Andrew Morton Garrett and Commissioner of Taxation
[2015] AATA 247
•24 April 2015
[2015] AATA 247
Division TAXATION APPEALS DIVISION
File Number 2014/4068
ReAndrew Garrett in his capacity as an Authorised Officer of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2 and as Authorised Officer of the Andrew Garrett Family Trust No 4 as the Sole Unit Holder of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2)
APPLICANT
And Commissioner of Taxation
RESPONDENT
File Number 2014/4070
ReAndrew Garrett in his capacity as Authorised Officer of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2 and as Authorised Officer of the Andrew Garrett Family Trust No 4 as the Sole Unit Holder of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2)
APPLICANT
And Commissioner of Taxation
RESPONDENT
File Number 2014/4071
ReAndrew Morton Garrett in his capacity as an Authorised Officer of the Andrew Garrett Family Trust No 3)
APPLICANT
And Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President S A Forgie
Date 24 April 2015
Place Melbourne
Decision:The Tribunal decides:
1.that the applicant is not a person who is entitled to apply for review of the reviewable objection decision made by the respondent in each matter; and
2.refuses the applicant’s request to extend the time within which to lodge an application for review of the reviewable objection decision made by the respondent in each matter.
[sgd]
S. A. Forgie
Deputy President
CATCHWORDS – TAXATION – GOODS AND SERVICES TAX – extension of time – whether applicant has standing to seek review of reviewable objection decisions – no standing – application refused in any event.
LEGISLATION
A New Tax System (Goods and Services Tax) Act 1999; ss 7-1, 9-5, 9-10, 9-15, 9-20, 9-25, 9-30, 9-39, 9-40, 9-70, 11-5, 11-10, 11-15, 11-20, 11-25, 11-30, 17-1, 17-5, 23-1, 23-5, 23-10, 24B, 25-5, 25-55, 25-60, 29-5, 29-10, 31-5, 31-8, 31-10, 31-15, 31-20, 31-25, 35-5, 35-10, 58-20, 184-1, 195-1, 960-100
Administrative Appeals Tribunal Act 1975 ss 2A, 25, 27, 29, 30, 44
Administrative Decisions (Judicial Review) Act 1977 s 11
Corporations Act 2001 ss 9, 51, 51A, 127, 206A, 206B, 206F, 206G, 249D, 250D, 471A, 477
Criminal Law Consolidation Act 1935 (SA) s 140
Federal Circuit Court of Australia Act 1999
Federal Court of Australia Act 1976
Income Tax Assessment Act 1936 ss 175A, 252, 252A
Income Tax Assessment Act 1997 ss 995-1, 960-100
Indirect Tax Laws Amendment (Assessment) Act 2012; s 3 and Schedule 1, Item 45
Migration Act 1958 s 420
Personal Property Securities Act 2009 ss 3, 6, 8, 9, 10, 12Taxation Administration Act 1953 ss 3AA, 8AAZA, 8AAZC, 8AAZLF, 8AAZLGA, 8AAZGL, 14ZW, 14ZZ , 14ZZB, 14ZZC, 14ZL, 14ZQ, 14ZY, 14ZYA; Schedule 1 105-20, 105-25, 105-40, 110-50, 298-30, 388-75, 444-10
CASES
Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541; 139 ALR 1
Brown v Federal Commissioner of Taxation [1999] FCA 563; (1999) 99 ATC 4516; (1999) 42 ATR 118
Budd v Secretary, Department of Education, Employment and Workplace Relations [2008] FCA 1540
Chalk v Commissioner for Superannuation (1994) 50 FCR 150; 33 ALD 420
Comcare v A’Hearn (1993) 45 FCR 441; 119 ALR 85
Cummings v Claremont Petroleum NL (1996) 185 CLR 124; 137 ALR 1
Federal Commissioner of Taxation v Brown [1999] FCA 1198; (1999) 99 ATC 4852; 42 ATR 672
HP Mercantile Pty Ltd v Federal Commissioner of Taxation (2005) 143 FCR 553; 219 ALR 591; [2005] FCAFC 126
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344; 58 ALR 305; 7 ALD 315
Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611; 162 ALR 577
Pearson v Commissioner of Taxation [2000] FCA 1427; (2001) 116 FCR 357
Phillips v Australian Girls’ Choir Pty Ltd & Anor [2001] FMCA 109
Re Coshott and Commissioner of Taxation [2013] AATA 822
Re Phillips and Inspector-General in Bankruptcy [2012] AATA 788; (2012) 131 ALD 564; 58 AAR 452
Re Simon Harland as Trustee for the PCS Global Discretionary Trust and Commissioner of Taxation [2013] AATA 930
Re The Trustee for the Confidential Trust and Commissioner of Taxation [2013] AATA 682Sola Optical Australia Pty Ltd v Mills (1987) 163 CLR 628; 75 ALR 513
Sun Zhan Qui v Minister for Immigration and Ethnic Affairs [1997] FCA 324
The Trustee for Oenoviva (Australia & New Zealand) Plant and Equipment Trust and Commissioner of Taxation [2014] AATA 614; (2014) 64 AAR 374
REASONS FOR DECISION
Mr Garrett seeks an extension of time within which he may lodge three applications in the Tribunal seeking review of reviewable objection decisions made by the Commissioner of Taxation (Commissioner) in relation to three entities: the OenoViva (Australia & New Zealand) Plant and Equipment Trust (P&E Trust), the OenoViva (Australia & New Zealand) Plant and Equipment Trust No. 2 (P&E Trust No. 2) and the Andrew Garrett Family Trust No. 3 (Family Trust No. 3). Each objection decision is made on objections to assessments or decisions under either the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)[1] or under the Taxation Administration Act 1953 (TAA).
[1] The GST Act has been amended at various times since the first of the periods to which the assessments and decisions relate. I have set out the law as it applied at those times.
Mr Garrett has made the applications in his own name in various capacities. They are as an Authorised Officer of the P&E Unit Trust No. 2, an Authorised Officer of the Family Trust No. 3, an Authorised Officer of the Andrew Garrett Family Trust No. 4 (Family Trust No. 4) and as the sole Unit Holder of the P&E Trust No. 2. I have summarised the basis on which Mr Garrett has made his applications in the following table. I have also included the reference to the provision under which the initial decision was made and the decisions under which the Commissioner’s decisions or assessments were made and which became the subject of objections and then of objection decisions:
Applicant
(Basis on which Mr Garrett applied)Date of decision
Decision
P&E Trust
No. 2014/4068(“In my capacity as Authorised Officer of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2 and as Authorised Officer of the Andrew Garrett Family Trust No 4 as the Sole Unit Holder of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2”)
16 April 2013
Decision to retain activity statement refund for the period ended 30 November 2012 affirmed because an amended assessment had been made in respect of the period 1 November to 30 November 2012 and the refund claimed (an amount of $531,437.00) had been revised to NIL.
(TAA; s 8AAZLGA)
P&E Trust No. 2
No. 2014/4070(“In my capacity as Authorised Officer of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2 and as Authorised Officer of the Andrew Garrett Family Trust No 4 as the Sole Unit Holder of the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2”)
7 June 2013
Four decisions were made by the Commissioner:
(1) Objection to decision to cancel GST registration disallowed (GST Act; s 25-55(2));
(2) Objection to the date on which that cancellation came into effect disallowed (GST Act s 25-60);
(3) Objection to amended assessment of net amount for the tax period 1 November 2012 to 30 November 2012 disallowed in full (TAA; Schedule 1, s 105-25); and
(4) Objection against administrative penalty assessment for the tax period 1 November to 30 November 2012 disallowed in full (TAA; Schedule 1, s 298-30).
Family Trust No. 3
No. 2014/4071(“Andrew Morton Garrett in my capacity as Authorised Officer of the Andrew Garrett Family Trust No 3”)
7 June 2013
Objection disallowed in full in respect of quarterly tax periods ending 31 March 2010; 30 June 2011; 30 September 2011; 31 December 2011; 31 March 2012; 30 June 2012 and 30 September 2012 (TAA; Schedule 1, ss 105-20 and 105-25).
The Trustee of the Family Trust had claimed a total of $108,947.00 as input tax credits or as GST refunds in the course of that period.
Mr Garrett lodged each of the applications on 4 August 2014 and applications for extension of time within which to seek their review on 6 August 2014. When he was advised that each was out of time, he lodged and an application for an extension of time within which to lodge them. For the reasons I give in the remaining paragraphs, I have decided not to extend the time within which Mr Garrett may lodge each of the applications. In summary, I have done so for two reasons. The first is that Mr Garrett is not a person who is entitled to make an application for review of the Commissioner’s objection decisions. Therefore, there is no basis on which I can consider his applications for extension of time within which to lodge an application. If I am incorrect in that conclusion, I do not think that the balance of relevant principles warrants my doing so. I have set out my reasons below.
THE TRIBUNAL’S POWER TO REVIEW A DECISION
General provisions
The Tribunal is a statutory body and the only powers that it has are those given to it by Parliament in an enactment. Its power to review particular decisions depends on whether an enactment has said that it may do so. This follows from the provisions of s 25(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act), which, in so far as it is relevant in this case, reads:
“An enactment may provide that applications may be made to the Tribunal:
(a)for review of decisions made in the exercise of powers conferred by that enactment; …
(b) …”
Where an enactment makes a provision of that sort, it:
“(a) shall specify the person or persons to whose decisions the provision applies;
(b)may be expressed to apply to all decisions of a person, or to a class of such decisions; and
(c)may specify conditions subject to which applications may be made.”[2]
[2] AAT Act; s 25(3).
If an enactment makes such provision in respect of a decision, the effect of s 25(4) of the AAT Act is that the Tribunal has jurisdiction to review that particular decision. Section 25(4) provides:
“The Tribunal has power to review any decision in respect of which application is made to it under any enactment.”
Even if an enactment provides that an application may be made to the Tribunal for review of a decision, such an application may only be made by certain persons and in certain circumstances. In relation to persons, for example, s 27(1) provides that:
“Where this Act or any other enactment (other than the Australian Security Intelligence Organisation Act 1979) provides that an application may be made to the Tribunal for a review of a decision, the application may be made by or on behalf of any person or persons (including the Commonwealth or an authority of the Commonwealth or Norfolk Island or an authority of Norfolk Island) whose interests are affected by the decision.
…”
The manner in which an application is made to the Tribunal is the subject of s 29. So too is the time within which an application must be lodged. Putting aside deemed decisions, the time within which an application must be lodged is generally a 28 day period commencing on the day on which the decision was made and ending on the 28th day after the day on which a document setting out the terms of the decision and the reasons for decision, including the findings on material questions of fact, is given to the person.[3]
[3] AAT Act; s 29(2)(a)
The parties to a proceeding for review of a decision are specified in s 30(1) of the AAT Act. Putting aside proceedings in which an Attorney-General intervenes, the parties are “any person who, being entitled to do so, has duly applied to the Tribunal for review of the decision”,[4] the person who made the decision[5] and any other person who has made a party to the proceeding on an application under s 30(1A).[6] Section 30(1A) provides:
“Where an application has been made by a person to the Tribunal for review of a decision, any other person whose interests are affected by the decision may apply, in writing, to the Tribunal to be made a party to the proceeding, and the Tribunal may, in its discretion, by order, make that person a party to the proceeding.”
