Peng v Chief Commissioner of State Revenue

LEGISLATION CITED : Administrative Decisions Tribunal Act 1997

Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, 624 Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 67 ALJR 170 Residents against Improper Development Incorporated and Another v Chase Property Investments Pty Ltd (2006) 149 LGERA 360 Vero Insurance Ltd v The Gombac Group Pty Ltd [2007] VSC 117 CASES CITED: Yates v Bola [2000] FCA 1895 Colgate Palmolive v Cusson (1993) 46 FCR 225 Lee v Mavaddat 2005 WASC 68 Gribbles Pathology Pty Ltd v Health Insurance Commission [1997] 80 FCR 283 CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 38 Kyriacou v Chief Commissioner of State Revenue [2009] NSWADT 175 IRG Technical Services Pty Ltd v FCT (2007) 156 FCR 57

APPLICANT B L Jones, barrister REPRESENTATION: RESPONDENT I Young, barrister

ORDERS: The Applicants must pay to the Respondent and on an indemnity basis his costs incurred since 3 September 2007 as agreed or failing agreement as assessed.

1 The Respondent (who is usually referred to in these reasons as the Chief Commissioner) seeks an order for costs on an indemnity basis for the period from commencement of proceedings by the Applicants in application number 076108 on 3 September 2007 up to and including the hearing of this costs application.

2 On 30 July 2009 (and in the late afternoon of that day) and which was one working day immediately prior to the days (3 and 4 August 2009) scheduled for the hearing of the applications (076108 and 086110 and collectively referred to as "the applications") the Applicants withdrew their applications for the review of decisions by the Chief Commissioner refusing the Applicants a principal place of residence ("PPR") exemption from land tax in respect of their property situated at 70 Barker Road Strathfield, (and which is referred to in these reasons either as "the property" or as "70 Barker Road"), for the land tax years 2002 to 2008 (both years inclusive and collectively referred to as "the relevant years".)

3 Application 076108 is applicable to the 2002, 2003 and 2004 land tax years; land tax was originally imposed in respect of the property for those years and also the 2005 and 2006 land tax years. Having received an objection in respect of all of those years, the Chief Commissioner originally allowed a PPR exemption in respect of the 2005 and 2006 land tax years but disallowed the objection in respect of the other land tax years. The Applicants were dissatisfied with the Respondent's decision and brought application number 076108 in order to seek a PPR exemption in respect of the property for the 2002, 2003, and 2004 land tax years.

4 The Chief Commissioner made enquiries and in consequence of which he reversed his decision to allow a PPR exemption for the 2005 and 2006 land tax years and in addition imposed land tax in respect of the 2007 and 2008 land tax years. Application number 086110 was then brought by the Applicants in respect of the 2005, 2006, 2007 and 2008 land tax years. The applications were scheduled to be heard together.

5 The Tribunal had before it the documents lodged pursuant to section 58 of the Administrative Decisions Tribunal Act 1997 in respect of each of the applications together also with a large number of other documents and including affidavits tendered by the parties. It is relevant in this context to note that on the second hearing day and after some discussion and argument it was agreed between the parties that all affidavits filed by the parties in respect of the applications would be treated as evidence before the Tribunal for the purposes of this decision. The volume of documentation before the Tribunal in aggregate is very large indeed. At the commencement of this costs application (the hearing of which took place during two days and being 12 October 2009 and 13 November 2009) the Chief Commissioner furnished the Tribunal with a substantial volume divided by numbered tabs containing a large number of documents ,and which was and is, in these reasons, referred to as the "Working Bundle".

6 The Working Bundle contains only documents which were before the Tribunal in respect of the applications. It was furnished by Mr Young in part to enable the Tribunal to have documents on which it could make notes, but also and more importantly to obviate the need for repeated references to different sets of documents and in particular, but not only, the two different sets of section 58 documents in respect of the two applications. The Tribunal is satisfied that the Working Bundle does not contain anything which was not before it in respect of the applications, and indeed Mr Jones did not object to this (convenient) method of dealing with the large volume of documentation involved. The Working Bundle contains an appropriate index at its front; it was not tendered as an exhibit because to do so would have duplicated documents already before the Tribunal, but this does not alter the fact that it was relevant and that it facilitated references to the documents before the Tribunal. The Working Bundle is sometimes referred to in these reasons as "WB"; where that reference is followed by a number the number refers to the relevant tab.

7 Each of the parties furnished written submissions, referred to as "AS" in the case of the Applicants' submissions and "RS" in the case of the Respondent's submissions. AS is much shorter than RS simply because it makes no attempt to deal with any of the evidence before the Tribunal. AS makes it clear that the Applicants contend than in the absence of a hearing an order for costs is not competent. RS is much longer than AS because it deals, and in detail, with the evidence before the Tribunal. AS, comprising clauses 1 to 12, inclusive, which is set out in full, reads as follows; 1. The presumption underlying section 88 of the ADT Act is that the unsuccessful party will not be required to pay the costs of the other side unless in circumstances it is fair to do so. While since the amendment to s.88 (1A) the provision gives the Tribunal greater scope to award costs the underlying presumption ought not to be disturbed without good cause. Where there has been no hearing on the merits the Court should be even more reluctant to depart from the presumption. Applicable Principles 2. In Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622, 624 McHugh J said: "In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra- curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action." [emphasis added] 3. In support of this passage McHugh J cited the decision of Hill J in Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194. In that case Hill J considered the circumstances in which a court could make a costs order without a trial. After referring to several English and Australian cases he stated (at 201) the following propositions: (1)Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order. (2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue. (3)In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB). (4)In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation. (5)Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted, a case which, however, depended upon the specific wording of the statute under consideration. (citations omitted) [emphasis added] 4. The Full Court approved the passage emphasized in Chapman v Luminis Pty Ltd [2003] FCAFC 162, at [7]. The Chief Commissioner's Submissions 5. The Commissioner submits that the Applicants' conduct constituted an `attempt to deceive' him and the Tribunal and that they are guilty of "gross and palpable falsehoods". 6. These are serious allegations with a serious consequence. Any finding of attempted deception therefore requires satisfaction to the Briginshaw. standard of proof. Dixon CJ said in Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194at 361 to 362: "Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the Tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences". 7. The High Court explained the content of the Briginshaw standard in Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 67 ALJR 170 where Mason CJ, Brennan, Deane and Gaudron JJ said at 171: [T]he strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct". 8. This standard could not reasonably be satisfied in the absence of a hearing of all the evidence. Indeed given the extent to which the Commissioner impugns the Applicants' credit and where there are apparent inconsistencies in evidence filed (but never read), procedural fairness requires an oral hearing on the merits before such a finding (and consequently any costs orders) can be made: see Heatley v Tasmanian Racing & Gaming Commission (1977) 137 CLR 487 at 516; Clarence City Council v South Hobart Investment Pty Ltd [2007] TASSC 16 at [28]. 9. While the content of the requirement of procedural fairness is not fixed,' This is particularly the case in judicial or quasi judicial proceedings such as those before the Tribunal where it is reasonably expected that, consistent with the obligation to afford procedural fairness, the Tribunal would hold a hearing on the merits before adverse findings and costs orders are made, particularly of the nature sought by the Commissioner; see Kioa v West (1985) 159 CLR 550 at 584-585, 626. It is worth noting that in none of the authorities cited by the Commissioner did the Court make adverse costs orders for misconduct of a party without a hearing on the merits.

