Chief Commissioner of State Revenue v Paspaley

Case •

[2008] NSWCA 184

•

7 August 2008

No judgment structure available for this case.

New South Wales


Court of Appeal


CITATION: CHIEF COMMISSIONER OF STATE REVENUE v PASPALEY [2008] NSWCA 184
HEARING DATE(S): 4 July 2008
 
JUDGMENT DATE: 
7 August 2008
JUDGMENT OF: Giles JA at 1; Basten JA at 2; Campbell JA at 70
DECISION: (1) Extend time for filing and serving the application for leave to appeal.
(2) Grant the Chief Commissioner leave to appeal and direct that the notice of appeal be filed within seven days.
(3) Allow the appeal and set aside the orders of Gzell J made on 20 September 2007 dismissing, with costs, the Chief Commissioner’s motions:
(a) filed 24 March 2006 in proceedings 1267 of 2006;
(b) filed 10 August 2007 in proceedings 6008 of 2006; and
(c) filed 15 August 2007 in proceedings 3772 of 2007.
(4) Remit the proceedings to the Equity Division for directions for their continuance in accordance with the judgment of this Court.
(5) Order the plaintiff to pay the costs of the Chief Commissioner’s motions in the Equity Division.
(6) Order the respondent to pay the Chief Commissioner’s costs of the proceedings in this Court, but to have a certificate under the Suitors’ Fund Act 1951 (NSW) in respect of those costs.
CATCHWORDS: ADMINISTRATIVE LAW – judicial review of tax decisions – scope of privative clause – Taxation Administration Act 1996 (NSW), s 103A - PROCEDURE – alteration of grounds of appeal – Taxation Administration Act 1996 (NSW), s 100 - PROCEDURE – interlocutory appeal – summons – striking out misconceived claims – whether curable by amendment – whether proceedings of trial court should be interrupted by interlocutory appeal - TAXES AND DUTIES – land tax – objections to land tax assessments – procedure for out of time objections – whether refusal to allow objection to be lodged out of time is reviewable – election of principal place of residence – Land Tax Management Act 1956 (NSW) s 10(1), Schedule 1A, cll 2, 12 – Taxation Administration Act 1996 (NSW) ss 86, 97 - WORDS & PHRASES – “decision” – “objection”
LEGISLATION CITED: Administrative Decisions Tribunal Act 1997 (NSW), s 6
Civil Procedure Act 2005 (NSW) s 64
Land Tax Management Act 1956 (NSW), ss 3, 7, 8, 9, 10; Pts 2, 3; Schedule 1A, cl 2, Pt 4, cl 12; Schedule 2, Pt 16
Premium Property Tax Act 1998 (NSW), ss 3, 10
Supreme Court Act 1970 (NSW), ss 69, 75A
Taxation Administration Act 1996 (NSW), ss 4, 8, 14, 16, 86, 89, 90, 96, 97, 100, 101, 103A; Pt 3, 6 and 10, Div 2
CATEGORY: Principal judgment
CASES CITED: McDonald’s Australia Ltd v Chief Commissioner of State Revenue NSW [2005] NSWSC 6; 58 ATR 260; 12 BPR 23,897; ATC 4094
PARTIES: Chief Commissioner of State Revenue (Applicant)
Nicholas Theodore James Paspaley (Respondent)
FILE NUMBER(S): CA 40742/07
COUNSEL: M L Robertson (Applicant)
C J Bevan (Respondent)
SOLICITORS: I V Knight, Crown Solicitor (Applicant)
Bartier Perry (Respondent)
LOWER COURT JURISDICTION: Supreme Court
LOWER COURT FILE NUMBER(S): SC 1267/2006; SC 6008/2006; SC 3772/2007
LOWER COURT JUDICIAL OFFICER: Gzell J
LOWER COURT DATE OF DECISION: 20 September 2007; 27 September 2007
LOWER COURT MEDIUM NEUTRAL CITATION: Paspaley v Chief Commissioner of State Revenue [2007] NSWSC 1048





                          CA 40742/07
                          SC 1267/2006
                          SC 6008/2006
                          SC 3772/2007

                          GILES JA
                          BASTEN JA
                          CAMPBELL JA

                          7 August 2008
CHIEF COMMISSIONER OF STATE REVENUE v PASPALEY
Headnote

From 1997 to 2007, the Chief Commissioner of State Revenue (the appellant) issued notices of assessment of land tax in respect of a property owned by the respondent, Mr Paspaley, in Sydney. Pursuant to s 89 of the Taxation Administration Act 1996 (NSW), the respondent was entitled to lodge an objection within 60 days of service of a notice of assessment. The respondent could also apply to lodge an objection out of time: s 90.

The respondent did not lodge timely objections in relation to the tax years from 1997 to 2005. In 2005, the respondent sought permission, pursuant to s 90, to lodge objections out of time to the land tax assessments for those years. Permission was refused. No timely objection was lodged to these refusals. The respondent then sought permission, again pursuant to s 90, to lodge objections out of time to the appellant’s refusal.

In relation to the 2005, 2006 and 2007 tax years, the respondent requested that the appellant recognise the property as his principal place of residence so that it was exempt from land tax: Land Tax Management Act 1956 (NSW) s 10(1), Schedule 1A, cl 2. (The proposed objections in relation to the earlier years sought to raise the same claim.)

Section 97 of the Taxation Administration Act provides that the Supreme Court can review a decision of the appellant. The respondent sought review of the appellant’s decisions in the Equity Division by three summonses. The appellant sought to strike out parts of the claims for relief in these summonses. Before Gzell J, the appellant was largely unsuccessful and sought leave to appeal to the Court of Appeal. The Court granted leave to appeal.

