Adam Bennett and and and Commissioner of Taxation

[2015] AATA 144

[2015] AATA 144 

Division	TAXATION APPEALS DIVISION
File Number(s)	2013/1926-1930
Re	Adam Bennett
APPLICANT
And	Commissioner of Taxation
RESPONDENT

File Number(s)	2013/2253-2260
Re	Molly Bennett
APPLICANT
And	Commissioner of Taxation
RESPONDENT

File Number(s)	2014/6631-6638
Re	The Estate of the Late Edward Bennett
APPLICANT
And	Commissioner of Taxation
RESPONDENT

DECISION

Tribunal	The Hon. Brian Tamberlin QC, Deputy President
Date	28 January 2015
Date of written reasons	13 March 2015
Place	Sydney

The application for referral to the Federal Court is dismissed

........................................................................

The Hon. Brian Tamberlin QC, Deputy President

CATCHWORDS

PRACTICE AND PROCEDURE – referral to Federal Court on question of law – whether question in the form of a special case – absence of findings or agreement on facts – application refused.

LEGISLATION

Administrative Appeals Tribunal Act 1975 ss 2A, 43, 45

Taxation Administration Act 1953 ss 14ZZE, 14ZZJ

SECONDARY MATERIALS

Federal Court Rules r 38.01

REASONS FOR DECISION

The Hon. Brian Tamberlin QC, Deputy President

13 March 2015

INTRODUCTION

1. This is an application under s 45 of the Administrative Appeals Tribunal Act 1975 (the AAT Act) requesting the Tribunal to refer questions of law arising in the proceedings before the Tribunal to the Federal Court for decision.

2. I have reached the conclusion that this is not an appropriate case for the reference of questions of law to the Federal Court.

3. Section 45 of the AAT Act provides that the Tribunal may of its own motion or at the request of a party refer a question of law arising in a proceeding before the Tribunal to the Federal Court of Australia for decision but that a question must not be referred without the concurrence of the President. The Federal Court has jurisdiction under s 45(2) to hear and determine a question of law referred to it under the section and the jurisdiction is exercised by a Full Court of that court.

4. Under subsection (3) where a question of law has been referred to the Full Court the Tribunal must not give a decision which is relevant to the question while the reference is pending or proceed in a manner or make a decision inconsistent with the opinion of the Federal Court on the question. 

   CONFIDENTITALITY

5. The hearing was conducted in private under s 14ZZE of the Taxation Administration Act 1953 (TAA). I am obliged by s 43 of the Administrative Appeals Tribunal Act 1975, as modified by s 14ZZJ of the TAA, to disguise the taxpayers’ identities. I have therefore allocated to the taxpayers the pseudonyms of Adam Bennett for the son, Molly Bennett for the wife and the Estate of the Edward Bennett for the Estate of the deceased.

   HISTORY

6. In May 2013, Adam Bennett and Molly Bennett lodged applications for review of objection decisions and in late December 2014 an application for review was lodged by Molly Bennett on behalf of the Estate of the Edward Bennett.

7. The matters were listed for hearing for three days commencing on 25 February 2014 at the applicants’ request.  On 3 December 2013 the hearing dates were vacated and the matters were listed for conciliation.  After this the matters were listed for hearing for three days commencing on 11 August 2014 but were vacated at the request of the applicants.  On 9 October 2014 the matters were listed for hearing on 4-6 March 2015. 

8. At a directions hearing on 11 December 2014 the Tribunal ordered that the applicants file their proposed application under s 45 seeking a reference on questions of law by 22 December 2014.

9. On 22 December 2014 the applicants filed a document entitled Questions for Referral Under s 45 AAT Act. 

10. On 6 January 2015 the applicants wrote to the Tribunal and the respondent to notify an intention to add to the request on further questions.

11. On 14 January 2015 the applicants filed a document entitled Questions for Referral Under s 45 AAT Act.

    THE QUESTIONS

12. After discussions during the course of the hearing the questions were narrowed down and modified to five questions as follows:

    (i) Is the power under s 170 of the Income Tax Assessment Act 1936 (the ITAA Act) to amend an assessment enlivened only if the Tribunal is able to and does pursuant to its powers under s 25 and s 43 of the AAT Act:

    
    
    

    (a)       find an incidence of an avoidance of tax; and
    (b)       form the opinion for itself that it was due to fraud or evasion.

    (ii) If the Tribunal is unable to find on any probative evidence before it that there was an incidence of avoidance of tax or to form an opinion for itself that any incidence was due to fraud or evasion, must it find that the correct decision is that the amendments made in pursuance of the s 170 power were not authorised?

    (iii) Is an “outstanding tax-related liability” for income tax as at the date of the death within s 260-145 in Schedule 1 of the Taxation Administration Act 1953 (Administration Act) only income tax for which the process of assessment, including notification to the deceased has been completed by the date of death?

    (iv)      If the answer to question (i) is no, is an outstanding tax related liability for income tax as at the date of death only income tax for which the process of assessment including notification to the representatives of the Estate of the deceased, has been completed by the date of the determination?

    (v) If the answer to question (ii) is no, is any determination, in purported pursuance of s 260-145 that there is an outstanding tax-related liability because an assessment for a year of income should be amended, constrained by the time limits set out in s 170 of the ITAA Act?

    APPLICANTS’ CASE             

13. The applicants submit that the questions set out above raise important issues about how the Tribunal must exercise its jurisdiction under s 25 and s 43 of the AAT Act. The applicants submit that in exercising its powers in this case a finding must be made by this Tribunal on a full merits review that there is evidence of avoidance of tax and that it was due to fraud or evasion.

