FLLH and Commissioner of Taxation (Practice and procedure)

[2025] ARTA 392

FLLH and Commissioner of Taxation (Practice and procedure) [2025] ARTA 392 (4 April 2025)

Decision and Reasons for Decision

Applicant/s:   FLLH

Respondent:  Commissioner of Taxation

Tribunal Number:                2023/9191-93, 2023/9195-97, 2023/9199-9200

Tribunal:  Senior Member Jane Lye

Place:  Brisbane

Date:  4 April 2025

Decision:Pursuant to sections 49 and 53 of the Administrative Review Tribunal Act 2024 (Cth), the Tribunal declines to admit the witness statements dated 16 July 2024 and 1 December 2024 into evidence.

..................................SGD......................................

Senior Member Lye

Catchwords

PRACTICE AND PROCEDURE – TAXATION – objection to opinion evidence, Tribunal not bound by rules of evidence, obligation to assess probative value of evidence, Tribunal’s power to exclude evidence, assessment of weight to apply to evidence

Legislation

Administrative Appeals Act 1975 (Cth) s 33(1)(a)

Administrative Review Tribunal Act 2024 (Cth) ss 49, 50 and 52.

Cases

HG v R (1999) 197 CLR 414; (1999) 160 ALR 554; [1999] HCA 2

Pochi and Minister for Immigration and Ethic Affairs (1979) 26 ALR 247

R v War Pensions Entitlement Appeal Tribunal; ex parte Bott [1933] HCA 30; (1933) 50 CLR 228 (2 August 1933)

Stockland Constructors Pty Ltd v Darryl I Coombs [2004] NSWSC 323

Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93

Secondary Materials

Explanatory Memorandum to the Administrative Review Tribunal Bill 2023

Statement of Reasons

1. These reasons address an interlocutory issue which arose ahead of the final hearing of the applications. That issue was whether two witness statements lodged in support of the Applicant’s case should be admitted into evidence and if so, whether the Tribunal should nevertheless decline to afford any weight to them.

1. On 4 April 2025, I heard and determined the Commissioner’s objection to the two statements and provided an oral decision to avoid delay in the conduct of the substantive hearing. These are my reasons for that decision.

BACKGROUND

1. The substantive proceeding is a tax dispute. A taxpayer, FLLH (the Applicant) seeks to review a decision by the Commissioner of Taxation (the Respondent) to raise amended assessments against him.

1. The amount in issue in these proceeding is in the order of many tens of millions of dollars. The taxpayer is a businessperson and there are transactions of some complexity to be reviewed by the Tribunal. These include transactions relating to the Applicant’s participation in international gambling junkets conducted at the Star Casino between 2014 and 2018. Both parties are legally represented by solicitors and counsel, and it is fair to describe the proceedings as factually dense.

1. Casino records were obtained by both parties and have been produced to the Tribunal. These report on matters such as gaming chip activity and the Applicant’s player history audit though his cage1 account. Others record information relating to the junkets.

1. Evidence will be taken by the Tribunal from 7 April 2025 for eight days and the hearing will be conducted in private.

1. Among the evidence filed by the Applicant, are two witness statements from a former Casino employee who I will refer to in these reasons as AIJL.2 AIJL’s evidence describes and comments on the records, systems and procedures of the Star Casino as well as the organisation of the junkets.

1. The Respondent did not object to AIJL’s evidence when originally filed, but on 1 April 2025, he lodged objections to both statements.3 The primary objection was that AIJL’s evidence was apt to mislead the Tribunal, as he was purporting to provide opinion evidence for which he did not possess the requisite skills or experience. However, the Respondent also

1 The cage acts as a banker or cashier for the casino, for example by handling gaming chips and cashing out a player’s winnings.

