HANSON and COMMISSIONER OF STATE REVENUE
[2013] WASAT 32
•1 MARCH 2013
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: TAXATION ADMINISTRATION ACT 2003 (WA)
CITATION: HANSON and COMMISSIONER OF STATE REVENUE [2013] WASAT 32
MEMBER: JUSTICE J A CHANEY (PRESIDENT)
HEARD: 27 FEBRUARY 2013
DELIVERED : 1 MARCH 2013
FILE NO/S: CC 1646 of 2012
BETWEEN: SAM GEOFFREY HANSON
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords:
Stamp duty - Reassessment - Refund of duty - Application for refund made one month after time limit for applications expired - Whether discretion to reassess exists - Whether Commissioner estopped from refusing to reassess
Legislation:
Stamp Act 1921 (WA), s 20
Taxation Administration Act 2003, s 16, s 17, s 17(1), s 17(2)
Result:
Commissioner's decision on objection affirmed
Summary of Tribunal's decision:
This matter raises the question as to whether there was any discretion available to the Commissioner of State Revenue to make a reassessment of stamp duty more than five years after the date of the original assessment, having regard to s 17 of the Taxation Administration Act 2003 (WA). A secondary issue arose as to whether the Commissioner could be estopped from declining to reassess the duty by reason of a representation by an officer of the Office of State Revenue that the refund of duty was possible notwithstanding the lapse of the five year time limit.
The Tribunal concluded that no discretion exists to extend the time limit imposed by s 17 of the Taxation Administration Act 2003 (WA). It also concluded that the evidence was insufficient to conclude that a representation of the type asserted by the applicant had been made prior to the expiry of the time limit, but in any event, even if it had, an estoppel could not operate to overcome the duty of the Commissioner to apply the relevant statutory provisions.
Category: B
Representation:
Counsel:
Applicant: Self-represented
Respondent: Ms R Panetta
Solicitors:
Applicant: N/A
Respondent: State Solicitor for Western Australia
Case(s) referred to in decision(s):
Federal Commissioner of Taxation v Wade (1951) 84 CLR 105
Kosonen and Commissioner of State Revenue [2009] WASAT 135
Sutherland Shire Council v James [1963] NSWR 1573
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
This case gives rise to two issues. The first is whether there is a discretion on the part of the Commissioner of State Revenue (Commissioner), and in turn the Tribunal on review, to consider a reassessment of stamp duty where the application for reassessment was made more than five years after the date of the original assessment. A secondary issue arises as to whether the Commissioner can be estopped from refusing to issue a reassessment in circumstances where the applicant asserts that a representation was made by the Commissioner's delegate that a reassessment could be made and a refund could be available.
For reasons which will be explained below, the decision of the Commissioner to decline to issue a reassessment must be confirmed because there is no discretion to extend the time limit imposed by s 17 of the Taxation Administration Act 2003 (WA) (TA Act) and no estoppel operates in a way which would oblige or permit the Commissioner to make such a reassessment.
This is a case where the operation of the legislative provisions results in a harsh and unfortunate outcome for an ordinary citizen of the State caught up as an innocent investor in a failed property development which has already caused him financial loss and apparent hardship. Had the applicant, Mr Hanson, lodged his application for a reassessment one month earlier, (if he been in a position to do so which he was not), he would clearly have been entitled to a refund of the $19,200 stamp duty he paid in 2007. It can be readily accepted, as counsel for the Commissioner submitted, that the five year time limit upon reassessment provides the respondent, and therefore the State of Western Australia, with certainty of revenue. That is doubtless cold comfort for Mr Hanson in the quite unusual circumstances of this case.
The background facts
On 4 April 2006, Mr Hanson entered into an agreement to purchase proposed Lot 103, Port Geographe, Busselton, from a company called Tallwood Nominees Pty Ltd. Lot 103 formed part of the Port Geographe Joint Venture (PGJV) (established for the purposes of carrying out a residential and waterway development overlooking Geographe Bay near Busselton). The development was managed by QUBE Property Group (QUBE).
The contract was assessed for stamp duty of $19,200 on 19 March 2007, and that duty was paid by Mr Hanson on 24 April 2007.
There followed difficulties with completion of the contract, at least in part because Mr Hanson had difficulty obtaining finance because valuers considered Lot 103 to be worth less than the purchase price. That was apparently largely due to the PGJV failing to complete and provide substantial works required under the contract. From August 2009 until December 2010, there was an exchange of correspondence between Mr Hanson and QUBE or different solicitors acting from time to time for the seller. Mr Hanson's position, in essence, was that he sought to have the contract terminated because of a failure by the seller to develop the estate in the form promised by the seller. The seller, on the other hand, sought to require Mr Hanson to complete the contract.
