FANDS (ACT) Pty Ltd v Commissioner for ACT Revenue
[2017] ACAT 65
•31 August 2017
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
FANDS (ACT) PTY LTD v COMMISSIONER FOR ACT REVENUE (Administrative Review) [2017] ACAT 65
AT 16, 23, 24, 25, 26, 27/2017
Catchwords: ADMINISTRATIVE REVIEW - subpoenas – application for subpoenas to be set aside – whether documents required to be produced are relevant to the substantive issues in the proceedings – test of relevance that applies to subpoenas generally – whether a different or additional test has to be satisfied for documents to which section 99 of the Taxation Administration Act1999 applies – whether the Commissioner for ACT Revenue can be compelled to answer a subpoena for production of documents containing protected information because the production is necessary for the purpose of the administration of a tax law – whether the subpoenas are oppressive
Legislation cited: Taxation Administration Act 1999 s 99
Rates Act 2004 ss 6, 9, 10, 11, 11A, 14, 71Cases cited:Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq)[2017] FCA 358
Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197
Propend Finance Pty Limited v Commissioner of Australian Federal Police (1994) 27 ATR 584
Donnelly v Davison (2000) 105 FCR 1
National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372
Tribunal: President G Neate AM
Date of Orders: 31 August 2017
Date of Reasons for Decision: 31 August 2017
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 16, 23, 24, 25,
26, 27/2017
BETWEEN:
FANDS (ACT) PTY LTD
Applicant
AND:
COMMISSIONER FOR ACT REVENUE
Respondent
TRIBUNAL: President G Neate AM
DATE:31 August 2017
ORDER
The Tribunal orders that:
1.The application for the subpoena dated 20 July 2017 to be set aside is dismissed subject to the qualification that the Commissioner for ACT Revenue need not produce the amounts of the assessments of stamp duty in respect of the nominated transactions.
2.The application for the subpoena dated 25 July 2017 to be set aside is dismissed, and FANDS (ACT) Pty Ltd is directed to provide, as soon as possible, a written reply to the request for clarification of the scope of the second subpoena set out in the letter dated 22 August 2017 from the Commissioner’s solicitors to the solicitor for FANDS.
3.Liberty to apply.
………………………………..
President G Neate AM
REASONS FOR DECISION
Introduction
1.FANDS (ACT) Pty Ltd (FANDS) has applied to the ACT Civil and Administrative Tribunal (the Tribunal) for a review of the decision by the Commissioner for ACT Revenue (the Commissioner) dated 3 March 2017 to disallow FANDS’s objection to the Commissioner’s decision to re-determine the unimproved value of Block 15, Section 28, Braddon, known as 11 Lonsdale Street (the subject land) which FANDS owned from about mid 2002 until about May 2017.
2.Subpoenas have been issued on behalf of FANDS to the Commissioner to produce a range of documents in relation to proceedings AT 16, 23, 24, 25, 26 and 27 of 2017.
3.On 23 August 2017, the Commissioner applied to the Tribunal for orders that:
(a)the subpoena (a) dated 20 July 2017 (the first subpoena) is set aside; and
(b)the subpoena (b) dated 25 July 2017 (the second subpoena) is set aside.
4.The Tribunal as presently constituted heard the application on 28 August 2017.
5.The decision about whether those two subpoenas should be set aside requires consideration of the scope of the subpoenas, the legal principles governing what material must be provided in response to subpoenas, and practical issues in relation to compliance with those two subpoenas, particularly whether they are oppressive.
The scope of the original and amended subpoenas
6.The first subpoena, as originally worded, sought:
1. Assessments, contracts, and transfers for all matters relating to the sale or purchase transactions in:
(a)The period 1 July 2008 to 1 July 2017;
(b)For properties within the district/division of Braddon in the Australian Capital Territory but limited to properties in:
i.Lonsdale Street;
ii.Mort Street;
iii.Torrens Street; and
(c)Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT).
2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.
For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).
