Oswal v Commissioner of Taxation

REASONS FOR JUDGMENT 1 The proceeding is in the nature of an application for judicial review of the refusal by the Commissioner of Taxation (the Commissioner) to give the applicants (Mr and Mrs Oswal) an undertaking that he will not issue a departure prohibition order (DPO) under s 14S of the Taxation Administration Act 1953 (Cth) (TAA) in relation to either Mr or Mrs Oswal. 2 It is convenient to summarise the background facts (which are not in dispute) and to outline the submissions made on behalf of the parties.

Summary of background facts 3 The Commissioner has issued Mr and Mrs Oswal with various notices of assessment and penalty which impose significant tax liabilities on each of them. The Commissioner has also obtained judgment against Mrs Oswal in the amount of approximately $186m and against Mr Oswal in the amount of approximately $6.5m. The assessments are the subject of Pt IVC proceedings which are scheduled to be heard by Pagone J in April next year. Apparently Mr and Mrs Oswal have also brought Pt IVC proceedings in the Administrative Appeals Tribunal relating to the assessments. 4 The Commissioner has commenced separate proceedings in the Court which are listed for hearing before Gilmour J for six days commencing on 29 January 2016 (the mortgage proceedings). 5 The Commissioner alleges in the mortgage proceedings that Mrs Oswal entered into a mortgage with a company called Mercury Services Ltd with the intention of defrauding her creditors. A declaration is also sought that the mortgage is void. Mrs Oswal proposes to defend the proceedings. Both she and Mr Oswal have filed affidavits in the mortgage proceedings. 6 By a letter dated 29 October 2015, the Commissioner notified the Oswals' solicitors that he required both the Oswals to attend at the hearing in the mortgage proceedings so that they could be cross-examined. 7 By letter dated 30 October 2015, the Oswals' solicitors wrote to the Commissioner and sought an undertaking in respect of the Commissioner's power under s 14S of the TAA. After setting out various matters, including the nature of the mortgage proceedings and the Oswals' concerns that if they were to return to Australia the Commissioner might issue a DPO against them, an undertaking was sought from the Commissioner. Paragraphs 13 and 14 of that letter were as follows: 13 The Commissioner has power to give an undertaking of the type given at paragraph [21] in Commissioner of Taxation v Arnold [2014] FCA 959. A copy of that case is enclosed. 14 Mr and Mrs Oswal ask the Commissioner to give such an undertaking to Mrs and Mr Oswal that if they were to return to Australia for the purposes of: (a) preparing further supplementary evidence between 16 November to 30 November 2015; and (b) preparing for the hearing and being available to be cross-examined at the hearing of this matter between mid January to 12 February 2016; the Commissioner will not issue a departure prohibition order within the meaning of s 46 of the TAA (DPO). 8 The Commissioner was asked to take into account various matters which were set out in the letter in considering the request. The Commissioner was asked to indicate whether he agreed to give an undertaking that, if the Oswals returned to Australia for the purposes of preparing further supplementary evidence in the mortgage proceedings and being available for cross-examination, the Commissioner would not issue a DPO. The Commissioner was also asked to give reasons and identify the matters he had taken into account in the event that he was not prepared to give an undertaking in respect of either or both of the two matters identified above. 9 The 30 October 2015 letter was accompanied by voluminous documents, including various affidavits which had been filed in various proceedings involving the Oswals' taxation affairs and their assets. The attachments also included a copy of Edmonds J's judgment in Commissioner of Taxation v Arnold [2014] FCA 959 (Arnold). 10 The letter contained lengthy submissions in support of the Oswals' request for an undertaking to be given. It is unnecessary to set out the detail of those submissions because they substantially overlap with the contentions raised in the proceeding. 11 The Commissioner's solicitors responded to the Oswals' requests by letter dated 4 November 2015. The body of the letter was as follows: 1. We refer to your letter of 30 October 2015 addressed to our client, the Commissioner of Taxation in which you have requested the Commissioner to given an undertaking to your clients Mr and Mrs Oswal in the terms set out at paragraph 14 of your letter. 2. We have been instructed to respond to that request. 3. Section 14S of the Taxation Administration Act 1953 (TAA) provides that the Commissioner may issue a departure prohibition order where: (a) a person is subject to a tax liability; (b) the Commissioner believes on reasonable grounds that it is desirable to do so for the purpose of ensuring that the person does not depart from Australia for a foreign country without: (i) wholly discharging the tax liability; or (ii) making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged. 4. Your clients are not presently in Australia. By your request you are effectively asking that the Commissioner bind himself in relation to some future action that may or may not be taken pursuant to section 14S of the TAA. 5. In the circumstances, we are instructed to advise that the Commissioner declines to provide the undertaking which your clients seek. 12 By letter dated 9 November 2015, the Oswals' solicitors asked the Commissioner to reconsider his decision given that their proposed return to Australia was imminent. The Commissioner was provided with additional material relating to the value of the Oswals' assets in Australia and other matters. The Commissioner was requested to give reasons if he again refused to give the undertaking. 13 By letter dated 12 November 2015, the Commissioner's solicitors stated that his position remained the same as set out in the earlier letter of 4 November 2015. The second paragraph of the latter letter stated: We are instructed to advise that the Commissioner has considered the matters raised in your letter of 9 November 205 (sic) but his position remains the same as set out in our letter to you of 4 November 2015. The letter of 4 November 2015 sets out the reasons for that position.

