Molyneux and Vermeesch v Chief Commissioner of State Revenue

State Administrative Tribunal (WA)|2013-07-24

Revenue Division File Number(s): 106021

Background 1This is an appeal from the decision of the Tribunal in Molyneux and Vermeesch v Chief Commissioner of State Revenue [2011] NSWADT 117 (the Decision). The underlying proceedings concern an application to review a decision of the Respondent to reassess duty on the transfer of a property at 26 The Strand Whale Beach (the Property). 2The factual background is not in dispute. The Appellants acquired the Property from their family trust, by contract for sale dated 10 December 2005 (the Contract). As the parties were not at arms' length, the consideration under the Contract was determined in accordance with a valuation from a registered valuer, Bruce Clisdell of B&C Clisdell Consulting. He valued the property in the range of $2.5m - $2.75m. This valuation was provided to the Respondent and on 15 December 2005 the Contract was assessed to duty on a dutiable value of $2.5m. 3Subsequently (some 3½ years later) the Respondent notified the Appellants of his intention to investigate the transfer valuation. On 25 May 2009, the Respondent reassessed the Contract on the basis of a valuation provided by Andor Kabok of the Department of Lands. The value ascribed was $5.8m. The Respondent applied additional duty and imposed penalty tax pursuant to Part 5 Division 2 of the Taxation Administration Act 1996 (NSW) (TAA) at the rate of 25% and interest pursuant to s 22 of the TAA, which included both a market rate component and a premium rate component. 4The Appellants objected to the reassessment on 23 July 2009 and on 26 February 2010 the objection was disallowed. The Appellants subsequently filed an application for review in the Tribunal. 5At the hearing, evidence was led from several different valuers. There were written valuation reports and the valuers were cross examined as a panel. The Judicial Member was ultimately not satisfied with the valuation evidence. At [67] to [70] of the Decision, the Tribunal outlined various deficiencies in each valuer's report. 6In summary, the Tribunal considered that both Mr Clisdell and Mr Wotton (another valuer called on behalf of the then applicants) relied for their conclusions on sales that were not comparable sales. On the other hand, Mr Kabok whilst using comparable sales failed to fully assess the negative impact of two factors: (1) the existence of a restaurant adjacent to the Property which affected the value of the Property because of noise and smell pollution; and (2) the existence of a large pine tree which, at least partially, blocked the view from the Property. The Tribunal said at [71]: In these circumstances, I think it is only appropriate and fair that I should remit the valuation issue to the respondent to make proper adjustments in respect of the impact of the kiosk/restaurant next door and the pine tree. In carrying out further assessment of any impact, the valuer may need the assistance of appropriate expertise and relevant local government authorities to determine their real impact. Further, the assessment has to be made retrospectively as at 10 December 2005. 7In relation to interest and penalty tax, the Tribunal held that there were circumstances to warrant the remission of penalty tax and the premium component of interest. The Judicial Member said at [79]: When all facts and circumstances, including the long delay that occurred before the respondent's investigation leading to the reassessment, are taken into account I think this is a proper case where the premium component of the interest should be remitted in full under s 25 of the Administration Act and the penalty tax remitted in full under s 33 of the Act. 8By orders of 26 May 2011 (the Orders) the Tribunal remitted the reassessment back to the Respondent to: (1) make adjustments to the valuation as directed; and (2) make a further reassessment on the basis of the adjusted valuation. 9It is apparent that the Tribunal anticipated that there would be a reduction to the dutiable value, in the further reassessment. 10Nevertheless, on 10 November 2011 the Respondent informed the solicitor for the Appellants that a new valuation had been obtained from Mr Kabok and that he had affirmed his earlier valuation. Rather than issuing a further reassessment, the Respondent notified the Appellants' solicitor of his decision to affirm the original reassessment. 11The Appellants appeal from the Decision on questions of law and seek leave to extend the appeal to the merits.