[4] AAT Act; s 30(1)(a)
[5] AAT Act; s 30(1)(b)
[6] AAT Act; s 30(1)(c)
Variation of provisions
I have given an outline of the provisions that govern the circumstances in which the Tribunal has power or authority to review a decision and, if it does, how an application is made to it asking it to do so. Section 25(6) of the AAT Act provides that provisions of the AAT Act may be added to, excluded or modified by an enactment that provides for applications to be made to the Tribunal. Although it refers to particular provisions that may be treated in this way in relation to applications made for review of decisions under a particular enactment, I am of the view that it extends to all provisions of the AAT Act. I gave my reasons in Re The Trustee for the Confidential Trust and Commissioner of Taxation[7] for reaching that conclusion and note that Deputy President Tamberlin QC reached the same view in Re Coshott and Commissioner of Taxation.[8]
MODIFICATION OF THE PROVISIONS OF THE AAT ACT BY THE TAA
[7] [2013] AATA 682 at [14]-[28]
[8] [2013] AATA 822 at [13]-[18]
Decisions in respect of which an application may be made to the Tribunal
Section 14ZZ(1) of the TAA is a provision of the sort contemplated by ss 25(1) of the AAT Act. Section 14ZZ(1)(a)(i) provides:
“If the person is dissatisfied with the Commissioner’s objection decision … , the person may:
(a)if the decision is a reviewable objection decision – either:
(i) apply to the Tribunal for review of the decision; …
(ii) …”
As required by s 25(3)(a) of the AAT Act, it has specified the person to whose decision the provision applies: the Commissioner. It also complies with s 25(3)(b) by specifying the decision: “the Commissioner’s objection decision”. Each needs further explanation.
A. Reviewable objection decision
A “reviewable objection decision” means an “… objection decision that is not an ineligible income tax remission decision.”[9] Whether there is a reviewable objection decision requires an examination of the decision that is said to be a reviewable objection decision.
[9] TAA; s 14ZQ
An “objection decision”, that is the reviewable objection decision in most cases, is a decision made by the Commissioner when a person has objected against a taxation decision.[10] A person may only object if Part IVC of TAA or if a provision of an Act or regulations provides that a person who is dissatisfied with an assessment, determination, notice or decision may object against it in the manner set out in that Part.[11] As is apparent from the particular provisions I have set out above, the provisions that provide for an objection to be made specifies the entity or person who may object. That same person or entity would appear to be the person to whom the Commissioner must give written notice of a decision on the objection, the objection decision, under s 14ZY(3). That person would seem to be the same person who may require the Commissioner to make a decision on an objection under s 14ZYA when a decision has not been made within a specified time period.
[10] TAA; ss 14ZY and 14ZYA
[11] TAA; s 14ZL(1)
B. The person dissatisfied with the Commissioner’s objection decision
In many instances, the enactment providing that an application may be made to the Tribunal for review of a decision does not alter or modify the operation of s 27 of the AAT Act. That means that, when an enactment provides that an application may be made for review of a decision, an application may be lodged by any person whose interests are affected by that decision. Section 25(6) of the AAT Act, however, makes provision for the modification or exclusion of, among others, s 27. When it is excluded, as it is in Part IVC of the TAA, this means that the identity of the person who may lodge an application for review must be found in the particular provisions of the enactment providing for review i.e. the TAA in this case. The general provisions of the AAT Act are no longer relevant.
Section 14ZZB(1)(a) of the TAA is the provision that excludes the operation of s 27 of the AAT Act. This means that regard must be had to the TAA in order to identify the persons who may apply for review of a reviewable objection decision. Putting that another way, the provisions of s 27(1) specifying that “… an application may be made by or on behalf of any person or persons … whose interests are affected by the decision” do not apply.
Time within which an application may be made to the Tribunal
The time limits specified in s 29 of the AAT Act do not apply to applications seeking review of a reviewable objection decision. Section 14ZZC modifies s 29 so that an application for review of a reviewable objection decision must be lodged with the Tribunal “… within 60 days after the person making the application is served with notice of the decision.” That modification applies equally to an application for review of an objection decision made on an objection to a reviewable GST decision or to another decision of the sort I have described.
Provisions relating to extension of time within which application may be lodged unaltered
A. Section 29(7) not modified
The provisions of s 29(7) relating to an extension of the time within which an application may be made to the Tribunal have not been varied by the relevant legislation in this case: the TAA Act and the GST Act. That provision gives the Tribunal a discretionary power to extend the time but, as with any discretionary power, it is not a power without boundaries. Rather, it is a power whose boundaries are circumscribed by the AAT Act and of the relevant enactment that provides for an application to be made to the Tribunal for review of a decision.
B. Principles relevant to exercise of power
The search for those boundaries is made in light of principles established by the courts. I refer in particular to those set out by Wilcox J in Hunter Valley Developments Pty Ltd v Cohen[12] (Hunter Valley) and to the six factors that he distilled as relevant in the Court’s considering an application for extension of time under s 11 of the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act) rather than s 29 of the AAT Act. Section 11(1)(c) of the ADJR Act permits an application to be lodged “… within such further time as the court concerned … allows” but does not prescribe any criteria or principles guiding the exercise of that discretionary power. It is very similar to the discretionary power given to the Tribunal by s 29(7).
[12] (1984) 3 FCR 344; 58 ALR 305; 7 ALD 315 at 348-349; 310-311; 320
His Honour’s first factor[13] was modified by the Full Court of the Federal Court in Comcare v A’Hearn[14] although in the context of the AAT Act. Allowing for that modification, the factors were summarised by Federal Magistrate McInnis, as he then was, in Phillips v Australian Girls’ Choir Pty Ltd & Anor[15] (Phillips) when he said:
[13] It read in part that “It is a pre-condition to the exercise of discretion in his favour that the applicant for extension show an ‘acceptable explanation of the delay’ and that it is ‘fair and equitable in the circumstances’ to extend time …”: (1984) 3 FCR 344; 58 ALR 305; 7 ALD 315 at 348; 310-311; 320
[14] (1993) 45 FCR 441; 119 ALR 85
[15] [2001] FMCA 109
“1. There is no onus of proof upon an applicant for extension of time though an application has to be made. Special circumstances need not be shown, but the court will not grant the application unless positively satisfied it is proper to do so. The ‘prescribed period’ of 28 days is not to be ignored (Ralkon v Aboriginal Development Commission (1982) 43 ALR 535 at 550).
2. It is a prima facie rule that the proceedings commenced outside the prescribed period will not be entertained (Lucic v Nolan (1982) 45 ALR 411 at 416). It is not a pre-condition for success in an application for extension of time that an acceptable explanation for delay must be given. It is to be expected that such an explanation will normally be given as a relevant matter to be considered, even though there is no rule that such an explanation is an essential pre-condition (Comcare v A’Hearn (1993) 45 FCR 441 and Dix v Client Compensation Tribunal (1993) 1 VR 297 at 302).
3. Action taken by the applicant other than by making an application to the court is relevant in assessing the adequacy of the explanation for the delay. It is relevant to consider whether the applicant has rested on his rights and whether the respondent was entitled to regard the claim as being finalised. (See Doyle v Chief of Staff (1982) 42 ALR 283 at 287).
4. Any prejudice to the respondent, including any prejudice in defending the proceeding occasioned by the delay, is a material factor militating against the grant of an extension. (See Doyle at p 287).
5. The mere absence of prejudice is not enough to justify the grant of an extension. (See Lucic at p 416).
6. The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted. (See Lucic at p 417).
7. Considerations of fairness as between the applicant and other persons otherwise in a like position are relevant to the manner of exercise of the court’s discretion (Wedesweiller v Cole (1983) 47 ALR 528).”[16]
[16] [2001] FMCA 109 at [10]
In Budd v Secretary, Department of Education, Employment and Workplace Relations,[17] Cowdroy J approved and applied these factors in the context of s 44(2A)(a) of the AAT Act. Section 44(2A) provides that an appeal instituted under ss 44(1) or (2) shall be instituted within 28 days of the day on which a person is given a document setting out the terms of the decision or within such further time as the Court allows.
[17] [2008] FCA 1540 at [18]-[19]
I also adopt the seven principles identified in Phillips but would add three paragraphs explaining the sixth principle. Two are based on the judgment of Hill J in Brown v Federal Commissioner of Taxation[18] (Brown) when he commented upon the relevance of particular principles set out in the Hunter Valley case to an application for an extension of time under the TAA. The third is based on the judgment of the Full Court of the Federal Court on appeal from the judgment of Hill J. They are:
(1)Whether a would be applicant has an arguable case represents “... quite a low threshold. What is involved is whether the objection on its face discloses a case which is arguable, not whether having regard to other matters, including evidence which may not even be known to the taxpayer at the time of making the application, the case is one that the taxpayer will or will probably lose.”[19]
(2)“… No doubt if the objection on the face of it is one which is frivolous or bound to fail as a matter of law it would be a futility to permit an extension of time to enable it to be considered. …”[20]
(3)“… We wish to make it clear, however, that the AAT is not precluded from taking into account the apparent strength or weakness of taxpayer’s case, when determining whether an extension of time should be granted, if the overall circumstances are such that the apparent strength or weakness of that case is properly to be regarded as a material consideration. In the present case, for example, while the AAT should not have resolved the application by rejecting the taxpayer’s evidence as unworthy of belief, it could have taken into account the obvious difficulties confronting the taxpayer’s claim when deciding whether, in the light of all the circumstances, an extension of time was appropriate. …”[21]
[18] [1999] FCA 563; (1999) 99 ATC 4516; (1999) 42 ATR 118 at [56]; 4527; 131
[19] [1999] FCA 563; (1999) 99 ATC 4516; (1999) 42 ATR 118 at [56]; 4527; 131
[20] (1999) 99 ATC 4516; (1999) 42 ATR 118; [1999] FCA 563 at 4527; 131; [56]
[21] Federal Commissioner of Taxation v Brown [1999] FCA 1198; (1999) 99 ATC 4852; 42 ATR 672 at [28]; 4860; 680-681
In the context of merits review in the Tribunal, reference needs to be made to s 2A of the AAT Act. Section 2A provides that:
“In carrying out its functions, the Tribunal must pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick.”
Section 2A does not have an equivalent in the ADJR Act, to which Wilcox J referred in setting out relevant principles or in the Federal Court of Australia Act 1976 or in the Federal Circuit Court of Australia Act 1999, which apply in one or other of the two Courts that would be expected to hear an application under the ADJR Act. It is a provision of a sort that is, as the High Court concluded in relation to s 420 of the Migration Act 1958, “… intended to be facultative, not restrictive …”[22] or, as Lindgren J said in Sun Zhan Qui v Minister for Immigration and Ethnic Affairs,[23] one of the “general exhortatory provisions”.
[22] Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611; 162 ALR 577 at [49]; 628; 588 per Gleeson CJ and McHugh J and 659; 613 per Hayne J and see also similar views expressed by Gaudron and Kirby JJ at [74]-[75]; 635; 592-594
[23] [1997] FCA 324
A facultative and non-restrictive approach was advocated by Davies J, with whom Black CJ agreed, in Chalk v Commissioner for Superannuation[24] when he said that:
“Most provisions which authorise an extension of time are instances of beneficial legislation which, accordingly, should be applied beneficially. With respect to such discretions in rules of court, Reynolds, Hutley and Bowen JJA said, in Outboard Marine Australia Pty Ltd v Byrnes: Bauknecht (Third Party) [1974] 1 NSWLR 27 at 30:
‘We appreciate that the rules of court, particularly those relating to time, should never be allowed to be an instrument of tyranny. They do, however, have purposes, one of which is that the parties may know where they stand and regulate their affairs accordingly. It is also appreciated that where genuine issues ought to be litigated, if such can be done with fairness to all concerned, it is appropriate to take a benign view of applications to extend time.’
