trust fund; in default of a determination to distribute the net income of a financial year, such net income was to be retained by the trustee and no beneficiary would, for the purposes of Division 6 of the Part III of the ITAA 1936, be presently entitled to that net income. (f) Alternatively to (e), if cll 10.3 and 10.7 did require the trustee to determine to distribute the net income of the trust fund for each financial year properly construed, cll 10.3 and 10.7 did not require the trustee to make the determination to distribute the net income by midnight on 30 June. Rather, clause 10.3 allowed the trustee to determine the amount of the distributions of the net income within a reasonable time after 30 June, or alternatively, after the determination of the net income under clause 10.3. (g) On the facts found by the Tribunal, the trustee did not make any determination to distribute the net income of the trust fund by midnight on 30 June 2007, consequently, Asten Pty Ltd was the taxpayer assessable under s 99A(4) of the ITAA 1936 on the whole of the net income of the trust as defined in s 95 of the ITAA 1936. (h) Further to paragraphs (d), (e), (f) and (g) above, [the Tribunal] erred in law by failing to take a relevant consideration into account; namely, the evidence of Mr Christopher Lucas that Asten Pty Ltd did not make any decision before or on 30 June 2007 as to what the income of the trust would be or any decision relating to the net income of the trust fund. Whether to allow Mr and Mrs Lucas to rely upon these new grounds in judicial review proceedings raises a number of issues that is likely to complicate the ultimate resolution of the dispute unnecessarily. In the first place there is the conceptual difficulty about whether contentions not put to the Tribunal, upon evidence that had not been explored, can be a ground for error in judicial review proceedings: see Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex Parte S134/2002 (2003) 211 CLR 441, 457; SZBZJ v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 771, [18]; Luu v Renevier (1989) 91 ALR 39; Batchelor v Federal Commissioner of Taxation [2014] FCAFC 41, [8]. There is also the question of whether the Commissioner would be prejudiced if Mr and Mrs Lucas were allowed to rely upon contentions that were not explored in the Tribunal. Mr and Mrs Lucas do not wish to have their application for judicial review determined without being able to rely upon this additional argument. That may not be because the argument is necessarily essential to their success but, because, as they submit, "it is in the interests of justice for a court hearing an appeal to allow a party to raise a question of law for the first time upon facts either admitted or proved beyond controversy". Those interests are best served in the Part IVC proceedings. 29 Counsel for Mr and Mrs Lucas characterised the additional contentions they seek to raise as "a pure question of law" going to "a misapprehension that was shared by the parties before the Tribunal" and is said for them to depend only upon the construction of the relevant clauses of the Botanical Unit Trust. The Commissioner, however, contends that to allow Mr and Mrs Lucas to rely upon the additional argument would cause prejudice because the Commissioner would effectively be denied the opportunity to cross-examine Mr Lucas about the circumstances in which an unsigned distribution resolution dated 28 June 2007 was prepared. 30 The basis upon which Mr and Mrs Lucas were assessed by the Commissioner, and accepted by the Tribunal in its answer to the second of the two relevant questions, was that they were presently entitled to the net income of the trust estate flowing to them from the Botanical Unit Trust and the Lucas Family Trust. The terms of the trust deeds is relevant to that, as is the effect under those deeds of any determination or resolution which the trustee may have made. In that context whether the trustee made any determination before 30 June 2007 and the effect, if any, of an unsigned resolution dated 28 June 2007 are significant. The evidence before the Tribunal was that Mr Lucas (as the relevant natural person acting for the trustee of the Botanical Unit Trust) had not made a determination regarding the net income of the Unit Trust on or before 30 June 2007. At [180] the Tribunal said: That brings me to [Mr Lucas's] evidence. He states that he did not make a decision regarding the net income of the [Botanical] Unit Trust on or before 30 June 2007. He recalled making neither a decision that it would be a specific amount nor a decision that it would be nil. After having his attention drawn to the unsigned determination purporting to distribute the net income of the [Botanical] Unit Trust according to the Unit Holdings, the following exchange occurred between Mr Halperin and [Mr Lucas]: "Can you tell us whether you - perhaps this prompts your memory - can you tell us whether you made any decision before or on 30 June 2007 as to what the income of the trust would be? --- No. You're saying you didn't make a decision or you don't recall making a decision? --- I didn't make a decision. Do you recall making a decision in terms of what the minute says? --- No, I don't recall. Do you recall making a decision before or on 30 June 2007 whether the net income would be a specific amount? --- No. Do your recall making any decision relating to the net income of the trust before 30 June 2007? --- No. Do you recall making a decision on or before 30 June 2007 that the trust's income would be nil? --- No." Counsel for the Commissioner submitted in the judicial review proceedings in this Court that he had no need to cross-examine Mr Lucas about this evidence because the taxpayers' case at the Tribunal had not been that a determination about the net income of the Trust was a prerequisite to a conclusion about present entitlement. Indeed Mr Halperin's submission about the relevant operation of the Trust is recorded at [137] as that the "[Botanical] Unit Trust's net income is determined by reference to cl 10.5" of the Unit Trust Deed (and not clauses 10.3 and 10.7 which are now sought to be relied upon). In any event it is reasonable to assume that counsel for the Commissioner might have sought to explore the evidence about whether a determination had been made before 30 June if the contentions now sought to be made had been in issue at the Tribunal. The circumstances surrounding the fact that there had been an unsigned distribution resolution dated 28 June 2007 were not explained and there was no evidence about the processes that were followed in making distribution minutes or the process that was followed in preparing books of account in