10. Consequently, the present case is a paradigm example of when costs should not be awarded. The Chief Commissioner's costs application necessarily involves a hearing of the merits of the Applicant's case, the very thing the Court in Aust-Home Investments and Chapman said should not happen. 11. Moreover, as adverted to above, it is an application involving complex facts where credit is seriously in issue. The extensive references to the Applicants' affidavits, submissions and other evidence in the Commissioner's submissions (and their very length) underscore this point.

8 The Applicants contend, put succinctly, that costs cannot be awarded in the absence of a hearing. It is plain, as a matter of statutory interpretation, that an order for costs can be made prior to completion or even commencement of a hearing; some of the subparagraphs in section 88(1A) make it clear that this is so. As I understood Mr. Jones the case for his clients is that in this particular instance the allegations against the Applicants are so serious that it is not possible without a hearing to determine whether those allegations are valid. The Chief Commissioner contends that the wealth of evidence before the Tribunal demonstrates a clear attempt to deceive such that the Tribunal should be satisfied that an order for costs is both competent and justified. It is relevant to note that the Chief Commissioner's factual allegations are contained in RS and that the Applicants made no attempt to challenge that content.

9 At the commencement of the hearing of the costs application the Tribunal admitted as Exhibit R1 an affidavit by Ms Rebecca Kui, a solicitor acting for the Chief Commissioner, dated 19 August 2009 together with the large bundle of annexures referred to in that affidavit; the annexures are referred to in Exhibit R1 and in these reasons as RK3. (It may be noted that Ms Kui had furnished affidavits previously in respect of these proceedings).

10 Mr. Jones conceded that the without prejudice correspondence (and including a letter dated 9 July 2009 and which is included in RK3) is admissible in respect of the Respondent's application for costs.

11 The Chief Commissioner seeks costs against the Applicants pursuant to section 88(1A) of the Administrative Decisions Tribunal Act 1997 ("ADT Act") on the grounds that the Tribunal should be "satisfied that it is fair to do so having regard to" the Chief Commissioner being unnecessarily disadvantaged and the factors enumerated in sections 88(1A) (a), (b), (c), (d) and (e) of the ADT Act.. The Chief Commissioner moreover seeks costs on an indemnity basis because, so he contends, he was required to meet and to refute a series of false and specious claims made by the Applicants in respect of the property.

12 In summary form, the Chief Commissioner contends that, objectively viewed, the Applicants by their conduct have: (a) unnecessarily disadvantaged the Chief Commissioner by attempting to deceive the Chief Commissioner and putting the Chief Commissioner to unreasonable and unnecessary time, effort and expense to expose false evidence and a fraudulent claim; (b) by vexatiously conducting the proceedings; (c) by making a claim for a principal place of residence exemption which has no tenable basis in fact or law.

13 The Chief Commissioner notes that he does not ordinarily seek a costs order in first instance revenue proceedings in this Tribunal. The Chief Commissioner notes further that this attitude reflects a wider concern that litigants should be able to seek in the Tribunal a merits review of administrative decisions affecting themselves without the risk of an adverse costs order. This attitude is of course the correct attitude.

14 The policy rationale as to "no order as to costs" in first instance administrative review matters was explained by McClellan CJ at CL in Residents against Improper Development Incorporated and Another v Chase Property Investments Pty Ltd (2006) 149 LGERA 360 at [231] as follows: "The reason for such an approach is well known. It is accepted, in my view correctly, that where an individual or corporation believes that an administrative decision which affects it is unreasonable, it should not be discouraged from seeking to have the decision reviewed by a concern that it may have to pay the costs of the decision-maker (invariably a public body) if the application fails. This approach acknowledges the fact that the nature of the proceedings is a review of an administrative decision where, unless review is provided, an individual will have no means of challenging the decision, however unreasonable, except if the high threshold of Wednesdbury unreasonableness can be overcome. It is derived from considerations of fundamental fairness and seeks to strike an appropriate balance between the resources of the decision-maker and those of the citizen affected by its decision ." The Chief Commissioner contends, and the Tribunal accepts, that a taxpayer with a barely or fairly arguable case should not be at risk as to costs. The Chief Commissioner contends (and the Tribunal agrees) that so much may be accepted, but the Tribunal also agrees that there is a significant difference between a weak case and one which proceeds on the basis of falsehood.

15 There is moreover, a power available to the Tribunal in appropriate cases to award costs. That power is contained in section 88(1A) of the Administrative Decisions Tribunal Act in the following terms: 88 Costs (1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section. (1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following: (a) Whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as: (i) Failing to comply with an order or direction of the Tribunal without reasonable excuse, or (ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or (iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or (iv) Causing an adjournment, or (v) Attempting to deceive another party or the Tribunal, or (vi) Vexatiously conducting the proceedings, (b) Whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) The relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) The nature and complexity of the proceedings, (e) Any other matter that the Tribunal considers relevant. Section 88 was amended by the Administrative Decisions Tribunal Amendment Bill 2008 . Previously, section 88 was limited to "special circumstances" only for an award of costs.

16 The modern approach to statutory construction emphasises that the context is to be considered in the first instance and not merely at some later stage when ambiguity might be thought to arise, and it uses context in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means, the statute was intended to remedy: see CIC Insurance Limited v Bankstown Football Club Limited (1997) 187 CLR 384 at [408]. Secondary extrinsic material (including reports of commissions and enquires) may be considered in the ascertainment of that context considered in its widest sense: see IRG Technical Services Pty Ltd v FCT (2007) 156 FCR 57 at [23].

17 It follows then that resort as to the scope, subject matter, purpose and intended mischief can be had to the recommendations contained in the Report as to the review of the Administrative Decisions Tribunal Act 1997,

18 The Report noted that a number of submissions had been received which queried the Tribunal's then general policy against awarding costs and "advocated a new policy of awarding costs to penalise irresponsible or frivolous actions": see paragraph 6.4.1 at page 38. The report noted the terms of section 109(3) of the Victorian Civil and Administrative Tribunal Act 1997 which set out the powers of the Victorian Tribunal to award costs. The report concluded immediately prior to its recommendation that the Tribunal be given power to award costs on terms similar to the Victorian provision as follows: "While introduction in the Act of a provision similar to section 109 is unlikely to have a radical effect on Tribunal Costs Practice, its potential effect should not be underestimated. By deleting the term "special circumstances", the new provision would remove a source of interpretive ambiguity, and the enumerated grounds for awarding costs would provide members with a mandate for making awards in some of the circumstances referred to in submissions."

19 Within the second reading speech for the Administrative Decisions Tribunal Amendment Bill 2008, the Attorney General said: "The Bill also addresses a recommendation of the statutory review that concerns costs. It amends sections 88 to confirm that the parties in the Tribunal are to bear their own costs unless the Tribunal orders otherwise, and incorporates an expanded range of matters to be considered in the making of an award of costs. The provision is modelled on the provision contained in the Victorian Civil and Administrative Tribunal Act 1997." 20 The Victorian provisions were discussed by His Honour Gillard J in Vero Insurance Ltd v The Gombac Group Pty Ltd [2007] VSC 117 at paragraph 18-20 as follows: "[18] It can be seen that the general rule to apply in all proceedings is that "each party is to bear their own costs in the proceeding." Despite the general rule, the Tribunal may at any time order a party to pay costs to another party. The general rule expressed in s 109(1) must yield to a finding by the Tribunal pursuant to s 109(3). However, the Tribunal may not make an order unless it is "satisfied that it is fair to do so", and in arriving at that decision the Tribunal is bound to have regard to a series of matters set out in s 109(3). Despite the fact that the various matters are listed, s 109(3) (e) operates to extend the relevant matters if the Tribunal considers that some other matter is relevant. That is, the listed matters are not exhaustive. [19] It follows that the general rule applies and the Tribunal may only make an order for costs if it is satisfied that it is fair to do so. That finding is an essential prerequisite to making an order for costs. [20] In approaching the question of any application for costs pursuant to s 109 in any proceeding in VCAT, the Tribunal should approach the question on a step by step basis, as follows - (i) The prima facie rule is that each party should bear their own costs of the proceeding. (ii) The Tribunal may make an order awarding costs, being all or a specified part of costs, only if it is satisfied that it is fair to do so. That is a finding essential to making an order. (iii) In determining whether it is fair to do so, that is, to award costs, the Tribunal must have regard to the matters stated in s 109(3). The Tribunal must have regard to the specified matters in determining the question, and by reason of para (e) the Tribunal may also take into account any other matter that it considers relevant to the question."

