Hayson Group of Companies Pty Ltd v Chief Commissioner of State Revenue

[2007] HCATrans 66

[2007] HCATrans 066

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S336 of 2006

B e t w e e n -

HAYSON GROUP OF COMPANIES PTY LIMITED

Applicant

and

CHIEF COMMISSIONER OF STATE REVENUE

Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 9 FEBRUARY 2007, AT 12.14 PM

Copyright in the High Court of Australia

MR M. RICHMOND:   If the Court pleases, I appear for the applicant.  (instructed by Harris & Company)

MR J.E. MARSHALL, SC:   May it please the Court, I appear with MR I. MESCHER for the respondent.  (instructed by Crown Solicitor’s Office)

GUMMOW J:   Yes, Mr Richmond.

MR RICHMOND:   This case, your Honours, is a question of statutory construction which, in our submission, raises importance questions of principle.  If I may take your Honours to the relevant legislation to start with.  Your Honours should have a folder of materials.  At tab 1 of that folder is the statute in its form.

GUMMOW J:   Do not go so fast.

MR RICHMOND:   The statute in its form, your Honours, when enacted.

GUMMOW J:   We are speed readers but not all speed hearers.  Whereabouts?

MR RICHMOND:   Tab 1, page 7, very top right‑hand corner, your Honours.  Section 9, as your Honours will see, imposed a levy of a flat amount as at the beginning of each financial year commencing on 1 July on the owner of premises to which the Act applies for each parking space on those premises subject to the concluding words commencing “if the space.”  It is those concluding words, your Honours, which are in issue in the present case.  You will see that those concluding words use a defined term, “parking space to which this Act applies”.  That is a term defined in section 4. 

Before coming to that definition I should take you to section 13 on the next page because it also uses those same words and needs to be read with section 9.  Section 13 played a significant part in the reasoning process of the Court of Appeal and we say the court misconstrued it.  It overlooked the words, “parking space to which this Act applies”.  Your Honours will see that section 13 involved the application of two steps.  The first step, which comes out of the fourth line, is that you need to determine the amount of the levy apart from section 13.  You will see those words, “amount of levy determined in respect of the financial year”.  The section assumes you find that amount apart from section 13 and you do so under section 9, your Honours. 

Then the second step is that you determine whether the parking space existed as a parking space to which the Act applies in the prior financial year.  You get that from the last line of section 13.  If it existed for only part of the prior financial year as “a parking space to which this Act applies”, then there is a reduction of the levy that would otherwise be payable, we say, under the terms of section 9.  Now, the key error, we submit, in the Court of Appeal’s reasoning was that it construed section 13 as concerned only with whether a space existed in a physical sense in the prior financial year.  The concern of section 13 is not simply with whether it existed in a physical sense but whether it existed in the sense of a parking space to which the Act applies.  The question is, why is that so? 

We say you can only determine why that is so by looking at the entire legislative scheme which includes both section 7, section 8, and the regulations made under section 8.  The Court of Appeal concluded that one could not have regard to the regulations and we submit that was a significant error of principle.  If I can explain why it is ‑ ‑ ‑

GUMMOW J:   What do you say – if I can just interrupt for a minute, Mr Richmond – looking at your opponent’s written submissions on page 75, paragraphs 13, 14, 15.  What is wrong with that analysis?

MR RICHMOND:   The error is that section 9 if read by giving the words their ordinary meaning in the context in which they appear should be read on the basis that the words “if the space” are a condition to which the preceding words are subject.  So that the temporal element is 1 July.  The section is imposing a levy on an owner of premises as at 1 July for each parking space on the premises and we would say, reading the words in the ordinary sense, it is on the premises as at 1 July.  Then it goes on to have this condition.  The Court of Appeal refused ‑ ‑ ‑

GUMMOW J:   What was the factual circumstance that made this critical in this case from your client’s point of view?

MR RICHMOND:   The factual circumstances were, your Honour, that this parking station for which the levy was imposed had become subject to the Act when it first came in in 1992 and the levy had been paid, we submit, for each year from that time until the year commencing 1 July 2004.  For that year the levy was not paid because the station had closed two months before 1 July.  In our submission, reading section 9 in its literal, and we would say ordinary, meaning in the context of the Act as a whole, the levy was not payable for the year commencing 1 July 2004 because whilst there was an owner on that date of premises to which the Act applies, there were no parking spaces on the premises at that time.

HAYNE J:   Why was there an owner of premises to which the Act applies?  Why did the Act apply to the particular premises?

MR RICHMOND:   Your Honour, because the definition of “premises” to which the Act applies in section 4, top of page 5 ‑ ‑ ‑

HAYNE J:   Takes you to section 6, which takes you to geographic areas.

MR RICHMOND:   Yes, your Honour.

