Kabale Holdings Pty Ltd v State of Queensland
[2006] QDC 354
•8 September 2006
DISTRICT COURT OF QUEENSLAND
CITATION:
Kabale Holdings Pty Ltd v State of Queensland [2006] QDC 354
PARTIES:
KABALE HOLDINGS PTY LTD
Plaintiff
V
STATE OF QUEENSLAND
Defendant
FILE NO/S:
BD1313/05
DIVISION:
PROCEEDING:
Application
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
8 September 2006
DELIVERED AT:
Brisbane
HEARING DATE:
3 April 2006
JUDGE:
McGill DCJ
ORDER:
To be listed for further hearing.
CATCHWORDS:
LAND TAX – Exemption – assessment amended to exclude exempt land – whether open to challenge amended assessment by action.
Land Tax Act 1915 s 58(4), (5).
Re Australia and Overseas Telecommunications Corporation Ltd [1994] 2 Qd R 350 – cited.
F. J. Bloemen Pty Ltd v Commissioner of Taxation (1981) 147 CLR 360 – applied.
Darrell Lea Chocolate Shops Pty Ltd v Commissioner of Taxation (1996) 72 FCR 175 – distinguished.
Deputy Commissioner of Taxation v Heather No. 2 Pty Ltd (1988) 88 ATC 4120 – followed.
Plaintiff S157/2002 v Commonwealth of Australia (2003) 195 ALR 24 – cited.
Platypus Leasing Inc v Commissioner of Taxation (2005) 189 FLR 441 – followed.
R v Hickman ex parte Fox (1945) 70 CLR 598 – considered.COUNSEL:
D. B. Fraser QC for the plaintiff
J. A. Logan SC and D Marks for the defendant
SOLICITORS:
Piper Alderman for the plaintiff
Crown Solicitor for the defendant
The plaintiff’s claim in this action has a deceptive simplicity about it. It alleges that the defendant assessed it for land tax in respect of certain parcels of land, which included a particular lot. Those assessments were paid. There were subsequently amended assessments issued, which excluded that particular lot from the assessable land as it was exempt from tax. Accordingly, the defendant was not entitled to retain the amounts paid as land tax in respect of that lot, and the plaintiff wants it back. The defendant’s case is on the face of it even simpler: although there have been amended assessments issued, in the light of all the assessments that have issued, all credits given and all payments made, there is and has been since last year no money owing by either party to the other. The defendant submits that this is so obvious that it has applied for summary judgment under rule 293. There is a cross‑application on behalf of the plaintiff for disclosure, but it was agreed that I should deal first with the application for summary judgment.
Background facts
The plaintiff is a property developer, which over a period of time has been developing a residential suburb at the Gold Coast.[1] In connection with this it constructed an artificial lake which was filled with water in about January 1995. The land occupied by the lake became a particular lot on a plan of subdivision, apparently on 31 May 1996 when it became lot 903 on registered plan 889879. On 2 February 1998, the real property description changed to lot 903 on registered plan 901455, and on 29 March 2001 it changed again, to lot 903 on survey plan 130788.[2]
[1]This and the other factual material comes from the affidavit of Mr Dalley filed on 17 March 2006. He was not cross‑examined and the evidence on behalf of the defendant did not touch on these matters.
[2]The copies of the plans are Exhibit RRED6, 7 and 8; lot 903 is essentially the same, although the area varies slightly, and the new plans may reflect the results of some further construction work undertaken in parts of the land.
On 24 September 1997 the Office of State Revenue issued a notice of assessment of land tax to the plaintiff said to be in respect of land owned at midnight on 30 June 1996.[3] The assessment covered 32 individual lots or groups of lots on particular plans, one of which was lot 903 on registered plan 889879, then the description of the lake. However, only one lot (not the lake lot) was given an individual valuation, the rest had a combined valuation of $8,250,000. No part of the land was said to be exempt land. The Commissioner’s counsel subsequently conceded during proceedings in the Land Court that once lot 903 became a lake, it became exempt land under the exemption in s 13(1)(g)(v) of the Land Tax Act 1915.
[3]Affidavit of Dalley Exhibit RRED9.
The position was similar the following year; again, there was a notice of assessment which included a large number of lots (including the lake lot) within an overall unimproved value of $6,760,000. In 1998 there were only 13 lots which were valued together, at $4,465,000, together with a large number of lots which were valued separately, but otherwise the situation was the same. In 1999, the number of lots valued together (including the lake lot) had increased somewhat, but in 2000 there were only six lots valued together, at $1,255,000 including the lake lot. Finally, the 2001 notice of assessment contained a separate line entry for the lake lot, which by then was lot 903 on survey plan 130788; it had an unimproved value of $65,000, and a land tax value of $61,750.[4] In each case, the lot was not identified as being exempt land. All of the amounts assessed as payable by way of land tax in each of those notices of assessment were paid.
