KURT ALIM KENNEDY & COMMISSIONER for ACT REVENUE (Administrative Review)

[2010] ACAT 55

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

KURT ALIM KENNEDY & COMMISSIONER FOR ACT REVENUE (Administrative Review) [2010] ACAT 55

AA 10/13

Catchwords:             ADMINISTRATIVE REVIEW- rates – whether registered lessee is “owner” for rating obligations – not registering new lease – name of proprietor of leased land - tax avoidance scheme.

List of legislation:     Land Titles Act1925, s.14

Rates Act 2004, ss.14 and 16

ACT (Self-Government) Act 1988 (Cth), s.27

Legislation Act 2001, s.183

Taxation Administration Act 1999, s.8

Case law:                  Re Adams (1976) 1 ALD 251 at 257

Tribunal:                  Mr W G Stefaniak, Appeal President

Date of Orders:  20 August 2010

Date of Reasons for Decision:         20 August 2010

AUSTRALIAN CAPITAL TERRITORY            )
CIVIL & ADMINISTRATIVE TRIBUNAL       )          AA 10/13

BETWEEN:

KURT ALIM KENNEDY

Applicant

AND:

COMMISSIONER FOR ACT REVENUE

Respondent

TRIBUNAL:            Mr W G Stefaniak, Appeal President

DATE:  20 August 2010

ORDER

1.        The Appeal is dismissed.

………………………………..

Mr W G Stefaniak

Appeal President

REASONS FOR DECISION

1. Before I commence my reasons for this decision, I need to state, as I indicated during the hearing and during submissions on the matter, that it was common ground that the Tribunal in first instance (hereinafter referred to as the Tribunal below) had made a factual error.  The Tribunal below had stated that the Appellant refused to pay the rates notice.  This was not correct.  The Appellant did pay the rates notice as he was obliged to.  This error is now hereby corrected. 

2. I must say that I am also satisfied that this error did not affect the conclusion reached.  In allowing the decision to stand despite this error, I did not feel there would be any miscarriage of justice.  The error was a simple factual one.  It has now been corrected. 

1. The Appellant at all material times abided by the law and quite legitimately made a number of objections to relevant authorities in relation to the point he was pushing. There is nothing before me to indicate that he was in breach in any material way of the law. In fact, it was clear in the normal course of events when a new lease is issued that the necessary documents would have to be lodged to enable this to occur. Mr Kennedy obviously lodged the required documents. The legal requirement seemed to be on the Registrar-General to record the new lease in the register. Section 14(6) of the Land Titles Act1925 states,
   
   “(6) If—

   (a)the register contains a record in relation to land or an interest in land; and

   (b)the lease of the land is surrendered by the lessee; and

   (c)a new lease of the land comprised in the surrendered lease is granted to the lessee;

   the registrar-general must make a corresponding record in the register in relation to the new lease.”