The judicial review proceeding 14 The proceedings were commenced in the Court on 18 November 2015 by an originating application for relief under s 39B of the Judiciary Act 1903 (Cth) (the originating application). At a directions hearing held on 24 November 2015, directions were given for the filing of evidence and outlines of submissions. In view of the urgency of the matter, the originating application was listed for final hearing on 11 December 2015. 15 The originating application was supported by an affidavit sworn by the Oswals' solicitor. The annexures to the affidavit totalled approximately 1000 pages. They included correspondence between the parties, including but not limited to the letters referred to above, as well as copies of all the material provided to the Commissioner in support of the Oswals' requests that he give an undertaking. As noted above, the material included multiple affidavits filed in various proceedings which provided information concerning such matters as the value of the Oswals' assets. The relief sought in the originating application included a declaratory order to the effect that the Commissioner's refusal to give an undertaking was unreasonable and constituted jurisdictional error. A further declaration was sought that the Commissioner could not lawfully exercise his power under s 14S of the TAA to issue a DPO against the Oswals. An injunction was sought to prevent the Commissioner from exercising his power under that provision against the Oswals. 16 By an interlocutory application filed on 7 December 2015, the Oswals sought leave to amend the originating application so as to seek the following relief: (a) a declaration that the Commissioner had power under s 3A of the TAA to agree to an undertaking having regard to the Oswals' individual circumstances; (b) a declaration that the Commissioner's refusal to agree to give such an undertaking was unreasonable so as to result in jurisdictional error; (c) an order quashing the Commissioner's decision as contained in his letters dated 4 and 9 November 2015; and (d) mandamus to compel the Commissioner to consider, according to law, whether to make the agreement as sought by the Oswals. 17 Leave was granted to enable the Oswals to rely upon the amended originating application.

The Oswals' submissions summarised 18 The Oswals contended that the Commissioner wrongly construed his powers under ss 3A and 14S of the TAA in deciding that he "could not provide the undertaking/agreement" sought by the Oswals because the Commissioner considered that: (a) the power to exercise the discretion under s 14S only arose once the Oswals were present in Australia; and (b) the undertaking sought by the Oswals would amount to an unlawful fetter on the future exercise of the power under s 14S. 19 The Oswals contended that the power under s 14S could be exercised even when the taxpayers are not physically in Australia and also that, having regard to s 3A of the TAA, the Commissioner lawfully had power now in the relevant circumstances to make an agreement/undertaking that would not constitute an unlawful fetter on his power. 20 As to the Commissioner's power to make an agreement or give an undertaking, the Oswals stated that they relied on the Commissioner's power of general administration under the TAA as conferred on him by s 3A of that statute. They cited inter alia the Full Court's decision in Grofam Pty Ltd v Federal Commissioner of Taxation [1997] FCA 660; (1997) 97 ATC 4656 (Grofam) at 4,665. 21 They further contended that in the circumstances of the mortgage proceedings and the Oswals' concerns that a DPO would be issued against them if they came to Australia for that proceeding, there "is a current dispute in which the Commissioner is a party and a question has arisen as to the efficient management of the dispute before the Federal Court". They cited Arnold as a precedent which demonstrated the Commissioner's preparedness to give an undertaking in the context of a dispute involving the Commissioner and another taxpayer in the context of "an efficient management of the dispute before the Federal Court in that case". The Oswals also pointed to the Commissioner having entered into other agreements in relation to the recovery of disputed debts where he agreed on particular terms not to recover disputed debts in the future and for a specified time. They contended that these types of agreements were not unlawful fetters on the Commissioner's powers. 22 The Oswals also made submissions in support of their claim that the Commissioner had misapprehended the limits of his powers because they claimed that the Commissioner took the view that he was powerless to give the undertaking because the Oswals were not present in Australia. Ultimately, this argument was not pressed. 23 The Oswals contended that the Commissioner's decision to decline the undertaking was unreasonable in the legal sense established in cases such as Minister for Immigration and Citizenship v Li [2013] HCA 18; (2013) 249 CLR 332 (Li) and Minister for Immigration and Border Protection v Singh [2014] FCAFC 1; (2014) 231 FCR 437 (Singh). 