Weeks v Commissioner of Taxation

Federal Court of Australia (Full Court)|2013-01-25|Before: Brennan J, Robertson JJ

Introduction 1 This appeal is from the orders of the primary judge made on 4 April 2012 that the appeal be dismissed and the applicant pay the respondent's costs of the appeal. 2 That "appeal" was brought in the original jurisdiction of this Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act), which provides for an appeal to this Court from the Administrative Appeals Tribunal (the Tribunal) on a question of law. It is well established that the presence of a question of law goes to the existence of, and delimits the scope of, the jurisdiction conferred on the Court by s 44 of that Act. 3 Shorn of impermissible attempts on the part of the appellant to revisit findings of fact made by the Tribunal, impermissible because there is "no error of law simply in making a wrong finding of fact": Waterford v Commonwealth (1987) 163 CLR 54 at 77 per Brennan J, the appeal presents an orthodox question of statutory construction. It is that question which is the question of law to which the "appeal" to the Court is limited. The appellant's difficulty in framing a question of law and the respondent's attempts to ensure that such a question of law was identified, and did not change, has led to procedural issues. In these reasons for judgment we adopt the same course as in the hearing of the appeal, that is, we first address the question or questions of law and then consider briefly the procedural issues. 4 The underlying substance of the matter is that the appellant contends that the tax properly payable on the relevant part of her redundancy payment is nil while the respondent Commissioner contends that the tax properly payable is $7,825.

The Tribunal's findings of fact 8 We now turn to the findings of fact by the Tribunal, so far as presently relevant. In setting out these findings we have retained the original paragraph numbering but in some instances have summarised the effect of the Tribunal's findings. [2] The appellant took up her appointment as a senior public servant within the ATO in 1999. She was graded as an Executive Level 2.1 officer (an "EL2.1") within the ATO hierarchy. She was originally based in Canberra but transferred to Brisbane in 2005. … [12] The appellant had already considered retiring. She was 59 years old in 2009. The national director said in his statement that the appellant had foreshadowed her intention to retire sooner rather than later in a meeting with him in May following her decision to relinquish the acting national director's role. He was under the impression she was considering retirement once she had become entitled to long service leave. The appellant agreed she had considered retirement in the recent past but decided her financial and personal circumstances were such that she was not in a position to retire in the short term even though she was increasingly unhappy. The possibility of retirement was discussed between the appellant and her national director, but they may have had a different understanding of the timeframe. [13] The appellant took recreational leave commencing on 6 July 2009. She returned to work for a week after 13 August. The national director said he did not allocate her any fresh tasks upon her return to work because he knew she was scheduled to go on long service leave commencing on 21 August until 30 November 2009. He said she was not replaced during the period of her absence. The work the appellant would otherwise have done was allocated amongst the other staff at the national director's disposal while she was away. [14] In the meantime, the ATO advertised its intention to appoint another EL2.1 officer in its Melbourne office reporting to the national director. There was no connection between the appellant's absence and the decision to advertise the position in August 2009. [15] This appointment (and the appellant's negotiations) occurred in the shadow of a plan to reorganise the ATO that saw the amalgamation of the appellant's business line with another office during 2010. That new business line had two EL2.1 directors: the newly appointed director in Melbourne and a director in Adelaide. The litigation coordinators in Adelaide that were the source of conflict with the appellant now reported to one of the other directors. [16] … [T]he appellant would have been able to return to work as an EL2.1 officer in Brisbane notwithstanding the reorganisation and the other difficulties. … The position had not disappeared or been reorganised out of existence. The assistant commissioner insisted that the appellant would have retained her job and would have been doing the same or similar work to that which she had been discharging before she went on leave. He said he did not anticipate there being any redundancies as a result of the reorganisation. He agreed that the position number assigned to the appellant's job disappeared some 11 months after the appellant was made redundant, but nothing turned on that. He said the substantive job remained after that date and needed to be filled; the functions that the appellant had left behind were absorbed by others on a temporary basis. [17] While she was on leave, the appellant considered her options. She said in her statement that she felt she had become redundant at work. She says she consulted the terms of the ATO (Executive Level 2) Agency Agreement 2009 under which she was employed. Clause 97 of the agreement referred to EL2 officers "whose services can no longer be effectively used in their current job because of changes in technology or work methods or changes in the nature, extent or organisation of the ATO…". The agreement contemplated retraining or redeployment (or reclassification) of an officer in those circumstances. The appellant said she did not think the ATO would want to retrain her given her age, and she said the assistant commissioner had already made it clear to her that redeployment was not an option. In her statement, she suggested she would consider reclassification but decided the best outcome for her was redundancy. She said she calculated that a voluntary redundancy payment