Molyneux v Chief Commissioner of State Revenue

[2012] NSWADTAP 53

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:	Molyneux v Chief Commissioner of State Revenue (RD) [2012] NSWADTAP 53
Hearing dates:	14 November 2012
Decision date:	17 December 2012
Jurisdiction:	Appeal Panel - Internal
Before:	RL Seiden, Deputy President
Decision:	Time to appeal extended to 10 April 2012 on condition that the Appellants pay the sum of $1,683.00 to the Respondent within 14 days of the delivery of these reasons.
Catchwords:	Extend time to appeal; conditional grant of leave
Legislation Cited:	Administrative Decisions Tribunal Act 1997 (NSW) Duties Act 1997 (NSW) Taxation Administration Act 1996 (NSW)
Cases Cited:	Brisbane South Regional Health Authority and Taylor (1996) 186 CLR 541 Chand v Rail Corporation of New South Wales (No 3) [2010] NSWADTAP 11 Chief Commissioner of State Revenue v Doney (RD) [2006] NSWADTAP 22 Cleary Bros (Bombo) Pty Ltd -v- Cvetkovski (EOD) [2001] NSWADTAP 10 Commonwealth of Australia v Beale (1993) 30 ALD 68 Gonzalez v TAFE [1999] NSWADTAP 4 Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531 Leichhardt Municipal Council v Seatainer Terminals Pty Limited (1981) 48 LGRA 409 Lupevo Pty Ltd t/a Ampol Nabiac v Bree [2002] NSWADTAP 9 Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 Minister for Immigration and Multicultural Affairs v Perth City Mission [2000] FCA 397 Molyneux & Vermeesch v Chief Commissioner of State Revenue [2011] NSWADT 117 NZ v Commissioner of Police, New South Wales Police (GD) [2008] NSWADTAP 23 Opera Australia Limited v Carr [1999] NSWADTAP 6 Re Schmack and Defence Force Retirement and Death Benefits Authority (1981) 3 ALN N77 The Smith's Snack Food Company Limited v Chief Commissioner of State Revenue (NSW) [2012] NSWSC 1116 Tomko v Palasty (No 2) (2007) 71 NSWLR 61 Windshuttle v Commissioner of Taxation (1993) 46 FCR 235
Category:	Interlocutory applications
Parties:	Eve Maria Heaton Molyneux and Skye Vermeesch (Appellants) Chief Commissioner of State Revenue (Respondent)
Representation:	M Richmond SC (Appellants) I Mescher (Respondent) CLS Legal (Appellants) Crown Solicitor's Office (Respondent)
File Number(s):	129007
Decision under appeal	Citation: [2011] NSWADT 117 Date of Decision: 2011-05-26 00:00:00 Before: Revenue Division File Number(s): 106021

REASON FOR DECISION

The application

1. The Appellants seek leave pursuant to s 113(3)(b) of the Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act) to appeal out of time. Applications for extensions of time for the lodgement of an appeal may be determined by one presidential judicial member: s 24A(1)(d) and (2) of the ADT Act.

The first instance proceedings

1. The first instance proceedings concerned an application to review a decision of the Respondent to reassess, for stamp duty, the transfer of a property at Whale Beach.

1. The proceedings at first instance were heard and determined by the Tribunal constituted by Mr A Verick: Molyneux & Vermeesch v Chief Commissioner of State Revenue [2011] NSWADT 117. The Tribunal remitted the matter to the Respondent to:

(1)   Make adjustments to the valuation as directed;

(2)   Make a further reassessment on the basis of the adjusted valuation; and

(3)   Remit in full the premium component of interest and the penalty tax included in the reassessment.

1. The evidence before the Tribunal at first instance included several written valuation reports and oral evidence of the valuers.

1. The Tribunal at [67] to [70] outlined various deficiencies in each valuer's report. Mr Kabok (a valuer called by the Respondent) identified what could be described as comparable sales, but the Tribunal noted "the difficulty with his valuation is that his valuation process was somewhat hindered by lack of actual viewing of the subject property and assessing the views and surrounding effects first hand". The Tribunal further noted at [69]:

The tribunal is also troubled by the absence of hard evidence as to the actual impact of the business premises next to the subject property and the lone pine tree opposite the subject property. Whilst Mr. Kabok mentions the restaurant "has a negative effect" but not being "significant" in his report, he has not properly and fully assessed the extent the noise or smell pollution from that source affected the sale of the subject property. In the case of the pine tree he has not really given any consideration in his valuation report.