Those remarks indicate the importance of forming a view as to whether it is in the interests of justice that time be extended...”[25]
[24] (1994) 50 FCR 150; 33 ALD 420
[25] (1994) 50 FCR 150; 33 ALD 420 at 155; 425
Similar sentiments were expressed by McHugh J in the High Court in Brisbane South Regional Health Authority v Taylor:[26]
“Even where the cause of action relates to personal injuries …, it will be often just as unfair to make the shareholders, ratepayers or taxpayers of today ultimately liable for a wrong of the distant past, as it is to refuse a plaintiff the right to reinstate a spent action arising from that wrong. The final rationale for limitation periods is that the public interest requires that disputes be settled as quickly as possible …
In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut-off point unrelated to the demands of justice or the general welfare of society. It represents the legislature’s judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated. Against this background, I do not see any warrant for treating provisions that provide for an extension of time for commencing an action as having a standing equal to or greater than those provisions that enact limitation periods. A limitation provision is the general rule; an extension provision is the exception to it. The extension provision is a legislative recognition that general conceptions of what justice requires in particular categories of cases may sometimes be overridden by the facts of an individual case. The purpose of a provision such as s 31 is ‘to eliminate the injustice a prospective plaintiff might suffer by reason of the imposition of a rigid time limit within which an action was to be commenced.’ [[27]] But whether injustice has occurred must be evaluated by reference to the rationales of the limitation period that has barred the action. The discretion to extend should therefore be seen as requiring the applicant to show that his or her case is a justifiable exception to the rule that the welfare of the State is best served by the limitation period in question. Accordingly, when an applicant seeks an extension of time to commence an action after a limitation period has expired, he or she has the positive burden of demonstrating that the justice of the case requires that extension.”[28]
[26] [1996] HCA 25; (1996) 186 CLR 541; 139 ALR 1; Dawson, Toohey, McHugh and Gummow JJ; Kirby J dissenting
[27] Sola Optical Australia Pty Ltd v Mills (1987) 163 CLR 628; 75 ALR 513 at 635; 518
[28] [1996] HCA 25; (1996) 186 CLR 541; 139 ALR 1 at 553-554; 9-10 (footnotes omitted)
TWO PRELIMINARY ISSUES TO BE DECIDED BEFORE CONSIDERING APPLICATION FOR EXTENSION
It is apparent from the modifications made by the TAA to the AAT Act that I must be satisfied of two preliminary matters before considering Mr Garrett’s application for an extension of time within which to lodge an application. The first is that he is seeking review of a decision that is reviewable by the Tribunal. If so, the second is that he is entitled to make the application. Section 29(7) of the AAT, which has not been modified by s 14ZZ of TAA, assumes that these preliminary matters have been satisfied.
Identifying each reviewable objection decision
At [11]-[17] above, I set out the provisions of Part IVC of the TAA providing that an application may be made to the Tribunal for review of a reviewable objection decision. There is no issue in this case that the Commissioner has made reviewable objection decisions. Although there is no doubt that each is such a decision in this case, it remains relevant to identify the basis on which each objection decision was made. That is so because it is only by identifying the basis and following through the process that the identity of the person entitled to lodge an application becomes clear.
A.No. 2014/4068: P&E Trust; retention of amount under s 8AAZLGA(6)
Section 8AAZLGA(6) of the TAA is a provision of that sort. It provides:
“The entity may object to a decision of the Commissioner to retain the amount under this section in the manner set out in Part IVC, if the entity is dissatisfied with the decision.”
In order to understand the provision, it is necessary to know that, under Part IIB of the TAA, the Commissioner may establish one or more systems of accounts for primary tax debts.[29] Each account is known as a “Running Balance Account”[30] (RBA). An RBA may be established for any “entity”.[31]
[29] TAA; s 8AAZC(1) The expression “primary tax debt means any amount due to the Commonwealth directly under a taxation law (other than, except in Division 4, the Product Grants and Benefits Administration Act 2000), including any amount that is not yet payable.”: TAA; s 8AAZA.
[30] TAA; s 8AAZC(2)
[31] TAA; s 8AAZC(3)
Division 3 of Part IIB sets out the way in which the Commissioner must treat payments received in respect of a current or anticipated tax debt, a credit that an entity is entitled to under a taxation law and an RBA surplus of an entity. The RBA surplus means a balance in favour of an entity based on primary tax debts allocated to the entity’s RBA and payments made in respect of the current or anticipated primary tax debts of the entity and credits to which the entity is entitled under taxation law and allocated to the RBA.[32]
[32] TAA; s 8AAZA
Division 3A provides for refunds of RBA surpluses and credits. The Commissioner must refund to an entity so much of an RBA surplus of that entity or a credit in the entity’s favour as the Commissioner does not allocate under Division 3.[33] Section 8AAZLGA provides that the Commissioner may retain refunds he or she would otherwise have refunded if the entity has given notification to him or her and it would be reasonable to require verification of that information.[34] Among the matters to which the Commissioner must have regard in deciding whether to retain the amount, he or she must have regard to:
“whether the Commissioner has enough information to make an assessment relating to the amount (including information obtained from making further requests for information)”.[35]
[33] TAA; s 8AAZLF(1)
[34] TAA; s 8AAZLGA(1)
[35] TAA; s 8AAZLGA(2)(h)
The Commissioner is required to inform the entity of the retention either by the RBA interest day in the case of there being an RBA surplus of the entity or a credit in the entity’s favour or, if the entity has given a notification that affects, or may affect, the amount of any refund, within 30 days of that notification.[36] The Commissioner may only retain the amount until one or other of three circumstances arises. Only that referred to in s 8AAZLGA(5)(c) is relevant in this case. It provides:
[36] TAA; s 8AAZLGA(3)
“The Commissioner may retain the amount under this section only until:
(a)-(b)…
(c)in any case – there is a change to how much the Commissioner is required to refund, as a result of:
(i)the Commissioner amending an assessment relating to the amount; or
(ii)the Commissioner making or amending an assessment, under Division 105 in Schedule 1, relating to the amount;
whichever happens first.”
Division 105 of Part 3.10 of Schedule 1 to the TAA sets out the General Rules relating to indirect taxes including GST.
The entity may object to the Commissioner’s decision to retain an amount.[37] Section 14ZW(1)(aad) sets out the time within which that objection must be made. The period is structured so that the Commissioner effectively has 60 days within which to consider the information. That follows from the fact that the period starts after the end of the day before which the Commissioner must inform the entity of the retention under s 8AAZLGA(3). The period ends on the day on which there is a change of a kind mentioned in s 8AAZLGA(5)(c) to how much the Commissioner is required to refund in relation to the amount.
B.No. 2014/4070: P&E Trust No. 2; GST registration, assessment and penalty
[37] TAA; s 8AAZLGA(6)
B.1 Cancellation of GST registration: GST Act; ss 25-55(2) and 25-60
In general terms, GST is payable on taxable supplies and taxable importations. An entitlement to input tax credits may arise in relation to a taxable supply if that supply was to an entity that made a creditable acquisition i.e. it satisfied the four criteria in s 11-5 of the GST Act. Among those criteria is that requiring that the entity is registered or required to be registered under the GST Act.
An entity is registered under Part 2-5 of the GST Act.[38] Section 25-5(1) provides that:
“The Commissioner must *register you if:
(a) you have applied for registration in an *approved form; and
(b)the Commissioner is satisfied that you are *carrying on an *enterprise, or you intend to carry on an enterprise from a particular date specified in your application.
Note: …”
[38] GST Act; s 195-1
An “enterprise” has the meaning given by s 9-20.[39] Although qualified by ss 9-20(2)-(4), it is enough to note that the definition in the first three paragraphs of s 9-20(1):
“An enterprise is an activity, or series of activities, done:
(a)in the form of a *business; or
(b)in the form of an adventure or concern in the nature of trade; or
(c)on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property; or
(d)-(h) …”
[39] GST Act; s 195-1
Subdivision 25-B of Part 2-5 sets out three ways in which registration may be cancelled. I am concerned only with s 25-55, which sets out the circumstances in which the Commissioner must cancel registration. The Commissioner has used the power given to him by s 25-55(2):
“The Commissioner must cancel your *registration (even if you have not applied for cancellation of your registration) if:
(a)the Commissioner is satisfied that you are not *carrying on an *enterprise; and
(b)the Commissioner believes on reasonable grounds that you are not likely to carry on an enterprise for at least 12 months.
Note:Cancelling your registration under this subsection is a reviewable GST decision (see Subdivision 110-F in Schedule 1 to the Taxation Administration Act 1953).”
The date on which registration is cancelled is a matter for the Commissioner to decide under s 25-60(1). That provision goes on to state that “… That date may be any day occurring before, on or after the day on which the Commissioner makes the decision.”
The GST Act does not provide for review of decisions made under it. That is left to the TAA. Section 110-50(2) in Schedule 1 of the TAA sets out 63 decisions made under the GST Act and provides that each is a “reviewable GST decision”. Among them are decisions made under ss 25-55(2) and 25-60.[40] Provision is made in s 110-50(1) for an objection to be made against them:
“You may object, in the manner set out in Part IVC, against a decision you are dissatisfied with that is:
(a)a *reviewable GST decision relating to you; or
(b)a *reviewable GST transitional decision relating to you.”[41]
[40] TAA; Schedule 1; s 110-50(2), Items 5 and 7
[41] A reviewable GST transitional decision is a decision under s 24B of the GST Act; TAA; Schedule 1, s 110-50(3).
Once an objection is made, Part IVC of the TAA applies.[42] The Commissioner’s decision on the objection is a reviewable objection decision and reviewable by the Tribunal under s 14ZZ.
[42] TAA; s 14ZL(1)
B.2 Amended assessment of net amount of GST: TAA, Schedule 1; s 105-25
The Goods and Services Tax (GST) is an “indirect tax”.[43] Therefore, Part 3-10 of Schedule 1 to the TAA is relevant. Section 105-40(1) provides that:
“You may object, in the manner set out in Part IVC, against a decision you are dissatisfied with that is a *reviewable indirect tax decision relating to you.”
A decision under s 105-25 of Schedule 1 to the TAA involving an amended assessment of a net amount or an amount of indirect tax is a reviewable indirect tax decision.[44] As the objection is made and considered under Part IVC of the TAA, the Commissioner’s decision on the objection becomes, in this case, a reviewable objection decision and so reviewable by the Tribunal.
[43] Income Tax Assessment Act 1997 (ITAA97); s 995-1. Section 3AA(2) of the TAA provides that “An expression has the same meaning in Schedule 1as in the Income Tax Assessment Act 1997.”
[44] TAA; Schedule 1, s 105-40(2)
B.3 Administrative penalty relating to GST: TAA, Schedule 1; Division 284
Administrative penalties are the subject of Division 284 of Schedule 1 to the TAA. Section 298-30(1) provides that the Commission must make an assessment of the amount of an administrative penalty under that Division. Section 298-30(2) provides that:
“An entity that is dissatisfied with such an assessment made about the entity may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.”
Again, the decision made by the Commissioner on the objection under Part IVC will be reviewable by the Tribunal as a reviewable objection decision.
C.No. 2014/4071: Family Trust No. 3; disallowing input tax credits and GST refunds: TAA, Schedule 1, ss 105-20 and 105-25
The Commissioner’s disallowance of input tax credits and GST refunds led to an assessment or an amended assessment. Whether one or the other, an objection may be made and the objection decision reviewable by the Tribunal.
D. Conclusion
For the reasons that I have given, each of the decisions of which review is sought is reviewable by the Tribunal.
Is Mr Garrett a person who may make the applications to the tribunal for review of the reviewable objection decisions?
The review rights related to the decisions in this case are linked to either an “entity” or to “you”. In each case, the “entity” is identified or the identity of “you” apparent. Therefore, the entity that may object to the Commissioner’s decision under s 8AAZLGA(6) of the TAA is the entity in relation to which a particular RBA has been established. The entity that may object to an assessment of an administrative penalty is the entity dissatisfied with such an assessment made about it. That is clear from s 298-30(2) of Schedule 1 to the TAA. The “you” who may object to reviewable indirect tax decision such as an assessment or amended assessment under ss 105-20 or 105-25 of Schedule 1 to the TAA is the “you” to whom the reviewable indirect tax decision relates. The same is true of a reviewable GST decision. “You” may object if the reviewable GST decision relates to “you”, s 110-50(1) of Schedule 1 to the TAA states.
A. “Entity”
The words “entity” and “you” are defined. I will begin with the word “entity”. It is defined in s 995-1(1) of ITAA97 to have the meaning given in s 960-100. That meaning applies to words used in TAA by virtue of s 3AA(2) of that legislation. The definition reads:
“Entity means any of the following:
(a)an individual;
(b)a body corporate;
(c)a body politic;
(d)a partnership;
(e)any other unincorporated association or body of persons;
(f)a trust;
(g)a *superannuation fund;
(h)an *approved deposit fund.