Grounds of Appeal 12The Grounds of Appeal are as follows: (1)The learned Judicial Member erred in law in failing to consider whether the reassessment of the transfer of the property at 26 The Strand, Whale Beach was authorised by section 9(2) of the TAA. The reassessment was not authorised by that provision (in particular, it was contrary to the legal interpretation and assessment practices generally applied by the Commissioner at the time of the transfer as set out in Revenue Ruling DUT 12 (DUT 12)) and consequently both the reassessment and the Tribunal's decision were a nullity [or beyond power]. (2)Alternatively, the learned Judicial Member erred in law when he decided (at [71]) that the "valuation issue" should be remitted to the Respondent "to make proper adjustments" to it, pursuant to s 63(3)(d) of the Administrative Decisions Tribunal Act 1997 (NSW) rather than making a new decision on the reassessment in substitution for the Respondent's decision under s 63(3)(c) of the ADT Act. The power to remit under s 63(3)(d) of the ADT Act may only be exercised where the Tribunal is not in a position to formulate a decision in substitution for the decision under review: see Commonwealth of Australia v Beale (1993) 30 ALD 68 at 70; Minister for Immigration & Multicultural Affairs v Perth City Mission [2000] FCA 397. That was not so in the present case. (3)In the further alternative, and subject to a grant of leave to extend the appeal to the merits, the learned Judicial Member erred (at [77]) in failing to remit the interest in full (rather than merely in part) under s 25 of the TAA because, on the facts as found by the Tribunal, the delay in payment was due to no fault of the appellant but rather a difference of opinion as between the parties' valuers (at [76]-[77]).

Jurisdiction 13Because the Orders made at first instance did not specify under what provision they had been made, there was discussion as to whether the Appeal Panel was properly seized of the matter. The reason this is important is that the Appeal Panel cannot simply assume it has jurisdiction to deal with a matter simply because the parties contend that to be the case: Commissioner of Taxes v Tangentyere Council, Inc (1992) 107 FLR 470. This issue also took up some time at the hearing of the interlocutory application which was brought to extend the time for the Appellants to bring their appeal: Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [7] - [11]. 14If the Decision is a final decision, the Appeal Panel is properly seized of the appeal. The question is whether the Decision was a final decision and if not what flows from this. 15The Tribunal was hearing a review of a reviewable decision, being a decision of the Respondent that had been the subject of an objection: s 8 and s 96(1) TAA. Section 65(1) of the Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act) provides that the Tribunal may remit a reviewable decision to the administrator who made it. Section 101(1)(d) of the TAA also provides the Tribunal with power to remit the matter to the administrator. Neither s 65 of the ADT Act, nor s 101 of the TAA require the reviewable decision to be revoked or set aside before it is remitted. This is unlike s 63(3)(d) of the ADT Act which also empowers the Tribunal to remit a matter, but expressly requires the reviewable decision to be set aside before the matter is remitted. 16The parties contended that the Decision was not a decision under s 63 of the ADT Act (despite the reference to s 63 in the grounds of appeal). They relied on s 101(1)(d) of the TAA or s 65(1) of the ADT Act. The parties contended that the Decision was a final decision and therefore the Appellants could, by right, appeal on questions of law and with leave extend the appeal to a review of the merits: s 113(2) ADT Act. 17Contrary to the parties' submissions, a decision under s 65 of the ADT Act is an interlocutory decision: Roads and Traffic Authority, New South Wales v Hutchinson (GD) [2007] NSWADTAP 28 at [12]. 18Pursuant to s 65(2) of the ADT Act, if a decision is remitted to an administrator, the administrator may affirm, vary or set aside the decision and make a new decision. If the administrator varies or sets aside the decision, the application "is taken" to continue and the applicant may proceed or withdraw the application: s 65(3) and (4) of the ADT Act. The legislation does not expressly identify the consequences if the decision is neither varied nor set aside by the administrator, but it is implicit that if the decision is affirmed the proceedings continue. There is no need for the proceedings to "be taken" to continue: the same decision remains the subject of the review. We note that the position under the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) is different. Section 42D of the AAT Act expressly provides that the Application may continue whether the decision is varied, set aside or remains the same (our emphasis): s 42D(3), (4) and (8) AAT Act. 19In the present case, the administrator (the Respondent) neither varied nor set aside the reviewable decision. By letter dated 10 November 2011, the Respondent notified the then applicants that the original reassessment was affirmed. The Respondent also took the view that the Tribunal's remittal decision was a decision under s 65 of the ADT Act. If that view was correct, then the notification by the Respondent to the Appellants that he had affirmed his reassessment did not bring the first instance proceedings to a close. 20On a fair reading of the decision, it was not interlocutory. The Tribunal set no forward date for the application to continue and it is implicit that the Decision the subject of the review was set aside: the Respondent was ordered to make a further reassessment. The Decision was not therefore a decision under s 65 of the ADT Act and it was not an interlocutory decision under s 101(1)(d) of the TAA (assuming that is authorised). 21If we are wrong and the Orders were interlocutory, leave to appeal the interlocutory decision is necessary and we would grant such leave: s 113(2A) ADT Act. The issues are substantive, the appeal will effectively deal with the whole subject matter of the proceedings and there is no prejudice to the Respondent who, in any event, dealt with the matter on a final basis. 22We note the different regime under the AAT Act where interlocutory decisions are not "decisions" amenable to appeal in the same way as final decisions (i.e., under s 44 of the AAT Act), but are amenable to judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) or the Judiciary Act 1903 (Cth): Director General of Social Services v Chaney (1980) 47 FLR 80 (Chaney). Here the context is quite different. First, appeals to the Appeal Panel on interlocutory issues do not disrupt proceedings in the same way as described in Chaney (at 102), where it was noted that appeals under s 44 of the AAT Act are as of right and to an external forum. Here interlocutory appeals are by leave and internal. Secondly, appeals to the Appeal Panel are not limited to questions of law as they are under s 44 of the AAT Act. Finally, s 113(2A) of the ADT Act expressly contemplates appeals to the Appeal Panel on interlocutory matters. 23Accordingly, whether the Decision was final or not, we are nevertheless satisfied that we have jurisdiction to deal with it. The Decision is an appealable decision, being a decision on review of a reviewable decision: s 112 ADT Act.

