Parker v Ramanathan

BACKGROUND 5 The applicant is the director, public officer and shareholder of the company Ivyside Pty Ltd (Ivyside). Ivyside claimed GST input tax credits with respect to various purchases in relation to the company. On 22 May 2007, Mr Michael Parker (the respondent to matters WAD79 of 2008 and WAD81 of 2008) advised the applicant that the claims at 'label G11' on his activity statement for the period July to September 2006 would be disallowed because valid tax invoices were not produced to substantiate the amount of GST credits claimed. The ATO subsequently issued the applicant notices pursuant to s 264 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) and s 353-10 of the Taxation Administration Act 1953 (Cth) (TAA). On or around 3 October 2007, the ATO issued the applicant an amended assessment and penalties for the July to September quarter of 2006.

COMPLAINT 6 In this matter, the applicant seeks to review a decision of the respondent in raising an amended tax assessment and penalties for the July-September quarter of 2006. It is said that the respondent in making that decision has acted oppressively towards the applicant, is acting in breach of the Taxpayer's Charter and in breach of the ATO Receivables Policy, has abused his power and has purposefully caused mental and emotional pain and suffering on the applicant. 7 However, in an affidavit in support of his application, the applicant stresses that the decision of which review is sought is not that decision but rather the decision of the respondent to deny and refuse him the right to an informal review of the GST issue relating to a company of which he is the director, public officer and shareholder. The applicant stresses that it was not the decision made by the respondent on or around 3 October 2007 to raise a tax assessment or an amended statement or penalties for the relevant quarter. Accordingly, these reasons focus on the substituted ground of complaint. 8 The respondent complains that there was no evidence put forward which could possibly support the allegations of oppressive, harassing or unlawful behaviour or, indeed, any conduct other than the alleged issue by the respondent of the amended assessment in relation to the GST liability of Ivyside. Assuming that the complaint is that of refusing the informal review, the respondent points to the fact that there is no evidence that such a review was sought, refused or agreed to. These submissions are correct.

APPROACH TO COMPETENCY CHALLENGE 9 The Court has jurisdiction to determine that it has no jurisdiction in respect of a proceeding instituted in the Court and to dismiss the proceeding accordingly (Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at [14]). As observed in Mirvac Homes (NSW) Pty Limited v Airservices Australia (No 1) [2004] FCA 109 by Branson J, the provision in the Federal Court Rules for the filing and service of a notice of objection to competency is intended to encourage a respondent to inform the applicant promptly that the jurisdiction of the Court is in issue. The filing of a notice of objection to competency also places the Court on notice that its jurisdiction to make the orders sought by the applicant in the proceeding is challenged. The Court must then decide, before it makes the orders sought by the applicant or any substantive orders, whether it has jurisdiction to proceed (R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190). 10 In Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317, Finkelstein J at [239] expressed the view that, where an issue which is properly characterised as jurisdictional is raised, it should be dealt with at the outset although a different approach was taken in Khatri v Price (1999) 95 FCR 287 per Katz J at [14]). 11 Whether or not it is necessary to resolve the jurisdictional issue at the outset, it appears to me that the current jurisdictional argument is succinct and independent in the sense that it can be resolved without any other evidentiary enquiry. If the argument is correct, there seems no obvious reason in this case why consideration of the jurisdictional challenge should be further deferred. Deferral has not been sought by the applicant. (As distinct from raising opposition to the objection).

