Commissioner of Taxation v Jayasinghe

[2016] HCATrans 275

[2016] HCATrans 275

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S177 of 2016

B e t w e e n -

COMMISSIONER OF TAXATION

Applicant

and

KAMAL JAYASINGHE

Respondent

Application for special leave to appeal

BELL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON WEDNESDAY, 16 NOVEMBER 2016, AT 9.33 AM

Copyright in the High Court of Australia

MR J.O. HMELNITSKY, SC:  May it please the Court, I appear with my learned friend, MS T.L. PHILLIPS, for the applicant.  (instructed by Australian Government Solicitor)

MR A.H. SLATER, QC:  If the Court please, I appear with my friend, MR L. McBRIDE, for the respondent.  (instructed by Balazs Lazanas & Welch LLP)

BELL J:   Yes, Mr Hmelnitsky.

MR HMELNITSKY:   Your Honours, the question of construction that is raised by the first proposed ground of appeal concerns the meaning of section 6 of what we, in our submissions, have called the “IOPIA” – the International Organisations (Privileges and Immunities) Act. The Court below was divided on that question at a high level of principle. Section 6 of the Act is reproduced over pages 71 and 72 of the application book. May I draw the Court’s attention to the language of section 6(1)(d) which appears around halfway down page 72. Your Honours there see the language that is in dispute. Skipping over the chapeau, the language is:

a person who holds an office in an international organisation –

I also draw the Court’s attention to regulation 10 of the 1986 regulations which give effect to that provision which appears on page 75 of the application book.  Your Honours see there in clause 10 that the language is relevantly the same.  It is a reference to:

a person who holds an office in the United Nations –

The particular question that arises, your Honours, is as to the meaning of those words and, specifically, whether or not the concept that is referred to in both section 6 and in regulation 10, is one that is informed by the meaning of the international agreement to which this Act gives effect.

The majority and the minority in the Court below took what we would suggest are starkly different approaches to resolving that issue. The first of those is the approach for which the Commissioner contended and that was adopted by the Chief Justice below. That is, that the reference in section 6 and in regulation 10 to a person who holds an office is to that same concept that appears in the UN Convention to which these provisions give effect. That is to say, an official, as that expression is used in the international agreement and by the UN itself. If that is the approach that is ultimately adopted, then the Commissioner succeeds essentially for the reasons that are given by the Chief Justice.

The second approach, as your Honours will have seen from the materials, is different and, we suggest, different at a high level of principle.  That is the approach that was adopted by the majority starting with what might be called – although, perhaps, inaccurately – a common law conception of what it means to hold an office by reference to something said by Justice Rowlatt in Great Western Railway v Bater. On that approach – which was the approach expressly adopted in the Court below by the majority – it is possible to fix a meaning for section 6 without regard at all to the international law concept of an official which appears in the agreement to which that provision gives effect.

GAGELER J:   You are addressing your submissions to what you identified as the first ground of the appeal.

MR HMELNITSKY:   Yes.

GAGELER J:   But, there is really just one ground, is there not?  Is it not just teasing out the consequences of ‑ ‑ ‑

MR HMELNITSKY:   Yes.  Yes, that is so, your Honour.  The proposed grounds of appeal necessarily address two matters.  First, the question that arises under the Act and then, secondly, necessarily the question that arises under the ruling.  If leave is granted in relation to the first issue, then it necessary for the Court to grapple with the issue that arises in relation to the ruling.  Of course, that is a point that really comes bundled with that larger question of principle that is raised by the first ground of appeal. 

So, in that sense, if your Honours are otherwise of the view that the first ground warranted a grant of special leave, then the only question would be whether there was anything in that second issue – the ruling issue – that ought stand in the way of a grant of leave.  Ultimately, what the respondent puts against us in relation to that is that it is a ruling.  It may be withdrawn by the Commissioner at any time.

But, in a sense, your Honours, that is our point. It is just a ruling. It may be withdrawn at any time and there is a need for rulings, and the whole of the ruling regime, to conform with the law properly understood. So, if there is a need – and we say there is – to clarify the meaning of section 6 of the IOPI Act, then the existence of a ruling, or the withdrawal of a ruling, really makes no difference and is certainly not a reason for the Court not to address the issue.

BELL J:   Yes, I think, Mr Hmelnitsky, it might be sensible at this juncture if we hear from your opponent.