Note:The term ‘entity’ is used in a number of different but related senses. It covers all kinds of legal persons. It also covers groups of legal persons, and other things, that in practice are treated as having a separate identity in the same way as a legal person does.”
Section 960-100(2) of ITAA97 goes on to provide that:
“The trustee of a trust, … is taken to be an entity consisting of the person who is the trustee, or the persons who are the trustees, at any given time.
Note 1:This is because a right or obligation cannot be conferred or imposed on an entity that is not a legal person.
Note 2:The entity that is the trustee of a trust or fund does not change merely because of a change in the person who is the trustee of the trust or fund, or persons who are the trustees of the trust or fund.”
Section 960-100(3) explains that a legal person can have a number of different capacities in which that person does things and that, in each of those capacities, the person is taken to be a different entity. By way of example, it is said that a person may be an entity in that person’s personal capacity and a different entity if a trustee of a trust.
Applying the provisions to this case, the entity in each case is the relevant trust be it the P&E Trust, the P&E Trust No. 2 or the Family Trust No. 3. As the Note to s 960-100(1) acknowledges, though, the term is applied to things that may not be treated as having a separate legal identity. A trust is one of those things. Therefore, s 960-100(2) has to make provision for a legal entity when one is required in relation to a trust. A legal entity is required in a case such as this when an application on behalf of the trust. The legal entity is prescribed by s 960-100(2) to be the trustee of the trust. The particular identity of that trustee may change from time to time according to the provisions of the trust deed establishing the trust. When, as in this case, review is sought of a decision relating to a trust, the application must be made by the entity that is a legal person i.e. the trustee of the trust.
B. “You”
The word “you” that is used in the GST Act. Section 195-1 of the GST Act explains what is meant by the term:
“you: if a provision of this Act uses the expression you, it applies to entities generally, unless its application is expressly limited.
Note:The expression you is not used in provisions that apply only to entities that are not individuals.”
The word “entity” is also defined in the GST Act. The definition is found in s 184-1.[45] It is in terms similar to that in s 995-1(1) of the ITAA97 and provides:
[45] GST Act; s 195-1
“Entity means any of the following:
(a) an individual;
(b) a body corporate;
(c) a corporation sole;
(d) a body politic;
(e) a *partnership;
(f) any other unincorporated association or body of persons;
(g) a trust;
(h) a *superannuation fund.
Note:The term ‘entity’ is used in a number of different but related senses. It covers all kinds of legal persons. It also covers groups of legal persons, and other things, that in practice are treated as having a separate identity in the same way as a legal person does.”
By virtue of s 184-1(2), the trustee of a trust is taken to be an entity and that entity consists of the person or persons who are trustees at any given time. The Notes to this subsection explain why it is necessary:
“Note 1: This is because a right or obligation cannot be conferred or imposed on an entity that is not a legal person.
Note 2:The entity that is the trustee of a trust or fund does not change merely because of a change in the person who is the trustee of the trust or fund, or persons who are the trustees of the trust or fund.”
Section 184-1(3) explains that a legal person can have a number of different capacities in which that person does things and that, in each of those capacities, the person is taken to be a different entity. By way of example, it is said that a person may be an entity in that person’s personal capacity and a different entity if a trustee of a trust.
Given the similarity between ss 960-100 and s 184-1 of the GST Act, the relevant entity, whether described in those terms or as “you” is the relevant trust being the P&E Trust, P&E Trust No. 2 or the Family Trust No. 3. Should a legal entity be required to take action on behalf of the trust, that legal entity is the particular trust’s trustee.
C. File No. 2014/4070: P&E Trust No. 2
C.1 Factual background
C.1.1 The P&E Trust No. 2
I will begin with the P&E Trust No. 2 as it is the entity that is the subject of one of the Commissioner’s reviewable objection decision. It is the trust in relation to which I have the most documentation. Mr Garrett has submitted a copy of the P&E Trust No. 2 Deed of Settlement dated 23 November 2012. Clause 3.2 provides that Oenoviva (Australia & New Zealand) Pty Ltd[46] (OenoViva) is its trustee. Clause 5.21 provides for the removal and appointment of trustees. Clause 5.21(a) provides for the circumstances in which a trustee will be removed. Power is given to the Unit Holders[47] to remove any trustee and to appoint a new trustee or trustees in place of, or in addition to, the trustee.[48] The Unit Holders will be taken to have consented if all of them execute a formal written consent or if, at a meeting, at least 75% of them pass a resolution that they consent.[49] I am not aware of any document showing the removal of OenoViva as trustee or the appointment of any additional trustee.
[46] ACN 133861579
[47] One hundred units have been issued and each is held by Mr Garrett in his capacity as Joint Trustee of the Andrew Garrett Family Trust No. 4. The other Joint Trustee of the Andrew Garrett Family Trust No. 4 is Sanctuary Australasia Pty Ltd
[48] P&E Trust No. 2 Trust Deed; cl 5.21(b)
[49] P&E Trust No. 2 Trust Deed; cl 5.24
The P&E Trust No. 2 is a discretionary trust. The power conferred on the trustee by cll 5.11.1 and 5.11.2, which must be exercised in accordance with cl 5.11.3, is a discretionary power. Unless and until the trustee made a determination to distributed Distributable Income, no Unit Holder has an interest in that Distributable Income. Clauses 5.11.1 and 5.11.2 provide:
“5.11.1 All Distributable Income payable in accordance with the provisions of this deed to Unit Holders is payable to them separately and income received by the Trustee is not received and must not be construed as having been received by or on behalf of the Unit Holders jointly or otherwise.
5.11.2The Trustee may at any time during an Accounting Period with respect to each part of the Distributable Income of the Trust Fund for that Accounting Period determine whether:
(a)to pay or apply it or set it aside or for the Unit Holders pro rata according to the number of Units held by each Unit Holder at the time of that determination;
(b)to pay or apply it or set it aside for such charitable purposes as the Trustee (with the Consent of the Unit Holders) thinks fit; or
(c)to accumulate it; but if the Trustee does not make an effective determination under this clause in respect of the whole or any part of the Accounting Period to which that Distributable Income relates the Trustee will be deemed to have made a determination in respect of that Undistributed Income under cl 5.11.2(a).”
As from the Date of Distribution, the trustee must hold the Trust Fund on trust to pay to, or hold for the benefit of, the Unit Holders[50] but that does not alter the discretionary nature of the trust before that date. The Date of Distribution is either a date set by the Trustee or the last day of the maximum period within which a trust may vest to ensure that it does not offend against the rule in perpetuities.[51]
[50] P&E No. 2 Trust Deed at cl 5.26
[51] P&E No. 2 Trust Deed at cl 5.27
C.1.2 Mr Andrew Garrett’s roles in relation to the trustee, OenoViva
Mr Garrett has held positions as Director and Secretary of OenoViva but, on 22 October 2010 was automatically disqualified from managing corporations when he was convicted in the District Court of South Australia for contravening s 140 of the Criminal Law Consolidation Act 1935 (SA). That was an offence involving dishonest dealings with documents and having a maximum penalty of ten years’ imprisonment or, if an aggravated offence, 15 years’ imprisonment. Mr Garrett was placed on a two year Good Behaviour Bond. Although that period has passed, the effect of ss 206B(1)(b) and 206B(2) of Part 2D.6 of the Corporations Act 2001 (Corporations Act) is that Mr Garrett is disqualified from managing corporations for five years until 22 October 2015.
One of the outcomes of Mr Garrett’s becoming disqualified to manage corporations is that he ceases to be a director, alternate director or a secretary of a company unless he or she is given permission to manage a corporation under ss 206F or 206G. There is no suggestion that Mr Garrett has been given such permission. Therefore, he remains disqualified and commits an offence if he breaches s 206A, which is also found in Part 2D.6. Section 206A(1) provides:
“A person who is disqualified from managing corporations under this Part commits an offence if:
(a)they make, or participate in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(b)they exercise the capacity to affect significantly the corporation’s financial standing; or
(c)they communicate instructions or wishes (other than advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation) to the directors of the corporation:
(i)knowing that the directors are accustomed to act in accordance with the person’s instructions or wishes; or
(ii)intending that the directors will act in accordance with those instructions or wishes.
Note:Under section 1274AA, ASIC is required to keep a record of persons disqualified from managing corporations.”
An Extraordinary Meeting of OenoViva was held on 23 October 2012 to discuss the letter dated 23 October 2012 that Mr Garrett had received from the Australian Securities and Investments Commission (ASIC) advising him of his disqualification. Notes of the meeting record that:
“It was discussed that the company should resolve to appoint Andrew Garrett as Corporate Power of Attorney effective from the date of incorporations and that Robert Nowak as sole Director authorize Mr. Garrett in respect to his actions on behalf of the company.
It was agreed that the intent of the aforementioned is to give full effect to the application of Mr. Garrett’s Signature on behalf of the Company and that the Company continues to accept all agreements and correspondence as being binding and enforceable upon it.”
Resolutions were passed at the meeting that Mr Robert Nowak be appointed as Director of OenoViva and as its Secretary. It was also resolved that:
“… any document, Correspondence and Agreement executed by the Company under the hand of Andrew Garrett is accepted as being binding and effective upon the company in accordance with this resolution of 100% of the Members and the Sole Director & Secretary.”
C.1.3 Order for OenoViva to be wound up
On 22 January 2014, an order was made that OenoViva be wound up in insolvency under the provisions of the Corporations Act. Mr Timothy Clifton was appointed as its liquidator. As a consequence of the appointment of the liquidator and of cl 5.21(a)(iii) of the P&E Trust No. 2, Trust Deed, OenoViva was immediately removed from the office of Trustee.
C.1.4 Notice of Crystallisation of Charge
On 23 January 2014, Mr Robert Nowak signed a document entitled “Notice of Crystallisation of Charge” (Notice of Crystallisation) and addressed to OenoViva. He did so as the Sole Director and Secretary of The Light Pty Ltd (Light PL). The Notice of Crystallisation began by reciting that:
“WHEREAS by deed of charge dated 27th July 2012 (‘the Charge’), and registered 28th July 2012 given No. 201207280005469 in accordance with the Personal Properties Security Act 2010, OENOVIVA (AUSTRALIA & NEW ZEALAND) PTY LTD in its Capacity as Trustee of the OenoViva (Australia & New Zealand) Trust ABN 59 486 167 468 charge in favour of THE LIGHT PTY LTD (ACN 155 464 225) in its Capacity as Trustee of the Andrew Garrett Family Trust No. 3 (‘the Chargee’) on a fixed and floating basis of all of its business, intellectual property, assets and undertaking to secure the payment of the secured money as defined therein.”
Mr Nowak then stated that an event or default had occurred in the form of the appointment of a liquidator. Therefore, the floating charge was converted to a fixed charge with immediate effect with respect to property described in Schedule 1. That Schedule is not attached to the copy of the document that I have.
The Deed of Charge is said in the Notice of Crystallisation to have been dated 27 July 2012. I do not have a Deed of Charge with that date but I do have one dated 28 July 2012. It is signed on behalf of OenoViva in its capacity as trustee for the OenoViva (Australia & New Zealand) Trust and as Chargor. The Chargee is shown as Light PL in its capacity as trustee for the Family Trust No. 3. Mr Garrett signed the Deed of Charge on behalf of OenoViva as its Sole Director/Secretary.
I have a document entitled “Supplementary Deed” and “The Deed of Variation of Charge”. It is stated to have been made on 20 September 2012 between Mr Garrett, Light PL and OenoViva. OenoViva is described in the Supplementary Deed as the trustee, or one of the trustees, of the Family Trust No. 3, the Andrew Garrett Family Trust, the Andrew Garrett Family Trust No. 4 and the P&E Trust. No mention is made of the P&E Trust No. 2. Mr Garrett signed on behalf of OenoViva as sole Director and sole Secretary. The Deed stated that the parties had agreed to vary cl 7.2 of the Deed of Charge dated 27 July 2012 and registered under the PPS Act on 28 July 2012 with the number No. 201207280005469.