1. The Tribunal therefore concluded at [71]:

In these circumstances, I think it is only appropriate and fair that I should remit the valuation issue to the respondent to make proper adjustments in respect of the impact of the kiosk/restaurant next door and the pine tree. In carrying out further assessment of any impact, the valuer may need the assistance of appropriate expertise and relevant local government authorities to determine their real impact. Further, the assessment has to be made retrospectively as at 10 December 2005.

The nature of the decision below

1. Before dealing with the Appellants' application for leave to appeal out of time, it is convenient to consider an anterior question: have the proceedings at first instance been finalised? Both parties submitted that the first instance proceedings had come to an end.

1. The Appellants submitted that, properly construed, the decision of the Tribunal was a decision under s 65(1) of the ADT Act which, it was submitted, is equivalent to s 101(1)(d) of the Taxation Administration Act 1996 (NSW) (the TAA Act). The Tribunal remitted the decision, but did not first set aside the decision. No forward date was set and therefore it was not possible for the reconsidered decision of the Respondent to become part of the original review proceedings, which might be the position in another case, under s 65 of the ADT Act.

1. The Respondent similarly contended that the Tribunal's decision was a decision under s 101 of the TAA and a final decision. The Respondent contended it was not necessary for the Tribunal to have made a decision in accordance with s 63 of the ADT Act, to set aside the decision before remitting it. No reliance was placed on s 65, by the Respondent.

1. There is some tension between the various provisions. Section 63 of the ADT Act appears to require, in the case of remittal of a matter, for the decision first to be set aside and then remitted to the decision-maker: s 63(3)(d). Section 65 appears to be invoked wherever a decision to remit is taken prior to the final determination of the application for a review. Section 101 of the TAA is not in identical terms to either s 63 or s 65 of the ADT Act. Yet s 101(2) of the TAA expressly preserves the application of Division 3 of Part 3 of Chapter 5 of the ADT Act, which is where s 63 and s 65 may be found.

1. As neither party argued that the matter was not finalised at first instance, it is appropriate to deal with the matter as the parties have urged, as an application to appeal a final decision of the Tribunal, out of time.

Chronology

1. On 10 December 2005 the Appellants purchased land which was assessed for duty on 15 December 2005. The transfer was stamped with duty of $122,990.00, in reliance upon a valuation provided to the Commissioner for the purposes of assessing duty. In May 2009 the Commissioner obtained a further valuation. His valuer placed a value on the property of $5.8 million (the second valuation). The property was reassessed to additional duty of $223,500.00 together with penalty tax and interest. The taxpayers objected to the reassessment and the objection was disallowed. The taxpayers' application for review was heard and determined by Mr Verick. The decision of the Tribunal was delivered on 26 May 2011 remitting the matter to the Commissioner and directing him to make adjustments to the second valuation and to make a further reassessment. On 10 November 2011 the Commissioner informed the solicitor for the Appellants that a "new valuation" (the third valuation) had been obtained which valued the property at $5.8 million. For the reason that the third valuation valued the property at the same figure as the second valuation there was no need for a further reassessment. A copy of the third valuation was not provided to the Appellants until 6 February 2012. It was not until 10 April 2012 that the Appellants filed a Notice of Appeal with the Tribunal.

Factors to be considered in granting an extension of time to appeal

1. The Appeal Panel in Chand v Rail Corporation of New South Wales (No 3) [2010] NSWADTAP 11 at [20] stated as follows:

Principles for determining leave out of time. The general rule is that an appeal must be made within 28 days after the Tribunal gives the party reasons for the decision. However, the Appeal Panel may allow an appeal to be made out of time: ADT Act, s 113(3). Such an application should be assessed in accordance with the interests of justice in the circumstances: NZ v Commissioner of Police, New South Wales Police (GD) [2008] NSWADTAP 23 at [5]. Relevant considerations include the length of the delay, the reasons for the delay, diligence in lodging the application after it came to notice that there were circumstances justifying an appeal, the nature of the decision below, any prejudice to the other party and the merits of the grounds of appeal: Lupevo Pty Ltd t/a Ampol Nabiac v Bree [2002] NSWADTAP 9 at [6].

