The Smith's Snackfood Company Limited v Chief Commissioner of State Revenue

EX TEMPORE Judgment 1Reasons for judgment in this matter were published on 28 August 2012, The Smith's Snackfood Company Limited v Chief Commissioner of State Revenue (NSW) [2012] NSWSC 998. The court determined that Smith's objections were allowed in part. The parties were directed to bring in short minutes of order reflecting those reasons. 2Smith's seeks the following orders amongst others: "The matter be re-listed for further hearing if either: (a)the Chief Commissioner has not made his determination within 2 calendar months of the date of this Order; or (b)the Plaintiff contends that such determination is not in accordance with the Court's findings and decision." 3Those orders seek to overcome the operation of s 86(2)(b) of the Taxation Administration Act 1996. The matter is to be remitted to the Chief Commissioner for determination in accordance with the court's findings and decision. Smith's submits that without the above orders it will have no recourse if it disagrees with the reassessments made by the Chief Commissioner on the remitter. 4Section 86(1) of the Taxation Administration Act provides that a taxpayer who is dissatisfied with an assessment or other decision of the Chief Commissioner may lodge an objection. Section 86(2) is in the following terms: "However, a taxpayer may not lodge such an objection in respect of the following: (a) an assessment made under s 12 (Compromise assessment) with the agreement of the taxpayer, (b) the determination of an objection under this Part (including such part of any reassessment that gives effect to the determination of an objection that is allowed in whole or in part), (c) a decision to reassess the taxpayer's liability that does not have the effect of increasing that liability where the taxpayer seeks to lodge the objection more than 60 days after the date of service of the notice of the initial assessment, (d) a decision not to reassess the taxpayer's tax liability where the taxpayer seeks to lodge the objection more than 60 days after the date of service of the notice of the initial assessment." 5Section 86(2)(c) and s 86(2)(d) are subject to s 86(3) of the Taxation Administration Act which provides that it does not preclude the lodgment of an objection that is sought to be lodged more than 60 days after the date of service of notice of the initial assessment if the Chief Commissioner permits its lodgment. 6Mr Leggat SC, who with Mr Young appeared for the Chief Commissioner, said that his instructions were that the Chief Commissioner would act under the Taxation Administration Act s 86(3) in this case. The bar to lodging an objection that is crucial in this case is thus s 86(2)(b). 7Section 102(1) of the Taxation Administration Act provides that within 60 days after the decision on a review becomes final, the Chief Commissioner must take any action that is necessary to give effect to the decision. That action may include amending any relevant assessment. 8In light of that provision, I agree with the Chief Commissioner's submission that the order sought in sub-paragraph (a) of the proposed orders is inappropriate. 9The order sought in sub-paragraph (b) of the proposed orders ought not be made for the following reasons. 10If Smith's says of a reassessment by the Chief Commissioner that it is not in accordance with the court's reasons, then, arguably, it does not "give effect to the determination of an objection that is allowed in whole or in part" and the exclusion does not apply. So Smith's may have a basis for challenge within the terms of Part 10. It does not have any other basis for challenge. 11There is a privative provision in the Taxation Administration Act with exceptions irrelevant for present purposes. Section 103A(1) provides: "No court or tribunal (or other body or person) has jurisdiction or power to consider any question concerning an assessment or other decision of the Chief Commissioner under a taxation law (including the determination of an objection under Division 1) except as provided by this Part." 12The operation of that provision makes Part 10 of the Taxation Administration Act an exclusive code that bars other forms of relief (Harrington Park Children Services (NSW) Pty Ltd v Chief Commissioner of State Revenue [2008] NSWSC 266; (2008) 71 ATR 143). 13This would exclude an application under s 65 of the Supreme Court Act 1970 for an order that the Chief Commissioner fulfil a duty in the fulfilment of which Smith's is personally interested or relief in the nature of a prerogative writ under s 69, unless the Chief Commissioner commits jurisdictional error (Kirk v Industrial Court of New South Wales [2010] HCA 1, (2010) 239 CLR 531). 14I am loath to alter the operation of s 86(2) of the Taxation Administration Act. The clear legislative intention of the provision is that there should be an end to the review process under Part 10. 15The powers of the court and the Administrative Decisions Tribunal on a review are set out in s 101(1) of the Taxation Administration Act: "The court or tribunal dealing with the application for review may do any one or more of the following: (a) confirm or revoke the assessment or other decision to which the application relates, (b) make an assessment or other decision in place of the assessment or other decision to which the application relates, (c) make an order for payment to the Chief Commissioner of any amount of tax that is assessed as being payable but has not been paid, (d) remit the matter to the Chief Commissioner for determination in accordance with its finding or decision, (e) make any further order as to costs or otherwise as it thinks fit." 16The general power to make orders under s 101(1)(e) of the Taxation Administration Act, if not limited to orders ancillary to the exercise of the other powers conferred by that subsection, should not be utilized to avoid the operation of a provision within the exclusive code in Part 10. 