The issues for determination on appeal were:

(i) whether the appellant’s refusals to extend time to lodge objections were reviewable decisions under s 97 of the Taxation Administration Act;

(ii) whether the respondent could elect his principal place of residence for land tax purposes, pursuant to cll 2 and 12 of Schedule 1A of the Land Tax Management Act;

(iii) whether the respondent was limited to the grounds of objections in his application for review of tax decisions; and

(iv) whether elements of the relief sought in the three summonses should be struck out.

The Court held, allowing the appeal:

(per Basten JA, Giles and Campbell JJA agreeing)

In relation to (i)

1. Where the Chief Commissioner refuses permission to lodge an objection after the 60-day period, an objection may be lodged with respect to that decision under s 86 of the Taxation Administration Act: [1], [30], [41], [70].

2. Absent appropriate permissions under s 90, objections lodged out of time (either in relation to an assessment or a refusal of permission to lodge out of time objections) are not valid objections for the purposes of s 86: [1], [35], [37]–[38], [40], [42], [48], [70].

3. Section 97(1) of the Taxation Administration Act enables a taxpayer to apply to the Supreme Court for review of a decision (including a land tax assessment) by the appellant, which has been the subject of an objection under s 86. A decision to which an objection cannot be taken, and a decision to which an objection has not been taken, does not fall within the scope of s 97; it is excluded from review by the privative provision, s 103A(1): [1], [27], [70].

4. The subject matter of a review under s 97 is the appellant’s operative decision, not the appellant’s disallowance of an objection. Therefore, the appellant’s disallowances of objections were not reviewable decisions: [1], [28], [53], [70].

In relation to (ii)

5. The question of an election arises under cl 12 of Schedule 1A because there can only be one exemption in respect of a family and different members of a family may own different principal places of residence: [1], [56], [70].

6. As an individual, the respondent could not have more than one place of residence; therefore, he could not elect which of two properties was to be his principal place of residence for land tax purposes: [1], [56]–[57], [60], [62], [63], [70].

In relation to (iii)

7. It was inappropriate for the respondent to seek court approval to “amend” his grounds of objection in relation to the application for review because s 100(2) of the Taxation Administration Act provided that he was not limited on an application for judicial review to the grounds specified in his objection: [1], [28], [40], [54], [62], [70].

In relation to (iv)

8. Although parts of the relief sought by the respondent were inappropriate and should have been struck out, because the proceedings were subject to an order for consolidation, the proper form of the fresh pleading should be left to the Equity Division on remittal: [1], [46], [68], [70].



                          CA 40742/07
                          SC 1267/2006
                          SC 6008/2006
                          SC 3772/2007

                          GILES JA
                          BASTEN JA
                          CAMPBELL JA

                          7 August 2008
CHIEF COMMISSIONER OF STATE REVENUE v PASPALEY
Judgment

1 GILES JA: I agree with Basten JA.

2 BASTEN JA: This matter concerns assessments of land tax made by the Chief Commissioner of State Revenue with respect to a property owned by the respondent, Mr Paspaley, at Billyard Avenue, Elizabeth Bay in Sydney (“the property”). By August 2007 the respondent had commenced three sets of proceedings in the Equity Division seeking to challenge determinations made by the Chief Commissioner in respect of the following tax years, namely 1997-2004 (“the first period”); 2005; 2006 and 2007. The Chief Commissioner sought, largely unsuccessfully, to strike out various claims for relief: see Paspaley v Chief Commissioner of State Revenue [2007] NSWSC 1048. The present application for leave to appeal is brought in relation to the motions brought by the Chief Commissioner which were rejected by the primary judge, Gzell J.

3 Two preliminary issues may be disposed of immediately. First, the summons seeking leave to appeal was filed out of time, but only by a matter of days. There is no opposition to the grant of an extension of time which should therefore be made.

4 Secondly, although the respondent resisted the application for leave to appeal, for reasons set out below, leave should be granted. The matter proceeded as a concurrent hearing with respect to both leave and the substance of the proposed appeal.

Background

5 Pursuant to statutory provisions which will be addressed below, land tax was payable in respect of the property unless it was exempt as the principal place of residence of the respondent. From 1997 to 2007 the Chief Commissioner issued assessments in respect of the property on the basis that it was not exempt. The relevant date for valuation and ownership purposes was 31 December of the year immediately preceding the tax year (which is a calendar year). Notices of assessment were routinely issued in January or early February of the tax year. The taxpayer was entitled to lodge an objection within 60 days of service of the notice of assessment.

6 For the first period, being the tax years 1997-2004, no objections were lodged by the respondent. On 13 January 2005 a notice of assessment was issued for the 2005 tax year. In April, the respondent filed a “Land Tax – Variation Form” identifying the property as his principal place of residence. That application was rejected by the Chief Commissioner by a letter dated 21 July 2005. On 12 September 2005 the taxpayer sought to lodge an objection against the decision not to reassess, although the relevant legislation did not permit such an objection. By the same document, the respondent also sought permission to object against the assessments of land tax out of time in relation to each of the tax years 1997 to 2005. On 14 December 2005 those applications were refused.

7 On 2 February 2006 the respondent commenced proceedings by summons issued in the Equity Division (“the first summons”) challenging those decisions, being matter No. 1267 of 2006.

8 The notice of assessment for the 2006 tax year was served on 22 February 2006. On 6 April 2006 the respondent lodged an objection within time. On 24 October 2006 the Chief Commissioner disallowed the objection. On 27 November 2006 the respondent commenced further proceedings by summons (“the second summons”) being matter No. 6008 of 2006. These proceedings made claims in respect of the first period as well as the 2005 and 2006 tax years.

