Gallo v Chief Commissioner of State Revenue

[2023] NSWCATAD 311

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Gallo v Chief Commissioner of State Revenue [2023] NSWCATAD 311

Hearing dates:

On the papers and 8 September 2023

Date of orders:

07 December 2023

Decision date:

07 December 2023

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

N S Isenberg RFD, Senior Member

Decision:

The decision under review is affirmed.

Catchwords:

MERITS REVIEW - REVENUE LAW – jurisdiction of the Tribunal - onus – surcharge land tax on residential land – foreign person – effect of submissions without supporting evidence or relevant authority.

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)
Civil and Administrative Tribunal Act 2013 (NSW)
Land Tax Act 1956 (NSW)
Taxation Administration Act 1996 (NSW)

Cases Cited:

Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184
B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, (2008) 74 NSWLR 481
Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25

Federal Commissioner of Taxation v Wade (1951) 84 CLR 105

Tajjour v State of New South Wales (2014) 254 CLR 508

Texts Cited:

The third edition of “Estoppel by Conduct and Election” published in 2023 by Sweet & Maxwell and Thomson Reuters, authored by the Honourable Patrick Keane AC KC, former Justice of the High Court of Australia.

Category:

Principal judgment

Parties:

David Jude Gallo (Applicant)
Chief Commissioner of State Revenue (Respondent)

Representation:

Counsel:
D Reynolds (Respondent)

Solicitors:
Applicant (Self Represented)
Crown Solicitor (Respondent)

File Number(s):

2023/00134313

Publication restriction:

No restriction

REASONS FOR DECISION

Background

1. These proceedings concern an application to the Tribunal by David Jude Gallo (referred to in these reasons as the Applicant or Mr Gallo) to review the Chief Commissioner of State Revenue’s Land Tax Assessment Notice issued 31January 2023 in respect of the 2023 land tax year (the Assessment) to the effect that Mr Gallo was liable to pay surcharge land tax (the Surcharge) on land owned by him as a foreign person under section 5A of the Land Tax Act 1956 (NSW) (LT Act). The subject land is Mr Gallo’s residential property at Surry Hills in New South Wales (NSW) (the Property).

2. All references to legislative provisions in these reasons are to provisions of the LT Act unless stated to the contrary.

3. Mr Gallo objected to the Assessment on several grounds including that United States nationals, such as himself, were exempt from NSW Foreign Owner Surcharge by operation of Australian federal law. Mr Gallo claimed that the relevant law was the Australia-US Free Trade Agreement (the Treaty) and the wording of s. 109 of the Australian Constitution. In Mr Gallo’s opinion (while he concedes he is not trained in Australian law and provides no relevant Australian supporting legislative or judicial or tribunal authority) the Treaty “constitutes Australian federal law”.

Material before the Tribunal

4. Mr Gallo relied on:

1. A 4 page letter to Revenue NSW dated 17 February 2023 signed by Mr Gallo, which he stated constituted his objection to the Assessment (the Objection).

2. An Administrative Review Application, filed with the Tribunal on 27 April 2023, together with several attached documents (the Application).

3. A ten page document attached to the Objection Determination, signed by Mr Gallo and headed “APPLICATION FOR REVIEW OF DETERMINATION OF OBJECTION TO ASSESSMENT OF FOREIGN OWNER SURCHARGE ON LAND TAX”. I refer to that document as the Applicant’s Submission (AS). The AS included references to numerous other documents, contained excerpts from several documents, as well as statements and submissions.

4. Mr Gallo’s Submissions in Reply dated and filed 17 July 2023 (ASR); and

5. Oral submissions made to the Tribunal by Mr Gallo during the course of these proceedings on 8 September 2023.

5. The Chief Commissioner of State Revenue (the Respondent or the Chief Commissioner) relied on:

1. The Assessment.

2. An Objection Determination Notice (the Determination) dated 28 February 2023 (and redated 7 March 2023) issued to Mr Gallo on behalf of the Respondent.

3. A bundle of documents filed on 6 June 2023 pursuant to section 58 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act).

4. Submissions over the signature of Daniel Reynolds of Counsel, dated and filed 3 July 2023 (RS); and

5. Oral submissions made to the Tribunal by Mr Reynolds on behalf of the Chief Commissioner during the course of these proceedings on 8 September 2023.