7.Following correspondence and discussions between the parties, the scope of the subpoena was adjusted as at 22 August 2017 to the following:
1. Documents constituting assessments of Stamp Duty (limited to the Notice of Assessment, and the front pages of the associated Contract for Sale, and/or Transfer, and any associated special conditions) for all transactions in:
(a)The period 1 July 2008 to 1 July 2017 (“the Period”);
(b)For properties within the Sections 20, 21, 28, 29 within the District/Division of Braddon in the Australian Capital Territory (“the Area”);but
(c)Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT) in that Period and Area.
2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.
For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).
8.In effect, the scope of the first subpoena has been narrowed.
9.The second subpoena, as originally worded, sought:
1. Documents associated with any lease variation charges calculated and unimproved value analyses:
(a)The period 1 July 2008 to 1 July 2017;
(b)For properties within the district/division of Braddon in the Australian Capital Territory but limited to properties in:
i.Lonsdale Street;
ii.Mort Street;
iii.Torrens Street; and
(c)Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT).
(d)But including any instructions from the Commissioner of ACT Revenue (or his or her representative) to the ACT Valuation Office or the Australian Valuation Office.
2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.
For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).
10.Following correspondence and discussions between the parties, the scope of the second subpoena has been adjusted as at 22 August 2017 to the following:
1. Documents constituting the determination of Change of Use Charge and/or Lease Variation Charge under the Planning and Development Act 2007 (limited to the statutory calculation and associated V1, V2, or other valuation is relied upon) in respect of:
(a)The period 1 July 2008 to 1 July 2017 (“the Period”);
(b)For properties within the Sections 20, 21, 28, 29 within the District/Division of Braddon in the Australian Capital Territory (“the Area”);but
(c)Excluding any transactions involving the sale, purchase or transfer of residential property known as units under the Unit Titles Act 2001 (ACT) in that Period and Area.
2. Copies of any of the documents sought in paragraph 1 above where the original documents are no longer in the possession, custody or control of the recipient of the subpoena.
For the purposes of this Subpoena, the Applicant adopts the definition of “Document” as defined in the Legislation Act 2001 (ACT).
11.In effect, the scope of the second subpoena was narrowed in some respects but, the Commissioner contends, was also broadened by the inclusion of a new chapeau to paragraph 1.
12.Although the overall scope of these subpoenas has been narrowed, the Commissioner submits that the documents sought to be produced are not relevant to the matters in issue between the parties and their production is not necessary for the purpose of the administration of a tax law, in this case the Rates Act 2004 (see section 99 of the Taxation Administration Act 1999). In the alternative, the Commissioner contends that, even in their refined form, these subpoenas are oppressive. Consequently, the Commissioner presses for both subpoenas to be set aside.
13.The Commissioner’s submissions have two components:
(a)legal principles in relation to what might properly be the subject of a subpoena; and
(b)the practical consequences of complying with the two subpoenas.
The applicable law
14.The issues raised by the application for the setting aside of the two subpoenas have to be resolved by reference to the law relating to subpoenas generally and the operation of section 99 of the Taxation Administration Act 1999.
15.The authorities outlining what documents can be covered by a subpoena were usefully summarised by McWilliam AsJ in Canberra Cleaners Pty Ltd & Ors v Commissioner for ACT Revenue[1] (Canberra Cleaners). In that case, the Commissioner sought the setting aside of a subpoena issued to the Commissioner by the plaintiffs. The primary basis for the Commissioner’s application was that the documents sought under the subpoena were irrelevant to the issues in the substantive proceedings. Her Honour wrote:[2]
The test for relevance of a subpoena is whether production of the documents would be reasonably likely to add in the end to the relevant evidence in the case, including apparent or adjectival relevance, in the sense that the documents could ‘possibly throw light on the issues in the main case’: Trade Practices Commission v Arnotts Ltd (1989) 88 ALR 90 at 103, or that it is ‘on the cards’ that they could do so: Portal Software v Bodsworth [2005] NSWSC 1115 at [24]. See also DPP v Warren [2015] ACTSC 111 at [22] and Elmaraazey v Capital Lawyers Pty Ltd [2016] ACTSC 54 at [44] where Mossop AsJ (as his Honour then was) cited in addition Spencer Motors Pty Ltd v LNC Industries Ltd [1982] 2 NSWLR 921 at 926-927 and Re North Coast Transit Pty Limited [2013] NSWSC 1912 at [7]-[9].
