Sports Centres Australia Pty Limited v Commissioner for
[2019] ACTSC 279
•29 August 2019
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
| Case Title: | Sports Centres Australia Pty Limited v Commissioner for Australian Capital Territory Revenue | ||||
| Citation: | [2019] ACTSC 279 | ||||
| Hearing Dates: | 29 August 2019 & 30 September 2019 | ||||
| Decision Date: | 11 October 2019 | ||||
| Before: | Crowe AJ | ||||
| Decision: | See [155] | ||||
Catchwords: | JUDICIAL REVIEW – STATUTORY INTERPRETATION – Rates Act 2004 (ACT) – Taxation Administration Act 1999 (ACT) – Legislation Act 2001 (ACT) – when rates become “payable” – | ||||
| powers of the Commissioner for ACT Revenue to apply for a | |||||
| charge over title – delegation – whether procedural fairness | |||||
| owed | |||||
| JUDICIAL REVIEW – PROCEDURAL FAIRNESS – Taxation Administration Act 1999 (ACT) – whether procedural fairness | |||||
| must be afforded to a ratepayer prior to the Commissioner for ACT Revenue applying for a statutory charge over title | |||||
| JUDICIAL REVIEW – DELEGATION – Whether a delegate of | |||||
| the Commissioner for ACT Revenue had jurisdiction to apply for | |||||
| a statutory charge – whether delegation required – where | |||||
| relevant delegation came into effect the day after the delegate sought to exercise the delegated power | |||||
| Legislation Cited: | Administrative Decisions (Judicial Review) Act 1989 (ACT) ss 5, 17 Land Titles Act 1925 (ACT) ss 14, 58 Legislation Act 2001 (ACT) ss 196, 230, 232, 233, 234, 238, 239, 242 Proceeds of Crime Act 2002 (Cth) s 34 Rates Act 2004 (ACT) ss 16, 17, 18, 19, 76 Revenue Legislation Amendment Act 2019 (ACT) Pt 1.7 Taxation Administration Act 1999 (ACT) ss 48, 51, 52, 56H, 56L, 56M, 56N 74, 78, 82, Div 7.3 | ||||
| Cases Cited: | Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Albrecht v Insurance Australia Ltd [2016] ACTCA 58; 12 ACTLR 96 | ||||
| Burridge v Chief Magistrate of the Magistrates Court (No 2) | |||||
| [2018] ACTCA 43; 13 ACTLR 307 Carltona Ltd v Commissioners for Works (1943) 2 All ER 560 | |||||
| Commonwealth v Rian Financial Services and Developments | |||||
| Pty Ltd (1992) 36 FCR 101 CPCF v Minister for Immigration and Border Protection [2015] HCA 1; 255 CLR 514 CRW16 v Minister for Immigration and Border Protection [2018] | |||||
| FCA 710 | |||||
| Edelsten v Wilcox (1988) 83 ALR 99 Griffiths University v Tang [2005] HCA 7; 221 CLR 99 Hutchins v Collins, Deputy Commissioner of Taxation (1996) 65 FCR 269 Johns v The Australian Securities Commission (1993) 178 CLR 408 | |||||
| Lewis v Chief Executive Department of Justice and Community | |||||
| Safety of the Australian Capital Territory [2013] ACTSC 198; 280 FLR 118 Minister for Health v Nicholl Holdings Pty Ltd [2015] FCAFC 73; 231 FCR 539 Minister for Immigration and Border Protection v WZARH [2015] HCA 40; 256 CLR 326 Minister for Immigration and Ethnic Affairs v Mayer (1985) 157 CLR 290 N MacDonald Pty Ltd v Hamence (1984) 1 FCR 45 New South Wales v Bardolph (1934) 52 CLR 455 | |||||
| O’Reilly v Commissioners of the State Bank of Victoria (1983) | |||||
| 153 CLR 1 PFTF Stock Pty Ltd v Deputy Commissioner of Taxation [2010] FCA 557; 116 ALD 80 | |||||
| Plaintiff S10/2011 v Minister for Immigration and Citizenship and | |||||
| Anor [2012] HCA 31; 246 CLR 636 | |||||
| Rawson Finances Pty Ltd v Deputy Commissioner of Taxation | |||||
| [2010] FCA 538; 189 FCR 189 | |||||
| Rawson Finances Pty Limited v Deputy Commissioner of | |||||
| Taxation [2010] FCAFC 139; 81 ATR 36 Saitta Pty Ltd v Commissioner of Taxation [2002] FCA 1105; 125 FCR 388 Walker v Secretary, Department of Social Security (No 2) (1997) 75 FCR 493 ZS v Sentence Administration Board [2018] ACTSC 289 | |||||
| Texts/material cited: | Legislative Assembly of the ACT, Assembly Debates, 21 March | ||||
| 2019 | |||||
| |||||
| Amendment Bill 2019 (ACT) Revenue Legislation Amendment Bill 2019 (ACT) | |||||
| Parties: | Sports Centres Australia Pty Limited (First Plaintiff) Jenke Investments Pty Limited (Second Plaintiff) | ||||
| Konstantinou Developments Pty Ltd (Third Plaintiff) Gungahlin Golf Investments Pty Limited (Fourth Plaintiff) | |||||
| Harry Konstantinou (Fifth Plaintiff) Commissioner for Australian Capital Territory Revenue (First Defendant) | |||||
| Registrar-General of the Australian Capital Territory (Second Defendant) | |||||
| Representation: | Counsel | ||||
| P Walker SC & B Buckland (Plaintiffs) C Young (First Defendant) D Jarvis (Second Defendant) | |||||
| Solicitors | |||||
| Viera Legal & Morgan Bryant (Plaintiffs) | |||||
| ACT Government Solicitors (Defendants) | |||||
| File Number: | SC 237 of 2019 | ||||
| Crowe AJ |
1. The plaintiffs seek relief in relation to action taken by the first defendant (the Commissioner[1]) to notify the second defendant (the Registrar-General) of a charge over land owned by each plaintiff. The charge was said to have arisen as a
[1] According to the relevant legislative instrument, the Commissioner at all relevant times, other than
consequence of land rates, or in one case, payroll tax, having become “payable” in
respect of a relevant parcel of land.
2. When the Registrar-General was notified of this fact it recorded the charge on each title to the relevant land. In accordance with its standard procedure, the Registrar- General then notified the mortgagees who have registered mortgages over the land of the registration of the charge. The plaintiffs claim that the notification to their financiers has caused them reputational harm and may result in actual financial harm.
The plaintiffs contend that the action taken by the Commissioner’s office to notify the
Registrar-General was erroneous and unlawful. The Commissioner, on the other hand, says that upon the correct interpretation of the relevant provisions of the Taxation Administration Act 1999 (ACT) (the Tax Act) the notification to the Registrar-General was valid and did not give rise to any cause for relief in favour of any of the plaintiffs. The Registrar-General took only a limited part in the litigation. Its concern related to the nature of any order which might be made amending the Register, should the plaintiffs succeed.
Facts
4. Ultimately there was no dispute about the factual circumstances. It is, however, useful to set out the events relating to each plaintiff.
The First Plaintiff
5. The first plaintiff is the registered proprietor of the property at Block 7 Section 3 Bruce. On 4 April 2019, the Commissioner sent a Rates Arrears Notice to that plaintiff addressing the Bruce land. Pursuant to that notice the amount said to be owing, assuming payment by 15 April 2019, was $36,782.87 (including interest up to that date). The first plaintiff is recorded as having paid $4,000 on 5 April 2019, $2,000 on 2 May 2019 and $31,050.69 on 10 May 2019. The final payment cleared the debt.
6. However, on 2 May 2019, an “Application to Register an Over-Riding Statutory Charge” was prepared and signed by Ms L Amos who was described on the form as
“Delegate of the Commissioner for ACT Revenue”. Under the heading on the form,
which read “Details of Statutory Charge to Be Registered”, the following appeared:
A statutory charge which is a First Charge on the Land pursuant to Section 56H of the Taxation Administration Act 1999 and for the purposes of Section 58(1)(f) of the Land Titles Act 1925, has been expressly declared to be a charge on the land for the outstanding debt amount of $385,373.69 plus accrued interest.
7. That form was lodged with the Registrar-General’s office and registered on the title
with the dealing described as
Overriding First Charge in favour of Commissioner for ACT Revenue, First Charge on the
Land pursuant to 56H of the Taxation Administration Act 1999.8. On 10 May 2019, Ms Amos applied to remove the charge. Removal of the charge was noted on the title on 13 May 2019.
9. The sum of $385,373.69 on the application referred to in paragraph [6] above related to a payroll tax debt owed by the first plaintiff.
The Second Plaintiff
10. The second plaintiff is the registered proprietor of the property at Block 13 Section 275 Kambah. On 4 April 2019, the Commissioner sent a Rates Arrears Notice to that plaintiff in relation to the Kambah land. Pursuant to that notice, the amount said to be owing, assuming payment by 15 April 2019, was $126,540.14 (including interest up to that date). The second plaintiff paid $2,000 on the same date as the notice.
11. On 29 April 2019, the Commissioner sent a letter of demand to the second plaintiff. That letter stated that the amount of $124,540.14 was overdue and payable immediately. It then provided:
If this account is not settled or an appropriate payment plan is not arranged within 14 days recovery action will commence. This includes:
- Registering an overriding statutory charge on the title of your property (financial
institutions with an interest in the property will be notified).- Garnishee action (deductions from your wages/income and/or bank account). - Court proceedings (sale of land/property, windup action and examination of records).
[Emphasis added.]
12. On 1 May 2019, in response to the letter of demand, Ms Zhang on behalf of the second plaintiff contacted Ms Amos and negotiated a payment plan. On 2 May
2019m, at 08:46 am Ms Amos emailed Ms Zhang a letter setting out the terms of the approved payment plan which was said to be put in place pursuant to s 52 of the Tax Act. In essence the plan required fortnightly payments of $4,930, with the first due on 3 May 2019.
13. The first instalment was made on 3 May 2019 and subsequent instalments were paid on 20 May, 4 and 14 June 2019. On 18 June 2019, the amount of $144,758.19 was paid. This cleared the debt.
14. In the meantime, presumably later on 2 May 2019, Ms Amos signed an Application to Register an Over-Riding Statutory Charge over the Kambah land. She again signed as a delegate of the Commissioner. The details given of the statutory charge used the
same words as were used in the application in relation to the first plaintiff’s land,
although on this occasion the amount referred to was the figure outstanding for rates and interest on the Kambah land at that time, namely $124,540.14. The notification of the charge was registered on the title on 8 May 2019. The description was in the same terms as that relating to the Bruce land; see [7] above.
15. Following the payment made on 18 June 2019 on 20 June 2019, Ms McCarthy for the Commissioner applied to remove the charge notice from the title. That removal was registered on 26 June 2019.
Third Plaintiff
16. At all material times the third plaintiff was the registered proprietor of the land at Block 18 Section 11 Mitchell. On 7 March 2019, the Commissioner sent a Rates Arrears Notice to the third plaintiff. Pursuant to that notice the amount said to be owing, assuming payment by 15 March 2019, was $62,454.71 (including interest up to that date). The third plaintiff is recorded as having paid $71,556.69 on 14 June 2019. That payment cleared the debt.
