3. The application, so far as it relied upon the Administrative Decisions (Judicial Review) Act 1978 was out of time but an order was made under s.11(1) of that Act extending the time in which the application could be lodged.

4. The application alleged that the decision that no relief be given was an improper exercise of the power conferred upon the Relief Board by the Act, in that there had been a failure to consider relevant considerations, or that irrelevant considerations had been taken into account, or that the decision involved an error of law. It was also alleged that the decision was in the relevant sense, unreasonable.

5. During the course of the hearing, two further but related issues emerged and I gave leave to the applicant to amend her application accordingly to deal with them. First it was said that there was no evidence before the Board upon which the Board could find, as it did find, that the deceased was "involved in tax avoidance schemes" and second, that if there were evidence before the Board, the applicant was denied natural justice in that the Board gave no indication to the applicant to enable her to rebut the suggestion of such involvement. That suggestion was made in an enclosure to a letter that came to be before the Tribunal and which emanated from the Deputy Commissioner of Taxation, New South Wales and which was addressed to the Commissioner of Taxation in Canberra, presumably ultimately for forwarding on to the Relief Board. The letter enclosed five copies of a "Statement of Case relating to an application for relief" which statement in addition to formal matters contained a statement that the deceased "was also involved in a tax avoidance scheme".

6. Before me, evidence was given on affidavit, which evidence was of a documentary kind attaching copies of the application and tax assessments involved and correspondence between the applicant's solicitor and the Relief Board. Also tendered in evidence, so that I had before me the whole of the material that was before the Board, were, in addition to the application and letter from the Deputy Commissioner of Taxation to which I have referred: a transcript of an examination which took place before Mr. R. Stephens, the then Deputy Registrar of the Administrative Appeals Tribunal, Sydney Registry; Mr. Stephens' report; Taxation Ruling No. IT2440 setting out guidelines for determining the existence of serious hardship under s.265; and correspondence passing between Mr. Warburton (the applicant's solicitor) and the Deputy Commissioner of Taxation, and also between Mr. Warburton and Mr. Stephens.

7. The Board in response to a request so to do provided a statement of reasons under s.13 of the Administrative Decisions (Judicial Review) Act, and this statement was also in evidence before me. In that statement the Board set out in paragraph 1 its findings on material questions of fact. These findings, which with the exception of that set out in paragraph (c) are not challenged, are in the following terms:

"The findings on material questions of fact were:

(a) The tax liability of the estate was as at 10

February 1987 in the amount of $175,183.36.

(b) The occupation of Mr. Powell was as a medical

practitioner, with a medical practice based at

Henty, NSW.

(c) Mr. Powell was prior to his death involved in

tax avoidance schemes

(d) Mr. Powell died in August 1984.

(e) Mrs. Powell is the sole beneficiary of the

estate and was, together with her two

daughters, dependant on Mr. Powell at the time

of his death.

(f) The net value of the estate is approximately

$175,000 and is comprised of the following

major assets:

(i) Proceeds from a Life Insurance

Policy current on deposit $150,000

(ii) Property at

11 Bartsch Avenue, Henty

Valued at $75,000 by

executor but later

revised down to

$55,000, with a mortgage

of $30,000 Approx. 25,000

$175,000

(g) The estate received interest payments since

the grant of Probate which have in the main

been applied toward Mrs. Powell's living

expenses but also to the administration of the

estate.

(h) Mrs. Powell personally received $40,000 being

proceeds of an insurance policy on her

husband's life, of which an amount of

approximately $12,000 remains on deposit with

the Commonwealth Bank.

Mrs. Powell's current liabilities amount to

$12,830.60 of which the major portion is

comprised of unbilled fees of Sly & Russell.

(i) Mrs. Powell has not worked since November 1980

due to a car accident in which she suffered

whiplash.

(j) Mrs. Powell is in receipt of money from the

following sources:

(i) weekly workers compensation;

(ii) part widow's pension which had ceased

due to administrative problems but

presumed to be reinstated in near

future;

(iii) distribution from estate of interest of

an average of approximately $14,000 per

year;

(iv) Rental subsidy paid direct to Mrs.

Powell's landlord by AMA Benevolent Fund

in the amount of $400 per month.

(k) The average weekly expenditure incurred by

Mrs. Powell and one of her daughters is $640

per week, with the major outlay being the

monthly rental of her Elizabeth Bay flat which

was in the amount of $1,315 of which $400 was

met by way of the rental subsidy.

(l) Mrs. Powell's daughter, Natasha, left home in

early 1985 and is self supporting although

requiring occasional financial assistance.

Her other daughter, Yasmin, resides with Mrs.

Powell.

Mrs. Powell has encountered difficulty and

emotional strain in relation to Yasmin and

attributes the cause to her considerable

financial difficulties since her husband's

death.

(m) The Board was not satisfied that the payment

of the tax liability due by the estate would

entail serious hardship to Mrs. Powell."

8. In paragraph 3 the Board sets out its reasons for the decision not to grant release from payment of tax. Having regard to the argument advanced it is necessary to set out in full paragraph 3 of the s.13 statement.