[1] Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197
[2] Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197 at [4]
16.As her Honour noted, the application in that case required an understanding of the issues arising in the main proceedings.[3] That observation applies equally to the present proceedings.
[3] Canberra Cleaners Pty Ltd & ors v Commissioner for ACT Revenue [2017] ACTSC 197 at [5]
17.Counsel for the Commissioner in Canberra Cleaners also relied on section 99 of the Taxation Administration Act 1999 which provides:
99 Restrictions on disclosures to courts and tribunals
(1) A person who is or has been a tax officer is not required to divulge protected information to a court, or produce a protected document or a document containing protected information to a court, unless its disclosure or production is necessary for the purpose of the administration or execution of a tax law.
(2) In this section:
court includes a tribunal, authority or person having power to require the production of documents or the answering of questions.
divulge includes communicate.
produce includes allow access to.
protected document means a document obtained or created in the administration or execution of a tax law.
protected information means information obtained in the administration or execution of a tax law.
18.There is a question whether, in cases such as this, satisfying the test of relevance in relation to a subpoena is sufficient to meet the requirements of section 99 that the production of the protected information “is necessary for the purpose of the administration or execution of a tax law.”
19.That issue was considered, but not decided, by McWilliam AsJ in Canberra Cleaners, where her Honour was referred to the decision of the Federal Court in Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq)[4] (Binqld). That case concerned the Federal equivalent to the non-disclosure provision in the Taxation Administration Act 1999.
[4] Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq)[2017] FCA 358
20.McWilliam AsJ wrote:
It seems to me that what is ‘necessary’ under s 99 of the Act will be determined by what is relevant in proceedings before the Court, with the test for relevance being in accordance with the authorities I have set out above.[5]
[5] Canberra Cleaners Pty Ltd & Ors v Commissioner for ACT Revenue [2017] ACTSC 197 at [26]
21.However, having decided that the documents sought in that case were not relevant at all, her Honour did not have to decide whether (as submitted by the Commissioner) the Court had to find those documents were more than simply adjectivally relevant before disclosure would be required under section 99 of the Act.
22.In relation to the present application, counsel for the Commissioner submitted that a two stage process is involved before deciding whether documents have to be produced in response to a subpoena. First, are the documents relevant to the issues in the substantive proceedings? Second, would the production of the documents involve carrying into effect the relevant provisions of a tax law (in this case the Rates Act 2004)?
23.Counsel for the Commissioner also described this process as a balancing exercise, having regard to the general complexion of the case.
24.In support of that submission, the Commissioner relied on parts of the reasons for judgment in Binqld. The Commissioner submitted that the effect of Binqld is that a court or tribunal should look behind the intention of a provision such as the secrecy provision of a tax law. If a document or documents might have some relevance to the issues in the substantive case, one must then ask whether the production of the document(s) involves carrying into effect a tax law.
25.The Commissioner submits that the documents sought by the subpoenas are not relevant; therefore they cannot be necessary for the purposes of section 99 of the Taxation Assessment Act 1999.
26.Counsel for FANDS noted that the circumstances in Binqld were different from the circumstances surrounding the present application because the case was before the Federal Court and the application was made at a different stage of the proceedings.
27.It is not necessary to deal in detail with the decision in Binqld, which dealt with legislation and circumstances different from those in the present case. However, some aspects of that decision can be applied in this case.