[4]The land tax value is the lesser of the unimproved value or the average of the unimproved value or values for the year of assessment and the two previous years; this implies that the department had unimproved values for the lake lot for the 1999 and 2000 tax years.
By a notice dated 27 April 2001 the plaintiff objected to its assessment in respect of each of the years 1996 to 2000 in respect of the land tax paid on lot 903. That notice did not identify any particular grounds of the objection. Perhaps because of this, the objection was disallowed by letter dated 1 August 2002. In that letter it was claimed that the assessments were based on valuations by the Department of Natural Resources and Mines, “firstly issued as part of a larger parcel and later as a single block.” That is consistent with the state of the assessments, and suggests that in those years where there was a single unimproved value stated for a collection of lots, there had just been a single valuation of the whole parcel of land.
Appeal to the Land Court
By notice of appeal dated 30 August 2002, the plaintiff appealed to the Land Court against the decision on the objection.[5] The ground of appeal was that the land was exempt from land tax as a public recreation ground, being a public lake, pursuant to s 13(1)(g)(v) of the Act. That appeal was in accordance with s 27 of the Land Tax Act 1915, which relevantly provides:
[5]Under s 26G(1) of the Land Tax Act.
“(1) A taxpayer may appeal to the Land Court against an assessment for the taxpayer’s land, on the ground that –
(a) the taxpayer is not liable for the land tax or any part of the tax; or
(b) the assessment is excessive.
(1A) However, no right of appeal against an assessment exists under this Act, on the grounds that the relevant unimproved value assigned to an area of land or interest in land is excess –
(a) for a case in which the value is an unimproved value – if the value is the value of the area or interest made or caused to be made by the Chief Executive under the Valuation of Land Act 1944; or
(b) for a case in which the value is an averaged unimproved value[6] – if the value, or each value, used to work out the averaged unimproved value is the value of the area or interest made or caused to be made by the chief executive under the Valuation of Land Act 1944.”
[6]This could have applied only to the 2001 assessment.
The effect of subsection (1A) is clear enough, when it is borne in mind that there is also a right of appeal under the Valuation of Land Act 1944 in respect of unimproved values made or caused to be made under that Act. No doubt the intention of the provision is that where there is a right of appeal under the Valuation of Land Act, the appeal should be taken under that Act, and, where there was a right of appeal under that Act, the Commissioner is entitled for the purpose of setting land tax to act on the value determined under the Valuation of Land Act without having to defend that value on appeal.
Nevertheless, if land which is exempt land has been included in an assessment, one would expect the assessment would be excessive, or alternatively, that the taxpayer was not liable for part of the tax so assessed. That might not necessarily be the case; for example, if there is a valuation of a large area of land involving a number of lots, including one which is a lake, the value of the land as a whole may be the same as the value of the land apart from the lot which is the lake, because that lot may have no value in itself, although it may enhance the value of the surrounding land. Accordingly, the value of all of that land, apart from the lake, may be the same as the value of everything. One would suspect, however, that it was likely that the assessment, and perhaps the valuation on which it was based, proceeded on the basis that the lake lot was not exempt land.
It seems to me, therefore, that this was a valid ground of appeal, and gave rise to matters which could validly be agitated in the Land Court, although it might not necessarily follow that the land tax payable would come down by any particular amount. The Land Court could find the appropriate amount. If there had been an assessment of a parcel of land consisting of a number of lots on the basis of a valuation of the whole parcel, but one of the lots was exempt land, it seems to me that that would invalidate the whole process of assessment, and it would be necessary for the Commissioner either to determine, or to obtain from a valuation made under the Valuation of Land Act in respect of the land which was not exempt land, a value of that land in order to enable a valid assessment to be made in respect of that land. It would also seem to me that subsection (1A) would not close off any issues raised in relation to such an appeal; it would still be necessary for the Land Court to investigate what unimproved value had been determined in respect of the land which was not exempt land, or separately for the exempt land, and to the extent that the assessment depended on any other valuation, it would be open to dispute that valuation on the appeal. The Land Court may have taken the same view; in any event, the President on 13 February 2004 ordered the Commissioner of land tax, the respondent to the appeal, to provide disclosure by list of the calculations of land tax and the documents relied on for the calculations by a particular date.