Leave to extend appeal to the merits 24The first ground of appeal concerns the lawfulness of the Respondent's reassessment. The issue was not ventilated before the Tribunal at first instance and the Appellants therefore seek leave to extend the appeal to the merits in order to raise this point. The general principles governing the raising of a new issue on appeal were stated in Water Board v Moustakas (1988) 180 CLR 491 at 497: where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point. 25Here, the point is that s 9(2) of the TAA precludes the Respondent from issuing a reassessment in circumstances where Revenue Ruling DUT 12 (DUT 12) was complied with at the time of assessment. It is submitted that it is not a point that could have been met by the Respondent calling evidence below. The Respondent does not object to the Appellants raising the new ground, but takes issue with the Appellants' construction of s 9(2) and contends that there was no breach of that section by the Commissioner in issuing the reassessment. 26In Commissioner of Police v Fortuna [2010] NSWADTAP 51 the Appeal Panel said at [44]: It is not necessary for the Appeal Panel to first identify an error of law before granting leave for an appeal to be extended to the merits of the Tribunal's decision: Lloyd v Veterinary Surgeons Investigating Committee [2005] NSWCA 456. The onus of proof lies on the party applying for leave and the standard of proof is on the balance of probabilities: World Best Holdings Ltd v Sarker & Anor [2004] NSWSC 935 at [25] per Sully J. The discretion is open and unfettered but must be exercised in a fair and just manner having regard to the purpose of the relevant legislation: Jones v Ekermawi [2009] NSWSC 143 at [13]. Certain inferences can be drawn from the fact that leave is required. They include the fact that the need for leave is a "control filter" designed, among other things, to protect respondents from the cost of a full hearing of appeals which should not properly be entertained: World Best Holdings Ltd v Sarker & Anor, per Sully J at [25]. Circumstances which may justify leave being granted include where the Tribunal has gone about its fact finding process in an unfair or unorthodox manner: K v K [2000] NSWSC 1052 at [10] to [15]. 27We are satisfied that it is in the interests of justice to grant leave to extend the appeal to the merits and to determine the new ground. First, if the Appellants are correct, it is a knock out point and disposes of the appeal. Secondly, it is a matter of construction and therefore itself raises a question of law. Thirdly, it is an important provision within the Taxation Administration regime. Finally, there is no objection from the Respondent.