17. On 2 May 2019, Ms Amos signed a charge application in relation to the Mitchell land. She again signed as a delegate of the Commissioner. The same words were used to describe the details of the charge as those in the applications referred to above. The amount of the debt in this case was $63,496.58. That amount represented the outstanding rates and interest up to that date.
18. On 20 June 2019, Ms McCarthy applied to remove the charge notice. The removal was recorded on the title on 26 June 2019.
Fourth Plaintiff
19. The fourth plaintiff is the registered proprietor of three parcels of land which are relevant to the subject dispute. They are Block 2 Section 85, Unit 1 Block 11 Section 86 and Unit 2 Block 11 Section 86, Nicholls.
20. In relation to the first of these parcels, the Commissioner sent Rates Arrears Notice to that plaintiff on 4 April 2019. That notice advised that the amount outstanding, assuming payment by 15 April 2019, was $104,503.36. On the same date, Rates Arrears Notices were also sent in relation to the second and third parcels on the same assumption, the arrears were $15,245.11 and $22,083.98 respectively.
21. On 2 May 2019, Ms Amos, as delegate of the Commissioner, signed three applications to register charges in relation to these three parcels owned by the fourth plaintiff. The details of the charges were described in the same way as the charge applications referred to above. The amounts specified were for rates and interest outstanding as at that date in respect of each relevant parcel of land. The charges were noted on the respective titles on 8 May 2019.
22. On 14 June 2019, the fourth plaintiff paid the arrears in respect of these three parcels. On 20 June 2019, Ms McCarthy applied on behalf of the Commissioner to remove the charges. The removals were registered on each title on 26 June 2019.
Fifth Plaintiff
23. The fifth plaintiff is the registered proprietor of four parcels of land which are relevant
to the subject dispute. They are Block 33 Section 16 O’Malley, Unit 77 Block 1
Section 42 Barton, Block 14 Section 103 Lyneham and Unit 7 Block 7 Section 42
Mitchell.24. On 6 February 2019, the Commissioner sent a Rates Arrears Notice to the fifth plaintiff in relation to the Lyneham property.
25. The overdue amount, assuming payment by 15 February 2019, was $49,021.08.
26. On 7 March 2019, the Commissioner sent Rates Arrears Notices in relation to the
O’Malley, Barton and Mitchell parcels. Assuming payment by 15 March 2019, the
arrears of rates and interest were $11,214.38, $4,700.21 and $13,926.54
respectively.27. On 2 May 2019, Ms Amos, as delegate of the Commissioner, signed four applications to register charges in relation to the parcels owned by the fifth plaintiff. The details of the charges were described in the same way as the charge applications referred to above. The amounts specified were for rates and interest outstanding as at that date in respect of each relevant parcel of land. The charges were noted on the respective titles on 7 May 2019.
28. On 14 May 2019, the arrears of rates and interest owing in relation to the O’Malley
parcel were paid by the fifth plaintiff. On that same day, Ms McCarthy applied for removal of the charge. The memorandum removing the charge was recorded on the title on 15 May 2019.
Facts relevant to each of the plaintiffs
29. The Commissioner did not give notice to any of the plaintiffs that they were going to apply to register the charges.
30. The first notice which the plaintiffs received of the applications to register the charges was received through their solicitor, Mr Bryant. Mr Bryant received an email late on 9 May 2019 from a solicitor acting on behalf of a mortgagee of the Bruce land owned by the first plaintiff. The email attached a Notice of Registration of an Overriding
Charge from the Registrar General’s Office. The notice stated (among other things):
…
Application has been made to this office to register an Overriding Statutory Charge to the Commissioner for ACT Revenue. As a result the Registrar-General has registered a Variation of Priorities which has changed the priority of your encumbrance on title.
…
31. As a consequence of receiving this Mr Bryant commenced investigations into the titles of the other properties owned by the plaintiffs and discovered the charges recorded on those titles.
32. On 17 May 2019, the fourth plaintiff (through the fifth plaintiff) was contacted by a representative of a mortgagee over land owned by the fourth plaintiff. In the email the
writer said, “…revenue seem to be taking some action. Could I get details please? Lender is naturally concerned…”. The email attached copies of Notices of
Registration of an Overriding Charge as described above.
33. On 5 June 2019, the fifth plaintiff received an email from Mr Blair, an executive with the National Australia Bank who is an important finance contact for the plaintiffs.
Attached to Mr Blair’s email was a copy of a notice issued on 28 May 2019 under s 82
of the Tax Act by the Commissioner seeking transaction details for all of the fifth
plaintiff’s accounts with the bank.
34. The fifth plaintiff and Mr Bryant met with Mr Blair who is said to have expressed disquiet in relation to the registration of dealings and investigations undertaken by the Commissioner.
Delegation
35. On 2 May 2019, the Acting Commissioner signed a delegation under s 78 of the Tax
Act (see Exhibit “D2”). It provided:
For the purpose of updating the current revenue law delegations, I revoke the delegation instrument made on 27 February 2019, and delegate to the people within the Chief Minister Treasury and Economic Development Directorate performing the duties at the level specified in the accompanying schedule 1, my functions under the tax laws of the Act.
Delegations in this instrument are effective on the day after this instrument is signed.
36. At pp 16 of 20, the persons to whom power is delegated under s 56H of the Tax Act are identified as those at the level of ASO 6 and higher within the Division of Revenue Management, and specifically within the Branch of Compliance. On the same page, the persons to whom power is delegated under s 56L are those at the level of SOG C and higher within the same Branch and Division. The description of the s 56H delegation is as follows:
Tax payable is charge on land - notify a mortgagee of the parcel or the credit provider of the owner of the parcel about tax payable and the statutory charge - includes associated requirements before notification such as registering the charge, taking reasonable steps to make arrangements for the payment of tax debt; the giving of notices before and after notification; and for removal of the charge.
37. There is a similar description in relation to s 56L.
38. The plaintiffs tendered a copy of an ACT Government Human Resources record
(Exhibit “P6”) which establishes that at all material times Ms Amos was classified as
an ASO 6 in the Compliance Branch.
Substantive Legislation
39. It is convenient to commence by reference to the Rates Act 2004 (ACT) (the Rates Act). The relevant sections are:
16 Owner to pay rates
(1) Rates imposed for a parcel of land are payable to the commissioner by the owner of the parcel.
(2) The person who is the owner of a parcel of land is liable to pay to the commissioner the whole or any part of rates payable for the parcel that have not been paid whether the amount became payable before or after the person became the owner.
17 When are rates payable?
(1) The assessment notice for the rates payable for a year for a parcel of land must state a date for payment of the rates (the payment date).
(2) The payment date must not be a date earlier than 4 weeks after the date of
the notice.(3) The rates are payable on the payment date. 18 How may rates be paid?
(1) Rates payable for a year for a parcel of land must be paid by the owner —
(a) if the amount payable is for a year and any arrears of rates in relation to previous years have been paid in full—by paying, on or before the
payment date, the amount of the rates less the discount rate; or
(b) if the amount payable is for part of a year—by paying the amount of the rates on or before the payment date; or
(c) by paying the rates in instalments in accordance with section 19; or (d)
by paying amounts so that the total amount paid by the person on or before a date in the year is not less than the total amount that the person would have paid on that date if the person were paying the rates in instalments in accordance with section 19.
(2)
If the amount payable under a notice of assessment is for a period of longer than a year, subsection (1) (a) applies only to the payment of that part of the amount payable that is for a year.
(3) In this section:
discount rate means the discount rate determined under the Taxation
Administration Act, section 139.19 Payment of rates by instalments
(1) For payment of rates in instalments—
(a) the amount of each instalment must be a whole dollar amount worked out by dividing the total amount of the rates payable by 4 and adding the amount of any remainder to the amount worked out for the 1st instalment; and (b) the date when an instalment is due for payment is not less than 3 months after the date when any previous instalment is due for payment. (2) The Taxation Administration Act, section 52 (4) (which deals with failure to pay an instalment when due) does not apply to the payment of rates in instalments. 76 Certificate of rates and other charges
(1) A relevant person for a parcel of land may apply to the commissioner for a certificate of—
(a)
the rates assessed to be payable under this Act for the parcel for the current year; and
(b)
the rates and other amounts immediately payable to the commissioner under this Act in relation to the parcel.
(2) The commissioner must give the applicant the certificate. (3) The certificate is conclusive proof for an honest buyer for value of the matters
certified.(4) For this section, rates and other amounts are taken to be payable immediately
even though any necessary time after service of a notice has not ended.(5) In this section:
relevant person, for a parcel of land, means—
(a) the owner of the parcel; or (b) a buyer who has entered into a contract to buy the parcel; or (c) a mortgagee of the parcel.
[Notes omitted.]
40. Sections 48, 51 and 52 of the Tax Act relevantly provide (noting that
sub-s 52(4) does not apply to a rates instalment debt – see sub-s 19(2) of the Rates
Act):
48 Tax payable to the commissioner
(1) Tax that is payable is payable to the commissioner, who may recover any amount unpaid in a court of competent jurisdiction as a debt to the commissioner.
...
51 Time for payment of tax
Subject to this Act, tax is due and payable—
(a) in accordance with the relevant tax law; or
(b) if that law makes no provision in relation to the time for payment—on the last day when the return or other document in relation to the tax is
required to be lodged under that law.52 Arrangements for payment of tax
(1) The commissioner may extend the time for payment of tax by a taxpayer and may accept the payment of tax by instalments.
(2) A decision of the commissioner under this section may be made subject to the conditions (for example, about the payment of interest) that the commissioner may determine.
(3) If the commissioner has accepted the payment of tax by instalments, each instalment is due and payable at the time determined by the commissioner in relation to the instalment.
(4) If an instalment of tax is not paid on or before the time that payment is due, the whole of the outstanding amount of the tax, duty or penalty tax becomes due and payable at that time.
41. The issues raised in this case primarily involve the correct interpretation of Div 7.3 of the Tax Act. The provisions of that division as they operated from 28 March 2019 are attached as Schedule 1 to these reasons for judgment.
42. The current sub-ss 56H(3)-(6) and (8), and ss 56HA, 56L, 56M and 56N were inserted into the Tax Act by the Revenue Legislation Amendment Act 2019 (ACT)
(RLAA)(also referred to as ‘the 2019 amendments’).
43. Section 74 of the Tax Act at all material times provided:
74 General administration of the tax laws
The commissioner has the general administration of this Act and the other tax laws and may do all the things that are necessary or convenient to give effect to this Act and the other tax laws.
44. Section 78 of the Tax Act at all material times provided:
78 Delegation by commissioner
The Commissioner may delegate to any person the commissioner’s functions
under this or any other Act.
45. Certain provisions of the Land Titles Act 1925 (ACT) (LTA) are pertinent. They are:
14 Powers of registrar-general
…
(3) If notice in writing is given to the registrar-general that land, or an interest in land, is affected by—
(a) a Territory or Commonwealth law; or
(b) anything done under a Territory or Commonwealth law;
the registrar-general must make a record in the register that the land or
interest has been so affected.