Clause 7.2 in its original form stated:
“No trust
The chargor warrants and represents that the chargor has not entered into this document and does not hold any of the secured property as trustee of any trust and the chargor enters into this document as beneficial owner of the secured property.”
The variation reads:
“1. The Chargee, The Chargor and the Joint Trustee hereby agree and resolve that Clause 7.2 of the Charge is varied as follows with immediate effect;
The Chargee warrants and represents that the Chargee has entered into this charge personally and in its capacity as a Trustee of Trusts and the Chargor enters into this Charge as Beneficial Owner of the secured property subject to the Charge.
2.The Chargee, The Chargor and The Joint Trustee hereby resolve and agree with immediate effect that the Charge is security for all moneys owed by the Chargee in any of its capacities to any and all Trustees of any related Trust in existence at the date of the execution of this Deed.”
Mr Garrett produced a document entitled “The Deed of Appointment of Controller”. It is a Deed between him as Controller and Light PL as the Chargee. It refers to Light PL’s being entitled to issue a Notice of Crystallisation as it came to do in the circumstances outlined in the previous paragraph. In contemplation of that Notice’s being served on OenoViva, Light PL had resolved to appoint Mr Garrett as Controller under Part 5.2 of the Corporations Act to take control of OenoViva’s assets and undertakings. The Deed appointed him as Controller with effect from 23 January 2014.
Mr Garrett has applied for review of the Commissioner’s decision to cancel P&E Trust No. 2’s registration and his decision regarding the date of effect of that cancellation as the Authorised Officer and Sole Unit Holder of the P&E Trust No. 2 and as Authorised Officer of the Family Trust No. 4. I will now turn to the bases on which Mr Garrett claims that he may lodge an application for review of the Commissioner’s decision.
C.2 Who may lodge an application for review of reviewable objection decisions?
C.2.1 When objection decision made on objection to GST reviewable decisions
I will begin with the two reviewable objection decisions that were made following an objection to the Commissioner’s decision under the GST Act. They relate to the cancellation of the registration of the P&E Trust No. 2 under the GST Act and the date of effect of that cancellation. Section 14ZZ(1) provides, in effect, that an application for review of a reviewable objection decision may be made by “… the person … dissatisfied with the Commissioner’s objection decision …” (emphasis added). I have highlighted the word “the” used to qualify the word “person” because it is significant. Section 14ZZ does not provide for an application to be made by “a person” who is dissatisfied with the Commissioner’s objection but by “the person” who is dissatisfied. Dissatisfaction may be common to both but only “the person” may apply.
Who is “the person”? It seems to me that the answer lies in the identification of the person who is entitled to make an objection for an objection decision, and so a reviewable objection decision, may only be made in response to an objection. The person who is entitled to object is the person identified in the particular provision providing for an objection to be made. In the case of decisions made under ss 25-55(2) and 25-60 of the GST Act, the person who may object is “you”. What “you” may object to is “a *reviewable GST decision relating to you”. That is provided for in s 110-50(1) of Schedule 1 to the TAA. It is important to note that s 110-50(1) does not give a right to object to a decision that may affect a person the person objecting. The identity of the person making the objection and the person to whom the reviewable GST decision relates is one and the same person.
In the case of the P&E Trust No. 2 and so, for the reasons I gave at [42]-[50] above, that means that the trustee is the “you” who may lodge an application for review in the Tribunal. It is the legal entity of the P&E Trust No. 2 in relation to which the decisions were made under ss 25-55(2) and 25-60 of the GST Act. It is the legal entity that was given an entitlement to object under s 110-50(1) of Schedule 1 to the TAA and so it becomes the “the person” who, if dissatisfied, may apply for review of the reviewable objection decisions made by the Commissioner on its objections.
If the trustee chooses not to apply or, as in this case where it is in liquidation, its liquidator chooses not to lodge an application for review, that is an end of the matter. Given that s 27 of the AAT Act does not apply in the Taxation Division of the Tribunal, there is no room to consider the claims of another person wishing to make an application on the basis that he or she is dissatisfied with the decision. Parliament has clearly given the entitlement to apply to one person and that is the person to whom the reviewable objection decision relates.[52]
[52] Once an application for review has been lodged, a person other than the person in relation to whom the decision has been made, would be entitled to apply to be joined as a party under s 30(1A) of the AAT Act. The TAA has not modified or excluded its operation. It is a discretionary power and, before it may be exercised, the Tribunal must be satisfied that the person applying to be joined as a party is a person whose interests are affected by the decision under review.
C.2.2 When objection decision made on objection to an assessment, decision etc
The same reasoning leads to the conclusion that only the trustee, OenoViva, and so its liquidator as it is in liquidation, may apply for review of the reviewable objection decisions that were made in response to objections to assessments made by the Commissioner as to the net amount and as to an administrative penalty.
Taking first the decision to amend the assessment of the net amount. It is a decision made in relation to P&E Trust and it is a reviewable indirect tax decision because it has been made under s 105-25 of Schedule 1 to the TAA.[53] Section 105-40(1) provides that “You may object … against a decision you are dissatisfied with that is a *reviewable indirect tax decision relating to you” (emphasis added). Again, the “you” is the same person throughout. The person who may object is the person to whom the relevant decision relates. The decision made on that objection becomes the reviewable objection decision and “the person” upon whom s 14ZZ confers a right to apply for review is the person who made the objection to the decision relating to him or her and who is dissatisfied with the outcome. Again, in the case of a trust, the legal entity for the purposes of pursuing the trust’s entitlement is the trustee.
[53] TAA; Schedule 1, s 105-40(2)
C.3 Trustee in liquidation
OenoViva is in liquidation by order of the Court. Under s 477 of the Corporations Act, the liquidator has comprehensive powers to manage the affairs of OenoViva. The liquidator has not taken any steps to seek review of the Commissioner’s reviewable objection decisions. Unless and until he does take steps, the Tribunal has no power to review the four reviewable objection decisions in File No. 2014/4070.
C.4 Mr Garrett’s entitlement to apply on basis he is the Authorised Officer or Public Officer of the P&E Trust No. 2
That is an end of the matter if Mr Garrett sought to rely on his authority as an Authorised Officer or as a Public Officer of OenoViva. That would follow from the fact that, while OenoViva is being wound up by order of the Court and so long as he or she does not have either the liquidator’s written approval or the approval of the Court, “… a person cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the company.”[54] Mr Garrett, however, has not relied upon being an officer of OenoViva but of the P&E Trust No. 2.
[54] Corporations Act; s 471A(1)
In his application, Mr Garrett described himself as the Authorised Officer of P&E Trust No. 2 but, at [20(d)] of his Outline of Submissions dated 18 September 2014, he described himself as the Public Officer of P&E No. 2 and the Controller of its trustee, OenoViva. It is in one or other of those capacities, or all of them, that Mr Garrett claims that he is entitled to lodge the application. It is inherent in his submissions that Mr Garrett considers that s 14ZZ of the TAA permits an application to be lodged by someone other than the trustee of the P&E Trust. I do not resile from my conclusion that s 14ZZ does not permit that but have considered his claims separately.
C.4.1. Authorised Officer
Mr Garrett has relied on his being an “Authorised Officer” of the P&E Trust No. 2 but I am not aware of any such position. Section 250D of the Corporations Act provides for the appointment of a representative but that appointment would neither permit Mr Garrett to make an application to the Tribunal on behalf of the P&E Trust No. 2. There are two reasons for this.
The first is that there is no provision for the appointment of an Authorised Officer in relation to a trust. Provision is made in the Corporations Act for the appointment of a representative in relation to a corporation but a trust is not a corporation. The trustee of the P&E Trust No. 2 was, until it’s being placed in liquidation, OenoViva. That leads to the second reason. Even if Mr Garrett had been appointed as the representative of OenoViva, it would not have given him the authority to make an application for review of a decision made by the Commissioner in relation to the P&E Trust No. 2. That follows from the limited nature of the powers that a representative may exercise. They are set out in s 250D(1):
“A body corporate may appoint an individual as a representative to exercise all or any of the powers the body corporate may exercise:
(a)at meetings of a company’s members; or
(b)at meetings of creditors or debenture holders; or
(c)relating to resolutions to be passed without meetings; or
(d)in the capacity of a member’s proxy appointed under subsection 249X(1).
The appointment may be a standing one.”
The appointment may set restrictions on the representative’s powers[55] but:
“Unless otherwise specified in the appointment, the representative may exercise, on the body corporate’s behalf, all of the powers that the body could exercise at a meeting or in voting on a resolution.
Note: For resolutions of members without meetings, see sections 249A and 249B.”[56]
[55] Corporations Act; s 250D(2)
[56] Corporations Act; s 249D(4)
The GST Act also makes provision for a representative of an incapacitated entity. In the context of a corporation, an “incapacitated entity” is an entity that is in liquidation or receivership.[57] In the context of Mr Garrett’s submissions, I note that the meanings of the term “representative” include those of a liquidator or a controller within the meaning of s 9 of the Corporations Act. Section 9 provides:
“controller, in relation to property of a corporation, means:
(a)a receiver, or receiver and manager, of that property; or
(b)anyone else who (whether or not as agent for the corporation) is in possession, or has control, of that property for the purpose of enforcing a security interest;
and has a meaning affected by paragraph 434F(b) (which deals with 2 or more persons appointed as controllers).”
[57] GST Act; s 195-1
A representative of an incapacitated entity is required to be registered in that capacity if the incapacitated entity is registered or required to be registered.[58] Generally, a transaction by a representative has the same consequences under the GST Act as if the incapacitated entity had undertaken it. In most cases, though, the liabilities and entitlements accrued under the GST Act are attributed to the representative provided they arise from transactions within that representative’s responsibility or authority.
[58] GST Act; s 58-20(1)
In this case, I have no material that suggests that Mr Garrett was the representative of the P&E Trust No. 2 or of its trustee. He was not the liquidator of OenoViva. For the reasons given below, he was not in possession of any of its property for the purpose of enforcing a security interest. The only basis on which he could have been in possession for that reason would have followed from his being its Controller under the Personal Property Securities Act 2009 (PPS Act). For the reasons I give at [87]-[96] below, I find that he was not its Controller. Therefore, I find that Mr Garrett was not a representative of either the P&E Trust No. 2 or of its trustee, OenoViva. If he intended his reference to his being an Authorised Officer to his being a representative, I find that he is not.
Mr Garrett has also made the application for review of the Commissioner’s objection decision relating to the P&E Trust No. 2 as the Authorised Officer of the Family Trust No. 4. The Family Trust No. 4 is an entity that is entirely separate from the P&E Trust No. 2. Neither entity can hold sway over the other and neither can stand in the position of trustee of the other for neither has the legal capacity. For those reasons as well as for the reasons I have given above in relation to the role played by an Authorised Officer, I have concluded that Mr Garrett does not have standing to make an application on the basis as an Authorised Officer of the Family Trust No. 4.
C.4.2. Public Officer
Section 444-10 of Schedule 1 of the TAA identifies the person who is the public officer of a company for the purposes of an indirect tax law and so of the GST law.[59] It does so by providing that the person who is the public officer of a company for the purposes of the Income Tax Assessment Act 1936 (ITAA36) is also its public officer for the purpose of an indirect tax law. Section 252(1) of ITAA36 provides that every company carrying on business in Australia shall, unless exempted by the Commissioner, have a public officer. That person is appointed by the company or by its duly authorised agent or attorney. Section 252(1)(b) requires that the company keep the office of the public officer constantly filled.
[59] An “indirect tax law” includes the GST law. The “GST law” includes, among other enactments, the GST Act, any Act that imposes GST, the TAA and any other Act relating to any of these Acts or so many of its provisions as do: GST Act; s 195-1.
The public officer’s address for service under ITAA36 is also the public officer’s address for service for the same purposes under the GST law.[60] Section 444-10(2) provides that the public officer is answerable for doing everything required to be done by the company under an indirect tax law and, in case of default, is liable to the same penalties. A proceeding under an indirect tax law that is brought against the public officer is taken to have been brought against the company. That is the effect of s 444-10(3), which also provides that the company and the public officer are jointly liable for any penalty imposed on the public officer. Section 444-10(4) provides:
“Everything done by the public officer that the public officer is required to do in that capacity is taken to have been done by the company.”
[60]TAA; Schedule 1, s 444-10(5) and see also GST Administration Act; s 56(5)
There is nothing in these provisions that entitle a public officer to institute proceedings in the name of the company. It is an office that requires its occupant to fulfil obligations imposed upon the company under the GST law and to accept service of notices or documents but it is not an office that allows its occupant to be proactive. Lodgement of an application for review is provided for in a GST law, being Part IVC of the TAA, but it is not something that is required to be done. Therefore, it falls outside the scope of the role of a public officer under s 444-10 of Schedule 1 to the TAA.[61]
[61] I also note that s 206A of the Corporations Act provides that persons, who are disqualified from managing corporations Under Part 2D.6, commit an offence if:
“(a) they make or participate in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or.
(b) they exercise the capacity to affect significantly the corporation’s financial standing; or
(c)they communicate instructions or wishes (other than advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation) to the directors of the corporation:
(i)knowing that the directors are accustomed to act in accordance with the person’s instructions or wishes; or
(ii)intending that the directors will act in accordance with those instructions or wishes.
Note …”
Dr McRae, Member, and I considered the scope of s 206A in our decision in Re Phillips and Inspector-General in Bankruptcy [2012] AATA 788; (2012) 131 ALD 564; 58 AAR 452 at [188]-[325]]; 617-659; 505-550. I adopt our reasons in that case and note that I would doubt that, assuming he otherwise had standing, Mr Garrett could have lodged an application for review without breaching s 206A.
I also note that s 252A(1) of ITAA36 provides that the trustee of a trust estate commits an offence if an appointment of a public officer has not been made in accordance with s 252A(5).[62] Other bases on which the trustee of a trust estate commits an offence arise if:
“(a) any business of a trust estate is carried on in Australia or any income from property (not being solely income in respect of which tax is payable under Division 11A of Part III) is derived by a trust estate from sources in Australia;
(b)there is not a trustee of the trust estate who is a resident in Australia; and
(c)there is not in force in relation to the trust estate an exemption granted by the Commissioner under subsection (3); …
(d)…”
[62] ITAA36; s 252A(1)(d)
Whether or not the P&E Trust No. 2 falls within the scope of s 252A is not apparent on the material that I have but I will consider it lest it does. I do not have a document appointing Mr Garrett as a Public Officer of the P&E Trust No. 2, the Family Trust No. 3 of the Family Trust No. 4 but, even if I did, it would not assist his submission that he has standing to make an application on behalf of the trust. That follows from the fact that the role of a Public Officer of a trust estate is determined by s 252A(7). That provides for service of documents or requisitions upon the Public Officer and that service is deemed to have been made on the trustee.[63] Section 252A(9) imposes an obligation upon the Public Officer:
“The public officer of a trust estate shall be answerable for the doing of all such things as are required to be done by the trustee of the trust estate under this Act or the regulations, and in case of default shall be liable to the same penalties.”
A reference in s 252A to ITAA36 or to the regulations includes a reference to Part III of the TAA to the extent to which that Part relates to this Act or the regulations.[64] Part III of the TAA is concerned with prosecutions and offences. Where proceedings are taken against the Public Officer for offences against the ITAA36 and regulations and under Part III of the TAA, those proceedings are deemed to have been taken against the trustees of the trust estate.
[63] ITAA36; ss 252A(7) and (11)
[64] ITAA36; s 252A(14)
As I said, there is no evidence that Mr Garrett has been appointed as a Public Officer of the P&E Trust No. 2. Even if he has been, it is apparent from the role of a Public Officer of a Trust that it does not extend to lodging an application for review of a reviewable objection decision. Such a decision is not made under the ITAA Act, the regulations made under that Act or under Part III of the TAA. A Public Officer is only answerable for the doing of things required to be done under those provisions and otherwise acts as the recipient of documents that are served on the trustee of a trust estate.
C.5Mr Garrett’s entitlement to apply on the basis he is the Controller of OenoViva
The provisions relating to the duties and liabilities of a Controller are found in Part 5.2 of the Corporations Act. The focus of each is upon the property of the corporation of which the Controller takes possession and over which he or she assumes control. A Controller, however, takes possession only for the purpose of enforcing a “security interest”. A “security interest” is defined in the Corporations Act to mean “a PPSA security interest; or … a charge, lien or pledge.”[65] A “PPSA security interest” means a security interest within the meaning of the PPS Act.[66]
[65] Corporations Act; ss 9 and 51A
[66] Corporations Act; ss 9 and 51
In general terms, a security interest under the PPS Act:
“… means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).”[67]
Section 12(2) goes on to give specific examples of what constitutes a security interest but, before setting them out emphasises that the transaction that provides for the interest is a transaction that secures payment or performance of an obligation. The opening words of s 12(2) are:
“For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation: …”
[67] PPS Act; s 12(1)
The expression “personal property” is defined in s 10(1) of the PPS Act to mean:
“… property (including a licence) other than:
(a) land; or
(b) a right, entitlement or authority that is:
(i) granted by or under a law of the Commonwealth, a State or a Territory; and
(ii) declared by that law not to be personal property for the purposes of this Act.
Note: This Act does not apply to certain interests even if they are interests in personal property (see section 8).”
That definition is wide enough to include intangible property if the grantor is an Australian entity.[68] It is wide enough to include a right or entitlement to apply to the Tribunal for review of a decision for such a right or entitlement must, for the reasons I have given, necessarily be granted by or under a law of the Commonwealth.[69] Regard must, however, be had to s 8(1) for it excludes certain property from the scope of the PPS Act. In particular, s 8(1)(b) provides:
“This Act does not apply to any of the following interests (except as provided by subsection (2) or (3)):
(a) …
(b)a lien, charge, or any other interest in personal property, that is created, arises or is provided for under a law of the Commonwealth (other than this Act), a State or a Territory, unless the person who owns the property in which the interest is granted agrees to the interest;
(c)-(l) …”
[68] PPS Act; s 6(2)(a)
[69] I note that, in Cummings v ClaremontPetroleum NL (1996) 185 CLR 124; 137 ALR 1 at 139; 10, Brennan CJ, Dawson and Gaudron JJ held that they “… would not regard the right to appeal as property of the respective bankrupt appellants …”. Their Honours reached their conclusion in the context of whether bankrupt persons had standing to institute appeals against a judgment for damages awarded against them. It seems to me that the context and provisions of the PPS Act leads to a different conclusion.
Has the person who owns the property, OenoViva, agreed that the PPS Act will apply to its interest in the form of any statutory right or entitlement that it has as a trustee of various trusts, to apply for review of a decision in the Tribunal? On my reading of the Deed of Charge and, in particular, of cl 4, I can find nothing that would bring a right or entitlement of that sort within its scope. Therefore, I find that OenoViva did not agree to the PPS Act’s applying to its right or entitlement. Therefore, it is not within the scope of the Deed of Charge and not within the scope of any property that was the subject of the Notice of Crystallisation. Therefore, as Controller, Mr Garrett could not exercise any rights in relation to it. He could not exercise any rights or entitlements that OenoViva might have had in relation to seeking review in the Tribunal.
There is another reason why Mr Garrett could not exercise any rights in relation to any property held by OenoViva as trustee of the P&E Trust. The reason is that OenoViva was not a party to the Deed of Charge in that capacity. Before the Supplementary Deed purported to amend it, OenoViva was not a party to the Deed in relation to any of the three trusts of concern in this case be they the P&E Trust, the P&E Trust No. 2 of the Family Trust No. 3.
Putting that and any amendment aside, the validity of the Deed of Charge causes me some concern. The PPS Act provides for security interests. They are interests in personal property provided for by a transaction that secures payment or the performance of an obligation. It is difficult to see a transaction that secures payment or the performance of an obligation. That will be payment or performance of an obligation by OenoViva as the Chargor. Certainly, reference is made to “secured money” and “secured property”. The former is said to mean “… all moneys (including damages) in any currency which the chargor is or may at any time be liable (actually, prospectively or contingently) to pay to the chargee on any account for any reason …”. Ten examples then follow in cl 1.1(20). There is no transaction identified.
Consideration is the subject of cl 2 where it is stated that the “… chargor has entered into this document for valuable consideration from the chargee and receipt of the consideration is acknowledged.” That does not overcome the absence of a transaction for “value”. A security interest is enforceable against a grantor in respect of particular collateral (personal property) only if the security interest has attached to that collateral.[70] “Value” is defined in s 10 to mean, in part, consideration that is sufficient to support a contract and to include antecedent debt or liability. The remainder of the definition is concerned with purchase money security interest but that is not relevant. Whether “value” of that sort has been given is unknown.
[70] PPS Act; ss 3 and 19
The Deed of Variation would seem to be intended to relate to the Deed of Charge because it amends a clause that appears in the latter and it refers to the document itself as well as to the relevant security interest number. Beyond that, it cannot be said to be an agreement between the parties to the Deed of Charge for it is an agreement between OenoViva in its capacity as trustee of more than simply the OenoViva (Australia & New Zealand) Trust but to it as trustee, or one of the trustees of, at least three other trusts. Whether there are four other trust depends on whether OenoViva is the Chargee, as described in the Deed of Variation in the heading, or the Chargor (which would seem more consistent with the Deed of Charge), in the body of the text. Mr Garrett is also a party to the Deed of Variation. In view of all of these discrepancies, the Deed of Variation cannot be said to be a variation of the Deed of Charge but a new agreement of some sort.
I would also note that, at the time he signed the Deed of Charge and the Deed of Variation on behalf of OenoViva, Mr Garrett was disqualified from managing a corporation. Therefore, neither was executed on behalf of OenoViva as provided for in ss 127(1) and (2) of the Corporations Act. Section 127(4) provides that the ways in which a company may execute a document are not limited but reference was made in both documents to their being executed in accordance with s 127. Therefore, neither was executed.
C.6Mr Garrett’s entitlement to apply on the basis he is the Unit Holder of the P&E Trust No. 2
Mr Garrett states that he is the sole unit holder in the P&E Trust No. 2. Ms Barker drew my attention to the case of Pearson v Commissioner of Taxation[71] (Pearson) in which the Full Court of the Federal Court considered whether the beneficiary of a trust had standing to appeal against an appealable objection decision. The taxpayer was the trustee of a discretionary trust and the Commissioner had disallowed its objection. A beneficiary of the trust applied for review of the Commissioner’s decision although the trustee did not. She applied on the basis of being both a unit holder in the trust and Public Officer of the trustee which was then in liquidation.
[71] [2000] FCA 1427; (2001) 116 FCR 357; Tamberlin, Mansfield and Emmett JJ
At first instance, Spender J had decided that Mrs Pearson did not have standing because she was not the taxpayer. The taxpayer was the trustee of the trust but, as the trustee was in liquidation, the responsibility for challenging the Commissioner’s decision lay with the liquidator. That followed from s 477(2) of the then Corporations Law, which provided that a liquidator may, among other things, “… bring or defend any legal proceedings in the name and on behalf of the company.” Mrs Pearson could not rely on her role as Public Officer of the trustee. That followed from s 471A(1) of the same legislation. It provided that, except in certain circumstances, a person could not perform or exercise, or purport to perform or exercise, a function or power as an officer of the company while a company was being wound up. Exceptions included his or her being given written approval to take that action or a Court’s giving such approval. None had been given in that case.
As to her being a unit holder, Spender J considered Mrs Pearson’s argument that she should be permitted to institute proceedings that the trustee, through its liquidator, would not institute. His Honour did not specifically address this submission preferring to find that the authority to which he had been referred turned on there being something special or unusual. There was nothing special or unusual in the case before him, he found. Mrs Pearson was not the taxpayer referred to in s 175A of ITAA36.
On appeal, the Full Court dismissed it. The majority, Tamberlin and Mansfield JJ, decided that they did not have to consider whether s 14ZZ permits a beneficiary to bring an appeal against an objection decision where the trustee has declined to do so. For the sake of deciding the matter, they assumed that it would permit her to do so provided there were special or exceptional circumstances. For those special or exceptional circumstances to have existed, she would have needed to approach the liquidator to exercise the trustee’s right to lodge an application for review. Whether she had offered some form of indemnity for the trustee’s costs and her ability to satisfy that indemnity might have been relevant. So too would some opinion about prospects of success of an appeal or the offer of funds to obtain an independent opinion. Emmett J was of the same mind and set out four matters she should have addressed.[72] Mrs Pearson had done none of those things and the Full Court decided that Spender J had been correct in his finding that she had no standing.
[72] [2000] FCA 1427; (2001) 116 FCR 357 at [52]; 370
There is a difference between an appeal against the Commissioner’s objection decision in the Court and an application for review in the Tribunal. It is apparent in the wider discussions in Pearson regarding the right of a beneficiary of a trust estate to take steps necessary to prevent the loss of, or to preserve the assets of, a trust estate. That right only exists in limited circumstances and provided the trustee is added as a defendant. Emmett J observed that a beneficiary might, in appropriate circumstances, commence a derivative action against a third party when the trustee has declined to enforce a cause of action available for the benefit of the trust estate. The beneficiary’s action would be instituted for the benefit of the trust estate and the trustee added as a beneficiary.
Issues of this sort do not arise in the same way in Tribunal. Had the trustee applied for review of the Commissioner’s reviewable objection decisions, considerations of whether the trust was a discretionary trust or whether beneficiaries had vested interests would inform a decision whether their interests were affected by the Commissioner’s decision. A decision of that sort would be made if the beneficiaries were to apply to be joined as parties to the proceeding under s 30(1A) of the AAT Act. That provision has not been excluded or modified by the TAA.
Issues of the sort considered in Pearson do not arise in the Tribunal because of the careful way in which the right to lodge an application is crafted. It is limited to the trustee in the case of a trust. The rights of the beneficiaries are limited to those they may take under the general law in relation to the way in which the trustee carries out his, her or its duties.
C.7Mr Garrett’s entitlement to apply on basis he is the trustee of the P&E Trust No. 2
Although Mr Garrett did not base his application on a claim that he was the trustee of the P&E Trust No. 2, he did so in his submissions. Among the extensive material that he has given me, I cannot find any that supports my finding that he was the trustee. The entity named as trustee in the Trust Deed dated 23 November 2012 is OenoViva. It is named as the “First Trustee” but I can find no reference to a second trustee or to Mr Garrett’s appointment as trustee.
Even if I were to find material of Mr Garrett’s being a trustee, I would not extend the time within which he might lodge an application for review of any of the reviewable objection decisions. I give my reasons below.
D.File No. 2014/4068: P&E Trust
The same reasoning applies to Mr Garrett’s claims that he may lodge an application for review of the objection decision made by the Commission in relation to the P&E Trust. Under s 8AAZLGA(6) of the TAA, it is the “entity” that may object to the Commissioner’s decision to retain an amount. The particular “entity” to which reference is made is the entity for which the Commissioner has established an RBA. In this case, that is the P&E Trust. That is the entity in relation to which the Commissioner was verifying information and so leading him to decide to retain the refund while he did so. It is the entity that is specified in s 8AAZLGA(6) as the person who may make an objection. It is the entity that may seek review of the reviewable objection decision made by the Commissioner on the objection. That means that the legal entity that is entitled to object to the reviewable objection decision is the trustee of the P&E Trust.
For the reasons I have previously given, it is not Mr Garrett in any of the capacities he has put forward. In relation to the Commissioner’s decision relating to the P&E Trust, his being an Authorised Officer and a Public Officer of the P&E Trust No. 2 and the Family Trust No. 4 does not give him standing to make an application. They are entities separate from the trust in relation to which the decision was made i.e. the P&E Trust. They cannot be trustees of the P&E Trust and his being an Authorised Officer or a Public Officer gives him no authority to lodge an application in any event.
Mr Garrett has also relied on his being the Sole Unit Holder in the P&E Trust No. 2 but, again for the same reasons, that does not entitle him to make an application.
Although he did not make the claim on his application, Mr Garrett has submitted that he is the trustee of the P&E Trust. I do not have any documents supporting his claim. He did refer to documents that he had lodged in the proceedings heard by Senior Member Fice: File Nos. 2012/5901 and 2014/1300.[73] Those documents are with the Federal Court following Mr Garrett’s appeal from Senior Member Fice’s decision. I have not waited for their return for, even if they supported Mr Garrett’s claim that he is the trustee of the P&E Trust, I would not extend the time within which he may make the application. I will come to my reasons for that at [121]-[126] below.
[73] The Trustee for Oenoviva (Australia & New Zealand) Plant and Equipment Trust and Commissioner of Taxation [2014] AATA 614; (2014) 64 AAR 374
E. File No. 2014/4071: Family Trust No. 3
In his application, Mr Garrett has based his claim on his being the Authorised Officer of the Family Trust No. 3. In his submissions, he has claimed that he is the trustee and makes his application on that basis. I will consider each.
E.1 Authorised Officer
In relation to the Family Trust No. 3, Mr Garrett’s being its Authorised Officer does not entitle him to apply for review of the Commissioner’s decision. I have given my reasons in in relation to the P&E Trust No. 2 in which Mr Garrett relied on his capacity as its Authorised Officer. The reasons are no different in this matter.
The objection was made against an assessment or amended assessment disallowing claims in respect of quarterly tax period. Those assessments were made under ss 105-20 of Schedule 1 to the TAA. For the reasons I have given at [72]-[73] above in relation to the P&E Trust No. 2, the entity that may apply for review of that decision in that case is Family Trust No. 3 and so its trustee.
E.2 Trustee
If Mr Garrett is the trustee of the Family Trust No. 3, I would find that he is entitled to make an application for review of the Commissioner’s objection decisions relating to assessments issued to the Family Trust No. 3.
He has given me several documents to support his claim that he is the trustee. He was said to be the trustee of the Family Trust No. 3 in a document dated 7 November 2005. There is no clause appointing him to be trustee but he has signed the deed in that capacity. Mr Michael Cowan Garrett was described as the “Appointor”, Mr Garrett as the Trustee and Mr Andrew Morton Kennet Sandow as the Settlor.
Mr Garrett has also given me a document dated 30 September 2009 in which he stated that he was the “Retiring Trustee” and wished to be discharged from the Trust from that date. He appointed Two Tribes Wine Company Pty Ltd (Two Tribes) as Trustee in his place. On 2 February 2012, Two Tribes appointed Light PL as trustee. This is followed by a further document Mr Garrett has given me. It is a deed dated 23 January 2014 in which Light PL is described as the “Continuing Trustee”, OenoViva (in liquidation) as the “Prior Trustee”, The Hunger Food & Wine Company Pty Ltd (Hunger Food & Wine) as the “New Trustee” and Mr Garrett as the Appointor. It is recited that OenoViva was appointed as the trustee of the Family Trust No. 3 on 7 November 2005 and that it vacated that office with the appointment of a liquidator on 22 January 2014. It is also recited that Mr Garrett was appointed as the Managing Controller under a charge registered under the PPS Act. Light PL then appointed Hunger Food & Wine as a joint trustee with effect from 23 January 2014.
The Deed is hard to follow for, on the material that I have been given OenoViva was not appointed as trustee of the Family Trust No. 3 on 7 November 2005 or by any of the subsequent documents purporting to change the trustee. The Deed that I have bearing that date appointed Mr Garrett as the trustee but he had since relinquished the role.
Matters are not made any clearer by the further Deed bearing the date 16 October 2014. It is said to be made between OenoViva as the Retiring Trustee and Mr Garrett as the New Trustee and as the Appointor. The Deed recorded that OenoViva had retired and Mr Garrett had been appointed as the sole trustee of the Family Trust No. 3.
What this Deed overlooks is that, some months earlier on 22 January 2014, OenoViva had been placed in liquidation and could not, without the consent of the liquidator, enter such a deed even if it had been a trustee, of which I have no evidence. Second, it overlooks that, if OenoViva had been a trustee, as the earlier deed recited, it ceased to be a trustee when it was placed in liquidation. That is the effect of cl 11.2 of the Deed of Trust establishing the Family Trust No. 3. There was no basis on which it and Mr Garrett could agree that he would be the new sole trustee. Third, it overlooked that Hunger Food &Wine was the trustee and had followed Light PL in that position.
In view of the inconsistencies in these documents, I am not satisfied that Mr Garrett is the trustee of the Family Trust No. 3.
F.Conclusion
For the reasons I have given, I have concluded that Mr Garrett is not entitled to lodge an application for review of any of the Commissioner’s reviewable objection decisions.
APPLICATIONS FOR EXTENSION OF TIME
Even if Mr Garrett were entitled to apply for review of the Commissioner’s reviewable objection decisions, I have decided to refuse his application for an extension of time within which he may lodge the applications. He has not given me evidence to indicate that he has an arguable case that would lead to his successfully setting aside the Commissioner’s decision. While he does not have to establish that case, Mr Garrett does have to produce some material that shows that indicates support for his case.
In the case of the cancellation of the registration of the P&E Trust Estate No. 2 under the GST Act, Mr Garrett needed to produce some material that pointed to its carrying on an enterprise. In Attachment A, I have set out the terms of s 9-20(1) defining an “enterprise” at [34] above. That shows that there has to be material pointing at least to an activity, or series of activities. Those activities have to be in the form of a business, in the nature of trade or, if in the form of a lease, licence or other grant of an interest in property, on a regular or continuous basis. Production of documents relating to a trust do not point to that. Documents in the nature of contracts but unsupported by evidence of the transactions underpinning them and the means to fulfil them do not. Invoices similarly unsupported do not.
In so far as the subject matter of the remaining reviewable objection decisions is concerned, they arise out of the assessment of the net amounts. That requires a consideration of the input tax credits due and the GST payable. Those terms are described in Attachment A. Whether a person is entitled to an input tax credit depends on whether that person has made creditable acquisitions. A creditable acquisition is made when a person acquires anything solely or partly for a creditable purpose, the supply of the thing to that person is a taxable supply, the person is liable to provide consideration for the supply and the person is registered or required to be registered.[74] Even though an applicant for review bears the burden of proving each of these matters on review, an applicant for an extension of time needs to lodge some material showing that it is arguable that the person is entitled to input tax credits. I explored the issues that each criterion raises in my earlier decision Re Simon Harlandas Trustee for the PCS Global Discretionary Trust and Commissioner of Taxation.[75] It requires material that at least touches on the issues raised by each of the criteria. That requires more than copies of contracts, invoices and receipts. There must be something that touches on acquisition or supply, purpose of that acquisition or supply, liability to pay consideration or payment of consideration for the acquisition or supply and so on. In all the material that Mr Garrett has supplied, I cannot find material that is of this sort and so I am not satisfied that he has an arguable case in relation to decisions made under the GST Act.
[74] GST Act; s 11-5
[75] [2013] AATA 930 at [64]-[119]
In relation to the P&E Trust, the application for review of the Commissioner’s decision to retain the activity statement refund under s 8AAZLGA(6) of the TAA must be seen in its particular context. That context is one in which the Commissioner is given power to retain an amount that he would otherwise have to repay to the taxpayer until he can check information. The time within which an objection may be made to a retention decision is brought to an end when there is a change in the form of an amended assessment relating to the amount held or the making or amending of an assessment relating to a penalty. The rationale for that must be that any substantive dispute will focus on the assessment or amended assessment for that will alter the balance in the RBA. If the balance is in favour of the taxpayer, it is paid to the taxpayer. If it is not, the money is no longer being retained under s8AAZGL(1). The decision to retain it until that point loses all currency and relevance.