Assessments amended
In the meantime, however, on 21 January 2004, the Department of Natural Resources and Mines issued new valuations in respect of lot 903 for each of 1 January 1996, 1 October 1996, 1 October 1997, and 1 October 1998 “for Office of State Revenue (land tax) purposes only”, in each case in the sum of $64,000.[7] The notices were said to be subject to objection in the prescribed form, and presumably were subject to appeal under the Valuation of Land Act. On 29 January 1994, amended assessments were issued in respect of each of the years 1996 to 2001. For the 1996 year the effect of the amendment was to drop lot 903 from the list of land included in the overall value, and to reduce the overall value by $64,000. In 1997, there were two amended assessments issued that day; the first dropped lot 903 from the list of land and reduced the value attributed to the parcels that were valued jointly by $266,800, while the second had the same list of lots and reduced the value overall by a further $64,000.[8]
[7]These valuations look artificial and contrived; apart from anything else, it is difficult to believe that the value of the land would have been constant for four years.
[8]That assumes that Exhibit RRED33 follows RRED32; if they were issued in the opposite order, the effect of RRED32 was to increase the unimproved value of the total parcel by $64,000.
For 1998, four amended valuations were issued. All omitted lot 903 from the list of lots which were valued together, and all gave a different value overall for those lots. Again, there seems to be nothing in the notices to indicate in what sequence they are to be read, but compared with Exhibit RRED36, Exhibit RRED27 reflects a reduction in value for the land in that list overall of $64,000. For 1999, three different amended assessments were issued on this date; all omitted lot 903 from the list of lots valued together, but each gave a different total value for the lots. For 2000, two amended assessments dated 29 January 2004 were issued, but compared with the previous amended assessment for this year[9] Exhibit RRED47 omitted lot 903 from the list of land valued together, and reduced the unimproved value of the land in that list by $64,000. The other also omitted lot 903 but produced a different, even lower, unimproved value for the land in that list.
[9]Issued 16 October 2001, which dropped lot 589 from the list of lots valued together, but did not change the unimproved value of the land in that list!
For 2001, lot 903 had previously in the assessment and an amended assessment been listed separately and valued at $65,000, and for this amended assessment, lot 903 no longer appeared, and the total taxable value was reduced by $61,750, the land tax value previously attributed to lot 903. There were further amended assessments issued on 1 June 2004 in respect of the years 1996 to 2000, but none of these made any reference to lot 903; the value attributed to the parcel of various lots valued together was in each case adjusted again.[10]
[10]I hope that I have interpreted the effect of the various amended assessments correctly. There does not appear to be in the material any explanation for what is intended to be the effect of each amendment. Plainly, no explanation is included in the amended assessment; either there was no explanation provided with it, or any explanation provided has not been included in the affidavit. I note that there does not appear to be any provision in s 20 of the Act requiring an explanation for any amendment, but obviously an explanation should be given.
On 27 January 2004, the Commissioner advised that the amount refundable as a result of the amendments was $6,278.34: Exhibit RRED52. It appears that as a result of all of the amendments made on 21 January 2004, a total refund of $12,793.52 was payable to the plaintiff: Exhibit RRED54. The cheque for $12,793.52 was sent but was not presented for payment by the plaintiff, nor has the plaintiff presented any other refund cheque. The cheque was returned to the solicitor for the defendant under cover of letter dated 4 May 2004.
It was submitted that the Commissioner had not complied with s 20B in altering the assessments in this way. On the face of it, however, the amended assessments issued on 29 January were issued at least 14 days before the appeal was due to be heard, the appeal having been set down for hearing on 13 February 2004, although just in time. But in any case, the function of s 20B, which is clearly procedural, is to enable the parties to know what effect the amended assessment will have on the appeal. The section does not provide that the assessment cannot be validly altered other than in accordance with s 20B, and I was not cited any authority to that effect. There is nothing in the statute to suggest that an amended assessment issued in breach of s 20B would be invalid, and in my opinion that is not the effect of the Act. Indeed, I think the contrary is not even seriously arguable.
It was also submitted at one point that the assessment was not in accordance with s 20, but there is a very wide power of amendment in s 20(4), which would seem to me to be quite wide enough to justify amending an assessment by omitting therefrom land which is not subject to land tax and making consequential charges to the assessment.