"(a) Although Mrs. Powell appears to be suffering

personal difficulties both in relation to her

physical condition and also in respect of her

relationship with her daughter, the Board is

not satisfied that the circumstances are such

that the exaction of the full amount of tax

from the estate will entail serious hardship

to the dependants of the deceased Mr. Phillip

Powell.

The factors which have led the Board to this

finding are:

(i) The net value of the estate is

considerable and sufficient to meet the

tax liability.

(ii) Mrs. Powell has approximately $12,000 on

deposit with the bank, owns a motor

vehicle outright and has over the years

received considerable interest from the

estate to pay for her excessive living

costs. (Receives approximately $1,000

interest annually).

(iii) Mrs. Powell is only residing with her

daughter Yasmin and yet incurs

considerable weekly expenditure and

chooses to continue renting

accommodation in Elizabeth Bay at the

rate of approximately $1300/month.

Living expenses amount to $22-23,000 per

year.

(iv) The amount of income received weekly is

sufficient to meet reasonable living

costs, if new cheaper accommodation is

found.

(v) The Deputy Registrar suggested that

the Board should have regard to the

likelihood that workers compensation

payments and rental subsidies will

continue, in considering the application

for relief. The Board has done so and

is of the opinion that in view of the

fact that both these payments have

continued over the past 3-4 years that

it is likely that they will continue.

Both Mrs. Powell and Mr. Warburton only

suggested that there may be a chance

that they will not continue. The Board

is of the opinion that it is not likely

to be a big chance.

(vi) Mrs. Powell has provided a loan to her

son in the amount of $3,000.

(vii) Mr. Powell was involved in Tax avoidance

schemes which gave rise to the tax debt

and used this money to finance the

lifestyle for his family.

(b) The Board decided not to release the trustee

of the said estate because, in addition to its

finding on serious hardship, it found that:

(i) The deceased was involved in Tax

avoidance schemes and had a history of

failing to make adequate provisions to

pay his tax debts by the due date.

(ii) The tax avoided was used to finance the

lifestyle of the deceased and his family

which is evidenced by the private

schools and the rental accommodation

provided to Mrs. Powell in Elizabeth

Bay, Sydney which is one of the more

exclusive areas of Sydney.

(iii) Mrs. Powell is unwilling to make the

necessary changes in her lifestyle

following the death of her husband."

9. Counsel for the applicant made four basic submissions.

10. First it was submitted that the Board committed an error of law by only considering the question of whether the estate could be released from the whole of the tax but did not consider whether it would be appropriate for the estate to be released from part only of the tax. This error was said to be found in the s.13 statement.

11. Second,it was said that having regard to the s.13 statement and the lack of evidence from the respondent it was clear that the Board had erred in law in interpreting the expression "serious hardship". Put in another way it was submitted that because the Board's conclusion was, having regard to the facts found by it, so unreasonable that no reasonable decision maker could reach it, it was clear that the Board must have misdirected itself as to the meaning of "serious hardship".

12. Third, it was submitted that it was clear from the s.13 statement that the Board had taken into account irrelevant considerations and had failed to take into account relevant considerations.

13. Finally, it was submitted that there was no evidence in any event to support the Board's finding of participation in tax avoidance schemes but that if there were there had been a denial of natural justice.

14. I shall deal with each of the four submissions in turn.

15. With all respect to counsel's first submission, it is hard to see on the face of the s.13 statement that the Board erred in law in considering only the question of whether complete relief should be given without considering the question of whether partial relief should be given. It seems clear from the s.13 statement that the Board formed the view that even the payment of the whole amount of tax by the estate would not entail serious hardship to the applicant or the dependants of the deceased. If it be the case that the exaction of the full amount of tax would not entail serious hardship then of course it must follow that the exaction of part of the amount of tax would not entail serious hardship. In my view no criticism can on this ground be advanced against the Board.

16. An alternative way of putting the argument is to consider the issue that is thrown up by the wording of s.265(1) namely, whether owing to the death of a person, the dependants of that person are in such circumstances that the exaction of the full amount of tax would entail serious hardship. Once there is a finding that the exaction of the full amount of tax will not entail serious hardship it would have to follow that there was no power in the Board to release any tax at all.

17. In this second submission counsel for the applicant argued that I should examine the s.13 statement carefully and that it was clear from that statement that the Relief Board had necessarily misconstrued the expression "serious hardship".

18. A statement under s.13 is not a document necessarily prepared by a lawyer although no doubt the request for such a statement may indicate that litigation is at the very least possible. The court will not subject such a statement to a fine analysis with a view to finding through a microscopic study of it some error of law. As Lockhart J. said in Smith v. Minister for Immigration (1984) 53 ALR 551 at p 554:

"As has been said by judges of this Court more than

once, it is not legitimate to scrutinize reasons

for decisions of government officers too finely or

precisely. Such reasons should be studied

carefully but sensibly, and not zealously in the

pursuit of error."