would enable her to clear her mortgage and leave her in a position to retire. She formally raised the possibility of a voluntary redundancy in an email to the national director dated 23 October 2009. [18] The national director discussed the proposal with the assistant commissioner but told the appellant in an email dated 4 November 2009 that the ATO did not agree there was a redundancy. The email concluded: We would like you to return to your EL2.1 position in the litigation and legal support area as well as taking a greater leadership responsibility in some additional areas that will ensure a full job at the EL2.1 level. [19] The appellant subsequently filed a Notice of Dispute in relation to the request which was dealt with in a separate process. The appellant decided to remain on leave without pay after her long service leave concluded until after Christmas. As it happened, her leave without pay extended to March 2010. [20] The assistant commissioner agreed to revisit the question of a voluntary redundancy. He discussed the proposal with the appellant in the course of a telephone conversation on 22 December. He agreed to put together a business case seeking to justify a voluntary redundancy under clause 97 of the agency agreement. In the business case, the assistant commissioner raised concerns about whether the appellant would be able to adjust to SIEBEL, a new information management system. The business case was accepted and approval was given on 25 January 2010 to make a formal offer of redundancy under clause 97. The first step in that process was contained in a letter dated 18 February 2010. The letter from the assistant commissioner notes: I am now satisfied that, under the provisions of Clause 97 of the ATO (Executive Level 2) Agreement 2009, you can no longer be gainfully employed in the ATO. [21] It was followed by another letter from the assistant commissioner dated 11 March 2010 which contained the formal offer. The letter reiterated that "your services cannot effectively be utilised by the ATO in your current position and that alternative employment for you within the ATO is not available" and proceeded to make an offer of redundancy in accordance with the provisions of Clause 97 of the agency agreement. [22] The final step in the process was another letter from the assistant commissioner to the appellant dated 30 March 2010. It said: I,…delegate of the Commissioner of Taxation: (1) being satisfied that you are, within the meaning of Clause 97 of the ATO (Executive Level 2) Agreement 2009, an employee whose services can no longer be effectively utilised; (2) having fully considered all possible options for redeployment or retraining that could allow you to be retained in gainful employment and whether it is in the interests of the efficient administration of the Office to assign new duties to you under s 25 of the Public Service Act 1999; and (3) having received your acceptance of an offer of voluntary redundancy; Give notice to you, … EL2.1, that your employment as an APS employee in the ATO is terminated on the grounds that you are excess to the requirements of the ATO (s 29(3)(a) of the Public Service Act 1999). … [25] The appellant was dismissed from employment. The fact she effectively sought the dismissal was irrelevant as it was ultimately her employer's decision to make the offer. The more important question for present purposes is whether she was genuinely redundant. … [28] … [T]he appellant's job remained and would need to be performed by an EL2.1 officer. They expected that would be her if she returned. The appellant was not being pushed out, and she was genuinely welcome to return to her role or something that closely approximated it. Her work had to be done by somebody at her level. If she was not available, the national director would eventually need to replace her with someone who possessed the same technical skills. The fact that the office has managed to operate for a while with only two officers at the EL2.1 level is not inconsistent with that view. [29] The distinction embodied in clause 97.2 proceeds from the understanding of the concept of redundancy which has emerged from the case law. Cases like R v Industrial Commission; ex parte Adelaide Milk Supply Cooperative Ltd (1977) 16 SASR 6 and Dibb v Commissioner of Taxation [2004] FCAFC 126 at [33]-[44] make it clear that a redundancy occurs where an employer no longer requires that a job be done by anyone. That situation - where a job effectively disappears - must be distinguished from the situation in which the employer no longer wants a job done by the (former) employee in question. [30] The job in this case has not disappeared, even if the position number had changed. A range of functions in the area still had to be performed by someone at the EL2.1 level. It follows the employee's position is not redundant, even if the particular employee is no longer able to be utilised in that role. Given my findings of fact, it seems to me that is the end of the matter. The objection decision must be affirmed. The reference to Dibb v Commissioner of Taxation is to (2004) 136 FCR 388 (Dibb). 9 In summary, the Tribunal at [25] found that the appellant was dismissed from employment. At [26] the Tribunal found that the appellant's services could no longer be utilised. At [28], the Tribunal found as a fact that the appellant's job remained and would need to be performed by an EL2.1 officer. The Tribunal further found at [28] that the appellant's work had to be done by somebody at her level. The Tribunal found at [30] that the appellant's job had not disappeared, even if that position number had changed. A range of functions in the area still had to be performed by someone at the EL2.1 level. 10 The Tribunal then said, at [29], that the situation where a job effectively disappears had to be distinguished from the situation in which the employer no longer wanted a job done by the (former) employee in question. Applying the law to the facts as found, the Tribunal held, using the language of s 83-175(1), that "the employee's position is not redundant, even if the particular employee is no longer able to be utilised in that role".