   4. Accordingly, the Registrar-General in this matter made a corresponding record in the register in relation to the new lease granted over Block 6 Section 45, Lyons in 2007.  It would seem the Registrar-General made this corresponding record at some time in 2008. 
   5. The Appellant was requested pursuant to section 14(1)(a) of the Act to produce to the Registrar-General the instruments pertaining to the re-grant of land within 14 days of the letter sent on the 11^th of November 2008.  The Registrar-General’s Office indicated that they had also contacted ACT Planning and Land Authority (ACTPLA) to obtain a copy of the re-grant of the lease which they would use to record the new lease on the register if the Appellant failed to produce the original documents.  The Appellant failed to produce the original documents.  Accordingly, the Registrar-General made the required notation in the register.
   6. At the appeal, it was conceded by Mr Kennedy, the Appellant, that he was in fact the registered proprietor of the land.  This concession negated the need to consider a number of his submissions.  His submissions still left alive the issues which are described as the constitutional issues and also the name issue. 
   7. I do not intend to regurgitate in this judgment a lot of what was said in the judgment of the Tribunal below, dated the  31^st of March 2010.  Suffice to say that the appeal proceeded by way of a review of this decision and by way of submissions.  No transcript is available from the decision below.  I had nothing to contradict any findings of fact made by the Tribunal below having heard the evidence and having assessed the demeanour of witnesses.
   8. I accordingly have no reason to interfere with any observations made by the Tribunal below except to correct the error made by that Tribunal, which was conceded by the legal representatives for the Respondent. 
   9. The only additional information by way of factual information before me was the letter from the Registrar-General, several emails and a contention by the Appellant elaborating on what he said to the Tribunal below in relation to why he surrendered his lease in 2007 and obtained a new 99 year-lease to the property in Lyons.  I shall deal with this point shortly.
   10. Agreed facts are that the Appellant and his wife on the 6^th of June 2007 surrendered his Crown lease and on the 7^th of June 2007 ACTPLA, on behalf of the Commonwealth, granted a new Crown lease for 99 years.  This new lease was not registered with the Registrar-General.  The reasons for this seemed to be the Appellant feeling that he should not have to pay rates basically because in his view the land was owned by the Commonwealth and the Territory Government could not levy the Commonwealth in term of charging its rates. 
   11. This brings me to the first of the two remaining points in the appeal, which are still afoot, that is, the constitutional issue in relation to the Commonwealth, the owner of the land, not being responsible for paying rates.
   12. I think the law is quite clear, however, on this point, that it is not the Commonwealth that has to pay the rates but the registered proprietor of the land and that registered proprietor is the Appellant. 
   13. The Tribunal below declined to deal with the constitutional arguments put forward by the Appellant because it was not the relevant forum to consider whether the legislature had exceeded its constitutional powers in passing legislation.  This is consistent with what Brennan J said in Re Adams
       (1976) 1 ALD 251 at 257 –

   “As at present advised, it appears to me that, when a decision maker acts in conformity with his statutory authority, a person whose interests are affected by his act may not obtain relief from this tribunal upon the ground that the statute is ultra vires the Parliament.”

   
   
   

   14. At any rate, the constitutional argument put by the Appellant, at
       paragraphs 59-64 of his submission is without foundation, because the Rates Act 2004 imposes no obligation on, and does not bind, the Commonwealth.  The obligation to pay rates is imposed on the owner of parcel of land
       (section 16) and to all intents and purposes that is the registered proprietor of the land by definition, not the Commonwealth.  The Rates Act as amended deals in section 14 with the imposition of rates. Section 14 states how rates are imposed on parcels of rateable land.
   15. Section 16 of the Rates Act states

   “(1)          Rates imposed for a parcel of land are payable to the commissioner by the owner of the parcel.

   (2)The person who is the owner of a parcel of land is liable to pay to the commissioner the whole or any part of rates payable for the parcel that have not been paid whether the amount became payable before or after the person became the owner.”

   16. In the dictionary section of the Act,  the owner is described as follows:

   “owner, of a parcel of land, means—

   (a)       except for part 7—

   (i)        the registered proprietor of an interest in the

   parcel (other than an interest in a lease granted

   by a person other than the Territory or the Commonwealth); or

   (ii)       if the registered proprietor has sold the interest

   to another person (the new owner) and the new

   owner is in possession of the parcel but not yet

   registered as the proprietor—the new owner; or

   (iii)      a mortgagee in possession of the parcel; or

   (iv)a person holding the parcel of land under a

   sublease from the Territory, if the Territory holds the parcel under lease from the Commonwealth; and

   (b)       for part 7 (Deferral and rebates)—see section 45.”

