Re VLKG and Commissioner of Taxation
[2011] AATA 915
•19 December 2011
[2011] AATA 915
Division TAXATION APPEALS DIVISION File Number(s)
2011/3027, 4544
Re
VLKG
APPLICANT
And
Commissioner of Taxation
RESPONDENT
INTERLOCUTORY DECISION AND ORDER
Tribunal Senior Member S E Frost
Date 19 December 2011 Place Sydney 1. Refuse the application for the giving of a notice to the Respondent under s 37(2) of the Administrative Appeals Tribunal Act 1975 (AAT Act), as modified by s 14ZZF(1)(b)(iii) of the Taxation Administration Act 1953 (TAA).
2. Order that the Applicant not be permitted, without leave of the Tribunal, to apply for the giving of a notice to the Respondent under s 37(2) of the AAT Act, as modified by s 14ZZF(1)(b)(ii) of the TAA, until the Applicant files and serves a statement of facts and contentions.
3. List the matter for directions on the afternoon of 21 December 2011 for the purpose of hearing the parties in relation to the setting of a timetable.
.................[sgd]...................
Senior Member S E Frost
CATCHWORDS
PRACTICE AND PROCEDURE – lodging of documents with the Tribunal – claim that documents that may be relevant to the review are in the possession of the Respondent but have not been lodged – modification of s 37 of the Administrative Appeals Tribunal Act 1975 by s 14ZZF of the Taxation Administration Act 1953 – application for an order that the Respondent lodge a list of documents – application refused
LEGISLATION
Administrative Appeals Tribunal Act 1975, s 37
Taxation Administration Act 1953, s 14ZZF
CASES
Re Christie and Commissioner of Taxation [2008] AATA 320
Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566; [2008] FCAFC 124
SECONDARY MATERIALS
Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 3) 1991
REASONS FOR INTERLOCUTORY DECISION
Tribunal Senior Member S E Frost
Date 19 December 2011 INTRODUCTION AND BACKGROUND
The taxpayer has applied for review of an objection decision made by the Commissioner. In that objection decision the Commissioner disallowed the taxpayer’s objection against an amended assessment which increased the taxpayer’s assessable income for the 2005 income year by several hundred thousand dollars.
On 29 August 2011 the Commissioner lodged with the Tribunal the “T-documents” which are the documents required to be lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act). Supplementary T-documents were lodged on 20 October 2011 and further supplementary T-documents were lodged on 8 December 2011.
The taxpayer says that the Commissioner has in his possession additional documents that are, or at least may be, relevant to the Tribunal’s review of the objection decision, and has therefore asked the Tribunal to take action to enforce the lodgement under s 37 of the AAT Act of those additional documents. As a preliminary point, the taxpayer asks the Tribunal to order the Commissioner to lodge with the Tribunal a list of the documents that are relevant to the review but which have not yet been lodged.
I have decided not to make the preliminary order requested by the taxpayer. My reasons follow.
SECTION 37 OF THE AAT ACT
Ordinarily s 37(1) of the AAT Act requires a decision-maker to lodge with the Tribunal a certain number of copies of:
every … document or part of a document that is in the person’s possession or under the person’s control and is relevant to the review of the decision by the Tribunal.
Section 37(2) provides a safeguard against a decision-maker who does not lodge under s 37(1) everything that it should. Section 37(2) provides:
Where the Tribunal is of the opinion that particular other documents or that other documents included in a particular class of documents may be relevant to the review of the decision by the Tribunal, the Tribunal may cause to be given to the person a notice in writing stating that the Tribunal is of that opinion and requiring the person to lodge with the Tribunal, within a time specified in the notice, the specified number of copies of each of those other documents that is in his or her possession or under his or her control, and a person to whom such a notice is given shall comply with the notice.