Land Court hearing
The appeal came on before the President of the Land Court on 13 February 2004. In the course of this hearing, counsel for the Commissioner conceded to the court that the lake lot was exempt land, at least once it became a lake. Counsel for the plaintiff pointed out that the plaintiff was still within the objection period in respect of the valuations issued for lot 903, and was still considering whether or not to appeal against those valuations. At that stage, the plaintiff asked to have the appeal adjourned to a date to be fixed, and for a direction for further disclosure by the Commissioner. In response, counsel for the Commissioner submitted that the effect of the amended assessments was that the ground of objection raised, that the earlier assessments had included land which was exempt land, had been completely overcome so that the appeal was spent.
It was also submitted that the plaintiff was confined by s 26G(3) of the Land Act to the grounds stated in the objection, but that was wrong for two reasons. The first is that there were no particular grounds stated in the objection, the objection was simply against the imposition of land tax on lot 903 in a particular amount. Secondly, if s 20B applies and the appeal continues under subsection (3)(d), subsection (4) converts the appeal into one against the assessment as altered, and it therefore ceases to be an appeal against the decision on the objection in relation to the original assessment, so s 26G(3) can no longer apply.
In addition, even though the amended assessment does not purport to impose land tax in respect of lot 903, there may be still issues as to the effect of removing lot 903 in terms of the valuation applied to the balance of the land which is subject to assessment under the amended assessments. It does not seem to me obvious that an appellant would not be able to dispute the assessment on the ground that the appropriate adjustment had not been made for the omission of lot 903 from the land subject to the assessment, that is to say, that the value attributed to the land which remained in the assessment as amended was inappropriate. That seems to have been recognised by the President on p 16 where he noted that the application was for disclosure of “the particular calculation that led to the assessment on the land, I guess, with and without 903.” Ultimately, he ordered that the appeal be adjourned to a date to be fixed, and that the Commissioner provide disclosure by list of the calculations of land tax and the documents relied upon for the calculations by 15 March 2004. Costs were reserved.
Following the issue of the amended assessments, correspondence ensued between the plaintiff and the Commissioner about whether proper effect had been given to the recognition that lot 903 was exempt land during the relevant years. It appears that once this was accepted the Commissioner obtained retrospective valuations of the land from the Department of Natural Resources, and then reassessed the balance of the parcels omitting lot 903 by subtracting from the values which had previously been attributed to those parcels the amount of the retrospective valuations for lot 903.
It is certainly not obvious to me that this was a valid approach. What has to be determined is either what value was originally attributed to lot 903, or what value ought to have been attributed to the land which was subject to land tax, that is the whole of the land apart from lot 903. The idea of obtaining this by a process of subtraction strikes me as simplistic and conceptually dubious. Valuation of land is not like valuation of a bulk commodity like wheat. If you have a thousand tonnes of wheat, which has a particular value, it is probably sensible to talk in terms of a value per tonne and to apportion the value among particular quantities of wheat which make up the overall amount simply by reference to the tonnage involved.[11]
[11]Even this may not be strictly correct in practice; economies of scale or market differentiation may mean that large quantifies of wheat have a different value per tonne from small quantities. The price mechanism can be a subtle and complex thing, and real markets rarely behave with the sort of theoretical simplicity which facilitates calculations.
There is no reason to assume that the value of a particular parcel of land can be derived by taking the value of a larger value parcel of land which includes it, and subtracting the value of the balance.[12] Considerations such as the shape and topography of the piece of land, or other matters which affect the value of unimproved land, could easily operate in quite a different way in respect to different parts of the same large parcel. It therefore also cannot be assumed that the value of a particular part of the larger parcel can be determined simply by taking a pro rata part of the value of the whole parcel by reference to an amount per hectare. It follows, in my opinion, that whatever the relevant considerations for determining the value of land which is subject to land tax, the value of other land which is not subject to land tax ought not to be one of them. I would have thought that it followed that whatever process of reasoning ought to have been taken into account in determining the amended assessments to issue in January 2004, the one thing which was not relevant was the value of lot 903 at a time when it was exempt land.
[12]Particularly when the land being subtracted is a large and unusually shaped piece of the whole land.
The retrospective valuations of lot 903 certainly look artificial and contrived, but the process of appeal against the valuations was not followed. It seems to me, however, that it was still open to the appellant to have argued that those valuations were irrelevant to the process the Commissioner had to undertake, and that the reassessment process was therefore inappropriate. It is no answer to this to say that the Commissioner has to act on the basis of valuations from the department. That the department has provided a particular valuation of a particular parcel of land does not authorise the Commissioner to make use of that in an inappropriate or improper way. Nor would this have the effect of depriving the Land Court of jurisdiction to argue about the reassessment; s 27(1A) would not apply to a situation where the Commissioner has made an inappropriate use of a valuation obtained from the department in respect of one parcel of land when performing the exercise of assessing the value of a different parcel of land. The Commissioner’s arguments before the Land Court to the contrary are superficial and seem to me to be obviously wrong.[13] It must be recognised that I have heard no argument about the merits from the defendant, and there has been no attempt to justify the defendant’s approach; this may be a consequence of a tactical decision on the part of the defendant.