   17. Clearly, Mr Kennedy, as the Appellant, is the registered proprietor of an interest in the parcel of land in question here.  He is interested in the land by way of a lease of 99 years granted by the Commonwealth through the good offices of the Territory. 
   18. Mr Kennedy attempts to use section 27 of the ACT (Self-Government) Act 1988 (Cth) as amended.  The section he quotes states that the Crown may not be bound except as provided by the regulations and an enactment does not bind the Crown in its right of the Commonwealth.
   19. This means that the Territory government cannot make laws inconsistent with Commonwealth laws and cannot bind the Commonwealth accordingly.  It does not mean that the Territory government cannot do what every other municipal government and State government in Australia does, that is, charge a citizen for services by way of rates and other taxes which State and Territory governments are by law in Australia able to do.  It is not relevant to
       Mr Kennedy’s arguments, in my view. Similarly, I accept the Respondent’s submission in relation to section 183 of the Legislation Act 2001.  This section states

   “Change of name of entity

   (1)   If a law changes the name of an entity established under a law, the entity continues in existence under the new name and its identity is not affected by the change.

   (2)   If the name of an entity is changed, a reference in a law to the entity by its previous name is taken, after the change, to be a reference to the entity by its new name.

   (3)   To remove any doubt, subsection (2) applies to all entities, whether or not in or for the Territory, including entities established under a law of another jurisdiction.”