9 On 15 January 2007 a notice of assessment was issued for the 2007 tax year and an objection was lodged on 27 February 2007 within time. That objection was disallowed on 9 July 2007 and shortly thereafter a summons was issued (“the third summons”) seeking to review only the 2007 assessment: it was matter No. 3772 of 2007.

10 It will be necessary to consider in more detail the relief sought by the respondent in the various proceedings and to identify those aspects to which the Chief Commissioner objects. It is sufficient for present purposes to say that the Chief Commissioner did not deny the right of the taxpayer to bring proceedings by way of judicial review to challenge the refusal to permit him to lodge objections out of time in relation to the first period and the 2005 tax year. However, he objected to any relief sought by way of statutory review or seeking declarations in relation to matters relevant to those years.

11 In relation to the 2006 and 2007 tax years, the Chief Commissioner conceded that proceedings are available by way of statutory review, but maintained his objection to various forms of declaratory relief sought.

Statutory scheme

12 The relevant statutory scheme has two separate elements. First, the relevant taxing statute is the Land Tax Management Act 1956 (NSW). Secondly, procedures, applicable to a variety of State taxation laws, are set out in the Taxation Administration Act 1996 (NSW). It is convenient to deal with the taxing statute first. (Calculation of tax payable is governed by the Land Tax Act 1956 (NSW), but nothing turns on the provisions of that Act for present purposes.)

13 Part 3 of the Land Tax Management Act provides that land tax is to be levied and paid on all land situated in New South Wales (other than that which is exempt), based on the value of the land as at 1 July in the previous year: ss 7 and 9. The relevant ownership date is identified as midnight on 31 December in the year immediately preceding the tax year, which is a calendar year: see ss 3(1) “tax year” and 8.

14 Exemptions are provided by s 10 and include, relevantly for the present case, “land that is exempt from taxation under the principal place of residence exemption, as provided for by Schedule 1A”: s 10(1)(r). Clause 2 of Schedule 1A relevantly provides:

          “ 2 Principal place of residence exemption
              (1) Land used and occupied by the owner as the principal place of residence of the owner of the land, and for no other purpose, is exempt from taxation under this Act, in respect of the year commencing 1 January 2005 or any succeeding year, if the land is:
                  (a) a parcel of residential land …
              (2) Land is not used and occupied as the principal place of residence of a person unless:
                  (a) the land, and no other land, has been continuously used and occupied by the person for residential purposes and for no other purposes since 1 July in the year preceding the tax year in which land tax is levied, or
                  (b) in any other case, the Chief Commissioner is satisfied that the land is used and occupied by the person as the person’s principal place of residence.
              …
              (5) The principal place of residence exemption is subject to the restrictions set out in Part 4.”

15 The key provision in cl 2(1) was inserted by the State Revenue Legislation Amendment Act 2004 (NSW) and operated from 1 January 2005, being consequent upon the repeal of the Premium Property Tax Act 1998 (NSW): Land Tax Management Act, Schedule 2, Part 16. Prior to that date, and relevantly for the first period in this case, a different statutory regime prevailed, which contained an additional element, at least from 1998, requiring that the land value be less than the “premium tax threshold” identified in the Premium Property Tax Act. This requirement was first found in s 3(3) and s 10(1)(r) and then (apparently only for the 2004 tax year) in Schedule 1A. Nothing turns on the operation of that provision, although it seems unlikely that the property would have satisfied the principal place of residence exemption while the premium tax threshold applied.

16 It is also necessary to note the relevant parts of cl 12 which appears in Part 4 of Schedule 1A:

          “ 12 Only one principal place of residence for all members of same family
              (1) For the purposes of the principal place of residence exemption, only one place of residence may be treated as the principal place of residence of all members of the same family.
              (2) If members of a family own (whether jointly or separately) more than one residence used and occupied by any of them as a principal place of residence, the Chief Commissioner is to treat the one place of residence elected as the principal place of residence of the family as the principal place of residence of all members of the family in respect of a tax year.
              (3) Such an election is to be made, by or on behalf of the members of the family, in writing and must be lodged with the Chief Commissioner within the period for the lodging of objections under section 89 of the Taxation Administration Act 1996 .
              (4) An election may be made, in respect of a tax year, by the end of the period allowed for the lodging of an objection to a notice of assessment of land tax liability (being an initial assessment of land tax liability) for that tax year.
              (5) If an election is not made, the Chief Commissioner is to treat the residence that has the highest land value for land tax purposes as the principal place of residence of all members of the family.”

17 The term “family” is defined as a person, his or her spouse and any dependent child under 18 years of age and not legally married: sub-cls 12(6), (7) and (9). As will be seen, the respondent sought to make an election under this provision on the basis that, as between the property and a residence in Fannie Bay, Darwin, which the Chief Commissioner considered was his principal place of residence, he might properly make an election. In relation to the first period and the 2005 tax year he needed an extension of the period within which to lodge an objection, to be permitted to make the election.

18 Finally, it is necessary to note the following definition in s 3(1):

          “ principal place of residence of a person means the one place of residence that is, among the one or more places of residence of the person within and outside Australia, the principal place of residence of the person.”

19 In broad terms, the Land Tax Management Act requires that tax be levied on all land situated in New South Wales, unless exempt, the tax being payable by the owner of the land. Thus, in a particular year, a taxpayer will be liable to pay tax calculated on all land, other than exempt land, in New South Wales owned by that person on 31 December in the preceding year. The principal place of residence exemption is available only in respect of land used and occupied by the owner. Further, in respect of any one person, there can be only one principal place of residence. However, land can have more than one owner. If two persons jointly own houses on two parcels of land, each having his or her principal place of residence in a different home from the other, each will be entitled to an exemption in relation to that parcel which constitutes his or her principal place of residence (cf s 27). However, if they are members of the same family, they will be able to claim only one principal place of residence, but will be able to elect which to treat as the principal place of residence.

