Bennelong Medical Pty Ltd v Commissioner of Taxation (No 5)

[2024] ACTSC 194

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Bennelong Medical Pty Ltd v Commissioner of Taxation (No 5)

Citation: 

[2024] ACTSC 194

Hearing Date: 

21 June 2024

Decision Date: 

21 June 2024

Before:

Mossop J

Decision: 

1.  The proceedings are dismissed.

2.  The plaintiff is to pay the defendant’s costs of the proceedings.

Catchwords: 

PRACTICE AND PROCEDURE – APPEARANCE – Claim against Commissioner of Taxation – director refused leave to represent corporate plaintiff – plaintiff not appearing by solicitor at final hearing – proceedings dismissed pursuant to r 1505 of the Court Procedures Rules 2006 (ACT)

JURISDICTION, PRACTICE AND PROCEDURE – JURISDICTION – Claim against Commissioner of Taxation for orders against an officer of the Commonwealth – submission by defendant that court lacked jurisdiction to determine application – submissions inadequate – plaintiff not appearing – not essential to determine jurisdiction in circumstances where proceedings would be dismissed in any event

Legislation Cited: 

Constitution, ss 76(ii), 75(v)

Australian Capital Territory (Self-Government) Act 1988 (Cth), Pt VA

Court Procedures Rules 2006 (ACT), r 1505

Income Tax Assessment Act 1997 (Cth)

Judiciary Act 1903 (Cth)

Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), s 6

Jurisdiction of Courts (Cross-vesting) Act 1993 (ACT)

Seat of Government Supreme Court Act 1933 (Cth)

Taxation Administration Act 1953 (Cth), Pt IVC

Cases Cited: 

Bennelong Medical Pty Ltd v Commissioner of Taxation [2023] ACTSC 74

Bennelong Medical Pty Ltd v Commissioner of Taxation (No 2) [2023] ACTCA 28

Bennelong Medical Pty Ltd v Commissioner of Taxation (No 3) [2023] ACTCA 37

Bennelong Medical Pty Ltd v Commissioner of Taxation (No 4) [2024] ACTSC 190

Gedeon v Commissioner of the New South Wales Crime Commission [2008] HCA 43; 236 CLR 120

May v Commonwealth [2024] ACTCA 6

Quach v Butt [2016] ACTSC 153

R v Donyadideh (1993) 115 ACTR 1

Re Governor, Goulburn Correctional Centre; Ex parte Eastman [1999] HCA 44; 200 CLR 322

Yager v The Queen (1977) 139 CLR 28

Parties: 

Bennelong Medical Pty Ltd ( Plaintiff)

Commissioner of Taxation ( Defendant)

Representation: 

Counsel

No appearance ( Plaintiff)

J Moffett ( Defendant)

Solicitors

No appearance ( Plaintiff)

Australian Government Solicitor ( Defendant)

File Number:

SC 1 of 2023

MOSSOP J:

Introduction

1․These proceedings arise from an Originating Application filed by the plaintiff, Bennelong Medical Pty Ltd. The defendant is the Commissioner of Taxation.

2․The proceedings are listed before the court for the purposes of the final hearing. The proceedings have a substantial interlocutory history, most of which relates to the refusal of leave for the company to act without a solicitor and instead have Dr Michael Quach, the director of the company, to represent it in the proceedings.

3․Bennelong Medical Pty Ltd v Commissioner of Taxation [2023] ACTSC 74 was an appeal by the plaintiff from the decision of a Registrar refusing Dr Quach leave to appear on behalf of the plaintiff company. I dismissed the appeal on 11 April 2023.

4․Bennelong Medical Pty Ltd v Commissioner of Taxation (No 2) [2023] ACTCA 28 was a decision of Curtin AJ in which his Honour struck out the Notice of Appeal on 20 June 2023, but granted leave to file an Amended Notice of Appeal.

5․Bennelong Medical Pty Ltd v Commissioner of Taxation (No 3) [2023] ACTCA 37 involved Taylor J striking out the Amended Notice of Appeal on 4 October 2023, as it was incompetent. Her Honour also considered the merits of the appeal and determined that she would have refused leave to appeal in any event.