(4) For subsection (3), the following provisions apply:
(a)
subject to any relevant provision of the Territory or Commonwealth law, a record made under that subsection takes effect accordingly;
(b)
that subsection does not apply to a matter if a provision of a Territory or Commonwealth law makes provision (however expressed) for making a record in the register in respect of the matter.
…
58 Estate of registered proprietor paramount
(1) Notwithstanding the existence in any other person of any interest, whether derived by grant from the Crown or otherwise, which but for this Act might be held to be paramount or to have priority, a person becoming registered as proprietor of land or of any interest in land under this Act shall, except in case of fraud, hold the land or interest, subject to such interests as are notified on the folium of the register constituted by the grant or certificate of title of the
land, but absolutely free from all other interests whatsoever except as to—
...
(f) any unpaid duty, rates, taxes or other moneys which are expressly declared by any Act or law to be a charge upon land. …
46. In relation to the delegation of the Commissioner’s functions under ss 56H and 56L of
the Tax Act the following sections of the Legislation Act 2001 (ACT) (LA) are relevant:
196 Provision giving function gives power to exercise function
(1) A provision of a law that gives a function to an entity also gives the entity the powers necessary and convenient to exercise the function.
(2) The powers given to the entity under subsection (1) are in addition to any other powers of the entity under the law.
230 Application—pt 19.4 generally
This part applies if a law authorises or requires an entity (the appointer) to delegate (or subdelegate) a function.
Note: Function is defined in the dictionary, pt 1 to include authority, duty and power.
232 Delegation must be in writing etc
A delegation must be made, or evidenced, by writing signed by the appointer.
233 Delegation may be made by name or position
(1) The appointer may delegate by— (a) naming the person to whom the delegation is made; or
(b) nominating the occupant of a position (however described), at a particular time or from time to time. … 234 Instrument may provide when delegation has effect etc
The instrument making or evidencing a delegation may provide—
(a) that the delegation has effect only in stated circumstances or subject to stated conditions, limitations or directions; or (b) that all of a function, or a stated part of the function, is delegated.
238 Appointer responsible for delegated function
The delegation of a function, or a part of a function, does not relieve the
appointer of the appointer’s obligation to ensure that the function is properly
exercised.
239 Exercise of delegation by delegate
(1) A delegate must exercise the delegation subject to any conditions, limitations or directions in the instrument making or evidencing the delegation.
(2) All territory laws apply to the delegate in the exercise of the delegation as if the delegate were the appointer.
(3) Without limiting subsection (2), if the exercise of a function by the appointer is
dependent on the appointer’s state of mind and the function is delegated, the
function may be exercised by the delegate on the delegate’s state of mind.
(4) Anything done by or in relation to the delegate in the exercise of the delegation is taken to have been done by or in relation to the appointer.
…
242 Delegation not affected by defect etc
(1) A delegation, or anything done under a delegation, is not invalid only because of a defect or irregularity in or in relation to the delegation.
(2) Anything done by or in relation to the delegate while the delegate purports to exercise the delegation is not invalid only because—
(a) the delegation had been amended or revoked; or
(b)
the occasion for the delegate to exercise the delegation had not arisen or had ended.
Submissions
Plaintiffs’ submissions
47. The plaintiffs made submissions in writing and also orally by their counsel Mr P Walker SC leading Mr B Buckland.
48. The central contention of the plaintiffs was that the scheme of rates recovery introduced by the amendments to the Tax Act made by the RLAA required that any application to register a charge arising under s 56H was subject to the steps set out in s 56L. That is, before the Commissioner could apply to register the charge they had to comply with the requirements of sub-s 56L(5). In particular, the following steps had to be taken:
(1) The Commissioner had to have taken reasonable steps to make arrangements for the debtor to pay the debt; and,
(2) The Commissioner had to notify the debtor in writing that the charge will be registered not earlier than 28 days after the notice.
49. Apart from the payment plan made with the second plaintiff, step (1) was not complied with in relation to any of the applications to register charges made by Ms Amos. Moreover, step (2) was not complied with in relation to any of the applications.
50. The plaintiffs submit that it is apparent from both the text of Div 7.3, and particularly ss 56H and 56L, and the extrinsic materials which the Court may consider under s 142 of the LA, that the requirements of s 56L were imposed over any action to be taken under s 56H by way of protection for ratepayers of the Territory. With respect to
the former, the plaintiffs argue that the words “has registered the charge on the parcel” in sub-s 56H(4)(a) pick up s 56L of the Tax Act. This is because the latter
contains a specific reference to the power to register the charge (sub-s 56L(3)),
whereas there is no such reference in s 56H.51. The plaintiffs rely on the Minister’s presentation speech in relation to the Revenue
Legislation Amendment Bill 2019 (ACT) on 14 February 2019, as extrinsic material supporting their position. The plaintiffs refer to the following statements made in the course of the Minister’s speech (Legislative Assembly of the ACT, Assembly Debates,
21 March 2019, 224 (Mr A Barr):
The bill provides the ACT Revenue Office with the ability to inform parties who have an interest in the property of a defaulting taxpayer, such as mortgagees or creditors, of the amount of an outstanding tax debt and the existence of a statutory first charge. This will promote transparency and allow tax debts to be on a level playing field with private debts.
…
The bill also provides for the recovery of tax debts from mortgagee banks, similar to tax arrangements in New South Wales, Queensland and Victorian legislation. Provision is also made for tax debts to be registered as a first charge on land owned by a debtor. This will facilitate the recovery of unpaid tax debts from future sales proceeds or from the mortgagee of that land. These provisions include appropriate safeguards to ensure engagement with the tax debtor, to promote transparency of actions over clear time frames and to address the potential for substantial hardship to some affected parties.
52. The plaintiffs point out that prior to the commencement of the RLAA there was no regulation of the power to register the charge created by sub-s 56H(1). The insertion of s 56L created a scheme to ensure that the registration power was not used capriciously and to ensure that a debtor was given notice and an opportunity to enter into a payment plan to avoid the potential consequences of having a charge registered on their title.
53. In relation to sub-s 14(3) of the LTA, the plaintiffs point to sub-s 14(4)(b), which expresses that sub-s 14(3) does not apply if a Territory law already makes provision for a record to be made on the register. They submit that the
Tax Act relevantly “makes provision” through s 56L. It follows that sub-s 14(3) could
not be relied upon to facilitate registration in this case because s 56L was not
complied with.54. The plaintiffs also rely on the decision of Minister for Immigration and Border Protection v WZARH [2015] HCA 40; 256 CLR 326 (WZARH) at [30] to argue that procedural fairness required that each of them should have been given the opportunity to be heard in relation to the decision to apply to register the charges over their properties.
55. On the question of whether the context of Div 7.3 implies a right to procedural fairness for a decision under s 56H to register a charge, the plaintiffs refer to Plaintiff S10/2011 v Minister for Immigration and Citizenship and Anor [2012] HCA 31; 246 CLR 636 at [97]-[100] per Gummow, Hayne, Crennan and Bell JJ; CPCF v Minister for Immigration and Border Protection [2015] HCA 1; 255 CLR 514 at [367] per Gageler J; and CRW16 v Minister for Immigration and Border Protection [2018] FCA 710 at [20]-[24] for the proposition that there must be a very clear expression of statutory intent to exclude procedural fairness in relation to the making of an administrative decision.
56. The plaintiffs then submit that there was no effective delegation of power to Ms Amos to make the applications to register the charges. It was initially argued that the terms of the delegation to Ms Amos (referring to persons having certain classifications within the Directorate) was ineffective. This is because it did not identify the delegates by name or position number. It was also argued that the delegation failed to delegate any power under the LTA.
57. After the hearing on 29 August 2019, the Court drew the parties’ attention to the fact that the delegation (Exhibit “D2”) stated that it was to be effective on the day after the
instrument was signed – that is, it did not commence effect until 3 May 2019. The
applications to register the charges were all signed by Ms Amos on 2 May 2019.
58. In response, the plaintiffs, with the consent of the Commissioner, amended the Further Amended Originating Application to rely upon the apparent discrepancy in the
dates of the delegation and Ms Amos’ signing of the applications.
59. The plaintiffs submit that the power to take the various steps permitted under ss 56H and 56L were vested in the Commissioner; see s 74 of the Tax Act. For someone other than the Commissioner to exercise those powers there had to be a valid delegation under s 78. The specification of the effective date of the delegation was a stated condition, limitation or direction under s 234 of the LA. It followed that Ms Amos did not have any delegated power to do what she did on 2 May 2019.
In answer to the Commissioner’s reliance on s 242 of the LA the plaintiffs, referring to
the decision in Burridge v Chief Magistrate of the Magistrates Court (No 2) [2018] ACTCA 43; 13 ACTLR 307 (Burridge) at [79], argued that the section could not operate to cure an absence of a delegation. It could not apply to make effective a delegation which has yet to come into effect. Indeed, even if the section could extend that far any such operation was displaced by the contrary intention of the instrument of delegation itself in specifying a delayed date of commencement. In that context the plaintiffs pointed out that s 234 was not a determinative provision (see ss 5 and 6 of the LA).
61. The plaintiffs also rely on the Administrative Decisions (Judicial Review) Act 1989
(ACT) (the AD(JR) Act) to argue that the “decision” to apply to register the charges
was affected by one or other of the errors set out in s 5 of the AD(JR) Act. It was submitted that there was an implied authorisation, permission or requirement for the making of that decision having regard to s 56L of the Tax Act. Such a decision was
subject to review under the AD(JR) Act as being a decision “made under an
enactment” (see Minister for Immigration and Ethnic Affairs v Mayer (1985) 157 CLR
290 at 302-303; and, Hutchins v Collins, Deputy Commissioner of Taxation (1996) 65
FCR 269 at 271-272, 278).62. The plaintiffs acknowledge that to be actionable under the AD(JR) Act the relevant decision also had to be operative and determinative, that is, it had to confer, alter or otherwise affect legal rights or obligations (see Griffiths University v Tang [2005] HCA 7; 221 CLR 99 (Tang) at 130-131). They argue that that test was met here as the
decision to register “…adversely affected (their) Crown Leases, commercial interests
and reputation.”
63. On behalf of the first plaintiff it was submitted that the application to register a charge in relation to outstanding payroll tax was outside the terms of Div 7.3 (see s 56F). There was simply no charge arising with respect to that debt. It followed that the Commissioner had no power to apply for registration in the terms described in [6] above.
64. On behalf of the second plaintiff it was submitted that upon the agreed payment arrangement having been made on 1 May 2019 the rates debt was no longer
“payable”. On that basis there was no charge under s 56H. The application signed by
Ms Amos on 2 May 2019 was thus without foundation.
65. It was also submitted that in relation to the properties of the third plaintiff and some of the properties of the fifth plaintiff that the rates did not become due and payable until 15 May 2019. On that basis it was said that there was no charge in existence at the time the registration application was made.
66. As to remedy, the parties agreed that should one or more of the plaintiffs succeed in establishing grounds for relief, the formulation of any appropriate declaration should be addressed after the publication of my reasons for decision.