24 In further support of their claim of unreasonableness, the Oswals submitted that, if the Commissioner had power under s 3A to agree to the undertaking in the particular circumstances here, his decision to decline to exercise the power now was unreasonable because, having regard to all the materials that had been provided in support of the Oswals' request: (a) that request was made in the context of a serious dispute, namely the mortgage proceedings and the Commissioner wanted to cross-examine the Oswals; (b) the Commissioner had power under s 3A of the TAA to consider whether to agree to give an undertaking and the terms on which it would be given; (c) the power under ss 3A and 14S of the TAA had to be exercised "fairly and reasonably in the administration of the Act"; (d) the Commissioner was provided with material as to Oswals' asset position and the Commissioner had freezing orders and garnishee notices in respect of those assets within Australia; and (e) the Commissioner was in a position now to make a determination whether or not to agree to the undertaking and on what terms.

Commissioner's submissions summarised 25 In broad terms, the Commissioner contended that the Oswals' case rested on a fundamental mischaracterisation of the reasons why the Commissioner had rejected their request. As to the Oswals' claim that the Commissioner considered that his discretion under s 14S of the TAA was only exercisable once the Oswals were physically in Australia, the Commissioner said that no such statement was made in either the 4 or 9 November 2015 letters. Rather, the statement that the Oswals were not presently in Australia in that correspondence was simply "a statement of accepted fact". 26 As to the Oswals' claim that the Commissioner rejected their request on the basis that the undertaking would amount to an unlawful fetter on the future exercise of power, the Commissioner emphasised that the letter dated 4 November 2015 simply stated that the Oswals were effectively asking the Commissioner to bind himself in relation to some future action that may or may not be taken under s 14S of the TAA. The Commissioner contended that this statement was plainly correct because that was precisely the intended outcome being sought by the Oswals. 27 Because of these fundamental mischaracterisations of the reasons, the Commissioner contended that it was neither necessary nor appropriate for the Court to determine whether as a matter of law: (a) a DPO may be issued in relation to a person not present in Australia; or (b) whether s 3A of the TAA authorised the Commissioner to grant an undertaking in the terms sought by the Oswals. 28 As to the Oswals' claim of unreasonableness, the Commissioner submitted that this ground was not established in circumstances where: (a) the Oswals' evident purpose in seeking the undertaking was to fetter the Commissioner's power to issue DPOs against them and it was not unreasonable for the Commissioner to refuse to give any such undertaking. The legislation, including s 3A of the TAA, did not oblige or require the Commissioner to accede to the Oswals' request and s 14S conferred a statutory discretion which may be exercised from time to time; (b) the discretion under s 14S is wide and may require consideration of a wide range of different facts and circumstances which may change from time to time and it was not unreasonable for the Commissioner to decline to give the undertaking. Moreover, it was not unreasonable for the Commissioner not to give the undertaking in circumstances where the Oswals were not physically in Australia and there is a statutory precondition to the exercise of the power that the Commissioner believes, on reasonable grounds, that it is desirable to issue a DPO for the purpose of "ensuring" that a person subject to a taxation liability does not leave Australia; (c) the terms of the undertaking sought by the Oswals were ambiguous, referring to the requests "to give" an undertaking and to "agree to give" an undertaking. Furthermore, the undertaking was premised on a hypothetical and uncertain state of affairs, namely whether or not the Oswals would return to Australia; (d) the Commissioner's position was not unreasonable having regard to such matters as the Oswals' very large taxation liabilities and the serious claims made in the mortgage proceedings, including the Commissioner's allegations that Mrs Oswal left Australia shortly after the ANZ Bank had issued demands against her and she had failed to return since then; and (e) the Commissioner's position did not create an unreasonable or unjust result because the Oswals may never return to Australia and, if they did, they may or may not be subject to DPOs. If DPOs were issued, the Oswals would have rights of appeal and the legislative scheme should be allowed to take its natural course. 29 The Commissioner also made submissions as to why the Court would not grant any of the relief sought in the amended originating application.