   20. I accept the Respondent’s submission in this regard. The Respondent has indicated section 183 addresses a completely different issue to that which arises in this case. It addresses a situation where a statutory authority or other entity has had its name changed by statute and ensures that, notwithstanding the name change, the entity continues in existence and references to the old name of the entity in a statute are taken to be references to the new name. It has nothing whatsoever to do with a statutory notice such as a rate assessment in this case identifying a person by reference to the initials of their given names. I agree with the Respondent’s submission and in my view the intent of section 183 of the Legislation Act is as submitted by the Respondent. 
   21. I also accept the rationale at paragraph [51] of the Tribunal below in its judgment.  The Tribunal said, “The Tribunal also rejects the argument the assessment notice issued to the Applicant was invalid because it used his initials and surname, rather than his full name.  The Applicant acknowledged that there was no other person by the initials and surname of K A Kennedy at the address of the property.  He also acknowledged that he had used this description of himself both in the letter of objection and in his signature.  The Tribunal finds that there is no merit in his argument.  It is a well known practice in notices from regulatory authorities to be issued in this way, and the Tribunal cannot see how any confusion or other undesirable outcome results from the practice.” 
   22. I agree with those observations made by the Tribunal below in relation to the name.  I would also agree with the observations made by the Respondent in its submissions.  The Respondent indicated that the Appellant failed in the Tribunal below because he and his wife were at the time of the Tribunal’s decision the registered proprietors of the property, and hence, by definition, owners of the land and subject to an obligation to pay rates under the Rates Act 2004. 
   23. Additionally, the Tribunal below found that if the Appellant and his wife were not owners then their conduct amounted to a tax avoidance scheme which the commissioner and the Tribunal were entitled to deal with under section 8 of the Taxation Administration Act 1999.  I also accept the Respondent’s submission that in order for the Tribunal to confirm the Respondent’s decision it was only necessary for the Respondent to succeed on either the owner point or the tax avoidance point, not both.  As the Respondent succeeded on the owner point the reasoning of the Tribunal on tax avoidance point was an additional reason but not an essential reason for dismissing the Appellant’s application. 
   24. I agree with this observation.  I accept the decision of the Tribunal below as indicated above in relation to owner point, that is the Appellant and his wife were the registered proprietors and by law he has to pay rates.  I do not need to elaborate further on my reasoning above in coming to this view and I also commend the reasoning contained within the written decision of the Tribunal below of the 31^st of March 2010.
   25. I wish to say one point however in relation to the tax avoidance scheme.  I feel the Appellant took umbrage at being accused of being a tax avoider.  I was at pains during the course of the appeal to differentiate between a tax avoidance scheme and a tax evasion scheme. It was stated during conversation about this issue that a tax avoidance scheme is perfectly legal.  There are many examples of companies going offshore to operate rather than pay taxes in their country of origin.  Many people may not like that but it is a perfectly legitimate way of doing business as a tax avoidance scheme.
   26. The Appellant felt he was not attempting to avoid tax, that he had a legitimate concern, and that he was taking that legitimate concern to the Tribunal for determination.  He felt he had a significant constitutional point.  I have already indicated my views on that.  I do not agree with him but I think it is quite legitimate for him to take the action that he did.  He at all material times paid his rates.  He simply felt he had a point that he should not have to, and he was taking that to the Tribunal for determination.  He wanted his day in court.  That is his right as a citizen of this free country. 
   27. Much was made in the Tribunal below of when he surrendered his lease and sought a new lease, and this coincided with the relevant period of time for rates assessment notices to be sent out.  Again, I do not have to decide that. 
       I do note that the Appellant did indicate to me that he wished to surrender his lease so that he can get a 99 year lease, and that he wished to perhaps do this every 20 years or so just to make sure that he was protected. 
   28. I note in paragraph 41 of the decision of Tribunal below that they also considered this point and rejected that, and described how a further granting of the lease must be made providing the land is not required by the Territory or the Commonwealth for a public purpose.  Some citizens may not have the same trust in the Territory or the Commonwealth as the Tribunal below and I can see some substance in the argument that the Appellant was ensuring his land had a further 99 years to run from the time he surrendered his lease. 
   29. However, he did contradict his own argument here.  He stated that his reasons were two-fold, that he felt he found a loophole in the law and that if he handed in his old lease and got a new one and then chose not to register it he would not have to pay rates.  As indicated, he fails on that point as far as I am concerned for the reasons stated above.  He secondly indicated that he was wanting the security of tenure and so indicated he would get a further 99 years if he handed in his lease.  He indicated that the lease had only about 60 years to run when he handed it in, which would be correct for that part of Canberra.  I did note that if he was concerned about the security of tenure, why didn’t he register the new lease so he could get security of tenure.  That point is however answered by the fact that the Registrar-General at any rate registers the details. 
   30. However, I felt that his explanation as to wanting the greater security of tenure may have not been as convincing as it otherwise would have been had he gone ahead and registered the new lease.  I am aware of a number of people in Canberra who have surrendered leases and got a re-grant at 99 years because they have some concerns that a government, 50 or 60 years down the track, may requisition the land for a Territory or Commonwealth purpose.  It gives them that extra feeling of protection and as far as it goes that is probably as good as any reason for surrendering a lease (regardless of whether their fears are totally unfounded or not) and obtaining and registering the re-granted lease. 
   31. My comments above in no way challenge the decision the Tribunal at first instance made in relation to the tax avoidance scheme.  I feel it is necessary to make the above observations as they did come up in the appeal.  At the end of the day, however I need only be satisfied on the first point, which I am. 
       I make no comment or formal finding in relation to any tax avoidance scheme save my observations above. 
   32. I see no reason to interfere with the decision of the Tribunal below for the reasons given.  Accordingly, the appeal will be dismissed.
        

………………………………..

Mr W G Stefaniak
Appeal President

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A  FILE NO:      AT 10/13

APPLICANT:                KURT ALIM KENNEDY
RESPONDENT:            COMMISSIONER FOR ACT REVENUE

COUNSEL APPEARING:       APPLICANT:          

RESPONDENT:      D J C Mossop

SOLICITORS:  APPLICANT:           Self represented

RESPONDENT:      Mr Derek Kettle

(ACT Government Solicitor)

OTHER:  APPLICANT:          

RESPONDENT:      

TRIBUNAL MEMBER: Mr W G Stefaniak, Appeal President

DATE/S OF HEARING: 9 June 2010 and                   PLACE: CANBERRA

29 July 2010

DATE OF DECISION:  20 August 2010  PLACE: CANBERRA

PART B

RECOMMENDATION:

FULL REPORT ( )        CASE NOTE ( )        UNREPORTED DECISION ( )

COMMENTS: