Australian Investment and Development Pty Ltd v Commissioner of State Revenue
[2018] VSC 154
•13 April 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
TAXATION LIST
S CI 2017 03965
| AUSTRALIAN INVESTMENT AND DEVELOPMENT PTY LTD | Plaintiff |
| v | |
| COMMISSIONER OF STATE REVENUE | Defendant |
---
JUDGE: | CROFT J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 March 2018 |
DATE OF JUDGMENT: | 13 April 2018 |
CASE MAY BE CITED AS: | Australian Investment & Development Pty Ltd v Commissioner of State Revenue |
MEDIUM NEUTRAL CITATION: | [2018] VSC 154 |
---
PRACTICE AND PROCEDURE – VCAT – Whether application for leave to appeal decision of VCAT may succeed where appeal is doomed to fail – Relevance of applicant’s intention to revisit recent intermediate appellate authority – Powers of Court of Appeal upon appeal from decision to refuse leave – Myers v Medical Practitioners Board (Vic) (2007) 18 VR 48 –Commissioner of State Revenue v Frost (2011) 83 ATR 832 – Victorian Civil and Administrative Tribunal Act 1997, s 148.
TAXATION AND REVENUE – Whether right to object to assessment to tax affects appellate procedure – Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 – McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 – Taxation Administration Act 1997, s 96.
TAXATION AND REVENUE – Land tax – Definition of “greater Melbourne” – Commissioner of State Revenue v EHL Burgess Properties Pty Ltd (2015) 209 LGERA 314 – Land Tax Act 2005, ss 64, 65.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Grace | M&K Lawyers Group Pty Ltd |
| For the Defendant | Mr C J Horan QC with Mr D Morgan | Solicitor to the Commissioner of State Revenue |
HIS HONOUR:
By its Origination Motion of 3 October 2017, Australian Investment and Development Pty Ltd (“the Taxpayer”) seeks leave to appeal the Order of the Victorian Civil and Administrative Tribunal (“VCAT” or “the Tribunal”) which confirmed the Commissioner’s assessment of the liability of the Taxpayer to pay land tax of $711,487.11 for the 2013 land tax year. The land in respect of which the Taxpayer was assessed is located at 2-180 Davis Road, Diggers Rest and is owned by the Taxpayer (“the Land”). Unusually, while the Taxpayer formally seeks the setting aside of the Order of VCAT,[1] it tacitly accepts that this Court is bound by a recent decision of the Victorian Court of Appeal to dismiss the appeal.[2] Thus at the hearing of this matter, the principal issue in contention was whether the Taxpayer ought to be granted leave to appeal notwithstanding agreement that the appeal is bound to fail, at least in this instance. Against this background, it is helpful to first set out why the appeal would be dismissed if leave to appeal were granted, before turning to the issue of leave itself.
[1]Proposed Notice of Appeal (3 October 2017), 6.
[2]Plaintiff’s Outline of Submissions (11 December 2017), [18]–[19], [23]; Plaintiff’s Reply (6 March 2018), [20], referring to Commissioner of State Revenue v EHL Burgess Properties Pty Ltd (2015) 209 LGERA 314.
Although other land tax years and exemptions were agitated before VCAT, it is common between the parties that the present application is only in relation to the findings of the Tribunal in respect of the 2013 land tax year and the availability of an exemption under section 65 of the Land Tax Act 2005 (“the LTA”). The provisions of the LTA which establish the prima facie liability of the Taxpayer to land tax are as follows:[3]
[3]Land Tax Act 2005 ss 3, 7–8, 10.
3 Definitions
(1) In this Act—
…
taxable land means land that is not exempt land;
…
…
7 General imposition of land tax
Land tax is imposed in respect of each year on all taxable land in Victoria.
8 Who is liable for land tax?
The owner of taxable land is liable to pay land tax on the land.
…
10 Who is the owner of land?
(1)The following persons are owners of land for the purposes of this Act—
(a) a person entitled to land for a freehold estate in possession;
…
…
The LTA exempts owners of taxable land from liability to pay land tax in respect of land outside greater Melbourne which is used primarily for primary production:[4]
[4]Land Tax Act 2005 ss 64–5.
64 Definitions
(1) In this Division—
…
greater Melbourne means the aggregate area consisting of—
(a)the area within the municipal district of each Council listed in Part 1 of Schedule 2; and
(b)the area within an urban growth boundary specified in a planning scheme that is in force in the municipal district of each Council listed in Part 2 of Schedule 2;
…
65 Exemption of primary production land outside greater Melbourne
(1) Land outside greater Melbourne that is used primarily for primary production is exempt land.
(2)If a part of any land outside greater Melbourne is used primarily for primary production that part is exempt land even if an activity other than primary production is carried on on any other part of the land.
Before VCAT, the Taxpayer adduced evidence as to the use of the Land in an effort to establish inter alia that throughout the 2013 tax year the Land was used primarily for primary production. However, the relevance of that evidence was contingent on the threshold question, of which the decision of the Court of Appeal in Commissioner of State Revenue v EHL Burgess Properties Pty Ltd is decisive,[5] of whether the Land is within “greater Melbourne” within the meaning of sections 64 and 65 of the LTA. Briefly, the position of the Taxpayer is that “greater Melbourne” within the meaning of those sections ought to be interpreted as being only the City of Melbourne,[6] and that the decision of the Court of Appeal in CSR v Burgess was impermissibly legislative in its use of repealed legislation to give those sections of the LTA their intended effect. In putting this position, the Taxpayer seeks to reagitate the ratio decidendi of that decision, and while accepting that this may not be done in this Court,[7] seeks the grant of leave to appeal the decision of VCAT to facilitate the reagitation of the matter before the Court of Appeal.
[5]Commissioner of State Revenue v EHL Burgess Properties Pty Ltd (2015) 209 LGERA 314 (“CSR v Burgess”).
