The 601 Management Company Pty Ltd (ACN 145 343 826) v Commissioner of State Revenue - Legal Services (Taxation) [2011] VCAT 2129

1. Proceeding dismissed pursuant to Section 75 of the Victorian Civil and Administrative Tribunal Act 1998.
2. No order as to costs.

1. This proceeding concerns an assessment of stamp duty made by the respondent, Commissioner for State Revenue. That assessment was made on 26 October 2010. The person assessed for duty was the applicant in the proceeding, The 601 Management Company Pty Ltd.
2. On 22 November 2010 an objection to that assessment was lodged by a law firm acting for 601. The objection was disallowed by notice dated 4 April 2011. It will be seen that more than 90 days elapsed between the lodgement of the objection and the publication of the determination disallowing the objection. A month later 601 filed an application in the form appropriate for a matter in the Civil Claims List of this Tribunal challenging the validity of the assessment. Precisely what happened in the Civil Claims List to that matter is unknown to me but on 25 July 2011 the Senior Member in charge of that List signed an order transferring the proceeding from the Civil Claims List to this List, the Taxation List. As Deputy President in charge of the Taxation List, I signed that order to consent to the receipt of the proceeding.
3. Notice of the proceeding was then given to the Commissioner of State Revenue and without tracing the plethora of correspondence in various directions which passed between the Commissioner, 601 and the Tribunal, the matter now comes before me upon an application by the Commissioner under Section 75 of the Victorian Civil and Administrative Tribunal Act 1998 seeking an order that the proceeding be dismissed as frivolous, vexatious, lacking in substance or otherwise an abuse of process. The Commissioner contends that what has occurred entails a purported invocation of a Tribunal jurisdiction which simply does not exist.
4. The Commissioner goes first to the Taxation Administration Act 1997 which deals with the assessment of liabilities under State tax laws and their Tribunal review or review by the Supreme Court under statutory appeal. The Commissioner contends that this statute lays down the sole means whereby the validity of a tax assessment may be challenged. Section 106 of that Act provides as follows:

(a) a taxpayer is dissatisfied with the Commissioner's determination of the taxpayer's objection; or

(b) 90 days (not including any period of suspension under section 102) have passed since a taxpayer's objection was received by the Commissioner and the Commissioner has not determined the objection -

the taxpayer, in writing, may request the Commissioner to refer the matter to the Tribunal or to treat the objection as an appeal and cause it to be set down for hearing at the next sittings of the Supreme Court.

(a) in the circumstances referred to in subsection (1)(a), must be made within 60 days after the date of service on the taxpayer of the notice of the Commissioner's determination of the objection; or

(b) in the circumstances referred to in subsection (1)(b), may be made at any time after the 90 day period (not including any period of suspension under section 102).