[13]The submission that the appeal was spent, which was repeated in correspondence from the Crown Solicitor of 26 November 2004 (Exhibit RRED72), was inconsistent with the submission to me that the Land Court was the proper forum for the matters the plaintiff wished to raise: outline para 20.
It seems to me clear that the appropriate vehicle in which to dispute this was the Land Court appeal which was then pending. That course, however, was not taken. On 28 February 2005 the plaintiff signed a notice of agreement to withdraw the appeal, which was also signed by the Crown solicitor; pursuant to that notice, on 2 March 2005 a member of the Land Court ordered that the appeal be withdrawn from the list and that the Commissioner pay the plaintiff’s standard costs of and incidental to the appeal up to 29 January 2004.
Ultimately, a significant volume of material was disclosed by the Commissioner to the plaintiff pursuant to the direction made by the President of the Land Court: Exhibit RRED61. Mr Dalley in his affidavit comments on what is revealed in this material, and to some extent what is not revealed by it, and suggests that, because of the way in which the land tax was originally assessed, the land tax paid in relation to lot 903 was substantially greater than $6,000 or indeed $12,000, being of the order of the amount claimed in the present action, or perhaps a much greater amount. It does appear that land tax was never assessed in a way which assumed any particular separate valuation for lot 903, at least prior to the 2001 year. He gives some reasons for thinking that what occurred in the early years was that a larger parcel of land was valued at a particular rate per hectare in respect of the whole parcel, including lot 903. If that occurred, in circumstances where lot 903 was exempt, then it would seem to follow that the assessment was not properly made. It seems to me that what the Commissioner ought to have done in each of those years was to assess the tax payable in respect of the land which was taxable, which would involve taking into account the value of that land, and only that land.
Because of the way land tax is imposed, it is necessary to have regard to the value of all of the land owned by the taxpayer, but obviously if exempt land has been wrongly included in the process of assessment, the tax paid will be greater than it would have been had that not occurred. Prima facie, the appropriate exercise is to identify the amount, in respect of each tax year, by which the land tax assessed would have been less had the exempt land lot 903 not been taken into account when performing the assessment. There is nothing in the material that I have seen,[14] to suggest that the Commissioner undertook that exercise until after the Land Court hearing in 2004. It would seem to me that that was the matter which could and should have been determined on the hearing of the appeal in the Land Court. In my opinion, the Land Court had jurisdiction to deal with that question and to make the appropriate findings, if necessary by valuing relevant parcels of land itself where there was not an applicable valuation from the Department of Natural Resources. However, that course was not followed by the plaintiff.
[14]To the extent, at least, that I have examined it; I have not actually read every page of all of the documents in the exhibits.
It did apparently eventually occur to the Commissioner that the process being adopted was not appropriate. According to a letter dated 15 September 2004 (Exhibit RRED69), after the Land Court hearing, the Commissioner obtained from the Department of Natural Resources a valuation for the parcels of land which had previously been valued including lot 903, but with lot 903 excluded from the valuation. These valuations differed from the value previously attributed to them by a calculation based on a valuation of $64,000 for lot 903.[15] These valuations were said to have been the basis of the further amended assessments issued on 1 June 2004, which actually produced a slightly lower refund than the amount calculated as a result of the amended assessments in January 2004. Nevertheless, the valuations must have come to similar results, because of the very small change in the amount of the refund offered as a result. Thereafter, the Commissioner continued to assert that any argument about the valuation had to be dealt with by an appeal under the Valuation of Land Act. The plaintiff said that the problem with this argument is that it has never been given notice of these valuations under that Act, which is the first step in the process which leads to an appeal under that Act. The whole logic of the restriction of s 27(1A) depends on the existence of a right of appeal under the Valuation of Land Act in respect of valuations under that Act. Accordingly, it may be arguable that if something has been done which does not give rise to a right of appeal under the Valuation of Land Act, it does not fall within s 27(1A). But that would be an issue as to the scope of an appeal under s 27, which would be a matter for the Land Court on the hearing of that appeal. It is not a matter that I can decide in these proceedings.
[15]Not to my surprise.