As I have said, that is what s 37 “ordinarily” provides. But the position is different where the decision under review is a “reviewable objection decision” as defined in s 14ZQ of the Taxation Administration Act 1953 (the TAA). The decision under review here is such a decision. That means that s 14ZZF of the TAA applies so as to modify s 37 of the AAT Act. Section 14ZZF of the TAA provides in paragraph (1)(a) that instead of being required to lodge copies of those documents as described above in [5], the Commissioner is required to lodge:
every … document that is in the Commissioner’s possession or under the Commissioner’s control and is considered by the Commissioner to be necessary to the review of the objection decision concerned.
Section 14ZZF(1)(b) also modifies the safeguard provision of s 37(2) by providing that s 37 applies as if:
the power of the Tribunal under subsection (2) of that section to cause a notice to be served containing a statement and imposing a requirement on a person were instead:
(i)…
(ii)a power, by such a notice, to make such a statement and impose a requirement that the person lodge with the Tribunal, within the time specified in the notice, the prescribed number of copies of each of those other documents that is in the person’s possession or under the person’s control; and
(iii)a power, by such a notice, to make such a statement and impose a requirement that the person lodge with the Tribunal, within the time specified in the notice, the prescribed number of copies of a list of the documents in the person’s possession or under the person’s control considered by the person to be relevant to the review of the objection decision concerned.
It will be apparent that the taxpayer’s principal application at the moment is for the Tribunal to take action under s 37(2) as modified by s 14ZZF(1)(b)(ii); the preliminary application is for the Tribunal to take action under s 37(2) as modified by s 14ZZF(1)(b)(iii). The taxpayer notes that the Tribunal took this course in Re Christie and Commissioner of Taxation [2008] AATA 320.
The first point to note is that the documents required by the modified s 37(1) of the AAT Act to be lodged are those that the Commissioner considers to be necessary to the review. That represents a significant departure from the unmodified s 37(1), which requires lodgement of those documents that are relevant to the review. The modified s 37(1) substitutes, for the objective test of relevance, a subjective test of necessity.
The second point to note is that the modification of s 37(2) by s 14ZZF(1)(b)(ii) does not take the same approach as the modification of s 37(1). In the modified s 37(2), the test for the enlivening of the Tribunal’s power to issue a notice to the decision-maker is whether the Tribunal is of the opinion that “particular other documents” or “documents included in a particular class of documents” may be relevant (as opposed to the test of necessity in the modified s 37(1)).
The third point to note is that, if the Tribunal requires the Commissioner to provide a list of additional documents, perhaps as a prelude to a requirement that the Commissioner produce the documents themselves, the list is to be of documents “considered by the [Commissioner] to be relevant to the review …”: again, the word used is “relevant”, rather than “necessary”.
There is an assumption that the range of documents that are “relevant” to a review is potentially broader than the range of documents that are “necessary” to it, and it is this assumption that underpinned the introduction in 1991 of the word “necessary” into s 14ZZF, representing a change from the word “relevant” which appears in the unmodified s 37(1) of the AAT Act and also appeared in the former s 14ZG of the TAA. The explanatory memorandum to the 1991 Bill, which became the Taxation Laws Amendment Act (No. 3) 1991, included this at paragraph 26.28-29:
The new approach [of substituting “necessary” for “relevant”] will reduce the number of documents referred to the AAT when the application for review is made, without restricting the AAT’s power to obtain any documents it requires in particular cases.
THE PRELIMINARY APPLICATION
The taxpayer submits that the Commissioner “accepts that he has in his possession a large number of documents that are relevant to the review of the objection decision at issue in these proceedings which have not been lodged with the Tribunal pursuant to s 37(1) as modified”.
The taxpayer says that the application for an order to lodge additional documents will be considerably assisted by an order that the Commissioner first lodge a list of additional documents, so as to avoid conducting the argument “at a level of abstraction [which is] prone to generate additional, and unnecessary, confusion and disputation”.
The taxpayer submits that I should be of the opinion that there are documents other than those lodged under s 37(1) as modified that “may be” relevant to the review of the decision. That is because, according to the taxpayer:
the express position of the Commissioner is that the class of documents he is obliged to lodge under s 37(1) as modified is a sub-set of relevant documents. It follows that the Commissioner concedes that he is in possession of relevant documents that have not been lodged under s 37(1) as modified.
