Commissioner of Taxation of the Commonwealth of Australia v White, M.W.D. Commissioner of Taxation of the Commonwealth of Australia v Griffin, J.A

[1985] FCA 339

Re: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
And: MICHAEL WILLIAM DUCKETT WHITE and JOHN ANTHONY GRIFFIN
Nos. QLD G53 and G54 OF 1985
Income Tax

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.

CATCHWORDS

Income Tax - federal Court - leave to appeal from Supreme Court - principles governing grant of leave - Supreme Court reversed divided Board - question arguable - long-standing Department practice involved.

Federal Court - practice - costs of application for leave to appeal in income tax case - attitude of Commissioner - leave subject to Commissioner's undertaking to pay costs.

Income Tax Assessment Act 1936, ss.23(qa), 196(5)

HEARING

BRISBANE
#DATE 12:7:1985

ORDER

1. Upon the Commissioner of Taxation, by his counsel, undertaking to pay the reasonable costs of the respondent on a party and party basis, with respect to the appeal to the Full Federal Court, in any event, that is, irrespective of the result, leave be granted to the Commissioner of Taxation to appeal from the judgment of the Supreme Court of Queensland given on 4 June 1985, whereby Mr Justice Macrossan allowed the respondents' appeal before him with costs, and made certain other orders.

2. The Commissioner of Taxation pay the respondents' costs of and incidental to this application, and this order, to be taxed.

JUDGE1

These are applications made by the Commissioner of Taxation for leave to appeal to the Full Court of the Federal Court, brought pursuant to s.196(5) of the Income Tax Assessment Act. That permits an appeal by leave against a decision of a Supreme Court on appeal from a Board of Review, and under the relevant provision of the Federal Court of Australia Act, which is s.25, I have jurisdiction to determine the applications for leave.

1. The taxpayers, Messrs Griffin and White, are barristers of the Supreme Court of Queensland, who did some work in Papua New Guinea in the 1977-78 year, and in the case of Mr White, subsequently. The question, which has so far been dealt with at two levels, namely, in the Board of Review and the Supreme Court of Queensland, is whether or not the income which the taxpayers derived in Papua New Guinea is exempt from Australian tax, pursuant to s.23(qa) of the Income Tax Assessment Act.

2. In the Board of Review, the taxpayers, by a majority, were held not to be protected by that provision, but Macrossan J. on appeal reversed that decision. I have his Honour's reasons before me, and it is clear that his Honour regarded the matter as quite an arguable one; indeed, he expressed towards the end of his judgment his difficulty in arriving at any certain conclusion.

3. Mr Gzell Q.C., who has appeared for the taxpayers before me, has admitted - correctly, in my view - that the question is arguable, and I therefore think it unnecessary to discuss its nature in any more detail than to say that it requires an interpretation of the word "employment" in s.23(qa), the applicant arguing that "employment" is used in what it says is the ordinary sense, employment under a contract of service.

4. Counsel for the applicant, Mr Hartigan Q.C., has referred me to evidence before the Court, suggesting that the question is one of some general importance. There is an affidavit by a legal officer employed in the office of the Australian Government Solicitor filed in each case, which says, among other things, that there are other barristers who have derived income in Papua New Guinea, and the question raised in the appeal which is proposed is relevant to their assessment. The affidavit further says:-
   
   

"The terms of His Honour's reasons are effectively wide enough to apply to all persons deriving

income from Papua New Guinea under a contract or

contracts for services, so that the decision would be significant in relation to a large number of

other taxpayers apart from barristers."

1. The evidence which I have mentioned does not appear to me to provide overwhelming support for the submission of Mr Hartigan Q.C. There is no indication given of how commonly it occurs that people go from this country to New Guinea to work, otherwise than under a contract of service, and it is necessary to some extent to rely upon general knowledge to assess that.

2. I have been referred to a number of decisions of the Court determining similar applications, the first of which is that of Toohey J. in Lombardo v. The Federal Commissioner of Taxation 79 ATC 4079. His Honour pointed out in his judgment that the existence of a question of law is not of itself enough to warrant the grant of leave, and that something else is required. Toohey J. said at p.4080:-
   
   

"A question of law that is important, or of general application, is no doubt sufficient, but there may be other considerations that justify leave."

1. Here, it is argued by Mr Hartigan Q.C. that the question of law is of sufficient importance and general application to justify leave. The matter seems to me perhaps marginal; the onus is clearly on the applicant to show the importance of the question. As Toohey J. implies, there must be a question of law for the matter to come thus far; otherwise, it cannot have gone properly to the Supreme Court. Any question of law must to a degree be of general application, and I am not entirely convinced that the present question is especially weighty. However, on the whole, I am inclined to think that it involves or is likely to involve enough repercussions, as far as the other taxpayers are concerned, to warrant the grant of leave. I have also taken into account the fact that, as I am informed, the decision of Macrossan J. reversed a long-standing practice of the applicant and it was, of course, a reversal of the decision of the Board of Review, which itself was divided on the issue.

2. Mr Hartigan Q.C., for the Commissioner, not pursuant to any suggestion made by me, submitted that it might be a case in which I should consider imposing conditions on the applicant as to the payment of costs, as had been done in some other similar applications. Mr Gzell Q.C., for the respondents, has applied for a special order as to costs, in a form to be mentioned later. In view of the attitude of the Commissioner, it seems to me unnecessary to consider the question of costs in any detail, or to give attention to the general question of the circumstances in which such an order is appropriate. However, I may say that the attitude of the Commissioner appears to me a proper one, in that the amounts involved in the two cases are not very large and, as has been pointed out by counsel for the respondents, it is to a degree oppressive that taxpayers should have to pursue their rights through a whole series of hearings. I am therefore content to act upon the intimation on behalf of the Commissioner, that the making of such an order for costs as was made by Neaves J. in FCT v. Knight 83 ATC 4275 would not be opposed.

3. The order I shall mention will be made in each case: upon the Commissioner of Taxation, by his counsel, undertaking to pay the reasonable costs of the respondent on a party and party basis, with respect to the appeal to the Full Federal Court, in any event, that is, irrespective of the result, leave be granted to the Commissioner of Taxation to appeal from the judgment of the Supreme Court of Queensland given on 4 June 1985, whereby Mr Justice Macrossan allowed the respondents' appeal before him with costs, and made certain other orders.

4. It will be further ordered that the Commissioner of Taxation pay the respondents' costs of and incidental to this application, and this order, to be taxed.