6. Both parties adopted an Agreed Statement of Facts (the Agreed Statement). The Agreed Statement was signed by Mr Gallo, annexed to RS, and dated 21 June 2023. The Agreed Facts are:

1. At all relevant dates Mr Gallo was a citizen of the United States of America;

2. Mr Gallo has never held Australian citizenship;

3. Mr Gallo has never resided in Australia;

4. Mr Gallo has never been to Australia for more that about two weeks at a time, or more than twice in any year;

5. On 27July 2018, Mr Gallo purchased, and as at 21 June 2023 was the owner of the Property;

6. The Property was leased to tenants during the 2023 calendar year with the tenant as at 21 June 2023 committed until September 2023; and

7. Mr Gallo did not reside in the Property during the 2023 calendar year.

7. All references to written submissions of the Chief Commissioner are to numbered paragraphs of RS unless stated to the contrary.

Consideration

Brief Chronology

8. Mr Gallo bought the Property. The Chief Commissioner issued the Assessment to Mr Gallo. Mr Gallo objected to the Assessment. The Chief Commissioner disallowed the objection and Mr Gallo applied to the Tribunal to review the disallowance. The parties made written submissions to the Tribunal. The parties also requested that the Tribunal hold a hearing to enable them to each make oral submissions to the Tribunal. The Tribunal agreed to hold this hearing as requested by the parties.

9. During the hearing Mr Gallo informed the Tribunal that he has not studied NSW or Australian law to any particular extent.

Role of the Tribunal

10. The Tribunal was established by the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act). The objects of the CAT Act include enabling the Tribunal to review and determine appeals against specified categories of decisions (administratively reviewable decisions) made by certain persons and bodies; enabling the Tribunal to resolve the real issues in proceedings justly, quickly, cheaply and with as little formality as possible; and ensuring that the Tribunal’s processes are open and transparent (ss 3(b)(ii) and (iii), 3(d) and 3(f)).

Jurisdiction of the Tribunal

11. Section 28 of the CAT Act provides:

12. “The Tribunal has such jurisdiction and functions as may be conferred or imposed on it by or under this Act or any other legislation.”

13. There is no dispute that the Tribunal is empowered to review the Assessment (ss 9 and 55 of the ADR Act and s 96 of the Taxation Administration Act 1996 (NSW) (TA Act)). Section 63 of the ADR Act requires the Tribunal, in determining an application concerning an administratively reviewable decision, to decide what the correct and preferable decision is having regard to the material then before it, including any relevant factual material and any applicable written or unwritten law, and authorises the Tribunal to affirm, vary or set aside the administratively reviewable decision. If the Tribunal sets aside that decision the Tribunal is to make a decision in substitution for that decision or remit the matter for reconsideration by the administrator who made the decision.

Identification of the decision the subject of review by the Tribunal.

14. The Application sought a review of the Determination which disallowed Mr Gallo’s objection to the Assessment. In Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 the Court of Appeal said at [28]:

… the right of review under s 97 is given by reference to the operative decision of the Chief Commissioner and not to a ruling made on an objection. Although the existence of an objection is a necessary precondition to the power of review by the Court, and it is the taxpayer’s dissatisfaction with the determination of the objection which provides standing to seek review, it is the initial decision which is the subject matter of the review.

15. Section 96 of the TA Act provides the jurisdictional power of administrative review by the Tribunal. That power is commensurate with the Supreme Court’s jurisdictional power in s 97.

16. There is no dispute that, while Mr Gallo was dissatisfied with the disallowance of his Objection, it is the Assessment, not the disallowance of the objection to the Assessment, which is the subject of review by the Tribunal in these proceedings. After some discussion, Mr Gallo agreed to vary his application to the Tribunal to be a review of the Assessment rather than a review of the Determination. The Respondent consented to the variation, and I directed that the proceedings be varied accordingly.

Transcript

17. During the hearing, the parties agreed that a transcript of the day’s hearing would be obtained by the Respondent and Mr Gallo would pay half the relevant costs. The Respondent will provide a copy of the transcript to each of Mr Gallo and the Tribunal.

Onus

18. I asked Mr Gallo what he regarded as his onus in the proceedings. Mr Gallo informed the Tribunal that it was his understanding that the Chief Commissioner was under a statutory duty to state his reason for his decision and referred to s 93(2) of the TA Act.

19. Mr Gallo also said he believed that his:

“… sole burden should be to establish that the Chief Commissioner’s statutory stated reason was inaccurate and our papers have done that…”

20. In Mr Gallo’s opinion the Chief Commissioner has abandoned his theory with a rather implausible construction of the double taxation convention and his reasons do not withstand any scrutiny. The Chief Commissioner is required by statute to state his reasons and that is the only reason he stated. If the Chief Commissioner has erred “this Tribunal must reverse”.

