New York Properties Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia

= .

-F

JUDGMENT No.

. .

Pecponclent

IN THE

FFDEFAL

COURT

O F AUSTT.ALI3

1 1

NEW YORK PFOPEDTIES PTY. LTD.

Appel lan t

and

TYE COT4?lISSiONER OF TAXATIt?M

OF THE COMMONX3.LTH OF AUSTRALIA

Re:rjondent

COURT :

NORTHROP,

LOCKHART

AND BFAUMONT JJ.

U:	16 August 1985
PLACE :	SYDNEY

REASONS

FOR

JT.??GiEPIT

NGRTSIIOF J .

I wcul2

d1am;ss

tiic- a p p e c l .

I agree vith

the

reasons

f o r

j u d g m e n t

Seaurnont ;.

, b u t d e s i r e tc make

5ome

o b s e r v a t i o n s

g e n e r s l

kznd .

- 2 -

apparent that a decislon referred to in Eub-section

196(1) is

limltrd

to a decision of the

Board

made

purzuant

SUb-SEctlZn 194;(1), namely

a Leclslon confirming, relcclng,

1ncreaslr.y

varying

the azsessment.

I n particclar, it

shoc ld be noted that sub-section

196(1) doez not confer

rlght of appeal from decislons of a procedural o r adjectival nature made ky a Soard or its Chalrman in reviewing a decision of the Cornmlsslon referred to it under t h e

provisions of Fart V; see

s.192.

It follows, that unless a

decision of

a procedural or adjectlval nature

macLe by the

Board can be treate6 as a decision to "confirm, reduce,

mcrease o r vary the assessnent",	no appeal lies to a Sdprxne
Court under subsection 196(1).

In my oplnion, the decislon of the Soard conflrming

the assessment,

is the only decision from which

an appeal may

be take!? under sub-sectim 195(1) of tke Assezsaent A c t .

The

deczsion to refuse to grant

the ad2ournment of ths hearlz$ ni

the reference, Ehether

it was nade by the Chxrman or by the

Eoard, was a declsion of a FrocedLral or adjectlval natur?.

Or: the facts of this case, that deczslon cannz't be treated as

a declsior. to confirrn the assessment. For t 3 l e reasons given

by Beaunont J., t h e

decislon conf:rmlr.T

rhe ascezsment doss

not in-iolve a qwstion of law.

- 3 -

the Administratlve Deciclons (Judicial Revlesl) Act 1977;

see

sub-section 3(1) of that -2ct and paracjraph (f) of Scheduie

to that Act.

It is possible t‘nat that exclusion does not

apply to decisions madE bl- the Clairman	of a kai-d under Peg.
36 of the Income Tax Regulations, but	Euch a drcislor. by a

Chairman

can

never

the

s u b ~ e c t of

appeal

u.1dsr

sub-section 196(1) of th? Assessment Act.

Xever

t h e l e s s ,

there appears to be no reason why the Hlgh Court, in an approprlate case, cannot exercise the jurisdiction conferred upon it by s.75(v) of the Constitutlon, or the Federal Court

in an appropriate case, cannot exercise

the

jurisdiction

conferred cpon It by s.39(B) of the Judiciacir Act 1903

w:tk..

respect to the exercise of powers conferred upon members

the Board.

In exercising those powers, those members are

officers of the Commonwealth and su5ject to writs of mandamus

or prohibition or to an injunction.

IN THE FEDERAL COURT OF AUSTRALIA	)
)

QUEENSLAND

DISTRICT

REGISTRY

)

No. QLD G.26 of 1985

DISTRICT REGISTRY

GENERAL DIVISION

ON APPEAL FROM THE SUPREME COURT OF

QUEENSLAND

BEXNEEN:

NEW YORK PROPERTIES PTY.

LTD.

Appellant

AND :	THE COMMISSIONER OF TAXATION OF THE
COMMONWEALTH OF AUSTRALIA

Respondent

Northrop, Lockhart and Beaumont JJ.

16 August 1985

. I	. -	REASONS FOR JUDGMENT
LOCKHART J.