2 The witness statements are dated 16 July 2024 (the ‘first statement’) and 1 December 2024 (the ‘second statement).

3 On 1 April 2025, the Respondent lodged objections both to the whole of each of AIJL’s statements and in the alternate, to paragraphs 10-14, 15-25, 16, 26, 33 and 35-56 of the first statement and to paragraphs 3-19 and 21 of the second statement.

observed that Star Casino had not authorised the evidence and that it was not confined to circumstances and events relevant to the tax years in dispute. The Respondent sought to have the evidence excluded or if not excluded, qualified.

1. The parties lodged written submissions on the objection and addressed the Tribunal orally on 4 April 2025.

1. The Applicant, in his written submissions dated 3 April 2025 (the ‘Applicant’s written submissions’), conceded AIJL’s statements may contain some opinion evidence.4 However he maintained that on balance ‘[AIJL’s] statements are descriptive of facts and circumstances attending playing in a junket at the Star Casino, facts and circumstances observed by [AIJL], represented and quantified in the business records of the Star Casino’.5 He contended that ‘[AIJL’s] statements do not contain expressions of opinion, but observations of events within the Star Casino and explanations of terminology used at the Star Casino which it used in its documents’.6

1. The Applicant submitted that the statements were intended to assist the Tribunal to understand the technical terms, records, and processes of Star Casino. He argued the proper course was for AIJL’s evidence to be admitted so the Respondent could cross examine him. Following this process, the Applicant submitted, the Tribunal would be able to assess the weight, if any, to be applied to AIJL’s evidence.

1. The Respondent disagreed. He submitted there was a real risk given AIJL’s lack of expertise or experience and the nature of the opinions expressed, that AIJL’s evidence would misrepresent Star Casino’s practices, mislead, or embarrass the Tribunal and potentially disclose confidential information. He contended that the evidence should be limited pursuant to s 53 of the Administrative Review Tribunal Act 2024 (Cth) (the ‘Act’) and not considered by the Tribunal.

4 The Applicant conceded that paragraphs 37, 46, 50 and 52 of AIJL’s first statement and paragraphs 16 and 19 of the second statement may be opinion evidence. However, he submitted that if paragraphs 50 and 52 of the first statement contained opinions, they were permissible lay opinions based on what AIJL saw or heard in the course of his employment at Star Casino. He further submitted that the calculation at paragraph 56 was not an opinion, the basis for which is disclosed in AIJL’s statement.

5 Applicant’s written submissions, [4].

6 Applicant’s written submissions, [6].

1. For the reasons which follow, I have decided not to admit the two statements of AIJL into evidence.

The scope of the Tribunal’s power to receive and consider evidence

1. The Tribunal has discretion as to how it conducts proceedings7 but is required to act with a little formality and technicality as a proper consideration of the matters before it permits.8 The Tribunal is not bound by the rules of evidence9 but there are good reasons why it should conduct its processes in a manner consistent with the rules of evidence and prime among these is its obligation to afford parties procedural fairness.10

1. The Tribunal can, in deciding an application, decide what weight if any should be applied to particular evidence. In an appropriate case, the Tribunal may decide that it will apply little or no weight to particular evidence and explain its reasons for that decision.11 At all times, the Tribunal is required to observe the rules of procedural fairness.

1. The rule against the giving of opinion to prove the existence of a fact (subject to exceptions) is codified in section 76 of the Evidence Act 1995 (Cth) (‘Evidence Act’) (the ‘opinion rule’). In this case, the Respondent has relied on that principle to object to the opinion evidence in AIJL’s statements. He contends the opinions in AIJL’s statements are unsupported by any factual bases or assumptions and that AIJL is not qualified to offer them.

1. The Applicant correctly observes that neither the Evidence Act nor the rules of evidence bind the Tribunal but this does not mean those rules should be ignored.12 While section 52 of the Act permits the Tribunal to inform itself on any matter in such manner as it considers appropriate, it has long been accepted the Tribunal has good reason to be guided by the

7 Section 49 of the Act.

8 Section 50 of the Act.

9 Section 52 of the Act.

10 See the various comments of the majority in R v War Pensions Entitlement Appeal Tribunal; ex parte Bott [1933] HCA 30; (1933) 50 CLR 228 (2 August 1933) (‘ex parte Bott’) as well as Starke J as to the role of a Tribunal on merits review and Evatt J (in dissent) at 256.