21 It must be noted that in the first instance that section 88(1A) (a) (v) does not require that the proceedings be completed. So much is clear (as has been noted previously in these reasons) from the wording of some of the subparagraphs contained in section 88(1A) (a). The focus is rather on the conduct of the proceedings which unnecessarily disadvantages the other party by conduct which amounts to an attempt to deceive.

22 The decision of Hill J in Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 at 201 was considered by Finkelstein J in the case of Gribbles Pathology Pty Ltd v Health Insurance Commission [1997] 80 FCR 283 at 287 where His Honour said as follows: "It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a court determining how the costs of proceedings should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue." 23 But that is not the position with section 88(1A)(a)(v) in that it is the conduct in the course of the proceedings, including at any stage once the proceedings have commenced (and see in this context Kyriacou v Chief Commissioner of State Revenue [2009] NSWADT 175 at [41]) which "unnecessarily disadvantaged" another party that enlivens the jurisdiction. Moreover, the conduct is complete if, objectively viewed, it can be seen as an attempt to deceive. It is not a requirement of the section that anybody, whether the Chief Commissioner or the Tribunal, actually be deceived.

24 The focus is by contrast on the attempt. Further, it must be noted, that the attempt to deceive is connected disjunctively, to another party, or alternatively, the Tribunal itself. Thus, any sort of hearing on the merits, much less findings of fact by the Tribunal, is not necessary. Section 88(1A)(a)(v) is satisfied once the attempt to deceive the Chief Commissioner as a party, is complete. The attempt is complete as soon as such a step is taken or such conduct is engaged upon. An "attempt" is the completion of some act, transaction, circumstance or event that, objectively viewed, is likely to so deceive.

25 The word "deceive" is defined by the Shorter Oxford English Dictionary 5th edition as: "Trap or overcome by trickery; take unawares by craft or gyle; lead astray. Caused to believe what is false; delude, take in; allow oneself to be misled, be mistaken, err. Use deceit, act deceitfully."

26 In re London & Globe Finance Corporation Limited [1903] 1 Chancery 728 at page 732-733 Buckley J said: "To deceive is, I apprehend, to induce a man to believe that a thing is true which is false, and which the person practising the deceit knows or believes to be false. To defraud is to deprive by deceit: it is by deceit to induce a man to act to his injury. It may be put, that to deceive is by falsehood to induce a state of mind; to defraud by deceit is to induce a course of action." 27 Within the context of the Patents, Designs and TradeMarks Act 1883 in considering the expression and whether a registration of a trademark was "calculated to deceive", Lord Macnaghten in Eno v Dunn (1890) 15 APP CAS 252 at 263 said that calculated to mislead involved: "A misleading allusion or a suggestion of that which is not strictly true, as well as words which contain a gross and palpable falsehood." 28 The observations by Buckley J in London & Globe Finance Corporation were explained by Lord Radcliffe in Welham v DPP [1960] 103 at page 127 where deceiving was described as "the essence of which is to bring about a state of mind."

29 The Chief Commissioner contends that the Applicants have attempted to perpetrate upon the Commissioner a claim for an exemption for principal place of residence which claim is itself a gross and palpable falsehood.

30 Put in summary form an analysis of section 88(1A) makes it clear that an award of costs without a hearing is competent. The Tribunal draws attention by way of example to subparagraphs (i) to (v) of paragraph (a) of section 88(1A) each of which allows for costs at a point in time prior to the conclusion of or the commencement of a hearing.

31 The Tribunal notes that the Applicants contend that a costs award would not be competent in the absence of satisfaction with the Briginshaw standard. If that contention is correct the Tribunal considers that the standard has been satisfied. The Tribunal intends to deal in Part D with the first application in particular, in Part E with the second application in particular, and in Part F with submissions made at the hearing although, and to avoid duplication, the submissions made at the hearing will be dealt with in brief terms only.. The Tribunal notes also that it has for the purposes of Parts D and E drawn on RS to some considerable extent having checked and confirmed that its content is accurate.

32 The first application was supported by a document on the letterhead of the Applicants' then representatives, Andrew Lim and Associates Chartered Accountants Tax and Business Advisors dated 31 August 2007 and lodged with the Tribunal. By that letter, the Applicants stated at numbered paragraph (3) on page 1 and 2: "On 17 May 2006, We (sic) wrote to OSR objecting to the land tax assessment raised under item (2) above affirming that as No.3 Sugarwood Grove is getting too overcrowded for the 'big family', the client therefore purchased 70 Baker (sic) Road Strathfield in July 2000, and together with his wife and children the client physically moved over to 70 Baker (sic) Road, Strathfield in July 2000 and occupied that as their PPR from that date onwards while leaving their in-laws to occupy No 3 Sugarwood Grove." 33 On the third page, the Applicants stated: "The non-inclusion of No 3 Sugarwood Grove as an (sic) rental property in July 2000 to 2004 tax years does not alter the fact that client has physically occupied 70 Baker (sic) Road as PPR from July 2000 onwards whilst treating No.3 Sugarwood Grove as an investment property from July 2000 onwards with no rental income coming in for the years 2000 to 2004 but with rental income coming in from 2005 onwards and thus the disclosure in the clients 2005 tax return. We therefore respectfully request the Tribunal to review OSR's decision and to allow the client full objection in determining that the client has occupied 70 Baker (sic) Road, Strathfield as the PPR from date of purchase i.e. from July 2000 to present time and that No 3 Sugarwood Grove was the investment property for the same period with no rental income from 2000 to 2004 and rental income from 2005 onwards. Accordingly, we request the Tribunal to allow the objection in full and to amend the Land Tax Assessments for 2002-2006 to reflect 70 Baker (sic) Road as PPR for the whole period since July 2000." 34 It will be noted then that the Applicants have from the first contended that they purchased 70 Barker Road in July 2000 and they have, continuously thereafter, used and occupied Barker Road as their principal place of residence from July 2000 through to the date of when the Tribunal proceedings were commenced i.e. 3 September 2007.

35 The letter of 31 August 2007 is silent as to the fact that by June 2006 (some 14 months before the letter was written), the house at 70 Barker Road was vacant and subsequently demolished. (Affidavit of Mr. Peng sworn 5 February 2009 at [34]) In fact, as at the date of that letter, 70 Barker Road was a construction site and could not have been anyone's principal place of residence.

36 Additionally, the submission/letter of 3 September 2007 fails to mention that 70 Barker Road was in fact used as a rental property or perhaps as a boarding house but in either event so as to derive income, continuously since January 2001 to the period when the house was demolished in June 2006. Moreover, the letter represents the Applicants'' occupation upon settlement in July 2000. That allegation was not correct because the vendors held over in possession until December 2000 and the Applicants were not given vacant possession until about 6 months after acquisition.