20 Turning to the Taxation Administration Act, Part 3 provides that the Chief Commissioner may make an assessment of tax liability and may issue a notice of assessment: ss 8 and 14. Objections and reviews are provided for in Part 10. Objections are dealt with in the following terms:

          “ 86 Objections
              (1) A taxpayer who is dissatisfied with:
                  (a) an assessment that is shown in a notice of assessment served on the taxpayer, or
                  (b) any other decision (within the meaning of section 6 of the Administrative Decisions Tribunal Act 1997 ) of the Chief Commissioner under a taxation law,
                  may lodge a written objection with the Chief Commissioner.
              (2) However, a taxpayer may not lodge such an objection in respect of the following:
                  …
                  (b) the determination of an objection under this Part …,
                  …
                  (d) a decision not to reassess the taxpayer’s tax liability where the taxpayer seeks to lodge the objection more than 60 days after the date of service of the notice of the initial assessment.
              (3) The provisions of subsection (2)(c) and (d) do not preclude the lodgment of an objection that is sought to be lodged more than 60 days after the date of service of the notice of the initial assessment if the Chief Commissioner permits its lodgment. …
          89 Time for lodging objection
              (1) An objection must be lodged with the Chief Commissioner not later than 60 days after the date of service of the notice of the assessment or the date on which the decision referred to in section 86 (1)(b) is served on the taxpayer, except as provided by section 90.

              …

          90 Objections lodged out of time
              (1) The Chief Commissioner may permit a person to lodge an objection after the 60-day period.
              (2) The person seeking to so lodge the objection must state fully and in detail, and in writing, the circumstances concerning and the reasons for the failure to lodge the objection within the 60-day period.
              (3) The Chief Commissioner may grant permission unconditionally or subject to conditions or may refuse permission.
              (4) The Chief Commissioner must give notice to the person of the Chief Commissioner’s decision and include in the notice the reasons for refusing to grant permission or for imposing conditions of the permission.”

21 Provision is made for review in Division 2 of Part 10. One form of review, not presently relevant, is available by the Administrative Decisions Tribunal: s 96. In the alternative, review is available by the Court:

          “ 97 Review by Supreme Court
              (1) A taxpayer may apply to the Supreme Court for a review of a decision of the Chief Commissioner that has been the subject of an objection under Division 1 if:
                  (a) the taxpayer is dissatisfied with the Chief Commissioner’s determination of the taxpayer’s objection, or
                  (b) 90 days … have passed since the taxpayer’s objection was served on the Chief Commissioner and the Chief Commissioner has not determined the objection.
              …
              (4) A review by the Supreme Court is taken to be an appeal for the purposes of the Supreme Court Act 1970 and the regulations and rules made under that Act, except as otherwise provided by that Act or those regulations or rules.”

22 It was assumed for present purposes that the Taxation Administration Act in its present form applied and that no question arose as to the nature of the review available in this Court, pursuant to s 75A of the Supreme Court Act 1970 (NSW). The powers of the Court include the power to make an assessment or decision in lieu of that made by the Chief Commissioner or to remit the matter to the Chief Commissioner: s 101(1).

23 There are privative clauses which seek to restrict the scope of available review beyond that provided by the Act itself. Thus s 16 provides:

          “ 16 Validity of assessment
              The validity of an assessment is not affected because a provision of a taxation law has not been complied with.”

24 Further, and relevantly for present purposes, s 103A, which appears in Part 10, provides:

          “ 103A Review or appeal by other courts or tribunals
              (1) No court or tribunal (or other body or person) has jurisdiction or power to consider any question concerning an assessment or other decision of the Chief Commissioner under a taxation law (including the determination of an objection under Division 1) except as provided by this Part.
              (2) Subsection (1) does not apply to a decision of the Chief Commissioner under Part 4, 7, 8, 9 or 11 (not being an assessment).
              Note. This subsection preserves the inherent jurisdiction of the Supreme Court to entertain an application for judicial review of any such decision of the Chief Commissioner.”

25 The privative clause operates with respect to Parts 3 (assessments), 6 (lodgment of returns, including decisions as to the extension of time and other special arrangements) and 10 (which includes decisions as to extension of time under s 90). In other words, the privative clause in sub-s (1) is not excluded from such operation, if, in its terms, it extends to such decisions.

26 Because the Taxation Administration Act is itself a “taxation law” (see s 4), any decision under the Taxation Administration Act itself is liable to fall within s 103A(1). Although the broad definition of “decision” found in s 6 of the Administrative Decisions Tribunal Act 1997 (NSW) (“the ADT Act”) operates in terms only in relation to s 86(1)(b), given the expansive definition in s 86(1)(b) and given the application of the ADT Act to reviews under s 96, it would be surprising if some more restricted construction were to be given to the term “decision” in s 103A(1). Indeed, the reference to “an assessment or other decision of the Chief Commissioner” would appear to reflect the two categories identified in s 86(1).

27 Importantly, the review provided by s 97 (consistently with s 96) is limited to a decision “that has been the subject of an objection under Division 1”: s 97(1). Accordingly, a decision to which an objection cannot be taken, and a decision to which an objection has not been taken, will not fall within the scope of s 97 (providing a review by this Court), but will fall within the exclusion in s 103A(1).