First defendant’s submissions
67. In relation to the correct interpretation of ss 56H and 56L, the first defendant submitted through its counsel Mr Young that these sections deal with entirely separate situations. The former enables the Commissioner to take action (including registering the charge) in relation to the parcel of land in respect of which there is a payable tax debt. The latter enables the Commissioner to take action (commencing with the registration of the charge) in relation to a property other than the parcel in respect of which the tax debt is payable. The action to be taken is elaborated by ss 56M and 56N.
68. The Commissioner argues that this interpretation is supported by the context of the legislation. Thus, they point to the separate schemes of action having its own provisions as to:
(1) priority (s 56H(2) v s 56M(2));
(2) notification of mortgagees (s 56H(3)-(4) v s 56M(3));
(3) the position of honest purchasers for value (s 56H(8) v s 56M(7)); and,
(4) the recovery of the tax debt from mortgagees (s 56HA v s 56N).
69. It is said that the reason why the s 56L scheme is stricter and more detailed than the s 56H scheme is because it relates to land other than the land on which the tax is payable. That is, the tax debtor, having had notice of the tax arrears should expect that some action might be taken in relation to the land to which those arrears relate.
70. Support for this interpretation can be seen by reference to “other land” in the
headings of ss 56M and 56N. Given that these sections operate by reference to the charge registered under s 56L (see s 56M(1)) it is apparent that the scheme of
recovery enabled by these sections is intended to operate with respect to “other land”,
that is, land other than the land in respect of which the tax debt is payable.
71. The Commissioner also relies on the Revised Explanatory Statement, Revenue Legislation Amendment Bill 2019 (ACT) (Revised Explanatory Statement) to support this interpretation. Pages 1-13 and 19-21 of the Revised Explanatory Statement are attached as Schedule 2 to these reasons for judgment. In particular,
the Commissioner refers to the second paragraph under the heading “TAA” on p 4 to suggest that the powers introduced by ss 56L-56N are an “alternative” to existing
powers.
72. In relation to the procedural fairness issue, the Commissioner submits that:
(1) No “decision” is made under s 56H. The charge arises with respect to the land
the subject of the tax debt by operation of law. All the Commissioner did here
was to give the Registrar-General notice of the charge; and,(2) The legislative context suggests that the omission of a requirement to give notice of an application to register the charge under s 56H was deliberate. Thus, sub-s 56L(5)(a)(iii) specifically imposes the obligation on the Commissioner to give notice. The lack of a notice requirement under s 56H is not surprising given that the charge arises automatically in relation to the land
the subject of the tax debt. Section 56L, on the Commissioner’s preferred
interpretation, only relates to other land.
In response to the plaintiffs’ submission as to the effect of sub-s 14(4)(b) of the LTA
the Commissioner argues:
(1) Sections 56H and 56L give rise to charges which can be registered. They do not provide for the recording of the charge in the register. That requires an application to be made to the Registrar-General; and,
(2) Section 14(3) deals with the obligation imposed upon the Registrar-General if certain conditions are met. It does not relate to any duties or obligations which might be owed by the Commissioner. The situation might be different if, for example, s 56H made some provision for the registration of the charge. In that case sub-s 14(4) would require the Registrar-General to act in accordance with the provisions of that section, not sub-s 14(3).
74. I asked Mr Young if he could give me a practical example of the operation of sub-s 14(4). He referred to s 34 of the Proceeds of Crime Act 2002 (Cth) (POC Act), which enables the Registrar-General to record on the Register the particulars of a restraining order made under the Act with respect to real property in the Territory.
75. The Commissioner took issue with the proposition that for any of the plaintiffs there
were no rates “payable” in the relevant sense at the time the application to register the charge was signed. The Commissioner’s written submissions argued that the
rates became payable in each case on the “payment date” as identified in the
assessment notice pursuant to s 17 of the Rates Act. Nothing in ss 18 or 19 of that Act altered this fundamental position. Nor did any arrangement under s 52 of the Tax Act.
76. In oral submissions Mr Young argued for a slightly different proposition. By reference to s 56H(7) of the Tax Act and s 76 of the Rates Act he submitted that the reference
in the latter to both rates “assessed as payable” and those which were “immediately payable” having regard to the use of “tax payable” in sub-s 56H(7)(a)(iii) meant that
both were comprehended by that term in the Tax Act. That is, for the purposes of s
56H the rates were a “tax payable” from the time they were assessed as payable.
77. In relation to each individual plaintiff, Mr Young submitted as follows:
(1) As to the first plaintiff, although the application to register the charge referred to the payroll debt of $385,373.69 the evidence established that there was in fact a rates debt on 2 May 2019. The written submissions suggest that it was a figure over $36,000. However, in oral submissions Mr Young did refer to a payment made in April 2019 and another on 2 May 2019. It seems clear that
something over $30,000 was, on any view, outstanding and thus “payable” on
that date. Section 56H did not require the Commissioner to specify the amount of the tax debt supporting the charge. On that basis the incorrect amount specified in the application could be ignored.
(2) In relation to the second plaintiff, because the notice of assessment had issued the rates, they were at all material times thereafter “payable” and the
agreement reached under s 52 of the Tax Act did not alter that position. The arrangement under that section merely altered the times at which the
instalments of rates fell due for payment. -- (3) In relation to each of the third, fourth and fifth plaintiffs, the evidence disclosed that as at 2 May 2019, on any view, there were arrears of rates which were payable as at that time. The references to another instalment for the 2018/9 year falling due on 15 May 2018 in some of the rates notices did not alter that fact.
78. In response to the plaintiffs’ initial argument as to delegation, the Commissioner
submitted that there were many activities carried out by public servants which did not
require delegation. The giving of notice of the charge was such an activity.79. Alternatively, the Commissioner pointed to the terms of sub-s 233(1)(b)of the LA,
emphasising the words “occupant of a position (however described)”. It was argued
that the identification of persons occupying ASO 6 positions or higher in the Compliance Branch (which included Ms Amos) was sufficient for the purposes of that section.
80. The Commissioner also sought to rely on the principle established in Carltona Ltd v
Commissioners for Works (1943) 2 All ER 560 as recognised in O’Reilly v
Commissioners of the State Bank of Victoria (1983) 153 CLR 1 (O’Reilly’s case).
However, I understood the Commissioner to abandon reliance on this principle because Ms Amos purported to sign the applications as a delegate of the Commissioner, and not in her capacity as an employee or agent.
81. As to the issue of the apparent discrepancy between the date of the commencement of the delegation and the date on which Ms Amos signed the applications the Commissioner countered with two arguments. Firstly, by way of elaboration of the point summarised at [77] above the Commissioner argued that there was nothing in the legislation referring to the power to sign an application to register a charge. By reference to N MacDonald Pty Ltd v Hamence (1984) 1 FCR 45 (Hamence) at 50, and Commonwealth v Rian Financial Services and Developments Pty Ltd (1992) 36 FCR 101(Rian Financial Services) at 105-6, the Commissioner submitted that there was no need for a delegation in the circumstances here. Ms Amos, as a member of
the Commissioner’s staff could sign the application in the same way as any natural
person might sign a form giving notice of a charge, mortgage or other interest in land.
82. Secondly, if there was a need for a delegation, the act of Ms Amos signing as delegate on 2 May 2019 was validated by sub-s 234(2)(b) LA. This was because the
delegation existed on 2 May 2019. Thus, Ms Amos was a “delegate” on that day. The
occasion for her to exercise her delegation would not arise until the following day. On
that basis the circumstances fell within sub-s 234(2)(b).83. Insofar as the plaintiffs rely upon the AD(JR) Act, the first defendant says that no relief is available under that Act because there was no decision made (or proposed to be made) under an enactment. In particular, it was submitted that the application to register the charge did not involve a substantive determination that conferred, altered or otherwise affected the legal rights and obligations of the plaintiffs in relation to their rates. The decision of Yates J in Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCA 538; 189 FCR 189 (Rawson) was relied upon in that regard.
84. Mr Young also argued that the action taken under the power given by s 56H, inasmuch as it was authorised by s 196 of the LA, was the exercise of a discretionary power only. It did not involve a decision under any enactment (see PFTF Stock Pty Ltd v Deputy Commissioner of Taxation [2010] FCA 557; 116 ALD 80 at [16]-[17]).
85. Finally, in their written submissions, the Commissioner argued that because the registration of the charges had been removed there is no point in the Court making any declarations in the event that some or all of the plaintiffs were successful in their claims. However, it was my understanding by the end of the hearing that the Commissioner was content to await my conclusions on the substance of the case before formulating their final position as to the precise terms of any declaration.
Submissions of the second defendant
86. Dr Jarvis, counsel for the Registrar-General adopted the submissions of the first defendant as to the relationship between sub-ss 14(3) and (4) of the LTA in this case. He emphasised that sub-s 56L(3), for example, was directed to action which the Commissioner might take, not to any action which the Registrar-General might take. It could not, therefore, be characterised as a provision for making a record in the Register for the purposes of sub-s 14(4)(b).
Submissions in reply of the plaintiff
87. Mr Walker SC argued that there was nothing in the Explanatory Statement to support
the proposition that a tax became “payable” upon assessment. Moreover, reference
to p 11 of the Explanatory Statement strongly supported the proposition that the amendments introduced in 2019 were designed to provide protection for taxpayers with recovery action only being taken when it was reasonable to do so. That in turn provided support for the argument that s 56L governed the action the Commissioner
might take to register a charge in all cases, not just those of “other land”.
88. Mr Walker SC also emphasised that the plaintiffs maintain their position that s 56H required that notice be given to the ratepayer before a step could be taken to register the charge arising under that section. Pursuant to leave given at the end of the hearing he referred me to the following authorities for the proposition that the statutory intention to oust procedural fairness had to be clearly expressed: Plaintiff S10/2011 at [97]-[100] per Gummow, Hayne, Crennan and Bell JJ; CPCF at [367] per Gageler J; and, CRW16 at [20]-[24].
89. In relation to the suggestion that no harm could be done by the registration of the charges, Mr Walker SC referred to cases such as Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 (Ainsworth) and Johns v The Australian Securities Commission (1993) 178 CLR 408. He also pointed to the evidence of the reaction of
some of the plaintiffs’ financiers upon receiving notice of the registration of the
charges. He submitted that the risk of reputational damage warranted the giving of notice before the Commissioner took the step of applying to register the charges. It was no answer for the Commissioner to argue that the ratepayer was actually in arrears. There were a range of reasons why this may have been so, some of which would not justify the inflicting of reputational harm.
Consideration
Relationship between ss 56H and 56L
90. In Albrecht v Insurance Australia Ltd [2016] ACTCA 58; 12 ACTLR 46 the Court said
(per Murrell CJ, Burns and Perry JJ) at [43] – [46]:
The applicable principles of statutory construction were articulated by the primary judge at [47]-[50] and are not in dispute. Relevantly, first, as his Honour explained below, the interpretation of a statute is not merely a linguistic or semantic exercise. The context in which the words appear, including the purpose of the provisions, must be considered in the process of statutory construction: see e.g. Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 (Project Blue Sky) at 381 [69]; Alcan (NT) Alumina Pty Ltd v Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at 46-47[47]. No less is required by s 139 of the Legislation Act 2001 (ACT) which requires that, in working out the meaning of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred and s 140 which requires that the provisions of the Act must be read in the context of the Act as a whole.