1. The Appeal Panel in Opera Australia Limited v Carr [1999] NSWADTAP 6 noted at [16] as follows:

The Appeal Panel should allow an extension of the 28 day appeal period if satisfied that failure to extend the period will work an injustice between the parties: Gallo v Dawson (1990) 93 ALR 479. To determine whether a strict application of the rule as to time will work an injustice, it is necessary to consider the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the grant or refusal of the application for extension of time. It is important to consider the applicant's prospects of success on appeal and to bear in mind that, upon the expiry of time for appealing, the respondent has a vested right to retain the judgment unless the application is granted.

Dealing with the factors in turn

Reasons for the delay

1. Evidence was filed on behalf of the Appellants by the solicitor, Ms Deigan, to the effect that she understood that the Tribunal had pointed to "errors" in the valuation relied upon by the Respondent and further, that she anticipated the result of the remittal would be to reduce the primary duty payable. Ms Deigan was cross-examined and accepted that the word "error" does not appear in the decision at first instance. Nevertheless, she maintained her view that the first instance decision foreshadowed a lower valuation. Further, her evidence was that she understood the taxpayers would have objection rights in respect of any reassessment arising out of the remittal.

1. A fair reading of the first instance decision suggested some prospect that a new valuation would result in a lower primary duty. At [69] the Tribunal refers to the "negative effect" of the restaurant and that the valuer had not properly and fully assessed the extent of the noise or smell pollution, nor had he considered the impact of the pine tree. At [71] the Tribunal remitted the decision to enable a valuer to make "proper adjustments" in respect of the "impact" of the restaurant and pine tree. Read in context these comments are open to being interpreted as heralding a reduction in the valuation.

1. By letter dated 19 July 2011, Ms Deigan was advised by the Office of State Revenue that the Commissioner had accepted the decision of the Tribunal (implying that he would not be appealing) and stated further:

In accordance with the decision the Chief Commissioner will obtain a new valuation of the property at 26 The Strand Whale Beach, and taking into account the comments made in the decision.

A reassessment of the duty will be issued once a new valuation is received and in accordance with the decision only the market rate of interest will be imposed.

1. The reference to taking into account the comments made in the decision and the reference to a reassessment of duty could reasonably have suggested to the taxpayers that a reduction in the overall duty was possible.

1. In essence, the Appellants made a "commercial decision" to refrain from appealing. In Cleary Bros (Bombo) Pty Ltd -v- Cvetkovski (EOD) [2001] NSWADTAP 10 a commercial decision was made to not appeal a decision. However, subsequently Cleary Bros was ordered to pay costs of the proceedings. By that time, time to appeal had expired. However, as the balance of the commercial considerations had "tipped in favour of appealing" (at [13]) an appeal was lodged out of time and leave to do so was granted.

1. The Appeal Panel acknowledged, in that case, that the Appellant could have, within time, lodged an appeal which it did not at that stage intend to pursue, pending the outcome of the costs decision. A similar submission was made in the present case, that the Appellants ought to have filed an appeal pending the outcome of the remittal. The Commissioner submits that the taxpayers could have filed a holding appeal or written to the Commissioner at a much earlier stage notifying that they were preserving their position with respect to appeal. In Cleary Bros, the Appeal Panel noted that the Appellant ought not be penalised for failing to take the alternative course.

1. The Commissioner did not advise the Appellants until 10 November 2011 that the third valuation had been obtained and that it was at the same value as the second valuation. Despite requests for a copy of the third valuation (15 November, 2 December, 20 December, 16 January, 25 January, 1 February), a copy of the third valuation was not provided until 6 February 2012. I accept the Appellants' submission that it was not practicable to make any decision about an appeal until a copy of the third valuation had been obtained.