28.Having reviewed the numerous authorities in relation to statutory provisions comparable to section 99 of the Taxation Assessment Act 1999, Foster J adopted the authorities that uniformly supported a liberal approach to the construction of the provisions, particularly the exception provided in them.[6] He considered and followed earlier authorities in which it was held that “necessary” in this statutory context should be construed liberally to mean “requisite.” His Honour quoted judgments to the effect that “necessary” here does not mean absolutely or essentially necessary. It means appropriate, plainly adapted to the carrying out of the Act or its efficient administration.[7]
[6] Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [78]
[7] Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [57], [80](f), [109], quoting Propend Finance Pty Limited v Commissioner of Australian Federal Police (1994) 27 ATR 584, 591-592
29.Foster J concluded that, in every case, the nature of the proceeding in the Court is relevant to the conclusion reached about the applicability of the exception.[8]
[8] Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [79](c)
30.His Honour also quoted authority for the proposition that the purpose of section a provision such as 99 is not principally to protect confidential information in the interests of taxpayers but to protect officers from compulsion to divulge that information other than in prescribed circumstances.[9]
[9] Donnelly v Davison (2000) 105 FCR 1 at [6]
31.Counsel for the Commissioner drew the Tribunal’s attention particularly to the part of the decision where Foster J stated, among other things, that the objects of the legislation “make clear that it is the intention of the legislature to secure a reasonable balance between the protection of the taxpayers’ confidential information, on the one hand, and the efficient and effective administration of government and law enforcement, on the other.”[10] Later in the judgment his Honour stated:
It seems to me that the concept of carrying into effect the provisions of a taxation law involves, directly or indirectly (inter alia), the recovery of unpaid tax, that is to say, the true or correct amount of unpaid tax. This means that the Court does not simply focus on the position of the Commissioner but looks at the nature of the relevant proceedings and the issues raised in that proceeding in order to determine if it involves the carrying into effect of a taxation law.[11]
[10] Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [105]
[11] Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [113]
32.Foster J identified the “ultimate aim” or “real purpose” of the proceedings in Binqld as being to recover the unpaid tax which is the subject of various assessments issued by the Commissioner. His Honour concluded that, if that “complexion of the present proceedings is correct,” it would be “quite wrong” to allow the Commissioner to disclose protected information to one party while withholding the same documents from other parties. In his view, such a “one-sided outcome would not be conducive to the recovery of the correct or true amount of tax and would not be in the interests of justice.” On that basis, the disclosure of the information in that case was “necessary for the purpose of carrying into effect a taxation law being those parts of the Commonwealth taxation law which allows the Commissioner to issue assessments and to recover unpaid tax.”[12]
Practical issues
[12] Binqld Finances Pty Ltd (In Liq) v Tamarama Fresh Juices Australia Pty Limited; In the Matter of Binqld Finances Pty Ltd (In Liq) [2017] FCA 358 at [114]
33.The practical aspects of the application to set aside the two subpoenas relate to what the Commissioner submits is the oppressive nature of those subpoenas as demonstrated by:
(a)the number of documents that the Commissioner would have to produce; and
(b)the time that employees of the Commissioner would take to produce the documents.
34.Evidence in relation to those points was provided in the form of witness statements from Mr Russell Stroud, the Assistant Manager in the Objections Unit of the ACT Revenue Office and Mr Carlo King, a certified practising valuer and Senior Manager of the ACT Valuation Office.
35.Those statements were accepted by the Tribunal over the objection of counsel for FANDS on the basis that that the documents had only been provided to her minutes before the hearing of this application commenced.
36.For present purposes it is sufficient to note that, in relation to the first subpoena, Mr Stroud has conducted searches to extract commercial transactions for the nominated sections within Braddon. He would need to search further 203 dutiable transactions. He estimates that each search will take approximately 10 minutes to complete and the exercise would produce more than 600 pages of documents.
37.In relation to the second subpoena, Mr Stroud has been advised by the ACT Valuation Office that there would be approximately 70 Lease Variation Charge transactions captured under the subpoena. Most of the information is saved on the ACT Planning and Land Authority’s internal computer system and it would take between one and five hours per transaction to collate the requested information.
38.In relation to the second subpoena, Mr King observed that the subpoena relates to 58 properties within the Braddon Commercial precinct and he estimated the subpoena would capture approximately 200 valuation files. He stated that the properties include office blocks, bulky good outlets, licensed premises, service stations and communication facilities with limited relevance to an assessment of the unimproved value of the subject property. Having regard to the range of documents held by each file and the need to identify and copy relevant documents, he estimated it would take 55 minutes per file. The total time for the ACT Valuation Office to comply with the second subpoena, if one person with dedicated to that task full-time, would be in the order of 4.5 working weeks.