[6]See, in this respect, the first instance decision of Croft J in EHL Burgess Properties Pty Ltd v Commissioner of State Revenue [2015] VSC 295; 101 ATR 486.
[7]Transcript, 4; Plaintiff’s Outline of Submissions (11 December 2017), [19]; Plaintiff’s Reply (6 March 2018), [20].
While the precise nature of an appeal from a decision of VCAT—which was the principal issue in dispute between the parties at the hearing of this proceeding—is discussed in detail below, it is presently sufficient to observe that under section 148(1) of the Victorian Civil and Administrative Tribunal Act 1998 (“the VCAT Act”), a party may only appeal to the Supreme Court from an order of the Tribunal on a “question of law”, and with the leave of the Court. The Taxpayer’s Proposed Notice of Appeal sets out the proposed questions of law and grounds of appeal on which it relies:[8]
[8]Proposed Notice of Appeal (3 October 2017), 3–5. These questions make up the subject matter of the proposed appeal, see Patsuris v Gippsland and Southern Rural Water Corporation (2016) 218 LGERA 167 at 180 [43]–[44]; Risi Pty Ltd v Pin Oak Holdings Pty Ltd [2017] VSCA 317, [50]–[52].
Questions of Law
1. Whether, assuming a finding of fact to the effect that the land was ‘primarily used for primary production’ in the 2013 tax year, the exemption under section 65 of the Land Tax Act 2005 would be available in respect of the plaintiff’s land for the 2013 tax year (on the basis that the land was located outside of ‘greater Melbourne’).
2.Whether the Tribunal was required to make findings as to the use of the plaintiff’s land, for the purposes of section 65 of the Land Tax Act 2005 for the 2013 tax year, pursuant to section 117(5) of the Victorian Civil and Administrative Tribunal Act 1997.
3.Assuming that the Tribunal failed to make any findings of fact as to the use of the plaintiff’s land in the 2013 tax year for the purposes of the exemption under section 65 of the Land Tax Act 2005, whether, in light of the plaintiff’s stated and reasoned intention to challenge the correctness of the decision in Commissioner of State Revenue v EHL Burgess Properties Pty Ltd (‘EHL Burgess’) the Tribunal failed, in these circumstances, to perform its review function.
4. Whether, on the basis that the Tribunal did make relevant findings as to the use of the plaintiff’s land for the purposes of section 65 of the Land Tax Act 2005 (which is denied), the Tribunal ignored, or failed to take into account, a substantial body of material relevant to the use of the land for the purposes of the exemption under section 65 of the Land Tax Act 2005, being material that supported the plaintiff’s claim for the exemption under section 65 of the Land Tax Act 2005.
5. If the Tribunal did ignore, or failed to take into account, a large body of relevant material favourable to the plaintiff’s case as to the use of the land for the purposes of section 65 of the Land Tax Act 2005 exemption in the 2013 tax year, whether the Tribunal’s findings on this question were, as a result, vitiated.
Grounds of Appeal
1.The Tribunal erred by deciding that the exemption under section 65 of the Land Tax Act 2005 would not be available in respect of the plaintiff’s land for the 2013 tax year on the basis that, on the authority of EHL Burgess, the Tribunal considered that the plaintiff’s land was not located outside of ‘greater Melbourne’.
2. The Tribunal further erred by failing to make any findings as to whether or not the plaintiff’s land was, as a matter of fact, ‘used primarily for primary production’ for the purposes of section 65 of the Land Tax Act 2005, for the 2013 tax year – being findings of fact which the Tribunal was required to make under section 117(5) of the Victorian and Civil Administrative Tribunal Act 1997.
3. Further or alternatively to Ground 2, the Tribunal failed to perform its review function by failing to make any of the findings that the Tribunal was required to make as to the use of the land for the purposes of the section 65 of the Land Tax Act 2005 exemption for the 2013 tax year, in circumstances where the plaintiff had signalled its intention to challenge the correctness of the decision in EHL Burgess and had explained in detail the basis for that proposed challenge.
4. Alternatively to Grounds 2 and 3, if the Tribunal did make (which is denied) any findings as to the use of the plaintiff’s land for the purposes of the section 65 of the Land Tax Act 2005 exemption in the 2013 tax year (that being a material fact, or potentially material fact) the Tribunal, in purporting to make these findings, ignored, or failed to take into account, a substantial body of material relevant to the use of the land for the purposes of section 65 of the Land Tax Act 2005 for the 2013 tax year, being material that supported the plaintiff’s claim for the exemption under section 65 of the Land Tax Act 2005.
[citations omitted]
Given that the proposed questions of law and the proposed grounds of appeal address the same underlying issues, it is sufficient to discuss only the latter bearing in mind that such discussion applies mutatis mutandis to the proposed questions of law.
In respect of the first proposed ground of appeal, the Commissioner correctly observes the effect of a decision of the Court of Appeal upon both this Court and VCAT:[9]
While the Commissioner does not accept that EHL Burgess was wrongly decided, all that matters for the purposes of this application for leave is that a single judge of this Court is bound by the decision of the Court of Appeal, and so much is accepted by [the Taxpayer]. Even if the Court were to consider that EHL Burgess was clearly wrong, the decision definitively establishes the legal position and must be followed unless and until the Court of Appeal says otherwise.
That this is the position is beyond doubt; and with it the Taxpayer does not cavil.[10]
[9]Outline of Submissions of the Commissioner of State Revenue (19 February 2018), [9].
[10]Transcript, 4; Plaintiff’s Outline of Submissions (11 December 2017), [19]; Plaintiff’s Reply (6 March 2018), [20].