1. No evidence was given as to why there was a further delay in filing the appeal between February 2012 and April 2012. The Respondent emphasised this lacuna in the evidence and submitted that it should be inferred that the missing evidence would not assist the Appellants. A similar submission was made in Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [79]. Given the explanation for the delay generally and that by February 2012 time to appeal had clearly passed, I am not inclined to draw any adverse inference. I however appreciate that the Appellants did not act with particular alacrity after finally receiving a copy of the third valuation.

1. Nevertheless, as submitted by the Appellants, by then time to lodge the appeal had clearly passed and further, the prejudice to the Respondent (as discussed below) had already occurred. The Commissioner's costs in briefing the valuer in accordance with the Tribunal's orders would have been incurred, even if the Appellants had lodged a "holding appeal" (by that I refer to lodging an appeal and seeking a stay).

1. An adequate explanation has been given for the delay in lodging the appeal.

Length of delay

1. The first instance decision was delivered on 26 May 2011. A notice of appeal was filed with the Tribunal on 10 April 2012. This constitutes a delay of over ten months. The normal appeal period is 28 days. Accordingly, the delay is significant. The Respondent submits that in the face of such delay, it would require extraordinary circumstances to justify leave.

1. In Gonzalez v TAFE [1999] NSWADTAP 4 at [26] as follows:

The delay in issue is highly disproportionate to the appeal period permitted by the Tribunal Act - 28 days. The factors advanced by an appellant would have to be extraordinary for leave to be granted to pursue an appeal where 16 months has passed since the expiry of the statutory period. The matters canvassed by counsel fall well short of that threshold. Counsel for the appellant appears to have understood throughout the period that the options for having the decision of 6 March 1998 reconsidered and varied were limited. At no stage has there been any attempt to expedite attempts at reconsideration. The applicant has had notice since 9 October 1998 of the respondent's (understandable) desire to retain the benefits of the order of 6 March 1998. This did not lead to any expedition on the part of the applicant in seeking to bring forward its submissions seeking reconsideration.

1. It is apparent that what is "extraordinary" will depend upon the context, including the reasons for the delay and the actions of the Appellants during the relevant period. In Gonzalez it was held that Counsel for the Appellant had first attempted to have the Reasons for Decision reconsidered and varied. Counsel for the Appellant was aware that the possibilities of varying the decision were limited, yet no attempt had been made to expedite attempts at reconsideration. Once advised by the Divisional Head of the Equal Opportunity Division that appeal rights in relation to the decision lay to the Supreme Court or the Appeal Panel, the appeal was filed shortly thereafter.

1. In this case, as explained above, the decision not to appeal was taken on the basis that the Appellant anticipated that the Commissioner's new valuation would reduce the amount of duty ultimately payable and therefore, as a commercial decision, no appeal was being pursued. Unlike the situation in Gonzalez where the Appellant did nothing to expedite the process, the Appellants did not rest on their hands, but consistently wrote to the Respondent asking for a copy of the valuation and responses to earlier communication.

1. The reason for the delay by the Respondent in providing the valuation to the Appellants was not the subject of evidence or argument. Whether or not there were reasonable grounds for not providing the third valuation earlier, the mere passage of time between notifying the Appellants that the valuation had not changed and providing a copy of the valuation to the Appellants, contributed to the delay of the Appellants.

1. On balance, the rather extreme length of the delay and the unexplained delay between February and April weighs against the Appellants, as a factor in relation to the discretion to extend time to lodge the appeal. However, in the circumstances described the delay does not act as an absolute bar to granting leave to extend time.

Prejudice to the Appellants

1. The Appellants point to the fact that, if successful on Ground 1 of their Appeal (discussed below), they would not be liable to pay duty at all. Further, it is submitted that there are no objection or appeal rights in respect of the decision not to reassess in light of the third valuation. Therefore the only avenue of redress is an appeal.

1. Some time in argument was devoted to the possibility that the Commissioner's decision to, in effect, affirm his original decision, did not enliven fresh objection rights. The Appellants maintained that the recent decision of Gzell J in The Smith's Snack Food Company Limited v Chief Commissioner of State Revenue (NSW) [2012] NSWSC 1116 was authority for the proposition that where an assessment has been remitted to the Chief Commissioner, no objection rights lie with respect to any decision that comes out of the remittal: at [14], [20]. On the other hand, the Chief Commissioner submits that Smith's case is consistent with the proposition that fresh objection rights arise in relation to any decision of the Commissioner made after a remittal. The Respondent pointed, in particular, to [8] where his Honour held that it was not necessary, in order to protect the interests of the taxpayer after a remittal, to make orders for the relisting of the matter, in case the Commissioner did not make his determination or he made a determination that was not in accordance with the Court's findings and decision.