11 Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93, [95]-[96] (Flick and Perry JJ). The FCAFC’s observations in Sullivan referred to section 33(1)(a) of the Administrative Appeals Act 1975 (Cth) (the AAT Act) as well as to common law principles. The Explanatory Memorandum to the Administrative Review Tribunal Bill 2023, notes that section 49 of the Act is equivalent to section 33(1)(a) – see [425]-[427].

12 Applicant’s written submissions, [8] and section 52 of the Act.

rules of evidence, which can support the Tribunal to discharge its obligation to afford procedural fairness, including whether evidence should be taken into account.13

1. In Pochi and Minister for Immigration and Ethic Affairs, (Pochi)14 the inaugural President of the Administrative Appeals Tribunal, Sir Francis Gerard Brennan AC KBE, GBS, QC (then Justice Brennan), considered the Tribunal’s ability to exclude evidence and referred to its obligation to satisfy itself of the probative value of evidence which is proposed to be admitted and in doing so referred to the majority in R v War Pensions Entitlement Appeal Tribunal; ex parte Bott.15 Justice Brennan’s observations in Pochi are equally applicable to this Tribunal.16

1. In some cases, it will be appropriate for the Tribunal to admit evidence and then, having heard from the parties, decide, in its reasons for decision, whether to apply much or any weight to it. However, there will also be cases where the Tribunal is satisfied at an earlier stage that the evidence a party is proposing to lead is not relevant or of any probative value as to material facts. In such cases, the Tribunal has an obligation to critically engage with the evidence and decide whether it should be excluded or given no weight.17 Both sections 53 and 79(2)(c) of the Act contemplate and provide for this possibility.

1. I should add that in a case where expert evidence is sought to be led by a party, it would be particularly appropriate for the Tribunal to make its views or concerns about the admissibility of that evidence known to the parties as early as possible. In this case, the Applicant did not wish to contend that AIJL had the required knowledge to give expert evidence, but the Tribunal has a Practice Direction18 which provides clear guidance to parties about such evidence and how it should be presented. The Tribunal should not be left to guess whether a witness is purporting to give expert opinion.

13 Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93, [95]-[96] (Flick and Perry JJ) (‘Sullivan’).

14 (1979) 26 ALR 247 per Brennan J (‘Pochi’).

15 Pochi and in particular at p 257 per Brennan J, with reference to ex parte Bott per Starke J at pp 249-50.

16 Pochi at pp 256-257 per Brennan J.

17 See Sullivan at [95] per Flick and Perry JJ and the examples cited.

18 Administrative Review Tribunal Expert Evidence Practice Direction 2024.

Application of these principles to the current proceeding

1. It is necessary to set out some information about the two statements for the purposes of these reasons. AIJL purported to address the following subject areas in his evidence:

   (a)gambling chips, including types of chips, their limitations and the types of chips used by junket operators for their players;

   (b)gambling junkets;

(c)the casino cage and cage records;

(d)the KCMS software used by Star Casino to operate accounts and to create and maintain players’ records and activities; and

(e)casino records and in particular, records evidencing the establishment and conduct of particular international junkets generated by the KCMS software.