The defendant’s case
The defendant has not attempted to justify before me anything which was done by the Commissioner in relation to this matter. The defendant has rather sought to support its application, and its defence, on a much narrower basis: for the purposes of these proceedings, the court cannot do what the Land Court can do, which is to go behind the assessment. The defendant’s position is that for the purpose of this proceeding the assessment, that is the final version of the assessment for each year, is conclusive, and on the basis of those assessments there is no refund owing to the plaintiff, and therefore the action must fail. If this is correct, it does not matter what I think about the correctness or otherwise of the processes undertaken by the Commissioner.
The defendant relied in particular on parts of s 58 of the Land Tax Act which provides relevantly:
“(4) The production of any assessment of register or book, or of any document under the hand of the Commissioner purporting to be a copy or extract from any such register or book, shall be conclusive evidence of the making of the assessment, and, except as hereinafter mentioned, shall be conclusive evidence that the amount and all the particulars of such assessment appearing in such register, book, or document are absolutely correct.
(4A) However, in any proceedings on appeal the same shall be prima facie evidence only of the matters aforesaid.
(5) The validity of any procedure under this Act, or of any assessment or any register or book or any document purporting to be made under this Act, or to be signed by the Commissioner, shall not be prejudiced or affected by reason of any irregularity or informality therein, or of the fact that any of the provisions of this Act have not been complied with.”
The defendant has filed an affidavit of the delegate of the Commissioner of land tax which exhibits what are sworn to be true copies of the relevant original and final amended land tax assessment signed by his hand.[16]
[16]Affidavit of Kulpa Exhibits AGK2-13.
These provisions are familiar in the field of revenue law. Subsections (4) and (4A) are very similar to s 177 of the Income Tax Assessment Act 1936, and subsection (5) is similar to s 175 of that Act. Those sections were considered by the High Court in F. J. Bloemen Pty Ltd v Commissioner of Taxation (1981) 147 CLR 360. Mason and Wilson JJ, with whom two of the other members of the court agreed, said of the former provision at p 375:
“The effect of this policy is that, once the Commissioner takes advantage of s 177(1) by producing an appropriate document, the taxpayer is precluded from contesting that the Commissioner has made an assessment or that in making the assessment he has complied with the statutory formalities. The taxpayer is entitled to dispute his substantive liability to tax in proceedings under Part V.”
Their Honours went on at p 376 to point out that this did not exclude the general jurisdiction of, in that case, the Supreme Court of New South Wales, and continued:
“The general tenor of the statutory provisions suggests that a taxpayer wishing to challenge a notice of assessment served upon him will be effectively confined to the Part V procedures.”
That approach is still being applied in the case of the Commonwealth legislation, now relevantly provisions of the Taxation Administration Act. In Platypus Leasing Inc v Commissioner of Taxation (2005) 189 FLR 441 Gzell J said at p 453:
“Once the signed notices of assessment and declaration were tendered, this court was precluded from considering the amounts and particulars contained in those documents and that precluded any consideration of the ingredients of which they were composed.”
His Honour went on to cite authority, and accordingly struck out proceedings seeking declaratory relief with respect to liabilities to tax under A New Tax System (Goods and Services Tax) Act 1999. Leave to appeal in the New South Wales Court of Appeal was refused: [2005] NSWCA 399; see in particular [60]. This approach was applied to s 58(5) of the Land Tax Act by the majority of the Court of Appeal in Re Australia and Overseas Telecommunications Corporation Ltd [1994] 2 Qd R 350 at 361. Once an amended assessment issues, what matters is the effect of the amended assessment, and any invalidity of any earlier assessment or amended assessment becomes irrelevant: Deputy Commissioner of Taxation v Heather No. 2 Pty Ltd (1988) 88 ATC 4120.
In response, counsel for the plaintiff submitted that the certificates relied on by the defendant did not assist because the certificates do not address the crucial issues, which is whether a due refund has been provided. They do not on their face comply with s 20B. They concern a flawed process engaged in by the defendant which occurred in the context of the plaintiff’s pursuit of the statutory method prescribed for appeals against assessments. As to the first of these points, the question of whether the plaintiff is entitled to a refund depends on what amount is payable for land tax in respect of the various years, and what amount has been paid. The certificates do not assist on the latter point, but they are conclusive in relation to the former. As to the second point, that is answered by s 58(5). Assuming that s 20B was not complied with, subsection (5) expressly provides that the validity of what has occurred and the evidentiary affect of the certificates are not affected by a failure to comply with any provision of the Act, which would include s 20B. There is therefore nothing in this point. As to the third proposition, that is really a submission that there is a limit to the scope of the Bloemen doctrine, and that if what has been done is bad enough, effect will not be given to it.