21. In response, Mr Reynolds submitted that Mr Gallo’s argument precludes the Chief Commissioner:

“… from advancing different arguments on an application for review, to the arguments that were recorded in the notice of disallowance. And as Mr Gallo has pointed out, the notice of disallowance contained a construction of provisions of the Australia-United States Free Trade Agreement [the Agreement] as well as provisions of the double taxation convention. Whereas in this proceeding, the argument on which the Commissioner relies is that [the Agreement] simply has no legal effect relevant to this application because it is not a law of the Commonwealth and therefore cannot override state legislation under s 109 of the Constitution.

That’s our core answer to this application…”

22. Mr Gallo submitted that he understood Australia was a common law country and under the common law of England there would be common law estoppel but not if Australia no longer followed English common law.

23. I observe that Mr Gallo provided no authority to support his submission.

24. On the other hand, Mr Reynolds submitted that the submission argued by Mr Gallo was “not the law of Australia” and referred to the decision of the High Court of Australia in Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 (Wade). His Honour, Kitto J, held in Wade “No conduct on the part of the Commissioner could operate as an estoppel against the operation of the Act.” Mr Reynolds referred to Wade, which he submitted was:

´… about estoppel generally, as a matter of Australian law, and it is authority for the proposition that a public authority cannot estop itself from the proper application of the law.”

25. Mr Gallo submitted that if the Chief Commissioner at an early stage of proceedings made a decision which he later realised was contrary to legislation, he should be bound by his earlier decision “That’s the principal of estoppel.” Mr Gallo conceded that he was not aware of any judicial decision in Australia, which accorded with the submission he had just made. However, he relied on the words of a statue he had placed in his papers. I note that Mr Gallo had recently referred to the requirements of s 93(2) of the TA Act. That section provides “The Chief Commissioner must, in the notice, give the reasons for disallowing an objection or for allowing an objection in part only.”

26. Mr Reynolds referred to s 93(2A) of the TA Act and s 49(3) of the ADR Act.

27. Section 93(2A) of the TA Act provides:

“(2A) The reasons for a determination of an objection in respect of an assessment or other decision that the Civil and Administrative Tribunal has jurisdiction under Division 2 to review must set out the matters referred to in section 49(3) of the Administrative Decisions Review Act 1997 in respect of the determination.”

28. Section 49(3) of the ADR Act states that when providing a statement of reasons for a decision, an administrator must ensure that the statement:

“… is to set out the following:

(a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based,

(b) the administrator's understanding of the applicable law,

(c) the reasoning processes that led the administrator to the conclusions the administrator made.”

29. As Mr Reynolds submitted, none of the above sections made any reference to estoppel.

30. Mr Gallo conceded that he was aware of no judicial or tribunal decision which supported his argument. He placed his reliance solely on the statutory requirement that the Chief Commissioner must give his reasons for his decision.

31. Mr Reynolds also referred to Wade’s Case and to an article authored by the Honourable Patrick Kean (formerly a Justice of the High Court of Australia) in a recently published third edition of “Estoppel by Conduct and Election” provided to both Mr Gallo and the Tribunal. Mr Gallo informed the Tribunal that although he had not located the publication, he accepted that Mr Reynolds was reading the relevant excerpt correctly. Mr Reynolds read the following from the article.

“An estoppel cannot prevent the exercise of a statutory discretion or the performance of a statutory duty”.

32. Mr Reynolds then submitted:

“… the principles of estoppel, both in England and Australia, could not apply here to preclude the Commissioner from advancing, in this proceeding, what it submits to be the correct legal position …”.

33. Mr Gallo then informed the Tribunal that he had nothing further to say concerning estoppel.

34. In RS, Mr Reynolds provided at [9] to [19] detailed reasoning for his submission that a key argument of Mr Gallo, namely that from 1 January 2005, the Treaty constituted Australian federal law, was wrong as a matter of Australian law.

35. In summary, Mr Reynolds submitted:

“[11]   The argument that the Applicant makes in this case is identical to the "misconceived" argument that was rejected by the High Court in Tajjour v State of New South Wales (2014) 254 CLR 508 (Tajjour). As French CJ held:

It was submitted for Tajjour and Hawthorne that the legislative powers of the Parliament of New South Wales are limited by obligations which Australia, through the Executive Government of the Commonwealth, has assumed at international law under treaties to which it is a party. In particular it was submitted that the Parliament of New South Wales could not enact a law infringing upon the "right to freedom of association with others" set out in Art 22 of the ICCPR, to which Australia is a party. There is no authority which would support such a proposition. It is incompatible with the long accepted dualism of international law and Australian domestic law. If given effect by a Commonwealth statute, the freedom of association set out in Art 22 of the ICCPR could be said to enliven the operation of s 109 to invalidate inconsistent State laws…The submission would treat as invalid any law of a State inconsistent with, or in contravention of, an obligation assumed by the Executive Government of the Commonwealth. There is no constitutional basis for that submission, which should be rejected.