In respect of grounds two and three, it is sufficient to note that no error of law can arise as a result of the Tribunal declining to decide issues where those issues are rendered otiose by a decision of the Court of Appeal.[11] The present case is far from the circumstances referred to in Minister for Immigration and Multicultural Affairs v Yusuf[12] or Htun v Minister for Immigration and Multicultural Affairs,[13] where the failure to make findings on material facts impugned the entire decision.[14] For this reason alone, the appeal on grounds two and three would fail if leave to appeal were to be granted. Before VCAT, the primary position of the Taxpayer was that the Land was exempt under section 65 of the LTA and its secondary position was that the land was exempt under section 67 of the LTA.[15] It led evidence in respect of both positions. In light of CSR v Burgess, the Tribunal inevitably found that the only relevant exemption for the 2013 tax year was section 67 of the LTA.[16] Having determined the applicable law, the Tribunal then moved on to determine whether the facts met the requirements of that relevant exemption, and found that they did not. It was entirely proper for the Tribunal to proceed in this manner, especially in circumstances where the Taxpayer conceded that the correctness of CSR v Burgess was for the Court of Appeal and not for the Tribunal to decide.[17] It is not the role of the Tribunal to answer hypothetical questions, nor to “second guess” future legislative or judicial changes in the law, and indeed, to do so would be antithetical to VCAT’s goal of fast and cost effective resolution of disputes.
[11]See Victorian Civil and Administrative Tribunal Act 1998 s 117(5); cf Plaintiff’s Outline of Submissions (11 December 2017), [121], [125].
[12](2001) 206 CLR 323 at 341 [46].
[13](2001) 233 FCR 136 at 152 [42].
[14]See also State of Victoria v Turner (2009) 23 VR 110 at 173 [240].
[15]Australian Investment and Development Pty Ltd v Commissioner of State Revenue (Review and Regulation) [2017] VCAT 1418, [3] (“the Tribunal’s Reasons”).
[16]Tribunal’s Reasons, [60]–[65], [103] et seq.
[17]VCAT Transcript (25 June 2017), 9 (10-14), 14 (12-14), 20 (17-20).
The fourth proposed ground of appeal is directed to the contention of the Commissioner that the reasons of the Tribunal did—in determining the entitlement of the Taxpayer to an exemption under section 67 of the LTA—include all of the findings of fact which are necessary to conclude that the Land was not used primarily for primary production in the 2013 tax year,[18] and therefore that even if CSR v Burgess was wrongly decided, the Taxpayer is nonetheless not entitled to an exemption under section 65 of the LTA. It is not necessary to decide this issue, but the preliminary view of this Court is that to rely on the findings of the Tribunal in the manner suggested is at least undesirable. As has been noted, the Tribunal found, applying CSR v Burgess, that the Land was within greater Melbourne and therefore that the exemption under section 65 of the LTA was unavailable. The Tribunal then proceeded to making findings of fact in respect of the use of the land in the 2013 tax year in relation to the exemption under section 67 of the LTA, which, in contrast to section 65 of the LTA, requires that the land be “used solely or primarily for the business of primary production”.
[18]Outline of Submissions of the Commissioner of State Revenue (19 February 2018), [14]–[17]. The exemption under s 67 imposes more stringent requirements than that under s 65, including that the land is “used solely or primarily for the business of primary production” (s 67(1)(a)(iii)) and, for corporate owners, that the principal business of the owner of the land must be “primary production of the type carried on on the land” (s 67(2)(b)).
As the Taxpayer submits, the Tribunal’s findings of fact were addressed to particular sections of the LTA:[19]
16.The structure of the Member’s decision shows that separate consideration was given to the relevant provision for the relevant tax year. Paragraphs [60]–[65] of the Member’s decision dealt with the legal claim that s 65 applied to the land; this part did not make any findings of fact relating to s 65—despite the evidence led by the plaintiff in support of that claim. Paragraphs [66]–[102] of the Member’s reasons were dedicated to the alternative claim under s 66; that part was in turn broken down by the Member into each of the tax years for which the s 66 exemption was claimed (where s 66 was relied on in the alternative to s 65). Then, paragraphs [103]–[122] of the Member’s decision were dedicated to the plaintiff’s alternative claim, for the 2013 tax year, that the exemption under s 67 applied (where s 67 was relied on as an alternative to s 65).
Given that the Tribunal has declined to make findings on the factual issues agitated in relation to section 65 of the LTA, it would be unhelpful for this Court to seek to distil a determination of those issues from elsewhere in the reasons of the Tribunal.[20] Indeed, to do so may perhaps be incompatible with well-established principles of appellate deference.[21] As the decision of the Court of Appeal in CSR v Burgess entails that the fourth proposed ground of appeal—even if established—does not affect the ultimate conclusion reached by the Tribunal, there is no error of law which would justify disturbing the Orders of the Tribunal.
[19]Plaintiff’s Reply (6 March 2018), [16].
[20]See Boucher v Dandenong Ranges Steiner School Inc (2005) 145 LGERA 21, [15].
[21]See Mark Leeming, Authority to Decide: The Law of Jurisdiction in Australia (Federation Press, 2012) 276, citing Warren v Coombes (1979) 142 CLR 531 at 551; Abalos v Australian Postal Commission (1990) 171 CLR 167; Devries v Australian National Railways Commission (1993) 177 CLR 472; Fox v Percy (2003) 214 CLR 118; Singer v Berghouse (1994) 181 CLR 201 at 210–2; Dwyer v Calco Timbers Pty Ltd (2008) 234 CLR 124 at 138–9 [37]–[40]; House v The King (1936) 55 CLR 499; Macedonian Orthodox Community Church St Petka Inc v Petar (2008) 237 CLR 66 at 125 [190]; Hili v The Queen (2010) 242 CLR 520 at 542–4 [73]–[76]; Lacey v Attorney-General (Qld) (2011) 242 CLR 573 at 580–1 [12]–[14].
For the preceding reasons, I am satisfied that no material error of law arises in respect of any of the grounds put by the Taxpayer and consequently that if leave to appeal were granted on any of the proposed questions, the appeal must be dismissed. Yet it remains to be determined whether leave ought to be granted, and in this context, it is helpful to set out the general nature of the leave requirement under section 148, which has been well established.[22]
[22]See Pin Oak Holdings Pty Ltd v Risi Pty Ltd [2016] VSC 773; Swan v Uecker (2016) 50 VR 74; Casdar v Fanous [2017] VSC 616; Primrose Meadows Pty Ltd v River View Pty Ltd [2017] VSC 487; CB Cold Storage Pty Ltd v IMCC Group (Australia) Pty Ltd [2017] VSC 23; Risi Pty Ltd v Pin Oak Holdings Pty Ltd [2017] VSCA 317.