In August 2011, the seller was placed into administration, and Mr Hanson's solicitors wrote to the seller requesting a refund of the deposit. Between September 2011 and early April 2012, Mr Hanson corresponded with the seller's administrators seeking cancellation of the contract. The administrators responded seeking completion of the contract.
Eventually, on 13 April 2012 the administrators wrote to Mr Hanson confirming a telephone conversation that had occurred on 4 April 2012 in which Mr Hanson had agreed that the contract be terminated and that he would forfeit his deposit. The letter stated that the seller would provide Mr Hanson with a signed Form 20 Stamp Duty Refund form for the purposes of the Stamp Act 1921 (WA).
The contract was terminated by consent between Mr Hanson and the seller's administrators some time between 13 April and 19 April 2012, and on 19 April 2012, the applicant lodged with the Commissioner a letter dated 13 April 2012 attaching the Form 20 request for a refund of stamp duty. The refund request was disallowed on 4 May 2012. A subsequent objection by Mr Hanson to the decision to disallow the refund was eventually disallowed by the Commissioner on 26 September 2012, and Mr Hanson then commenced these proceedings for a review of that decision on his objection.
The basis of the refusal was that the application for a refund of duty was required by s 17(1) of the TA Act to be submitted no later than five years after the original assessment, in this case by 19 March 2012, and it was not received until one month later on 19 April 2012. The Commissioner concluded that there was no discretion to vary the time limit prescribed under s 17 of the TA Act and that there was therefore no legislative authority upon which the request for a refund of stamp duty could be accepted.
If the Commissioner's view of the absence of a discretion to extend time is correct, then, subject to the estoppel question dealt with below, Mr Hanson's application for review is doomed to failure. That is because the Tribunal, in reviewing a decision of the Commissioner, is bound by the same legislative provisions as applied to the Commissioner.
Is there a discretion to extend time?
Reassessments can be made by the Commissioner under s 16 of the TA Act. Section 17, however, provides time limits on reassessments. Section 17(1) provides:
A taxpayer is not entitled to apply for a reassessment more than 5 years after the original assessment was made.
There are particular circumstances set out in s 17(2) in which the Commissioner may make a reassessment at any time, but the particular circumstances described in that section have no application to the present case.
It is not in issue that, but for the question of time limit, Mr Hanson would have been entitled to a reduction of the full amount of duty payable in respect of his contract pursuant to s 20 of the Stamp Act 1921 on the basis that the transaction the subject of the contract had not been, and would not be, carried into effect, Mr Hanson has not received any benefit in respect of the contract and the termination of the contract was not merely to enable a replacement transaction to be entered into.
The question of whether or not any discretion exists to extend the time limit under s 17(1) of the TA Act has been previously considered by the Tribunal in Kosonen and Commissioner of State Revenue [2009] WASAT 135, where it was concluded that no discretion exists. There is no reason to depart from the conclusion reached in that case. Section 17(1) of the TA Act is clear in its terms. Limited exceptions to s 17(1) are contained in the balance of s 17, but none of those exceptions apply in this case. In the absence of being able to bring the matter within the exceptions contained in s 17(2), there is simply no entitlement to apply for a reassessment more than five years after the original assessment was made.
Does an estoppel arise?
In the grounds set out by Mr Hanson in the application for review, which were accepted as evidence from Mr Hanson, he said:
In July 2009, I began trying to be released from the contract due to the short falls of the development. Unfortunately, from this date until now the development has seen a number of different lawyers and administrators handle affairs and serious delay in dealing with any such issues. I tried at this point to seek a refund of stamp duty as the matter was clearly not being dealt with and the development still not being complete after ample time to do so. The advice I was given from the OSR was that they could not consider refunding my stamp duty until I could lodge a reduction of stamp duty form 20, which would require the seller to agree to cancelling the contract. I then continued trying to negotiate a cancellation with the seller. FINALLY, right around the 5 year expiry timeframe, the current administrator (PPB Advisory) agreed to cancel the contract, however, to do so, I would be required to forfeit my deposit of $23,500. This is a lot of money to me and in my current financial situation with 5 dependants, I was hesitant to let the deposit go, as I still believe the seller has not produced what was represented to me or reasonably expected of this development and therefore also believed that there was hope to get the deposit back. I then spoke to the OSR again regarding the 5 year expiry, the advice I was given there was that, if I can produce the form 20 after getting the contract cancelled I could expect a favourable refund given the situation and how close to the 5 year expiry date it would be lodged. From that advice and the amount of stress the whole dispute was causing me, I decided to forfeit my deposit of $23,500 and seek the refund of my stamp duty of $19,200 with the vision of moving on.