It was submitted that for a provision of this kind to operate, it was necessary to satisfy the test in R v Hickman ex parte Fox (1945) 70 CLR 598. That case concerned the effect of a regulation under the National Security (Coal Mining Industry Employment) Regulations that a decision of a local reference board “shall not be challenged, appealed against, quashed, called into question, or be subject to prohibition, mandamus or injunction, in any court on any account whatever.” Sir Owen Dixon said at p 615:
“Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body.”
The principle in Hickman has subsequently been accepted by the High Court as authoritative: Plaintiff S157/2002 v Commonwealth of Australia (2003) 195 ALR 24 at 32. In Darrell Lea Chocolate Shops Pty Ltd v Commissioner of Taxation (1996) 72 FCR 175, this approach was applied in relation to an assessment under the Sales Tax Assessment Act, which was similar in effect to s 58(4). In that case, it was held that there has not been a bona fide attempt to exercise the power of assessment in circumstances where it was based on facts which were known by the Commissioner to be untrue: p 186, where it was said elsewhere that: “The fact that an assessment may be wrong could never enliven the Hickman principle.” It appears to me, however, that in that case the issue arose in an appeal following the disallowance of an objection to the assessments (see p 176), which is the authorised method of appeal against an assessment under the Act.
Accepting that the Hickman principle would apply as a general proposition in relation to decisions under the Land Tax Act, the cases where it has been applied are cases where the court has been able to exercise administrative law jurisdiction in respect of the decision concerned. Hickman was a case where the constitutionally entrenched administrative law jurisdiction of the High Court was invoked. It may be that the principle could be invoked in respect of decisions taken under the Land Tax Act by proceedings in the Supreme Court, under the Judicial Review Act, or in some other way by which the general administrative law jurisdiction of that court is invoked.[17] But this court has no general administrative law jurisdiction.
[17]On this point of course I express no concluded opinion.
Apart from that, despite my comments on the various valuations which the Commissioner is said to have relied on, the fact that such valuations have been relied on is hardly evidence of bad faith. The fact that for a long time the Commissioner seemed to be going about the exercise the wrong way is hardly evidence of bad faith in going about the exercise the right way, which is ultimately apparently what the Commissioner did do. That is the effect of the plaintiff’s evidence. This is not a case like Darrell Lea where it can be said that in making the relevant assessments, that is the last set of amended assessments, the Commissioner has been acting on facts known to be wrong, and nor is bad faith shown or even seriously suggested in any other way. Despite my view that on the material I have seen the Commissioner does seem to have made rather a hash of dealing with the realisation that lot 903 was exempt land, it is a substantial step to go from that point to say there was bad faith, particularly in relation to the last amended assessments, which are the important ones.
I appreciate that for the purposes of this application I am in a sense anticipating the outcome of the trial. Prior to any trial there would be disclosure and there may be interrogatories or third party disclosure. But it does not follow that a plaintiff who cannot at the moment show even an arguable case of bad faith, or point to any real indication that the application of further court processes may well throw up evidence of bad faith, can be allowed to continue the action simply in the hope that in time those processes may do so. I do not think that that is an appropriate approach to the application of rule 293.[18]
[18]As laid down in Deputy Commissioner of Taxation v Salcedo [2005] QCA 227.
The plaintiff also submitted that the case came within the third limb of the Hickman test, that the decisions of the Commissioner were not reasonably capable of reference to the power conferred by the Act. But that is clearly not the case. There is no indication that the Commissioner has not been trying to work out what land tax was actually payable, which was an appropriate approach in the circumstances.
I am not persuaded that in this case the application of the Bloemen principle has been excluded, even arguably. In my opinion, for the purposes of this action I have to proceed on the basis that the ultimate version of the assessment issued in respect of each year is correct. On that basis, for the purposes of this action, the only question is whether it follows that on that basis there is now money owing to the plaintiff.
The defendant’s affidavits exhibit various copies of both the original assessments for each of the 1996 to 2001 years, and the final assessments for each of those years. The final amended assessments for each of 1996 to 1999 each show a total amount payable as zero; in each case, the amount of the assessment was equal to the amount of “credit arrears”. For the final amended assessment for the year 2000, however, (Exhibit AGK11) the notice shows “credit available $12,385.43) because the amount of arrears credit is greater than the amount of the assessment. For 2001 the final amended assessment, Exhibit AKG13, shows credit available of $12,793.52, for the same reason. That was issued on 29 January 2004, and it is not at all clear that the amended assessment for 2000 issued on 1 June 2004 showing the smaller amount of credit available does not supersede that earlier notice.