I have also had regard to the time that has passed between the Commissioner’s reviewable objection decisions and the time at which Mr Garrett lodged his applications for review. Even allowing for the 60 day period in which an application may be made for review of the Commissioner’s reviewable objection decision, over a year separated the two events in each file. That is a lengthy period. The Commissioner is entitled to think that the matters were at an end well before Mr Garrett lodged his applications for an extension of time.
Taking all those matters into account, I am not satisfied that I should extend the time within which Mr Garrett is entitled to lodge applications for review of the Commissioner’s reviewable objection decisions.
LEGISLATIVE FRAMEWORK
General scheme regarding GST: imposition of GST
With the commencement of the GST Act on 1 July 2000, a GST became payable on taxable supplies and taxable importations.[76] In the following paragraphs, I summarise the scheme in only the broadest terms and omit the many qualifications that apply to the general principles. In this case, for example, only a “taxable supply” is relevant. In the language of s 9-5 of the GST Act, there is:
“… a taxable supply if:
(a)you make the supply for consideration; and
(b)the supply is made in the course or furtherance of an enterprise that you carry on; and
(c)the supply is connected with Australia; and
(d)you are registered or required to be registered.
However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.” [77]
[76] GST Act; s 7-1
[77] Asterisks appearing in the GST Act and denoting that terms have been defined elsewhere have been omitted throughout these reasons.
Part 2-5 is concerned with registration. As with much of the GST Act, it is written in the second person and uses the word “you” and explains when “when you are required to be, and when you may, be registered.”[78] At times, however, it is written in the third person and so refers, for example, to an “entity”. An “entity” is defined in s 184-1 and, under s 184-1(g), includes a trust. By virtue of s 184-1(2), the trustee of a trust is taken to be an entity and that entity consists of the person or persons who are trustees at any given time. Section 184-1(3) explains that a legal person can have a number of different capacities in which that person does things and that, in each of those capacities, the person is taken to be a different entity. By way of example, it is said that a person may be an entity in that person’s personal capacity and a different entity if a trustee of a trust.
[78] GST Act; s 23-1
The obligation to be registered turns on the amount of annual turnover but “you” may be registered if carrying on an enterprise, or intending to carry on an enterprise from a particular date, whether or not the turnover is above or below the registration turnover threshold.[79] The note accompanying s 23-5 of the GST Act explains that “It is the entity that carries on the enterprise that is required to be registered (and not the enterprise).” In view of the definition of “entity”, to which I have referred above, the Trust was registered by the Commissioner in this case.
[79] GST Act; s 23-10
Section 31-5(1) provides that “If you are registered or required to be registered, you must give to the Commissioner a GST return for each tax period.” A GST return must comply with the requirements of ss 31-15 (relating to its form and contents) and 31-25 (relating to electronic lodgement) of the GST Act and s 388-75 in Schedule 1 to the TAA relating to the requirement to sign a declaration. A GST return must be given to the Commissioner for each tax period applying to the entity.[80] In this case, the relevant period was quarterly. Businesses use a form known as Business Activity Statement (BAS) to report on their activities that are relevant to an assessment of their obligation to pay a range of taxes including that under the GST Act.
[80] GST Act; ss 31-8 and 31-10
“You” must give that return whether or not “your net amount for the tax period is zero” or “you are liable for the GST on any taxable supplies that are attributable to the tax period.”[81] The person who fits the description of “you” is not specified but I note that, before its amendment with effect from 1 July 2012,[82] s 31-20(1) required that:
“In addition to the GST returns required under section 31-5, you must give to the Commissioner such further or fuller GST returns as the Commissioner directs you to give (including any GST return in your capacity as agent or trustee).”[83]
That section suggests that the “you” in s 31-5 of the GST Act on which liability to lodge is imposed is the trustee of the trust, rather than the trust.
[81] GST Act; s 31-5(2)
[82] Indirect Tax Laws Amendment (Assessment) Act 2012; s 3 and Schedule 1, Item 45. The form in which it relates to payments and refunds relating to tax periods from 1 July 2012 reads: “You must, if required by the Commissioner, whether before or after the end of a tax period, give to the Commissioner, within the time required, a *GST return or a further or fuller GST return for the tax period or a specified period, whether or not you have given the Commissioner a GST return for the tax period under section 31-5.”
[83] GST Act; s 31-20(1)
Division 3 again speaks of “your” obligation to pay amounts of GST that remain after off-setting “your” entitlements to input tax credits. There is no suggestion there that “your” obligation to pay amounts of GST may be the trustee’s obligation but regard must be had to ss 184-1(1) and (2) of the GST Act. The trustee of a trust is taken to be an entity consisting of the person who is, or the persons who are, the trustees, at any given time. This concept led Hill J in HP Mercantile Pty Ltd v Federal Commissioner of Taxation[84] to decide:
“… It is the Trustee who is made liable to the tax payable by reason of the activities of the Trust and entitled to any credit arising by virtue of acquisitions made by the Trust. Accordingly, it is appropriate that it be the Trustee which is the appellant or cross-respondent and not ‘the Trust’. Leave was accordingly given to substitute the name of the Trustee in place of the relationship which is known as the trust.”[85]
In light of His Honour’s conclusion, I have interpreted “you” to include the trustee unless reference is made to an entity of a particular kind excluding an entity in its capacity as a trustee.
[84] (2005) 143 FCR 553; 219 ALR 591; [2005] FCAFC 126
[85] (2005) 143 FCR 553; 219 ALR 591; [2005] FCAFC 126 at 555; 593; [2]
A “supply”, to which reference is made in s 9-5 means “… any form of supply whatsoever.”[86] Without limiting the breadth of that meaning, s 9-10(2)(d) provides that:
“… supply includes …:
(d)a grant, assignment or surrender of real property”.
Whether the act constituting supply is lawful or not is irrelevant.[87]
[86] GST Act; s 9-10(1)
[87] GST Act; s 9-10(3)
Section 9-25 provides for the occasions on which a supply of goods is connected with Australia. In particular, s 9-25(4) provides that:
“A supply of real property is connected with Australia if the real property, or the land to which the real property relates, is in Australia.”
“Consideration” is also defined in wide terms. In so far as it is relevant, it:
“… includes:
(a)any payment, or any act or forbearance, in connection with a supply of anything; and
(b)any payment, or any act or forbearance, in response to or for the inducement of a supply of anything.
(2)It does not matter whether the payment, act or forbearance was voluntary, or whether it was by the recipient of the supply.”[88]
[88] GST Act; s 9-15
Section 9-30 provides for supplies that are GST-free or input taxed. A supply is GST-free if it is either GST-free under Division 38 or under a provision of another piece of legislation or it is a supply of a right to receive a supply that would be GST-free.[89] A supply is input taxed if it is either input taxed under Division 40 or another piece of legislation or it is a supply of a right to receive a supply that would be input taxed.[90] Particular provision is made for supplies that would be both GST-free and input taxed but they are not relevant in this matter.[91] Nor are the special rules relating to taxable supplies.[92]
[89] GST Act; s 9-30(1)
[90] GST Act; s 9-30(2)
[91] GST Act; s 9-30(3)
[92] GST Act; s 9-39
GST is payable on any taxable supply that the person makes.[93] The amount of GST on a taxable supply is an amount that is 10% of the value of the taxable supply.[94]
[93] GST Act; s 9-40
[94] GST Act; s 9-70
Division 29 is concerned with attribution to tax periods be it attribution of GST on taxable supplies, input tax credits or adjustments. In so far as the attribution of GST is concerned for a person accounting on a cash basis, s 29-5(2) applies. If all of the consideration is received for a taxable supply, the GST on the supply is attributable to that tax period.[95] If, in a tax period, part of the consideration is received, GST on the supply is attributable to that tax period but only to the extent that consideration is received in that tax period.[96] If none is received, no GST on the supply is attributable to that tax period.[97]
[95] GST Act; s 29-5(2)(a)
[96] GST Act; s 29-5(2)(b)
[97] GST Act; s 29-5(2)(c)
General scheme regarding GST: input tax credits
A person is entitled to an input tax credit when making creditable acquisitions. A creditable acquisition is made when a person acquires anything solely or partly for a creditable purpose, the supply of the thing to that person is a taxable supply, the person is liable to provide consideration for the supply and the person is registered or required to be registered.[98] “An acquisition is any form of acquisition whatsoever.”[99] Without limiting that meaning, the word “acquisition” includes “an acceptance of a grant, assignment or surrender of real property”.[100]
[98] GST Act; s 11-5
[99] GST Act; s 11-10(1)
[100] GST Act; s 11-10(2)(d)
A person acquires a thing for a “creditable purpose” to the extent that person acquires it in carrying on that person’s enterprise.[101] A person does not acquire a thing for a creditable purpose to the extent that the acquisition relates to making supplies that would be input taxed or the acquisition is of a private or domestic nature.[102] The GST Act qualifies these provisions but the qualifications are not relevant in this case.
[101] GST Act; s 11-15(1)
[102] GST Act; s 11-15(2)(b)
A person is entitled to the input tax credit for any creditable acquisition that the person makes.[103] Section 11-25 provides that:
“The amount of the input tax credit for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired. However, the amount of the input tax credit is reduced if the acquisition is only partly creditable.”
Acquisitions that are partly creditable are provided for in s 11-30. They will be of that character if they are either made for a purpose that is only a creditable purpose in part or if the person making the acquisition provides, or is liable to provide, only part of the consideration for the acquisition.
[103] GST Act; s 11-20
General scheme regarding GST: working out the net amount that is payable by or to a person
A net amount is worked out in respect of each person who, for the purposes of this case, is registered. The net amount becomes the amount that is payable either by the person to the Commonwealth or by the Commonwealth to the person for that tax period.[104] The “net amount” for a tax period is worked out by deducting input tax credits from the GST.[105] The net amount may be increased or decreased if there are any adjustments.[106] Payment of any net amount of GST that a person owes must be paid in accordance with Division 33 of Part 2-7. If the net amount is less than zero, the Commissioner must, on behalf of the Commonwealth, pay that amount in accordance with the terms of Division 35 to the person on lodging a GST return.[107]
[104] GST Act; s 17-1. The tax period is generally a three month period unless a person elects to have one month tax periods or the Commissioner determines otherwise under Division 27 of Part 2.6: s 27-5.
[105] GST Act; s 17-5(1)
[106] GST Act; s 17-5(2)
[107] GST Act; ss 35-5 and 35-10
Division 29 of Part 2-6 specifies the tax periods to which a person’s taxable supplies, creditable acquisitions, creditable importations and adjustments are attributable.[108] In so far as it is relevant to this case, s 29-5(1)(a) provides that the GST payable by a person on a taxable supply is attributable to the tax period in which any of the consideration is received for the supply. In the simplest case, the input tax credit to which a person is entitled for a creditable acquisition is attributable to the tax period in which the person provides any of the consideration for the acquisition.[109] If a person accounts on a cash basis and that person pays part only of the consideration for a creditable acquisition in a tax period, the input tax credit for the acquisition is attributable to that tax period but only to the extent that the person provided the consideration in that tax period.[110]
[108] A person who is registered or required to be registered must give the Commissioner a GST return for each tax period within the time specified in: ss 31-5, 31-8 and 31-10.
[109] GST Act; s 29-10(1)(a)
[110] GST Act; s 29-10(2)(b)
I certify that the one hundred and forty-three paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ………..[sgd]................................................
Personal Assistant
Dates of Hearing 18 September 2014 and 8 December 2014
Date of Last Submission 19 December 2014
Date of Decision 24 April 2015
Self-represented Applicant Mr A Garrett
Counsel for the Respondent Ms M. Baker
Solicitor for the Respondent Mr V Tavolaro, Australian Government Solicitor
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