19. There is no definition in s.265 of what is meant by "serious hardship" nor would one expect there to be. Each of the words in the phrase is an ordinary English word having a well understood meaning. The context in which the words appear makes it clear that the Relief Board is to consider whether the exaction of the full amount of tax would involve the dependants of a deceased taxpayer in financial difficulty which in all the circumstances can be said to be serious. The financial difficulty will be such that the dependants will be in significant need warranting action by the Relief Board to relieve their condition.

20. It would seem that the expression "serious hardship" has not been the subject of judicial comment in the present context. Counsel for the respondents referred me to the decision of Williams A.M. of the Supreme Court of Victoria in Deputy Commissioner of Taxation (Vic.) v. Hoare (1987) 19 ATR 772. That case concerned an application for a stay of judgment by a taxpayer who had been sued by the Commissioner for outstanding tax. Among the criteria relevant to the exercise of the discretion of the court in stay proceedings is clearly financial hardship to the defendant if the stay were refused. It was in this context that Williams A.M. considered the issue of financial hardship. However, I find the case quite unhelpful for two reasons. The first is that the context in which the analysis of financial hardship arose is completely different to that in s.265. Second, the phrase is not a statutory one but merely an expression of a factor relevant to the exercise of a judicial discretion, which factor is in other parts of the judgment referred to as "extreme" financial hardship. Clearly, there is a distinction between, on the one hand hardship which is serious, and on the other hand, hardship which may be said to be extreme although it is obvious enough that what will constitute either will depend upon the circumstances of a given case.

21. It is inappropriate to endeavour in the abstract to state tests of what will and what will not constitute serious hardship within the context of s.265. Clearly there would be severe financial hardship if the dependants of a deceased person were left destitute without any means of support. That is not to say that in any particular case something less than that will not constitute serious hardship.

22. It was further submitted for the applicant that the finding by the Board that the exaction of the full amount of tax would not cause serious hardship was a finding in the circumstances so unreasonable that no reasonable decision maker could have reached it. Indeed, such a finding was, it was suggested, so perverse that it must be clear that the Board had adopted a wrong test as to what was serious hardship, it not really being apparent on the face of the reasons what test the Relief Board adopted.

23. There was it was said a band or spectrum of situations within which the decision maker could operate in making his decision. At one end of the spectrum there would be hardship so severe that no reasonable decision maker could gainsay it. At the other end of the spectrum there would be the case where the dependants were left in comfortable circumstances so that there was no, or only slight, hardship and in consequence no serious hardship. In between these two extremes there was an area where the discretion of the decision maker could operate. The analogy to a band of decisions derives from the judgment of Lord Hailsham in re W (An Infant) (1971) AC 682 at p 700. See also "Sydney" Training Depot Snapper Island Ltd v. Minister for Sport, Recreation and Tourism & ors, Wilcox J. 26 October 1987 (unreported).

24. One illustration of a case involving the extreme of the spectrum is Edelsten v. Wilcox & anor (1988) 83 ALR 99 where the decision of the Commissioner to issue a notice under s.218 of the Income Tax Assessment Act 1936 to the Health Commission in respect of Medicare benefits which had been bulk billed, those benefits representing practically the whole medical income of the doctor would clearly have been an unreasonable exercise of power. Another illustration is the decision of the Privy Council in Williams v. Giddy (1911) AC 381 where an award of one penny per annum under a section of the New South Wales Public Service Superannuation Act 1903 was held to be illusory and tantamount to a refusal by the Board to exercise its discretion.

25. It was said that the facts of the present case likewise fall at the end of the spectrum so that the present is likewise a case where the exercise of discretion was either illusory or conversely the wrong principles must have been applied. In support of this submission it was pointed out that the effect of the whole amount of the deceased taxpayer's tax being paid out of the estate was to leave Mrs. Powell depleted of all assets in circumstances where she had a dependent child and depended for her livelihood upon uncertain factors such as the workers compensation award (which could terminate), a pension which apparently had terminated although it could be reinstated, and a voluntary rent supplement paid by the AMA.

26. Put shortly, it was said the applicant would in truth be destitute if the whole of the tax was paid and such destitution constituted clearly "serious hardship" if this expression is given its correct meaning. There is some merit in this submission if the premises assumed by it are correct. The Board appears to have formed the view that the income received by the applicant would continue (no challenge was made on the ground that the evidence would not have justified this conclusion although it is hard to see how a voluntary rent supplement from the AMA Benevolent Fund could be assumed to be a continuing benefit). Further, the Board concluded that the amount of income received, assumed to be continuing, was sufficient to meet reasonable living costs. In these circumstances it was open to the Board to conclude that the exaction of the full amount of tax would cause serious hardship just as it was also open to the Board to conclude that exaction of the whole tax would not leave the applicant and her daughter in a situation that could properly be described as one of serious hardship. The circumstances of the present case, while clearly very close to the end of the spectrum representing destitution still come within that range of the spectrum in which the decision could not be described as unreasonable in the Wednesbury sense (cf. Associated Provincial Picture Houses Ltd v. Wednesbury Corporation (1948) 1 KB 233), that is to say unless consideration of some extraneous or irrelevant factor intervened to vitiate the decision.

