Lo and Chief Commissioner of State Revenue (No 2)
[2011] NSWADT 306
•22 December 2011
Administrative Decisions Tribunal
New South Wales
Medium Neutral Citation: Lo and Chief Commissioner of State Revenue (No 2) [2011] NSWADT 306 Hearing dates: Decision on the papers Decision date: 22 December 2011 Jurisdiction: Revenue Division Before: J Block, Judicial member Decision: The Applicant must pay to the Respondent one half of his costs as agreed or as taxed
Catchwords: whether Applicant had a tenable case - consideration of case law in the light of the evidence Legislation Cited: Administrative Decisions Tribunal Act 1997 Cases Cited: Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57;
Chief Commissioner of State Revenue v Aldridge & Anor (RD) [2003] NSWADTAP 50; ;
Giris Pty Ltd v Chief Commissioner of Taxation of the commonwealth (1968) 119 CLR 365;
Federal Commissioner of Taxation v GM Swift and ors 89 ATC 510;
AT v Commissioner of Police NSW 2010 NSWCA 31Category: Costs Parties: Patrick Pak Kit Lo (Applicant)
Chief Commissioner of State Revenue (Respondent)Representation: Counsel
D Miller SC (Applicant)
K Richardson (Respondent)
Gadens (Applicant)
Crown Solicitor (Respondent)
File Number(s): 106045
REasons for decision
Part A Preliminary and Introduction
The Respondent, who is usually in these reasons referred to as "the Chief Commissioner", seeks an order for costs in accordance with section 88 of the Administrative Decisions Tribunal Act 1997 ("the ADT Act") arising from the decision of the Tribunal issued on 19 September 2011 (which is referred to as "the principal decision") and following a hearing which took place on 14 and 15 July 2011; the Tribunal refers in particular to clause 38 of the principal decision as to the circumstances in which it is called upon to decide the costs question separately.
The Chief Commissioner furnished his submissions on costs ("RSC") on 14 October 2011; in accordance with clause 38 of the principal decision the Applicant was obliged to furnish his submissions as to costs within the period specified. Having noted an appeal against the principal decision the Applicant did not furnish his costs submissions within the period specified but subsequently delivered his costs submissions ("ASC") on 16 December 2011 after a direction requiring him to do so by the Tribunal.
The events which took place leading up and including the hearing which gave rise to the principal decision were in some respects unusual; in this context;
(a) this matter was originally scheduled to be heard on 20 October 2010. In respect of that hearing the Applicant furnished one witness statement only by his solicitor Chung Yun Lo; that witness statement contained a number of statements of fact preceded by words to the effect that the statement was made on instructions. That witness statement was clearly of little probative value; the matter was then postponed by M Hole JM who granted an order for costs against the Applicant. That costs order is referred to as "the original costs order"; ACS makes it clear that the Applicant does not contest the original costs order and that order is in no way affected by this decision.
(b) this matter was rescheduled for hearing on 14 and 15 July 2011. The Applicant applied for the matter to be determined on the papers That application which is referred to in these reasons as the "papers determination application" was made on the basis that the Tribunal was in possession of all of the information and evidence which it needed for this purpose and including the witness statements which were at the hearing admitted as exhibits A1 (the witness statement of the Applicant's father, Wai Kong Lo), A2 (the witness statement of the Applicant's wife, Annette Wing Yan Yu) and A3 (the witness statement of the Applicant himself). The papers determination application was not made in consequence of the illness from which the Applicant suffers and which is referred to in clause 8 of the principal decision; the papers determination application was opposed by the Chief Commissioner and was refused; as set out in the principal decision that application was in the view of the Tribunal misconceived.
(c ) The Applicant was represented at the hearing by Gadens, an eminent firm of solicitors, and by Mr. D Miller SC of counsel; if it is fair to say that the Applicant's representation was inadequate prior to their appointment this was not so after their appointment. .
(d) Oral evidence was given at the hearing by the Applicant's father and the Applicant's wife both of whom were cross-examined and, in the case of the Applicant's wife in some considerable detail as to trips by her as a visitor to Australia from Hong Kong and where she and the Applicant were resident during the relevant years; (the term "relevant years" and other terms defined in the principal decision have unless the context requires otherwise the same meanings when used in this decision)..
(e) The Applicant was then called to give evidence. Although he was educated in Australia both at high school and at university level an interpreter was at his request provided for his assistance. It became clear at an early stage of his cross-examination that he was not able to continue. On the following day the parties furnished the Tribunal with a statement of agreed facts which are set out in full in the principal decision. Time was then allowed in respect of final submissions which were duly furnished
Section 88 of the ADT Act reads as follows:
(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.