The proceedings before the primary judge 11 The Notice of Appeal from the Tribunal as amended, described as a Supplementary notice of appeal and filed on 29 August 2011, and with which the primary judge was concerned was as follows: Questions of law 1. Whether a payment made by a Statutory Agency to an ongoing Australian Public Service (APS) officer, in relation to the termination of that officer's employment under paragraph 29(3)(a) of the Public Service Act 1999 on the grounds that the officer is excess to the requirements of the Agency, is an Employment Termination Payment under section 83-175 of the ITAA 1997. 2. Whether clause 97.2 of the ATO (Executive Level 2) Agreement 2009 (Agency Agreement) is invalid because it is inconsistent with clause 97.1 and is beyond the power of the Public Service Act. 3. Whether a redundancy payment, made to an ongoing APS officer in relation to the termination of that officer's employment following action under clause 97.1 of the Agency Agreement on the grounds that the services of the officer can no longer be effectively utilised by the ATO, is an Employment Termination Payment under section 83-175 of the ITAA 1997. 4. Whether a statutory agency, which has terminated the employment of an ongoing APS officer under paragraph 29(3)(a) of the Public Service Act on the grounds that the officer was excess to the requirements of the Agency, is authorised to make a payment to that officer out of the Consolidated Revenue Fund in relation to that termination, in circumstances where the statutory agency considers that the officer was not genuinely redundant. 12 The primary judge held that questions 2 and 4 were not raised before the Tribunal, could not be properly stated as questions of law in the appeal and were misconceived. The primary judge then said that questions 1 and 3 failed to address the critical question in the appeal, namely whether the appellant's payment was made in relation to a "genuine redundancy" within the terms of s 83-175. He then identified, at [26], the following as a question of law: If an employee is terminated under s 29(3)(a) of the Public Service Act 1999 or cl 97.1 of the Agency Agreement on the grounds that, as an employee, she is excess to the requirements of the ATO, in the sense that her services can no longer be utilised, does any payment made consequent upon that termination, fall within the expression "genuine redundancy payment" under s 83-175(1) of the ITA Act? The primary judge answered that question in the negative.

Consideration 13 The appellant's contention that the Tribunal erred in law seemed to be put in a number of shifting ways, which we shall attempt to capture. 14 One way in which the matter was put in the course of oral submissions by the appellant to the Full Court was that the Tribunal had been distracted by the terms of cl 97.2 of the agency agreement, which we have set out above, into making the findings of fact which it did. However, in our view, while the terms of that clause served as an introduction to the findings of fact they did not have the consequence that those findings were legally impeachable such as to give rise to a question of law within the meaning of s 44 of the AAT Act. Further, in our opinion, the underlying concept of cl 97.2 of the Agency Agreement is similar to the substance of s 83-175(1) and, in referring to the terms of cl 97.2, the Tribunal was there commencing its consideration of the distinction between redundancy as generally understood and the narrower class of redundancy dealt with by s 83-175(1). 15 Another way in which the matter was put by the appellant in the course of oral submissions was that the Tribunal had failed to make sufficiently detailed findings of fact as to the nature of the appellant's position, contrary to the approach of the Full Court in Dibb, and had thereby erred in law so as to give rise to a question of law within the meaning of s 44 of the AAT Act. In our opinion this is a criticism of the Tribunal's fact-finding only. The Tribunal had written statements from the relevant officers and heard those officers' evidence in cross-examination. In Dibb, the tax appeal came to the Court in the first instance and not by way of the Tribunal so that a fuller review of the facts by the Court at first instance and on appeal to the Full Court was appropriate. In the present case, in the circumstances to which we have referred, it was not an error of law for the Tribunal to make the findings of fact which it did and as it did. 16 A related submission was that, as in Dibb, there had been a reallocation of the appellant's duties such that her position no longer existed. Again, this is a factual matter. The Tribunal had evidence in the present case and found that the appellant's position had not disappeared or been reorganised out of existence. 