1. AIJL was employed by a casino for more than 5 years. In that time, he held three different positions:

   (a)A premium service concierge where his job was to provide reception services to the VIP players who played in the VIP rooms;19

   (b)A casino executive host where his responsibility was to provide customer services to the junket operators’ representatives and players inside the VIP gambling rooms – transport, food drinks and make sure they had a ‘great personal experience’;20 and

   (c)A premium guest executive with 24/7 responsibility as a member of the casino sales team to make contact with players and invite them to events at the casino.21

1. AIJL provided partial descriptions of each of these roles in his first statement.22 He did not provide any details of his education or other qualifications. He did not disclose his current position of employment or any information about his employment before or after the period

19 See paragraph 8 of the first statement.

20 See paragraph 10 of the first statement.

21 See paragraphs 13-14 of the first statement.

22 See paragraphs 8-14 of the first statement.

in which he worked at Star Casino. He did not state that the evidence he was giving was authorised or approved by Star Casino. His evidence is not limited to a particular point in time but presumably was limited by his period of employment (which did not exactly match the tax years in dispute in the proceedings). He stated that he did not personally know the Applicant.23

1. The available evidence suggests that AIJL’s combined experience at Star Casino was in the fields of customer service and sales, ultimately at an executive level position where he was responsible for sales to many significant clients for Star Casino. AIJL did not suggest, and the Applicant does not contend that he worked in the casino cage or with the casino credit team or that he maintained or managed the casino’s KCMS system or that he directly negotiated junket agreements or calculated turnover of a junket or any rebate owed to a junket operator.

1. AIJL’s statements are presented as though he is deposing to facts. However, on closer examination, AIJL is expressing opinions, and these are neither supported by documentary evidence nor underpinned by facts. To give just two examples, first, at paragraph 16 of his first statement, AIJL states that ‘Non-neg programs arranged by JOs for players in their junkets did not and could not use cash chips’. He then expresses a view about how and why Star Casino used particular chips for the conduct of junkets to calculate turnover.

1. At paragraph 21 of his second statement, AIJL observes that Patron cards can be used by third parties on slot machines and then suggests that it is ‘common practice’ for third parties to use a Patron’s card to play slot machines to afford the Patron greater rebate.24

1. AIJL’s second statement attempts to analyse the content of the various Star Casino records and reports, with reference to particular reports generated by the KCMS system. As part of this evidence, AIJL purports to describe how the cage, client accounts and Patron numbers worked at Star Casino and how the KCMS software used by Star Casino generated reports.25 He also makes observations about purported deficiencies in various reports.26

23 See paragraph 4 of the first statement.

24 The Commissioner’s written submissions at [7] also referred to further examples in both statements.

25 See for example, paragraphs 14, 15, 16 and 18 and 19 of the second statement.

26 See for example at paragraph 15 of the second statement.

1. As I have noted, AIJL did not demonstrate any expertise or experience relevant to these areas of Star Casino’s operations which appear to have little to do with customer service or sales. Further, none of the opinions expressed in the second statement are underpinned by facts, or assumptions which support the opinions expressed. They are also not corroborated by any documents or manuals or policies from Star Casino.

1. From my review of both statements, I am satisfied AIJL’s evidence does not merely comprise descriptions of records, issues, or events. He is expressing opinions. I am satisfied AIJL has not demonstrated knowledge based on his experience working at Star Casino or otherwise, which qualify him to offer these opinions. Even if he did possess such expertise or experience, his statements do not explain how or why he has arrived at these opinions.27

1. Noting a particular submission by the Applicant, I do not accept that paragraphs 50 and 52 of the first statement are merely factual descriptions of what AIJL saw or heard in the course of his employment at Star Casino (or indeed at any other time). AIJL offers opinions in each of these paragraphs. For example, at paragraph 52, he suggests that the record in question is ‘probably not an accurate measure’.28

1. As to paragraph 56 and to respond to a further submission by the Applicant, I cannot accept that this evidence comprises nothing more than a factual calculation. Here, AIJL, offers an opinion about the profitability of a particular junket by means of the calculation. There is nothing in either statement which points to AIJL having any experience in calculating these amounts or indeed having any involvement in this aspect of Star Casino’s operations. He has not established the basis for the integers he used to calculate the amounts he has proposed as the overall loss amount, the amounts won and the chips exchanged for the junket in question. He also has not identified the question he was seeking to answer in performing this calculation, which leaves the whole process and his observations open to question and misunderstanding.