Sometlmes more difficulty arises and more time is consumed in

deciding whether a question of law

1 s

involved in a

decision under

appeal and, if it

is, in identifying what it is, than in hearing the

appeal Itself on the merits.

This case

is no exception. It has a

long and rather bizarre history. By notice of assessment dated

April

1978 the Commissioner

of Taxation assessed the taxpayer to

income tax for the year ended

30 June 1974.

The objection to the

assessment clalmed that it should be reduced by allowing a deduction

of $92,298 and

allowing

partnerhsip

loss of $13,089. The

taxpayer asserted In Its notlce

of objection that:-

2 .

It was during the year

of income a member of a partnership

known as Colray Land Co.;

2 .

The

Partnership

during

the

year

of income

carried

the

business of tradlng in land;

3 .

On 7 June 1974 the

taxpayer

became

member

of a

further

Partnershlp known as Colray Noird;

4. (a)

On 7 June

1974 the Colray Nolrd Partnership acqulred certaln

lands from the Colray Land

Co.

Partnership which were assets

of a

business carried on by the latter partnership and became assets

of the

business carried on by the Colray Noird Partnership. Members

of both

partnerships elected, in accordance with

S. 36A of the Income Tax and

Social Services Contribution Assessment Act

1936 (“the Assessment

Ad’‘),

that the value of the lands for the purposes of

S. 36 of the

Assessment Act should be the cost	of the lands to the Colray Land Co.
Partnership;

4. (b)

As a result of the sale of

the lands the assessable

income of

the Colray Land Co. Partnership wa

S equal to the allawable

deductions

and the taxpayer did not derive any assessable Income under

S . 92 of

-. the Assessment Act;

5. (a)

During the year

of income the Colray Noird Partnership sold

the lands to Nolrd Limited.

The lands were assets of

a business

carried on by the Colray Noird Partnership until that sale was made

whereupon it became an asset of the business carried on by Nolrd

Limited.

The members of

the partnership and Nolrd Limited elected In

accordance with S.

36A that the value of

the lands, for the purposes

of S . 36,

should be their original cost to Colray Land Co. bemg the

original purchaser;

5. (b)

As a result of the sale the assessable income of Colray Land

Co. was equal

the allowable deductions and the taxpayer had not

derived any assessable income under

S. 92;

The Colray

Nolrd

Partnershlp

incurred

a loss of $955,360

pursuant to S . 63 of the Assessment Act;

Alternatively,

the

Colray

Noird

Partnership

incurred

allowable deduction of $2,362,490

which was a bad debt written off

durinq the year

of income and which had been brought to accounc

by the

taxpayer as assessable income;

a.	The taxpayer incurred a loss of $13,089 being its share of a

partnership loss

Incurred during the year

of income and whlch was an

allowable deduction under

S. 92: and

Section 260 of

the Assessment Act did not apply to enable the

Commlssioner to ignore the

S. 36A electlons and assess the taxpayer as

as if the elections had not been made.

The

objection

was

disallowed

1 9 July 1978 and the

Commissioner‘s decision was referred to

Board

of Renew. The

Commissioner furnished a statement to the Board as required by Req.

of the Income

Tax Regulations which provided:-

“(1) No

part

of the amount of

$13,089 claimed by the

taxpayer as its share

of a partnership loss of

$261,783 allegedly incurred by Colray Land Company

the

year

income

ended

30 June

1974 1 s

allowable as a deduction under section	9 2 ( 2 ) of	the
Act.

(ii)

The net income

of Colrap Land Company for the year

of income ended	30 June 1974 was not less than
$1,845,966.

(ili) In terms of section 9 2 ( 1 ) of the Act the taxpayer’s

individual interest in the net income of Colray

Land Company was not less than

$92,298 for the year

of income ended 30 June

1974 and that amount was

correctly

included

as assessable income In the

taxpayer‘s assessment for that year.

(iv) The taxpaver‘s

taxable

income

for

the

vear

income

ended

30 June 1974 was

not less than

$139,298.

(V)

The provislons of section

36A of the Act have no

appllcation

the

purported

transfer

of the

trading stock (I.e. the land in questlon) by Colray

Land Company

to the Colray-Nolrd partnership and

the value of the land was properly included in the

assessable

income

Colray

Land

Company

accordance with sectlon

36 of the Act.