28 It is also important to note that the right of review under s 97 is given by reference to the operative decision of the Chief Commissioner and not to a ruling made on an objection. Although the existence of an objection is a necessary precondition to the power of review by the Court, and it is the taxpayer’s dissatisfaction with the determination of the objection which provides standing to seek review, it is the initial decision which is the subject matter of the review. Consistently, the parties are not limited to the grounds of the objection in relation to the application for review: s 100(2). Further, it is the original assessment or other decision which is confirmed, revoked or replaced: s 101(1)(a) and (b).

29 There are assessments and other decisions which fall within s 86(2), as to which a taxpayer may not lodge an objection. Such a decision cannot be the subject of review under ss 96 or 97. It would be surprising if, given that policy, judicial review might be available under s 69 of the Supreme Court Act in relation to those assessments or decisions. Section 103A imposes a blanket “no jurisdiction” embargo, except as provided by Part 10 itself. If Part 10 provides no exception, the embargo would apply.

30 Where the Chief Commissioner refuses permission to lodge an objection after the 60 day period, there seems to be no reason why a written objection may not be lodged with respect to that decision. If an objection were to be lodged, but rejected, there would appear to be statutory power to review the decision to refuse permission to lodge out of time an objection to an assessment. That would mean that a general review would be available under ss 96 or 97, a conclusion which would suggest strongly that such decisions were not to be treated differently for the purpose of the privative clause in s 103A from other decisions which might be subject of review.

Issues raised by motions

31 It is convenient to deal with the issues in relation to the first period, the 2005 tax year and the 2006 and 2007 tax years separately and chronologically.

(a) 1997-2004 tax years (the first period)

32 No objection was raised by the respondent in relation to the assessments for these years until 12 September 2005, when permission was sought pursuant to s 90 of the Taxation Administration Act to lodge objections after the 60 day period. The application was refused on 14 December 2005. No objection was lodged within 90 days of that decision, but rather the respondent sought review by the first summons filed on 2 February 2006.

33 On 24 March 2006, the Chief Commissioner filed a notice of motion seeking to have paragraphs 7-13 of the first summons struck out on the ground that they disclosed no reasonable cause of action “in that by reason of s 103A of the Taxation Administration Act 1996 the Supreme Court has no jurisdiction to hear that part of the summons”. That challenge addressed all of the prayers for relief relating to the first period. The relief sought was of surprising breadth. Not only did it seek to set aside the refusal of the application for permission to lodge objections out of time, but it sought to have the objections (which had not been lodged) remitted to the Chief Commissioner, an order revoking the assessments, and declarations that the property was exempt for each of the relevant years.

34 On 29 March 2006, after the Chief Commissioner had filed his notice of motion, the respondent lodged a document which purported to be a notice of objection to the decision made on 14 December 2005. As the application correctly noted, it was itself some five weeks out of time, and sought permission under s 90 to lodge the further objection: see notice and application, 29 March 2006, par 4. The Chief Commissioner took the position that a refusal of permission under s 90(3) was not a “decision” for the purposes of s 86(1)(b). It was not, therefore, a decision to which objection could be taken. The Chief Commissioner accepted, however, that it was not a “decision” for the purposes of s 103A(1), and accordingly it was reviewable under s 69 of the Supreme Court Act. (That, of course, would be a review limited to jurisdictional error or error on the face of the record and not the full review available under s 97 of the Taxation Administration Act.) Accordingly, on 24 October 2006, the Chief Commissioner responded to the letter of 29 March stating:

          “The second part of our response [of 14 December 2005] was a refusal to grant permission to lodge out of time objections against the notices of assessment that issued for all prior tax years going back to the 1997 tax year. This refusal was made under s 90(3) of the TA Act. Accordingly it does not constitute a decision of the Chief Commissioner under a taxation law within s 86(1)(b) of the TA Act. In view of this it is considered there is no right of objection to the notification dated 14 December 2005 of the refusal to grant permission to lodge out of time objections.”

35 For the reasons set out above, that view of the scope of the phrase “other decision” would appear to be erroneous. Nevertheless, it is not necessary to determine that matter for the purposes of the present argument. Because objections were not lodged in time in response to the refusal to permit out of time objections to the assessments of the first period, the relief sought in the first summons was unavailable under s 97 of the Taxation Administration Act.

36 The reasoning, to this point, is consistent with that of the primary judge. In particular, his Honour noted that he remained of the view expressed in McDonald’s Australia Ltd v Chief Commissioner of State Revenue NSW [2005] NSWSC 6; 58 ATR 260; 12 BPR 23,897; ATC 4094 at [47]-[48], with the result that the decision was indeed one in relation to which an objection could be lodged under s 86: at [18]. However, his Honour declined to strike out the relevant paragraphs of the first proceedings on the ground that, in accordance with the Chief Commissioner’s construction of the statute, the respondent was entitled to seek judicial review: at [19]. Consistently with his Honour’s view of the meaning of “decision” such relief was not available. But it was not the fact that the legal issue was contestable that caused his Honour to grant the respondent leave to amend. Rather, he thought it was “arguable that there was an objection to the assessments for the 1997 to 2004 tax years”: at [21]. That required there to be ambiguity or uncertainty about the documents referred to above.

37 With respect, I do not see the ambiguity or uncertainty. There were two parts to the notice of objection and application lodged on 12 September 2005. The first part (the objection) was concerned only with a decision in respect of the 2005 tax year; the second part (the application for an extension of time) related to both the first period and the 2005 tax year. Secondly, the letter of 29 March 2006 was clearly expressed as an objection to the refusal to be permitted to lodge objections out of time. Even if those documents could be construed as objections in relation to the first period, because they were out of time, both in relation to the assessments and then the refusal of permission on 14 December 2005, absent appropriate permissions, they were not “objections” for the purposes of ss 86 or 97.