Was the Reassessment Lawful? 28The question for the Appeal Panel is whether the Commissioner was precluded from issuing the reassessment because of the operation of s 9(2) of the TAA. 29Section 9(2) of the TAA provides as follows: A reassessment of a tax liability is to be made in accordance with the legal interpretations and assessment practices generally applied by the Chief Commissioner in relation to matters of that kind at the time the tax liability arose except to the extent that any departure from those interpretations and practices is required by a change in the law (whether legislative or non-legislative) made after that time. 30The precursor to s 9(2) can be found in s 35B(1) of the Stamp Duties Act 1920 (NSW) but there is no authority relevant to the issue that we are concerned with. No similar provisions existed in relation to other revenue statutes such as the Land Tax Management Act 1956 (NSW) or the Payroll Tax Act 1971 (NSW). Section 9(2) has been in the TAA since its enactment. We were informed by counsel for the Respondent that neither the second reading speech nor the explanatory notes are helpful. 31As contended by both parties, it is necessary for the Appeal Panel to approach the question on the following basis. First, identify the "matters" or types of matters to which the legal interpretations and assessment practices referred to in s 9(2) apply; second, identify the legal interpretations and assessment practices that apply; and third, determine whether or not the reassessment was in accordance with the legal interpretations and assessment practices. The Respondent contended that there is a fourth step in the process and that is to determine whether a breach of s 9(2) leads to the invalidity of the decision: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [91]. 32The Appellant contended that the relevant matters are agreements for the transfer of land or transfers of land between associated persons: Butler Land Company Pty Ltd and Commissioner of State Revenue [2012] WASAT 33. The Respondent contended that the relevant matters are assessments of duty based on the dutiable value of dutiable property. Nothing turns, in this case, on the difference. 33As to the second point, the parties differed on a potentially significant issue. The Appellants contended that the legal interpretations and assessment practices are limited, in this case, to DUT 12. On the other hand, the Respondent, whilst accepting that DUT 12 is relevant, contends that s 305 of the Duties Act 1997 (NSW) (the Duties Act) and s 11 of the TAA are also relevant. The Appellants, in oral argument, contended that this cannot be the case because statutory provisions themselves do not constitute legal interpretations or assessment practices. Further, the Appellants contended s 9(2) of the TAA reads down s 305 of the Duties Act. 34DUT 12 relevantly provides: 2. In general, the dutiable value of dutiable property is the greater of consideration for the dutiable transaction, and the unencumbered value of the dutiable property (section 21). Section 305 authorises the Chief Commissioner to require a person who is liable to duty "to provide a declaration by a competent valuer as to the unencumbered value of the property or to provide such other evidence of that value as the Chief Commissioner thinks fit". The Act does not prescribe the circumstances in which evidence of value may be required. 3. A decision to require a person liable to duty to provide evidence of value, and the type of evidence required, are at the discretion of the Chief Commissioner. This ruling provides some general guidelines as to when evidence of value will be required, and sets out types of valuations or other evidence of value acceptable to the Chief Commissioner... 4. In general, evidence of value will be required in 2 circumstances: if there is no consideration or nominal consideration and if the Chief Commissioner is not satisfied that the consideration is an adequate indication of the unencumbered value of the property... 6. The important matter for determination is whether or not the parties are dealing with each other at arm's length. Therefore, any relationship between the parties is relevant, as related parties may not act severally and independently in forming their bargain in the same manner that arm's length parties would normally do... 12. Where evidence of value of land is required to determine the adequacy of the consideration as outlined in paragraph 8 above, the following are acceptable: (a) a "declaration by a competent valuer" as outlined in paragraph 13 or (b) a private opinion or expression of value by a registered valuer, identifying the specific property or (c) an agreement which is evidence of a recent arm's length sale of the property or (d) a valuation required by a financial institution for finance purposes, with the proviso that such valuations are often conservative and may indicate that the property has a higher unencumbered value. If this evidence of value indicates that the consideration is adequate, no further evidence of value will be required. 13. If the above evidence of value indicates that the unencumbered value of the land exceeds the consideration by a significant amount, a "declaration by a competent valuer" will be required, being either: (a) a valuation by the Valuer General of the improved land value; or (b) a valuation by a registered real estate valuer within the meaning of the Valuers Registration Act 1975 of the full market value, being a comprehensive valuation of the property in its present condition indicating that an inspection of the property has been undertaken. (Brief market appraisals, estimates of value or other statements that do not indicate a full inspection of the subject property has been undertaken will not be acceptable.) 