The Commissioner’s response to the application is that the taxpayer’s premise as to the existence of a large number of documents that are relevant but have not been lodged with the Tribunal is “wholly mistaken”. He says that in considering which documents to lodge under the modified s 37(1), he actually applied a “relevance” test, rather than a “necessity” test, and that he “has no other documents which he presently considers to be relevant”. He submits that, as a precondition to the making of an order under the modified s 37(2), the Tribunal needs to be satisfied that:
(a)particular documents, or particular classes of documents, exist; and
(b)those documents may be relevant to the review.
The Commissioner cites the full Federal Court in Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124; 168 FCR 566 at [28]:
… [An applicant] must show how a particular document or category of documents may be relevant to specific issues of fact relating to the excessiveness of the assessments issued to him. … The intent of s 14ZZF of the TAA was clearly to narrow the class of documents which the Commissioner must produce to the Tribunal, and in the absence of a demonstration by Mr Kennedy of the relevance of any additional documents, it is not appropriate to widen the class of documents which the Commissioner has already provided in this case.
The Commissioner submits that the taxpayer has not identified any particular documents, or category of documents, which “may be” relevant, and for that reason an order under s 37(2) for the lodgement of a list would not be appropriate. In fact, as Mr Steward SC for the Commissioner put it in oral submissions, if I were to order the lodgement of a list, then the list would be identical to the index to the T-documents and the supplementary T-documents, since those documents are the only documents that the Commissioner considers relevant to the review, which is the language of s 14ZZF(1)(b)(iii).
Mr Steward submitted, in summary, that there is no evidentiary basis for making an order under s 37(2).
CONSIDERATION
I agree with the Commissioner that the taxpayer has not established why an order under s 37(2), as modified by s 14ZZF(1)(b)(iii) of the TAA, should be made. There is no identification of any “particular other documents” or any “documents included in a particular class of documents” that may be relevant to the review. That shortcoming is sufficient to reject the application for the preliminary order.
There was filed with the Tribunal on 14 December 2011 an “Applicant’s Schedule of Relevant Documents Referred to in the Reasons for Decision ” which sets out a three-column table. The first column is headed “Page of the [Reasons for Decision]”, the second is headed “Document” and the third is headed “Is it in the T-docs?”.
Many of the entries under that third heading are the single word “No”. But what is listed under the heading “Document” are, almost without exception, not documents at all but generally findings of fact, or observations, the relevance, or potential relevance, of which is not explained. It seems to me that the potential relevance might be capable of being established once the taxpayer has filed a statement of facts and contentions setting out the case the taxpayer wishes to mount in the Tribunal.
That has led me to conclude that this application for review should now proceed in the normal course with the filing and service by the taxpayer of a statement of facts and contentions. I am also mindful of the assurance that Mr Steward has given the Tribunal that the documentary position will be continuously monitored and that if, upon receipt of the taxpayer’s statement of facts and contentions or at any other time, it appears to the Commissioner that he is in possession of further documents that may be relevant to the review, those documents will be lodged with the Tribunal.
I also observe that the taxpayer may in any event press an application for lodgement of further documents if potential relevance can be established, but not, without leave of the Tribunal, until after the filing and service of a statement of facts and contentions.
The matter will be listed for directions on the afternoon of 21 December 2011 for the purpose of hearing the parties in relation to the setting of a timetable.
I certify that the preceding 26 paragraphs are a true copy of the reasons for the decision herein of Senior Member S E Frost. .....................[sgd].....................................
Casey Comans, Associate
Date(s) of hearing 15 December 2011 Counsel for the Applicant N Owens Solicitors for the Applicant Balazs Lazanas & Welch LLP Counsel for the Respondent SHP Steward SC, GS Robinson Solicitors for the Respondent Maddocks Lawyers
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