Leave to Appeal under Section 148
Section 148(1) of the VCAT Act provides:
A party to a proceeding may appeal on a question of law from an order of the Tribunal in the proceeding—
(a)if the Tribunal was constituted for the purpose of making the order by the President or a Vice President, whether with or without others, to the Court of Appeal with leave of the Court of Appeal; or
(b)in any other case, to the Trial Division of the Supreme Court with leave of the Trial Division.
It follows from this provision that any appeal is dependent upon two important qualifications. First, that the appeal be on a question of law, and secondly, that the Court gives leave to appeal. In the interests of expedition and economy in terms of time and cost, this proceeding was heard as a combined or “rolled up”[23] application for leave to appeal the decision of the Tribunal and, if leave were to be granted, the hearing of the appeal itself.
[23]An expression now well understood: see R (on the application of Miller and another) v Secretary of State for Exiting the European Union [2016] EWHC 2768 (Admin).
The legislative policy underlying these provisions is that “VCAT decisions should not generally be disturbed where cases have been decided in that forum other than on questions of law and where there is something about the decision bearing upon the question of law which warrants a grant of leave to appeal.”[24] It follows that “[t]his Court is not entitled to enter into the fact finding exercise which the legislature has deliberately entrusted to a specialist tribunal.”[25]
[24]Commissioner of State Revenue v Frost (2011) 83 ATR 832 at 834 [5] citing Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335–6 and Myers v Medical Practitioners Board (Vic) (2007) 18 VR 48 at 55 [28].
[25]Boucher v Dandenong Ranges Steiner School Inc (2005) 145 LGERA 21, [15] citing Spurling v Development Underwriting (Vic) Pty Ltd [1973] VR 1 and Whitehorse City Council v Golden Ridge Investments Pty Ltd [2005] VSCA 198.
The leave requirement under section 148(1) of the VCAT Act is designed to maintain this position. As Pagone J said in Commissioner of State Revenue v Frost:[26]
The requirement for leave under s 148(1) of the VCAT Act “is a safeguard that the appeal is on a pure question of law and that the grounds supporting the question of law articulated for determination by the Court do found the subject matter of the appeal”.[27] It also confers a discretion about whether to grant leave[28] which an applicant must persuade the Court to exercise in its favour. What must be shown will depend upon the particular case bearing in mind the statutory criteria being a grant of leave and not special leave.[29] It will ordinarily be necessary (in addition to a clearly articulated question of law)[30] for an applicant to make out a prima facie case[31] and in an appropriate case it may be necessary for the applicant to show that the question upon which leave is sought has public or general importance.[32]
[26](2011) 83 ATR 832 at 833–4 [3]; affirmed in Risi Pty Ltd v Pin Oak Holdings Pty Ltd [2017] VSCA 317, [53].
[27]Commissioner of State Revenue v STIC Australia Pty Ltd (2010) 81 ATR 682 at 687 [10].
[28]Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331; Al-Hakim v Monash University (Unreported, Victorian Supreme Court of Appeal, 28 March 2003); Myers v Medical Practitioners Board (Vic) (2007) 18 VR 48.
[29]See Morris v R (1987) 163 CLR 454 at 475.
[30]Osland v Secretary to the Department of Justice [No 2] (2010) 241 CLR 320 at 333 [21].
[31]Morris v R (1987) 163 CLR 454 at 475; Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335.
[32]Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331 at 335–6; Commissioner of State Revenue v Challenger Property Nominees Pty Ltd (2006) 63 ATR 65 at 69 [20], 77 [65].
The essential submission of the Commissioner in respect of the application for leave is that as the proposed appeal is bound to fail for the reasons to which reference has been made, leave ought not to be granted.[33] By contrast, it is put by the Taxpayer that this Court ought not to refuse leave to appeal under section 148 of the VCAT Act—at least in respect of the first ground of appeal—because to do so would deprive it of its statutory right to object to an assessment to land tax under section 96 of the Taxation Administration Act 1997 (“the TAA”). Thus the critical enquiry is to what extent, if any, is section 148 of the VCAT Act affected by the TAA, and in particular, by the right to object to an assessment to tax. But for these considerations it follows from the preceding discussion that leave to appeal should be refused.
[33]Outline of Submissions of the Commissioner of State Revenue (19 February 2018), [9], citing Knight v Secretary to the Department of Justice [2003] VSC 341, [24]; Transcript, 19.
The Nature of the Right to Object
The Taxpayer made reference to the statement of McHugh and Gummow JJ in Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd that the right to object to an assessment to tax will be assumed to exist absent its clear exclusion:[34]
It should be noted that an incontestable impost levied by law of the Commonwealth is not a tax in the constitutional sense and the law imposing it is not a law with respect to taxation within s 51(ii) of the Constitution. In that way, an incontestable tax is invalid[35] On the other hand, the respondents do not contend that, at the State level, the issue is more than one of statutory construction in the particular case. But what is at stake is an important principle of government and of the rule of law. Accordingly, legislation which empowers an officer of a State, such as the Commissioner, to assess ex parte a liability to pay an impost upon satisfaction of specified criteria, but which requires the taxpayer to pay the duty and conditions its recovery upon success in a court proceeding in which the taxpayer is restricted in proving the case that the criteria of liability were not satisfied, must be clearly expressed “in unmistakable and unambiguous language”.[36]
[34](1995) 184 CLR 453 at 467–8.
[35]MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 at 640–641, 645–646, 658.
[36]Cf Coco v The Queen (1994) 179 CLR 427 at 435–438.