37 At the first Directions Hearing in the Tribunal on 3 October 2007, the Applicants were directed to file and serve a list of witnesses, authorities, evidence and submissions by 14 November 2007. On that date, the Applicants filed one document, being part evidence and part submissions under the letterhead of their chartered accountant and representative, Andrew Lim and Associates.

38 The Applicants' submission of 14 November 2007 commenced by referring back to the letter dated 31 August 2007. On page 1 paragraphs 2 and 4, the Applicants, through their representative Mr. Lim, stated : "In that letter [that is, 31 August 2007] we advised that the applicant with his family and in-laws occupy No.3 Sugarwood Grove Greenacre as their principal place of residence (PPR) from June 1995 to June 2000, and that on July 2000 the applicant purchased 70 Barker Road Strathfield thereupon which the applicant together with his family moved from No [3] Sugarwood Grove to occupy 70 Barker Road as their PPR while leaving their in-laws at No.3 Sugarwood Grove. The Applicant and their family has therefore physically occupied 70 Barker Road as their PPR from July 2000 onwards while maintaining No 3 Sugarwood Grove as an investment property from July 2000 rental free to their in-laws. It was only until 2004-2005 income tax year onwards that the applicant decided to charge rental income on No 3 Sugarwood Grove and thus the disclosure in the income tax return of the applicant from that year onwards." 39 In the second full paragraph on page 2 of the letter, the Applicants stated: "In fact the applicant has been consistently occupying 70 Barker Road as their PPR (sic) since June 2000 irrespective of whether rental income has been charged on No 3 Sugarwood Grove which has become the investment property since June 2000." 40 At page 2 of the same letter, Mr. Lim stated: "When the purchase of the property was finalised in July 2000, the applicant together with his family and with all their personal belongings physically moved over to occupy the property as their PPR. The applicant had made the election to occupy 70 Barker Road as his PPR when the applicant lodged his 2005 Land Tax Registration Form dated 8 March 2005 affirming that:- No 3 Sugarwood Grove was occupied as PPR from January 1995 to June 2000 and, 70 Barker Road was purchased in July 2000 and applicant (sic) occupied it as PPR from July 2000 onwards. As the applicant is now the owner of 2 properties, by electing to occupy 70 Barker Road in July 2000 as his PPR will automatically leave the other property (No 3 Sugarwood Grove) as an investment property. Therefore from 1 July 2000 onwards the split up of the 2 properties are such that the Applicants (sic) and his family occupy 70 Barker Road as their PPR whilst the in-laws continue to occupy No.3 Sugarwood Grove which the applicant treats as an investment property, rental free until 2004-2005 year."

41 In the first full paragraph on page 3 of the letter/submissions, the Applicants stated: "Accordingly we respectfully request the Tribunal to review OSR's decision and to allow the applicant's (sic) objection in full in that the applicant despite owning 2 properties from July 2000 onwards, applicant had consistently occupy (sic) 70 Barker St as his PPR (sic) whilst using No 3 Sugarwood Grove as its investment property without charging rental income from July 2000 to 2004 and decided to charge rental income from 2005 onwards. 42 Those submissions refer to the documents filed pursuant to s. 58 of the Administrative Decisions Tribunal Act 1997, such as utility invoices including Sydney Water bills, AGL Gas bills, Strathfield Municipal Council rate notices, Energy Australia bills together with documentation previously forwarded to the Commissioner including a 2005 Land Tax Registration Form, the Chief Commissioner's decision on objection and the earlier letter to the Tribunal.

43 By that statement, the Applicants again failed to disclose that the house at 70 Barker Rd was demolished by June 2006 and that it was a rental property prior to that demolition. Additionally, and as subsequently ascertained from documents produced on summons to the Tribunal, including taxation returns, Roads and Traffic Authority Driver's Licence records, incoming passenger cards for immigration purposes, and ASIC company searches, all contained signed declarations by the Applicants that their residential address was Sugarwood Grove and not, at any relevant time, 70 Barker Road, Strathfield.

44 Following on from and as a consequence of the submissions of 14 November 2007, and summons issued at the Respondent's request, the matter was remitted to the Chief Commissioner under s. 65 of the Administrative Decisions Tribunal Act for further consideration.

45 Additionally on or about 14 December 2007 summonses issued to Energy Australia, the Commonwealth Bank and AGL Energy Ltd. The material produced on summons disclosed correspondence and documentation from the Commonwealth Bank, in particular that disclosed the Applicants' address as 3 Sugarwood Grove Greenacre and not 70 Barker Road, Strathfield.

46 The Commonwealth Bank documentation disclosed that, by that time, the house at 70 Barker Road, Strathfield was demolished and was a construction site. Arising from further consideration by the Chief Commissioner further assessments in respect of the 2005, 2006. 2007 and 2008 land tax years were issued.

Part E. The second application 47 On 10 September 2008, the Applicants, having appointed legal representatives, namely Turner Freeman, lodged an objection to the land tax assessments for the 2005, 2006, 2007 and 2008 land tax years. That objection was lodged under cover of letter, by their solicitors with the Chief Commissioner on 12 September 2008.

48 The objection was signed by both of the Applicants under a declaration "I declare that the information I have given is true, accurate and complete in every particular." That declaration bears the signature of both Mr. Peng and Mrs. Peng and is dated 10 September 2008. By that objection under the signature of both Applicants, the Annexure the 'Grounds of Objection' are stated as follows: "On 12 July 2007 the Chief Commissioner of State Revenue determined in a letter that "From 1 July 2004, our office is satisfied that your clients have been using 70 Barker Road, Strathfield as their PPR [principal place of residence.]" We have resided at 70 Barker Road, Strathfield and this property has been our principal place of residence as at midnight on 31 December 2000 right through to the present time. Prior to December 2000, we resided at 3 Sugarwood Grove, Greenacre with Zhi Peng's parents and our then two children born 15 June 1998 and 9 May 2000. We have since had a third child born on 16 August 2004. After we purchased the property at 70 Barker Road, Strathfield in mid 2000 we subsequently commenced residing there firstly together with our two children and then from 2004 with our three children. Zhi Peng's parents continued and have continued to reside at the Greenacre property. We have resided at 70 Barker Road, Strathfield since December 2000 and have continued to reside there right through until to date and this property has been our principal place of residence throughout that period." 49 It will be noted then that the Applicants declared that both of them together with their two children and subsequently with their third child have lived continuously at 70 Barker Road "right through until to date".

50 In September 2008, (and as set out previously in these reasons) 70 Barker Road was a construction site.

51 Additionally, that objection does not disclose that it was a rental property. Further, the affidavits subsequently sworn by the Applicants have Mrs. Peng only, together with the children moving back to No 3 Sugarwood Grove, Greenacre in May 2003. (Affidavit of Mr Peng sworn 5 February 2009 at [30] and Affidavit of Mrs Peng sworn on 5 February 2009 at [16]) That is not disclosed in that objection lodged in the proceedings.

52 That objection was disallowed and on 15 October 2008, the 2005, 2006 , 2007 and-2008 years were referred to the Tribunal under proceedings 086110. Thereafter the two proceedings were joined. On 19 November 2008 orders were made by the Tribunal for the filing of evidence in both proceedings, by the Applicants, by 19 January 2009.