27. Under the head of reasonableness it was also argued that the Board should have considered the application for remission of the tax separately in respect of the ordinary income tax payable by the deceased and additional income tax. From the material before the Tribunal it was clear that there was an overall liability as at 10 February 1987 of $175,183.36. Indeed, by 19 April 1988, the Board's decision having been given on 15 March 1988, the assessment had grown to $197,001.86 made up of primary tax for the years ended 30 June 1980 to 30 June 1984 of $92,597.52 and additional tax for late payment calculated to 15 April 1988 of $104,403.34. The additional tax referred to is that directed to be paid under s.207(1) of the Act, computed until 13 March 1982 at the rate of 10 per cent per annum and thereafter at the rate of 20 percent per annum.

28. While it is certainly clear that the Board considered the application in respect of the total liability calculated as at 10 February 1987 (and thereby ignored the fact that a further 20 per cent per annum on the primary tax calculated to the date of decision was payable) and while therefore it was clear that the Board did not consider the question of relief from primary tax separately from relief from additional tax I can see no error of law in the way in which the Board so proceeded. It is, at least, in the consideration of the question of serious hardship of no consequence whether the outstanding tax arose from an ordinary assessment of income tax or whether it arose by virtue of the operation of s.207 of the Act as a result of the tax being outstanding beyond the due date for payment. Further, if there were, in the Board's opinion, no serious hardship arising by virtue of the exaction of the full amount of tax, both primary and additional tax, it must follow that the same conclusion would be reached in respect of each of the separate components which make up this full amount of tax. If there be any relevance at all of the additional tax under s.207 in proceedings before the Tribunal, that relevance would lie not in relation to the issue of serious hardship but generally in relation to the alternate discretion of the Relief Board to grant relief.

29. By the third submission the applicant sought to persuade me that the Board had taken into account, in making its decision, irrelevant matters, or had failed to take into account relevant matters. The "relevant matters" not considered, as identified in the application for review, were said to be:

1. The effect of the decision upon the applicant;

2. The prospect of releasing the estate from part of the

tax otherwise payable;

3. The fact that the decision would leave the applicant

with insufficient income to meet reasonable living

costs; and

4. The cost of rental accommodation in areas of Sydney

other than Elizabeth Bay.

30. The first of these matters is clearly enough a relevant consideration but I do not think that it can be concluded from a reading of the s.13 statement that the Board ignored altogether the effect its decision would have upon the applicant. The Board considered that matter and concluded that there was no serious hardship to the applicant if the full amount of tax was exacted. Had I had to consider that matter myself I might have taken a different view but it is not for this Court to substitute its discretion for that of the Board.

31. The second matter, said to be relevant but ignored, I have already discussed. For the reasons already given it is clear that the prospect of releasing the estate from part of the tax was not a relevant consideration after a decision had been reached that there would be no severe hardship if the whole of the tax were exacted. Finally, it appears from the s.13 statement that the remaining two matters were in fact considered by the Board. It follows in my view that the Board did not err in law by failing to consider considerations that were relevant.

32. Before proceeding to deal with the question of whether the Board took into consideration irrelevant matters, one question of construction of s.265 arises. In the absence of authority, I should have thought that there was something to be said for the view that where s.265 provides that "the Board may release the taxpayer" those words becoming operative only after the matters in paragraphs (a) or (b) have been considered and it has been shown to the satisfaction of the Board "that the exaction of the full amount of tax will entail serious hardship", the word "may" is not used in the sense of giving yet another discretion to the Commissioner but rather in the sense of "shall", cf. Finance Facilities Pty. Ltd. v. Federal Commissioner of Taxation [1971] HCA 12; (1970-71) 127 CLR 106, per Windeyer J. at pp 133-5, per Owen J. at pp 137-8. If this were so, it would follow that once the Board had formed a conclusion that there was serious hardship it was then bound to remit the tax in whole or in part. One difficulty of such an interpretation however, would be that it leaves open the question of what the Board is in fact bound to do, given that under the section it has a choice to remit the tax in whole or in part. Therefore the word "may" presumably encompasses that choice which lies in the discretion of the commissioner.

33. The matter is however not free from authority. The High Court considered the construction of a similar provision, s.66(1) of the Land Tax Assessment Act 1910-34 (Cth) in R. v. Trebilco; ex parte Falkiner & Sons Ltd. [1936] HCA 63; (1936) 56 CLR 20. It might be noted that McTiernan J. who dissented in Finance Facilities did so relying upon Trebilco although the majority made no reference to the earlier case.