(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:
(i) failing to comply with an order or direction of the Tribunal without reasonable excuse, or
(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or
(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or
(iv) causing an adjournment, or
(v) attempting to deceive another party or the Tribunal , or
(vi) vexatiously conducting the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties , including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) any other matter that the Tribunal considers relevant.
(2) The Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.
(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs .
(4) In this section, "costs" includes:
(a) costs of or incidental to proceedings in the Tribunal , and
(b) the costs of or incidental to the proceedings giving rise to the application , as well as the costs of or incidental to the application .
Part B The relative strengths of the parties
There can be no doubt whatever, and the evidence before the Tribunal in this regard is overwhelming, that during the relevant years the Applicant was resident in and was a resident of Hong Kong; during the relevant years he made occasional and brief visits to Australia and to the Property. Much the same can be said in respect of the Applicant's wife except that her visits to Australia were rather more frequent and of longer duration.
The Applicant has in ACS referred to some ("off-the-cuff") remarks made by me as to landing cards and similar immigration data in the context of the immigration jurisdiction of the Administrative Appeals Tribunal and where in my experience mistakes are sometimes made by would-be immigrants in respect of the completion of landing cards. As to why the Applicant considered it necessary or desirable to quote some (informal) remarks by me during the course of the hearing is not clear, simply because in the result they were in no way relevant and notwithstanding the fact that some relevant landing cards were completed in a fashion which was inaccurate. This is so because there is no doubt at all that both the Applicant and his wife regarded themselves as resident in Hong Kong during the relevant years and as visitors to Australia on those occasions when they did visit Australia.
The evidence before the Tribunal indicated in the clearest possible terms that although the Applicant occupied the Property for a short period prior to his departure to Hong Kong he did not do so in the capacity of owner of it. He acquired the Property after he took up residence in Hong Kong. During that earlier brief period of residence the evidence indicated that the Applicant slept in the Property but took his meals with his parents. On the basis that the decision of the Appeal Panel in Mesiti (Chief Commissioner of State Revenue v Mesiti [2003] NSWADTAP 57) is correct (and I consider that it is) it is possible although not likely, but not in issue before the Tribunal, that the Property was at some stage prior to his departure to Hong Kong his principal place of residence. However Clause 8 of Schedule 1A to LTMA does not assist the Applicant because the period between that brief period of residence and the commencement of the relevant years was considerably in excess of the period permitted in accordance with clause 8(2) of schedule 1A. It would appear though that the Applicant may not accept the correctness of the decision in Mesiti and which relevantly provides that a place can be a taxpayer's principal place of residence even though not owned by that taxpayer, and having regard in particular in this context to the witness statements which emphasise the fact that the apartment in Hong Kong in which the Applicant resided was not owned by him. I refer in this context to the exhibits, clause 18 of AS and clause 47 of RCS..
During all of the relevant years the Applicant occupied an apartment provided to him by his employer Tectron and in which most of the belongings and effects of him and his family were maintained. On the evidence before the Tribunal the apartment in Hong Kong was the Applicant's principal place of residence,
It is not necessary for me to deal in any detail in this decision with the witness statements of the Applicant, his wife, and his father but it may be noted that I consider that they are sparse as to relevant detail. The evidence of the Applicant's wife was, as the Applicant has contended in ACS, acceptable; her evidence (and despite some difficulties and inconsistencies as regards landing cards and the place in which she stayed on some visits to Australia) made it clear that the Applicant and his wife were during the relevant years resident in Hong Kong and thus when they visited Australia did so as visitors to this country. If as would appear to be the case the Applicant seeks to contend that, although resident in Hong Kong and a visitor to Australia, the Property was nevertheless his principal place of residence (and the apartment in Hong Kong was not), that contention cannot be tenable. The mere fact that the apartment in Hong Kong was not owned by the Applicant is on the authority of Mesiti not relevant. If by contrast the Applicant accepts that Mesiti is correct he must rely on clause 8 of schedule 1A but is then ousted by subclause (2) because of the time period involved. If the Applicant accepts that Mesiti is correct then it must follow that he cannot contend that the apartment in Hong Kong was not his principal place of residence.
The decision of the Appeal Panel in Mesiti is strong and persuasive authority so far as this Tribunal is concerned and moreover the Tribunal considers, with respect, that it is correct. It may be that the Applicant will seek to persuade a differently constituted Appeal Panel that it was not correct and that a residence cannot be a principal place of residence unless owned but it is not possible to see how such a contention can advance his case in the light of the fact that he was throughout the relevant years a resident of Hong Kong and that he made trips to Australia as a visitor.
There is another significant hurdle facing the Applicant and that is the decision of the Appeal Panel In Aldridge (Chief Commissioner of State Revenue v Aldridge & Anor Chief Commissioner of State Revenue v Aldridge & Anor (RD) [2003] NSWADTAP 57) in relation to the contention of the Applicant that clause 2(2) (b) of Schedule! A to LTMA constitutes a discretionary power which should be exercised in favour of the Applicant. I refer in this context to clauses 28 and 27 of the principal decision; I refer also to clause 26 of the decision of the Appeal Panel in Aldridge..