35Section 305 of the Duties Act now provides as follows [our underlining]: (1) The Chief Commissioner may, for the purpose of determining whether a person is liable for duty or determining a person's liability for duty: (a) require the person, by notice in writing given to the person, to provide a valuation of property prepared by a registered valuer or to provide such other evidence of the value of property as the Chief Commissioner considers appropriate, or (b) obtain a valuation of property, or (c) rely on a valuation of property prepared for any purpose (whether or not for the purpose of determining liability for duty) by a registered valuer or other person the Chief Commissioner is satisfied is properly qualified to provide evidence of the value of property. (2) The Chief Commissioner may assess duty on the basis of a valuation or evidence referred to in subsection (1). (3) If a person is liable to pay duty under this Act that is chargeable by reference to the value of property, the Chief Commissioner may recover from the person the cost of obtaining a valuation of the property under this section. (4) In this section: "registered valuer" has the meaning given by the Valuers Act 2003. 36At the time DUT 12 was issued, 18 March 1999, s 305 provided as follows [our underlining]: 305 Valuation of property (1)The Chief Commissioner may require a person who is liable to duty determined with reference to the value of property to provide a declaration by a competent valuer as to the unencumbered value of the property or to provide such other evidence of that value as the Chief Commissioner thinks fit. (2)The Chief Commissioner may assess duty in accordance with the value so declared. (3)The Chief Commissioner may have property valued if not satisfied with the value so declared and may assess duty on the basis of the valuation. (4) The Chief Commissioner may recover the cost of obtaining a value under this section from the dutiable person. 37We are satisfied that DUT 12 contains a legal interpretation or assessment practice of the Respondent that is relevant to the matters between the parties. This is confirmed by Revenue Ruling DUT 1 which provides at [17] that Revenue Rulings provide the Commissioner's "interpretations, guidelines, precedents and practice under the Duties Act." This is to be contrasted with s 305 of the Duties Act, which is not itself a legal interpretation or assessment practice. Neither is s 11 of the TAA. 38The third issue is where the real dispute lies: whether the reassessment has been in accordance with the legislative interpretations and assessment practices. The Appellants contended that the expression "in accordance with" is to be interpreted consistently with the Australian Boot Trade Employees' Federation v The Commonwealth of Australia (1954) 90 CLR 24 at 37 to mean "in harmony with, in conformity with, in agreement with." The Respondent emphasised that s 9(2) of the TAA does not require identity or an exactitude and referred to the decision ISPT Nominees Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 697 at [148] where Barrett J described the provision as being of a relatively undemanding nature. 39At the heart of this issue is the interplay between s 305 of the Duties Act, s 9(2) of the TAA and DUT 12. 40The Appellants contended that s 305 of the Duties Act is only directed to the initial assessment stage. This followed, so it was submitted, from the fact that the Duties Act contains no definition of the expression "assess", and importantly it does not have an expanded definition of the expression "assessment" which includes a reassessment. Further, the Appellants contended that DUT 12 operated to read down s 305: where there had been an assessment and DUT 12 had been followed by the taxpayers, there was no warrant for the Commissioner to make a reassessment and any such reassessment would be beyond power. In certain exceptional cases, it was accepted, this would not be the case. For instance, when the valuations provided to the Commissioner in purported compliance of DUT 12 were fraudulent. In such a case DUT 12 was not satisfied because there was no bona fide valuation and also, the principle that one may not profit from one's wrong would be engaged: see, for instance, McColl JA in DeMarco v Chief Commissioner of State Revenue [2013] NSWCA 86 at [32] (her Honour was in dissent, but the principle is not contentious although its application might be; see at [76] and [77] per Basten JA). 41The Respondent contended that the Duties Act incorporates the TAA and therefore the two Acts must be read together. Relevantly s 5 of the Duties Act provides that the Duties Act does not contain all the provisions concerning duties and that it must be read together with the TAA which contains, inter alia, provisions dealing with how assessments of duty are made and the investigative powers of tax administrators. For the reason that "assessment" is defined in s 3 of the TAA to include a reassessment, s 305 of the Duties Act has application to reassessments. This submission is reinforced by s 7 of the TAA which is the corollary to s 5 of the Duties Act. It provides that the purpose of the TAA is to make general provision with respect to the administration and enforcement of other taxation laws with respect to, inter alia, the imposition of tax. The Duties Act is a taxation law: s 4 TAA. Consequently, the TAA contains provisions with respect to "assessment and reassessment of tax liability" including duty. The reference to "assess" in s 305 of the Duties Act must therefore include a reference to a reassessment.