38 It may be that his Honour also refused to strike out the paragraphs in the first summons relating to the first period because he thought it arguable that the respondent was entitled to seek judicial review of the Chief Commissioner’s refusal to permit him to lodge objections out of time: at [22]. On that basis, orders 7 and 8 in the first summons, seeking to set aside the Chief Commissioner’s refusal of 14 December and remittal of the application of 12 September to the Chief Commissioner for further consideration, could have remained (although order 8 would not be made precisely in the terms sought). However, the order and declarations in paragraphs 9-12 were unavailable except in relation to an assessment to which an objection had been lodged (in which case order 9 would have been sufficient). Order 13 related to costs and was not subject to an objection if any other part of the pleadings stood. (Whether the grounds in relation to that aspect of the summons were appropriate or sufficient may be doubted, but the argument did not turn on that aspect of the pleading.)

39 There is, however, a further reason for not allowing the claims for relief in the first summons, with respect to the first period, to remain. It flows from the fact that on 27 November 2006 the respondent issued the second summons which picked up and repeated (or recast) all of the claims in the first summons. In practical terms, this constituted a form of consolidation, although an order for a consolidation of all three sets of proceedings was not made until 20 September 2007. The parties accepted in the course of the hearing of the appeal that the first summons should be dismissed. That result would render the Chief Commissioner’s motion in relation to the first summons otiose. However, the parties further accepted that the arguments which have been rehearsed should apply to the claims with respect to the first period now contained in the second summons.

40 In the second summons, the orders sought with respect to the first period appear at paragraphs 19-26, the last paragraph relating to costs only. Orders 23-25 seek to revoke the assessments of land tax, and obtain a declaration that the land was exempt throughout the first period. For reasons already given, the orders and declaration sought in those paragraphs are not appropriate and should be struck out. Orders 20 and 21 are new and seek leave to amend the grounds on which the respondent sought an extension of time under s 90 within which to lodge an objection for the first period. If the respondent had a right of review under s 97, no such order was necessary: see s 100(2), which expressly states that the respondent would not have been limited to the grounds of his objection. If the respondent does not have a right of review under s 97, the orders sought would simply be misconceived. In the course of the appeal, the respondent abandoned any attempt to support such orders.

41 Of the two remaining claims for relief, the primary order (par 19) seeks to set aside a determination made pursuant to s 90 on 24 October 2006, refusing the respondent’s application for permission to lodge out of time objections in respect of the first period. That involves a change from the relief sought in the first summons, which involved a challenge to the determination on 14 December 2005 refusing the application to lodge objections out of time. However, so far as review under s 97 goes, the new order is subject to the same objection as arose in relation to the 14 December 2005 determination, namely that no objection had been lodged with respect to the refusal, if there were one on 24 October 2006, which is doubtful. What happened on 24 October 2006 was the refusal by the Chief Commissioner to allow objections to be lodged to the 14 December refusal, the new objections also being out of time. As noted above, the Chief Commissioner, probably erroneously, treated his refusal of a s 90 application as not open to objection. The respondent seeks to construe that letter as a second refusal to permit the lodging of objections out of time to the assessments for the first period. In my view that construction is not tenable.

42 The second remaining order (par 22) seeks remittal of the respondent’s “objection dated 29 March 2006 in so far as it relates to the 1997 to 2004 land tax years and s 90”. With respect, an order in this form is simply confused. The objection sought to be made on 29 March 2006 was to the refusal of permission under s 90. As already noted, that objection itself required permission to be lodged out of time and none was given (or considered).

43 These difficulties are primarily the result of confusion on the part of the respondent. The preferable course would be to strike out the whole of the remaining pleadings in relation to the first period, with leave to the respondent to replead if, and to the extent that, he wishes to do so. There are two difficulties in this course.

44 One difficulty is that, having failed in relation to his challenge to the material relating to the first period in the first summons, the Chief Commissioner took no objection to the material in the second summons, even though it was in quite different form. The second and consequential difficulty is that the relief sought in the second summons was not directly the subject of any ground of appeal. It was fully considered in the course of the hearing, but only because it became apparent during oral argument that the first summons might be otiose and the parties agreed that it could be dismissed.

45 Whilst this Court is properly reluctant to intervene in matters of practice and procedure at an interlocutory stage, let alone in a manner which extends beyond the grounds of appeal, the efficient resolution of this litigation would seem to leave little alternative in the present case. The principle causes of the confusion appear to be twofold. The first is that the respondent commenced proceedings in relation to the first period before he had established any right of review under s 97 of the Taxation Administration Act. He then made further applications and received further determinations which he sought to add to the existing proceedings. While an amendment can add a cause of action which arises after the commencement of the proceedings (Civil Procedure Act 2005 (NSW) s 64(3)), this course involves a risk of confusion and unsatisfactory pleading. Secondly, having been many years out of time in relation to objection to the notices of assessment issued during the first period, and having sought permission to lodge objections out of time, when that application was refused, he was then again out of time in lodging an objection to the refusal. At the stage at which the proceedings presently stand, it may be that his only theoretical claim to relief arises from the Chief Commissioner’s failure to treat his s 90(3) refusal as properly subject to objection.

46 The foregoing reasoning suggests that the orders made by Gzell J with respect to the Chief Commissioner’s notice of motion in matter No. 1267 of 2006 should be set aside. However, the respondent conceded during the appeal that the summons in matter No. 1267 of 2006 should be dismissed. There are also grounds to strike out paragraphs 19-26 in the second summons. Nevertheless, because the proceedings are all subject to an order for consolidation, the ultimate resolution of these matters can be left to the Equity Division on remittal: see [68] below.