It is said further that the right to object is relatively unrestricted in that it includes the right to object to both the assessment and all the particulars of the assessment. In this respect, a majority of the High Court said in Commission of Taxation v Futuris Corporation Ltd:[37]
…[B]ut a dissatisfied taxpayer may object to the assessment in the manner set out in Pt IVC of the Administration Act; in review or appeal proceedings under Pt IVC the amount and all the particulars of the assessment may be challenged by the taxpayer …
[37](2008) 237 CLR 146 at 157 [24].
In a similar vein, in McAndrew v Federal Commissioner of Taxation,[38] the majority found:[39]
It is the manifest policy, one may now almost say the historical policy, of the legislation on the one hand to give to the taxpayer full opportunity on objecting to his assessment of contesting his liability in every respect before a court or before a board of review but on the other hand to require that in proceedings for the recovery of the tax the taxpayer will be concluded by the assessment and will not be entitled to go behind it for any purpose.
[38]McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263.
[39]McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 at 270; see also Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 621.
Emphasis is also placed by the Taxpayer on the constitutional right to have recourse to judicial power in objecting to an assessment to pay tax levied under federal legislation,[40] a right which is presumed to apply as a matter of interpretation to Victorian legislation. In this respect, Dixon CJ stated in Deputy Commissioner of Taxation v Brown:[41]
Although there is no judicial decision to that effect, it has, I think, been generally assumed that under the Constitution liability for tax cannot be imposed upon the subject without leaving open to him some judicial process by which he may show that in truth he was not taxable or not taxable in the sum assessed, that is to say that an administrative assessment could not be made absolutely conclusive upon him if no recourse to the judicial power were allowed.
[40]Plaintiff’s Reply (6 March 2018), [5].
[41](1958) 100 CLR 32 at 40; see also Geoffrey Kennet and David FC Thomas, ‘Constitutional and Administrative Law Aspects of Tax’ in Neil Williams (ed) Key Issues in Judicial Review (Federation Press, 2014) 216, 218–22.
The Taxpayer maintains that the right to object under Part 10 of the TAA, as expounded by the authorities just cited, justifies the grant of leave to appeal the decision of the Tribunal, notwithstanding that such an appeal would be doomed to fail, for three interrelated reasons. First, it is said that the refusal of leave would deny the Taxpayer an opportunity to be heard on the merits of its claim;[42] secondly, that the refusal of leave would entail that the right to object was not fully recognised;[43] and finally, that the right to object transcends the doctrine of precedent and consequently this Court should not impede the attempt by the Taxpayer to re-agitate the issues in CSR v Burgess.[44]
[42]Plaintiff’s Outline of Submissions (11 December 2017), [9], [14]–[17]; Transcript, 3–4.
[43]Plaintiff’s Outline of Submissions (11 December 2017), [19]–[20]; Transcript, 5–8.
[44]Plaintiff’s Outline of Submissions (11 December 2017), [21]; Transcript, 12.
The Right to Object and Appellate Structure
The Taxpayer submits that if the current application for leave were to be dismissed, the right to argue before the Court of Appeal that CSR v Burgess should be overturned would be lost,[45] and this would entail that the Taxpayer would be, at least in part, without recourse to judicial power in respect of an assessment to tax.[46] Accordingly, it is said that this Court should grant leave to preserve the right to object. Yet were leave to appeal refused, the Taxpayer could apply for the leave of the Court of Appeal to appeal the present decision to refuse leave to appeal, and in the course of that application, agitate the correctness of CSR v Burgess. Of course, it is not satisfactory to refuse leave on the basis that the Taxpayer will not be denied further hearing because the Taxpayer could show that the decision to refuse leave was wrong. Rather, the critical question for the purpose of ascertaining whether the denial of leave to appeal here would affect the right of the Taxpayer to object to the assessment to pay tax is as follows: does the Court of Appeal upon hearing an application for leave to appeal and, if leave be granted, an appeal, from a decision of a trial judge to deny leave to appeal from a decision of VCAT, have substantially the same powers as it would have upon an application for leave, and if leave be granted, an appeal, from a trial judge’s decision to dismiss an appeal from a decision of VCAT?
[45]Plaintiff’s Outline of Submissions (11 December 2017), [20], [100], [106]; Plaintiff’s Reply (6 March 2018), [3], [10].
[46]See Deputy Commissioner of Taxation v Brown (1958) 100 CLR 32 at 40.
The Taxpayer submits that if this Court were to deny leave to appeal the decision of VCAT, the only issue upon appeal from this Court would be “whether the trial judge’s refusal to exercise the discretion to grant leave under section 148 miscarried”.[47] Reference is made by the Taxpayer to the interlocutory nature of the decision of whether to grant leave,[48] and to the statement of Warren CJ in relation to the nature of an appeal to the Court of Appeal from a decision of the trial judge denying leave to appeal a decision of VCAT:[49]
Although perhaps procedurally complicated, the ambit of this proceeding is confined to an appeal by way of rehearing: that is, whether the order of the judge below, in refusing to grant leave, is the result of some legal, factual or discretionary error.[50] I mention this in particular because many of the appellant’s submissions proceeded on the basis that this was yet another hearing de novo. Parts of the written submissions before us were identical to the written submissions before the judge below and were devoid of the appropriate corrections and adaptations for the appellate purpose. Rather, it was necessary for the appellant to show error in the conclusion of the judge below before this court would disturb his Honour’s conclusion.[51] Further, as I explain later, the nature of the decision of the judge below was essentially discretionary. This makes the appellant’s task all the more difficult in that it is incumbent upon him in these proceedings to show that the judge’s discretion miscarried.[52]
[47]Plaintiff’s Reply (6 March 2018), [9]–[10].
[48]Dodoro v Knighting (2004) 10 VR 277 at 283 [23].
[49]Myers v Medical Practitioners Board of Victoria (2007) 18 VR 48 at 55 [27].
[50]Allesch v Maunz (2000) 203 CLR 172 at 180.