39.To illustrate the Commissioner’s submission about the unnecessary, and perhaps the oppressive, nature of the subpoenas, counsel for the Commissioner noted that the valuation exercise in relation to the subject land has already been undertaken by a valuer, Mr Noel McCann on behalf of FANDS. Mr McCann had adopted a comparable sales approach to making his valuations, referring to seven comparable sales of land. Counsel expected that, as a highly competent valuer, Mr McCann found appropriate sales evidence including relevant features of sale properties. If Mr McCann has determined what are comparable sales then those sales are in his report. If he did not have sales evidence, that would have been an impediment before his report was provided. However, there is nothing to say that his report is incomplete due to lack of evidence.
40.Furthermore, FANDS is affiliated with three valuers. The original submissions made by FANDS to the Commissioner relied on comparable sales, similar to those identified by Mr McCann. Therefore, counsel submitted, it is “rather striking” that FANDS is seeking further information of that kind at this stage.
41.In reply, counsel for FANDS submitted that the information it seeks is relevant to the substantive issues. FANDS is entitled to obtain that information notwithstanding the evidence already filed. The purpose of seeking that information may be to attempt to bolster its case and to find weaknesses in the Commissioner’s case (the outline of which has yet to be provided).
42.Counsel for FANDS stated that it was not seeking information that is subject to privacy laws, and suggested that any such information in the subpoenaed documents could be redacted. Counsel for the Commissioner noted that reductions also take time to do.
43.As I understand her submission, counsel for FANDS suggested that there need be no breach of privacy in the production of the extracts from the subpoenaed documents. What FANDS seems to want is the data about transactions that might inform an assessment of the unimproved value of the subject land. Although that might be so, Mr McCann’s valuation assessment report indicates that the identity of a contracting party or parties might also inform the valuer about the utility of a particular sale for present purposes. Mr McCann stated, for example, that one sale to which he referred was not a true indicator of a single block value without adjustment for the keenness of the purchaser of adjoining blocks to buy that block to deliver consolidated redevelopment site.
44.If the identity of the contracting parties is at least potentially relevant to the expert analysis of a sale, then that need not prevent the production of a document or extract from a document. As counsel for FANDS noted, not all the subpoenaed material would necessarily be relied on, let alone tendered, in the hearing.[13] However, counsel submitted, one might expect that the subpoenaed material could confirm the case being put by FANDS and be used to critique the Commissioner’s case. I add that the converse might apply, and the information might bolster the Commissioner’s case. Either way, it is likely to be relevant to the matter in issue in this case.
[13] See National Employers’ Mutual General Association Ltd v Waind and Hill [1978] 1 NSWLR 372
45.There are other circumstances that provide the context for the issue of the two subpoenas. In the absence of a process for discovery of documents (as would apply in conventional litigation), parties before the Tribunal use subpoenas to obtain documents that are not provided otherwise (for example as part of the T documents). Furthermore, the two subpoenas have been issued in advance of the Commissioner filing and serving a statement of facts and contentions. In accordance with orders made previously by the Tribunal, that document is due to be filed and served on 1 September 2017. According to counsel for FANDS, the absence of that document at this stage means that FANDS does not know the case being advanced by the Commissioner at the time when FANDS is defending the scope of the subpoenas. In reply, counsel for the Commissioner observed that FANDS flagged the issues in this case. FANDS cannot claim to be in the dark because the Commissioner has not filed his case. As counsel also observed, the absence of the Commissioner’s statement of facts and contentions is not a proper basis for issuing a subpoena. FANDS can only seek what is relevant.
46.Finally the orders made previously by the Tribunal have scheduled the hearing of the substantive matters for 12, 13 and 14 September 2017. Both parties, and the Tribunal, are committed to complying with the timetable set out in those orders.
47.It is against that background that the Commissioner’s application is to be considered and decided.