(b) The 2005 tax year

47 The second set of issues concerned the assessment for the 2005 tax year. An assessment in respect of that year was made on 13 January 2005. The respondent did not immediately lodge an objection, but rather made a request to reassess on the basis that the property was his principal place of residence. That request, lodged on 15 April 2005, was rejected by a letter dated 21 July 2005. The “objection” then sought to be lodged on 12 September 2005 identified as the relevant decision the refusal of the Chief Commissioner of 21 July “to exercise his discretion under Schedule 1A cl 2(2)(b) of the Act to be satisfied that the taxpayer’s property … is used and occupied by the taxpayer as his principal place of residence for the 2005 land tax year”.

48 The document dated 12 September 2005 is ambiguous to the extent that the application to permit other objections to be lodged out of time extended to the 2005 land tax year. This may have been an alternative approach, in the event that it were held to be necessary to challenge the assessment for that year and not merely the refusal to reassess. This alternative appears to be required by s 86(2)(d) of the Taxation Administration Act, which precludes an objection in respect of a decision not to reassess, absent a timely objection to the initial notice of assessment. Because there had not been a timely objection to the initial assessment, the 2005 year may be seen to fall within the same principles as the first period: permission to object out of time was required.

49 The letter of 14 December 2005 from the Chief Commissioner appeared to treat the objection to the refusal to reassess as a valid objection, which he disallowed. The reason given was that, in the Chief Commissioner’s view, the respondent’s principal place of residence was in Darwin.

50 For reasons which are not entirely clear, on 8 June 2006 the respondent lodged a further objection to the assessment dated 13 January 2005. It raised the same issue with respect to cl 2(2)(b) of Schedule 1A. It was accompanied by an application for permission to lodge the objection out of time. On 15 June 2006 the Chief Commissioner responded by letter seeking detailed information with respect to the respondent’s residence in Darwin, together with information in respect of other members of his family. On 4 October 2006 the respondent’s solicitors provided a reply identifying his Darwin residence in Fannie Bay and noting that the owner was a company as trustee for the family trust.

51 On 24 October 2006 the Chief Commissioner wrote a number of letters to the respondent’s solicitors. In relation to the objection and application dated 8 June 2006, permission was granted to lodge the objection with respect to the 2005 tax year out of time. The letter then stated that, having considered the further information supplied by the respondent, the objection was disallowed for the reason previously given, namely that the respondent’s principal place of residence was considered to be Fannie Bay, Darwin.

52 The second summons was directed to the objection of 8 June 2006 and rendered otiose the relief sought in the first summons with respect to the 2005 tax year.

53 Orders 1-3 sought in the second summons seek to set aside the Chief Commissioner’s disallowance of the objection of 8 June and seek its remittal to the Chief Commissioner. As already noted, that relief is inappropriate if reliance is placed on s 97 of the Taxation Administration Act, as the decision to be reviewed is the assessment, rather than the disallowance of the objection. (Although the disallowance of an objection is no doubt a decision under a taxation law, there is no power to lodge an objection to the determination of an objection and hence that determination cannot be reviewed.) However, the purpose of the relief sought is apparent and no objection is taken to orders 1-3.

54 Order 4 seeks leave “pursuant to s 101(b) of the Taxation Administration Act” for the respondent to amend his grounds of objection to make an election under cl 12 of Schedule 1A of the Land Tax Management Act. The reference to s 101(b) is obscure, but may have been intended as a reference to s 101(1)(e), which permits the Court dealing with an application for review to make such orders as it otherwise thinks fit. The attempt to amend the grounds of objection is also inappropriate because the taxpayer is not limited to the grounds of his objection, in seeking review by the Court: s 100(2). Finally, the question of election was a question of fact: either the taxpayer had made an election or he had not.

55 Paragraph 6 of the second summons sought a declaration that the respondent had made a valid election “in the terms of his objection against the assessment of land tax for that year dated 29 May 2006”. This statement may be ambiguous as to whether it was an objection, a disallowance or an assessment which was dated 29 May 2006: however neither party took the Court to any document bearing that date. It may be that the pleading was inaccurate and intended to refer to the objection of 29 March 2006.

56 There is, however, a separate question arising in relation to the issue of an election, the Chief Commissioner contending that the summons is in this respect misconceived. He contended that the question of an election only arises in the case of two or more members of a family owning separate residences and having different principal places of residence. An individual cannot have more than one principal place of residence (see definition in s 3(1) set out at [18] above) and therefore cannot elect which of two is to be his or her principal place of residence for the purposes of land tax. The question of election arises because there can be only one exemption in respect of a family and different members of a family may have different principal places of residence.

57 An alternative approach, which might have been relied upon by the respondent, was that the property was the principal place of residence of his daughter, who had no other ordinary place of residence. However, this approach would also misconceive the nature of the exemption, which can only apply to land used and occupied “by the owner” as his or her principal place of residence: Schedule 1A, cl 2(1). The exemption does not identify, expansively, land used and occupied by the owner ‘or any member of his or her family’; the reference, in cl 12 only, to membership of the family is restrictive, rather than expansive. The respondent can only succeed if he persuades the Chief Commissioner that the property is his principal place of residence; because he can only have one principal place of residence, no question of election arises.

58 This argument was noted by the primary judge at [35] as one of the arguments raised by the Chief Commissioner, in the following terms:

          “Thirdly, the Chief Commissioner argues that the Land Tax Management Act 1956, Sch 1A, cl 12 does not convert a property that does not fall within the definition of ‘principal place of residence’ in s 3(1) into a principal place of residence. Clause 12 is only enlivened when two or more properties owned by family members fall within the definition. It was a legislative response to my decision in McNally .”