(vi)

No part of

the amount of $2,362,490

clalmed by the

Colray-Nolrd partnership in the year ended

30 June

1974 as a

bad debt 1s an allowable deduction under

section 63,	section 51(1) or any other section of
the Act.

(vii) Alternatively, no deduction is allowable to the

taxpayer under section

9 2 ( 2 ) of

the Act for Its

share of the alleged partnership

loss ($13,089) or

to the Colray-Nolrd partnershlp under sectlon

63 of

the Act for

the

alleged bad debt

($2,362,490)

because: -

the

transactions

whlch

gave

rlse

the

purported partnership

loss and the purported

bad debt were shams and did not have the legal

effect contended for

by the taxpayer:

such transactions constituted an arrangement

which sectlon 260

of the Act operates to void

as against the Commissioner;

such transactions should be dlsregarded

being a fiscal nullity for the purposes	of the
Act.

At the hearing before the Board which took place on 3 May

1983 both the Commissioner and the taxpayer were represented

by s nior

counsel.

After

the

appearances

had

been

taken,

counsel

for

the

taxpayer informed the Board that the taxpayer sought an

ad~ournment

the hearing

of the appeal

on the ground that the taxpayer had not been

able	to obtain all necessary evidence including documents for the

purpose of presenting

its

appeal.

relied

upon

a statutory

declaration of his instructing solicitor, Howard Lionel Alexander,

made on 3 May 1983. Mr. Alexander

affirmed, so far as is material:

...

is necessary that the taxpayer seek an

adjournment

the hearing set down before the

Board of

Revlew on 3rd and

4th May,

1983 for the

reason

that

the

taxpayer

has

not, despite

reasonable effort to date, been able to obtaln all

relevant documentation and evidence for the purpose

of the hear! ng .

An adjournment is sought so

that the task of

preparation for the hearing may be completed.

consider

that

adjournment

for

a perlod

approximately three weeks would suffice. I belleve that unless an adjournment of the hearing is granted the taxpayer will be seriously prejudiced. If the appllcation for adjournment 1 s refused the

taxpayer will not be able to proceed	with	the
hearinq of the appeal.

6 .

My firm first recelved instructlons to act in

this matter on behalf of the taxpayer on	or abcyt
20th January, 1983. ...

I am further informed

by Mr. Cominos

partner

Mr.

Alexander’s3

and verily believe

that he then set about obtaining from our client

all relevant documentation

so that preparatlon of

the

evidence

could

n ertaken.

Certain

documents

were

supplied

our

cllent

mid-February, 1983.

the documents did not however

include a

large number of relevant documents, and

none of them

were

originals.

Mr. Cominos

made

further inquiries of our client and its accountants

Messrs. Duesbury Johnston

& Marks, and in mid-April

1983 flew to Hong Kong where further

inquiries were

made of the accountants of Noird Ltd.

a company

which was involved In the instant transactions.

6. The first notice of the hearing date of this

appeal was received by my client‘s accountants by

notice dated 11th March, 1983 passed on to my firm

shortly thereafter.

7 .

The

conduct

the

hearing

and

further

preparation was largely delegated to me on or about

23rd March, 1983.

I retained counsel to appear at

the hearing, and gave consideration to assembling

the relevant documents and

evldence.”

Paragraph 8 of the declaration then set

forth a

serles of

steps taken by Mr. Alexander slnce 23 March 1983 for the preparation

of the case Including attempts by him

to obtain varlous documents from

persons

who

were

thought

hold

them

that

might

advance

the

taxpayer’s case, including accountants in Honq Kong. Paragraph	8 1 s
lengthy and I need not set It out.

The declaratlon then continued:-

“9.

am therefore presently left in the posltion

where :

.. .

7 .

(a) I have, as I

respectfully

contend,

made

reasonable efforts since becoming involved in

the matter to obtaln relevant documents and

evidence.

(b) Nevertheless,

the

documentation

presently

available 1 s incomplete, and in large part, comprlses copies of unexecuted documents.

have

yet

investigate

other

probable

sources of further documentatlon and evldence

and need further time in which

to do that.

