McDermott Industries (Aust) Pty Ltd v Commissioner of Taxation

REASONS FOR JUDGMENT LEE J: 1 On 8 March 1999 the respondent ("the Commissioner") issued amended assessments of the amount of income tax payable by the applicant ("the taxpayer") in respect of the years of income ending 31 March 1994, 31 March 1995 and 31 March 1997. The taxpayer duly lodged a single notice of objection with the Commissioner in respect of the three amended assessments. In due course the Commissioner informed the taxpayer, by a single notice, that the taxpayer's objections to the amended assessments had been disallowed. 2 Common questions of law and fact were considered in the process of assessment of the taxpayer's liability to pay income tax in the relevant years of income and in determining the decisions made on the objections to the amended assessments. No doubt it was for that reason that the taxpayer lodged a "rolled-up" objection to the three amended assessments and that the Commissioner responded with a single notice of disallowance in respect of the objections. 3 Perhaps it was not surprising that, pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth) ("the TAA"), the taxpayer lodged a single application in this Court as the "appeal" against the "appealable objection decision" of the Commissioner, namely, the decision to disallow the objections. Although the proceeding in this Court is described in the TAA as an "appeal", it is an application in the original jurisdiction of the Court and appellate jurisdiction is not exercised. The "appeal" may be described as a statutory right of action pursuant to which the legal rights of the applicant are determined. 4 The Commissioner contends that the "appeal" is incompetent insofar as it concerns "objection decisions" relating to more than one year of income. It was submitted that as a matter of construction the TAA requires a separate "appeal" to be instituted in respect of each "objection decision". The Commissioner's submission was treated as a motion on which the parties were asked to present argument by written submissions. These reasons have been prepared after consideration of those submissions. 5 The first point to note is that s 14ZZ of the TAA does not purport to instruct the Court on the manner in which "appeal" proceedings are to be commenced or conducted in the Court. It follows, as may be expected in respect of the exercise of judicial power vested in the Court pursuant to the Constitution, that the procedure for commencing and carrying on an "appeal" is governed by the Federal Court Rules ("the Rules") and by orders made by the Court from time to time. 6 In common with the long-standing practice of like superior courts, the Rules, in O 29 r 5, provide for the Court to order that separate proceedings, even if involving different applicants, be consolidated as a single proceeding where a common question of law or fact is raised in those proceedings. Such a rule recognises a public interest in the elimination of the unnecessary multiplicity of legal proceedings. It may be noted that in O 6 r 1 the Rules also provide that an applicant may claim relief in respect of more than one cause of action in the one proceeding. 7 It follows that unless the TAA, in clear terms, provides otherwise, a proceeding in the original jurisdiction of this Court, albeit described by the TAA as an "appeal", may be commenced by an applicant in respect of several "objection decisions" of the Commissioner where common questions of law or fact are involved in those decisions. That is to say, if, implicitly, the TAA acknowledges that several "appeal" proceedings may be consolidated as a single "appeal" by order of the Court, it follows that the TAA also accepts that if the Rules so provide, a single "appeal" proceeding may be commenced by an applicant in respect of several "objection decisions" where appropriate. Furthermore, for the reasons stated by Ryan J in Krampel Newman Partners Pty Ltd v Federal Commissioner of Taxation [2001] ATC 4473, no contrary intention appears in O 52B of the Rules relating to the institution of "appeal" proceedings under the TAA, nor in the TAA, so as to exclude the operation of s 23 of the Acts Interpretation Act 1901 (Cth) which would permit a single "appeal" proceeding to be commenced in respect of several "objection decisions". 8 Counsel for the Commissioner submitted that Krampel was decided in error and should not be followed. I cannot discern the error asserted and, if necessary, would follow and apply the reasoning adopted by his Honour. Counsel for the Commissioner further submitted that Legge Holdings Pty Ltd v Commissioner of Taxation (unreported, Lockhart J, 23 March 1990) required a different conclusion to be reached from that stated in Krampel. I am satisfied that Legge turns on its own facts. That case involved four discrete proceedings in the Administrative Appeals Tribunal ("the Tribunal"), notwithstanding that they were dealt with concurrently. The subsequent "appeal" from those decisions was said to take its character from the "initial act of the Commissioner". That "act" involved four separate decisions of the Commissioner leading to the four proceedings in the Tribunal. It does not appear that the applicant sought to rely on the enabling provisions of the Rules in respect of the commencement of a single proceeding and nor did the applicant seek to rely upon the provisions of s 23 of the Acts Interpretation Act 1901. It does not appear in Legge that his Honour was asked to consider whether the proceeding before him involved causes of action involving common issues of law or fact. 9 The statement of facts, issues and contentions filed by the Commissioner in the instant case shows that the objections and "objection decisions" related to common facts and issues arising in the several assessments. It follows that a single "appeal" proceeding is appropriate for determining the validity of the Commissioner's "objection decisions" set out in the notice issued to the applicant by the Commissioner.