As for example, Brennan CJ, Dawson, Toohey and Gummow JJ explained in CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384 (CIC
….Insurance) at 408:
... the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses "context" in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy. Instances of general words in a statute being so constrained by their context are numerous.... [i]f the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance. Further, inconvenience or improbability of result may assist the court in preferring to the literal meaning an alternative construction which, by the steps identified above, is reasonably open and more closely conforms to the legislative intent.
For the reasons set out below, this is a case within the principles articulated in CIC Insurance where the apparently general words of a provision, when read in the context of the Act as a whole and including its purpose, were clearly intended to bear a narrower meaning.
Secondly, as McHugh, Gummow, Kirby and Hayne JJ held in Project Blue Sky at 381-382
[70]:A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions
will often require the court “to determine which is the leading provision and which the
subordinate provision, and which must give way to the other”. Only by determining the
hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.
91. Although the provisions of Div 7.3 of the Tax Act are not as clear as they might be, I consider there to be much force in the submissions of the Commissioner as to the different circumstances ss 56H and 56L are intended to cover. In particular, it seems to me that there would, if the plaintiffs are correct, be significant and unnecessary duplication in the provisions dealing with the matters summarised in paragraph [68] above.
92. The scheme of recovery enabled by ss 56L-56N operates logically with respect to land other than the land to which the tax debt relates. The charge does not come into being until an application is made for it to be registered (sub-s 56L(3)). Given the remoteness of that situation from the circumstance where a tax debt is owed in respect of a known parcel of land it makes sense that there are strict conditions to be complied with, as set out in sub-s 56L(5), before the Commissioner is able to register the charge.
93. The plaintiffs point to the reference in sub-s 56L(1)(c) to the debtor being the owner of
“1 or more parcels of land” as providing a strong indication that s 56L must be
intended to apply to a situation where a debtor owns only one parcel of land, that being the land in respect of which the tax debt is owed. That is certainly a possible meaning. However, it seems to me that when s 56L in read in the context of the following sections it makes more sense to read the reference to the debtor owning one or more parcels of land other than that to which the debt related.
94. In relation to the reference to registration of the charge in sub-s 56H(4)(a), I do not see that as necessarily relying on s 56L. Sub-section 14(3) provides the Commissioner with an alternative mechanism to register the charge. If it was intended for the Commissioner to comply with the specific requirements of sub-s 56L(5) before applying to register a s 56H charge it would be reasonable to expect that to have been made clear earlier in s 56H itself, and certainly ahead of sub-s 56H(3). Sub- section 56H(4) deals with a subsequent recovery measure, namely the process of notifying a mortgagee or credit provider after the charge has been registered. That notification then enables the Commissioner to take appropriate steps to recover the unpaid tax from the party notified.
95. I should say that I have not found the Presentation Speech or the Revised Explanatory Statement to be particularly helpful in determining the meaning of these sections. There are parts of these documents which appear to lend support for the arguments of both sides.
96. I have concluded that the Commissioner’s interpretation of these provisions in the Tax
Act is the correct one. That is, s 56H operates according to its terms to properties to which the relevant tax debt relates. The Commissioner is not bound by the preliminary requirements set out in s 56L before applying to register the charge which arises under s 56H by operation of law.
Sub-section 14(3) of the LTA
97. I accept the submission of the defendants that neither ss 56H or 56L make provision for recording a charge in the Register so far as the Registrar-General is concerned. Sub-section 14(4)(b), in the context of the prior subsection, is clearly designed to prefer a specific provision in other legislation (such as s 34 in the POC Act) over the general obligation imposed on the Registrar-General under sub-s 14(3)).
98. It follows from my conclusion in [96] that sub-s 14(4) did not operate to prevent the Registrar-General from recording the charges on the Register once they received the applications from the Commissioner.
Procedural fairness
99. It is true, as the Commissioner submits, that s 56L makes detailed, specific provision for the giving of notice to the debtor before an application is made to register a charge. Section 56H, on the other hand, is completely silent in that regard. The Commissioner says that this silence should be taken as a deliberate expression of intention by the Legislature that the rules of procedural fairness do not apply to the action which might be taken by the Commissioner to register a s 56H charge.
100. In the decision of WZARH, which is relied upon by the plaintiffs, Kiefel, Bell and Keane JJ said at [30]:
The position has been made sufficiently clear that it is not necessary for this Court to engage again in discussion of the concept of "legitimate expectation" in administrative law or to trace its progress from its controversial origins, to its tentative acceptance in
Australian law, to its rejection as a touchstone of the requirement that a decision‑maker
accord procedural fairness to a person affected by an administrative decision. The "legitimate expectation" of a person affected by an administrative decision does not provide a basis for determining whether procedural fairness should be accorded to that person or for determining the content of such procedural fairness. It is sufficient to say that, in the
absence of a clear, contrary legislative intention, administrative decision‑makers
must accord procedural fairness to those affected by their decisions. Recourse to the notion of legitimate expectation is both unnecessary and unhelpful. Indeed, reference to the concept of legitimate expectation may well distract from the real question; namely, what is required in order to ensure that the decision is made fairly in the circumstances having regard to the legal framework within which the decision is to be made.
[Emphasis added, references omitted.]
101. In assessing the legislative intention here the Commissioner points to the outcomes in Walker v Secretary, Department of Social Security (No 2) (1997) 75 FCR 493 (Walker) and Saitta Pty Ltd v Commissioner of Taxation [2002] FCA 1105; 125 FCR 388 (Saitta). Walker concerned a garnishee notice given by the Secretary. Mr Walker had received over $20,000 pursuant to false claims. The Secretary issued a
garnishee notice to Mr Walker’s bank. This led to the recovery of monies standing to
Mr Walker’s credit in his account with the bank. Mr Walker challenged the issuing of
the garnishee notice in circumstances where he was given no notice that the Secretary was about to use the power given to him under s 1233 of the Social Security Act 1991 (Cth). He asserted that the Secretary was bound by the rules of procedural fairness to give him an opportunity to be heard before the power was exercised.
102. The Full Federal Court concluded that in the circumstances of the case there was no obligation on the Secretary to give Mr Walker notice before deciding to issue the garnishee notice. The Court (Burchett J at 500, Drummond and Mansfield JJ at 508) accepted the rationale expressed by the Burchett J in Edelsten v Wilcox (1988) 83 ALR 99 that in relation to a similar recovery provision under the Income Tax Assessment Act 1936 (Cth) it would not make sense to imply a right to notice. Indeed, the giving of notice could well undermine the utility of the recovery provision as, for example, it would have enabled Mr Walker to withdraw the funds from his account. That would have frustrated the recovery which the Secretary was attempting by using the garnishee provision.
103. The facts in Saitta related to the issuing of a notice under s 260-5 of the Taxation Administration Act 1953 (Cth) (TAA Cth). Such a notice has the same effect as the
garnishee notice in issue in Walker. Finkelstein J said at [9] – [10]:
The general rule in Australia is that whenever a statute confers on an administrative decision-maker the power to affect a person's rights, interests or legitimate expectations the decision-maker must accord procedural fairness to the person affected unless the statute clearly indicates that this need not be done: Kioa v West [1985] HCA 81; (1985) 159 CLR 550, 582-586; Annetts v McCann [1990] HCA 57; (1990) 170 CLR 596, 598. To determine precisely what procedural fairness requires is a separate question the answer to which will depend upon the facts of each particular case. In some cases, the obligation to adopt fair procedures will not require the decision-maker to do anything, as in the situation where there is a need to act quickly. On other occasions, the decision-maker should not make a decision without affording the person affected the right to be heard, bringing to his attention the critical factors upon which the decision is likely to turn, and giving notice of any adverse material on which the decision might be based: Miah v Minister for Immigration and Multicultural Affairs [2001] HCA 22; Abebe v Commonwealth of Australia [1999] HCA 14; (1999) 197 CLR 510, 553-554.
In many cases, there will be no obligation on the Commissioner to give prior notice of, and an opportunity to make submissions about, the issue of a notice under s 260-5. Here I am referring to the common situation where there is an undisputed liability to pay tax, the third party upon whom the notice is to be served owes money to the taxpayer and the collection of the money by the Commissioner will not cause any undue harm to the taxpayer or to any person who deals with the taxpayer. In those circumstances the collection of tax by means of a s 260-5 notice does not sufficiently affect the taxpayer's position as to warrant the giving of prior notice. Moreover, there is really nothing that could be said against the issue of the notice.
104. However, his Honour went on to accept that the circumstances of a particular debtor may require the Commissioner to give the debtor the opportunity to be heard before issuing the notice (see [11] of the decision).
105. In my view, the circumstances here are quite distinguishable from the garnishee cases. Rather than being an unsecured creditor with the risk that funds otherwise available might be removed or dissipated, the Commissioner here had at all material times a first priority charge over the real property the subject of the rates debts. It is difficult to imagine any action the plaintiffs could have taken to nullify or undermine the utility of the s 56H charge, had the Commissioner given them notice of his intention to register the charge.
106. Moreover, the evidence in this case establishes the real potential for an adverse effect of notice being given to a mortgagee of the registration of the charge. Indeed, that potential is recognised in the Revised Explanatory Statement for the RLAA (see
the paragraphs under the heading “Section 12 HR Act – Right to privacy and
reputation” at p 8). The last sentence of that extract is important, it states:
.. Disclosure of tax debts and recovery actions is not to be undertaken in (sic) arbitrary
manner and, where required, would be performed in a lawful considered manner.107. On the next page of the Statement, under the heading “The Importance of the Limitation” the third paragraph reads:
The new recovery provisions will only apply to persons who are in tax default and have not actively engaged with the ACT Revenue Office, such as by entering into and honouring a time payment arrangement.
108. On page 11 under the heading “The nature and extent of the limitation” it is pointed
out in the second paragraph that the “new recovery measures” are limited to debts of
more than $2,000 (or such sum as determined by the Minister by disallowable
instrument). The following statement is then made:This will avoid consequences for a person’s financial reputation for prescribed lesser tax
debts as related to sections 8 and 12 of the HR Act.
109. I read the Statement as assuming that a tax debtor will be given notice of recovery action under either ss 56H or s 56L (and related provisions in each case), before then being given the opportunity to make a payment arrangement with the Commissioner before the recovery action commences. Relevantly, for s 56H, these steps would take place before the application is made to register the charge. It should be noted that the Statement recognises that the provisions of Div 7.3 of the Tax Act before the 2019 amendments allowed for the notification of mortgagees etc., by the Registrar-General once a charge (or caveat based on the charge) was registered (see p 12, in
particular, the first two paragraphs under the heading “Any less restrictive means”[2]).
[2] Although the reference to ss 56M and 56N is somewhat confusing in that context. Those sections
110. Having regard to the circumstances in which the 2019 amendments were made as
reflected by the Statement, I am not persuaded by the Commissioner’s argument that
the text of the ss 56H and 56L indicate an intention to displace the implied requirement for procedural fairness before action is taken to register the s 56H charge.
111. The Commissioner breached that requirement by failing to give any of the plaintiffs, other than the second plaintiff, notice that action might be taken to register the charge. Indeed, in my view, having regard to the overall context, it was incumbent on the Commissioner to warn each plaintiff that the application for registration of the charge would lead to notification of that fact by the Registrar-General to registered mortgagees of the titles in question. The Commissioner failed to give that warning to any plaintiff, other than the second plaintiff. I will deal with the particular circumstances of that plaintiff below.