MR HMELNITSKY:   Thank you, your Honours.

BELL J:   Yes, Mr Slater.

MR SLATER:   Yes, your Honours.  Your Honours, as my friend has indicated, there are two parts to this application.  The first is whether the post occupied by the respondent, whom I will call the taxpayer, was an office for the purposes of the Privileges Act.  The second is whether the Commissioner is bound by his own ruling to accept that it was.  The Commissioner must succeed on both.  I will come back to the second but it is sufficient, perhaps, to say at the moment that the Commissioner’s case on the ruling depends on reading his own ruling – not according to its plain meaning but, instead, straining the meaning to achieve a particular result.  As my friend as indicated, it is very faintly pressed by them that the ruling does not bind the Commissioner and, in our submission, it makes this a poor vehicle for testing the argument on the first scratch, but I will come back to the ruling point a little later.

BELL J:   As I understand it, the applicant embraces the Chief Justice’s reasoning in relation to the ruling that a person in the position of your client would have been required to consider whether or not he was engaged by the organisation as an expert or consultant.

MR SLATER:   We say that the Chief Justice is wrong in that view.

BELL J:   Yes, yes. 

MR SLATER:   Does your Honour wish to hear from me on that immediately?

BELL J:   No.  However, it suits you, Mr Slater.  I think the freight is in the first ground.

MR SLATER:   Yes.  Turning to that, the issue is whether the respondent was a person who holds an office in an international organisation and my friend has taken you to the relevant part of the application book in that regard.  There is no factual contest.  He occupied the position of project manager.  The position met the tests of being an office as understood in Australian law.  That is not in contest.  The Tribunal found the facts that met that meaning and the words of the section are plain enough – “holds an office in an organisation”.  The ordinary meaning in Australian law is uncontroversial.  My friend drew your Honour’s attention to what was said by Justice Rowlatt in Bater’s Case.

The Tribunal found that the project manager position had those attributes and that, in turn, is not in contest.  What the Commissioner relies upon to displace the ordinary meaning in Australian law of the words in an Australian statute is not the context of the statute – neither the statute as a whole, nor the section in question.  What is relied upon is the context of the operations and understanding of the internal organisation of the United Nations and the interpretation of a contract between the United Nations and the respondent.

The substance of our friend’s submission is that in the Privileges Act and in the regulations made to invoke the operation of that Act, the words “hold an office” mean – not of the consequence thereof – but mean that the person concerned is designated internally as an official by the United Nations and is stated in United Nations contractual documents to be an official.  In substance, our friend’s submission is not that being designated by the United Nations as an official is a fact which falls within the scope of the meaning of the statute but, rather, that being designated by the United Nations is the meaning of the statute.

My friend referred to the agreement – the Convention – as being “the agreement” which is given effect by this Act.  He used the definite article, “the agreement”.  But, the International Organisation (Privileges and Immunities) Act is not confined in its operation to the United Nations.  Your Honours will recall the decision of this Court in Macoun’s Case.  That concerned the specified agencies regulation.  That regulation invoked the Act in relation to 16 other agencies, none of them the United Nations.  There are 37 other regulations made under the Act which invoke it in relation to 33 further agencies, so some 50 agencies in all.

The United Nations protocols and systems relied upon by the Commissioner and by the Chief Justice do not apply to any of them.  None of them have the same complex systems.  To give your Honours some examples, organisations in respect of which regulations have been made include the Customs Co‑operation Council, the International Plant Genetics Resource Institute, the Organisation for Economic Co‑operation and Development, the South Pacific Forum, the Commission for the Conservation of Southern Bluefin Tuna.

BELL J:   I do not know that we need to hear them all.

MR SLATER:   I just wanted to give your Honour the flavour of it.

BELL J:   Yes.  Can I take this up with you?

MR SLATER:   Yes.

BELL J: Chief Justice Allsop considered, when one looked at the scheme of section 6 and the companion regulation, that there was an obvious link to the provisions of the Convention set out at 75 and 76, and following, of the application book. That link is underscored by the fact that under section 6 are conferred on persons who hold high office, certain privileges and immunities – different privileges and immunities in relation to those who hold an office and different privileges, again, on those serving on committees and the like. On the face of it, one can see the force of that argument. I am not quite sure that I understand – your response is, simply, that it is possible that they are overlapping. Is that right?