53 On 5 February 2009, Mr. Peng swore an affidavit in the proceedings. At paragraph 16, Mr. Peng declared that: "The Vendor moved out of the property at 70 Barker Road, Strathfield in December 2000 and on about 20 December 2000, myself, my wife, our second child, Albert Peng born on 9 May 2000 and my wife's younger brother, Xu (Bruce) Peng, moved in and commenced living at 70 Barker Road, Strathfield…I, my wife and our child, Albert Peng (then about six months old), together with my wife's younger brother, Xu (Bruce) Peng, all moved into the property and resided at 70 Barker Road, Strathfield." 54 At paragraph 30 of his Affidavit, Mr Peng said: "My father-in-law was living in China between 14 February 2003 and 8 February 2005. My mother-in-law was also in China between 2 March 2003 and 15 February 2004. As the house at 3 Suguarwood Grove, Greenacre was empty during the time that my mother-in-law was away, my wife and children moved into 3 Sugarwood Grove, Greenacre in about May 2003 to look after the house. After my mother-in-law returned to Australia in mid February 2004 to look after my wife and the children during her pregnancy with our third child and my wife remained at 3 Sugarwood Grover, Greenacre because she was pregnant with our third child and was quite ill and needed help from her mother." 55 Within the body of paragraph 30 of his Affidavit, Mr. Peng continued: "I, however, continued to reside at 70 Barker Road, Strathfield because I was looking after the house as we had 2 sets of lodgers staying there."

56 In paragraph 32 of his affidavit, the reference to two sets of lodgers is further explained as follows: "From about May 2003 through to October 2005, one bedroom in the property at 70 Barker Road, Strathfield was rented out to Lucy, and her boyfriend, Astley (sic), and they paid a boarding fee of $140.00 per week. Also, between May 2003 and April 2004 one of the other bedrooms was rented out to Mr. Shong and his wife and they also paid a boarding fee of $140.00 per week. The third bedroom was kept by me and I continued to live at 70 Barker Road, Strathfield in that bedroom and my wife sometimes came to stay with me overnight at 70 Baker Rd, Strathfield with our 2 children." 57 At paragraph 34, evidence was given by Mr. Peng by affidavit as to the demolition of the house at 70 Barker Road, Strathfield as follows: "My wife and I and our 2 children moved out of the house at 70 Barker Road, Strathfield in about mid 2006 for the purpose of demolishing the house so that we could build the new home. The development approval had been obtained on 9 November 2004 and a builder was engaged." 58 On the same day, namely 5 February 2009, Mrs. Peng also swore an affidavit in these proceedings. At paragraphs 9 and 10 of that affidavit, Mrs. Peng said: "Sam and I exchanged contracts on a purchase of a two bedroom (plus sun room) house at 70 Barker Road, Strathfield on or about 28 June 2000. … On or about 20 December, just before Christmas, my husband and I, our son, Albert and my brother, Bruce, moved into the house at 70 Barker Road, Strathfield. My parents and our daughter, Debbo, remained at 3 Sugarwood Grove, Greenacre. I know that we moved just before Christmas because Sam did not have to work because his company was closed for the holiday, so we had time to move. We bought second-hand furniture and electrical appliances for the house." 59 At paragraph 16 of her Affidavit, Mrs. Peng said: "My father went to China on 14 February 2003. He did not return to Australia until 8 February 2005. On 2 March 2003, my mother also moved to China. My mother originally planned to be in China only for a short time to change her visa, however, she decided in May 2003 that she wanted to stay in China for a longer period of time so she could spend time with friends and family. My mother did not return to Australia until 15 February 2004. Because the house at 3 Sugarwood Grove, Greenacre was empty during the year that my mother was in China, I moved into 3 Sugarwood Grove, Greenacre in about May 2003 with my two children to look after the house. Sam continued to reside at 70 Barker Road, Strathfield to look after the house." 60 At paragraph 17 of her Affidavit, Mrs. Peng swore that "I moved back to live at 70 Barker Road, Strathfield with Sam in September 2004."

61 In paragraph 18 and 19 of her Affidavit, Mrs. Peng said: "In early 2003, Sam and I moved into the sun room at 70 Barker Road, Strathfield because we liked the room because it was very bright. Because two bedrooms in the house were empty, in May 2003 we rented one room to Lucy and Astley (sic) for $140.00 per week. We also rented the other bedroom to another couple, Mrs. and Mrs. Shong, also for $140.00 per week. The two couples both ran a removal business and were friends of each other. In April 2004, Mr. and Mrs. Shong moved out and the room was empty after that. Lucy and Astley (sic) moved out in October 2005 and their room was empty after that also." "When we purchased 70 Barker Road, Strathfield in 2000, Sam and I always intended to knock the house down and rebuild. When Mr. and Mrs. Shong moved out, and when Lucy and Astley (sic) moved out, we did not get anymore lodgers because we were about to begin the knock down and rebuild process." 62 On 6 March 2009, a further affidavit was sworn by their solicitor, Mr. Simon Della Marta, and served on behalf of the Applicants. That affidavit annexed amended Income Tax Returns for each of the Applicants for each of the years of income ending 30 June 2003, 2004, 2005 and 2006. Those amended Income Tax Returns amended the previous returns in two relevant respects: (a) The home address on the front page of each return was changed from 3 Sugarwood Grove, Greenacre to 70 Barker Road, Strathfield; and (b) The Returns were amended to disclose the receipt of rental income in respect of 70 Barker Road, Strathfield. 63 The amended income tax returns attached to the affidavit of the solicitor brought the income tax returns into alignment with the version of events deposed to by the Applicants in their affidavits. Thus, their amended income tax returns now showed 70 Barker Road as their home address. Secondly, the income tax returns attached to Mr. Della Marta's affidavit disclosed, for the first time, the receipt of rental income, presumably, in respect of Mr. and Mrs. Shong together with the other couple, only known as Lucy and Astley. Thus, the 2003 returns now disclose the receipt of 9 weeks of rental income, that is, from 1 May 2003 to 30 June 2003 in the sum of $2,520.00 or $1,260.00 in each tax return.

64 Furthermore the amended 2004 returns shows rental income of $7,280.00 for each of the Applicants which is consistent with two bedrooms being rented out to "Lucy and Astley" and "Mr and Mrs Shong" for most or all of the year.

65 Following on from, and, as a consequence of, the content of the affidavits filed on behalf of the Applicants, the Chief Commissioner caused a summons to be issued (or a request for documents made in the case of the Applicants) to each of the following persons: a. The Department of Immigration for Incoming Passenger Movement Records for Mr. Peng, Mrs. Peng, Bruce Peng and Ms. Hua Hui Lin; b. Optus Telecommunications; c.The NSW Roads and Traffic Authority for Driver's Licence Records in respect of Mr. Peng, Mrs. Peng, Bruce Peng, Ms. Hua Hui Lin, together with all persons who had disclosed 70 Barker Road, Strathfield as their residential address for licence purposes. d.Telstra Corporation Limited; e.The NSW Electoral Roll Commission for Electoral Enrolment at 70 Barker Road, Strathfield; f.The Applicants and Mr Xu Peng for the production of Income Tax Returns for various years between 2001 to 2008 in respect of Mr. Peng, Mrs. Peng, and Bruce Peng; and g.Mr. Peng in respect of policies of insurance for motor vehicle driven or owned by him.

66 The scheduled hearing in the matter on 2 and 3 April 2009 was ordered by the Tribunal to be vacated in order to, among other things, allow for the issue of the summons.

67 Additionally, the Chief Commissioner, through his solicitor undertook searches of the records of ASIC in relation to any company in which Mr. and/or Mrs. Peng were, at any material time, a director, shareholder or secretary.