Consideration 30 Section 3A of the TAA provides: 3A General administration of Act The Commissioner has the general administration of this Act. Note: An effect of this provision is that people who acquire information under this Act are subject to the confidentiality obligations and exceptions in Division 355 in Schedule 1. 31 Section 14S of the TAA provides: 14S Departure prohibition orders (1) Where: (a) a person is subject to a tax liability; and (b) the Commissioner believes on reasonable grounds that it is desirable to do so for the purpose of ensuring that the person does not depart from Australia for a foreign country without: (i) wholly discharging the tax liability; or (ii) making arrangements satisfactory to the Commissioner for the tax liability to be wholly discharged; the Commissioner may, by order in accordance with the prescribed form, prohibit the departure of the person from Australia for a foreign country. (2) Subject to subsection (3), a departure prohibition order remains in force unless and until revoked under section 14T or set aside by a court. (3) A departure prohibition order made in respect of a person shall be taken, by virtue of this subsection, not to be in force in respect of the person during any period during which an order is in force under the Migration Act 1958 for the deportation of the person. (4) Where a departure prohibition order is made in respect of a person, the Commissioner shall forthwith: (a) cause the person to be informed, as prescribed, of the making of the order; and (b) subject to subsection (5), cause a copy of the order, and such information as the Commissioner considers is likely to facilitate the identification of the person, to be given to: (i) the Immigration Secretary; and (ii) such other persons as the Commissioner considers appropriate, being persons prescribed, or included in a class of persons prescribed, for the purposes of this paragraph. (5) Where a departure prohibition order is made in respect of a person whom the Commissioner is satisfied is an Australian citizen, the Commissioner shall not cause a copy of the order, or any information likely to facilitate the identification of the person, to be given to the Immigration Secretary unless the Commissioner is of the opinion that it is desirable to do so. 32 Section 14V of the TAA provides that a person who is aggrieved by the making of a DPO may appeal to the Federal Court or the Supreme Court of a State or Territory against the making of the DPO.

Has the Commissioner misconstrued his powers under s 3A? 33 I accept the Commissioner's contention that the Oswals have misconstrued the reasons provided one behalf of the Commissioner in the solicitor's letters dated 4 and 11 November 2015. There was no legal obligation on the Commissioner to provide any reasons for his decision. The Oswals do not suggest that a provision such as s 25D of the Acts Interpretation Act 1901 (Cth) had any application here. The Commissioner's reasons are brief. I see no reason why those reasons should not be construed and understood by the well-established principle that even more formal reasons provided by administrative tribunals or decision-makers should not be read critically and with an eye for error (see, for example, Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 272). 34 The reference in the letter dated 4 November 2015 to the Oswals not being present in Australia should be viewed as a simple and indisputable statement of fact and not as some definitive statement on the part of the Commissioner (or his solicitors) that the Commissioner has no power to give an undertaking not to make a DPO unless the person seeking the undertaking is physically present in Australia. 35 I also accept the Commissioner's contention that it was open to the Commissioner, in deciding not to grant the requested undertaking, that the Oswals were not in Australia and there was at least a possibility that they would not return. 36 Similarly, fairly read and construed, the correspondence from the Commissioner's solicitors does not assert that the Commissioner refused to give the undertaking because he was of the view that such an undertaking would constitute an "unlawful fetter" on the exercise of his statutory power under s 14S. The second sentence in paragraph 4 of the letter dated 4 November 2015 (which is set out in [11] above) is an accurate characterisation of the Oswals' request. It was plainly open to view their request that the Commissioner give an undertaking as asking the Commissioner to bind himself in relation to the possible exercise of his discretion under s 14S. As the Commissioner submitted, this was the very outcome which the Oswals were seeking in requesting the Commissioner to give the undertaking. 37 For these reasons, the foundation for the Oswals' argument that the Commissioner misapprehended the scope of his powers under s 3A of the TAA is entirely misplaced.