HAYNE J:   So the owner of premises within an identified geographical area must, unless exempt – put aside the exemption – pay a levy for each parking space on the premises.  You say the temporal element to be assigned to for each parking space on the premises ‑ ‑ ‑

MR RICHMOND:   Is 1 July.

HAYNE J:   Is 1 July.  What is the “if” clause then doing?

MR RICHMOND:   The “if” clause, your Honour, is dealing with the exemptions.  Perhaps I need to explain that by going to the scheme of the exemptions.  I am sorry to take ‑ ‑ ‑

HAYNE J:   It seems to me that once you slip away elsewhere, you confront the difficulty that really is at the heart of your argument.

MR RICHMOND:   Well, your Honour, if I could address that by saying, we would say there is no difficulty on the literal words because the word “if” is in its ordinary meaning the introduction of a conditional clause.  We say literally the words ‑ ‑ ‑

GUMMOW J:   There is an echo of the land tax structure in this.

MR RICHMOND:   There is an echo of it, your Honour, yes, but ‑ ‑ ‑

GUMMOW J:   Namely, you fix upon a particular date.

MR RICHMOND:   Yes.  We would say that you pay in advance for the year but the exemptions – this is the key point about exemptions – cannot be determined for that year if one had regard only to matters within that year, obviously if the tax is not imposed at the beginning of the year.  So one has to look to the prior year to determine if the exemptions apply.  That is what the concluding words of section 9 and section 13 are doing.  Primarily they are concerned with the extent to which the levy for the current year should be reduced by reference to concessions because those concessions can only be ascertained at the beginning of the year when the levy is imposed, a reference to what occurred in a prior year.  The Act does not adopt the approach that the income tax does of requiring a return at the end of the year by reference to matters in the preceding year.

HAYNE J:   Does not your contention read the Act as saying, for each parking space on the premises at 1 July and at any time before 1 July?

MR RICHMOND:   No, your Honour, with respect, it does not.  I submit that what it says is that the owners at 1 July shall pay a levy in respect of parking spaces on the premises at that time ‑ present tense, at that time, not at prior time.  It then has a condition.  Your Honours would ask why is that condition there?  That is a very peculiar condition to have.  Well, as I say, it has to be read in light of the exemptions, your Honours.  If I can very quickly tell you what ‑ ‑ ‑

GUMMOW J:   Why?  It is…..for you to do that.

HAYNE J:   Because it is…..convenient.

MR RICHMOND:   I suggest not, your Honour.  I would suggest that the literal words take the taxpayer where it wants to go.  It is what the appeal panel construe the words to mean.  It is put against us that it cannot mean that; it is an odd result.   When one goes to the legislative scheme one finds that it is not an odd result and the first error, we would say, is that the Court of Appeal failed to go to the regulations because the regulations assist in that analysis.

GUMMOW J:   All right.  You had better show us the regulations.

MR RICHMOND:   Yes, your Honour.  Just very quickly, the concept of “parking space to which this Act applies” is defined in section 4 and it is on page 4 to have the meaning given in section 7(1).  Section 7(1) says:

The Act applies to a parking space on premises to which this Act applies, other than an exempt parking space.

Section 7(2) and following tells you when spaces are exempt.  As I said before, they require that you ascertain the matters relating to how the space is used or set aside and cannot be done at the beginning of the year, we would say.  Section 8(1)(b) says at the top of page 7:

(1)      The regulations may make provision for . . . 

(b)the length of time in any financial year for which a parking space is, or is not, a parking space to which this Act applies -

So if you go to the regulation that was made contemporaneously with this Act ‑ you will find that at tab 3 - you will see at the top of page 39 that regulation commenced on 1 July.  It was gazetted on 26 June 1992.  Regulation 6 is on page 40 over the page.  You will see that this provides that in the case of casual parking spaces - and they are spaces which are set aside for what is called casual parking.  In other words, if you go to a parking station as a member of the public there is a space that is available for use.  It is a casual space set aside for casual parking.  Obviously a very important part of most public car parks is that there are spaces set aside for casual parking.  Regulation 6(1) says that in the case of such a parking space, one set aside for casual parking, it:

is not a parking space to which the Act applies . . . in the opinion of the Chief Commissioner, the parking space was set aside for use as a casual parking space -

but was not so used.  In other words, if it is vacant for a period of a year, then it is not a space to which the Act applies.  Now, in the same way that the exempt spaces cannot be calculated at the beginning of the year, so you cannot calculate the extent to which casual parking spaces ‑ ‑ ‑

GUMMOW J:   What is the distinction drawn between casual parking spaces and other varieties of parking spaces?

MR RICHMOND:   Your Honour, in broad terms there are three types of spaces.  There are what you would call exempt spaces such as spaces set aside for disabled parking and so on.  You find those in section 7, that is, spaces that are exclusively used for some particular purpose set out in section 7 such as disabled parking.  The second category would be reserved spaces.  So, for example, if the car park gives you or I a particular space to park in and no one else can use it, that is a reserved space.  The levy would be imposed on that space with no concession under section 13.  The third category, in principle, is this casual parking space which is a space that any member of the public can use. 