34. Section 66(1) of the Land Tax Assessment Act 1910-34 read as follows:

"In any case where it is shown to the satisfaction

of a board consisting of the commissioner, the

Secretary to the Treasury and the

Comptroller-General of Customs, or of such

substitutes for any or all of them as the Minister

from time to time appoints -

(a) that a taxpayer liable to pay land tax has

become bankrupt or insolvent, or has suffered

such a loss that the exaction of the full

amount of tax would entail serious hardship;

(b) that, by reason of drought or adverse seasons

or other adverse conditions, the returns from

any land owned by the taxpayer upon which he

carries on agricultural or pastoral pursuits

have been seriously impaired; or

(c) that, owing to low prices in respect of

primary products the income derived from the

land the subject of land tax has been so

reduced that the taxpayer is unable to pay the

whole of the tax out of his income derived in

the financial year for which the land tax is

assessed, and that the financial position of

the taxpayer is such that the exaction of the

full amount of land tax would entail serious

hardship,

the Board may release such taxpayer wholly or in

part from his liability for land tax or for land

tax in respect of any particular land the returns

from which have been so impaired, and the

commissioner shall make such alternations in the

amount of tax payable and shall make such refund of

tax already paid as is necessary to give effect to

the decision of the board."

35. In Trebilco the High Court was of the view that notwithstanding the fulfilment of one of the conditions referred to in the lettered paragraphs of the section the Board was not bound to exercise its authority in favour of the taxpayer. Dixon J., with whom McTiernan J. agreed, said:

"Pars. (a), (b) and (c) of sub-sec. 1 state

conditions, one of which must be fulfilled before a

taxpayer qualifies for relief. But if a taxpayer

does satisfy one of the conditions precedent so

laid down, he does not obtain a right to relief.

In my opinion, he obtains only a title to the

consideration by the board of the general

circumstances of his case and to a determination

whether it is just and proper that he should

receive any, and if so what, relief." (p 31)

and:

"The degree of relief is left to the board in

express terms. A power given by the word "may" in

such a provision must, I think, be understood as

discretionary. It confers a discretion to release,

or not to release, the taxpayer according to the

board's opinion of the justice of the case." (p 32)

36. It follows from Trebilco that in the course of consideration of the release of tax under s.265 the Board may consider not only such matters as go to the issue of serious hardship but also other matters which in the discretion of the Board may be relevant, those other matters being merely proscribed by the general principle that the discretion must be exercised bona fide and for the purposes for which it was conferred, there being jurisdiction in this Court to intervene if in the overall exercise of the discretion the Board does take into account considerations which, having regard to the purposes served by s.265, can be seen to be irrelevant. Thus in Giris Pty. Ltd. v. Federal Commissioner of Taxation [1969] HCA 5; (1969) 119 CLR 365 at p 384 Windeyer J. said of the discretion vested in the Commissioner under s.99A of the Act:

"Moreover, the Act requires that he "shall have

regard to such other matters, if any, as he thinks

fit". However I assume that he is to be guided and

controlled by the policy and purpose of the

enactment, so far as that is manifest it it. That

would exclude from his consideration any matter

which it would be unlawful for him to take as a

criterion, such as the State of residence of a

trustee or of the beneficiaries of a trust. It

would also, I think, exclude all merely fanciful

and prejudiced tests which were hypothetically

suggested in argument, such as vocation, religion,

colour of skin or hair. Nevertheless the statute

seems to allow great latitude to the Commissioner

in forming his opinion."

37. In Trebilco Dixon J. said of the power under consideration in that case at p 32:

"The authority is to absolve the subject from a

liability to taxation imposed upon all alike whose

property is of the taxable description. The degree

of relief is left to the Board in express terms. A

power given by the word "may" in such a provision

must, I think, be understood as discretionary. It

confers a discretion to release, or not to release,

the taxpayer according to the Board's opinion of

the justice of the case. Except for implications

or inferences from the three paragraphs prescribing

the conditions precedent, the sub-section gives no

information as to the considerations by which an

exercise of the discretion is to be guided. The

nature of those considerations must be gathered

from the scope and object of the provision. No

doubt in a case coming within one of the prescribed

conditions the Board cannot proceed to grant or

withhold relief on grounds which are irrelevant to

the incidence and consequences of the tax and the

effect of its exaction upon the affairs of the

taxpayer. It would, for example, be outside the

ambit of their discretion to withhold relief in

order to force the taxpayer to conform with some

quite unconnected administrative policy adopted by

another department of government. ... where no

limits are expressly imposed by the legislature on

an administrative discretion, the questions what

are, and what are not, legitimate considerations

for its exercise must always be disputable and open

to wide differences of opinion. But, nevertheless,

in theory a legal right exists to compel an

exercise of the discretion on grounds which are not

extraneous and irrelevant to its purpose."

38. Thus in Trebilco it was held that the resources of the taxpayer and his receipts up to date, although not themselves relevant to a case which fell within paragraph (b) of the section, were not irrelevant to the final exercise of the discretion.

39. More recently Mason J. in Minister for Aboriginal Affairs v. Peko Wallsend Ltd. [1986] HCA 40; (1986) 162 CLR 24 made a similar point where his Honour said at p 40:

"In the context of judicial review on the ground of

taking into account irrelevant considerations, this

Court has held that, where a statute confers a

discretion which in its terms is unconfined, the

factors that may be taken into account in the

exercise of the discretion are similarly

unconfined, except in so far as there may be found

in the subject-matter, scope and purpose of the

statute some implied limitation on the factors to

which the decision-maker may legitimately have

regard: ... By analogy, where the ground of review

is that a relevant consideration has not been taken

into account and the discretion is unconfined by

the terms of the statute, the court will not find

that the decision-maker is bound to take a

particular matter into account unless an

implication that he is bound to do so is to be

found in the subject-matter, scope and purpose of

the Act."