Was the Commissioner's decision unreasonable in a legal sense? 38 For the following reasons, the Oswals' claims based on unreasonableness are also without substance. 39 It was correctly pointed out by Ms Kaur-Bains, who appeared for the Oswals, that the current leading authorities in Australia on this head of judicial review for jurisdictional error are the decisions in Li and Singh. The relevant principles established by those authorities may be summarised as follows.

The decision in Li 40 Li involved judicial review of a statutory discretionary power which was vested in the Migration Review Tribunal under s 363(1)(b) of the Migration Act 1958 (Cth) (the Migration Act) to adjourn a review by the tribunal from time to time. 41 The plurality (Hayne, Kiefel and Bell JJ) held that there was a legal presumption that the legislature intended that such a statutory discretionary power be exercised reasonably (see also at [23]-[29] per French CJ and at [88]-[92] per Gageler J). 42 In determining the standard of reasonableness in such a case, the plurality held that it was not confined to the concept of "Wednesbury unreasonableness" as defined by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. The plurality emphasised that the "legal standard of unreasonableness" in Australia is not limited to "what is in effect an irrational, if not bizarre, decision - which is to say one that is so unreasonable that no reasonable person could have arrived at it…" (at [68]). 43 The legal standard of reasonableness is the standard which is indicated by the true construction of the relevant statute. This serves to underline the central importance of construing the statute in determining whether or not an exercise of a statutory power is unreasonable in the legal sense (at [63] and [67]). 44 Within the bounds of legal unreasonableness, there "is an area within which a decision-maker has a genuinely free discretion" ([66]). It is critical that, in exercising a judicial review function, the courts not exceed "their supervisory role by undertaking a review of the merits of an exercise of discretionary power" ([66]). Application of a standard of legal unreasonableness "does not involve substituting a court's view as to how a discretion should be exercised for that of a decision-maker" ([66]). (To similar effect, see at [30] per French CJ and at [105]-[113] per Gageler J who, arguably, placed even greater emphasis on the "stringency" of the test). 45 By analogy with the approach in House v The King [1936] HCA 40; (1936) 55 CLR 499, i.e. that an appellate court should not interfere with the exercise of a discretionary power by an inferior court merely because the appellate court would have taken a different course, it must be evident in a judicial review of the exercise of a statutory power by a tribunal that there has been some error in exercising the discretion ([75]). Their Honours stated at [76] (footnotes omitted): As to the inferences that may be drawn by an appellate court, it was said in House v The King that an appellate court may infer that in some way there has been a failure properly to exercise the discretion "if upon the facts [the result] is unreasonable or plainly unjust". The same reasoning might apply to the review of the exercise of a statutory discretion, where unreasonableness is an inference drawn from the facts and from the matters falling for consideration in the exercise of the statutory power. Even where some reasons have been provided, as is the case here, it may nevertheless not be possible for a court to comprehend how the decision was arrived at. Unreasonableness is a conclusion which may be applied to a decision which lacks an evident and intelligible justification. 46 The application of these principles relating to legal unreasonableness in the particular legislative framework and circumstances in Li resulted in a finding that the Migration Review Tribunal had fallen into jurisdictional error in exercising its discretion under s 363 of the Migration Act to refuse the visa applicant an adjournment. The plurality's core reasoning and conclusion is reflected in [85]: The Tribunal's error might be identified as giving too much weight to the fact that Ms Li had had some opportunity to present evidence and argument and insufficient weight to her need to present further evidence. It would not appear that the Tribunal had regard to the purposes for which the statutory discretion in s 363(1)(b) is provided in arriving at its decision. It is not possible to say which of these errors was made, but the result itself bespeaks error. In the circumstances of this case, it could not have been decided that the review should be brought to an end if all relevant and no irrelevant considerations were taken into account and regard was had to the scope and purpose of the statute. Because error must be inferred, it follows that the Tribunal did not discharge its function (of deciding whether to adjourn the review) according to law. The Tribunal did not conduct the review in the manner required by the Migration Act and consequently acted beyond its jurisdiction.