59 The first two arguments to which his Honour had earlier referred were that an election cannot be made after the time for lodging an objection to a notice of assessment has passed and no such election had been contained in the objection considered by the Chief Commissioner: at [33] and [34]. His Honour addressed these two objections and noted the contention for the respondent that he should yet be allowed to make an election out of time: [37]. He concluded at [38]:

          “In light of this argument, I am not prepared, at this stage, to strike out the paragraphs in question. If Mr Paspaley makes an application for permission to lodge an election out of time, there will be a need to re-plead depending upon the result of that application. I would defer consideration of this matter until that time.”

60 The Chief Commissioner submitted that, although his Honour had identified the point upon which he now relies as the third matter raised, his Honour simply did not address the argument that no occasion for an election arose. That submission must be accepted, both as to the error on his Honour’s part and as to its substantive validity. The Chief Commissioner’s construction of the Act is correct and these paragraphs should not have been allowed to stand because they were based on a misconception.

(c) 2006 and 2007 tax years

61 A notice of assessment for the 2006 tax year was issued on 6 February 2006. A notice of assessment for the 2007 tax year was issued on 15 January 2007. In each case an objection was lodged within time; each objection was disallowed.

62 The Chief Commissioner’s motion to strike out parts of the second summons relating to the 2006 tax year was limited to paragraphs 12 (seeking an order that the respondent have leave to amend his grounds of objection), 16 (relying on the operation of cl 12(5) of Schedule 1A, in default of an election) and 17 (seeking a declaration that the respondent made a valid election under cl 12(3) of Schedule 1A). For reasons already given, these paragraphs should have been struck out.

63 On 25 July 2007 the respondent filed his third summons, purely in relation to the assessment for the 2007 tax year. The Chief Commissioner’s notice of motion sought to strike out paragraphs 6, 7 and 8. Each of these prayers for relief was directed to the existence of a valid election under cl 12(3) of Schedule 1A or, in the alternative, a declaration that the Chief Commissioner was required to treat the property as exempt in default of a valid election, pursuant to cl 12(5). For reasons already given, those prayers were misconceived and should have been struck out.

Leave to appeal

64 The Chief Commissioner’s application for leave raised important questions with respect to the operation of the Land Tax Management Act and the Taxation Administration Act. Nevertheless, it is usually undesirable to interrupt proceedings in a trial court by permitting appeals with respect to interlocutory questions, especially where those questions required the exercise of a discretionary power in relation to a matter of practice and procedure and which involve interlocutory strike out applications, limited to parts only of the relief sought.

65 This case may be seen to fall into an exceptional category. To the extent that the respondent, in commencing the proceedings below, had manufactured a degree of complexity and resulting confusion in what should have been a straightforward series of appeals from assessments or decisions of the Chief Commissioner, that situation warranted intervention to ensure that the proceedings did not become sidetracked by false issues. In order to appreciate the case sought to be presented by the Chief Commissioner, it has been necessary to analyse in some detail the statutory scheme, as it applied in these proceedings. That analysis shows that the Chief Commissioner’s contentions were correct and the relief sought should have been granted. It is appropriate in these circumstances to grant leave to appeal and to direct the Chief Commissioner to file his notice of appeal within seven days.

Costs

66 The Chief Commissioner sought to raise separate challenges to the costs orders made by the primary judge in respect of the motions to strike out parts of the pleadings. Those issues no longer arise. The Chief Commissioner having been successful in respect of his various strike out applications, he should have his costs of those motions in the Court below.

67 The respondent should also be required to pay the Chief Commissioner’s costs in this Court.

Conclusions

68 One of the orders made by the primary judge on 20 September 2007 required that the proceedings in relation to the third summons be consolidated with those in relation to the first and second summonses. That has not yet been done, but the need to take that step gives rise to a question as to the utility of this Court making orders in respect of the existing applications. No directions have been made to give effect to the order for consolidation, but that will be necessary when the matter returns to the Equity Division. Accordingly, the preferable course is to set aside the orders made by the primary judge and remit the proceedings to the Equity Division, where the respondent can reformulate his consolidated proceedings in accordance with the judgment of this Court. Any consequential issues will, in any event, need to be dealt with by the primary judge.

69 Accordingly, I propose the following orders:


      (1) Extend time for filing and serving the application for leave to appeal.

      (2) Grant the Chief Commissioner leave to appeal and direct that the notice of appeal be filed within seven days.

      (3) Allow the appeal and set aside the orders of Gzell J made on 20 September 2007 dismissing, with costs, the Chief Commissioner’s motions:
          (a) filed 24 March 2006 in proceedings 1267 of 2006;
          (b) filed 10 August 2007 in proceedings 6008 of 2006; and
          (c) filed 15 August 2007 in proceedings 3772 of 2007.


      (4) Remit the proceedings to the Equity Division for directions for their continuance in accordance with the judgment of this Court.

      (5) Order the plaintiff to pay the costs of the Chief Commissioner’s motions in the Equity Division.

      (6) Order the respondent to pay the Chief Commissioner’s costs of the proceedings in this Court, but to have a certificate under the Suitors’ Fund Act 1951 (NSW) in respect of those costs.

70 CAMPBELL JA: I agree with Basten JA.

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Cases Cited

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Paspaley v Chief Commissioner of State Revenue [2007] NSWSC 1048
McDonald's Australia Ltd v Chief Commissioner of State Revenue [2005] NSWSC 6