10.

I am informed by senior and junior counsel

f o r

the taxpayer and verily believe that in their

vlew

the material presently available is not sufficient to allow the taxpayer to proceed with the hearing

of the

appeal, particularly having regard to the

matters set out in the Commissioner's notice under

Regulation 35(1).

11.

In the circumstances I respectfully seek

adjournment of the

hearing

for

aperiod

approximately three weeks."

Counsel for the Commissioner opposed the application for an adjournment of three weeks on various grounds lncludlnq the

followma:

(1)

Based on the reasons for judgment

of the High Court Court in

E.G. & H. Nominees Ptv. Limited

v. General Mutual Insurance

Co.

Limited (In Liquidation)

(1976) 50 A.L.J.R.

460 an adlournment should

nor; be granted where the basis

of the application for the adjournment

is that further evidence may be obtained unless the Court has reason to conclude that there is "some solld" matter which exists and which, if produced, could be regarded as posslbly influencing the course of

the hearlng

of the appeal.

8 .

( 2 )

The material contained in

Mr. Alexander's declaration was in

essence that he and others advising the taxpayer were looking for

further documents or

further evldence to support the taxpayer's case,

but nothing suggested that the documents would be found

or that they

would produce "solid matter" that may influence the course	of the
appeal.

( 3 )

All the declaration really said was that there may be other

documents bearing on the case

which the solicitors for the taxpayer

had not seen and which may be relevant to some issue in the appeal:

that the taxpayer's advisers wanted more time to see

any such

documents existed, to determine their relevance and to decide whether

to use them on the hearing

of the appeal.

Counsel for the taxpayer then replied and said that the

appllcatlon for adjournment should be determlned

by applylng a general

princlple that adjournments wlll be granted

if they

are sought bona

flde on reasonable grounds and

if the other party either wlll not be

prejudiced or, If prejudice is likely, that it can

rendered

nugatory by compensation.

He said that the taxpayer undertook

to pay

the costs of the Cornmissloner occasioned by the adjournment. He relied upon Jordan v, Smart C19613 N.S.W.R. 735 and R05/3 v. Humbles C19707 1 W.L.R. 1061. He stressed that there was no suqgestlon of

absence

of bona fides on the part

of the taxpayer, and that

Mr.

Alexander

was

available

for cross-exammation, but

that

the

Commissioner did not seek to cross-examine him. Counsel submitted to the Board that the declaration of Mr. Alexander provided substanrial evidence that the adjournment was sought on reasonable grounds.

The Board then adjourned briefly and, upon reconvening, the Chairman of the Board said:

"THE CHAIRMAN : After

consultation

with

colleagues, I have decided that the hearing should

go ahead.

The board can, of course, proceed

without original documents,

so that the lack of

possession

the

original

documents

not

essential to the hearing before the board.

On a study

of the declaration, it lends nothing

to the belief that co-operation effected to produce

documents

and

records

can

expected

through

Yates, or Barry and Nilsson,

or Campbell - his

records

reveal

nothing,

and

he has

failed to

observe

the

board's

notice

anyway

- nor do I

consider that anything can emerge through Silke and

Jensen Exploration.

The situation in

relation

to the Hong Kong

accountants,

who are

outslde the jurisdiction

anyway,

that

to date

has

been

totally

unproductive, and reliance on

it seems to be based

on some uncertain communication between Mr. Cominos

and Mr. Alexander, and the prospect of anything

emerging from Myer Realty

is, to say the least,

very uncertaln and nebulous.

So I thlnk, in the

circumstances, the board will not accede to the

request that the matter be adjourned."

Counsel for the taxpayer informed the Board that the taxpayer

was unable to proceed with the appeal for the reasons dlsclosed in the

declaratlon.

The Chairman

the

Eoard

then

sald

that, as the

taxpayer had either made no effort

%as not m a positlon to present

its case to relieve it

the onus placed upon it by

S. 190(b! of the

Assessment Act,

the Board was in the positlon where it must confirm

the assessment. The Board then confirmed the assessment.

10.