The decision in Singh 47 Singh involved an appeal from a decision of the Federal Circuit Court of Australia which quashed a decision of the Migration Review Tribunal to refuse to grant an adjournment under s 363(1)(b) of the Migration Act. 48 The relevant principles established in Singh may be summarised as follows: (a) legal unreasonableness "is invariably fact dependent" and requires a careful evaluation of the evidence. The outcome of any particular case in which it is claimed that there has been a legally unreasonable exercise of a statutory discretionary power will depend on the application of the principles from Li and the authorities discussed therein, rather than on an analysis of factual similarities or differences between individual cases, including Li (at [42]); (b) there is a presumption of law that the Parliament intends an exercise of statutory power to be reasonable (at [43]); (c) there are two species of legal unreasonableness, namely where the review court has identified an underlying jurisdictional error in the decision-making process and also where the concept of legal unreasonableness is "outcome focused" and there is lacking "an evident and intelligible justification" (at [44] citing Li at [76] per Hayne, Kiefel and Bell JJ and at [105] per Gageler J); (d) where there are reasons in support of an exercise of discretion, those reasons will provide the focus for an assessment as to whether the decision is unreasonable in the legal sense and, in such a case, it would be a rare where the reasons demonstrate a justification but the ultimate exercise of the power is seen to be legally unreasonable ([45]-[47]); and (e) the standard of legal unreasonableness applies across a wide range of statutory powers, but the indicia of legal unreasonableness will need to be found in a scope, subject and purpose of the particular statutory provisions in issue in any given case, as well as the fact dependent (at [48]). 49 As is evident from the terms of s 14S of the TAA, the discretion (which is implicit in the word "may" and see also s 33(2A) of the Acts Interpretation Act 1901 (Cth)) conferred upon the Commissioner to make a DPO is a broad one. The discretion is enlivened where the two specified preconditions in that provision are met, namely: (a) where a person is subject to a tax liability, which could be described as a jurisdictional fact but there is no dispute in the circumstances here that the Oswals are subject to such a liability; and (b) the Commissioner believes on reasonable grounds that it is desirable to make a DPO for the purpose of ensuring that a person the subject of the DPO does not leave Australia for a foreign country without either wholly discharging the tax liability or making satisfactory arrangements with the Commissioner in that regard. 50 Where those two preconditions exist, the discretion whether or not to make a DPO is then enlivened. The Oswals did not suggest of course that this is a case where the word "may" should be read as imposing a duty (see Julius v Bishop of Oxford (1880) 5 App Cas 214 at 222-223 and Leach v R [2007] HCA 3; (2007) 230 CLR 1 at 17). It is notable that, apart from the two preconditions, there is no express list of considerations or matters which the Commissioner is obliged to take into account in determining whether the discretion should be exercised. The Commissioner's discretion is not unlike the discretion in another statutory context which was the subject of Deane J's well-known observations in Sean Investments Pty Ltd v MacKellar [1981] FCA 191; AustLII citation [1981] FCA 174; (1981) 38 ALR 363 at 375 (emphasis added): … where relevant considerations are not specified, it is largely for the decision-maker, in the light of matters placed before him by the parties, to determine which matters he regards as relevant and the comparative importance to be accorded to matters which he so regards. 51 The absence of an explicit list of matters to which the Commissioner must have regard in determining whether or not to exercise his power under s 14S does not mean, however, that the discretion is entirely at large. As Allsop CJ and Katzmann J stated in NBMZ v Minister for Immigration and Border Protection [2014] FCAFC 38; (2014) 220 FCR 1 at [6] in reference to the discretion under s 501(1) of the Migration Act 1958 (Cth): … Nevertheless, the law imposes certain limits on the exercise of the discretion. The Minister may not act arbitrarily, capriciously or legally unreasonably. The subject matter, scope and purpose of the Act may also require that certain considerations be taken into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 at 39; and Huynh at [71]… 52 Significantly, the focus of the Oswals' judicial review application was not directly on s 14S, but rather was on the Commissioner's decision to refuse to give an undertaking or enter into an agreement not to exercise his discretion under s 14S to make a DPO against either Mr or Mrs Oswal. The Oswals did not claim that the source of the Commissioner's power to give such an undertaking was to be found in s 14S itself. Rather, they submitted that the exclusive source of the power is s 3A of the TAA, the terms of which are set out in [30] above. 