[51]Minister for Immigration v Jia Legeng (2001) 205 CLR 507 at 547.
[52]See House v R (1936) 55 CLR 499 at 505; see also [29] below.
Thus, the Taxpayer submits that if leave were refused by this Court and the Court of Appeal granted leave to appeal that refusal and allowed that appeal, the Court of Appeal would then exercise its power set out in rule 64.36 of the Supreme Court (General Civil Procedure Rules) 2015 to “make any order which ought to have been given”.[53] The Taxpayer says that this would leave the Court of Appeal in an invidious position because it could only either (a) order that leave be granted and the appeal be dismissed as, standing in the shoes of the trial judge, it would be bound by its decision in CSR v Burgess; or (b) grant leave to appeal the decision of VCAT and remit the appeal to the Trial Division where the appeal would inevitably be dismissed.[54]
[53]Supreme Court (General Civil Procedure) Rules 2015 r 64.36(2)(b).
[54]Plaintiff’s Reply (6 March 2018), [10]; see also Transcript, 18.
The position of the Commissioner is that the Court of Appeal, upon hearing an application from a decision to refuse leave to appeal from a decision of VCAT, could, if satisfied that leave to appeal ought to have been granted, approach the matter afresh as though the substance of the attempted appeal from VCAT had been referred to the Court of Appeal from the Trial Division.[55] The Supreme Court (General Civil Procedure) Rules 2015 set out the broad powers of the Court of Appeal in hearing matters of this kind:[56]
[55]Transcript, 22–3, 26.
[56]Supreme Court (General Civil Procedure) Rules 2015 r 64.36.
64.36 Powers of the Court of Appeal
(1)Without limiting Rule 64.12, on an application for leave to appeal or an appeal, the Court of Appeal has the same powers and duties as to amendment or otherwise as the court or tribunal that made the decision the subject of the application for leave or the appeal.
(2) The Court of Appeal has power—
(a) to draw inferences of fact;
(b) to give any judgment and make any order which ought to have been given or made; and
(c) to make any further or other order as the case may require.
…
[emphasis added]
The position is elucidated by the distinctions drawn by the High Court in Lacey v Attorney General:[57]
[57](2011) 242 CLR 573 at 596–7 [57].
Appeals being creatures of statute, no taxonomy is likely to be exhaustive. Subject to that caveat, relevant classes of appeal for present purposes are:
1. Appeal in the strict sense – in which the court has jurisdiction to determine whether the decision under appeal was or was not erroneous on the evidence and the law as it stood when the original decision was given. Unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance.
2. Appeal de novo – where the court hears the matter afresh, may hear it on fresh material and may overturn the decision appealed from regardless of error.
3. Appeal by way of rehearing – where the court conducts a rehearing on the materials before the primary judge in which it is authorised to determine whether the order that is the subject of the appeal is the result of some legal, factual or discretionary error. In some cases in an appeal by way of rehearing there will be a power to receive additional evidence. In some cases there will be a statutory indication that the powers may be exercised whether or not there was error at first instance.
[citations omitted]
The submission of the Taxpayer is incorrect insofar as it suggests that an appeal from a refusal of leave to appeal a decision of VCAT is an appeal in the strict sense, rather than an appeal by way of rehearing.[58]
[58]Freeman v Rabinov [1981] VR 539 at 548.
Where the issues before the trial judge are solely questions of law, it is open for the Court of Appeal to rely on the power in rule 64.36(2)(c) to avoid the procedural difficulties referred to by the Taxpayer. The Court of Appeal could, upon hearing a “rolled-up” application for leave to appeal and appeal from this decision denying leave to appeal, consider and determine the substance of the appeal sought to be made before this Court. What is more, it is far from clear that if the Court of Appeal were to exercise the powers referred to in rule 64.36(2)(b), that it ought to shed its place in the hierarchy of precedent and consider itself bound by its previous decisions.[59] After all, a decision made pursuant to rule 64.36(2)(b) would nonetheless have the precedential status of a decision of the Court of Appeal. Further, were the Court of Appeal to allow an appeal from the decision of a trial judge to refuse leave and remit the hearing of the appeal to a trial judge, the reasons for the Court of Appeal so doing could assist the trial judge in hearing the appeal.
[59]See Transcript, 18.
In relation to the requirement, referred to by Warren CJ in Myers v Medical Practitioners Board of Victoria,[60] that error be established in the decision of the trial judge before the decision to refuse leave to appeal may be set aside, it is sufficient to observe that the critical error would likely be the reliance by this Court on CSR v Burgess. If the Court of Appeal or the High Court were to find that case was wrongly decided, the error in the decision of the trial judge to refuse leave would arise nunc pro tunc. The appellate court could then proceed to grant leave and allow the appeal. Closely read, the passage from the judgment of Warren CJ extracted above is directed at the requirement that the appellant show error in the decision of the trial judge to deny leave to appeal, rather than discussing the ambit of the powers of the Court of Appeal upon setting aside the decision of the trial judge to deny leave.
[60](2007) 18 VR 48 at 55 [27].
Further, it is important to note that if the Taxpayer is prejudiced—which it is not—by the denial of leave to appeal under section 148 of the VCAT Act, this prejudice would be of its own making. The right to object under section 96 of the TAA is complemented by a right under section 106 of the TAA to cause the review of the decision of the Commissioner to disallow the objection by either the Tribunal or the Trial Division of this Court. Given the existence of this option, the leave requirement in section 148 of the VCAT Act cannot be said to limit the right to object in any real sense.[61] Rather, it is the Taxpayer who has requested the procedural path which has made the appeal from the review by VCAT of the decision of the Commissioner subject to a requirement of leave. Thus the refusal of leave does not in any sense fail to “acknowledge” or “recognise” the right to object:[62] the application for leave by the Taxpayer has been heard in accordance with the right of the Taxpayer to seek such leave upon its unsuccessful referral of an objection to the Tribunal pursuant to sections 96 and 106 of the TAA.