The taxpayer appealed to the Supreme Court of Queensland from

the Board's declsion confirming the assessment. The notice of appeal to the Supreme Court stated that the decision of the Board lnvolved

the following question

of law:-

"Whether in the circumstances disclosed In the

statutory declaration

Howard Lionel Alexander

and other material placed

in evidence before the

Board,

the

Chairman

the

Board

should

have

granted

the

Appellant's

application

that

hearing before the Board be adjourned for

a period

of approximately three

( 3 ) weeks.

At the request of the parties the Supreme Court

determmed as

a preliminary question whether the decision appealed from involved

question of

law.

The Supreme

Court

(Ryan J.) rejected

the

Commissioner's argument that the Board's decision to confirm the

assessment followed from the taxpayer's election not to proceed on the

evidence which was then available to

it and that the earller decision

of the Board's Chairman refusing

an ad~ournment

played no part, except

historically, in the Board's declsion confirming the assessment.	Hls
Honour found that:-

"It was an integral part

of the Board's decision

that

appellant

was

not

entitled

adjournment to enable evldence to be pleced before

it. It does not appear

to me to matter whether

that conclusion was one reached by the Board itself

or accepted

the

Board

consequence

declslon by

Its Chairman.

If In arriving at the

decislon to

reject

the

application

for

adjournment, and in consequence thereof arrlving at

its ultimate decision to dismiss the appeal, the

Board could be sald to have misapplied the law, it

seems

me that a question of law would be

involved in its decision."

11.

Ryan J.

then examlned some of the authorities dealing

with

the question of when a declslon involves a question of

law and held

that

"However, I can find nothing to show that the Board

wrongly exercised its discretion to refuse an

adjournment in this case. Accordmgly its declsion

does not appear to me to involve a question of law.

At most it could be said that it would

have been a

more appropriate exercise

of the Board's discretion

to have granted a short ad~ournment

In view of the

consequences

the

appellant

of refusing

the

adjournment

and

the

undertaking

costs.

However, a court is not concerned

with the question

whether the discretion was exerclsed in the most

appropriate

way.

concerned

only

wlth

the question whether

it was

exercised in accordance

with law. The appeal must therefore fail."

The taxpayer then appealed to this Court, by leave, from the

Supreme Court's judgment.

Counsel for the taxpayer submitted before us:

That the decision

of the Board confirming the assessment was

necessarily based on the earlier decision, whether

of the Board or the

Chalrman alone, refusing the adjournment,

so that if the refusal of

the ad~ournment involved a question of law so	did the later declslon
confirming the assessment;

2. That the Board was invited by counsel for each party to apply

different principles governlng the applicatlon for adjournment namely,

those to which I referred earller.

A s

a question therefore arose

before the Board as to

whlch principles should apply in considering

the application for ad~ournment,

that itself gave rise to a question

law independently of the question whether

the Board applied the

right prlnciples in refusing the adjournment;

3 .

Alternatively,

that a question of law

was

involved

the

refusal of the adjournment and the subsequent confirmation of the

assessment in that the Board, by rejecting the taxpayer's submissions

and

accepting

the

Commissioner's

submissions,

applied

the

wrong

prlnciples in refusing the adjournment.

Counsel for the Commissioner submltted:

That

analysis of the

Assessment

Act

and

the

Income

Tax

Regulations establishes that, upon

a reference to the Board, certain

responsibilities are imposed upon the Board and others upon the

Chalrman alone. Reference was made m particular to s s . 178, 192, 193

and 195 of the Assessment Act and regulations 38 and 39.

The decision

to refuse the adjournment was a decision of the

Chairman, not of the

Board. As it

1 s

only decisions of the Board that are subject to

appeal to a Supreme Court (sub-s.

196(1)1 the decision of the Chairman

refuslnq the adjournment cannot be challenged in

chese proceedlngs.

3. That the Board's decision to conflrm the assessment followed

from the taxpayer's election not to proceed on the evidence then

available to

It;

and there was no nexus between the Chairman's

declslon refuslng the adJournment	and the	Board's later declslon
conflrmmg the assessment.

13.