53 It is not clear to me that s 3A is in fact the source of the power of the Commissioner to give an undertaking in relation to s 14S. It is evident from cases such as Arnold that the Commissioner considers that he does have such a power or capacity, but its source is uncertain. It should not be thought that the source of the power must be found in one or more specific provisions in taxation legislation, such as s 3A of the TAA (see the discussion in Hutchins v Commissioner of Taxation [1996] FCA 201; (1996) 65 FCR 269 at 273, 276-277 and 279 in the context of whether the Commissioner's power to vote against a motion at a creditors' meeting was derived from s 8 of the Income Tax Assessment Act 1936 (Cth), which is the predecessor provision to s 3A of the TAA, for the purposes of establishing whether the Court had jurisdiction under the Administrative Decisions (Judicial Review) Act 1977 (Cth)). My tentative view is that the source of the power is non-statutory and, in the circumstances of a case like this, is an aspect of the Commissioner's powers and function as a party to litigation, which should be viewed together with the relevant statutory power in s 14S. 54 It is unnecessary, however, to determine that question here because the Oswals presented their case on the explicitly stated basis that the only source of that power is s 3A. Let it be assumed that this is correct (emphasising, however, that I express no considered or final view on that question). If s 3A provides the source, it is notable that this provision is expressed in the broadest of terms, namely that the Commissioner has the general administration of the TAA. This has important implications for the Oswals' claim that the Commissioner's refusal to give the requested undertaking is unreasonable in a legal sense. As the analysis of both Li and Singh above demonstrates, where it is contended that a statutory discretionary power has been exercised unreasonably in a legal sense it is critical to focus on the statutory framework within which that power has been exercised. Legal unreasonableness does not involve a judicial review court deciding for itself how a statutory discretionary power ought to be exercised without reference to the relevant statutory framework in which the power must be exercised. It is only by a careful analysis of that statutory framework and the application of it to the relevant facts that a determination could be made on a judicial review as to whether a power has been exercised unreasonably in the legal sense. 55 When asked to identify the features of the relevant statutory framework within which to assess whether the Commissioner's decision to refuse to grant an undertaking was unreasonable, Ms Kaur-Bains submitted that: (a) s 3A is "a broad power to be exercised bona fide for, amongst other things, to make agreements, arrangements, undertakings" concerning "the efficient management of a dispute" in which the Commissioner is involved; (b) the discretion in s 3A has to be exercised according to law, consistently with authorities such as Li and Singh; and (c) the "statutory purpose of 3A is to permit the Commissioner to enter into agreements for the purpose of the efficient management of a dispute, and there's a dispute, being the mortgagee proceedings". 56 In support of her core submission that the statutory purpose of s 3A is the efficient management of a dispute, Ms Kaur-Bains relied on Spender J's decision in Precision Pools Pty Limited v Commissioner of Taxation [1992] FCA 746; AustLII citation [1992] FCA 445; (1992) 37 FCR 554 (Precision Pools) and subsequent decisions which have discussed and applied Precision Pools, including Grofam and Commissioner of Taxation v Clark (No 2) [2011] FCAFC 140; (2011) 197 FCR 251 (Clark). 57 In Precision Pools, at 566-7, Spender J said: I reject the suggestion that there is no power in the Commissioner to agree to receive moneys on the basis that, if it were to be held subsequently that he had no right to be paid those moneys, the Commissioner would repay them. By s 4 of the [Sales Tax Assessment Act] the Commissioner is given the general administration of that Act. That administration has to be bona fide and for the purposes of the Act, but it is a grant of a wide power and would encompass, for instance, the power to compromise proceedings in which he was a party or to make agreements or arrangements concerning the efficient management of a dispute in which he was involved. 58 Those observations by Spender J were made in the context of the Commissioner seeking to avoid an agreement which he had entered into with the applicants in those proceedings. The agreement was to the effect that, pending the outcome of an appeal to the High Court concerning the liability to pay sales tax on swimming pools constructed on site, the applicants would pay a part of the moneys claimed by the Commissioner and, if the High Court was adverse to the sales tax assessments, the Commissioner would refund those moneys with interest. The Commissioner contended that his power to refund sales tax was exhaustively dealt with in specific statutory provisions and that he did not have power to enter into the agreement. Those submissions were rejected. Spender J held that the specific statutory provisions relied upon by the Commissioner concerning the refund of sales tax did not exhaustively deal with that topic and that the agreement was binding on the Commissioner for two reasons, namely: (a) there was power under s 4 of the relevant legislation (which was expressed in similar terms to s 3A of the TAA) to make such an agreement in the context of the efficient management of a dispute in which the Commissioner was involved; and (b) it was also within "the general powers of the Government" to make ordinary contracts relating to the administration of public affairs, consistently with authorities such as Queensland Trustees Limited v Fowles [1910] HCA 51; (1910) 12 CLR 111 and New South Wales v Bardolph [1934] HCA 74; (1935) 52 CLR 455. 