17 In so far as the appellant contended that the Tribunal misconstrued cl 97.2 of the agency agreement, we see no such misconstruction. Clause 97 deals with where an individual employee's job is still required but where the employee's services can no longer be effectively used in their current job. Clause 98, which was not used in the case of the appellant, relates to where the job itself is no longer required. If the appellant's submission was that cl 97.1 was not available, which we apprehend it was not (see the succeeding paragraph of these reasons for judgment), it is not to the present point as it does not demonstrate a misconstruction of s 83-175(1). Whether or not cl 97.1 was available can only go now to a question of fact, being whether the appellant's circumstances were such that her services could no longer be effectively used in her then current job. 18 We note that the appellant said in oral submissions that she was not at all saying that it was not open to the respondent to use cl 97.1. Rather, she was using the ground in cl 97.1 to show that the respondent Commissioner was saying for employment purposes that she was no longer needed but then for the purposes of taxation he was saying it was not a real redundancy because she was needed and therefore the respondent was going to impose tax on that redundancy. But this is to indicate no more than there was a factual issue before the Tribunal, it does not bespeak legal error given that s 83-175(1) applies only to a limited type of redundancy, being where dismissal from employment is because the employee's position is genuinely redundant. 19 In relation to s 29(3)(a) of the Public Service Act, we see no inconsistency between the employee being excess to the requirements of the Agency and the employee's position not being (genuinely) redundant. Thus we see no relevant inconsistency between the terms of the letter from the Assistant Commissioner to the appellant dated 25 March 2010 and the Tribunal's findings or between the terms of that letter and the language of s 83-175(1). In our view s 83-175(1) deals only with one class of what might be described colloquially as a redundancy while s 29(3)(a) of the Public Service Act deals with termination more generally, in the present case where the ongoing APS employee, the appellant, was excess to the requirements of the Agency. We accept that in a particular case there could be a coincidence, at a factual level, between a termination under s 29(3)(a) of the Public Service Act and the class of redundancy dealt with by s 83-175(1), but we reject the submission that there is a necessary inconsistency and one which therefore gives rise to an error of law on the part of the Tribunal on the facts of this case. 20 We also see no inconsistency between the terms of the Gazette notice, published on 29 April 2010, referring to s 29(3)(a) of the Public Service Act, and the Tribunal's findings or between the terms of the Gazette notice and the language of s 83-175(1). Thus, contrary to the appellant's submissions, no question arises of estoppel or of conventional estoppel. 21 We also note that, contrary to the appellant's submissions, s 153 of the Evidence Act 1995 (Cth) does not confer any legislative force on the Gazette notice but operates only to make that notice prima facie evidence. Thus, contrary to the appellant's submissions, no question arises of whether the Tribunal was entitled to go behind the Gazette notice and no question arises as to whether that notice goes to the jurisdiction of the Tribunal. 22 It is unnecessary to refer to Dibb in detail: in our view no error of law in the Tribunal's construction of s 83-175(1) has been made out and the primary judge was correct so to hold at [27] of his Honour's reasons for judgment. The language of the present section being clear, by virtue of words which were not used in the earlier provision, it may well be a distraction to refer to earlier judicial consideration of the earlier form. Nevertheless we turn briefly to consider that decision. 23 In Dibb, the Full Court was considering the following expression in s 27F(1) of the Income Tax Assessment Act 1936 (Cth): Where: (a) an eligible termination payment is made in relation to a taxpayer in consequence of the dismissal of the taxpayer from any employment at any time (in this section referred to as the "termination time") by reason of the bona fide redundancy of the taxpayer; 24 In that context the Full Court noted, at [33] that there was no definition of the term "redundancy". The following passage contains the Full Court's essential reasoning: [43] The difficulty in this case has been caused by the aphorism which appears in both Pars 12 and 42 of TD 94/12 to the effect that the job, not the employee, becomes redundant. However s 27F speaks of the "bona fide redundancy of the taxpayer". We consider that it is more accurate to say that an employee becomes redundant when his or her job (described by reference to the duties attached to it) is no longer to be performed by any employee of the employer, though this may not be the only circumstance where it could be said that the employee becomes redundant. Reallocation of duties within an organisation will often lead the employer to consider whether an employee, previously employed to perform specific functions assigned to a particular "job", will be able to perform any available "job" existing after such reallocation. Even if the employee's job, defined by reference to its duties, has disappeared, he or she may be able to perform some other available job to the satisfaction of the employer. In that case, no question of redundancy arises. It is only if the employer considers that there is no available job for which the employee is suited, and that he or she must therefore be dismissed, that the question of redundancy arises … [44] In the present case, the