That, whether

the

Board's

decision

confirming

the

assessmenr.

did or did not follow causally upon the earlier decision refusing the

adjournment and whether that last mentioned decision was that of the

Board or

of the Chairman, no question

of law was involved in any

relevant decislon. The Board did not act on wrong principles or misunderstand or erroneously determine any of the material placed

before

It; hence it has not been shown that the adlournment was

wrongly refused. In the result no question	of law is involved in any
relevant declsion of the Board.

An appeal to

a Supreme Court from a decision of

a Board of

Review pursuant to

S. 196 of the Assessment Act can only be brought

where the decision involves

a question of law.

I propose to turn

first to the question whether a questlon of law was involved in the relevant declslon in the present case. I use the expression "relevant decislon" because there was some difficulty in argument before us in identifying the decislon which was said to have involved a qu stlon of

law and some tendency to treat that decislon

as bemg

slmply the

decislon refusing the adjournment rather than the decislon of the

Board confirmm9

the assessment. It

is the lacter declsion that was

the sub~ecr:

of the appeal from the

Bclard to the Supreme Court and that

lles at the heart of the appeal to this Court; but

lr: is susceptlble

of challenge in this case only if the declsion

(of the Chalrman or the

Board, as the case may be) refuslng the adlournment was an essential

part

the

Board's

decislon

confirming

the

assessment.

necessary to consider the nexus, lf any,

between those two declslons

14.

only If

I conclude that the declsion refuslng the adjournment itself

involved a

question of

law because the taxpayer's attack on the

Board's declsion cor:firmlnq the assessnent was mounted solely on the basis that the refusal of the adlournment was a decision that cannot stand. Unless that conclusion is favourable to the taxpayer it cannot

establish that the decision

of the Board confirming the assessment

involved a question of law, and must therefore fail in its appeal.

There is a considerable body of authority concerning the

meaning of

sub-S. 196(1) of the Assessment Act and the circumstances

that may give rlse to

a question of law being involved in

a decision.

The cases include The Australian Gas Liqht Company v. __ The Valuer-General (1940) 40 S.R. (N.S.W.) 126; Federal Commissioner of Taxation v. Broken Hill South Limited (1941) 65 C.L.R. 150; _. The Commissioner of Taxation v. Miller (1946) 73 C.L.R. 93; Haves v. Federal Commissioner of Taxation (1956) 96 C.L.R. 47; Buckland V. Federal Commissloner of Taxation (1960) 34 A.L.J.R. 60; Flsher v.

Deputy7 Commissioner

of Taxation (1966) 40 A.L.J.R.

328; Re Ne11

parte Cinema International Corporation Ptv. Limited (1976) 50 A.L.J.R. 499; Federal Commissioner of Taxation v. Coleman (1978) 78 A.T.C. 4,355; Federal Commissioner of Taxation v. Moody (1981) Qd.R. 272;

Lombardo v. Federal Commissioner cf Taxatlon

(1979) 79 A.T.C. 4,543.

Bowen C.J. said in Lombardo's Case at

pp. 4,545 and 4,546:

"Wlthout attemptinq an exhaustive summary, it may

be said that

a 'question of law'

will be involved

in a decision In the following circumstances:-

15.

(1)	If it was expressly raised and the Board

made a

ruling on it as

a relevant factor In Its

decision;

( 2 )

If It 1 s obvious

from

the

decision

transcript of the case that the Board in arriving at its decision has misunderstood the law In some relevant particular;

( 3 )

Technical

words

had

necessarily

construed before the statute could be applied;

(4) Where a particular set of facts had, of

necessity, to

be within or wlthout the statute;

( 5 )

Where,

in a submission of 'no

evidence',

there 1 s a real posslbillty of success."

Toohey J. said at pp.

4,549 and 4,550:-

"In the

Australian

decisions

these

g neral

princlples have been established.

(1) The proper construction of sec. 26(a) of the

Act is a question of law ...

(2) 9 question as to what constitutes income	1s a
questlon of law ...

( 3 ) Once a decision of

the

Board

mvolves a

question of

law, the whole decision

the Board

and not merely that question is open to revlew

...

(4) For purposes

of jurisdlctlon it 1s immaterlal

whether the question of

law involved was rightly

wrongly declded by the Board

...