[61]See Transcript, 27.
[62]Cf. Transcript, 5–6, 30.
For these reasons, the denial of leave to appeal in this instance will not, as a matter of fact, impinge upon the right of the Taxpayer to object.
The Right to Object and the Doctrine of Precedent
The Taxpayer also maintains that, assuming that the denial of leave would prevent the agitation of the substance of the proposed appeal before the Court of Appeal, the objection provisions of the TAA entail that leave to appeal ought to be granted to ensure that the right of a taxpayer to object is not nullified:[63]
[63]Plaintiff’s Outline of Submissions (11 December 2017), [16]–[18].
16. The present state of affairs is that the plaintiff has not yet been able to exercise its right to make its claim that the s 65 exemption was available for its land – because the Tribunal considered that it was ‘bound by’ the Court of Appeal’s decision in Burgess. And, because the Tribunal Member reached that conclusion, no consideration has as yet been given to the merits of its claim that the s 65 exemption applied – by reference to the evidence led in support of that claim for the 2013 tax year (or any other year). That is, the Tribunal Member, having decided that the plaintiff had no potential claim to an exemption under s 65 (because of the Court of Appeal’s decision in Burgess), made no findings of fact in relation to that claim by the plaintiff in its hearing, and disposition, of the matter.
17. The plaintiff has thus not had, to date, an opportunity to exercise the one right that every taxpayer is afforded by the TAA in respect of an adverse assessment – the right to object (and appeal).
18. It follows that – provided this Court is satisfied that the error of law asserted by the plaintiff is one in respect of which ‘there is a real or significant argument to be put that error exists’ – the plaintiff ought to be afforded its right to pursue its primary claim, even if the Trial Division of this Court were to dismiss the appeal itself (having granted the plaintiff leave to appeal). As noted below and based on the authorities there referred to, a judge of the Trial Division is bound by a relevantly indistinguishable decision of the Court of Appeal. Under this scenario (where the trial judge grants leave to appeal but dismisses the appeal on the basis that the trial judge is bound by the Court of Appeal), the plaintiff will, subject to a grant of leave by the Court of Appeal, be able to pursue its claim that the s 65 exemption was available in the Court of Appeal and, by those means, the plaintiff will have the opportunity to exercise its plenary right to contest the correctness of the 2013 assessment.
[emphasis added; citations omitted]
For the reasons which follow, I am satisfied that the denial of leave would not impermissibly impinge upon the right to object.
Turning first to the emphasised passage of the submissions of the Taxpayer, just as it is not for this Court to depart from a relevantly indistinguishable decision of the Court of Appeal, it is also not for this Court to evaluate the likelihood of the Court of Appeal or the High Court departing from previous authority, whether that authority be fresh or well-established. Thus, given the absence of a mechanism to distinguish between meritorious and unmeritorious attempts to re-agitate the correctness of decisions which are binding on this Court, it cannot be that the right to object under section 96 of the TAA transcends the orthodox interpretation of section 148 of the VCAT Act in the manner suggested by the Taxpayer. To hold otherwise would render the leave requirement under section 148 of the VCAT Act unworkable. It is also convenient to note that, while it is appropriate that paragraphs 25–98 of the Taxpayer’s written submissions (being those paragraphs which seek to re-agitate the matters decided in CSR v Burgess) have been put,[64] this Court need not consider their veracity other than to reject them entirely because they are premised on CSR v Burgess being open to doubt, a premise which this Court must,[65] and does, reject. Importantly, on no view does this approach deny the Taxpayer the substantive and substantially unconstrained right to object to the assessment in accordance with Part 10 of the TAA because the Taxpayer may still ventilate the issues decided in CSR v Burgess before the Court of Appeal and, in due course, the High Court, in seeking leave to appeal to those Courts.[66]
[64]See Coulton v Holcombe (1986) 162 CLR 1 at 7–8.
[65]See, for a discussion of the nature of the doctrine of precedent, Larry Alexander and Emily Sherwin, ‘Judges as Rule Makers’ in Douglas E. Edlin (ed) Common Law Theory (Cambridge University Press, 2007) 27.
[66]See Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 157 [24].
The conclusion that section 148 of the VCAT Act is unaffected by the right to object to an assessment to tax under the TAA is supported by an analysis of the nature of that right. The Taxpayer complained that it has not yet had an opportunity to fully exercise its right to object because both VCAT and this Court are bound by the decision of the Court of Appeal in CSR v Burgess. It says that the right to object “transcends… the rigidites of any doctrine or precedent in that it is the most… relevant consideration… and the relevantly unrestricted right to object is the most relevant consideration under section 148”.[67] Thus it is said by the Taxpayer that “if the doctrine of precedent is to hamstring the right to object, that must be expressed in clearer and unmistakeable language, in the same way that the denial of a right to object against a compromise assessment is expressed”.[68] Yet this analysis misunderstands the nature of the common law: just as VCAT found itself to be bound by the decision of the Court of Appeal in the decision below, the Court of Appeal in CSR v Burgess found itself to be bound by the numerous authorities to which the Court made reference in that case in deciding the matter as their Honours did.[69] Contrary to the submission of the Taxpayer,[70] the legal merits of the argument of the Taxpayer have been tested, and those arguments have failed because of the binding and indistinguishable decision of the Court of Appeal in CSR v Burgess.
[67]Transcript, 12, see also 4–5, 30–1.
[68]Transcript, 15.
[69]Cf. Transcript, 13, 31.
[70]Transcript, 6.