MR SLATER:   Our response is that the United Nations organisational system falls within the scope of the legislation but does not define its meaning.

BELL J:   Yes, yes.

MR SLATER:   It is a system of organisation to which the Act applies.

BELL J:   But does it follow that, on your construction, it would produce the result that a person coming within 6(1)(e) would not have the privileges and immunities that might be expected having regard to the scheme of the Convention. 

MR SLATER: Section 6(1)(e), your Honours?

BELL J:   Yes, I think it is that.

MR SLATER:   The expert on mission provision?

BELL J:   Yes.

MR SLATER:   I would not have thought so but I confess I do not quite understand the import of your Honour’s question.

BELL J:   If one looks to the particular privileges and immunities that one finds conferred under the fourth and fifth schedule, there are distinctions between them.

MR SLATER:   Yes.

BELL J: Those differing privileges might be thought to be reflected in the scheme of section 6 – that is, the intention to confer on people who, under the Convention, answer the description of – I think it is article – section 17 – and as officials of the United Nations having certain privileges that are distinct from those set out in the succeeding article in section 22 in relation to experts.

MR SLATER:   I think the point that your Honour is putting to me – please correct me if I am misunderstanding it – is that the Privileges Act should be limited by the terms of the UN Convention.

BELL J:   What I am putting to you, Mr Slater, is that one way of reading the Privileges Act might be that its intention is to pick up the scheme of the Convention in relation to the privileges and immunities that under Australian law are conferred, on the one hand, on people who hold an office and, on the other hand, on people who are experts.

MR SLATER:   We would say, your Honour, that the scheme of the legislation is that Australia should comply with the obligations which it had assumed.  But, it is important to understand that it is complying with the obligations, not confining itself.  The Act meets Australia’s obligations but does not limit Australia’s concession by reference ‑ ‑ ‑

BELL J:   It meets its obligations on your argument, as I understand it, in a way that differs from the provisions of the Convention respecting privileges and immunities.

MR SLATER:   Yes.  Those who fall within the scope of the Convention should fall within the scope of the Act.  But, the Act is not confined to those who fall within the scope of the Convention.  That is the point about the other treaties.  If the approach which the Chief Justice took were correct, then because the other organisations do not designate officials in the same way, there is nobody who meets, on his Honour’s view, the terms of the section.

What we say is that the section has a meaning according to Australian law.  Those who are properly officials under the scope of the United Nations’ system will fall within that.  But, it is not merely being designated an official by the United Nations which is sufficient.  We gave, in the written submissions, an example of some United Nations’ official designating a person in detention as an official for the purposes of getting him out of detention even though the person concerned had no obligations and no duties.  That would not be sufficient.

BELL J:  I think you and your ‑ ‑ ‑

MR SLATER:   The person has to be an officer.

BELL J:   I do not think there is an issue between the parties on that point. 

MR SLATER:   No.  But, there is an issue in the way in which we reach it.  We say that the way in which one reaches it is to read the statute as a matter of Australian law and ensure – because Australian law should be read so far as possible – to secure the result that the terms of the statute meet our obligations under the Convention but not in a way to limit the scope of the statute by the interpretation which is adopted by the United Nations of its protocols.

BELL J:   The submission assumes that Australian law has a settled meaning for office.

MR SLATER:   Yes.  That does not appear to be in contest.  The view which was expressed by Justice Rowlatt was said in the House of Lords and it was…..to be read into the bones of taxation lawyers.  As a taxation lawyer, I confess it is bred into my bones.  That is a rather sorry thing to say at this stage.  But, it has certainly been picked up by intermediate courts in this country.  This Court has not had occasion to consider it.  But, there has never been any contest about the meaning of “officer”.  There have been occasions when, for particular purposes, it has been said that an office has a different meaning – Sykes v Cleary is such an example ‑ but the reasoning in Sykes v Cleary has nothing to do with this issue.  The reasoning there was about conflicts between the person who was employed and a person who was performing parliamentary duties.  That does not arise here.

GAGELER J:   It is really all about the context in which the word is used and that is the point that was made by Chief Justice Allsop.

MR SLATER:   Yes.  But, if I can say, your Honours, about the Chief Justice’s approach?  What the Chief Justice is doing, in effect, is reiterating the view which he took when sitting – before he went to the Court of Appeal – as a judge of the Federal Court in the matter of NBGM and he took the same view there that one starts with the Convention, reads the Convention and then fits the language of the Act to the Convention.  That was a view which commended itself, I think, to Justice Kirby, although his Honour’s reasons are a little difficult to follow, but it was a view which was rejected by all the other members of the Court and very, very explicitly by the plurality. 

We have set out the passage from the reasons of the plurality at page 86 of the application book. What the Court said there was that his Honour’s approach – and the passage in the reported judgment, your Honours, is 231 CLR 52, page 71, paragraphs 60 to 61, but it is set out on page 86. What their Honours said was that to take the course which his Honour had taken was:

“. . . to invert the steps which an Australian court should take in situations in which international instruments have been referred to in, or adopted wholly or in part by, enactments.  The first step is to ascertain, with precision, what the Australian law is . . . The subsequent step ‑ ‑ ‑

GAGELER J:   What does that mean?  You look at the words of the statute ‑ ‑ ‑

MR SLATER:   You look at the words of the statute.

GAGELER J:   ‑ ‑ ‑ then you have to ask what do they mean and then you look to the context.

MR SLATER:   Yes, but you do not start with the context.  You do not start with the international obligation – I am sorry – you do not start with the international treaty as the context.  You start with the Australian statute.  You derive an understanding of the Australian statute and then an understanding of the operation of the Convention.  When their Honours said section 36 must be considered in context, they went on in the very next sentence to say:

The context is provided by other provisions of –

the Act:

The convention does not provide any of the framework for the operation of the Act.  The contrary is the case. 

They explicitly rejected what the present Chief Justice had expressly adopted as the foundation of his reasoning – that one starts with the Convention ‑ and that is what he has done here.  He has started with the Convention.  As your Honour Justice Bell put to me, start by looking at what the Convention does.  One understands the historical background to that.  The UN treaty was the first treaty in the series.  But, one reads the statute as a whole.  One reads the Australian statute and then looks to see whether it meets the obligations under the Convention, and it does. 

One does not then say, it meets the obligations of the Convention, it should then be read down to those obligations, and read down for all purposes to those obligations, even if it has application to other organisations where the extent to which it is read down is absent.  We say, your Honour, that is the wrong approach.  One starts with the words of the statute.  The words of the statute have a well‑established ordinary meaning in Australian law – what holds an office is.  One looks at the permanence of the position, the occupation by several persons, the duties which are to be performed, and the like, and there is no contest that all of those matters are met here.

One then says does the person who holds that office meet the terms of the section.  One then says does the section meet the terms of the obligation.  Does it need to be modified to meet the terms of the Convention?  We say, no, it does not.  It performs all Australia’s obligations under the Convention.  It does not read them down.  It does not read the statute down to limit it to what the United Nations says is an official.  Your Honours, that is the essential distinction between the parties.

BELL J:   Yes.

MR SLATER:   Your Honours, as far as the ruling is concerned, it is true that the ruling can be withdrawn, undoubtedly so.  But, this taxpayer should not be made the vehicle for the Commissioner to read the ruling down.  The Commissioner has the law established by the decision of the majority of the Federal Court.  He should amend his ruling according to it.  The ruling is quite clear.  It says – and if I could take your Honours to it – it is at page 52 of the application book.  The operative parts are in paragraphs 2 and 3.  There are three things to note about it.  It starts by saying:

The Department of Foreign Affairs and Trade . . . take the view that the phrase ‘person who holds an office’ . . . covers those people who work as employees for that organisation.

There is no contest that the respondent in this case worked as an employee.  They then go on to say, the Department does:

not accept, however, that the phrase includes ‑

among others:

persons engaged by the organisation as experts or consultants.

The exclusion is a person engaged as an expert.  That is, to perform a role as an expert.  Not persons who were engaged to perform a different role who happened to be an expert which is the view the Chief Justice took.  Here, the respondent, Mr Jayasinghe, was engaged as project manager.  That is what he did.  He was not engaged as an expert on mission to make inquiry.

The third thing that the ruling goes on to say in paragraph 3 is that – and this is about halfway down paragraph 3:

we will accept, in the absence of contrary evidence, that this designation –

That is, designation – a person who holds an office in the organisation:

is sufficient evidence –

The significant word there is “sufficient”.  The way the Chief Justice reads the matter is necessary.  The way our friends read it.  It is necessary evidence.  We say it is not necessary. 

On the plain words of the ruling, in our submission, it protects the respondent.  The Chief Justice and our friends rely upon what is, in effect, an inter partes estoppel by the terms of the contract.  But, the fact is that he was employed as an agent – employed as a project manager.  He was not employed as an expert and that is sufficient, in our submission.  One does not need to look at paragraph 3.

Your Honours, as my friend said, the ruling itself is of no particular moment.  It is an instrument which is revocable at will by the applicant.  In the ordinary course, that would not stand in the way of considering an important matter.  But, for this taxpayer, it is an important matter, that he was protected by the ruling, and this Court should not casually submit him to further obligations in a case where the Commissioner ‑ ‑ ‑

GAGELER J:   You mean, incidentally.

MR SLATER:   Sorry?

GAGELER J:   You mean, incidentally rather than casually.

MR SLATER:   I am sorry, your Honour, yes.  I did mean that and I apologise for the disrespect involved in the use of the word “casually”. 

BELL J:   And, I think, Chief Justice Allsop’s approach was to consider that your client might have read the taxation ruling in light of clause 4.1.4 that individual contractors were considered experts on mission for the United Nations and not subject to the privileges and immunities that included exemption from taxation.  I understand the point that you have put that runs counter to that, but ‑ ‑ ‑

MR SLATER:   Yes.  That is not the position he was engaged to perform.

BELL J:   Yes.

MR SLATER:   Your Honours, those are our submissions.

BELL J:   Yes.

MR HMELNITSKY:   Your Honours, can I say something briefly about NBGM?  It is put against us that the reasoning of the Chief Justice in dissent is an example of the error that was identified by this Court in NBGM.  But, your Honours ‑ ‑ ‑

GAGELER J:   If it is, Mr Hmelnitsky, then it is a big question.

MR HMELNITSKY:   Indeed, indeed.  It is a very large question.  The short point I wanted to make was that that was a case that involved a perceived conflict between section 36 of the Migration Act, on the one hand, and Australia’s international obligation on the other.  There was a conflict and the question was, in those circumstances, which prevailed.  That is not this case.  The Court in QAAH, which was decided at the same time as NBGM, pointed out, and made clear, the same proposition on which we rely here and which the Court repeated in Macoun and has done in other cases, that where a constructional choice is open as to the meaning of the Australian law that conforms to an international agreement to which it gives effect, then that construction should be chosen.

BELL J:   Mr Hmelnitsky, if it is put against you that the Privileges Act gives effect to a deal more than consideration of those employed by the United Nations, what is your answer to that?

MR HMELNITSKY:   The regulation in issue here, which appears particularly at page 75 of the application book, deals solely with the UN. So, the particular question of construction that arises here arises in the context of a regulation that applies only to the UN. But, can I offer your Honours perhaps a slightly wider answer to what is put against us, and that is that the reasoning of the Chief Justice on the construction of section 6 of the Act comes down to what appears in paragraph 25 of his Honour’s reasons at page 39 of the application book. And, particularly, what appears at the end of paragraph 25 of his Honour’s reasons, starting from about line 38 or 39 of the page. His Honour said:

The language, of the relevant provisions, itself directs one as to how the organisation itself structures its affairs and identifies those who work for it (in particular in regard to privileges and immunities) so as to best conduct its functions.

So, his Honour certainly has not confined himself in the way that is assumed by that submission that is put against us.  If the Court pleases.

BELL J:   Yes, thank you.  Yes, there will be a grant of special leave in this matter.  We note that there is an understanding in relation to the costs in light of the applicants’ test case litigation program referred to at paragraph 53 of the submissions.

MR HMELNITSKY:   Yes, your Honour.

BELL J:   Yes.  Yes, very well.  What is the estimate?

MR HMELNITSKY:   Certainly no more than a day, your Honour.

MR SLATER:   We think about a day.

MR HMELNITSKY:   Possibly more than half a day if it is necessary to look at all of the extrinsic material.

BELL J:   Yes, very well.  As indicated, special leave to appeal is granted.  The parties are invited to obtain the directions relating to the filing of submissions from the Registry and to adhere to those.

AT 10.03 AM THE MATTER WAS CONCLUDED