What does it mean to say that

a declsion of a Board

involves a

question of law? When the question

ltself

expressly

stated,

there

will be

difficulty In saylnq- that

the question was involved

In the

Board's

decision.

But

the fact

that a

question is not expressly referred to does not mean

Board's decision shows that some step, although not

that it is not so involved ... If a perusal of a

expressly referred to,

must have been taken by the

Board in arriving

its conclusion, that matter

was involved In the decision. And If the matter,

on examination, is shown to be

a question of law,

then a question of law will have been involved

..."

16.

None of the decided cases to which we were referred

arqument or which have been revealed by my own researches touch

directly the question that arises here where an adjournment was

refused. It

is necessary, in my view, for

a question of

law to be

involved in a decislon of

a Board of

Revlew that an appellant must

identify in the decision of the Board	a particular question of law
involved, expressly or by implication:	Lombardo’s Case per Toohey J.
at p. 4,550.

I reject the proposltlon that a question of law was Involved

in the present case simply because both the Commissioner and the

taxpayer

advanced

arguments

before

the

Board

the

proper

principles

applied

determinlng

the

application

for

adjournment, those arguments being mutually inconsistent and neither

of them manlfestly untenable. That proposition cannot be sustained.

I also re~ect

the argument that

a question of law

is Involved

in a decision of the Board or of Its Chalrman refuslng an adjournment

merely If it is reasonably arguable that the adjournment should have

been granted.

This

1 s a

very different case from one that turns on the

construction of a particular section of the Assessment Act, which may

be open to more than one

view each of which 1 s reasonably tenable, but

only

one

which 1 s correct.

The construction of

the

sectlon

involves a question of law.

It 1 s not because various arguments as to

construction of

a section are available or are reasonably open that

. .

17.

gives rlse to the question of

law; but the fact that the

Board's

declslon is concerned wlth the proper construction

the section.

Also, once the questlon

law is identified it is

immaterial whether

was rlghtly

or wrongly decided by the Board:

v. Federal

Commissioner of Taxation

(1971) 71 A.T.C. 4213 at p.

4215; XCO Pty.

Limited v.	Federal Commissioner of Taxation (1971) 124 C.L.R. 343 at
p. 348.

Counsel for the taxpayer relied on certain statements of

Wickham J. in Federal Commissioner of Taxation v. Coleman (supra) and

by Connolly J. in Federal Commissioner of Taxation v. Mlller (supra).

The passage from Wickham J.'s

~udgment

In Coleman's Case upon whlch

reliance was placed is at

4 ,358 :

"It must be demonstrated that there is

a qenuinely

arguable legal question. A question of law should be really and not merely colourably Involved."

The question which arose in Coleman's Case was very different

from the questlons before this Court in the present case. The taxpayer's argument before the Supreme Court of Western Australia in Coleman's Case was that the decision of the Board did not involve a question of law because the decislon of the Board was simply one of fact, namely, whether because of special clrcumstances it was lust to

allow the taxpayer a deductlon under

S . 82D of the Assessment Act wlth

respect to a housekeeper wholly enqaqed by the taxpayer in keeping

house for her and In caring for her child under the age of

16 years.

Wickham J.

held that no questlon of

law was involved.

The passage

from hls Honour's judgment upon whlch counsel for the taxpayer relied

18.

before us needs to be viewed in its context.	His Honour said at	p.
4,358:-

"Relevance of	criteria is of course a question of
law, but I do	not think it possible to insinuate a

questlon of law

into

the

decision

merely

submittinq that certaln crlteria adopted are not

relevant, or are arguably not relevant. It must be

demonstrated that there is

a genumely arguable

legal question. A question of law should be really

and

not

merely

colourably

involved

... the

appellant must do

more than merely pose

a questlon

of law . . .

When this passage from the judgment

of Wickham J. is read as

a whole and in the light

of the question which arose for decision by

his Honour in my m e w it gives no support to the argument of counsel

for the taxpayer, especially in

a case like the present xhere the

question of law is

said to arise from a decision

refuslng an

ad~ournment. Indeed, the judgment of Wlckham

J., in particular the

passage to which

I have referred, to the extent that

it may be sald to

have any bearing on the present case, tends to negate the taxpayer's

argument.