Delegation
112. I am not persuaded by the plaintiffs’ submission as to the insufficiency of the
identification of Ms Amos as a delegate in Exhibit “D2”. It seems to me that by
nominating the persons occupying the positions at a particular level (and above) within the relevant branch of the Directorate, the instrument complied with the requirements of sub-s 233(1)(b) of the LA.
113. Nor do I see the absence of a delegation under the LTA as significant here. The relevant functions and powers here arise under the Tax Act, not the LTA.
114. Having regard to my finding in relation to s 56L, it remains to be considered whether s 56H applied in such a way as to require that the Commissioner apply to register the charge, or whether the section permitted the function to be exercised by an officer within the Compliance Branch (such as Ms Amos) without the need for a delegation. Clearly, if the Tax Act required the signing of the application by the Commissioner there must have been a delegation in place to allow Ms Amos to sign the document.
115. It is true that s 56H does not refer specifically to the function of signing an application to register a charge. However, sub-s 56H(4)(a) elevates the registration of the charge to one of a number of mandatory pre-conditions to the formal notification of a mortgagee or credit provider of the tax debt and the charge. It is significant in my view that it is the Commissioner who is given the power of notification under sub-s 56H(2),
and it is the Commissioner who is referred to in sub-s 56H(4)(a) as having “registered
the charge”.116. Whatever the situation was before the commencement of the 2019 amendments, it is clear that there were no provisions equivalent to sub-ss 56H(3) and (4). This being the case, it seems to me that the addition of these provisions carried the implication that the power to register the charge was a power which must be exercised by the Commissioner. Although the section is silent about the actual execution of the application, that gap is filled by s 74 of the Tax Act. It follows that the Commissioner was required to either make the application personally, or to delegate the power to make the application (including signing the form).
117. In relation to the authorities relied upon by the Commissioner, I consider the circumstances in each of Hamence and Rian Financial Services as being distinguishable. The former concerned a decision by a public servant within a section of the then Commonwealth Department of Territories and Local Government not to
include the applicant’s business in a tourist publication. There was no legislation
governing the circumstances under which such a decision might be made. The applicant argued that a legislative source of power could be found in regulations made under the Public Service Act 1922 (Cth). Those regulations set out, in a very general way, the manner in which public servants were required to carry out their duties. It was in this context that Neaves J rejected the argument that the decision was made under an enactment, and went on to make the comment relied upon by the Commissioner at p 50 of the report.
118. Rian Financial Services dealt with a challenge to a decision of Miles CJ refusing leave
to appeal from an arbitrator’s determination. The arbitrator had decided that the notice
of cancellation under the contract between, effectively, the Australian Capital Territory and Rian Financial Services was not valid, as it had not been signed by an authorised person. The arbitrator had accepted the argument that in the absence of any delegation under s 55 of the Australian Capital Territory (Self-Government) Act 1988 (Cth) the signature of the Senior Contracts Officer was not sufficient for the giving of a valid notice.
119. Davies and Neaves JJ (with whom Higgins J agreed on this point) rejected the argument that there was a need for a delegation in the circumstances. Their Honours
referred to what Gibbs CJ had said in O’Reilly’s case, and to the comments of
Neaves J in Hamence. They also referred to the remarks of Dixon J in New South
Wales v Bardolph (1934) 52 CLR 455 at 508. However, the court’s acceptance of the fact that the contractual notice could be signed by one of the Territory’s public
servants turned on particular circumstances. Again, there was no directly relevant statutory context. The power to issue the notice arose pursuant to the contract between the parties, not pursuant to any statutory instrument.
120. The conclusion I have reached about the need for delegation here raises the question
of whether the statutory instrument (see Exhibit “D2”) was effective to delegate the Commissioner’s power to register a charge to Ms Amos on 2 May 2019. On its face,
by reason of the delayed time of effect, the delegation was not in place on 2 May
2019.121. The question is therefore whether s 242 of the LA provides a remedy to validate the purported exercise of the delegation a day before it became effective? I do not accept the submission of the Commissioner on this point. It seems to me that
sub-s 242(2) follows on from sub-s 242(1). The “delegation” referred to in the first part of the sub-section must refer to a delegation suffering from a “defect or irregularity”,
as described in sub-s 242(1). In that context, the purpose of the first sub-section is to save the delegation itself, as well as any actions taken under it; while the purpose of the second subsection is the saving of actions taken by or in relation to the delegate in the circumstances described in paragraphs (a) and (b).
122. In Burridge the Court of Appeal set out the following comments of Refshauge J in
Lewis v Chief Executive Department of Justice and Community Safety of the
Australian Capital Territory [2013] ACTSC 198; 280 FLR 118 at [111] – [113]:
These provisions appear to be a legislative expression of at least an aspect of what is
known as the de facto officer’s doctrine, namely that “[t]he acts of a de facto public officer
done in apparent execution of his office cannot be challenged on the grounds that he has
no title to the office” as stated by McHugh JA in G J Coles & Co Ltd v Retail Trade
Industrial Tribunal (1986) 7 NSWLR 503 at 525, and approved by the High Court in Cassell v The Queen (2000) 201 CLR 189 at 193; [19].
The limits of the doctrine are said not to be clear. See E Campbell, “De Facto Officers” (1994) 2 Australian Journal of Administrative Law 5; O Dixon, “De facto officers” (1938) 1
Res Judicatae 285. What limits there are, or should be, on the statutory validation in s 242 of the Legislation Act are not clear. It is, for example, not limited to formal defects, such as those which do not invalidate bankruptcy notices under the bankruptcy legislation: Adams v Lambert (2006) 228 CLR 409 at 415-6; [18]. The statutory provision is cast in wide
terms, using the words “anything done under a delegation” and the broad connector “or in
relation to the delegation”. As to the latter, an expression “of wide import” see, inter alia,
Victoria v Commonwealth (1971) 122 CLR 353 at 359 (Windeyer J).
The precise limits of s 242 of the Legislation Act must await for another day. It appears to have very wide application. In any event, I am satisfied that it would validate any report that was made by Mr Giucci under s 59 of the Sentence Administration Act were his appointment to an office, by which he was delegated to exercise the power under that section, to be found to be invalid in fact.
123. Returning to Burridge, after the extract set out in [122] above the Court said at [79]:
Refshauge J, as can be seen above, has pointed out the width of s 242, and in particular
that it refers to “anything done under a delegation” and also extends to a defect in “relation
to” the delegation. The wording is to be distinguished from curing an absence of a
delegation. That is the situation here. This is not a case of curing a defect in a delegation or something done in relation to the delegation. This is a case of there being no delegation in the first place. There is no delegation for s 242 to cure.
124. The plaintiffs rely on this comment for the proposition that there was no delegation in place at the relevant time and therefore nothing to cure under s 242. The Commissioner says that there was a delegation in place, albeit one that had not as a matter of formality commenced effect.
125. There is no other authority, so far as I can see, which sheds light on the particular words of s 242, and in particular on sub-s 242(2)(b).
126. I accept that the words used in s 242 are of very wide import. However, it seems to me that the whole purpose of the section, appearing as it does in Pt 19.4 of the LA, which is concerned with providing something of a code in relation to delegations, is to provide a remedy in cases where the delegation is defective or irregular for some reason. Although it is true that, unlike Burridge, the delegation existed on the day which
Ms Amos purported to act under it, it seems to me that s 242 cannot assist the Commissioner for the simple reason that there was no defect or irregularity in the delegation itself. The delegation was clear and should be held to operate according to its terms. Similar to the situation in Burridge, there was nothing to cure here. While the instrument of delegation might have existed on 2 May 2019, there was, by express and deliberate intent set out in the instrument itself, no effective delegation in force at that time.
127. It follows from the above that I reject the argument of the Commissioner as to the application of sub-s 242(2)(b) to validate the purported exercise of the delegation by Ms Amos on 2 May 2019.
When were the rates “payable”?
128. In my view, in the ordinary course, the rate debt became payable at the time prescribed by sub-s 17(3) of the Rates Act, namely the date specified in the assessment notice issued by the Commissioner. In the case of payments by instalments under s 19 the due date for each instalment will be not less than three months after the payment date for the initial instalment. I take that to be the date identified in the assessment notice. Presumably, the dates on which the other three instalments are due will also be stated in the assessment notice. I accept the submission of the Commissioner that s 19 draws a distinction between the date when
the assessed rates became “payable” and the dates on which instalments become
due and payable. That distinction is emphasised by sub-s 19(2) and the reference to sub-s 52(4) of the Tax Act. Also, there is no specific provision in relation to the instalments to displace the operation of sub-s 17(3) in accordance with its terms. I conclude, therefore, that at all material times after the payment date notified in the assessment notices for the relevant parcels of land (which are not in evidence) the annual rates were payable. Of course, the amounts which were outstanding as at 2 May 2019 are disclosed in the evidence
contained in Ms McCarthy’s affidavit (Exhibit “D1”).
129. I do not accept the submission of the Commissioner that s 76 of the Rates Act
provides a basis for finding that rates become “payable” as at the date of the notice of
assessment. The purpose of the certificate under that section is to provide the means
for a relevant person (including a buyer of the property) to have a clear statement of:(1) The amount of the annual rates struck for the property for the current year;
and,
(2) The amount of rates actually outstanding at the date of the certificate.
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and there is substantial opportunity afforded to the taxpayer to affect the commencement of
any recovery actions.
The importance of the limitation
The overarching intent of the amendments is the protection of public revenue. This is an important public policy goal, as revenue is required to fund services provided by the ACT Government, such as transport, health and education. The collection of tax from non-compliant taxpayers also promotes public confidence in the tax system. There is knowledge that every individual either pays their taxes or is subject to recovery action. This ensures all citizens are more likely to pay their taxes in full and on time.
Debt recovery action also ensures that taxpayers who pay correctly and on time are not at a disadvantage in relation to recalcitrant taxpayers who do not comply with the law and who avoid payment of tax.
The new recovery provisions will only apply to persons who are in tax default and have not actively engaged with the ACT Revenue Office, such as by entering into and honouring a time payment arrangement.
At present, the following sanctions may apply to defaulting taxpayers:
debts incur a penalty rate of interest of a market rate plus a premium component
(currently totalling 9.96 per cent); penalty tax for tax defaults starts at a rate of 25 per cent of the tax unpaid; tax payable in relation to a parcel of land is a charge on the interest held by the owner that takes priority over all other interests (a ‘first charge’) – this occurs automatically without the discretion of the ACT Revenue Office; the Commissioner for ACT Revenue may instruct the Registrar-General for Land Titles to place a physical charge (caveat) on the title of the parcel of land – this is available to anyone who inspects the title and shows that the Commissioner has an
interest in the property (but not the amount); the Commissioner may garnishee the amount of unpaid tax from sources such as a taxpayer’s bank account or wages to be paid by an employer – there is no requirement to inform the taxpayer before the garnishee action occurs; and the Commissioner may commence a process of selling the land, this involves a public
declaration that the tax for the parcel of land is in arrears.