27 See HG v R (1999) 197 CLR 414; (1999) 160 ALR 554; [1999] HCA 2, [20] (Gleeson CJ), [39]-[41] (Gaudron J).

28 See paragraph 52 of the first statement.

1. An exchange with the Applicant’s counsel in oral submissions about AIJL’s purported intentions for this very paragraph, illustrated how apt AIJL’s evidence was to be misconstrued. That exchange revealed differing views of what AIJL was attempting to convey in his analysis of the junket records, because he had not stated what he had been asked in respect of the records or his assumptions. This exchange only served to reinforce my concerns about the risks attending AIJL’s evidence.

Does AIJL possess sufficient expertise to give opinion evidence?

1. An exception to the opinion rule exists where a person giving the opinion has specialised knowledge based on the person’s training, study or experience and the opinion is wholly or substantially based on that knowledge. In his written submissions, the Applicant concedes that AIJL does not possesses specialised knowledge by means of his work experience. I accept that concession but would observe that the statements had somewhat the appearance of conveying expert evidence.

How should the Tribunal approach AIJL’s evidence?

1. In light of the Respondent’s objections and the Applicant’s concession, the Tribunal must consider how best to manage the two statements. I would stress that this is not a case at the margins given the extent of the opinion evidence and the fact that the opinions are directed at facts and records which will be relevant to the issues in dispute in the proceeding.

1. The Respondent has submitted that in this case and in the circumstances, the Tribunal should decline to admit the evidence or alternatively decline to afford weight to the whole or substantial portions of it. He points to section 53 of the Act which is equivalent to its predecessor, section 25(4A) of the Administrative Appeals Tribunal Act 1975 (Cth) and submits this permits the Tribunal to limit the evidence it considers.

1. For the reasons I have identified, I am satisfied the Tribunal could not safely apply any weight to AIJL’s statements given the extent of the opinion evidence which AIJL is not qualified to offer. With that in mind, I have considered how the statements should be managed.

1. There is the issue of fairness to the Respondent to be considered. I am conscious that admission of the statements, subject to weight, would put the Respondent to the task of

cross examining on them, should he decide to do so. There is also a risk that admission of the evidence may be unfairly prejudicial to the Respondent given the extent of the deficiencies and the relevance of the facts and records to the dispute.

1. There is also the question of fairness to the Applicant. I considered but rejected the option of asking the parties to agree to excise the opinion evidence in each of the statements and admitting the remainder. That would be time-consuming and from my assessment of the statements, it would not leave much of AIJL’s evidence intact.

1. The Applicant submits that the fairer approach for him would be to admit the statements and require the Respondent test the evidence via cross examination. However, he conceded in oral submissions that omission of this evidence would not be fatal to his case, given his stated purpose in lodging the evidence was to assist the Tribunal to understand various terms and reports.

1. A definitive ruling at this stage will give the Applicant an opportunity to reflect and decide how else he might address these matters during the hearing – for example by agreeing definitions for terms with the Respondent for use by the Tribunal and the parties.

1. Finally, there is the potential risk to the Tribunal to be considered. In this case, I am satisfied there is a material risk in admitting the statements and permitting the witness to give evidence that the Tribunal may fall into error.29

1. Having weighed the options and having heard from the parties, I have decided that the appropriate course is to decline to admit the statements pursuant to sections 49 and 53 of the Act. I have invited the Applicant, should he wish, to apply for leave to lead further evidence in the time available and I will hear the parties on any such application.

Dateofhearing:	4 April 2025
Datefinalsubmissionsreceived:	3 April 2025

29 Stockland Constructors Pty Ltd v Darryl I Coombs [2004] NSWSC 323, [20] (Einstein J).

SolicitorsfortheApplicant:	Kelly and Partners Tax Consulting
Solicitorsforthe Respondent:	Corrs Chambers Westgarth