40. As the language of s.265 discloses, and as is clear from what was said in Trebilco, the Board acting under s.265 must proceed in two steps. Where, as here, the case is one arising after the death of a taxpayer the Board must first decide whether owing to the death of the original taxpayer that person's dependants are in such circumstances that the exaction of the full amount of tax would entail serious hardship. If that question is answered favourably to the applicant for relief the Board must then address the next set of issues, namely whether there should be release in the circumstances and if so whether that release will be of the whole or part of the liability. It is obvious that the factors that may be relevant to the second of these steps could be a great deal wider than the factors which are relevant to the first of the steps.

41. It was argued for the applicant that in considering the issue of serious hardship the Board erred in law by taking into account matters that had taken place prior to the time of review. It was said that the only matter that could be relevant to the question of serious hardship was the present financial circumstances of the persons dependent upon the deceased taxpayer. Thus it was said that each of paragraphs (ii), (iii), (iv) and (vii) under heading 3(a) of the s.13 statement evinced the taking into account of irrelevant matters. For example, in paragraph (ii) the Board in its statement indicates that it took into account that Mrs. Powell had "over the years received considerable interest from the estate to pay for her excessive living costs". In fact, as the evidence disclosed, the interest in question was interest apparently received from the insurance company on the policy moneys not paid out and which in total amounted to approximately $20,000. Once, of course, the tax was paid out of the estate assets this interest would cease altogether.

42. There is much to be said for the argument that in considering the issue of severe hardship on its own, the fact that the dependants have received moneys from the estate would have little, if any, significance, for the money, having been spent, is unavailable to be used again to alleviate the financial hardship. It would however, be a matter that could be taken into account by the Relief Board in the second exercise of discretion to which I have referred.

43. Paragraph (ii) was criticised as well for its reference to "excessive living costs". It was said that the Tribunal had no evidentary basis for determining what level of living costs was excessive because in paragraph (i) of the statement it had set out in its findings of fact no finding relating to what was or was not a non-excessive living cost. It was not disputed that the Tribunal could, from its own knowledge and experience, determine what were and what were not reasonable living costs, cf. Minister for Health v. Thomson [1985] FCA 208; (1985) 60 ALR 701 at pp 706 and 713, but it was said that it clearly must have failed to do so since no statement to this effect appears under paragraph (i) of the statement under s.13.

44. With respect to this argument, it is at its best an argument as to form rather than substance. Under s.13 of the Administrative Decisions (Judicial Review) Act 1977 the statement furnished is required to set out "the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision." The policy which s.13 implements is, as Lockhart J. observed in Dalton v. Federal Commissioner of Taxation [1985] FCA 298; (1985) 7 FCR 382 at pp 391-2 when referring to s.25D of the Acts Interpretation Act 1901 (Cth) "to expose the decision-making processes of government tribunals, bodies and officers to public scrutiny and to ensure that persons whose rights and interests may be affected by decisions made in the course of administrative processes are properly informed of the reasons for them and the findings upon which they are based". The information received may be used "to chart" the "future course" of action for the person affected by the decision. It permits that person to see the decision for what it is, to examine whether irrelevant matters were taken into account or relevant matters not considered. For present purposes it enables that person to know whether the decision was made against a background of wrong facts. Only in such a way can the person affected be fully informed so that her or his advisers can make a proper decision how further to proceed.

45. Although it may be regrettable, statements under s.13 are generally prepared by administrators and not lawyers and are often not prepared with the care or precision which the policy of the section contemplates. It clearly would not follow merely because a statement did not set out the findings on a particular material question of fact that no such finding was made. Indeed, it may be implicit from what is said that such a finding was made or in a particular case evidence might be given in proceedings for review which make it clear that the particular finding was made, notwithstanding that it was not referred to in the s.13 statement. In other cases the failure to refer to the statement of fact in the s.13 statement coupled with the failure of the decision maker to give evidence may lead to an adverse inference being drawn provided there is other evidence before the court which permits that adverse inference being made. Cf. Gibbs J., as his Honour then was, in Finance Facilities at p 109, Jones v. Dunkel [1959] HCA 8; (1959) 101 CLR 298, at pp 308, 312, 320-1, Electronic Industries Ltd. v. The Mayor of the City of Oakleigh [1973] VicRp 15; (1973) VR 177 per Gowans J. at p 189, Lebanese Moslem Association v. Minister for Immigration & Ethnic Affairs (1986) 67 ALR 195 per Pincus J. at pp 199-200 and Citibank Ltd. v. Federal Commissioner of Taxation (1988) 88 ATC 4714 at p 4728 per Lockhart J.