Informing a mortgagee or credit provider of the tax debts of a defaulting taxpayer (section 56H (2) provides a middle ground between the automatic creation of a statutory first charge, and the existing recovery action where the repayment processes and amounts are dictated by penalty, garnishee and sale of land provisions.
By mortgagees being informed earlier of these debts, rather than at the time the property is about to be sold, allows for improved management of liabilities and interests. It is also
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generally a condition of a mortgage contract that the property owner pays all charges and
taxes relating to the property.
Taxpayers may be more inclined to engage with their mortgage provider than with the Revenue Office to clear their debts. A mortgage provider may provide the opportunity for the
debt to be rolled into the existing mortgage – this is likely to result in a lower interest rate on the debt than the Revenue Office’s statutory interest rate (which includes a premium on
market rates), which is of advantage to the taxpayer.
The taxpayer and the mortgagee are also given an incentive to manage existing tax debts before more aggressive debt recovery options, like garnishee (which could result in a mortgage default) or public sale of land proceedings, are employed.
The amendment is important to ensure the integrity of requirements for credit providers.
Without information on parties’ debts, lending institutions could inadvertently provide credit
beyond the individual’s means, thereby posing risks of financial harm to both individuals and
credit providers.
The recovery of tax debts from a mortgagee of the affected parcel of land (sections 56HA and 56N) is a step to be used after a mortgagee has been informed of the statutory charge and tax debt, and as a possible alternative to the sale of land provisions. This amendment will provide a better opportunity for the taxpayer to maintain ownership of their property.
The recovery of tax debts from a mortgagee does not necessarily alter a person’s property rights contemplated in their deed of mortgage. The Territory’s interest in a person’s property
arises because of the tax default alone. Recovering from a mortgagee ahead of the sale of the
land simply shifts the timing as to when the Territory will recover the tax debt.
This amendment will discourage those individuals who vary their affairs to avoid and evade the payment of tax. By improving debt enforcement and recovery, fairness and equity between taxpayers is better achieved. It ensures that taxpayers who pay correctly and on time are not put at a disadvantage in relation to taxpayers who do not comply with the law and avoid payment of tax.
Placing a statutory first charge on the title of property held by a taxpayer (sections 56M and 56N) protects public revenue by guaranteeing the recovery of tax debts. There are situations where the parcel of land to which the tax debt relates is sold before the debt is realised. For
example, it is a taxpayer’s responsibility to inform the Commissioner for ACT Revenue that
their property is liable for land tax. Some taxpayers do not inform the Commissioner and it may be several years before the Revenue Office identifies their liability and issues an assessment. If the ownership of the property has changed hands before the debt is realised there is no longer land against which the Revenue Office can secure the debt. This has limited
the Revenue Office’s ability to collect this revenue.
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Placing a statutory first charge on another property of the taxpayer guarantees the recovery of the tax debt. It also ensures equity between taxpayers who have incurred debts in relation to a property. It will no longer matter that property has been sold.
The nature and extent of the limitation
The new tax in arrears recovery measures are imposed in the context of tax system that requires taxpayers to be aware of and meet their tax obligations. The tax laws variously require taxpayers to pay taxes, and penalty and charges in the event of default. The measures support the recovery of taxes in the event of default.
The new recovery measures are limited to debts of more than $2,000 or an amount determined by the Minister, by disallowable instrument via the operation of
sections 56H (2B) (c) and 56L (1) (a). This will avoid consequences for a person’s financial
reputation for prescribed lesser tax debts as related to sections 8 and 12 of the HR Act.
The amendments for notification of a tax debt and recovery from a mortgagee provide a middle ground between the automatic creation of a statutory first charge and recovery by way of garnishee and public sale of land proceedings.
Debtors with tax in arrears are provided with substantial opportunities to consider and
address their unpaid taxes – demonstrating a fair and reasonable process (section 21 of the
HR Act). The Commissioner for ACT Revenue will utilise these steps only in respect of defaulting taxpayers who do not engage despite all reasonable attempts made by the ACT Revenue Office to facilitate payment of the debt (for example, automated arrears notices or reminders, issuing letters for payment, engaging the assistance of debt collectors, follow up phone calls, offering time payment arrangements).
Before the Commissioner notifies a mortgagee or credit provider however, a statutory charge
will be registered on the title, and 28 days’ notice given to the taxpayer and any joint owner of the Commissioner’s decision to notify their mortgagee or credit provider of the tax debt.
Before the Commissioner can recover from a mortgagee, the tax must have been in arrears
for a period of at least one (1) year. 90 days’ notice of the decision to recover must also be
given to the taxpayer and joint owners of the land before recovery action is taken.
In addition, before registering a charge or recovering from a mortgagee, the Commissioner must be satisfied that recovery is reasonable having consideration, from the information available, whether recovery is likely to cause substantial hardship to the taxpayer, any joint owner, or others residing at the property as their principal place of residence. Thereby, considering rights to family and home under sections 11 and 12 of the HR Act.
The amendment to recover tax debts by registering a statutory first charge on land of a debtor will be exercised in situations where there is no security available over land. For example where land that would otherwise have been secured by a statutory charge has been sold.
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Relationship between limitation and purpose
The limitation is necessary to achieve the purpose of revenue protection and preservation of the integrity of the tax system. It minimises the risk of non-compliance and revenue loss.
The notification of tax debts to mortgagees and credit providers (subsection 56H (2)) and registration of charges (section 56M and 56N) are directly related enabling the ACT Revenue Office to recover tax unpaid and in arrears. They may also act as deterrent to tax arrears while affording debtors appropriate notice to take alternate action.
The alternative recovery of debts (sections 56HA and 56N) will allow the ACT Revenue Office to pursue a different option to garnishee or sale of land proceedings which will be more beneficial to taxpayers and financiers. Earlier identification of tax debts will enable parties to better manage debts and minimise the risk of financial harm.
Any less restrictive means
For registration of charges (section 56M and 56N) the current land titles process issues notices to a mortgagee when a charge or caveat is registered over property. It is not necessary for the ACT Revenue Office to register a charge or caveat as the TAA provides for a statutory charge for tax payable.
This is a less effective means of notifying mortgagees which can result in extended timeframes as it relies on the physical registration of the charge or caveat on title, and the processes of another authority to provide notice.
Notice of outstanding tax debts of an individual (subsection 56H (2)) may also be obtained by application and the payment of a fee to the ACT Revenue Office. A certificate of the land-based taxes payable (for example, land tax, rates and duties) for the parcel of land is produced. This is ordinarily undertaken as part of the conveyance of a property by the purchaser of land. This is not a fully reliable means of providing notice due to timing of administrative process for certification and tax assessments, and the involvement of a third party who is interested in purchasing the land, or an existing mortgagee with an interest in the land to apply for a certificate.
It is not considered that there are any less restrictive means to achieve the purpose of these amendments. Existing provisions already provide an ability for the Commissioner to exert greater powers in recovery through the garnishee and sale of land proceedings.
Similar provisions exist in tax legislation of other jurisdictions such as Victoria, Queensland and New South Wales.
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Commencement
The amendments will commence on the day after the notification day, except for the amendments that relate to the TAA to re-align the 25 per cent rate as the base default penalty tax rate that will commence on 1 July 2019.
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Details of the Revenue Legislation Amendment Bill 2019
| Clause 1 | Name of Act |
This clause provides the name of the Act is the Revenue Legislation Amendment Act 2019.
| Clause 2 | Commencement |
This clause provides the Act commences:
after the day of notification – other than schedule 1, amendments 1.45 and 1.46; and 1 July 2019 for schedule 1, amendments 1.45 and 1.46.
| Clause 3 | Legislation amended |
This clause provides the Act amends the legislation mentioned in schedule 1.
Betting Operations Tax Act 2018 (Betting Operations Tax Act); Duties Act 1999 (Duties Act); Land Rent Act 2008 (Land Rent Act), the Land Tax Act 2004 (Land Tax Act); Planning and Development Act 2007 (Planning and Development Act); Rates Act 2004 (Rates Act); and Taxation Administration Act 1999 (TAA).
| Schedule 1 | Legislation amended |
| Part 1.1 | Betting Operations Tax Act 2018 |
| Clause 1.1 | Section 12 (2) (b) |
This clause updates paragraph 12 (2) (b) so that it correctly references paragraph 10 (2) (b) and uses consistent terminology to describe the tax payable by a betting operator.
| Clause 1.2 | Section 12 (4) (b) |
This clause corrects an incorrect reference in section 12 (4) (b) to section 10 (1) (b) which does not exist. The correct section number is section 10 (2) (b) which provides for the amount of betting operations tax payable.
| Clause 1.3 | Dictionary, definition of gaming Act, new paragraph (e) |
This clause amends the Betting Operations Tax Act to exclude bets placed under the Pool
Betting Act 1964.
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| Part 1.2 | Duties Act 1999 |
| Clause 1.4 | Section 10 (1) (f), note |
This clause makes a minor amendment to remove a note related to an earlier transitional provision.
| Clause 1.5 | Section 51 (3) |
This clause amends subsection 51 (3) of the Duties Act to provide for declared land subleases to be treated in the same way as Crown leases with respect to the duty exemption for the surrender and regrant of development leases. It also includes an amendment to the definition
of ‘development lease’ at subsection 51 (4) to include declared land subleases.
| Clause 1.6 | Section 75AA, definition of home buyer concession scheme, except note |
This clause amends the Duties Act to clarify the head of power in relation to home buyer assistance schemes to be section 139 of the TAA.
| Clause 1.7 | Section 115A, definition of FS (BTGR) Act |
| Clause 1.8 | Section 115A, definition of FS (TR) Act |
| Clause 1.12 | Dictionary, definition of FS (BTGR) Act |
| Clause 1.13 | Dictionary, definition of FS (TR) Act |
| Clause 1.14 | Further amendments, mentions of Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cwlth) |
| Clause 1.15 | Further amendments, mention of FS (BTGR) Act |
These clauses provide technical amendments to the definition of the ‘asset’, ‘business’, ‘receiving body’ and ‘voluntary transfer’ under Part 3.6 of the Duties Act by reference to the
relevant Commonwealth legislation.
| Clause 1.9 | Section 244 (1) |
| Clause 1.10 | Section 244 (1) (a) |
| Clause 1.11 | Section 244 (5) |
These clauses limits the operation of the section with respect to the ‘relevant person’ eligible
to apply for a certificate of duty and other charges and the related dutiable transaction. By limiting the relevant person to the transferor, transferee or the mortgagee of the property subject to the dutiable transaction the privacy of property owners is protected.
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| Part 1.3 | Land Rent Act 2008 |
| Clause 1.16 | Section 18 heading |
| Clause 1.17 | Section 18, new definition of tax |
| Clause 1.18 | Section 26 (3) |
| Clause 1.19 | Section 26 (4) (a) (iii) (A) |
| Clause 1.20 | Section 26 (4) (a) (iii) (B) |
| Clause 1.21 | Section 26A (3) |
| Clause 1.22 | Section 26A (4) (a) (ii) (A) and (B) |
| Clause 1.23 | Section 27 (6) (b) and (e) |
| Clause 1.24 | Section 31 (1) |
| Clause 1.25 | Section 31 (1) (a) |
| Clause 1.26 | New section 31 (5) |
| Clause 1.27 | Dictionary, new definition of tax |
These clauses amend the reference to tax in the Land Rent Act so as to include all taxes under the Duties Act, Land Tax Act and the Rates Act as recoverable in the sale of land provision.