STATUTORY FRAMEWORK 12 Section 5 of the ADJR Act relevantly provides as follows: 5 Applications for review of decisions (1) A person who is aggrieved by a decision to which this Act applies that is made after the commencement of this Act may apply to the Federal Court or the Federal Magistrates Court for an order of review in respect of the decision on any one or more of the following grounds: (a) that a breach of the rules of natural justice occurred in connection with the making of the decision; (b) that procedures that were required by law to be observed in connection with the making of the decision were not observed; (c) that the person who purported to make the decision did not have jurisdiction to make the decision; (d) that the decision was not authorized by the enactment in pursuance of which it was purported to be made; (e) that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made; (f) that the decision involved an error of law, whether or not the error appears on the record of the decision; (g) that the decision was induced or affected by fraud; (h) that there was no evidence or other material to justify the making of the decision; (j) that the decision was otherwise contrary to law. (2) The reference in paragraph (1)(e) to an improper exercise of a power shall be construed as including a reference to: (a) taking an irrelevant consideration into account in the exercise of a power; (b) failing to take a relevant consideration into account in the exercise of a power; (c) an exercise of a power for a purpose other than a purpose for which the power is conferred; (d) an exercise of a discretionary power in bad faith; (e) an exercise of a personal discretionary power at the direction or behest of another person; (f) an exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case; (g) an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power; (h) an exercise of a power in such a way that the result of the exercise of the power is uncertain; and (j) any other exercise of a power in a way that constitutes abuse of the power. (3) The ground specified in paragraph (1)(h) shall not be taken to be made out unless: (a) the person who made the decision was required by law to reach that decision only if a particular matter was established, and there was no evidence or other material (including facts of which he or she was entitled to take notice) from which he or she could reasonably be satisfied that the matter was established; or (b) the person who made the decision based the decision on the existence of a particular fact, and that fact did not exist. 13 Relevantly, s 3 of the ADJR Act identifies the decisions to which the Act applies as a 'decision of an administrative character made, proposed to be made, or required to be made (whether in the exercise of a discretion or not and whether before or after the commencement of this definition)': (a) under an enactment referred to in paragraph (a), (b), (c) or (d) of the definition of enactment; or (b) by a Commonwealth authority or an officer of the Commonwealth under an enactment referred to in paragraph (ca) or (cb) of the definition of enactment; other than: (c) a decision by the Governor-General; or (d) a decision included in any of the classes of decisions set out in Schedule 1. 14 By s 3(d) the definition of 'decision to which this Act applies' is narrowed by the exclusion of decisions included in any of the class of decisions set out in Sch 1. Schedule 1 of the ADJR Act relevantly provides: Schedule 1 - Classes of decisions that are not decisions to which this Act applies … (e) decisions making, or forming part of the process of making, or leading up to the making of, assessments or calculations of tax, charge or duty, or decisions disallowing objections to assessments or calculations of tax, charge or duty, or decisions amending, or refusing to amend, assessments or calculations of tax, charge or duty, under any of the following Acts: A New Tax System (Goods and Services Tax) Act 1999 A New Tax System (Luxury Car Tax) Act 1999 A New Tax System (Wine Equalisation Tax) Act 1999 Customs Act 1901 Customs Tariff Act 1995 Excise Act 1901 Fringe Benefits Tax Assessment Act 1986 Fuel Tax Act 2006 Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Petroleum Resource Rent Tax Assessment Act 1987 Superannuation Guarantee (Administration) Act 1992 Taxation Administration Act 1953, but only so far as the decisions are made under Part 3-10 in Schedule 1 to that Act Training Guarantee (Administration) Act 1990 Trust Recoupment Tax Assessment Act 1985; … Note: Subdivision B deals with the making, reduction and revocation of estimates of certain liabilities. (f) decisions of the Commissioner of Taxation under subsection 3E(1), 3G(1) or 3H(1) of the Taxation Administration Act 1953; (g) decisions under Part IV of the Taxation Administration Act 1953; (ga) decisions under section 14ZY of the Taxation Administration Act 1953 disallowing objections to assessments or calculations of tax, charge or duty; …

The Respondent 15 The respondent contends that the decision of the respondent in raising an amended assessment and penalties self-evidently formed part of the process leading up to the making of the decision by the Commissioner of Taxation (the Commissioner) to disallow GST input credits claimed by Ivyside and would be excluded pursuant to Sch 1(e) of the ADJR Act.

The Applicant 16 The applicant asserts that the Court does have jurisdiction to hear the matter. He contends that the respondent's decision or conduct is reviewable in this Court and it falls within the class of decisions to which the ADJR Act applies.

