Young v Commissioner of Taxation

Contentions of the parties 12 It was contended on behalf of the applicant that if I found the facts as I have, then the Commissioner had unlawfully tied his hands in exercising the power and discretions granted to him by the Act. Although Mr Gageler, for the Commissioner, made no concession that this is correct, for the purpose of his argument on the facts, he relied upon the circumstance that the Commissioner was bound to consider every case on its merits. This is also the position advanced on the Commissioner's behalf in letters to the applicant's solicitors. 13 It was contended for the Commissioner that even if the Policy was unlawful in the sense submitted by the applicant: 1. The Policy as such was not properly justiciable between the applicant and the Commissioner; 2. The applicant will have a right to a full merits review pursuant to the Act in relation to any steps taken to implement the Policy; 3. In any event, the relief sought by the applicant is precluded by s 175 and s 177 of the Act.

Decision 14 Assuming that the Policy is unlawful, as submitted on behalf of the applicant, although it is doubtful whether any of the points argued on behalf of the Commissioner preclude the relief sought, in my opinion, the combined effect of them is such that in the exercise of my discretion I should grant no relief. 15 The applicant can only be concerned with the Policy insofar as it affects him. The most controversial aspect of the Policy, in my opinion, is the settlement offer reflected in option 2. It raises questions of law and administration when proposed as part of this package of options. I can, however, see no adverse affect upon the applicant as a result. Indeed, it gives him an opportunity he would not otherwise have. The fact that he has to make a decision is not, in any relevant sense, adverse to him. In those circumstances, in my opinion, he has no standing to complain about any breach of the law that might be involved. The remedy, if any, would lie at the suit of the Attorney-General for the Commonwealth (Bateman's Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at 260-264). 16 The alleged unlawfulness in relation to options 1 and 3 is somewhat elusive. It is certainly correct that application of an inflexible policy without regard to the merits of individual cases is a standard ground of attack upon administrative decisions, although there is often a thin line between that situation and a decision-maker properly taking into account a general policy which is consistent with the Act (Corlette v MacKenzie (1995) 62 FCR 584 at 595 E-G). Here, Mr Gageler submits that options 1 and 3 are merely the result of applying Pt IVA to the transactions in question and reflect the statutory level of penalty, depending upon disclosure or otherwise. These options do indicate a fixed view about the question of remission of penalty and may also involve an unwillingness to consider the circumstances of individual taxpayers in entering into the transactions. It is not necessary to come to any final view as to whether this is unlawful. 17 What is clear is that the critical step which actually affects the taxpayer is the ultimate application of Pt IVA of the Act to the transaction by the Commissioner when the process of assessment takes place. When and if that takes place, the applicant has a full right of review on the merits, including the issue of penalty, and including an appeal on questions of law to the Court. That process results in the correct substantive decision. The existence of other remedies has always been a powerful factor against the grant of relief of the kind envisaged by s 39B of the Judiciary Act, including the alternate remedy of declaration. 18 There is also a real question as to whether the relief is not premature and the question hypothetical. Whilst I have found that the Policy is, in the relevant sense, inflexible, and it is clear that the Commissioner threatens to carry it out, the Policy as such is not generally reviewable by the Court. The administration of the Act is vested in the Commissioner and he is not answerable to the Court for that administration. Judicial review, it must be recalled, is rooted in the notion of ultra vires (Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5 (10 February 2000), par 43 and 44; Xu v Minister for Immigration & Multicultural Affairs [1999] FCA 1741 (17 December 1999) par 41 and 42). The judiciary has no role in matters of administration. 19 The mere fact that the act which it is alleged would be a breach of the law will not take place until a future time does not necessarily establish that a question as to the lawfulness of the act is hypothetical. Whether this is so or not will be influenced by the effect that such an act would have. In the present case, all that is to be done is that an assessment will be issued. There is no other action which will have any directly adverse effect upon the applicant such as would normally be found quia timet relief. Mr Robertson SC submits that there are practical consequences of assessment, particularly the fact that tax due and payable is a debt to the Commonwealth, may be sued for, and can be collected by way of statutory garnishee (see ss 204, 208, 209 and 218 of the Act). Decisions such as Oil Basins Ltd v Commonwealth (1993) 178 CLR 643, even if correct, are distinguishable because they deal with the ascertainment of substantive liability. At least it can be concluded that even if the issue is not technically hypothetical, the lack of any act to scrutinise is a factor against the grant of relief. See the discussion by Kenny J in Hamersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203 at 225-227. 20 This is particularly true where the act in question, assessment, cannot, for relevant purposes, be challenged otherwise than in accordance with Pt IVC of the Taxation Administration Act 1953 (Cth) by reason of the operation of s 175 and s 177 of the Act (Deputy Commissioner of Taxation (Cth) v Richard Walter Pty Ltd (1994-1995) 183 CLR 168; Sunrise Auto Ltd v Commissioner of Taxation (1995) 61 FCR 446; Golden City Car & Truck Centre Pty Ltd v Deputy Federal Commissioner of Taxation (1999) 99 ATC 4131; San Remo Macaroni Co Pty Ltd v Federal Commissioner of Taxation (1999) 99 ATC 5138, [1999] FCA 1468). Whilst, as Dawson J pointed out in Oil Basins Ltd (supra), the sections do not in terms relate to the period anterior to assessment, it would, in my opinion, be anomalous to permit issues which could not be agitated after assessment to be agitated before assessment, when it is only the assessment which gives effect to the unlawfulness so far as the applicant is concerned. 21 Mr Robertson SC argued, although somewhat faintly and as a last resort, that in circumstances of this case to assess the applicant on the basis of applying the Policy would be to assess in bad faith so as to bring the applicant within the so-called Hickman principle (based upon the decision of the High Court in R v Hickman; ex parte Fox & Clinton (1945) 70 CLR 598), relying particularly upon the decision of the Full Court in R v Commissioner of Taxation (WA); ex parte Briggs (1986) 12 FCR 301. This exception has recently been examined at some length by Hill J in San Remo Macaroni Co Pty Ltd v Commissioner of Taxation (supra). In my opinion, this submission is not made out. There is no proper basis for concluding that the Commissioner (by his relevant officers) does not genuinely believe that Pt IVA applies to the arrangements to which the Policy relates. The only doubt which is cast upon this is that the settlement proposal involves one class of taxpayer being assessed on a different basis. Whilst, as I have said, this may raise its own issues, it is not a sufficient foundation for a finding of bad faith on the part of the Commissioner. Ex parte Briggs (supra) is a different, and special, case. 22 In all the circumstances, in my opinion, the fact that the assessment will have some practical consequences for the applicant of the kind that I have mentioned is not sufficient to outweigh the arguments which have been advanced against intervention by the Court in the assessment process which the grant of an injunction would involve. If a declaration has any effect at all, it would also intrude into that process. I also have doubts as to whether, in any event, a declaration is appropriate relief. It would either be a surrogate injunction (which is undesirable) or have no utility (cf Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286 at 307). 23 In those circumstances, I dismiss the application and order that the applicant pay the costs of the respondent.

I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Counsel for the Applicant: Mr A Robertson SC and Dr JE Griffiths

Solicitor for the Applicant: Blake Dawson Waldron

Solicitor for the Respondent: Australian Government Solicitor