Hii v The Commissioner of Taxation of the Commonwealth of Australia

[2019] HCATrans 97

[2019] HCATrans 097

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B7 of 2019

B e t w e e n -

YII ANN HII

Plaintiff

and

THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Defendant

EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 15 MAY 2019, AT 9.35 AM

Copyright in the High Court of Australia

EDELMAN J:   On 8 February 2019, the applicant filed an application for a constitutional or other writ.  For the reasons that I now publish I would dismiss the application.

The orders are:

1.The plaintiff’s application for an order extending time under r 4.02 of the High Court Rules 2004 (Cth) is refused.

2.The application is dismissed under r 25.09.1 of the High Court Rules 2004 (Cth).

3.        The plaintiff pay the defendant’s costs.

I publish those orders.  I direct that the reasons as published be incorporated into the transcript.

The plaintiff is a Malaysian citizen.  On 26 June 2012, following an audit into the income taxation affairs of the plaintiff, the defendant ("the Commissioner") made findings in written reasons for decision ("the Audit Decision").  Those findings included that for each of the income years ended 30 June 2001 to 30 June 2009, the plaintiff was a resident of Australia and that his conduct amounted to evasion of tax for the income years ended 30 June 2001 to 30 June 2004 and 30 June 2007 to 30 June 2009.

The Commissioner's finding that the plaintiff was a "resident", as a "person ... who resides in Australia"[1], was based on the test that applies the meaning of resident according to ordinary concepts[2].  Applying that test the Commissioner rejected the plaintiff's submission that the plaintiff was a Malaysian resident and not an Australian resident and made findings of, and relied upon, numerous facts.  Some of the facts found by the Commissioner included the following:

[1]Income Tax Assessment Act 1936 (Cth), s 6(1).

[2]See Commissioner of Taxation v Miller (1946) 73 CLR 93 at 99; [1946] HCA 23.

(i)the plaintiff was granted a permanent residency visa on 20 March 1992;

(ii)the plaintiff was granted a five year resident return visa on 27 February 1995, which allows current or former Australian permanent residents to re-enter Australia after travelling overseas and to maintain status as a permanent resident on return to Australia;

(iii)the plaintiff was issued a Queensland Drivers Licence on 6 February 1996, and his most recent Queensland Drivers Licence had effective dates of 23 December 2005 to 30 January 2011, with a Queensland address listed by the plaintiff;

(iv)the plaintiff applied on 6 September 2005 to alter his credit card limit with the National Australia Bank, listing the same Queensland address for his contact details;

(v)the plaintiff and his wife purchased the property at that Queensland address on 2 April 2001 for $6.5 million and more than six gigabytes of documents pertaining to the plaintiff's business interests were found at that Queensland address and another property owned by companies controlled by the plaintiff;

(vi)the plaintiff's immediate family, his wife and six children, resided in Australia as permanent residents of Australia, the plaintiff's extended family lived in Brisbane, and his brothers lived in Victoria;

(vii)all the plaintiff's children undertook their schooling at Queensland schools, and several children attended the University of Queensland and Queensland University of Technology;

(viii)the plaintiff held in his own name 15 separate Australian bank accounts between 2001 and 2009;

(ix)the plaintiff stayed at seven different hotels between 2002 and 2007 on his visits to Malaysia, but there was no evidence of any hotel stays when he was in Brisbane;

(x)As at 21 January 2009, the plaintiff had a number of vehicles registered to him or his wife in Australia for which insurance was obtained listing either him or his wife, or both, as the main driver, including a Lamborghini Murcielago, a Rolls Royce Phantom, a Ferrari Coupe, and a Bentley Continental;

(xi)between 1 July 2000 and 30 June 2009, the plaintiff departed Australia 85 times, of which 84 departure cards were located on each of which the plaintiff indicated that he was an "Australian resident departing temporarily";

(xii)the plaintiff spent between 65 and 189 days in Australia in each year from 2001 to 2009 compared with 6 to 125 in Malaysia for the years known;

(xiii)the plaintiff was a director of seven Australian companies with registered offices in Queensland (in six of which the plaintiff held between 35% and 90% of the shares) during the relevant income years; and

(xiv)the plaintiff wrote a letter dated 12 March 2009 to the Australian Department of Immigration which he signed on behalf of one of the companies in which he was a director, which included his statement that "My family currently resides permanently in Brisbane since our first landing in 1993 ...  Due to the nature of my business I am forced to regularly travel overseas, because of other business interests".