See also clauses 1.36 and 1.37 for related amendments to the association rent payout lease variation provision of the Planning and Development Act.
| Part 1.4 | Land Tax Act 2004 |
| Clause 1.28 | New section 10 (1) (ba) |
| Clause 1.29 | New sections 13A |
These clauses amend the Land Tax Act 2004 to insert an exemption from land tax for private properties rented through a community housing provider for the purpose of affordable community housing (section 13A).
Under subsection 13A (3) agreements between property owners and a community housing provider must require the registered community housing provide to ensure the use of the property for affordable housing and notify the Commissioner of the rental status of the property. Where a property is not being rented for affordable community housing the exemption will not apply (subsection 13A (4)).
Subsection 13A (5) (a) provides for the Minister to determine the eligibility criteria for the owner of a property to obtain the exemption. It is intended that the properties must be rented at below market rent (that is less than 75 per cent of market rent) and be accessible to tenants in the bottom two income quintiles.
The number of properties for which a land tax exemption may apply may also be capped by the Minister (subsection 13A (5) (b)).
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New sections 10 (1) (ba) and 13A expire on 30 June 2021.
| Clause 1.30 | Section 17F (3) definition of P, except note |
This clause provides a technical amendment to align the ‘percentage rate’ applied in the determination of the ‘appropriate rate’ for the foreign ownership surcharge in the case of
land partly foreign owned (under section 17F) with the general imposition of the foreign
ownership surcharge under section 17E.
| Clause 1.31 | Section 36 |
| Clause 1.32 | Section 38 (i) |
The substitution of section 36 aligns with amendments to other tax laws in this Bill to provide a consistent arrangement for the remission penalty tax by the Commissioner. Clause 1.32 provides a consequential technical amendment to referencing of section 36.
| Clause 1.33 | Section 41 (1) |
| Clause 1.34 | Section 41 (1) (a) |
| Clause 1.35 | Section 41 (5), new definition of relevant person |
These clauses limit the operation of the section with respect to the ‘relevant person’ eligible
to apply for a certificate of land tax and other charges. By limiting the relevant person to the owner, buyer or the mortgagee of the property the privacy of property owners is protected.
| Part 1.5 | Planning and Development Act 2007 |
| Clause 1.36 | Section 272B (2) (a) |
| Clause 1.37 | New section 272B (4) |
Further to clauses 1.17 to 1.18 in the Bill, these clauses provide the related consequential amendment to the Planning and Development Act so as to include all taxes under division 9.6.3 of that Act, the Duties Act, Land Tax Act and the Rates Act as recoverable in the sale of land.
| Clause 1.38 | Section 279AE (2) |
| Clause 1.39 | New section 279AE (6) |
These clauses limit the operation of the section with respect to the ‘relevant person’ eligible
to apply for a certificate of lease variation charge and other charges. By limiting the relevant person to the lessee, buyer, mortgagee of the property, or applicant for development in relation to the property the privacy of property owners is protected.
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| Part 1.6 | Rates Act 2004 |
| Clause 1.40 | Section 43 |
The substitution of section 43 aligns with amendments to other tax laws in this Bill to provide a consistent arrangement for the remission of penalty tax by the Commissioner.
| Clause 1.41 | Section 76 (1) |
| Clause 1.42 | Section 76 (1) (a) |
| Clause 1.43 | New section 76 (5) |
These clauses limit the operation of the section with respect to the ‘relevant person’ eligible
to apply for a certificate of rates and other charges. By limiting the relevant person to the owner, buyer, or the mortgagee of the property the privacy of property owners is protected.
| Part 1.7 | Taxation Administration Act 1999 |
| Clause 1.44 | Section 29 |
| Clause 1.48 | Section 37 |
The substitution of sections 29 and 37 align with amendments to other tax laws in this Bill to provide a consistent arrangement for the remission of interest and penalty tax, respectively, by the Commissioner.
| Clause 1.45 | Section 31 (2) to (5) |
| Clause 1.46 | Table 34, items 3 and 4 |
These clauses amend the penalty tax provisions of the TAA to ensure that in the event of a default by a taxpayer the base penalty tax payable is at 25 per cent.
Under subsection 31 (2) the 50 per cent penalty tax rate remains but applies at the discretion of the Commissioner for specified circumstances. Those circumstances involve the conduct of the taxpayer such as delays relating to payment or provision of information, or providing incorrect, incomplete or misleading information. The amended penalty tax arrangements apply from 1 July 2019 to tax defaults occurring before or after the commencement of the subsection.
This means that for tax defaults occurring prior to 1 July 2019, the application of the 50 per cent penalty tax rate will be limited to the Commissioner being satisfied of the specified circumstances. The Commissioner will still have regard to whether a taxpayer has taken reasonable care to comply with tax laws in deciding whether or not to impose any penalty tax.
The circumstances for the application of 75 per cent penalty tax rate under subsection 31 (4) are unchanged in requiring the Commissioner to be satisfied that a tax default is subject to
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intentional disregard by the taxpayer. For consistency, the wording of this section is revised
to align with the discretionary approach under subsection 31 (2).
The amendments to Table 34 reflect the abovementioned amendments to section 31 of the
TAA.
| Clause 1.47 | Section 36 |
This clause amends the time period for the payment of penalty tax from 14 days to a ‘stated’
period.
| Clause 1.49 | New division 7.3 heading |
This clause is a technical amendment to reflect that the division has been expanded to cover additional debt recovery options for tax debts other than the sale of land in the event of tax arrears.
| Clause 1.50 | Section 56H (3) (a) (iv) |
This clause provides an editorial amendment to the referenced section 279AE.
| Clause 1.51 | New section 56H (2) |
| Clause 1.52 | New section 56H (4) |
This clause amends the TAA to allow the Commissioner the discretion to notify a mortgagee or credit provider about a tax debt and a charge in relation to a parcel of land.
The operation of this action is limited by requirements relating to the parcel of land and the tax debt of the owner (including debt in arrears, minimum amount and arrangements for repayment), and notification of the debtor/owner at least 28 days prior to notification of the mortgagee or credit provider. Determinations by the Minister of minimum tax debt amounts other than $2,000 are disallowable instruments.
The Commissioner must give a copy of a notice to the mortgagee or credit provider to the debtor.
A charge in relation to a parcel of land ends on the earlier of Commissioner applying for
removal of the charge or the sale of the land with the Commissioner’s consent.
| Clause 1.53 | New section 56HA |
This clause inserts a new subsection permitting the Commissioner to require the mortgagee of a parcel of land to pay the unpaid tax relating to the land for a tax debtor.
The Commissioner’s ability to seek debt recovery in this manner is limited to where a
mortgagee or credit provider has been notified about a tax debt and the tax debt remains in
arrears for at least one (1) year.
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The Commissioner must also notify the debtor of the intended action and only commence action if the debt remains unpaid after a further 90 days but before undertaking recovery be satisfied that the recovery is reasonable having regard to the potential for substantial hardship for affected parties, such as those occupying the parcel as their principal place of residence.
Where the Commissioner has notified the mortgagee or credit provider to pay the tax debt for the debtor a copy of the notice must be provided to the debtor.
Mortgagees may subsequently recover tax debts paid under this section as a debt and secured under the mortgage for the parcel of land.
| Clause 1.54 | Section 56J (12), definition of related, paragraph (b) |
| Clause 1.56 | Section 56K (1) |
These clauses provide technical amendments to correct referencing.
| Clause 1.56 | New sections 56L to 56N |
To provide for greater security in the recovery of tax debts, these new sections provide for the Commissioner to apply to the registrar-general for the registration of a tax debt of taxpayer as a statutory charge against a parcel of land owned by the taxpayer (either solely or jointly).
The ability of the Commissioner to seek registration of tax debt is limited to amounts of tax debt exceeding $2,000 or other amounts determined by the Minister. Such determinations by the Minister are disallowable instruments.
Under subsection 56L (5), before applying to register a charge the Commissioner must have taken reasonable steps for the repayment of the tax debt, be satisfied that the action is reasonable having considered whether it is likely to cause substantial hardship for affected persons, and notified the debtor and any joint owner at least 28 days prior.
The Commissioner must also notify the debtor and joint owner of the registration (subsection 56L (6)). Where a charge is registered, the charge will have priority over a sale consistent with other tax laws charges over land (subsection 56M (2)).
The Commissioner may also notify a mortgagee for the parcel of land or credit provider, subject to having first notified the debtor and any joint owner at least 28 days prior of the intended action (subsections 56M (3) and (4)). If the Commissioner notifies the mortgagee, then a copy of the notice must be given to the debtor and any joint owner (subsection 56M (5)).
Under subsection 56M (6), the charge will not have effect against an honest purchaser of the parcel of land where certificates of relevant taxes and charges have been obtained and the purchaser did not have notice of the liability.
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Schedule 2
The charge will end on the earlier of Commissioner applying for removal of the charge or the
sale/disposal of the land with the Commissioner’s consent.
Subject to notification under section 56M and tax debt remaining in arrears for at least one (1) year, new section 56N allows for the Commissioner to recover unpaid tax debt from the mortgagee of a parcel of land owned by a debtor.
After notifying the debtor of the intended action, if the tax remains unpaid after a further 90 days, the Commissioner may give notice to the mortgagee to pay the tax debt of the debtor. Aside from notice, this action is subject to a requirement for the Commissioner to be satisfied that the recovery action is reasonable having regard to whether it is likely to cause substantial hardship to the debtor, joint owner or other people occupying the parcel as their principal place of residence.
The Commissioner must notify the debtor and any joint owner of a notice to a mortgagee.
The mortgagee must pay the amount of unpaid tax on the later of the receipt of or date stated in the notice. A mortgagee may subsequently recover tax debts paid under this section as a debt and secured under the mortgage for the parcel of land.
| Clause 1.57 | New section 97 (aa) |
This clause permits a tax officer to disclose information obtained under or in relation to the administration of a tax law in circumstances where it is unreasonable or impracticable to obtain consent and there is reasonable belief of a threat of serious harm to an individual or the public. The provisions mirror those in section 19 of the Information Privacy Act 2014, and will permit tax officers to effectively address matters, such as threats of harm to officers or taxpayers.
| Clause 1.58 | Dictionary, definition of owner and parcel |
This clause provides consequential amendments to definitions related to the operation of tax recovery measures.
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between 4 May 2019 and 31 May 2019, was Mr K Salisbury. I have therefore referred to the
Commissioner as “he” in my reasons.
were introduced by the 2019 amendments. Thus, they did not form part of the “current process”.
Perhaps the reference to those was to provide an example of the new recovery process.
[1] Human Rights Committee, General Comment No 18: Non-discrimination. 37th sess (10 November 1989)
1[1].
[2] Ibid 2[6].
[3] Ibid 2[8].
[4]Ibid 3[13].
[5] Human Rights Act 2004 (ACT) Preamble para 6, s 28.
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1
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