68 In summary form, the documents produced on summons from the NSW Roads and Traffic Authority, the Department of Immigration, and the ASIC searches revealed the following: (a)That some 13 or more persons, other than Mr. and Mrs. Peng, in the period from 1 January 2001 to 31 December 2006 had registered 70 Barker Road as their residential address for the purposes of their NSW Driver's Licence;

(b)Throughout the relevant period from 1 January 2001 to date, Mr. and Mrs. Peng had signed some five or more declarations under the Corporations Act 2001 , declaring that 3 Sugarwood Grove, Greenacre was their place of residence;

(c)On some 19 occasions in the relevant period, Mr. Peng declared on Incoming Passenger Movement Cards that 3 Sugarwood Grove, Greenacre was his intended address in Australia; and (d) At no time prior to May 2008 was 70 Barker Road, Strathfield declared to be the address at which Mr. Peng's motor vehicles were garaged for insurance purposes.

69 On 29 May 2009, the Chief Commissioner filed the Affidavit of Ms. Rebecca Kiu, solicitor in the Crown Solicitor's Office, deposing to the searches undertaken on behalf of the Chief Commissioner and exhibiting all relevant documents produced on Summons.

70 On 16 June 2009, submissions were filed and served on behalf of the Chief Commissioner, setting out the contentions of the Chief Commissioner that the case advanced by the Applicants, and in particular by the Applicants in their affidavit of February and March 2009, was false and misleading and apt to deceive.

71 On 9 July 2009 the Applicants, by their solicitors, wrote to the Crown Solicitor's Office on a "without prejudice save as to costs" basis setting out a proposed compromise and settlement: see Tab 50 of Exhibit RK3 to the Affidavit of Ms. Kiu dated 19 August 2009. By that letter, the Applicants offered to pay land tax being varying proportions in respect of each tax year in dispute.

72 On the same day, that is, 9 July 2009, the Applicants, by their solicitor, sent a further letter to the Crown Solicitor's Office expressed to be "without prejudice". The admissibility of that letter in these proceedings, being limited solely to the question of costs, was not disputed. That "without prejudice" letter is at tab 51 of Exhibit RK3 to the Affidavit of Ms Kiu of 19 August 2009. The opening paragraph to that letter reads as follows: "We acknowledge receipt of the respondent's submissions by email at 5:15pm on 16 June 2009. We are instructed as set out below on the issues raised in the respondent's submissions. This is not intended to be the further submissions by our clients, but is rather intended to offer explanation to your client with a view to assisting your client to assess the matter." 73 Thereafter, the "without prejudice" letter contains a discussion of various items under 5 separate subject headings. The first section is entitled "ASIC Declarations Immigration Records". Within that section, being section 1 of the letter, the Applicants, by their solicitor, have stated as follows: "The Applicants note the respondent's submissions in relation to declarations made by the Applicants to ASIC and declarations made by the Applicants to the Department of Immigration and Citizenship on incoming passenger cards.

In response to the respondent's submissions, the Applicants say as follows:

1)The Applicants are aware of the large number of documents on which they have declared their residential address to be 3 Sugarwood Grove, Greenacre.

2)The Applicants did not intend, at any stage from December 2000 to date, to avoid, hide from or ignore communications from ASIC and/or Department of Immigration and Citizenship.

3)The Applicants did not understand nor appreciate the practical difference between a "residential address" and a "postal address" and an "intended address" for the purposes of completing declarations to ASIC and the Department of Immigration and Citizenship." 74 The second section of the letter is entitled "Persons declaring 70 Barker Road to be their home address". Within that section the Applicants, by their solicitor, have stated as follows: "The Applicants note the respondent's submissions in relation to the thirteen or fourteen people other than the Applicants who have declared their residential address to be 70 Barker Road, Strathfield.

In response to the respondent's submissions, the Applicants say as follows:"

75 Thereafter by sixteen (16) lettered paragraphs, the Applicants seek to explain how it is that those persons come to have declared that 70 Barker Road, Strathfield was their residential address. In summary form, the Applicants concede that 70 Barker Road, Strathfield has, at various times in the relevant tax years, been used and occupied as a residential home by each of the following persons: a)Bruce Peng, b)Ms. Fan Sun; c)Ms. Jennie Wong; d)Mr. Jack Chang Yuan Li; e)Ms. Ying Min Lin; f)Ms. Ran Wang; g)Mr. and Mrs Shong; h)Ms. Qui Song; i)Ms. My Le Thai; j)Ms. Yanli Xi; and i)Ashley Schwab (also known as Lucy and Astley).

76 The Applicants acknowledge receiving rental income from each of Ms. Jennie Wong, Mr. Jack Chang Yuan Li, Ms. Ying Min Lin, Ms. Ran Wang, Ms. Qui Song and Ms. My Le Thai. That rental income is in addition to the previous rental income from Mr. and Mrs. Shong and Lucy and "Astley" that they disclosed in their affidavits.

77 It is clear then that the affidavits sworn by the Applicants are false and misleading in that those affidavits disclose the existence of Mr. and Mrs. Shong and Lucy and "Astley" only, as tenants, at 70 Barker Road, Strathfield. There exists another 6 persons to whom, at various times, the property at 70 Barker Road, Strathfield had been tenanted, in whole or part.

78 The 'without prejudice' letter of 9 July 2009 discloses further (deceptive) use of the address of 70 Barker Road in respect of Mr. Min Zhang and Mrs. Jie Huang on the one hand and Mr. Kehui Xie as well, on the other hand. See paragraph 2(j), as follows: "Mr. Min Zhang and Mrs. Jie Huang were friends of the Applicants. They wanted to enrol their daughter in Strathfield South Public School. They used 70 Barker Road, Strathfield as their address for that purpose. They never lived at 70 Barker Road, Strathfield. Although the Applicants were aware that Mr. Min Zhang and Mrs. Jie Huang were going to use 70 Barker Road, Strathfield as their address for the purpose of enrolling their daughter in Strathfield South Public School, the Applicants did not know that they were going to use the address for more than (7) months and do not know why they did not change their address on their driver's licence until 4 November 2002 and 6 February 2003 respectively. It is not and has never been within the Applicants' power to force Mr. Zhang and Mrs. Huang to change the address on their drivers' licences.

79 The Applicants' letter further stated: "Mr. Xie was a friend of Ms. Yanli Xi (Lucy). He did not at any stage live at 70 Barker Road, Strathfield. Mr. Peng remembers Lucy telling him that Mr. Xie wanted to use 70 Barker Road, Strathfield as his address so that he could enrol his children in a local pubic school, however Mr. Peng does not remember exactly when that conversation occurred."

80 Additionally, paragraph 2(o) of the 'without prejudice' letter stated that "because [Mrs. Hua Hui Lin] was moving out of the rental unit in Kogarah shortly before the end of August 2001, she used 70 Barker Road, Strathfield as her address on company documents. She never lived at 70 Barker Road, Strathfield."