59 Justice Spender's observations in Precision Pools regarding the scope of a statutory power of general administration such as s 3A of the TAA have been referred to approvingly in subsequent decisions of the Full Court in Grofam at 4,665 and in Clark at [22]. Both those decisions were concerned with the Commissioner's power to enter into an agreement to settle legal proceedings in which the Commissioner was a party. In Grofam, the Full Court noted that the terms of settlement made reference to the future issue of assessments under taxation legislation which obliged the Commissioner to give effect to the terms of settlement by making those assessments. Thus the terms of settlement did not constitute an impermissible fetter on the Commissioner's power to settle the dispute and apply the relevant taxation law. 60 Clark involved the construction of offers of settlement made by taxpayers to the Commissioner and whether the Commissioner's response was a genuine offer to compromise for the purposes of determining whether an order for indemnity costs should be made against him. It was in that specific context that reference was made to Spender J's observations in Precision Pools. 61 Ms Kaur-Bains properly accepted that the factual circumstances here are different from those in Precision Pools, Grofam and Clark, which all dealt one way or another with settling or compromising proceedings. But she submitted that the observations concerning the equivalent provisions to s 3A were applicable to the circumstances here because the giving of the requested undertaking "enables the efficient management of [the] dispute". 62 Acceptance of Ms Kaur-Bains' submission would mean that any decision made by the Commissioner in the course of litigation with a taxpayer in which the taxpayer asks the Commissioner to do something (including giving an undertaking) concerning "the efficient management of a dispute" would be susceptible to judicial review if the Commissioner declined to do what the taxpayer asked. That seems most improbable: it would potentially give rise to serious fragmentation of civil proceedings (see the observations of Davies J in Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation [1993] FCA 854; AustLII citation [1993] FCA 534). This further underlines the doubts expressed above that s 3A is in fact the true source of the Commissioner's power to consider whether or not to give an undertaking of the type sought by the Oswals. 63 In any event, as Spender J emphasised, provisions such as s 3A involves "a grant of a wide power" ([49]). Even if it were accepted that "the efficient management of a dispute" is a relevant purpose of such a provision, that is not the only purpose. The primary purpose of the TAA is to provide for the administration of taxation legislation which is directed to the assessment of taxable income and to the tax payable for the purposes of collecting revenue (see the pertinent observations of Gleeson CJ in Carr v Western Australia [2007] HCA 47; (2007) 232 CLR 138 at [6] concerning the presence in taxation legislation of the general purpose of raising revenue for government and more specific statutory purposes). In considering whether or not to give an undertaking such as that sought by the Oswals, the Commissioner is entitled to take into account a wide range of considerations which are relevant to that general statutory purpose. The Commissioner would not be confined to considering only matters which concern "the efficient management of a dispute". 64 In the relevant circumstances here, the Commissioner was entitled to take into account such matters as the significant quantum of the Oswals' taxation liability, the fact that they were not present in Australia and might never return to this country (in which case no issue would arise concerning the making of a DPO). Even if the Oswals were to return, it was plainly open to the Commissioner to decline to give the undertaking sought having regard to the breadth of the discretion under s 14S and the need for the Commissioner to consider a wide range of different facts and circumstances at the relevant time in determining whether or not to make a DPO. It was not unreasonable for the Commissioner to decline to give an undertaking at the time that he did and by reference to the matters set out in his solicitors' correspondence.

Conclusion 65 For these reasons, the amended originating application should be dismissed and the applicants ordered to pay the respondent's costs. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.