6․Bennelong Medical Pty Ltd v Commissioner of Taxation (No 4) [2024] ACTSC 190 involved a further application for leave for Dr Quach to represent the company. Loukas‑Karlsson J determined the new application to be an abuse of process and dismissed the application on 18 June 2024.

The hearing

7․On 10 May 2024, Dr Quach had filed an application in proceeding seeking an adjournment of the proceedings. That was filed in circumstances where he did not have leave to represent the company.

8․At the hearing of the proceedings on 21 June 2024, Dr Quach was present and indicated that he wished for the proceedings to be adjourned. I indicated to him that he was not entitled to make such an application as he did not have leave to represent the company. He remained as an observer of the proceedings.

9․The plaintiff was formally called outside the court and there was no appearance by any lawyer on behalf of the company.

10․Counsel for the defendant tendered two affidavits which might have been relied upon by the company had it been represented at the hearing. Those were the affidavits of Dr Quach, dated 5 January 2023 and 6 May 2024. No other evidence was adduced by the defendant.

Position of the defendant

11․The defendant invited the court to dismiss the proceedings:

(a)because the court lacked jurisdiction;

(b)pursuant to r 1505(2) of the Court Procedures Rules 2006 (ACT);

(c)on the merits.

Jurisdiction

12․The defendant contended that the Supreme Court had no jurisdiction to deal with the proceedings. The written submissions made on behalf of the defendant relating to the jurisdiction of the court, which were adopted without elaboration by counsel appearing for the defendant, are set out in full in a schedule to these reasons.

13․While I accept the general proposition that it is appropriate to determine the court’s jurisdiction to hear a matter prior to addressing other issues, there are cases in which it is open to the court to dismiss a case without determining the issue of jurisdiction: May v Commonwealth [2024] ACTCA 6 at [197]. In the present case, it is appropriate to not determine the question of jurisdiction prior to dismissing the proceedings for other reasons because:

(a)the proceedings must be dismissed in any event because of their lack of substance;

(b)the plaintiff did not appear and, as a consequence, there was no contradictor to the submissions made in relation to jurisdiction;

(c)the scope of the jurisdiction of the Supreme Court in relation to the Commonwealth and its officers is a question of general importance and considerable complexity; and

(d)the written submissions were, for the reasons which will be elaborated upon, inadequate.

14․The written submissions provided by the defendant were prepared by a solicitor and then adopted by counsel during the course of oral submissions. They were inadequate in at least three respects.

15․First, they stated a fundamentally incorrect proposition that the Supreme Court was created by the Legislative Assembly in 1933. That is obviously wrong. The Legislative Assembly did not exist in 1933. The court was created by the Commonwealth Parliament: Seat of Government Supreme Court Act 1933 (Cth) (No 34 of 1933). The Supreme Court may well now be treated as existing by reason of the legislative powers that exist under the Australian Capital Territory (Self‑Government) Act 1988 (Cth) and the other provisions of that Act: see Re Governor, Goulburn Correctional Centre; Ex parte Eastman [1999] HCA 44; 200 CLR 322 at [68]-[81]. However, that is different from the proposition put on behalf of the defendant.

16․Second, the bald proposition that “[t]he Supreme Court is not exercising federal jurisdiction in these proceedings” is not self‑evidently correct. The proceedings are proceedings against the Commissioner of Taxation, a Commonwealth officer. Although the nature of the proceedings remains obscure because of the inadequacy of the Originating Application, the proceedings are likely to be within the scope of s 76(ii) (or possibly s 75(v)) of the Constitution and hence within federal jurisdiction. Whether or not the Supreme Court has jurisdiction to deal with such matters is a separate question from the characterisation of the proceedings as involving federal jurisdiction or not.

17․Third, the written submissions and the oral submissions which adopted them made no reference to:

(a)the provisions of the Judiciary Act 1903 (Cth);

(b)the provisions of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) and the Jurisdiction of Courts (Cross-vesting) Act 1993 (ACT);

(c)the provisions of Pt VA of the Australian Capital Territory (Self-Government) Act; or

(d)the “belonging” jurisdiction of the Supreme Court referred to in R v Donyadideh (1993) 115 ACTR 1 at 9.