The legal fiction underpinning the common law is that the common law has always been the way that it has subsequently been found to be.[71] The mere fact that a party seeks to agitate a question of law where only a higher court may discover that the position at law is otherwise than as it is currently understood to be does not allow that party to transcend the appellate structure. In my view, the right to object conferred by Part 10 of the TAA is largely if not entirely spent upon the matter being referred to the Tribunal and the Tribunal hearing and determining the original objection, given that the Taxpayer may rely on the avenues of appeal available like any other litigant. Indeed, this is why taxation appeals do not have any special status as compared to other appeals—if the ordinary appellate structure was intended not to apply, no doubt that would have been made clear in statute. Thus, the right to object sits below but does not affect the appellate structure because the right of parties to “take issue with any adverse court decision” is enjoyed, to the extent that it is enjoyed, independently of Part 10 of the TAA.[72] This position is entirely compatible with the position that the Taxpayer has a relatively unrestricted right to object, and a right to have the determination of that objection reviewed by a court, as established by McAndrew v Federal Commissioner of Taxation and the other authorities to which reference has been made.[73]
[71]See e.g. Babaniaris v Lutony Fashions Pty Ltd (1987) 163 CLR 1, especially at 15. See also Lord Reid, ‘The Judge as Lawmaker’ (1972) 12 Journal of the Society of Public Teachers of Law 22; Sir Anthony Mason, ‘The Judge as Law-maker’ (1996) 3 James Cook University Law Review 1.
[72]Transcript, 9.
[73]See above, [15]–[18].
Moreover, the doctrine of precedent is, together with the Constitution and legislation made under it, the source of all law.[74] It is not necessary to determine whether the doctrine of precedent may be excluded, but there are good reasons to believe that it cannot be. As Sir Owen Dixon maintained in The Common Law as an Ultimate Constitutional Foundation,[75] the common law can be conceived as the “ultimate constitutional foundation” because the Constitution of the Commonwealth of Australia has its genesis in an act of the Parliament of the United Kingdom, which in turn derives its power from the common law. Alternatively, it may be that the foundation of law is in the widespread recognition of a body having ultimate authority to make law.[76]
[74]Though perhaps there is such a thing as customary law, which sits apart from legislated and judge made law. In this respect, see John Gardner, ‘Some Types of Law’ in Douglas E. Edlin (ed) Common Law Theory (Cambridge University Press, 2007) 51.
[75]Sir Owen Dixon, ‘The Common Law as an Ultimate Constitutional Foundation’ in Jesting Pilate (Law Book Co, 1965) 203; see also Jeffrey Goldsworthy, ‘The Myth of the Common Law Constitution’ in Douglas E. Edlin (ed) Common Law Theory (Cambridge University Press, 2007) 204.
[76]John Gardner, ‘Some Types of Law’ in Douglas E. Edlin (ed) Common Law Theory (Cambridge University Press, 2007) 51, 61.
If the doctrine of precedent is essential to the common law,[77] how could legislation exclude it entirely? Yet it may be that the doctrine of precedent and the common law are distinct, and the former capable of modification by statute, as Professor Gardner writes:[78]
Indeed, comparative lawyers sometimes talk as if only legal systems with a doctrine of stare decisis can include case law. This is a mistake, for the decisions of earlier courts may add to the stock of case law even though there is no protection against these decisions being superseded by the decisions of other courts. Where there is no such protection, it is tempting to say that there is no “binding” precedent, but only “persuasive” precedent. But this is strictly speaking incorrect. Courts may change the law on Tuesday even though other courts may change the law back again on Wednesday. … The decision of an earlier court must be binding in law for it to be necessary for a later court to overrule it. So a doctrine of stare decisis does not alter the power to make binding law. It only alters the power of later courts to change the binding law that was thereby made. It follows that one may have case law in a legal system without having a doctrine of stare decisis. On the other hand one may not have a doctrine of stare decisis without having case law.
In spite of that, the doctrine itself need not be created by case law. It could in principle be created by statute. …
In any event, it is plain that the doctrine of precedent—being fundamental to the common law of Australia—will not be impliedly excluded by statute in the manner suggested by the Taxpayer.[79] In truth, all an applicant has a right to is the adjudication of its case on the law as it stands. If an applicant cannot succeed on the law as it stands, it must appeal to a place where it can properly argue that the law should be changed.
[77]Cf. Jeffrey Goldsworthy, ‘The Myth of the Common Law Constitution’ in Douglas E. Edlin (ed) Common Law Theory (Cambridge University Press, 2007) 204, 208–9.
[78]John Gardner, ‘Some Types of Law’ in Douglas E. Edlin (ed) Common Law Theory (Cambridge University Press, 2007) 51, 74.
[79]See David Wright, Common Law in the Age of Statutes: The Equity of the Statute (LexisNexis Butterworths, 2015) 10–1, citing American Dairy Queen (Qld) Pty Ltd v Blue Rio Pty Ltd (1981) 147 CLR 677 at 682–3. Note the distinction between stare decisis and the doctrine of precedent discussed in M J Beazley, P T Vout and S E Fitzgerald, Appeals and Appellate Courts in Australia and New Zealand (LexisNexis Butterworths, 2014) 28 et seq.
The right to object under the TAA does not detract from the well-established principles governing the interpretation of section 148(1) of the VCAT Act, both because that right is not impinged upon by that section of the VCAT Act, and because that right is limited in nature and subject to the doctrine of precedent.
Costs
In the Taxpayer’s written submissions in reply it raised the contention that if leave to appeal is granted and the appeal is dismissed, the Commissioner ought to bear the costs of the leave application, having regard to the opposition of the Commissioner to the grant of leave.[80] The Taxpayer conceded that if leave were granted and the appeal dismissed, it must bear the costs of the hearing of the appeal.[81] In the circumstances of the present disposition, it is unnecessary to consider these submissions, or those made in response by the Commissioner, other than to observe that neither party made submissions on the cost consequences of leave to appeal being refused.
[80]Plaintiff’s Reply (6 March 2018), [19].
[81]Plaintiff’s Reply (6 March 2018), [20].
Conclusion
For the preceding reasons, leave to appeal is refused on all grounds and were leave to have been granted on any ground, that appeal would have been dismissed.
Parties are to bring in Orders to give effect to these reasons. I otherwise reserve the question of costs and will hear the parties further on this issue.
---
3
26
0