1. Sixty days and more have elapsed since the determination made by the Commissioner to disallow the objection on 4 April 2011. The same lawyers who lodged that objection have subsequently written to the Commissioner seeking a referral under Section 106. This letter was after the lapse of 60 days from the lodgement of the taxpayer's objection. It is contended by the Commissioner that therefore it was incompetent for the solicitors at that stage after the Commissioner had made his determination to request a referral on the basis of 90 days having elapsed. Therefore says the Commissioner these proceedings are incompetent both because they were commenced in the wrong way and because with the initial period after the disposition of the objection having elapsed without a request for a referral that period is not susceptible to any enlargement.
2. As to the second point, Mr Kotros who appears on behalf of the Commissioner relies upon a decision of Deputy President Coghlan in Di Dio Nominees Pty Ltd v Commissioner of State Revenue [2004] VCAT 1352 and Baranov v Commissioner of State Revenue Office [2005] VCAT 2652 one of my own determinations. At paragraph [45] of the latter case, I noted that the Tribunal had power to enlarge the time within which a party was entitled to commence a proceeding in the Tribunal, in particular to seek a review of a determination. That power is to be found in Section 126 of the Victorian Civil and Administrative Tribunal Act 1998 but I concluded that this provision did not fit together with the provisions in the Taxation Administration Act for taxation reviews to be referred to the Tribunal by the Commissioner. Mr Kotros submits therefore that I should make an order of summary dismissal.
3. Mr Bell the secretary of 601 opposes the making of such an order. He took me first to Rule 2.05 of the Tribunal Rules which provides for the transfer of proceedings from one List to another. He said that the transfer from the Civil Claims List to the Taxation List was in accordance with that rule. He noted that the order was authenticated in accordance with Tribunal Rule 4.17. He observed that there was a limited time within which a correction or a re-opening of the order could be made by the Commissioner under Rule 4.19 which time limit had expired, therefore I should treat the order of transfer as a valid one. He referred to Pelechowski v Registrar Court of Appeal New South Wales (1999) 198 CLR 435 and Attorney General of New South Wales v Mayas Pty Ltd (1988) 14 NSWLR 342, 357 where the New South Wales Court of Appeal in Mayas drew a distinction between an order which was made improperly and an order which was made without power. The former remained valid until set aside, the latter was simply invalid.
4. Mr Bell said that once an objection had lain on the Commissioner's desk undetermined for 90 days or more an accrued right existed for the taxpayer to seek a referral under Section 106(1) of the Taxation Administration Act. That accrued right could not be taken away simply because the Commissioner afterwards determined the objection and purported therefore to start a further period of 60 days running creating a deadline for a taxpayer to request a referral.
5. In considering applications under Section 75 of the Victorian Civil and Administrative Tribunal Act 1998 the authorities are clear that orders of summary dismissal are to be made in only the clearest of cases. They are not to be made where issues of credibility or contested evidence are involved. A similar provision in the Equal Opportunity Act was considered by the Court of Appeal in State Electricity Commission v Rabel [1998] 1 VR 102 and the Court's formulation there has been regarded as authoritative as has the formulation of Deputy President McKenzie in Norman v The Australian Red Cross Society (1998) 14 VAR 143. I am conscious of those authorities. In my view the necessary clarity for a determination under Section 75 of the Victorian Civil and Administrative Tribunal Act 1998 exists here.
6. In my determination in Baranov I traced the structure of the Taxation Administration Act and its provisions for review of tax assessment by this Tribunal. I concluded that this regime was the sole regime whereby such assessments could be challenged in the Tribunal. It follows therefore that the proceeding filed or purportedly filed in the Civil Claims List was without any proper statutory authority. I accept Mr Bell's contention that the order of Senior Member Lulham and my endorsement of it as head of the receiving List are valid exercises of power within the Tribunal. The order is a valid order but how far does it go? The Rules provide that proceedings in the Tribunal are to be allocated to a series of nominated Lists. The allocation is to be done by reference to the statutes or enabling enactments as they are called under which particular proceedings are brought. Any matters not specifically dealt with are allocated to the General List. The order that was made on 25 July said nothing about the unrelying validity of what was being transferred. Its rationale was simply this, that the Civil Claims List does not undertake the task of reviewing determinations of Victorian taxing authorities but the Taxation List does. Therefore the Taxation List and its members were in a better position to deal with this proceeding than were those in the Civil Claims List. That is correct because the members of this list are acquainted with the Taxation Administration Act. That is not a statute with which the members in the Civil Claims List are accustomed to deal. Merely to say that this List is the more appropriate List to deal with this matter does not validate what might otherwise be invalid. The underlying validity of the proceeding remains to be determined on the same basis whichever List the proceeding is to be found in.
7. The reasoning set out in Baranov's case I think indicates that this matter has simply set off on the wrong road and the Tribunal's jurisdiction is not properly invoked. It is unnecessary for me to determine the true construction of Section 106(1) as it has been debated by the parties. Indeed it may be inappropriate for me to do so. What is implicit I think in Mr Bell's contention here is that in the events that have occurred, that the Commissioner having held this objection undetermined for 90 days or more there is an accrued right to seek a referral. The Commissioner has refused to make the referral, therefore some power needs to be exercised to compel the Commissioner to effect the referral which he refuses to do. Mr Bell has been unable to point me to any power of this Tribunal which would authorise it to make such an order. It is axiomatic that this Tribunal is a statutory Tribunal which has the powers set out in the statutes which constitute it and grant it jurisdiction. It is not a superior court of record and therefore it has no implied or inherent powers or jurisdiction The Supreme Court could, if persuaded that the Commissioner is obliged to refer the objection on this assessment, order him so to do; but the Tribunal could not. Therefore whoever is right about the true construction of Section 106 it says nothing about the validity and operability of this proceeding.
8. Frivolous, vexatious and lacking in substance are very pejorative terms. However in my view they are properly used here. In this context, namely Section 75 of the Victorian Civil and Administrative Tribunal Act and Order 23 of the Rules of the Supreme Court, they refer merely to matters which are not legally properly based. To invite the Tribunal to invoke a jurisdiction which it does not have is in that category. In the special way that these words are used in Section 75 this proceeding is frivolous and vexatious. It is proper therefore that I make an order of dismissal which I propose to do.