18․Given the absence of any consideration of the various statutory provisions or other sources of jurisdiction, it would not be possible to confidently reach a conclusion that the court lacked jurisdiction unless their scope and application in the circumstances of the present case were addressed. The submissions did not do so. A text addressing Territory judicial power would have provided, at least, a starting point for such submissions.

19․It is notable that, although the defendant contended that the court did not have jurisdiction, the defendant did not submit that the proceedings should be transferred to the Federal Court pursuant to s 6 of the Jurisdiction of Courts (Cross‑vesting) Act 1987 (Cth).

Dismissal pursuant to r 1505

20․Rule 1505(2) provides:

(2)If the plaintiff does not appear when the trial starts, the court may dismiss the plaintiff’s originating process and the defendant may call evidence to establish an entitlement to judgment under a counterclaim against the plaintiff, in the way the court directs.

21․Rule 1505(5) provides:

(5)On application made not later than 7 days after the day judgment is entered because of this rule, the court may amend or set aside the judgment.

22․Rule 1505(2) is clearly a discretionary power. In other words, if a plaintiff does not appear at the hearing of the proceedings, the court is not compelled to dismiss the claim. It could, for example, adjourn the proceedings. Whether or not to dismiss the proceedings pursuant to the rule may be substantially influenced by the assessment by the court of the merits or otherwise of the claim. The court will be more likely to dismiss an unintelligible or apparently weak claim than it will be to dismiss a clearly articulated or apparently strong claim.

23․There are three reasons why it is appropriate to exercise the discretion to dismiss the current proceedings pursuant to the rule.

24․First, in the present case, for the reasons which I will explain in a moment, the proceedings lack merit.

25․Second, the reason that the plaintiff has not appeared is because, although Dr Quach was present, the company has chosen not to retain lawyers to represent it in the proceedings. That is notwithstanding that, at least since my decision in April 2023, the company has known that Dr Quach was refused leave to represent the company in the proceedings.

26․Third, the plaintiff has an entitlement to object to any tax assessment pursuant to Pt IVC of the Taxation Administration Act 1953 (Cth). This provides a means by which the correctness of the defendant’s decision in relation to research and development salary expenditure and other expenditure can be determined on the merits.

27․In circumstances where the company has chosen to remain unrepresented and hence has not appeared at the final hearing of the proceedings, where the proceedings lack merit, and where there is an alternative forum in which merits review of the defendant’s assessment is available, it is clearly appropriate to dismiss the proceedings under r 1505(2).

Dismissal on the merits

28․Given that the proceedings will be dismissed under r 1505, it is not essential to determine whether they would have been dismissed in the absence of the application of that rule. However, insofar as it is possible to discern the merits of the proceedings, the claim for relief is without merit. That is largely because they do not articulate a coherent basis upon which relief might be granted.

29․The claim made in the proceedings was summarised in my earlier decision (at [3]-[7]) as follows:

3․The Originating Application seeks the following final relief:

Ruling pursuant to the High Court ruling in the Yager v Queen (1977) 139 CLR 28, 43 and Quach v Butt [2016] ACTSC 153 at [13],

There is, therefore, no legitimate foundation for resorting to the definitions [expense] contained in the [Taxation Administration Act 1953 (Cth)] for the purpose of modifying or qualifying another statutory definition [R&D expenses] contained in [Income Tax Assessment Act 1997 (Cth)] a different Act of Parliament.

4․The grounds of the application simply repeat the above from the reference to Yagerv The Queen (1977) 139 CLR 28 through to the end of the quote. The grounds do not explain how any question of statutory interpretation arises or what that question is.

5․At the same time as the Originating Application was lodged for filing, an application in proceeding was filed seeking leave for an officer of the corporation authorised by the corporation to represent it. Filed with that application in proceeding was an affidavit of Mr Quach dated 5 January 2023 identifying that he is a director of the plaintiff and authorising himself to act on behalf of the plaintiff. The affidavit also sought to support the originating application by saying:

3.The Australian Taxation Office is retaining a R&D Tax Incentive refund under s 8AAZLGA of the Taxation Administration Act 1953 (Cth). A letter, dated 25 July 2022, was sent to the Plaintiff, nominating Graham Turci as the contact officer (Annexure ‘A’).