81 Additionally, the table appearing at paragraph 2(p) also contradicts the sworn evidence given by the Applicants in their affidavits. The affidavits specifically state that Lucy and Astley (in fact, Ms. Yanli Xi) and Mr. Ashley Schwab occupied 70 Barker Road, Strathfield in the period from May 2003 to October 2005. In fact, the amended Income Tax Returns disclose rental income for that period. However, the table at paragraph 2(p) now represents that Ms. Yanli Xi and Mr. Ashley Schwab only occupied 70 Barker Road, Strathfield in the period from February 2004 to October 2005. If it were the case, in fact, that Lucy and Ashley occupied the property for the period previously stated (that is, May 2003 to October 2005) then, with the addition of the persons now admitted to also reside there, namely Ms. Qi Song and Ms. My Le Thai the house at 70 Barker Road was full; that is, all three bedrooms were occupied by tenants, and thus, accordingly, there was no room for Mr. and Mrs. Peng (leaving aside for the moment their children) to also occupy as their residence, the property at 70 Barker Road, Strathfield.

82 At 4:27pm on 30 July 2009, the Applicants "formally [withdrew] their application for review of decisions made by the Chief Commissioner of State Revenue with respect to all land tax years that are the subject of the review." (see Tab 64 of Exhibit RK3 to the Affidavit of Ms. Kiu.)

83 The effect of the withdrawal at 4:27pm on 30 July 2009 on the part of the Applicants is to accept the correctness of all the land tax assessments in dispute, without however, any liability to pay costs.

84 The Tribunal considers that the Chief Commissioner has made out his case in accordance with Parts D and E and so that it may not be strictly necessary for the Tribunal to deal with the submissions made during the hearing and which involved numerous specific references to the Working Bundle. However and in the interests of completeness it is desirable that the Tribunal make some (brief) mention of that material. .

85 The Tribunal was referred in particular to discrepancies in letters by Andrew Lim contained in WB1 and also WB 3 but considers that those letters have been dealt with sufficiently earlier in these reasons.

86 In the course of his submissions Mr Young drew attention to numerous inconsistencies in the affidavits by the Applicants but here too the Tribunal considers that those inconsistencies have been dealt with previously in these reasons.

87 The Working Bundle at Tab 13 contains a large number of tax returns and including amended tax returns submitted by the Applicants. The tax returns regarded as a whole contain numerous errors. The evidence before the Tribunal indicates that there were a large number of tenants or lodgers in the property and this being so it cannot accept that the rental returned in the amended returns represents the entire rental derived. It is conceivable that these aspects may to the attention of the Federal tax authorities and accordingly the Tribunal considers that it is best that it make no further comments as to the manner in which the Applicants conducted their tax affairs in relation to the property. The fact that amended assessments were required indicates that the original assessments were not correct and the Tribunal thinks it likely that the amended returns were also incorrect and in particular incomplete as to the income derived. 88 It will be seen then, that in respect of the applications, the Applicants furnished three markedly different versions.

89 The first version is that it contained in the letters/ submissions by Andrew Lim & Associates. Mr Young contended that they can aptly be described as submissions more particularly having regard to their form and content and the fact that they were furnished part in compliance with directions given by the Tribunal. Mr Jones in his closing submissions said that there was no evidence before the Tribunal as to the fact that the submissions in question by Mr Lim, described as the prior representative of the Applicants, were duly authorised. It may be noted that Mr Lim did indeed file the submissions in question as the representative of the Applicants. He was subsequently replaced as their representative by Turner Freeman but he is still the accountant and tax agent of the Applicants. His name appears on the tax returns referred to earlier in these reasons. There was no evidence before the Tribunal which would suggest that Mr Lim had no authority to file the submissions. Put in brief terms, the first version would suggest that the property was occupied from completion "until date" (and being a date after to the demolition of the house) and did not disclose that the property was leased out in whole or in part.

90 The second version is that set out in the affidavits by the Applicants and supported by certain other affidavits. The second version refers to the fact rooms in the three-bedroom house were let as to one to a married couple (Mr and Mrs Shong) and as to another to Lucy and Astley or Ashley; even more to the point is the fact that Lucy and Astley (or Ashley) under this version were in occupation from May 2003. The second version would appear to indicate that the third bedroom was occupied by the Applicants and in addition their children, originally two and later three children.

91 The third version is that set out in the without prejudice letter sent on behalf of the Applicants by their solicitor. That letter had been dealt with in some considerable detail earlier in these reasons. It discloses a whole host of people who occupied the house (and Mr Jones said that some of them were borders or lodgers); it is significant in particular but not only, in that of the date on which Lucy and Astley or Ashley took occupation is said to be February 2004. It would seem, and as Mr. Young contended, that this (significant) change was necessitated by the fact that there would not otherwise have been a bedroom available for the Applicants and all of their children.

92 There are undoubtedly significant differences between the three versions. Two of them at least must be false and it is of course possible that all of them false. The Tribunal cannot know which if any of them is true, but at the very least two of the three must be untrue.

93 In his closing submissions Mr Jones said, on more than one occasion, that the Tribunal cannot assess the veracity of the Applicants since it did not hear their evidence and thus cannot assess their demeanour. It is true that the Tribunal did not in respect of this costs application hear the evidence of either of the Applicants or indeed any of the other witnesses, but as the Tribunal noted (also more than once at the hearing), the Applicants were at liberty to produce evidence but elected not to do so.

94 RS is so lengthy and detailed that the Applicants were thereby made aware of the nature of the case against them and that accordingly and to rebut that case (and it is a very strong case) it would be necessary to furnish evidence in rebuttal.

95 Mr Jones said that the Applicants are persons who are not fluent in English and would, if they had given evidence, have required the assistance of an interpreter. Mr Jones however, when asked how long the Applicants have been in Australia, said that he did not know. That said, there is no reason whatever why the services of an interpreter would not and could not have been made available. It may be noted that none of the affidavits is noted to the effect that the deponent was assisted by an interpreter.

96 Mr Jones said from the bar table at the Applicants are not familiar with the customs of Australia and might not have appreciated that immigration forms as to their proper place of residence should have been completed correctly. I need hardly say that statements of this kind from the bar table, and there were a number of them, cannot be treated as a substitute for evidence. The third version (and being the last of three versions) indicates that contrary to the first and second versions, the house on the property was occupied by a whole host of tenants or lodgers or boarders (and the fact that some or more or all of them may have been licensees rather than lessees is hardly to the point), and that the Strathfield address was used by a considerable number of persons as an accommodation address on occasion in order to gain access to a school in the area and on other occasions for reasons which are not known'.. Mr Jones contended as I have said that the Applicants are unfamiliar with the customs of this country. I note merely that it would appear, and judging from their significant property holdings that they are not without considerable ability and financial acumen.

97 Mr Jones referred to a text-book entitled "Law of Costs" by G.E. Dal Pont, a professor in the Faculty of Law at the University of Tasmania, and in particular a passage reading as follows" "So for instance the objections of the New South Wales Decisions Tribunal - to ensure that it is accessible, its proceedings are efficient and effective, its decisions are fair and to enable proceedings to be determined in an informal and expeditious manner - have led the Tribunal to rule that an excessive zeal to find the special circumstances required by statute as a prerequisite to making a costs order would interfere with the achievement of these objectives". That passage and its reference to "special circumstances" indicate that it was apposite in respect of the statutory regime which applied prior to the legislative amendments referred to previously.

98 Mr Jones drew attention to case authority and in particular that set out in AS which indicate that awards of costs in the absence of a hearing may be rare. Those cases too were decided prior to the statutory amendments to which I have referred. The relevant legislation has been changed, and markedly so, so at as to allow for a costs award when a taxpayer has been guilty of conduct which is in breach of the legislation as amended; I refer in particular to clause 12 of these reasons, which sets out the grounds on which the Respondent seeks an order as to costs.