1. In my respectful view, his Honour was (at [8]) not suggesting that there would be objection rights, his Honour was merely adverting to the fact that the Respondent was "bound" to act in accordance with the Court's direction and if he makes a reassessment that is "not" in accordance with the decision of the Court, it "does not" give effect to the Court's (or Tribunal's) decision as required by s 102(1) of the TAA. It was therefore not necessary to make the orders sought by Smith's, to relist the matter in case the Commissioner did not so act: he was bound by the Court's decision to act in accordance with it. In a case where he did not so act, the taxpayer "may have a basis for challenge within the terms of Part 10" of the TAA (at [10]). It is to be noted that s 102 of the TAA is in Part 10. His Honour further noted (at [13]) that such a challenge would be limited to one founded on jurisdictional error (Kirk v Industrial Court of New South Wales [2010] HCA 1; (2010) 239 CLR 531).

1. It is not necessary for the purposes of this application to decide finally whether the Appellants have objection rights in respect of the decision not to reassess. It is sufficient to point to [14] and [20] of the decision in Smith's case which suggest that the bar on further objection rights extends to the Commissioner's determination on a remittal. Accordingly, there is a genuine basis for the Appellants' submission that appeal is the only avenue of redress, save with respect to any right to relief based upon a breach of the Tribunal's orders, under Part 10 of the TAA, or the principles in Kirk's case.

1. The Respondent queries whether prejudice to the Appellants is a relevant factor in the exercise of the discretion to grant an extension of time to appeal. He submits that if it is, it ought to be afforded little weight. He highlights that, particularly in relation to an appeal solely on a question of law, every refusal for an extension of time to appeal will necessarily result in prejudice to the Appellants and therefore that factor, if relevant, ought to be given little or no weight.

1. The prejudice to the Appellants is not an irrelevant consideration in the sense contemplated in Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 40. It is a factor which could affect the interests of justice as between the parties. In some cases prejudice in granting the appeal might be tied up with considerations of the merits. Further, as referred to above in Opera Australia, the "consequences for the parties" was said to be a relevant factor. In Re Schmack and Defence Force Retirement and Death Benefits Authority (1981) 3 ALN N77 (which was cited in Lupevo at [6] which was cited in the extract from Chand above) a relevant factor was described as "the nature of the decision below and the consequences of the decision upon the Appellant's rights". In Gonzalez, it was noted by the Appeal Panel at [28] that the refusal of leave did not operate as a final bar to the Appellant's ability to make a complaint, thus indicating that the effect on the Appellant's rights was a relevant factor.

1. In this case, I find that there is a risk of prejudice to the Appellants if leave to appeal is not granted. This factor weighs in favour of granting leave.

Prejudice to the Respondent

1. Great weight ought to be accorded to any prejudice to the Respondent. In Brisbane South Regional Health Authority and Taylor (1996) 186 CLR 541 per McHugh J noted:

When actual prejudice of a significant kind is shown, it is hard to conclude that the legislature intended that the extension provision should trump the limitation period. The general rule that actions must be commenced within the limitation period should therefore prevail once the defendant has proved the fact or the real possibility of significant prejudice.

1. In this case, the prejudice pointed to by the Respondent is that he has expended costs on briefing the valuer, Mr Kabok (an invoice in the amount of $1,683.00 was in evidence). The Respondent also points to further prejudice: time, costs and energy has been devoted to implementing the decision of the Tribunal including liaising with Mr Paul Goldsmith, Valuation Manager (Government Clients) at the Land and Property Information NSW (LPI) and in corresponding with the taxpayer.

1. The Appellants accepted that it may be appropriate for the Tribunal to order leave to be granted on the condition that the Appellants pay the costs thrown away by the Respondent in implementing the decision of the Tribunal, in particular the cost incurred in re-briefing Mr Kabok. The ability to grant an extension of time conditional on a costs order was identified in Cleary Bros at [35]. The Respondent however says that nothing will make him whole again, because it was not simply the cost of disbursements that caused the prejudice.