4.Mr Graham Turci verifies the R&D and VC incentives expenses for the Australian Taxation Office.

5.Mr Graham Turci was informed that there is no valid authority, ‘jurisdictional fact,’ under the Taxation Administration Act 1953 (Cth) to verify R&D tax incentive expense claims. In response, Mr Graham Turci stated that he relies on the s 355 of the Income Tax Assessment Act 1997 (Cth) to verify R&D tax incentive claims.

6.Mr Graham Turci was advised in [an] email (Annexure ‘B’), dated 8 December 2022,

… pursuant to the High Court ruling in the Yager v Queen (1977) 139 CLR 28, 43,

There is, therefore, no legitimate foundation for resorting to the definitions [expense] contained in the [Taxation Administration Act 1953 (Cth)] for the purpose of modifying or qualifying another statutory definition [R & D expenses] contained in [Income Tax Assessment Act 1997 (Cth)] a different Act of Parliament.

6.The letter annexed to the affidavit was a letter dated 25 July 2022 from a Deputy Commissioner of Taxation headed “We are checking your refund”. The letter indicated that the refund was being checked. The checking was pursuant to s 8AAZLGA of the Taxation Administration Act1953 (Cth) and identified under three different headings categories of documents which were required to be provided. From those headings it is apparent that information was sought in relation to a claim of “R&D Salary Expenditure” of $44,295 and “R&D Other Expenditure” of $631,321.

7.Also annexed to the affidavit was an email from Mr Quach to the contact officer for the letter, Mr Graham Turci which provided as follows:

Dear Graham,

In your letter dated 25 July 2022 (attached), you stated,

“We are retaining any refund you may be entitled to while we check your claim. We are allowed to do this under section 8AAZLGA of the Taxation Administration Act 1953 (Cth).”

With respect, you are not allowed [my emphasis] to do this (i.e. ‘retaining any refund’) pursuant to High Court ruling in [Yager v The Queen] (1977) 139 CLR 28, 43,

There is, therefore, no legitimate foundation for resorting to the definitions [expense] contained in the [Taxation Administration Act 1953 (Cth)] for the purpose of modifying or qualifying another statutory definition [R & D expenses] contained in [Income Tax Assessment Act 1997 (Cth)] a different Act of Parliament.

I look forward to hearing from you. Thank you so much.

Yours sincerely,

Dr Michael Quach

30․The further affidavit of 6 May 2024 provides:

3.The High Court ruling in Gedeon v NSW Crimes Commission (2008) 236 CLR 120, 139 [43] (Annexure ‘A’) requires the Commissioner of Taxation to ‘valid authority,’ under the Taxation Administration Act 1953 (Cth) to verify R&D tax incentive expenses under this Act. It is a fact that the Commissioner of Taxation does not have valid authority under this Act to issue the letter 22 July 2022.

4.The High Court Ruling in Yager v The Queen (1977) 139 CLR 28, 43 (Annexure ‘B’) does not allow the Commissioner of Taxation to resort to the definition of ‘expense’ in a different Act of Parliament to mean ‘expense,’ under the Income Tax Assessment Act 1997 (Cth).

5.The binding precedent of Mossop J in Quach v Butt [2016] ACTSC 153, [13] (Annexure ‘C’) applies both binding common laws of the High Court of Australia, to all jurisdictions and Acts of Parliament.

31․The passage from Gedeon v Commissioner of the New South Wales Crime Commission [2008] HCA 43; 236 CLR 120 provides:

43․The expression “jurisdictional fact” was used somewhat loosely in the course of submissions. Generally the expression is used to identify a criterion the satisfaction of which enlivens the exercise of the statutory power or discretion in question. If the criterion be not satisfied then the decision purportedly made in exercise of the power or discretion will have been made without the necessary statutory authority required of the decision-maker.