Conclusion on ground 1 42Viewed in context, which includes the interplay between the Duties Act and the TAA, s 305 of the Duties Act is not limited in its reach to the making of initial assessments, but extends to the making of reassessments. The expression assess, in s 305 of the Duties Act, includes reassess: s 5 Duties Act and s 3 TAA. 43In any event, DUT 12 is only concerned with circumstances in which it is necessary or desirable for the Chief Commissioner to require, by force of statute, a taxpayer to provide a valuation and therefore does not read down s 305. 44DUT 12 was issued on 18 March 1999. The then-existing s 305 of the Duties Act was in a different (but not relevantly so) form. In both the historical version and the current version, the Commissioner was empowered to obtain his own valuation. DUT 12 is neither expressly nor impliedly directed to the Commissioner's power to obtain his own valuation or "have property valued". This is apparent from paragraphs 2 and 3 of DUT 12, which are extracted above. 45The final words of paragraph 12 in DUT 12 are as follows: If this evidence of value indicates that the consideration is adequate, no further evidence of value will be required. [our underlining] 46The final words of paragraph 12 pick up the language of the historical version of s 305(1) of the Duties Act, now found in s 305(1)(a). This conclusion is reinforced by paragraph 13 which details circumstances where the Respondent would require further evidence of value and prescribes what will be "acceptable". DUT 12 is not a fetter on the Respondent's power to seek his own valuation and reassess, but explains the circumstances under which the Commissioner will exercise the power in s 305(1) to require, by force of statute, the taxpayer to incur the expense of providing valuation evidence. 47For the reasons expressed above we have granted leave to extend the appeal to the merits to enable the Appellants to rely on this ground. However, there has been no breach of s 9(2) of the TAA vis-à-vis DUT 12. In light of our conclusion, it is not necessary for us to consider whether a breach of s 9(2) leads to invalidity.