RELEVANT PRINCIPLES 17 Pursuant to s 8 of the ADJR Act, the Court has jurisdiction to hear and determine applications made under the ADJR Act. Section 5 of the ADJR Act provides that a person aggrieved by a decision to which the Act applies may apply to the Court for an order of review on certain grounds. Section 6 of the ADJR Act provides for review of conduct, engaged in, being engaged in or proposed to be engaged in for the purpose of making a decision to which the ADJR Act applies. 18 It is apparent from the definition of 'decision to which this Act applies' in s 3 of the ADJR Act that the Act only applies where there is a making of, proposal to make or requirement to make a decision, the decision is of an administrative character, and the decision is made under an enactment. In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 (at 335), Mason CJ discussed the meaning of 'decision' under s 3 of the ADJR Act and held (relevantly) (citations omitted): (1) Meaning of "Decision" The definition in s.3(1) does not elucidate significantly the meaning of the word "decision" as it is used in the A.D.(J.R.) Act. It is clear that a "decision to which this Act applies" must be a decision of an administrative character, that it may be made in the exercise of a discretion, and that it must be made under an enactment. But these characteristics provide little guidance as to the meaning of the word "decision" upon which the definition in s.3(1) is based. … Nonetheless other considerations point to the word having a relatively limited field of operation. First, the reference in the definition in s.3(1) to "a decision of an administrative character made ... under an enactment" indicates that a reviewable decision is a decision which a statute requires or authorizes rather than merely a step taken in the course of reasoning on the way to the making of the ultimate decision. Secondly, the examples of decision listed in the extended definition contained in s.3(2) are also indicative of a decision having the character or quality of finality, an outcome reflecting something in the nature of a determination of an application, inquiry or dispute or, in the words of Deane J., "a determination effectively resolving an actual substantive issue". Thirdly, s.3(3), in extending the concept of "decision" to include "the making of a report or recommendation before a decision is made in the exercise of a power", to that extent qualifies the characteristic of finality. Such a provision would have been unnecessary had the Parliament intended that "decision" comprehend every decision, or every substantive decision, made in the course of reaching a conclusive determination. Finally, s.3(5) suggests that acts done preparatory to the making of a "decision" are not to be regarded as constituting "decisions" for, if they were, there would be little, if any, point in providing for judicial review of "conduct" as well as of a "decision". The relevant policy considerations are competing. On the one hand, the purposes of the A.D.(J.R.) Act are to allow persons aggrieved by the administrative decision-making processes of government a convenient and effective means of redress and to enhance those processes. On the other hand, in so far as the ambit of the concept of "decision" is extended, there is a greater risk that the efficient administration of government will be impaired. Although Bowen C.J. and Lockhart J. appeared to emphasize the first of these considerations in Australian National University v. Burns, there comes a point when the second must prevail, as their Honours implicitly acknowledged. To interpret "decision" in a way that would involve a departure from the quality of finality would lead to a fragmentation of the processes of administrative decision-making and set at risk the efficiency of the administrative process. … Another essential quality of a reviewable decision is that it be a substantive determination. With the exception of s.3(2)(g), the instances of decision mentioned in s.3(2) are all substantive in character. Moreover, the provisions in sub-ss.(1), (2), (3) and (5) of s.3 point to a substantive determination. In this context the reference in s.3(2)(g) to "doing or refusing to do any other act or thing" (emphasis added) should be read as referring to the exercise or refusal to exercise a substantive power. I do not perceive in s.16(1)(b) or in par.(e) of Sched.1 or par.(a) of Sched.2 to the A.D.(J.R.) Act any contrary implication. These exclusions from the A.D.(J.R.) Act or from s.13 appear to have been introduced for more abundant caution and it would be unwise to take too much from them. (emphasis added) 19 Despite the clarity of the passage from the learned Chief Justice, application of the principles has not been without difficulty. Views on whether or not particular decisions or conduct constitutes a reviewable decision have not always been unanimous (for example, Guss v Federal Commissioner of Taxation (2006) 152 FCR 88). 20 Not only are there questions as to whether conduct constitutes a decision but also whether it is a decision taken under an enactment. For a decision to be reviewable it must be one 'for which provision is made by or under a statute', the provision should be more specific than general (for example, Hutchins v Commissioner of Taxationn (1996) 65 FCR 269 and Electricity Supply Assn of Australia Ltd v Australian Competition & Consumer Commission (2001) 113 FCR 230). A general authorisation for a body to act in a certain way is not usually regarded as being sufficient to qualify a decision as being one made under an enactment: Salerno v National Crime Authority (1997) 75 FCR 133. 21 Dealing with the enactment aspect, the majority of the High Court in Griffith University v Tang (2005) 221 CLR 99 held (at [89]) that: The determination of whether a decision is "made … under an enactment" involves two criteria: first, the decision must be expressly or impliedly required or authorised by the enactment; and, secondly, the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment. A decision will only be "made ... under an enactment" if both these criteria are met. It should be emphasised that this construction of the statutory definition does not require the relevant decision to affect or alter existing rights or obligations, and it will be sufficient that the enactment requires or authorises decisions from which new rights or obligations arise. Similarly, it is not necessary that the relevantly affected legal rights owe their existence to the enactment in question. Affection of rights or obligations derived from the general law or statute will suffice. 22 Indeed the High Court went on to observe that even though a decision taken may have a critical effect for the operation of the federal statute, if it is a decision made 'dehors' the federal statute, it would be un-reviewable.

CONSIDERATION 23 In the present circumstances, the alleged refusal to informally review does not constitute a decision in the sense contemplated in s 3 of the ADJR Act or as explained by the Chief Justice in Bond 170 CLR 321. 24 In the language of Fox ACJ in Evans v Friemann (1981) 35 ALR 428 at 431 the relevant decision or conduct did not constitute a decision which was final and conclusive for immediate purposes at least. It was not the ultimate or operative determination of an issue as distinct from the determination of issues arising in the course of making such an ultimate decision (Social Services, Director-General of v Chaney (1980) 31 ALR 571).

CONCLUSION 25 The original complaint was the raising of the amended tax assessment and penalties. That complaint appears to have been (emphatically) replaced by the applicant with a complaint to refuse an informal review. 26 In my view, the alleged actions or conduct of which complaint was originally raised by the applicant simply formed part of a process of leading up to the making of a decision by the Commissioner to disallow the GST input credits claimed by Ivyside. The alleged failure to informally review is not a relevant decision or conduct. 27 Further and as a distinct ground, even if there were an appropriate basis for review, it could be advanced only by the company, Ivyside not by the applicant. However, if this were the only issue standing in the way of the competency of this application, I may have granted any application to amend the identity of the applicant, or for that matter, the respondent. The difficulty with the competency of the application however, in my view, is much more fundamental, going to jurisdiction. 28 The respondent's jurisdictional objection to competency must be upheld and the claim dismissed. The applicant is to pay the costs of the respondent to be taxed if not agreed. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Associate: Dated: 25 August 2009 The Applicant represented himself.

Solicitor for the Respondent: Australian Government Solicitor