[12]   Likewise, Hayne J held:

The provisions of an international treaty to which Australia is a party do not form part of Australian law unless those provisions have been validly incorporated into Australian municipal law.

[13]   Likewise, Gageler J held:

The argument of Mr Tajjour and Mr Hawthorne that the section is invalid as infringing Art 22 of the International Covenant on Civil and Political Rights founders at the threshold; the argument is based on the flawed premise that international law operates of its own force to limit State legislative power.

[14]    Likewise, Keane J held:

The submission by Mr Tajjour and Mr Hawthorne that the act of the executive government of the Commonwealth imposes a restriction on the State's legislative power unduly exalts the executive power of the Commonwealth over the laws of the States. It is contrary to authority and should not be accepted.

The Commonwealth's ratification of the ICCPR did not affect the ability of the States to enact legislation contrary to that Convention. The validity of State legislation is not dependent on its conformity with international agreements made by the Commonwealth where the international agreement has not been given effect by Commonwealth legislation whereby s 109 of the Constitution might be engaged.”.

36. Mr Gallo made no express response to the judgment in Tajjour, whether in his Reply or in the oral hearing. I find that he has not satisfied his onus in relation to his submissions concerning the effect of the Treaty and of s 109 of the Australian Constitution.

37. I observe that s 100(3) of the TA Act provides that the Applicant has the onus of proving his case in a review by the Tribunal. Mr Gallo said he understood this obligation.

38. The requisite standard of proof for the Tribunal is the “balance of probabilities” Cornish Investments Pty Limited v Chief Commissioner of State Revenue (RD) [2013] NSWADTAP 25 at [31] and B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187, (2008) 74 NSWLR 481 at [104].

39. No legislation or judicial authority stating that an onus lies on the Chief Commissioner to prove his case was put to the Tribunal. I find that the onus lies on Mr Gallo to affirmatively prove each element of his case, not merely to prove that the Chief Commissioner has withdrawn from proving one element of the Chief Commissioner’s case. Accordingly, I reject any submission to the contrary by Mr Gallo.

40. In respect of the effect of the Treaty on the legislative power of Australian states, such as NSW, Mr Reynolds further submitted:

“And the real heart of this, in our submission, is a matter of Australian constitutional structure, which is quite important, and It’s this. It is the executive government that has the power to conclude treaties, it is not the parliament. And in our system of government - and I think this is where Australian law does differ from United States law and we’ve given the reference to this in our submissions-in-chief at para 16(d) - it is not the case that the executive government concluding a treaty on the international plane automatically gives that treaty legislative effect.

The executive then has to take the treaty and try and get parliament to agree to turn it into law. It may succeed in doing so, it may fail, or it may - as it has in this case - succeed in part. And the government’s attempts to get parliament to convert what it has agreed to in the international plane into domestic legislation is the way in which it tries to comply with its treaty. It takes it to parliament and says “Will you legislate this?” But the executive government never has the power to dictate to the parliament what it will do because there is a separation of powers in our constitutional system and the executive and the parliament are not the same.

So that’s why, even though the executive is perfectly free to go around the world stage and conclude treaties, it may not always be able to convert that into legislation. And in this case, in relation to the article on 'which Mr Gdllo relies, it has not been able to do that and therefore there is no federal law that overrides s 5A of the Land Tax Act.”

41. Mr Gallo’s response was to the effect that he thought his Federal government was not aware of the position of [the Chief Commissioner] that the relevant article in the Treaty was not in force. Mr Gallo provided no evidence or authority to support his submission as to any relevant opinion of the United States’ Federal government and I reject the submission..

42. As Mr Gallo is aware, he has the onus of proving his case in his application to the Tribunal. During the hearing, Mr Gallo made several suggestions as to issues which, in his opinion, should be addressed by the Tribunal. I observe that the Tribunal is required by s 63 of the ADR Act to determine the application before it, to the extent that it concerns an administratively reviewable decision, having regard to the material before the Tribunal. It does not authorise or require the Tribunal to consider hypothetical issues which do not need to be dealt with in order to determine the Application.

Findings and decision

Having regard to my above findings, I am not satisfied on the balance of probability on the material before me that Mr Gallo has satisfied his onus. Accordingly, the correct and preferable decision of the Tribunal is that the decision of the Chief Commissioner under review is affirmed.

Orders

1. The decision under review is affirmed

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 07 December 2023