32․The passage from Quach v Butt [2016] ACTSC 153 is a reference to a summary of Dr Quach’s submissions in an appeal from the Magistrates Court arising out of the refusal of a personal protection order. That passage included the following:

In oral submissions he referred to the decision of Mason J in Yager v The Queen (1977) 139 CLR 28 at 43 where his Honour, in the context of a drug prosecution, said that there was no legitimate foundation for resorting to definitions contained in one Act for the purposes of modifying or qualifying another statutory definition contained in a different Act of Parliament.

33․The relief sought in the Originating Application is described as a “ruling”. This might be interpreted as an application for a declaration. The terms of the ruling sought appeared to be addressed to the proposition that the definition of “expense” in the Taxation Administration Act cannot modify or qualify the statutory definition of “R & D expenses” contained in the Income Tax Assessment Act 1997 (Cth). This is somehow related to the assertion that the defendant is not entitled to retain the plaintiff’s refund.

34․Based upon the form of the orders sought, the proceedings appear to be seeking relief in the nature of a declaration as to the meaning of a statutory definition.

35․I would refuse to make any “ruling” or other order because:

(a)the legal proposition in relation to which the ruling is sought is not clear;

(b)the correctness of that legal proposition, whatever it might be, has not been established;

(c)even though it can be inferred that the plaintiff’s complaint relates to the failure by the defendant to pay to the plaintiff a tax refund, the factual circumstances in relation to which the ruling is sought to apply are not clear;

(d)the existence of a controversy between the parties which is suitable for the making of a ruling or declaratory order has not been established; and

(e)there is available to the plaintiff an alternative forum in which the correctness of any decision of the defendant relating to the claims for deductions based on “R & D Salary Expenditure” and “R & D Other Expenditure” ultimately adopted by the defendant could be reviewed.

36․For those reasons, the plaintiff has not established any entitlement to relief, and I would have dismissed the application in any event.

Costs

37․In the event that the proceedings were dismissed, the defendant sought costs. The application was made for costs on a party and party basis. No application was made for a more beneficial costs order or for a third party costs order. In my view, it is appropriate that costs follow the event.

Orders

38․The orders of the Court are:

1.The proceedings are dismissed.

2.The plaintiff is to pay the defendant’s costs of the proceedings.

Schedule – Defendant’s written submissions as to jurisdiction

THE ACT SUPREME COURT HAS NO POWER TO DETERMINE THE MATTER

13.The Commissioner submits that there is a threshold question as to powers of the Court, which amounts to a fatal defect in the Application, as

13.1.The Court cannot make orders binding the Commissioner, as an emanation of the Commonwealth. That is the case because of the operation of s 27 of the Australian Capital Territory (Self-Government) Act 1988 (Cth) (the Self‑Government Act).

13.2.The Supreme Court is not exercising federal jurisdiction in these proceedings.

14.Section 27 of the Self-Government Act provides that:

Except as provided by the regulations, an enactment does not bind the Crown in right of the Commonwealth.

15.Section 3 defines “Enactment” to include a law made by the ACT Legislative Assembly. The regulations are the Australian Capital Territory (Self-Government) Regulations 2021 (Cth) (the Self-Government Regulations).

16.The Supreme Court Act 1933 (ACT) was passed by the Legislative Assembly in the ACT and notified on 9 December 1933. Thus the Supreme Court Act 1933 (ACT) is an ‘enactment’ of the ACT legislative assembly for the purposes of the Self-­Government Act.

17.Thus, by operation of s 27 orders made under that enactment (Supreme Court Act 1933 (ACT)) do not bind the Commissioner, as an emanation of the Commonwealth.

18.While s 121(1) of the Legislation Act 2001 (ACT) provides that ‘an Act [of the ACT Legislative Assembly] binds everyone, including ... all governments’ (and ‘government is defined to include the Commonwealth) a legislative note immediately afters 121(1) refers to s 27 of the Self-Government Act and acknowledges that, except as provided by the regulations made under the Self-Government Act, ‘an ACT enactment does not bind the Crown in right of the Commonwealth’.

19.It follows that the Court cannot make orders that bind the Commissioner, as an emanation of the Commonwealth.

20.Different considerations apply if the Court is exercising federal jurisdiction, which is not the case here.

I certify that the preceding thirty-eight [38] numbered paragraphs and the Schedule are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: 10 July 2024