1. The Appellants rely on Windshuttle v Commissioner of Taxation (1993) 46 FCR 235 at 249 for the proposition that the kind of prejudice that the Respondent points to is not the type that would bar a putative appellant from being granted an extension of time to appeal. In Windshuttle the requisite prejudice was described to include the following: whether avenues of useful enquiry have dried up, whether documents have been destroyed, whether any potential entitlement to recover money might be diminished, whether witnesses have disappeared or their recollections have faded. In other words, the Appellant points to the fact that time and cost is not an irreparable prejudice.

1. On the other hand, the Respondent characterised the prejudice as "significant" and highlights that in cases where the issue is whether leave to extend time to appeal should be granted, rarely will loss of witnesses or loss of documents constitute the relevant prejudice. The Respondent submits that the appropriate principles are to be found in Chief Commissioner of State Revenue v Doney (RD) [2006] NSWADTAP 22; NZ v Commissioner of Police, New South Wales Police (GD) [2008] NSWADTAP 23 and Lupevo Pty Ltd t/a Ampol Nabiac v Bree [2002] NSWADTAP 9.

1. In NZ the Appeal Panel noted at [6] that where the successful party had taken steps based on the decision, that may well be sufficient to refuse leave. However, in that case no explanation for delay was given and the Appeal Panel could not detect a ground of substance in the appeal. Consequently, the Tribunal held that the Respondent ought not be put to considerable further costs and inconvenience if the appeal was allowed to proceed: at [24]. In Lupevo the Appeal Panel appeared to accept the Appellant's submission that no prejudice would be occasioned to the Respondent, but nevertheless highlighted that consideration must be given to the costs incurred in meeting an appeal particularly where the jurisdiction is generally a "no costs" jurisdiction: at [18]. However, in that case the Appeal Panel was not persuaded that there was any satisfactory explanation for the delay. Further, the Appeal Panel determined at [41] that there was no merit in the appeal. The Appeal Panel concluded "having regard to the lack of merit, together with the factors referred to above, the Panel is not disposed to grant leave to the Appellant to have the appeal lodged out of time". Doney was a case where leave to extend time (by one day) was intertwined with leave to extend to the merits. Ultimately, the Appeal Panel refused leave on the basis that the Respondent would be prejudiced by an inability to meet the issues raised on a new ground of appeal which would require an adjournment and require each party to expend considerable sums in preparing for the adjourned hearing. The cases are therefore distinguishable.

1. Prejudice is something that must be assessed in context. Here the Respondent's prejudice arises primarily because of costs and time thrown away. However, there is an explanation for the delay, which in this case was contributed to by the delay of the Respondent (and I use this term not in any pejorative sense, but merely in the sense of passage of time) in providing the written valuation to the Appellants. Further, the appeal is not contended to be untenable (though the Respondent describes the merits as "weak"). The prejudice to the Respondent, whilst weighing against the grant of leave, is not so extreme as to bar the possibility of granting relief, particularly where, as here, conditions can ameliorate the prejudice.

Merits of the Appeal

1. The Appellants have three grounds of appeal:

(1) The learned Judicial Member erred in law in failing to consider whether the reassessment of the transfer of the property at 26 The Strand, Whale Beach was authorised by section 9(2) of the Taxation Administration Act 1996. The reassessment was not authorised by that provision (in particular, it was contrary to the legal interpretations and assessment practices generally applied by the Commissioner at the time of the transfer as set out in Revenue Ruling DUT 12) and consequently both the reassessment and the Tribunal's decision were a nullity.

(2)   Alternatively, the learned Judicial Member erred in law when he decided (at [71]) that the "valuation issue" should be remitted to the Respondent "to make proper adjustments" to it, pursuant to s. 63(3)(d) of the Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act) rather than making a new decision on the reassessment in substitution for the Respondent's decision under s. 63(3)(c) of the ADT Act. The power to remit under s. 63(3)(d) of the ADT Act may only be exercised where the Tribunal is not in a position to formulate a decision in substitution for the decision under review: see Commonwealth of Australia v Beale (1993) 30 ALD 68 at 70; Minister for Immigration & Multicultural Affairs v Perth City Mission [2000] FCA 397. That was not so in the present case.