That would be consistent with what was said in a letter of 2 June 2004 from the defendant’s solicitors (Exhibit RRED64) which referred to the amended assessments which it issued and continued “your client is entitled to a refund of $12,385.43, and a cheque for that amount is being sent to your client.” This was after the earlier refund cheque of $12,793.52 was returned to the Commissioner. Mr Dalley does not appear to refer in his affidavit actually to receiving that cheque. In paragraph 26, however, Mr Dalley swore that the plaintiff did not present the cheque for $12,793.52 or any other refund cheque issued by the Office of State Revenue. On the face of it therefore, the plaintiff’s case is that neither that cheque (which was returned) nor any subsequent cheque issued as a result of the further amended assessments dated 1 June 2004 was actually banked.
Apart from the copies of the various assessments and amended assessments, the defendant’s affidavits set out various material mostly derived from computer programs used by the Office of State Revenue. They are extraordinarily difficult to follow. One affidavit verified some attachments to a letter which was exhibited to a different affidavit, which included a list of payments in respect of each of the years. This referred to refunds of $7,820.18 on 4 January 2000 and $378.63 on 5 April 2000, both in respect of the 1999 assessment, a refund of $1,074.10 on 5 December 2000 in respect of the 2000 assessment, and a refund of $7,468.65 on 12 February 2002 in respect of the 2001 assessment. It does not refer to any refund in 2004 either as a result of the January or the June amended assessments. There was attached to this letter a document which asserted that as a result of these refunds the total of all of the payments received in respect of land tax (less those refunds) equal the total of all of the amounts finally assessed in the various years in respect of land tax. That may be right, but if so it seems curious that a cheque for over $12,000 was actually sent in January 2004. Although there was some small adjustment to the tax payable in June 2004, the result does not seem to me to be much different, and these figures seem to show that after February 2002 there was no occasion to be making any refund to the plaintiff.
There are a mass of computer records exhibited to an affidavit of Mr Kulpa which are largely incomprehensible to me. The last page of these exhibits (Exhibit AGK25) purports to show that as far as the office’s computer is concerned no amount is owing for any year, nor is there any refund due for any year. But on the previous page (page 131), part of Exhibit AGK24, there is a reference to a refund issued in the amount of $12,793.52. This is given an allocated date of 18 May 2004. On p 126 there is an entry for “cancel refund” in the same amount. On the first page of Exhibit AGK24 there is a list of transactions, one of which is apparently a refund of $12,385.43 on 1 June 2004. There does not appear to be a “cancel refund” entry to correspond with this.
I would have thought it would have been easy enough to list all of the amounts ultimately said to be payable by way of land tax, and to list all of the payments which have been made at different times on behalf of the plaintiff in respect of land tax, to show how they have been allocated, identify when and what amount any refunds have actually been paid to the plaintiff, and in that way to work out the final balance, which the defendant’s evidence says is a nil balance. Unfortunately, that does not seem to have been done, at least not in a way which is comprehensible to me. What concerns me in all of this is that the defendant’s assertion that there is nothing owing may be based on an assumption that there has been a refund made to the plaintiff of $12,385.43, whereas the plaintiff’s position may be that any cheque for that amount has not been presented.
Sending a cheque is not the equivalent of payment. When payment is tendered by cheque, acceptance of the cheque is conditional upon the cheque being met on presentation, and if that does not occur then there has been no payment. If the cheque has never been presented, it necessarily follows that the payment has never been made. For all I know, the conclusion of the defendant’s computer that there is a nil balance may be assuming the cheque for $12,385.43 has been paid, but if that cheque has never been presented, and that payment has not been made, the true position may well be that the plaintiff is entitled to recover from the defendant for overpaid land tax $12,385.43. If that is the case, it follows the defendant is not entitled to have this action summarily dismissed. It may be that the appropriate course is for me to give judgment for that amount. That a cheque in this amount was previously sent (assuming that is the case) would in those circumstances I expect be relevant to costs.
These are matters, however, which were not raised in the course of argument, and it may be that I am misinterpreting the defendant’s affidavits and their exhibits. Accordingly, I propose to publish these reasons and invite further submissions from the parties as to the situation, and as to the appropriate order to make, if I conclude that, although the plaintiff has no arguable case for anything else, then the plaintiff may be entitled to judgment for some amount on this basis. It may even be that there is some factual dispute in relation to this issue. Accordingly, I propose to list the matter for further hearing, publish these reasons, and see what happens.
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