considering the financial position of the Trust. It was submitted for the Commissioner, therefore, that Mr Lucas would have been cross-examined about those circumstances and that the Commissioner may have called for production of the original signed version of the distribution minute as well as the unsigned copy that the accountant for Mr and Mrs Lucas had provided had it been suggested before the Tribunal that Asten had not made any determination to distribute the net income of the trust estate by 30 June 2007. It may be that Mr and Mrs Lucas have a contention which they now seek to raise which, from their point of view, can be characterised as a simple question of construction on the facts found, but the facts were found upon a basis of the issues in dispute at the Tribunal which is different from that which they now seek to maintain, and the Commissioner would be prejudiced if Mr and Mrs Lucas were able to rely upon uncontested facts found on a case which had proceeded on a different basis to that subsequently sought to be argued. 31 The desirability of resolving the question about whether Mr and Mrs Lucas should be permitted to rely upon the additional argument is a telling indicator in favour of exercising the discretion against considering the substantive merits application for judicial review in light of the Part IVC proceedings not having concluded. An application for judicial review does not sit comfortably with a need to rely upon an argument which played no part in what is said to be the Tribunal's error. Whether or not Mr and Mrs Lucas should be permitted to rely upon the additional argument is something which ought to be resolved in the first instance by a consideration by the Tribunal of whether the Tribunal is able to re-open any part of its preliminary decision and whether it is still able to determine the issue now sought to be raised by Mr and Mrs Lucas that they had not relied upon before. It is not desirable to express a concluded view about whether the Tribunal is able to re-open any part of the hearing covered by its answers to the preliminary questions to avoid any doubt about whether a conclusion on that issue may limit the ability of the parties to have that issue resolved in the Part IVC proceeding: see O'Toole v Charles David Pty Ltd (1990) 171 CLR 232, 259-260. The parties appeared to accept the fact that the Tribunal may still have had power to re-open those matters but the issue was not fully argued and is, in any event, best dealt with in the context of the Part IVC proceedings where all of the issues may be raised and fully determined. 32 A consideration of the adequacy of the alternative provisions available to Mr and Mrs Lucas does not exhaust the matters relevant to the exercise of the Court's discretion about whether to embark upon a hearing of the application. In considering the exercise of the discretion it is relevant to take into account the legislative policy that disputes about tax assessments and objection decisions be conducted under the regime provided through Part IVC of the Administration Act and s 44 of the AAT Act: Federal Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146; Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168. The regime established under those provisions is comprehensive and specific. It deals with such matters as the burden of proof and restricts appeals to questions of law: see TNT Skypack International (Aust) Pty Ltd v Federal Commissioner of Taxation (1988) 82 ALR 175, 178; Osland v Secretary to the Department of Justice (2010) 241 CLR 320, 333. The Tribunal has broad powers to manage the cases within its jurisdiction. Its decision in this case to proceed in two stages and to begin first by the determination of preliminary questions was how the Tribunal was persuaded to manage the Part IVC proceeding which Mr and Mrs Lucas had elected to have determined (together with Asten) by the Tribunal rather than by the Court. The application which had been made by Mr and Mrs Lucas, and accepted by the Tribunal, was for the Tribunal's determination of preliminary questions before it would then go on to consider the remaining issues in the Part IVC proceeding. A consideration of the substantive merits of the application for judicial review in this case would both fragment the Part IVC proceeding and interfere with the Tribunal's management of a proceeding within its jurisdiction. The Tribunal may have been persuaded to the course adopted for the reasons given by Mr Halperin, but what he had not sought on behalf of Mr and Mrs Lucas, and what the Tribunal could not have granted had he sought it, was to convert the Part IVC proceedings in the Tribunal into an alternative process for appeal to this Court. Other courses might also have been available such as that in s 45 of the AAT Act to refer certain questions of law to this Court but, rather, what the Tribunal decided, in accepting Mr Halperin's application, was to manage the proceeding to make use of the time available in the context of an application for an adjournment. 33 The exercise of the Court's discretion about whether to entertain an application for judicial review may in some cases turn upon some consideration of the substantive merits of the application. I am not persuaded, however, that it will always be necessary or appropriate to do so or that it should be done in this case. In this case I have had the benefit of the Tribunal's reasons and the detailed submissions from both parties in favour and against the Tribunal's answers to the preliminary questions. In this case I consider it to be undesirable to express a view about the substantive legal arguments which in due course may need to be determined by the Court on an appeal from the Tribunal's final decision. Such observations would be obiter and "may create an unnecessary impediment to the administration" of revenue law (St George Bank Ltd v Commissioner of Taxation [2008] FCA 453, [99]; see also Kheirs Financial Services Pty Ltd v Aussie Home Loans Pty Ltd [2010] VSCA 355, [103]). It may be sufficient for present purposes to note only that there are defensible propositions capable of being put for either party. 34 Accordingly, the orders sought for Mr and Mrs Lucas will not be granted. The parties will be directed to provide draft orders to dispose of the proceeding and, if necessary, to have the proceeding listed for further submissions upon the form of orders to give effect to these reasons and any order as to costs. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone.

Lucas v Commissioner of Taxation

At a glance

Court

Decision date

Before

Source

Judgment (7 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (29)

Cited By (1)