(3) In the further alternative, and subject to a grant of leave to extend the appeal to the merits, the learned Judicial Member erred (at [77]) in failing to remit the interest in full (rather than merely [in] part) under s. 25 of the Taxation Administration Act 1996 because, on the facts as found by the Tribunal, the delay in payment was due to no fault of the appellant but rather a difference of opinion as between the parties' valuers [at [76]-[77]).

1. As adverted to in the Appellants' Written Submissions the second and third grounds only arise if the first ground is unsuccessful.

1. The first ground was not raised before the Tribunal at first instance. Nevertheless, the Appellants would seek to agitate this ground before the Appeal Panel and therefore whether it has merit is a relevant matter in the consideration of the request for an extension of time.

1. Section 9(2) of the TAA provides:

(2) A reassessment of a tax liability is to be made in accordance with the legal interpretations and assessment practices generally applied by the Chief Commissioner in relation to matters of that kind at the time the tax liability arose except to the extent that any departure from those interpretations and practices is required by a change in the law (whether legislative or non-legislative) made after that time.

1. The Commissioner's Revenue Ruling DUT 12 (issued on 18 March 1999) sets out the Commissioner's practice in relation to transfers of dutiable property between parties not dealing with each other at arm's length. Paragraph 12 of that Ruling states as follows:

12. Where evidence of value of land is required to determine the adequacy of the consideration as outlined in paragraph 8 above, the following are acceptable:

(a) ...

(b) a private opinion or expression of value by a registered valuer, identifying the specific property; or

(c) ...

(d) ...

If this evidence of value indicates that the consideration is

adequate, no further evidence of value will be required.

(italics in original)

1. Paragraph 13 of the Ruling provides:

If the above evidence of value indicates that the unencumbered value of the land exceeds the consideration by a significant amount, a "declaration by a competent valuer" will be required ...

1. Paragraph 14 of the Ruling also refers to a declaration by a "competent valuer". The Duties Ruling must be read in consideration of s 305 of the Duties Act 1997 (NSW) (Duties Act) which provides that:

305 Valuation of property

(1) The Chief Commissioner may, for the purpose of determining whether a person is liable for duty or determining a person's liability for duty:

(a) require the person, by notice in writing given to the person, to provide a valuation of property prepared by a registered valuer or to provide such other evidence of the value of property as the Chief Commissioner considers appropriate, or

(b) obtain a valuation of property, or

(c) rely on a valuation of property prepared for any purpose (whether or not for the purpose of determining liability for duty) by a registered valuer or other person the Chief Commissioner is satisfied is properly qualified to provide evidence of the value of property.

(2) The Chief Commissioner may assess duty on the basis of a valuation or evidence referred to in subsection (1).

(3) If a person is liable to pay duty under this Act that is chargeable by reference to the value of property, the Chief Commissioner may recover from the person the cost of obtaining a valuation of the property under this section.

(4) In this section:

"registered valuer" has the meaning given by the Valuers Act 2003.

1. The Appellants' submission is that prior to an assessment the Commissioner may seek further or additional valuations, but once an assessment has issued that process is closed. The Appellants submit that this is only fair because as time passes trying to recreate historical valuations becomes a harder and harder task. The Appellants submit that the Commissioner's reassessment was invalid because it relied upon the second valuation contrary to the Duties Ruling and his administrative practice. On the other hand, the Respondent submits that the Commissioner is never precluded from relying upon a further valuation.

1. The Commissioner described the prospects of this ground of appeal as being "weak". He points to the implied assertion (which he contends must be wrong) that the Duties Ruling is cast in concrete and overrides the statutory power vested in the Respondent under s 305(1)(b) of the Duties Act. Further, the Respondent points to the consequence that a taxpayer would be at liberty to lodge with the Respondent any "declaration by a competent valuer" which may be ludicrous, but which under the Duties Ruling the Respondent must necessarily accept. The Respondent points out that the Duties Ruling does not expressly state that no further evidence of value could be required.