employer redistributed the duties previously performed by its District Managers and at the same time, added further duties. The job, described by reference to its duties as previously performed by Mr Dibb, ceased to exist. The employer no longer wished to have that job performed by anybody. The work was to be differently distributed. The result was that there was no job for which his skills qualified him. He was "surplus to [AVCO's] personnel needs". We consider that the respondent was in error in concluding that Mr Dibb's dismissal was not by reason of his bona fide redundancy. As a result, the respondent also erred in failing to address the matters prescribed by s 27F … 25 In our opinion, this reasoning may explain why Parliament decided to use the language "the employee's position is genuinely redundant" in the present s 83-175(1), but it is by reference to that language that the present appeal must be determined. Having said that, we see nothing in the reasoning of the Full Court in Dibb which assists the appellant on the facts found by the Tribunal. 26 For completeness we add that we see no merit in the contention that the primary judge erred in his construction of the phrase "the employee's position" in s 83-175. Even assuming, in favour of the appellant, that that ground extends to a contention that the Tribunal erred in its construction of the phrase, the point seems to come back to the proposition that because the appellant was made redundant it followed necessarily that her dismissal from employment answered the statutory criterion of "the employee's position is genuinely redundant". For the reasons we have already given, we reject that contention. 27 For these reasons, the appellant has failed to establish that the Tribunal erred in law or that the primary judge erred in failing to find the Tribunal erred in law. The appeal must be dismissed.

The procedural issues 28 The Notice of Appeal to the Full Court, dated 16 April 2012, is discursive. The respondent Commissioner filed a notice of objection to competency dated 30 April 2012. The objection to competency was that paragraphs 1 to 11 of the Notice of Appeal did not raise a question of law and that paragraphs 12 to 27 neither severally nor in combination raised a question of law. This notice of objection to competency was pursued at the hearing of the appeal and was said by counsel for the Commissioner to protect the Commissioner's costs position in the event the Court decided the appeal was incompetent. 29 Further, with one exception, the Notice of Appeal to the Full Court does not identify errors said to be made by the primary judge. 30 Under the heading "Nature of appeal" the following appears: 1. The ultimate issue is whether a termination payment made to an ongoing APS officer by a Commonwealth Agency, in consequence of the termination of that officer's employment pursuant to paragraph 29(3)(a) of the Public Service Act 1999, is a "genuine redundancy payment" for the purposes of subsection 83-175(1) of the Income Tax Assessment Act 1997 (Cth). There is then material set out under the heading "Background". 31 Under the heading "Questions of law" there is a reference first to "Jurisdiction" and then to "The legal principles relating to a 'genuine redundancy'". 32 The exception to which we have referred in [29] above is the following: 27. The taxpayer submits that in failing to apply the principles set out in Dibb's case, the primary judge fell into error. 33 The notice of objection to competency accepts that paragraph 27 of the Notice of Appeal raises a question of law although it contends that the paragraph is defective in that it does not identify whether and how the primary judge failed to apply any relevant principles in Dibb to the facts as found by the Tribunal. 34 It also appears from the appellant's outline of written submissions that the appellant does not limit her grounds in this way. An illustration is provided in [29] of those submissions where the appellant submits that the primary judge erred in his construction of the phrase "the employee's position" in s 83-175(1), yet that expression was not to be found in s 27F(1)(a) of the Income Tax Assessment Act 1936 (Cth) which the Full Court was considering in Dibb. 35 The respondent also submitted that the purported questions of law raised in paragraphs 12 to 15 of the notice of appeal were not questions of law that were before the primary judge, and therefore provided no basis upon which an appeal could come to this Court as there was no error that the primary judge made in finding that the Tribunal made no error on a question of law. 36 In our opinion, the Notice of Appeal to the Full Court was not incompetent although it was defective: see Zegarac v Dellios [2007] FCAFC 58 especially at [7]. As to the new grounds sought to be advanced in the Full Court, for example the contentions concerning estoppel, leave should have been sought to rely on those grounds.

Conclusion and orders 37 In the result, because the appellant represented herself we have endeavoured to identify the questions of law raised by her and to deal with those questions on their merits. For the reasons we have given we would dismiss the appeal with costs. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Dowsett, Besanko and Robertson.

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