In his statement of issues, facts and contentions, which he confirmed as his position at the hearing, Mr Hanson said:
The agent of the respondent made reference himself to inconsistency with decisions in this area. If he had not made references to such cases and never given any representation that a favourable refund of stamp duty could occur, the applicant would NEVER have forfeited a $23,500 deposit with the seller simply to receive the form 20 and apply for a refund of the $19,200 stamp duty.
A witness statement of Mr Geoffrey Edward Hanson, the applicant's father, contained references to a number of discussions which he had with officers of the Office of State Revenue in June 2012. There is considerable consistency between Mr Geoffrey Hanson's account of those conversations, and the witness statement of Mr Shane Thomas Hannan, a revenue consultant at the Office of State Revenue who handled Mr Hanson's objection to the rejection of his application for a refund. It is not necessary to go into the detail of those conversations, because it is quite clear that Mr Hannan held out a prospect that, notwithstanding the lapse of the five year period, a way may be found to refund the duty in the particular unique circumstances of the case, and that he took steps to have that possibility considered by others above him in the decisionmaking chain. What might have been said by any officers of the Office of State Revenue after the five year time limit had expired is not, for reasons which I will explain, relevant to any argument that the Commissioner is required to honour the representations of his officers.
Broadly speaking, a person is prevented from resiling from a representation which induces another person to act in a particular way where, to resile from the representation would cause detriment to the person to whom the representation was made. So, to fit the assertions made in this case into that legal framework, it would need first to be established that some representation was made. It would then be necessary to show that, in reliance upon that respresentation an application for a refund was not made within time, thereby depriving the applicant of the opportunity of obtaining a refund of duty. Any representation made after 19 March 2012, when the time limit had already expired, could not have the effect of depriving the applicant of the opportunity to make his application within time. For an estoppel to operate, the representations would necessarily have had to have been made prior to 19 March 2012.
At the commencement of the hearing, I invited Mr Hanson to give more particular evidence as to precisely when and by whom the representation to which he refers in his grounds of application was said to have been made. To his credit, Mr Hanson answered honestly and frankly, acknowledging that he had no record or recollection of any particular conversation with any particular person to which he could point prior to the involvement of Mr Hannan, which occurred after the time limit had expired. He simply reiterated that he would not have proceeded to agree to cancel the contract, and forfeit his deposit of $23,500, if he did not consider that he would be able, by doing that, to obtain a refund of the stamp duty.
On the available evidence, therefore, it would not be open to me to conclude that a relevant representation was made prior to 19 March 2012. I accept that Mr Hanson was motivated to agree to forfeit his deposit and to have the contract mutually cancelled in the belief that he would be able to recover his stamp duty. I note, however, that that step was only taken some time between 13 and 19 April 2012 by which time the five year time limit had already expired. The agreement to cancel the contract was apparently first made in a telephone conversation on 4 April 2012. Even if Mr Hanson's belief was influenced by conversations with officers of the Office of State Revenue, it is simply not possible to conclude, as would be necessary to establish an estoppel, that some representation was made prior to 19 March 2012 rather than in conversations between 19 March and 4 April 2012. Apart from timing difficulties, Mr Hanson carries the burden of establishing particular representations on which he relies, such as who he spoke to, the substance of what was said and when the conversation occurred. As he readily and frankly acknowledged, he simply has no record or specific recollection which would enable him to do so.
It follows that I do not consider, on the evidence available, that it would be open to find that the relevant representations were made. It is clear that, at least when Mr Hanson proceeded to make his application, he received some encouragement as to the prospects of a successful outcome but, as I have already noted, that is not sufficient to found an estoppel, even if estoppel were available as against the Commissioner.
I have set out my conclusions about the representations in some detail simply to assist Mr Hanson to understand the difficulties which this aspect of his case entails. But there is, in fact, a more fundamental difficulty, and that is that, even if he were to establish a representation which had induced him to delay making his application for a refund, that could not affect the Commissioner's duty to apply the provisions of the TA Act - see Federal Commissioner of Taxation v Wade (1951) 84 CLR 105 at 117; Sutherland Shire Council v James [1963] NSWR 1573. The law is clear that an estoppel of the type that is described above cannot operate to overcome the statutory duty of the Commissioner to apply the provisions of the TA Act.
Conclusion
For the above reasons, the decision of the Commissioner to dismiss Mr Hanson's objection should be affirmed. That is an unfortunate outcome, given that this is not a case where the applicant has delayed in lodging his application after he was in a position to do so, but rather one where a long and unhappy dispute delayed the ultimate termination of the contract which put the applicant in a position to seek a refund.
Orders
1.The respondent's decision dated 26 September 2012 to disallow the applicant's objection to the respondent's refusal to reassess duty is affirmed.
I certify that this and the preceding [24] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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JUSTICE J A CHANEY, PRESIDENT
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