The important point, your Honours, is that you cannot determine the extent to which such a space gets the concession under regulation 6 unless you look at the prior year because the tax is imposed at the beginning of the year.  So we say that is what section 13 and the concluding words of section 9 are really dealing with.  The concluding words of section 9 provide for a reduction in the levy where the space is exempt or concessionally treated under regulation 6 for the entirety of the prior year.  Section 13 is concerned – that is what the concluding words do and that is why we would say they are there because otherwise there would be no concession for that because section 13, the other concessional treatment provision, only applies where the concession applies for part of the prior year.  So in the case of, say, a disabled parking space you get under section 9, the concluding words, to find that it is not subject to the levy for the current year. 

Your Honours, my first special leave point is the regulations are critical, we would submit, to a proper understanding of the legislative scheme which is critical to an understanding of what the concluding words of section 9, which this case concerns, is all about.  The Court of Appeal said that no regard could be had to the regulations at application book page 49.  In so doing, the court said that ‑ ‑ ‑

GUMMOW J:   Wait a minute.  What do you say about paragraph 20 on page 76 of your opponent’s argument?  Now, the Commissioner argues – you see there:

Were s9 interpreted as Hayson would have it, the happenstance of the space not being a parking space on the 1^st of July would mean no levy at all would be payable, notwithstanding that for most of the previous financial year the space may have been a parking space.

MR RICHMOND:   Your Honour, our submission is that the levy is paid prospectively for the following year so that the levy for the prior year has already been paid, taking our particular case and the facts of this case are that ‑ ‑ ‑

GUMMOW J:   Also running through here is the ghost of Dennis Hotels too.

MR RICHMOND:   Yes, your Honour.  This is a bit similar to the tobacco legislation, your Honour, but fundamentally we say the levy for the prior period was paid in the prior period upfront prospectively on 1 September when the return for that year was lodged.  The levy for the current year, the year commencing 1 July 2004, is not payable because there are no parking spaces and, in fact there is a tax in respect of the period when there are no spaces and in fact when it cannot be passed on.  The other elements of this, of course, your Honours, in our submission, is that the purpose of this Act was to impose a levy that was ultimately to be passed on to the users of the car park in the levies made on them.  That is clear from the explanatory note in the second reading speech.  That supports the construction that we put about the reason for those concluding words. 

The second response I give to your Honours to that submission of the respondent is that it is in a sense throwing at us an anomaly.  The suggestion is that there are anomalies in this construction which should lead the Court to not construe the section in a literal manner.  In our submission, anomalies of themselves are not sufficient to lead the Court to give a section

a meaning other than the literal meaning as long as that literal meaning is consistent with the statutory purpose as determined from the terms of the Act.  We say we can establish the legislative purpose of this statute, determined from its terms, is consistent with the literal meaning that the appeal panel gave to section 9. 

So that was the first error of principle, the failure to have regard to the regulations.  There are three Full Court decisions, one in the Full Federal Court, one in South Australia and one in Western Australia, which are at tabs 14 to 16 of the materials, where Full Courts have accepted that the regulations can be had regard to if the regulations form part of a legislative scheme in order to understand the nature of that scheme.  Support for that proposition comes from what Justice Dixon said in the decision referred to at page 49 of the application book, Ellis & Clark, and some observations by Justice Mason in Brayson Motors, also referred to at page 49 of the application book.  So, your Honours, we would say there is a clear principle there that regulations can be resorted to and the Court of Appeal has said they will not apply that principle and it does not in fact apply, at the bottom of page 49 of the application book.  So, with respect, there is an error and it is an error which is material to the determination of this particular matter. 

The second important error principle, your Honours, is the approach taken to the retrospectivity of section 9.  The Court of Appeal in the application book at page 52, paragraph 43, concluded that section 9 operated retrospectively for the first year.  In our submission, there needs to be clear words in order for that construction to be given to a statute and there are no clear words in this case.  Section 9 does not supply the clear words.  On the appeal panel’s construction it operates to impose a liability on parking spaces on the premises on 1 July of the relevant year.  Section 13 does not operate in that way.  It did not apply to the first year and Schedule 1 had a special regime for the first year and it clearly operated wholly in respect of events in that first year. 

So we say the Act did not operate retrospectively.  There were no clear words and it follows logically from that that the Act operated prospectively for each year thereafter, including the year commencing 1 July 2004.  Your Honours, I see my time is up.

GUMMOW J:   Thank you, Mr Richmond.  We do not need to call on you, Mr Marshall. 

The actual decision of the Court of Appeal in this case was correct and, accordingly, there are no prospects of success on any appeal to this Court.  Special leave is refused with costs.  We will adjourn until 2.00 pm at which time we will take application No 11.

AT 12.34 PM THE MATTER WAS CONCLUDED