46. Where a Tribunal takes the view that expenditure of a particular magnitude is excessive, the reasoning process which leads to that conclusion, being as it is a conclusion of fact, proceeds first from a determination of the particular expenditure in fact made (cf. finding of fact 1(k) in the s.13 statement) and second from a finding that expenditure over and above a particular level can be classified as excessive. The ultimate conclusion of fact, that the particular level of expenditure is excessive, to be properly reached requires that each of the constituent factual determinations have been made. However, I do not think that the omission in the findings of material questions of fact in the s.13 statement that expenditure over and above a certain level is excessive, can be said necessarily to produce the conclusion that the Board reached the ultimate conclusion of fact without consideration of the level of expenditure which was or was not excessive. Similar criticisms were made in respect of the reference to the weekly expenditure being "considerable" in paragraph 3 and the reference to reasonable living costs in paragraph 4. In my opinion there is no real substance in the submission.

47. There remains however the prominence which the Board gave to the fact that the deceased had been involved prior to his death "in tax avoidance schemes". The sole material upon which the Board relied to reach its conclusion that the deceased had been involved in tax avoidance schemes was the "statement of case" of the Commissioner which in some way or other was forwarded to the Board. Nothing in the assessments before the Relief Board or in any other correspondence revealed one way or another whether as a matter of fact the deceased had been involved in a particular scheme. There was merely an assertion by the Commissioner of the fact. I should say that there may be difficulty in knowing at the best of times what is meant by the expression "a tax avoidance scheme" for what is seen by one person as legitimate family planning may well be seen by another as tax avoidance, but even if one assumes that there were universal agreement as to what tax avoidance means and that the mere assertion by the Commissioner was sufficient to justify a finding of fact that the deceased had been involved in a tax avoidance scheme (not as the Relief Board said "tax avoidance schemes") it must be said that it is difficult to see the significance of that statement to the issues under s.265.

48. As I have already indicated, the first issue under s.265 that arises is hardship of the dependants: that is an issue which clearly enough arises to be looked at at the time of the application. Whether the taxpayer had been involved in a tax avoidance scheme in the past could not conceivably affect the question of whether after the deceased's death his dependants are in a situation where their condition might be described as one of serious hardship. Yet in the s.13 statement it is made clear, see 3.(a)(vii), that a factor which led the Board to its finding that there would not be serious hardship to the dependants was the involvement of Mr. Powell in "tax avoidance schemes which gave rise to the tax debt and used this money to finance the lifestyle for his family".

49. Assuming that the Board had properly reached its decision that the present was not a case of serious hardship there was no reason for it to consider any further matter because the issue of the second discretion under s.265 could not arise. However, it seems from paragraph 3.(b) of the s.13 statement that the Board did go on and consider as an additional ground the fact again that the deceased was involved in tax avoidance schemes and had a history of failing to make adequate provisions to pay his tax debts by the due date.

50. One may ask rhetorically, assuming the deceased was a party to a tax avoidance scheme, what relevance that fact has? The Board did not know whether the scheme was one which had been "successful" or had been "unsuccessful". It might perhaps be said that if a scheme entered into was successful it would not be right to call it a tax avoidance scheme (cf. per Gibbs J. in Finance Facilities at p 125-126). That would depend on the context in which the expression "tax avoidance scheme" was being used. If, however, the deceased had been a party to a tax avoidance scheme which was successful and thereby avoided tax in his lifetime, it is hard to see how that could be at all a relevant matter to exercise the discretion against his beneficiaries under s.265. To do so would be to punish the dependants for the deceased arranging his affairs so that in accordance with the law of the land the correct income tax was payable albeit that that income tax was less than he might have paid if he had either not ordered his affairs at all or had ordered them in some other way, presumably to maximise the tax payable. But to punish the dependants in these circumstances would, in my view, clearly be improper and would vitiate the decision of the decision maker. Cf. per Hunt J. in Gwynvill Properties Pty. Ltd. v. Federal Commissioner of Taxation (1985) 85 ATC 4046 at p 4057 where his Honour indicated that it was a gross error on the part of an officer of the Australian Taxation Office considering the remission of additional tax under s.226(2) of the Act to take into account and therefore to penalise the previous success in tax avoidance on the part of either the taxpayer or some associated person.

51. The other possibility is that the deceased taxpayer was a party to a tax avoidance scheme which failed, with the result that income tax that was properly due became payable. The only relevance that I can see of that fact is that it explains how it came about that income tax was payable, but the fact that income tax was payable will be present in every case where an application for relief under s.265 is made.

52. I invited counsel for the respondents to indicate to me what relevance it was suggested the participation of the deceased in tax avoidance schemes might have. The only answer that I could be given was the assertion that it was not irrelevant. It seems to me that for the Board to refuse relief where the liability for tax arose in circumstances where the taxpayer had been party to a failed tax avoidance scheme would again be to use the non-exercise of discretion under s.265 to punish the taxpayer's beneficiaries and in my view that would be foreign to the purpose and policy of s.265.