As with Mesiti the decision in Aldridge is strongly persuasive and I again note with respect, that I agree with it. But let me assume for a moment that a differently constituted Appeal Panel holds that it is not correct and that there is a true discretionary power. In the light of the decisions in Giris and Swift (both cited in the principal decision) it does not appear to me to be likely or even conceivable that such a discretionary power, assuming that it exists at all, could be exercised in favour of the Applicant. To exercise that (notional) discretionary power in favour of the Applicant would in my view go well beyond any policy considerations.
The fact that the Applicant has noted an appeal cannot be relevant so far as this Tribunal is concerned. The Tribunal is firmly of the view that the Applicant's case does not have any tenable basis in fact or law and so that section 88(1A)(c) of the ADT Act is applicable.
Part C Other aspects
There are other aspects which can in this context be mentioned, albeit briefly, in this Part C:
(a) the Applicant and his family returned to Australia in 2010 after the expiry of the relevant years; the Applicant in AS made mention of the fact that he received the principal place of residence exemption in respect of the Property in relation to the 2011 land tax year (and which is not a relevant year). The Chief Commissioner took issue with the fact that it was mentioned at all given that there was no mention of it in the evidence before the Tribunal. The Chief Commissioner's concern is valid but the matter is not regarded as being of great significance.
(b) From the bar table and during the hearing Mr Miller advised the Tribunal that the Applicant and his family had returned to Hong Kong and where they are again resident in an apartment in Hong Kong provided by the Applicant's employer, Tectron and by whom he is again employed. That admission was properly made and might perhaps have been made at an earlier stage. It is also not a matter of great moment.
(c ) I have previously noted that the papers determination application was misconceived and in fact should not have been made. To seek to excuse it on the basis that the Applicant was ill must be regarded in the light of the fact that the Applicant was called to give evidence, and moreover because there was no such difficulty as regards his wife whose evidence was helpful and necessary. I accept that the Applicant suffers from an illness which is such that it was not possible for him to continue his cross-examination but at the same time note that he is currently employed in a full-time and responsible position by Tectron in Hong Kong.
(d) I have previously noted that the papers determination application was ill-founded and should not have been made. It resulted in expense and inconvenience to the Respondent and within subparar (a)(vi) or in the alternative to be taken into account within subpara (e) of Section 88 (1A) of the ADT Act.
(e) As appears from the principal decision, (and see in particular clause 4 in relation to the Applicant's response dated 23 February 2009) the Applicant failed to answer the request by the Chief Commissioner for information (and which was plainly relevant) as to the dates during which he resided in the Property during the relevant years. That conduct also falls within the statutory provisions cited in the preceding subparagraph
I again note at the risk of repeating myself that after Gadens and Mr Miller were briefed the Applicant was well-represented. They would have been fully aware of the Appeal Panel cases to which I have referred.
Part D Conclusion
The Applicant contends in ACS that he had an arguable case and that he has been frank with the Chief Commissioner, and so that and on this basis there should not be an order as to costs. It is my view as set out in these reasons that the Applicant did not ever have any case at all in respect of the Property in relation to the relevant years; moreover it does not seem to me that the witness statements to which I have referred contain all of the information which (having regard to the information sought by the Chief Commissioner and to which I have referred previously in this reasons) a frank disclosure would and should have contained.
The Applicant also in ACS seeks to claim credit for the disclosure contained in the agreed facts which have been included in the principal decision. The true position in my view is that the inability of the Applicant to continue his evidence left him with no option but to adopt such a procedure since otherwise it is likely that there would have been a finding against the Applicant on the basis that he had failed to discharge the onus.
I have nevertheless taken into account in favour of the Applicant that the agreed facts were of assistance to the Tribunal and that the evidence of the Applicant's wife was truthful and helpful. Indeed it was her evidence which established beyond any possible doubt that the Property could not be the Applicant's principal place of residence during the relevant years. As I have said it is possible that it was his principal place of residence at an earlier period before he went to Hong Kong (and which requires acceptance by him of the correctness of Mesiti) but clause 8 of schedule 1A to LTMA cannot assist him. In accordance with AT v Commissioner of Police NSW 2010 NSWCA 31 I have considered under subpara (e) of section 88(1A) of the ADT Act the nature of the application and the fact that it was brought in the revenue division of the Tribunal and I have also taken into consideration the objects of the Tribunal as contained in section 3 of the ADT Act. On this basis I have decided that a costs order is appropriate but that it should be restricted to one half of the Respondent's costs as agreed or as taxed. As set out previously in these reasons the original costs order is not affected.
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Decision last updated: 22 December 2011
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