Monisse v Chief Commissioner of State Revenue

The Chief Commissioner's case

1. The Chief Commissioner's case is, in summary, as follows: 1. Mr Monisse was a "foreign person" under the applicable land tax legislation in the relevant tax years, because he has not satisfied the onus he bears to establish that prior to the commencement of section 5D of the LT Act no potential beneficiary of the Trust was a foreign person and the amendments introduced by the Deed of Variation to prevent any foreign person from becoming a beneficiary were not in place prior to the required date of 31 December 2020. 2. There is no requirement on the Chief Commissioner in either the LT Act or in any savings or transitional provisions to notify individual taxpayers of amendments to tax legislation including, relevantly, the amendments to the LT Act which introduced section 5D 3. The functions of the Chief Commissioner under the relevant legislation are mandatory and not discretionary: see Brataniec v Chief Commissioner of State Revenue [2013] NSWADT 187. 4. Notice of the relevant amendments to the LT Act was provided to taxpayers and potential taxpayers, through the publicly available NSW legislation website, and through the publication of a practice note: CPN 004, "Foreign Surcharges and Discretionary Trusts" on the Revenue NSW public website on 1 July 2020. 5. Considerations of unfairness, such as appeals to leniency or natural justice, are simply not relevant when considering the validity of the Chief Commissioner's assessments. 6. It is well-established that no conduct or representation on the part of the Chief Commissioner can operate as an estoppel against him in issuing an assessment

The real issues

1. The real issues for my consideration emerge clearly from the parties' respective submissions as summarised above.
2. The real issues are whether the Chief Commissioner's decision under review, namely the decision to issue the Assessment, did not constitute the correct and preferable decision, by reason of: 1. its unfairness generally, as asserted by Mr Monisse as summarised above; in particular because he was not notified of changes to the surcharge land tax regime brought about by the SLT Amendments; 2. the operation of the doctrine of estoppel: that is, whether the Chief Commissioner's non-notification of the legislative changes, that is the SLT Amendments, estop (prevent) the Chief Commissioner from relying upon them; 3. the third issue which I have explained at [23] (3) above; namely whether the decision of the Chief Commissioner to issue the Assessment might give rise to a claim of breach of a possible general duty owed by public officials to protect those who are affected by their decisions, by way of a "warning" and whether breach of any such duty can emerge from a "pure omission" by a public official in a way that gives rise to a legal remedy.

Mr Monisse's circumstances

1. At the hearing I found Mr Monisse's account of his personal and financial circumstances to be credible and reliable. I accept and give some weight to his assertions, which appear to be unchallenged, that 1. he is a person who believes in compliance with the law; 2. he has what he termed a "clean record"; in that he has always complied with his land tax obligations; 3. as I understand it, he has never intended to have any foreign person or interest as a potential beneficiary of the Trust; 4. when alerted to his possible liability for additional duty correspondence under the SLT Amendments, he promptly arranged for his professional advisors to arrange the appropriate amendments to prevent any foreign person becoming a beneficiary under the Trust via the Deed of Variation; 5. he has experienced some financial hardship over the last two years, particularly as a result of the Covid pandemic and the restrictions and commercial effects of the health orders made as a result. This has arisen in particular because the international airline industry has been substantially adversely affected by Covid-based travel and immigration restrictions. Mr Monisse has been an employee of Qantas Airways for 32 years and for some time has held a senior position as an International Cabin Manager. He was effectively stood down without regular salary for nearly 2 years until recently and in that period has had to rely on Government grants and subsidies. He has had to sell some of his assets, including as I understand it his residence, in order to survive financially in this period, but is now re-engaged by the airline and is working more regularly.
2. In his written submissions and at the hearing Mr Monisse relied upon problems which he asserts arose in his communications to and from Revenue NSW. There are several of these instances but in particular he asserts essentially that important documentation may not have been sent to the address which he asserts to have notified. That is disputed by the Chief Commissioner, and I do not need to make a specific finding as to whether or not particular information or correspondence was received. However, I do accept that Mr Monisse for whatever reason did not receive promptly the Revenue NSW documentation explaining the SLT Amendments.
3. Notwithstanding those matters outlined at [27] and [28], Mr Monisse's application for administrative review stands to be decided in accordance with the applicable law. The central question remains whether or not, by application of the law, the Chief Commissioner's decision to issue the Assessment was the correct and preferable decision.
4. In order to answer that question, I need to consider and resolve the 3 "real issues" I have identified above.

Consideration: 1. Unfairness

1. The High Court decision in Commissioner of Taxation v Ryan (2000) 201 CLR 109 as cited by the Chief Commissioner remains the primary authority on this issue. The case before the High Court relevantly involved the issue of whether an amended assessment of taxation could be issued in the circumstances of the case. As was said by the Court at 123: That question cannot be answered by asserting the existence of any "policy" ot "general intention" unless that policy or intention is to be found reflected in the termsof the Act. Appeals to general notions of "fairness" or "justice" do no more than attempts to mask the absence of any foundation in the legislation for the conclusion which is asserted.
2. That general statement has been upheld in revenue cases, including in this Tribunal, over recent years: see for example Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218 ("Gunasti"); Hashim v Chief Commissioner of State Revenue [2020] NSWCATAD 67 at [82] - [83] and Strathavon Resort Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 200 ("Strathavon")
3. In Strathavon, which came before me and in which vigorous assertions were made as to the unfairness of the Chief Commissioner's assessments of land tax and the asserted injustice of upholding them, I concluded on the basis of the authorities in relation to this issue, at [22] , as follows: ...concepts such as fairness and justice cannot intrude into the legislative taxation scheme, notwithstanding the fact that such a scheme might in certain circumstances operate harshly. I accept that for a taxpayer in the position of (the applicant in that case) that may be a bitter pill to swallow. But that is the law.
4. That conclusion applies with equal force here.
5. To the extent that Mr Monisse has raised his financial position as a ground, it is clearly established that financial hardship, including where that has been caused to any extent by the COVID economic impacts is not relevant to the issue of whether an assessed tax or duty is payable: see for example Chu v Chief Commissioner of State Revenue [2021] NSWCATAD 238 (Chu) at [32]- [34].
6. Mr Monisse does not succeed on this ground.

Consideration: 2. Estoppel

1. Mr Monisse does not succeed on this ground either. The law is clear: no conduct or representation by or on behalf of the Chief Commissioner will be regarded at law as constituting an estoppel; such as to prevent the Chief Commissioner from issuing an assessment in the course of carrying out his functions and duties in administering the revenue laws of New South Wales: BBLT Pty Ltd v Chief Commissioner of State Revenue [2003] NSWSC 1003 at 111; Gunasti v Chief Commissioner of State Revenue [2012] NSWADT 218 at [19].

Consideration: 3. A duty to resolve, protect or liability for "pure omissions"?

1. As outlined at [26] above, an additional issue emerges from academic commentators' consideration of this area. That is whether a public official (such as the Chief Commissioner) can be held to have breached a possible general duty to protect those who are or may be adversely affected by their decisions by way of a "warning" and whether breach of any such duty can emerge from a "pure omission" by the public official in a way that gives rise to a legal remedy. See for example the discussion in Aronson, Groves and Weeks Judicial Review of Administrative Action and Government Liability 7th edition 2022 at [21.470] and [21.590],
2. Although the possible existence of such a duty has been identified, its application would appear to be very narrow and to apply to only some public authorities. I am aware of no authority which would stretch the application of the concept so far as to interfere with a revenue assessment. Certainly, the learned authors of Aronson, Groves and Weeks do not envisage that a government authority such as Revenue NSW or the Chief Commissioner has any general duty at common law to "resolve or protect", or to be liable for "pure omissions", including those omissions which might be characterised as a failure to take protective action.
3. My consideration of this area does reveal any ground upon which the Chief Commissioner's decision under review could successfully be challenged.

Due assessment of the quantum of duty

1. There was no assertion by Mr Monisse that the quantum of the duty or interest had been incorrectly calculated and there was nothing before me to indicate that any error in that regard had been made.
2. I find that the quantum of the duty was properly and correctly assessed, in accordance with the relevant legislation.

Conclusion: Was the decision the correct and preferable one?

1. The question of whether a decision is both correct and preferable must be made by reference to the relevant statute or other law under which the decision-maker purports to make that decision.
2. I reiterate that I must reach my decision on this only on the basis of the settled law, on the basis of the taxpayer's burden of proof explained above at [12] and [13]. It is not for the Chief Commissioner to make a case that his decision to issue the Assessment was the correct and preferable one, rather it is for Mr Monisse to demonstrate that that it was not the correct and preferable decision.
3. Mr Monisse has not persuaded me that the Chief Commissioner's decision to issue the Assessment was other than the correct decision, under the statutory provisions pursuant to which it was made.
4. The question as to whether it was the preferable decision must also be answered by reference to the powers and, if any discretions available under that legislation, if any. As was said by Senior Member Norman Isenberg in Valencia v Chief Commissioner of State Revenue [2017] NSWCATAD 261 at [84]: ..absent a discretionary power, the Chief Commissioner is required to administer the law in accordance with its terms. To give a benefit to the Applicants would unfairly disadvantage other taxpayers who have complied with their obligations.
5. There was no "discretionary power" as referred to in that passage available to the Chief Commissioner in this case. It follows that his decision to issue the Assessment was not only the correct decision, it was also the only decision open to him under the legislation which bound him. I conclude that his decision was therefore also the preferable decision.
6. Having decided that that decision was the correct and preferable one I must order that that decision of the Chief Commissioner is affirmed.
7. I order accordingly.

order The decision of the Chief Commissioner of State Revenue to issue an assessment of surcharge land tax for the tax years 2017 to 2021 of $87,018.70 is affirmed. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar

Amendments 15 September 2022 - 15 September 2022: • Page 1. Decision- "assessment of surcharge purchaser duty" amended so as to read "assessment of surcharge land tax". • Page 1. Catchwords- surcharge purchaser duty" amended so as to read "surcharge land tax". • Page 9. Paragraph [20]- last phrase amended so as to read: "Practice Note CPN 004 v2, which deals with surcharge land tax and surcharge purchaser duty". • Page 13. Paragraph [40]. Last phrase amended so as to read: "..decision under review could successfully be challenged." • Page 15. Order- "assessment of surcharge purchaser duty" amended so as to read "assessment of surcharge land tax". 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: 15 September 2022