53. It follows then that it is not necessary for me to decide whether the mere assertion by the Commissioner that the deceased had been a party to a tax avoidance scheme would be sufficient evidence upon which the Tribunal could rely. However, where a bare assertion is made by the Commissioner of participation in tax avoidance schemes, and assuming that this was a matter relevant for the Relief Board to consider, the rules of procedural fairness, if they apply to the Board, would clearly require that the applicant for relief be given an opportunity to deal with the allegation should he or she so desire. There is thus raised the question whether or not the rules of natural justice apply to proceedings for review under s.265.

54. Whether the rules of natural justice apply in a particular case and the content of those rules is largely a question of construction of the relevant legislation: per Mason J. in Kioa v. West [1985] HCA 81; (1985) 159 CLR 550 at p 584; Salemi v. Mackellar (No.2) [1977] HCA 26; (1977) 137 CLR 396 at pp 401, 416, 419; R v. Mackellar; Ex parte Ratu [1977] HCA 35; (1977) 137 CLR 461 at pp 463, 470, 475; Heatley v. Tasmanian Racing & Gaming Commission [1977] HCA 39; (1977) 137 CLR 487 at pp 491, 498. Relevant will be the nature of the inquiry, the subject matter and the rules under which the decision maker is acting. Also relevant to the question is whether or not reasons are required to be given by the decision maker although having regard to the provisions of s.13 of the Administrative Decisions (Judicial Review) Act, in all cases where that Act applies there will be an obligation to give reasons. Even where the discretion conferred upon the decision maker is a very wide one the requirements of fair play are not necessarily ousted, although an unfettered discretion has frequently been regarded as an indicia of the non application of the rules of natural justice: cf. fai Insurances Ltd v. Winneke [1982] HCA 26; (1982) 151 CLR 342 at p 362. The repository of a wide discretion may:

"be under a duty to receive representations before

arriving at a decision and that this is more likely

to be the situation where the decision turns on

"findings of adjudicative facts or the

interpretation or application of decisional

criteria of greater specificity than those

contained in the statute."" (per Mason J. at p 363)

55. While the ultimate discretion conferred upon the Relief Board is a very wide one, the discretion as to whether there is serious hardship turns upon a factual criterion which is quite specific and there is scant reason for the principles of natural justice not applying.

56. Section 265 of the Act gives little indication of the procedure which the Board is to adopt in exercising its discretions under the section. It contemplates, however, clearly enough that the person seeking relief is to be heard because relief may only be given where it is "shown" to the satisfaction of a Board that there is serious hardship. In a case where a person not at all a party to the application directly, viz. the Commissioner, produces material for the consideration of the Board and the Board determines to accept that material, it having not at all been dealt with by the applicant in his application, I think that there is a strong case for saying that procedural fairness requires that the applicant be given an opportunity of responding to the matter. Cf. Kioa v. West per Mason J. at p 586 and re H.K. (an infant) (1967) 2 QB 617, fai Insurances Ltd. v. Winneke (supra).

57. It follows therefore both from the view I take that the consideration of tax avoidance by the Relief Board was irrelevant, and from the denial by that Board to the applicant of procedural fairness in allowing her to deal with that matter that the decision of the Board is vitiated. I do not therefore need to consider whether the taking into account of the receipt of income from the estate prior to the Board's decision would also have vitiated it.

58. It was submitted for the respondent that even if I were of the view that the decision was vitiated by a failure to consider relevant matters or a breach of the rules of natural justice I should, as a matter of discretion, grant no relief to the applicant. Certainly, if no conclusion on the facts before the Board were possible other than that exaction of the full amount of tax would not cause the necessary serious hardship, I would have exercised the discretion conferred upon me in favour of the respondent. However, as I have indicated above so far as the issue of serious hardship is concerned, the present case is clearly on the borderline. While it is clear from the s.13 statement that the Board was affected in coming to its decision on this issue by irrelevant factors it seems to me that the proper course must be to remit the whole matter to the Board for reconsideration in accordance with law. In so doing it would seem not inappropriate for the Board to investigate whether in the period, now more than twelve months since the original decision, there has been any change in the applicant's financial affairs and whether the income to which the Board refers in the s.13 statement including ex gratia payments is clearly such that it will continue.

59. While therefore I propose that the application for release of tax under s.265 should be remitted to the Relief Board for reconsideration in accordance with law, I note that in the applicant's application the order sought is that the application be remitted to a differently constituted taxation relief board than that which considered the original application. Certainly, it would be preferable that the persons who reconsider the matter be persons other than those who had originally considered it, so that the decision may be seen to be made free of any possible bias or predisposition brought about by the initial consideration of the matter.

60. Under s.265(1) the relevant Minister, the Treasurer, may appoint substitutes for all or any of the Commissioner, the Secretary to the Department of Finance and the Comptroller General of Customs. I am not aware of whether such substitutes have been appointed and no argument has been addressed to me as to the appropriate form of order in the circumstances. Accordingly, I propose to stand over the matter until 27 April 1989 at 9.30 a.m. for further argument as to the appropriate form of order unless the parties are able to agree upon such an order beforehand, in which case short minutes can be prepared and handed up on that day.