1. This issue does not appear to have been the subject of discussion in earlier cases despite its apparent importance.

1. The second ground of appeal relied upon by the Appellants is that the matter ought not to have been remitted to the Commissioner because the Tribunal had before it sufficient evidence as to value together with the benefit of cross-examination to enable the Tribunal to make a decision as to the value of the subject property. The Appellants relied primarily on comments of Neaves J in Commonwealth of Australia v Beale (1993) 30 ALD 68 at 70 where his Honour noted that the Tribunal has express power to remit a matter for reconsideration:

However, it may only do so where, in order to give effect to the conclusions to which the tribunal has come, it is appropriate to set aside the decision under review but the tribunal is not in a position to formulate a decision in substitution for the decision set aside.

1. This reasoning is picked up by Lee J in Minister for Immigration and Multicultural Affairs v Perth City Mission [2000] FCA 397. The Appellant submitted that rather than remitting it back to the Commissioner the Tribunal ought to have made a determination as to the value after making the necessary adjustments itself: cf Leichhardt Municipal Council v Seatainer Terminals Pty Limited (1981) 48 LGRA 409 at 434 per Hope JA. Again, the Respondent submitted that the Appellants' grounds of review were "weak". The Respondent highlighted that Mr Verick is not a valuer and because not one of the valuers identified a dollar figure for the "adjustments", the Tribunal was not in a position to substitute its own decision for that of the Commissioner's.

1. The third ground of appeal relates to the Commissioner's failure to remit the interest in full. The Appellants rely upon a submission that the tax default is entirely due to the fault of the Commissioner whose delay in failing to acquire the second valuation caused the default. The Respondent points to the fact that this would require leave to extend the appeal to the merits and even if leave was granted there is no evidence of any fault on behalf of the Respondent.

1. The Respondent submitted that in a case such as this it was not sufficient for the Appellants to simply demonstrate that they had a "fairly arguable case" because, in the Respondent's submission, the explanation for the delay was less than satisfactory and the Respondent suffered substantial prejudice. It is necessary, so it was contended, for the Appellants to demonstrate that their case has more substantial merit than being merely fairly arguable. Authority for this submission comes from Tomko v Palasty per Hodgson JA at [14]. On the other hand, Basten JA considering whether merits could act as a positive factor (with whom Hodgson JA generally agreed and Ipp JA agreeing), noted at [58] that:

There is a danger in placing too much emphasis on the prospects of success: to do so invites the parties to treat the application as a dress rehearsal for the full appeal: see Jackamarra (at 521 [9]). In my view, it is not necessary, or appropriate, for the applicant to do more than demonstrate a fairly arguable case: it was not necessary nor appropriate to demonstrate in any detail the prospects of success. For present purposes it is sufficient to say that a number of grounds are fairly arguable and one at least has reasonable prospects of success.

1. This is not a case where there has been no explanation for the delay and for the reasons expressed above the prejudice to the Respondent can be ameliorated by an order that the Appellants pay the costs thrown away, in this case, the invoice to Mr Kabok. Accordingly, it was not necessary to demonstrate more than an arguable case, in this case.

1. The Respondent did not submit that the grounds of appeal were wholly untenable and accordingly I say nothing further about the prospects other than that the Appellants have met the necessary hurdle with respect to prospects.

Conclusion

1. As expressed above, the delay is considerable and the Respondent has been prejudiced in the sense that he has thrown away costs and expended time and energy in implementing the Tribunal's first instance decision. However, a rational explanation has been offered for the delay, there is a risk of prejudice to the Appellants if leave to appeal is not granted and the Respondent can be compensated, at least to some degree, by a conditional grant of leave. The Respondent does not contend the appeal is wholly untenable. Accordingly, while the delay and prejudice to the Respondent weigh against the grant of leave, the scales tip just slightly in favour of granting leave on condition that the Appellants pay the Respondent's costs of re-briefing Mr Kabok.

Decision

1. Time to appeal extended to 10 April 2012 on condition that the Appellants pay the sum of $1,683.00 to the Respondent within 14 days of the delivery of these reasons.

The matter is listed for directions on 16 January, 2013 at 10.00am.

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Decision last updated: 17 December 2012