The issues in the substantive case
48.The hearing of this application, the representatives of the parties agree that the substantive case raises two issues which are, in essence:
(a)What was the unimproved value of the subject land in each of the relevant years? [14]
(b)Whether the Commissioner should have exercised a discretion to redetermine the unimproved values of the subject land from 2011 onwards.
Consideration and conclusion
[14] The statement of facts and contentions filed by FANDS expresses this issue as whether or not the redetermination of unimproved values issued by the Commissioner redetermining the unimproved value of the subject land for the years 2009 to 2016 ought to have been made
49.In dealing with the Commissioner’s application to set aside the two subpoenas is necessary to consider:
(a)whether the documents sought by the subpoenas are relevant to the substantive issues in the case;
(b)whether the production of the documents would meet the requirements of section 99 of the Taxation Administration Act 1999; and
(c)whether, even if the answers to (a) and (b) are yes, the Tribunal should set aside the subpoenas in the exercise of discretion on the basis that it would be oppressive to require the Commissioner to produce the documents specified in those subpoenas.
50.Counsel for the Commissioner submitted that the issue for the Tribunal is the unimproved value of the subject land and that issue is to be resolved by reference to expert valuation opinion. That proposition is not disputed. She then submitted that the documents sought in relation to the unimproved value of other blocks in Braddon cannot go to the unimproved value of the subject land. That does not necessarily follow. Information about comparable blocks in the neighbouring area might throw some light on whether the unimproved value of the subject land is defensible relative to the values of other comparable parcels. That information, although not necessarily conclusive of the validity of the unimproved value assigned to the subject land in each of the eight years,[15] is reasonably likely to assist in reviewing the valuation assessments made by Mr McCann in his report and any valuation evidence provided by the Commissioner.
[15] For example, if the valuations of the blocks were infected by an error in the valuation process then they might be all ascribed incorrect valuations. Hence the valuations relative to each other would be defensible even though each is incorrect
51.The potential relevance of the material sought by the two subpoenas can be gleaned from Mr McCann’s report on his assessments of the unimproved value of the subject land for each of the eight years from 1 January 2009 to 1 January 2016.
52.He described the task for the valuer, consistent with section 6(1) of the Rates Act 2004, as being to assess the unimproved value having regard to the highest and best (optimum) use permitted by the Crown Lease, generally as a clean vacant site, with no improvements, no tenants, no agreement to lease and no pre-sales or any other commercial agreement that adds value. He contended that the best market evidence to determine the unimproved value of a site, in accordance with section 6 of the Rates Act, is to analyse sales of similar vacant sites of a similar value range, with similar development potential. He noted that it is difficult to obtain “exact like with like.”
53.He described the subject land as being positioned south of the midpoint of the Braddon former Service Trades redevelopment precinct, and stated that the Braddon redevelopment area is formed by Sections 20, 21, 28 and 29 Braddon with street frontages to the western side of Torrens Street, both sides of Lonsdale Street and the western side of Mort Street. He described the research undertaken in relation to sales and property trends in the Braddon and other ACT mixed land use development locations to finalise assessments of the unimproved value of the subject land at each of the required dates. He stated that market research indicates that the slow take-up of sites for early redevelopment in the Braddon Redevelopment Area over the past decade was a result of a number of factors. According to Mr McCann, “Government policy variations in how charges are to be assessed and rates charged has concerned property developers.” When setting out the underlying assumptions for the valuation report assessments, he stated that the sales information, market trends and ACT Government policy changes have been compiled from his research.
54.The seven sales in the precinct on which he relied comprise two in Torrens Street, three in Mort Street and two in Lonsdale Street. His observations about features of those sales include that four of the Braddon sales analysed confirm a trend that “the price paid prior to variation of the lease purposes clause, represents 90% of the value of the development site cost when the lease variation is paid.” Later in the report he stated:
The Braddon precinct redevelopment site sales, although relevant, are more difficult to analyse due to likely conflicting opinion on issues such as Crown Lease variation costs, demolition costs and Lease payouts from existing tenants and the added value of improvements.
55.Information about decisions in relation to the determination of Change of Use Charges and/or Lease Variation Charges for neighbouring properties might throw some light on the Commissioner’s decision in relation to the subject land and hence whether he should have exercised his discretion to issue a redetermination of its value. The material sought might also indicate when the Commissioner became aware of the change on the subject land.
56.Information about decisions in relation to the determination of Change of Use Charges and/or Lease Variation Charges for neighbouring properties might throw some light on the Commissioner’s decision in relation to the subject land and hence whether he should have exercised his discretion to issue a redetermination of its value. The material sought might also indicate when the Commissioner became aware of the change on the subject land.
57.I am satisfied that, subject to two qualifications set out below, the two subpoenas seek the production of material that would be reasonably likely to add to the relevant evidence in the case and could possibly throw light on the issues in the case.
58.The first qualification is in relation to the first subpoena. The letter dated 22 August 2017 from the Commissioner’s solicitor to the solicitor for FANDS refers to the opening words of paragraph 1 of the revised subpoena which identifies documents “constituting assessments of Stamp Duty” for a specified transactions. The Commissioner’s solicitor states that she is instructed that stamp duty is payable in relation to the capital improved value of a property, and therefore the assessment of stamp duty is of no apparent relevance for the purposes of determining the unimproved value of the subject land. That statement has not been contradicted in correspondence or before the Tribunal. If, as I have found earlier, the purpose of this subpoena is to obtain documents which, after some analysis, could assist in determining the unimproved value of the subject land at a relevant date or dates, then the assessment of stamp duty on another basis cannot assist in that determination. Accordingly, although I dismiss the application to have the first subpoena set aside, I direct that the Commissioner need not produce the amounts of the assessments of stamp duty in respect of the nominated transactions.
59.On the basis that documents produced in response to the second subpoena might assist in determining the unimproved value of the subject land and might provide information in relation to the basis on which the Commissioner exercised his discretion in 2016 to redetermine the unimproved land values of the subject land, I have decided not to set that subpoena aside. However, it would appear that, as at 22 August 2017 and at the date of the hearing of the set-aside application on 28 August 2017, the Commissioner was still seeking from FANDS some clarification as to the scope of the second subpoena. Accordingly, I direct that, if it has not done so already, FANDS is to provide a written reply to the request for clarification about the scope of the second subpoena set out in the letter dated 22 August 2017 from the Commissioner’s solicitors to the solicitor for FANDS. That reply should be provided as soon as practicable. If it is not provided, then the Tribunal will not be sympathetic to any submission by FANDS that the Commissioner has failed to produce all of the documents sought.
The operation of section 99 of the Taxation Assessment Act 1999
60.Having decided that most of the documents described in these subpoenas are relevant to the issues in the substantive case it is necessary to decide whether section 99 of the Taxation Assessment Act 1999 operates to inhibit or prevent the production of any documents in response to the two subpoenas. Section 99 is quoted earlier in these reasons for decision (at [17]) and judicial observations about its meaning and operation are also summarised above. The key issue is whether the disclosure or production of the protected document(s) or protected information would be “necessary for the purpose of the administration or execution of a tax law.”
61.The Note to section 1 of the Rates Act 2004 states that the Rates Act is a tax law under the Taxation Administration Act 1999.
62.The Rates Act 2004 provides for annual determinations of the unimproved value of parcels of land for each financial year.[16] If an error was made in relation to a determination of the unimproved value of a parcel of land is at 1 January in a particular year, the Commissioner may redetermine the unimproved value at the redetermination date (1 January of the relevant year). An “error” in relation to a determination includes an error in making a valuation on which the determination is based, and the duplication of an error in relation to an earlier determination.[17]
[16] Rates Act 2004 ss 9, 10
[17] Rates Act 2004 s 11
63.The Commissioner may redetermine the unimproved value of a parcel of land as at a date if a change of circumstances happens in relation to a parcel of land that affects the unimproved value of that land.[18]
[18] Rates Act 2004 s 11A
64.The rates to be imposed for a parcel of rateable land are calculated by reference to a statutory formula that includes the unimproved value of the land.[19] The Rates Act provides for objections to be made to an assessment, if the objection relates to the valuation on which the assessment is based.[20]
[19] Rates Act 2004 s 14
[20] Rates Act 2004 s 71
65.Adopting the approach taken by Foster J in Binqld, I have also considered the nature of these proceedings and the meaning of ‘necessary’ as that word has been interpreted when it is used in section 99 of the Taxation Administration Act 1999. I also proceed on the basis that section 99 protects the Commissioner from the compulsion to divulge information that is relevant to the proceedings other than as excepted by that section.
66.The ultimate aim of the application by FANDS is to ensure that the unimproved value of the subject land was correctly determined or redetermined for each of the eight years and hence that FANDS pays (or paid) the correct amount of rates and land tax. The resolution of that issue is entirely consistent with the scheme of the Rates Act 2004, particularly the sections summarised above. Accordingly, I am satisfied that the exception in section 99 applies to the Commissioner because the production of the document(s) and information sought by the subpoenas is necessary (in the sense of requisite or appropriate) for the administration of the Rates Act.
Whether the subpoenas are oppressive
67.For the reasons outlined above, there are practical difficulties in complying with the subpoenas within the period before the schedule hearing of the substantive case. It is apparent from the witness statements of Mr Stroud and Mr King that the relevant officers can identify, locate and produce or copy the relevant documents. Indeed it would appear that some work has already been done for the purpose of responding to the subpoenas.
68.Despite the practical difficulties, I am not satisfied that the subpoenas are inherently oppressive. To some extent, the scope of work to be done in response to the subpoenas might be reduced by the qualifications on the subpoenas outlined in these reasons the decision.
Conclusion
69.Having considered the statement of facts and contentions filed by FANDS on 24 July 2017, the correspondence between the solicitors for FANDS and the Commissioner between 3 and 22 August 2017, and the submissions made to the Tribunal on 28 August 2017, I am satisfied that, subject to two qualification set out below:
(a)the subpoenas seek the production of material that would be reasonably likely to add to the relevant evidence in the case and could possibly throw light on the issues in the case;
(b)the production of that material is not prevented by the operation of section 99 of the Taxation Administration Act 1999;
(c)the subpoenas are not oppressive; and
(d)the application that the two subpoenas be set aside should be dismissed.
70.The qualifications are that:
(a)the Commissioner need not produce the amounts of the assessments of stamp duty in respect of the nominated transactions; and
(b)as soon as practicable, FANDS provide a written reply to the request for clarification of the scope of the second subpoena set out in the letter dated 22 August 2017 from the Commissioner’s solicitors to the solicitor for FANDS.
71.Given the time constraints within which this matter was heard and decided, I consider it unnecessary to convene another hearing to hear submissions in relation to revised terms of the subpoenas to reflect this decision. I will rely on the parties to give effect to this decision. If, however, either or both of the parties is concerned to have the Tribunal reformulate the subpoena each party is granted liberty to apply for such orders to be made.
72.In conclusion, I urge the legal representatives of FANDS to consider carefully how much of the information covered by these orders they need, particularly after the Commissioner’s statement of facts and contentions and his valuation report are provided. If, as a result of reading those documents or any other communications between the parties, FANDS decides that it does not need some of the information within the scope of either subpoena, FANDS should advise the Commissioner’s representatives as soon as practicable.
………………………………..
President G Neate AM
HEARING DETAILS
FILE NUMBER:
AT 16, 23, 24, 25, 26, 27/2017
PARTIES, APPLICANT:
FANDS (ACT) Pty Ltd
PARTIES, RESPONDENT:
Commissioner for ACT Revenue
COUNSEL APPEARING, APPLICANT
Ms A Irving
COUNSEL APPEARING, RESPONDENT
Ms K Katavic
SOLICITORS FOR APPLICANT
Mr M Falcetta of Trinity Law
SOLICITORS FOR RESPONDENT
Ms L Tomlins of ACT Government Solicitor
TRIBUNAL MEMBERS:
President G Neate
DATES OF HEARING:
28 August 2017
2
9
0