1. I have given my reasons for making an order dismissing this proceeding under Section 75 of the Victorian Civil and Administrative Tribunal Act 1998 summarily. As a result of that determination Mr Kotros who appears for the victorious respondent, Commissioner of State Revenue, has sought an order that the applicant taxpayer pay the Commissioner's costs of this hearing. Mr Kotros seeks an order of costs fixed in a sum certainly not exceeding $1,000. He submits it is fair that there should be a costs award in these circumstances because this proceeding he says is misconceived. Rather than being initiated by referral under the Taxation Administration Act 1997 the taxpayer sought to commence the proceeding in the Tribunal by filing an application in the Civil Claims List. Whilst this was going on the time within which, as the Commissioner sees it, the taxpayer was entitled to seek a referral elapsed and is not susceptible of enlargement.
2. Mr Kotros notes the paradox in his cost's application because by virtue of Clause 91 Schedule 1 to the Victorian Civil and Administrative Tribunal Act 1998 proceedings under taxing Acts for review in the Tribunal operate on the basis that no orders for costs may be made. That is, this List simply does not order costs and has no power to do so. Yet Mr Kotros says that the effect of my determination is that this proceeding however one characterises it, cannot be characterised as a proceeding under a taxing Act because it was put into motion without jurisdiction, therefore that limitation on jurisdiction does not apply. He referred me to one of my own decisions in the matter of Nazligul v AMP Investments Pty Ltd, a determination in the Retail Tenancies List on 27 May 1999. I concluded in that case that the matter before me was brought without jurisdiction but determined that I had power to make a costs award despite the lack of jurisdiction on the basis that the Tribunal had jurisdiction to determine whether it had jurisdiction. I referred to a judgment of Kirby J in Re Bolton ex parte The Construction, Forestry, Mining and Engineering Union (1998) 73 ALJR 129, 133. I accept in the circumstances before me that I have power to make a costs award. First the exclusion of the costs power relative to proceedings under taxing Acts does not apply because this matter is not properly brought under a taxing Act. Secondly, whilst I believe there is something to be said for what I determined in Nazligul's case, namely that the Tribunal has power to determine its jurisdiction even if ultimately it concludes that the substantive matter brought before it goes beyond that jurisdiction, there is perhaps a more obvious power to award costs to be found in Section 75(2) of the Victorian Civil and Administrative Tribunal Act 1998. I adopted that line of reasoning to make a costs order in Niebieski Zamek Pty Ltd v Southern Rural Water (unreported 22 May 2003) some years ago. Mr Kotros was happy enough to embrace that view of things.
3. Mr Bell submits that it would be unjust in the circumstances to make a costs award against his company. He says that there is strong merit in the objection lodged by his company. If by legal misstep the company has been deprived of the opportunity to put the merits of its case, insult should not be added to injury by making a cost's award against it.
4. Mr Kotros stressed that the notice disallowing 601's objection explained the review rights at VCAT and had proper attention been paid to that notice matters would not have gone awry as they had.
5. In my view I do have the power to make a costs award but with some hesitation I determine in the circumstances I should not. It would be paradoxical I think to make a costs award in the Taxation List where the regime is specifically and deliberately established by Parliament on a no costs basis. I accept the logic of Mr Kotros' argument but in looking at the matter in a broader and juster way, I think even although this is not technically under a taxing Act it does relate to the taxation jurisdiction and given that this matter has been stopped off at a relatively early stage there is no injustice in there being no costs award now. I should observe however, had the matter gone further, had more elaborate steps been taken, the argument for making a costs award would have been difficult to resist. This was the situation which confronted me in Niebieski Zamek and which led me to make the order that I did.