17The legislative intention to bring the review process to an end in s 86(2) of the Taxation Administration Act would be thwarted if the court or tribunal was entitled under s 101(1)(e) to make an order allowing objection to the Chief Commissioner's reassessment giving effect to the determination of an objection allowed in whole or in part. That would give rise to a second round of objection enlivening the review process all over again, the very thing that s 86(2) is designed to prevent. 18For these reasons it is inappropriate, in my view, to make the order sought by Smith's in sub-paragraph (b) of their proposed orders. 19I had said that I proposed to make an order under s 101(1)(a) of the Taxation Administration Act that the assessments for each of the 2005 to 2009 years be revoked. I accept the submission of the Chief Commissioner, however, that it is inappropriate to make those orders and the preferable course is to make an order in terms of s 101(1)(d) that the matter be remitted to the Chief Commissioner for determination in accordance with the court's findings and decision as published on 28 August 2012. 20The suggestion that the revocation of the assessments would enable a fresh assessment to issue that would not be the subject of embargo under s 86(2)(b) of the Taxation Administration Act is not, in my opinion, sustained. The same problem will arise whether there is a reassessment or the issue of a fresh assessment because in either case it is for the purpose of giving effect to the determination of an objection allowed in part. 21Smith's seeks an order for costs. The Chief Commissioner puts forward three alternatives in relation to costs: that there be no order as to costs; that Smith's pay the Chief Commissioner's costs in relation to the evidence of Martin Keith Feil and the Chief Commissioner otherwise pay Smith's costs; and that costs be reserved pending the Chief Commissioner's determination on the remitter. 22It is inappropriate, in my view, to reserve costs. The proceedings ought to be brought to a conclusion. I rejected the evidence of Mr Feil as an expert. His report was voluminous. The principle as to multiple issues is stated in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38]: "Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v PC Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported)." 23The tender and rejection of evidence does not, in my view, constitute a separable issue, albeit that a separable issue can relate to any question of disputed fact or law (James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 at [34]). 24The report of Mr Feil was sought to be tendered as evidence of the non-labour component of the value of the services provided under relevant contracts. It was not itself a separate issue. It is inappropriate, therefore, to divide costs between those relating to Mr Feil's evidence and the rest of the costs. 25The usual rule is that costs follow the event. A successful party can generally expect an order for costs. Most recently this has been restated in Re Kerry (No 2) - Costs [2012] NSWCA 194 at [12]. 26But this is not the usual case. Smith's has won, in the sense that the Chief Commissioner issued five assessments that were incorrect. But that is not the end of the matter. The matter is to be remitted to the Chief Commissioner for determination in accordance with the court's findings and decision. 27The court identified 19 services provided by contractors, excluding the service of repeating actions at other vending machines. Of those, six were ancillary and exempt and 13 were not ancillary and hence not exempt. 28But the six services that were exempt accounted for a considerable amount of the time taken to complete the 19 services. Mr Russell QC, who with Mr Price appeared for Smith's, submitted that it accounted for over 80 per cent of that time. 29It has been pointed out, however, that there was no recording of six of the 13 matters to which I have referred and if one took into account the time taken to perform those tasks, it was submitted that the amount of time would be less than 80 per cent. 30To the contrary was the submission that the amount of time to perform those tasks was minimal by their very description and from what was said of them in the evidence before the court. 31It is not possible to predict the ultimate outcome of the Chief Commissioner's determination on the remitter. Nor is it possible to predict the ultimate percentage that might replace the submitted 80 per cent, if that be relevant to the reassessment process. 32I have said, however, that it is desirable to bring these proceedings to a close to allow the statute to dictate the next phase. In these circumstances, I consider it appropriate to make no order as to costs. 33The court orders that: (1)leave be given to file in court an affidavit of Robert Reaveley Wyld sworn on 10 September 2012; (2)the matter be remitted to the Chief Commissioner of State Revenue for determination in accordance with the court's findings and decision as published on 28 August 2012; (3)there be no order as to costs; and (4)the exhibits and subpoenaed material be returned forthwith.