The plaintiff recites in his application in this Court that the Commissioner determined the question of residence as if it were solely a question of fact and, on the basis of that decision, assessed the plaintiff to tax on approximately $99 million of income.

The Commissioner issued the plaintiff with original income tax assessments for the income years ended 30 June 2005 and 30 June 2006 (for which the plaintiff filed no income tax returns), and amended income tax assessments for the income years ended 30 June 2001 to 30 June 2004 and the income years ended 30 June 2007 to 30 June 2009.  The assessments were substantial.  The total shortfall amounted to more than $46 million.  The Commissioner also issued penalty assessments to the plaintiff totalling more than $14 million.  On 20 December 2013, the Commissioner issued a Notice of Objection Decision, which affirmed his decision in relation to residence and evasion but allowed, in part, an objection by the plaintiff to his assessments, reduced by around 42% the amount of income tax payable, and also reduced the penalties that were payable ("the Objection Decision").  The Commissioner's Notice of Objection Decision added two additional grounds for his finding that the plaintiff was a resident:  (i) the plaintiff was domiciled in Australia; and (ii) in relation to the 2006 tax year, the plaintiff spent more than 183 days in Australia.

The plaintiff then brought a series of applications.

One of the plaintiff's applications, on 14 February 2014, was an appeal in the Federal Court of Australia from the Objection Decision under Pt IVC of the Taxation Administration Act 1953 (Cth). On 8 February 2016, following a contested hearing at which both parties were legally represented, and in which it was not contested that the plaintiff had spent approximately $2 million in legal costs[3], Collier J ordered the applicant pay $400,000 by way of security for costs[4].  The plaintiff failed to pay and his proceedings were deemed to be dismissed on 22 February 2016.  On 22 February 2016, when the plaintiff's lawyer informed the Court in correspondence that the plaintiff would not pay the security for costs, no reason was provided.  The plaintiff's tax agent now deposes that the reasons were the short timeframe for payment, the plaintiff's concern about further amounts that would need to be paid, and the advice of legal representatives that there was little or no prospect of success if the plaintiff did not return to Australia to give evidence.

[3]Hii v Federal Commissioner of Taxation [No 3] (2016) 238 FCR 304 at 311 [27].

[4]Hii v Federal Commissioner of Taxation [No 3] (2016) 238 FCR 304 at 312 [32].

Another of the plaintiff's applications was an application on 17 February 2014 to the Administrative Appeals Tribunal in respect of the Commissioner's decision as to penalties.  On 1 July 2016, the plaintiff, by his legal representative, withdrew that application.  Consequently, it was dismissed by the Administrative Appeals Tribunal.

A third application brought by the plaintiff was a proceeding in the Federal Court under s 39B of the Judiciary Act 1903 (Cth), commenced on 26 November 2014. By an amended originating application, the plaintiff sought relief including declarations that the Commissioner's notices of amended assessment were void because the Commissioner had not re-formed his opinion concerning fraud and evasion of tax. On 23 April 2015, following a four day hearing at which the plaintiff was represented by senior and junior counsel, Collier J dismissed the plaintiff's amended originating application[5].  The plaintiff did not appeal from that decision.

[5]Hii v Federal Commissioner of Taxation (2015) 230 FCR 385 at 424 [120].

The plaintiff now applies in this Court for declarations and for writs of certiorari and mandamus in relation to the Audit Decision and the Objection Decision.  In very broad summary his grounds include:  (i) the Commissioner's decision that the plaintiff was a "resident according to ordinary concepts" involved a misconstruction of the legislative scheme concerning residence and therefore a misconstruction of the Commissioner's powers, a failure to take account of a relevant consideration, a denial of natural justice or procedural fairness, and reaching a decision that was legally unreasonable; (ii) the Commissioner's additional two grounds for the Objection Decision involved errors of law on the face of the record and jurisdictional errors of law including misconstruing the law applicable to domicile, relying upon irrelevant material, making an erroneous finding, reaching a mistaken conclusion, failing to take into account relevant considerations, making statements without evidence, denial of procedural fairness, and reaching a decision that was legally unreasonable; (iii) the Commissioner's decision on evasion involved errors of law on the face of the record and jurisdictional errors including ignoring relevant material, relying upon irrelevant material, making an erroneous finding, reaching a mistaken conclusion, and reaching a decision that was legally unreasonable; and (iv) the Audit Decision and the Objection Decision were made in bad faith.