The questions before Connolly

J. in Moodv's Case were similar

to those whlch arose in Coleman's Case.

Agam

no question

of any

ad2ournment by the

Board arose. Connolly

J. referred to the need to

raise a "contestable" proposition of law; but thls statement was made

in a context similar to that

whlch attracted the remarks

of Wickham J.

in Coleman's Case to which

I have referred.

19.

For a question of law to be involved in the declslon

of the

Board refusing the taxpayer an ad~ournment of the hearing of its

appeal It is necessary, in

opinion, for it to be established that,

in exercising its discretion to refuse the adlournment, the Board

acted

wrong

principles

took

into

account

lrrelevant

considerations or failed to take into account relevant conslderations

or denied the taxpayer natural justice.

It is well established that

refusal to grant

an adjournment

may constitute a miscarriage of justice which necessarily involves

error of law on which an appeal may be based: Dick v. Piller C19437

1 K.B.

497;

v. Humbles C19703 1 W.L.R. 1061; C19727 1 W.L.R. 33

(Court of Appeal);

Priddle v. Fisher G Sons C196811 1 W.L.R. 1478;

Ottley v . Morris (Inspector of Taxes) C197911 1 All E.R. 65;

Sullivan

v. Department of Transport ( 1 9 7 8 ) 20 A.L.R.

323.

In the present case, when the Chairman of the Board announced

the decision refusing the adjournment

it is plain that he considered

that the taxpayer would be able to conduct its case by tenderlng

copies of

documents if

the originals were unavailable, and that it

would be futile to ad3ourn the hearing for about three weeks because

it was unlikely that the documents which

the taxpayer thought it mlght

be able to obtain would in fact be obtained.

The

Chairman had

obviously

glven

consideration

Mr. Alexander's

statutory

declaration.

His

reasons

for

declinlng

the

adjournment

must

considered in the light of the background to the appeal some of which

I mentloned in the opening paragraphs

of these reasons. It

1 s an

20.

appeal involving the financial year ended 30 June 1974 and relates to

events that occurred during that year. The notlce of assessment

issued

1978

and

the

Commissloner's

decislon

disallowing

the

taxpayer's objectlon was referred to a Board of Review that same year.

The	hearing before the Board dld not take place until five years

later, on

May 1983. Contemporaneous documents relevant to the

matters in issue before the Board presumably would have been about ten

years old.

It comes a5 no surprlse to me that

the Chalrman sald in

effect that the prospect of anything emerging from any further search

for documents that may assist the taxpayer's case was very uncertain

and nebulous.

The Chairman was entitled to take into account the

matters to which he referred; and it has not been established that

acted on any wrong principle in concluding that the adjournment should

be refused.

It is true

that

counsel for the Commissioner relied in

argument before the Board on the judqment of the Hlqh

Court in E.G.

and H. Nominees

Ptv. Limited v. General Kutual Insurance Co. Limited

(In Liauidation)

(supra) and there is,

I thlnk, much to be said to

support the vlew that It was a case whlch depended upon Its own facts

and dld not lay down any general

principles

qovernlnq ad~ournment

applicatlons. But

the

Chairman m,?de no referencr to that judgmenr;

when refuslng

the adjournment and there is no reason to suppose

that

he made any use of it at all.

Even

if he did rely upon

It in some

unstated way I can see no reason to suppose that he would have done

other than as

an analogy. In my

opmion no questlon of law

was

lnvolved in the decision refusing

the adjournaent. It follows that no

Ll.

question was

involved in the decision impugned in this case. namely,

the Board's decision

confirmlng

the

assessment.

Hence

1 s

unnecessary to conslder the other arguments advanced	by	the parties
before us.

The appeal should be dismissed with costs.

I certify that th i s and the -26

precedlng pages are ii true copy of the

Reasons far

J>damcrit here,n

c f his Honour

Mr. Justlce Lockhart.

_. -

ALL.

Assactate

Rsspondent

d .

I certify :hat t h i s a d the 3 preceding

pages are a true copy of the reasons for

jc3gment here:n of The Hsnourable

[1985] FCA 684

16 Aug 1985