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.