The Valuation Issue 48Pursuant to Chapter 2 of the Duties Act, the Contract was liable to duty as if it was a transfer of land: s 8 and s 9 Duties Act. Duty is charged on the dutiable value of the dutiable property: s 19 Duties Act. The dutiable value is the greater of the consideration and the unencumbered value of the dutiable value: s 21(1) Duties Act. Here, the consideration was derived from a valuation because the parties were not at arms' length; the real question is therefore what is the unencumbered value of the property. It is for this reason that the valuation evidence was central to the proceedings at first instance. 49The Appellants contend that the Tribunal erred in law in failing to determine the dutiable value of the dutiable property: the valuation was a finding of fact that the Tribunal was required to make. Further, it was contended that the Tribunal could not, in the circumstances, abrogate its duty and pass back to the administrator the very subject of the proceedings. Only in the event that the Tribunal was unable to come to a view on valuation was it permissible to remit the matter to the Respondent. 50Primarily, the Appellants relied on the decision of Neaves J in Commonwealth of Australia v Beale (1993) 30 ALD 68. His Honour was there dealing with s 43(1) of the AAT Act which gave express power to the Administrative Appeals Tribunal to set aside a decision and to remit the matter for reconsideration. His Honour said at 70: However, it may only do so where, in order to give effect to the conclusions to which the Tribunal has come, it is appropriate to set aside the decision under review but the Tribunal is 'not in a position to formulate a decision in substitution for the decision to set aside.' 51In that case, the Tribunal had reached a firm conclusion that the documents were exempt documents, therefore it was appropriate for the Tribunal to have made an order to affirm the decision under review: at 70.5. That is a different case to the case we are faced with. 52The Appellants also relied on Minister of Immigration and Multicultural Affairs v Perth City Mission [2000] FCA 397 per Lee J at [23]. In that case, the Tribunal had, in effect, exercised the power of the administrator, to not refuse a visa on the grounds of bad character. There was, in the circumstances, nothing left to remit: at [24]. 53As the Appellants submitted, questions of valuation are not questions of precision: valuation is a judgment call. Valuation is not science. There may be genuine differences of opinion. Accordingly, the Appellants contended that the Tribunal was capable of ascribing value after hearing from each of the valuers. The Tribunal was in a position, so it was submitted, to form a judgment as to the dutiable value of the dutiable property. 54The Appellant relied upon Leichhardt Municipal Counsel v Seatainer Terminals Pty Ltd (1981) 48 LGRA 409 (Seatainer). At 434.8 per Hope JA said: The need to make adjustments to values deduced from sales in order to arrive at the true valuation of the land to be valued does not preclude the court which has the task of valuing the land from relying upon the sales as comparable in the relevant sense, nor from the making by the court or by valuers of adjustments which may be nothing more than the best guess that can be made. 55That case was concerned with whether there had been an error of law by the trial judge in arriving at a valuation where adjustments to comparable sales were necessary. No error of law was disclosed because the finding of fact (the valuation) was held to be reasonably open on the evidence: there was evidence to support the sales being comparable and there was no error of principle in making the adjustments. That it was not an error of law, in that case, to determine a valuation, does not mandate the conclusion that it will be an error of law to abstain from making a valuation. In Seatainer the valuer had quantified the adjustments and the court accepted the evidence at 436. Here the necessary adjustments were not quantified for the Tribunal and neither was the method or principle to do so. 56We have already detailed above the reasons why the Tribunal was not satisfied with the evidence of any one particular valuer and in the absence of some quantification of the adjustments, the Tribunal was not in a position to make the valuation. There was accordingly no error of law in relation to ground 2. 57Nevertheless, as the appeal has been extended to the merits, by the grant of leave occasioned by ground 1, the Appeal Panel must decide what is the correct and preferable decision: Building Professionals Board v Hans [2008] NSWADTAP 13 at [39]. Pursuant to s 115 of the ADT Act we are now charged with deciding what the correct and preferable decision is having regard to the material before us. In order to do so we may exercise all the functions that are conferred or imposed on the Tribunal at first instance under any relevant enactment or the ADT Act. This is not limited to only those parts of the Tribunal's decision that were the subject of an application for leave to extend to the merits. Issues of procedural fairness may of course arise. At the hearing of the appeal, both parties accepted it would be necessary for the Appeal Panel to have regard to the transcript of evidence and the valuations if we were disposed to grant leave to extend the appeal to the merits. We indicated that if we granted leave we would list the matter for further directions.