The plaintiff is not present within Australia.  He explains in his affidavit that he considers that there is "most probably a very high risk, that if I return to Australia, I will be prevented from leaving due to further action by or on behalf of the Commissioner".  He is no longer legally represented.  He seeks "to rely on written submissions rather than having to make oral submissions".  Having regard to this this submission, and in light of the substantial obstacles faced by his application, it is appropriate that this matter be dealt with on the papers, without an oral hearing[6].

[6]High Court Rules 2004 (Cth), r 25.09.1.

At the heart of the relief sought by the plaintiff is writs of certiorari to quash the Audit Decision and the Objection Decision.  The plaintiff seeks a writ of mandamus and other orders consequential upon that quashing, as well as declarations.  The application for a writ of certiorari in relation to the Audit Decision is more than six years out of time and the application for certiorari in relation to the Objection Decision is more than four and a half years out of time.  In Re Commonwealth; Ex parte Marks[7], McHugh J said that he found it difficult to see how a plaintiff who delays for 17 months could ever be granted an extension of time unless the delay were caused by some conduct of the respondent or a public body or official.  It would require absolutely exceptional circumstances when the delay, as here, is measured in years rather than months.

[7](2000) 75 ALJR 470 at 474 [16]; 177 ALR 491 at 495-496; [2000] HCA 67.

As the plaintiff's tax agent deposes, the primary ground for his application in this Court is an assertion of jurisdictional error in relation to the finding of the Commissioner that he was an Australian resident.  The plaintiff's tax agent deposes that the plaintiff "has consulted four legal firms as well as eight barristers, of which four were QCs or SC on the question of residence and the possibility of proceeding".  His tax agent explains that "no barrister was willing to proceed with an application on the question of residence" and that in late November or early December 2018, the plaintiff advised the tax agent that "he would proceed with the application without legal counsel if necessary".  In submissions, however, the plaintiff alleges that his delay was caused by the Commissioner's failure to consider or to give reasons for various legal matters, which the plaintiff said caused him to be unable to find any legal representation.  The plaintiff then says that it took him time to research and understand the matters of law involved.  In his reply submissions, the plaintiff submits that time should be extended because the Commissioner knew or ought to have known that the issue of residence involved more than a question of fact.

None of the matters raised by the plaintiff provides a reason for any substantial extension of time, particularly an extension of time measured in years.  That is a sufficient reason to dismiss the application.  There is, however, a further and more fundamental reason why the plaintiff's application must be dismissed.

In very broad terms, each of the grounds upon which the plaintiff relies seek to challenge the Audit Decision and the Objection Decision of the Commissioner are matters that either were, or could have been, raised in the primary proceedings commenced by the plaintiff, or on appeal, whether in the Federal Court proceedings under s 39B of the Judiciary Act or in the proceedings under Pt IVC of the Taxation Administration Act. As to the s 39B proceedings, subject to the requirement of leave, which might involve similar issues about delay to those raised above, there is no bar to an appeal. As to the Pt IVC proceedings, the Commissioner submitted that there is no res judicata that arises from the dismissal of the plaintiff's application following his failure to pay security for costs.  In any event, the plaintiff did not suggest that there was any reason why the issues that he now seeks to raise in this Court could not have been raised in those proceedings.  Further, the plaintiff made no application for any extension of time to comply with the order for security for costs, nor did he appeal from the decision that he pay security for costs.

In these circumstances it is an abuse of process of the Court for the plaintiff, years after the event, to seek effectively to "leapfrog”, by an application in this Court's original jurisdiction, the review and appeal procedures applicable to proceedings brought under Pt IVC of the Taxation Administration Act or under s 39B of the Judiciary Act[8].

[8]See Dimitrov v Supreme Court of Victoria (2017) 92 ALJR 12 at 17 [19]; 350 ALR 191 at 196; [2017] HCA 51.

The extension of time sought in the plaintiff's application filed on 8 February 2019 is refused. The application is dismissed pursuant to r 25.09.1 of the High Court Rules 2004 (Cth). The plaintiff must pay the defendant's costs.

AT 9.36 AM THE MATTER WAS CONCLUDED