99 The Applicants were confronted with strong evidence that they attempted to deceive the respondent and the Tribunal. As set out previously they were close to succeeding at least in part under the first application. It will be recalled that they were allowed the exemption for two land tax years. Not satisfied, they persevered with their application for the remaining land tax years and this in turn lead to the unravelling of a whole host of facts and circumstances not previously known, and which would in all probability never have become known were it not for the detailed enquiries instituted by the respondent.

100 There can be no doubt that the Applicants sought to deceive (as set out in clause 12(a) of these reasons); these also no doubt that they made a claim for a PPR exemption to which they were not entitled as to which see clause 12(c) of these reasons). Mr Jones contended that the conduct of the Applicants was not vexatious with in clause 12(b) of these reasons. The term "vexatious" is often used to denote someone who repeatedly launches proceedings which have no merit. As the decision in Kyriacou demonstrates the term "vexatious" can have a wider meaning. It is likely that the conduct of the Applicants was vexatious but it is not necessary for me to come to a conclusion as to this aspect.

101 Professor Dal Pont in Law of Costs comments at some length as to the manner in which Tribunals should award costs. It is to be noted that in general terms awards of costs by Tribunals at least in matters of taxation are comparatively rare. The Administrative Appeals Tribunal has never had power to award costs in its tax jurisdiction and this Tribunal had a very limited power as to costs prior to the legislative amendments to section 88. Authorities as to awards of costs by Tribunals must at least in respect of this Tribunal be considered with reserve in the light of the fact that the statutory regime referable to this Tribunal has altered so markedly.

102 In ordinary litigation, costs on an indemnity basis can be awarded where special circumstances exist. As such in the contention of the Chief Commissioner such cases warranting the making of an costs order provide a useful analogy to the present and in fact underlie in large part the examples given in section 88(1A). In the leading decision of Colgate Palmolive v Cusson (1993) 46 FCR 225 at 232-234 Sheppard J described the circumstances necessary for indemnity costs in the following terms: "it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and to other parties; the fact that the proceedings were commenced or continued for some ulterior motive ; or in wilful disregard of known facts or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions;" 103 In Lee v Mavaddat 2005 WASC 68 at para 23 Roberts-Smith J emphasised the waste of unnecessary expense in defeating a false claim as circumstances warranting an indemnity costs order. His Honour stated: "As I have found, this is a case in which the evidence of the defendant and his whole defence to the claim was a deliberate concoction. His conduct prolonged the trial. … The defendant propounded false documents to the Court in the course of this litigation. The defendant must, or ought to, have known at all material times that he had no chance of success in his defence of the claim or in his counterclaim - this is not simply a case of the defendant's evidence not being accepted. In the circumstances his defence of the case and prosecution of the counterclaim must be presumed to have been continued for some ulterior motive or in wilful disregard of the known facts and the established law. That motive must have been a desire to keep the plaintiff out of her funds and to retain for him the benefit of them for as long as possible. I am satisfied that by reason of his manner of conducting this litigation, the defendant has caused considerable unnecessary expense and cost to the plaintiff beyond that which could reasonably be expected to be incurred in litigation of genuine issues. The justice of the case requires an order for indemnity costs."

104 In Yates v Bola [2000] FCA 1895 at [73] and [74] the Full Federal Court considered an appeal from a decision of Branson J to award costs on an indemnity basis in connection with evidence that was false. Her Honour stated: The evidence called at trial showed both the plea and Mr Yates' affidavit evidence in this regard to be false, and that Mr Yates either knew or ought to have known that it was false. … The fact that the applicant persisted with the proceeding without apparent regard to significant deficiencies in the evidence available to be called to establish its case is sufficient, in my view, to enliven the discretion of the Court to make orders for costs on a basis other than a party and party basis. 105 The Full Court upheld the decision below and specifically referred to the finding that the false evidence was given negligently. Rather it was a finding that "the evidence was deliberately false or, at least, recklessly false" and accordingly "there can be no doubt that her Honour was correct in regarding that matter as relevant to the exercise of her discretion" to award indemnity costs.

106 In the circumstances of this case, as from 3 September 2007 when the application for review in proceedings 076108 was filed, which application attached the letter of 31 August 2007, the case for the Applicants has proceeded on the basis of falsehood.

107 The Chief Commissioner contends that the award of costs on an indemnity basis is warranted under sec 88(1A)(a)(v) on account of the attempt, from the day of filing application 076108, to deceive the Chief Commissioner as a party to the proceedings, or alternatively, within sec 88(1A)(a)(vi) the proceedings have been conducted "vexatiously", that is, amongst other, "proceedings instituted or pursued without reasonable ground": (and see Kyriacou (supra) at [42] to [45]) or further alternatively, within sec 88(1A)(c), the Applicants have made a claim that has no tenable basis in fact or law. Except that I have not made a finding as to the allegation of vexatious conduct the Chief Commissioner has made out his case in this regard..Mr Jones advised the Tribunal that he knows of no case where an award of costs on an indemnity basis has been made. As set out previously the regime in respect of costs awards in this Tribunal has been limited but in respect of this Tribunal the statutory regime has been altered to a significant extent.

108 In all the circumstances, the Tribunal agrees that the claim of the Chief Commissioner for costs on an indemnity basis ascertained as from the commencement of proceedings 3 September 2007 has been made out. As will have been noted the conduct of the Applicants has been particularly bad. The Applicants contend that the allegations made against them are such that they must be established within the Briginshaw standard and the Tribunal finds that if that contention is correct, that standard has been satisfied.

109 The evidence before the Tribunal indicates a consistent history of deceit on the part of the Applicants. The property was not during the relevant years occupied by the Applicants as their PPR and they were altogether aware of the true position

110 The conduct of the Applicants in relation to the property is properly characterised as deceitful. The fact that they own other real property indicates that they are not without means.

111 The essence of the submissions for the Applicants is that whatever their conduct an order for costs is not possible without a hearing. On this basis the argument must be that it is sufficient that the Applicants withdrew their applications. This may have been the correct view of the law prior to the amendments to the legislation but it ignores the fact that the statutory regime has been amended in a fundamental manner. The Tribunal does not agree that the facts are so complex that it is not possible to make a finding without a hearing; on the contrary the documents and letters submitted by the Applicants themselves setting out as they do the different versions make it clear that the Applicants have behaved in a manner which is deceitful. As stated previously in these reasons it was open to the Applicants to dispute the factual contentions contained in RS but they did not do so.

112 The conduct of the Applicants was deceitful as alleged in clause 12(a) of these reasons and it was also in breach as alleged in clause 12(c) of these reasons to such an extent that an order as to costs is clearly warranted and moreover it is proper that costs be awarded on an indemnity basis. It is not necessary for the Tribunal to come to a decided view as to "vexatious" as alleged in clause 12(b) of these reasons. 113 The Tribunal notes in passing that in some of the material quoted the word "principal" appears as "principle" and that the Tribunal has throughout these reasons included that word with the correct spelling..

114 In all the circumstances the Tribunal orders the Applicants to pay to the Chief Commissioner all of his costs incurred since 3 September 2007 on an indemnity basis as agreed or failing agreement as assessed.

I HEREBY CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF THE ADMINISTRATIVE DECISIONS TRIBUNAL.

15/01/2010 - Amendments under s87 of the Administrative Decisions Tribunal 1997 - Paragraph(s) Amendments :Paragraph 7 - deletion of repeated sentenceParagraph 8 and 9 deleted with the effect all subsequent paragraphs renumberedParagraph 98, 100 and 112, amend reference to clause 11 to clause 12 08/07/2010 - Amendment to coversheet,typographical error in applicant's names - Paragraph(s) coversheet

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