Interest 58The final ground of appeal concerns the decision of the Tribunal not to remit the market interest rate. 59Section 25 of the TAA confers a discretion on the Commissioner to remit the market rate component of interest. In declining to remit the market rate, the Tribunal said at [77]: In relation to the market rate imposed, no special circumstances were before the Tribunal to remit the interest payable. 60The Appellants sought leave to extend the appeal to the merits in relation to this ground. We have already granted such leave. The Appellants contended that the very factors that the Tribunal took into account to remit the premium component ought to have been taken into account to remit the market rate. 61The Tribunal found no special circumstances to justify the remission of the market rate component of the interest, yet accepted that there was relevantly no non-disclosure of the facts by the Appellants, there was no evidence that there was any arrangement or scheme in relation to the Clisdell valuation and there was no evidence the Appellants failed to take reasonable care or intentionally disregarded the law: at [77] and [78] of the Decision. Two other factors are relevant: first, more than three years passed before the reassessment issued and, secondly, the Appellants had complied with DUT 12. 62There is authority for the proposition that when the tax default is due to the fault of the Chief Commissioner, that may be a circumstance that warrants remission of the market rate of interest: Trust Co. of Australia v Chief Commission of State Revenue [2002] NSWADT 21 at [24] to [28]. Taking this factor into account pays due regard to the policy that the market rate component of interest reflects the use by the party of the money and the lack of use of the funds by the State during that period. 63The Appeal Panel in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd [2004] NSWADTAP 19 stated at [60]: In our view the primary interest rate (the market rate component) is intended to compensate the Commissioner (on behalf of the Government of New South Wales) for not having the benefit of the tax payment from the time it was due. So a rate is set which fluctuates, and is connected to an external rate, the Reserve Bank's Accepted Bill rate. This, as we see it, is a component that could rarely, if ever, be waived as otherwise tax would be paid at a de-valued amount thereby discriminating against taxpayers who meet their obligations on time. The tribunal made the observation at [50] that to justify any remission of the market rate component of interest, it would be necessary to show that in some way the Commissioner contributed to the default. We agree with this observation. 64The Tribunal failed to take into account the 3½ year interval between the assessment and the reassessment, in circumstances where this delay was not contributed to by the Appellants and furthermore the Appellants had, during the intervening period, the comfort of knowing they had complied with DUT 12 and nothing further could be expected of them. In those circumstances it can be said that the Respondent contributed to the tax default. 65It is not necessary to decide if the Respondent's contribution to default is a mandatory consideration, in the sense identified in Minister for Aboriginal Affairs v Peko-Wallsend (1986) 162 CLR 24 at 39-40 because leave to extend the appeal to the merits has already been granted. If not a mandatory consideration, then in any event, this was a material factor that was not considered by the Tribunal. 66We are satisfied that there are special circumstances in this case to warrant the remission of the market interest rate for the period up to the re-assessment. These are as follows: (a)there is no suggestion of lack of good faith on the part of the Appellants; (b)matters of valuation are matters of judgment and on which reasonable minds could differ; (c)the Appellants complied with DUT 12 and were entitled to expect that if the Respondent was not satisfied with the valuations he would have taken steps in a timely fashion; (d)three and one-half years went by between the time of the stamping of the Contract and the Commissioner's notification of further investigations into the transaction. 67There need not be any blame for the Commissioner's delay. It is the mere passage of time in circumstances where the Appellants justifiably considered the matter closed that sets this case apart from the ordinary case. 68The market rate interest component should be remitted for the period between the initial assessment and notification of the reassessment.

Conclusion 69The Respondent's reassessment, the subject of the review, was not beyond power. There was no breach of s 9(2) of the TAA for the reasons that DUT 12 does not speak to the circumstances in which the Respondent may obtain his own valuation and DUT 12 does not fetter the Respondent's power to reassess under s 305 of the Duties Act. Further, there was no error of law in relation to the Tribunal's decision to remit the valuation issue to the Respondent in circumstances where the Tribunal was unsatisfied with the valuation evidence. Finally, there was warrant to reduce the interest by expunging the market rate of interest under s 25 of the TAA. 70The only orders we propose to make are to grant leave to extend the appeal to the merits and to list the matter for further directions. In order to avoid fragmentation and to preserve the parties' rights to appeal, we will defer making final orders until the substantive valuation issue has been ventilated before us.

Orders 71The orders are as follows: (1)Grant leave to extend the appeal to the merits. (2)Matter listed for directions on 30 August 2013 at 12 noon.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 August 2013

Administrative Decisions Tribunal Act 1997(NSW)

Payroll Tax Act 1971(NSW)

Stamp Duties Act 1920(NSW)

At a glance

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Decision date

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Judgment (12 paragraphs)

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Legislation Cited (9)

Cases Cited (13)