14. The applicants submit that a review of the material before the respondent on objection shows that in no instance was there any probative evidence of the jurisdictional facts necessary under s 170, and they say that there is only an unparticularised assertion of fraud or evasion which is meaningless without evidence and that this is mere conjecture at this stage on the respondent’s part. It submits that the amended assessments have no probative force. They refer to two decisions said to raise similar questions about the duties of the Tribunal and its powers on review.

15. They also refer to the fact that there is an appeal to the Federal Court in one of these matters which has not yet been heard and that there is a matter currently awaiting judgement from Rares J on a similar question.  They anticipate that the first matter will be heard sometime in early 2015.

16. In relation to questions (iii), (iv) and (v) which concern the Estate of the Edward Bennett, it is said that additional questions of law of general importance arise concerning, for example, the meaning of the expression “outstanding tax related liability” within s 260-145.

17. The applicants say that the manner in which the Tribunal approaches its jurisdiction in these Estate matters is of general importance and that the existence and extent of the powers to assess a taxpayer post-mortem are of general importance, and are central to determination of the application for review in this case.

18. The applicants contend that even if the respondent is correct in respect of all questions the respondent cannot possibly succeed.  They contend that the question of law concerning the Tribunal’s duty and powers are made clear “by the highest authorities” but they accept that the respondent does not accept this assertion.  They also say that a referral of these preliminary questions has practical utility in that the jurisdictional issues are likely to be eventually determined by the Full Federal Court in matters presently before the Federal Court and they note the jurisdictional question has been the subject of full argument in the case before Rares J and that a decision may be forthcoming in the foreseeable future.

    REASONING

19. This Tribunal is required to pursue the objective of providing any mechanism of review that is fair, just, economical, informal and quick (s 2A AAT Act) and this object informs the approach which should be taken to an application for referral.

20. The matter has been on foot since May 2013 and a date has been fixed for hearing.  It was not until late December 2014 that an application for review was lodged by Molly Bennett on behalf of the Estate of her husband Edward.  The applications were fixed for an expedited hearing commencing on 25 February 2014.  There have been further adjournments since that date.  At a late stage the applicants have sought a reference on questions of law but the necessary factual basis which gives rise to these questions has not been the subject of any findings or agreement.  I am informed that a number of factual questions are in dispute. 

21. Under the Federal Court Rules a case stated or a question reserved for consideration of the Court must be in the form of a special case: rule 38.01.  A special case must state the specific facts and attach all documents necessary to enable the court to decide the question.  These questions of law should be formulated in a form which is clear and specific.

22. In the present case, if the application is granted, the Federal Court will be asked to answer questions and exercise jurisdiction without the necessary factual framework, any definitive findings or agreed facts.  The second question is framed on the assumption that the Tribunal is unable to find on any “probative evidence” that there was an incidence of avoidance of tax.  This clearly necessitates consideration of the nature and the extent evidence and the making of findings thereon in the absence of any agreement between the parties on these matters or to their existence and evidentiary weight.  I am informed by counsel for the respondent that there is no such agreement.

23. Likewise, the Tribunal is asked to refer questions (iii), (iv) and (v) without any factual context for consideration by the Federal Court.

24. Consideration of abstract questions of law in the absence of a factual matrix borders on requesting the Federal Court to seeking advisory opinion on a hypothetical basis in respect of which it may not have jurisdiction.

25. The respondent has referred to a number of discretionary considerations based on the authorities relevant to whether a referral should be made in the present case.

26. The questions said to be raised by the draft questions may not arise on the facts after a hearing and therefore determination of the questions prior to any hearing and determination would be futile. 

27. The determination of facts on a limited or partial basis is unsatisfactory and such findings could be inconsistent with findings in the light of all the evidence that is finally adduced on a full hearing both documentary and testimonial.  A further consideration against referral is that the issue or very similar issues are presently before or in the list for hearing by the Federal Court as to jurisdiction and accordingly there is no real utility in granting the application and seeking a determination from the Full Court.

28. Fragmentation of litigation is generally undesirable.  It can lead to numerous appeals and potential remittals for reconsideration. It can be unduly expensive, time consuming and inconclusive. I am not persuaded in this case that there will be any saving of time or costs by referrals.  Indeed, taking into account the prospects of possible appeals and remittals, the fragmentation of the proceedings by referral at this late stage will cause further delay and expense contrary to the Tribunal’s objectives of being fair, just, economical and quick.

29. I am satisfied, however, that the questions in the abstract sought to be referred are of general importance and that at least they raise significant issues.  However, this does not mean they should be referred having regard to the considerations referred to above.

30. The appropriate course in my view is for all the matters presently listed for hearing to proceed on the dates fixed and for all the evidence and arguments of law be raised and decided upon in those proceedings.  This will enable all disputed facts to be resolved and, if appropriate, questions of law can then be properly raised and determined. 

31. In the circumstances of this case it is my view that this Tribunal should make all necessary findings of fact and law on a full hearing.  This will provide a proper basis on which any appeal to the Federal Court could be conducted in the light of specific findings and decisions on questions of both law and fact.  In relation to the last three questions (iii), (iv) and (v), I consider that they are clearly premature and I note that the procedural steps required for a hearing of those matter before this Tribunal are incomplete.

    CONCLUSION

32. For the above reason I do not consider that any case has been has been made out for referral of any questions of law should be referred to the Federal Court.

33. Accordingly, the application for referral is dismissed. 

I certify that the preceding 33 (thirty -three) paragraphs are a true copy of the reasons for the decision herein of The Hon. Brian Tamberlin QC, Deputy President

........................[sgd]..............................................

Associate

Dated 13 March 2015

Date(s) of hearing	28 January 2015
Counsel for the Applicant	Mr M Robertson SC
Solicitors for the Applicant	Schurgott Noolan Pty Ltd
Counsel for the Respondent	Mr S Lloyd SC
Solicitors for the Respondent	Minter Ellison