Van Grieken v Veilands

[1991] FCA 613

Re: ANTHONY VAN GRIEKEN
And: ANDREW VEILANDS; DAVID KNAPP; JOHN HALL; GREGORY HARPER and BARRY AYRES
No. G243 of 1991
FED No. 613
Administrative Law
91 ATC 4685/22 ATR 630/103 ALR 233
(1991) 25 ALD 655 (extracts)

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies(1), Burchett(1) and Hill(1) JJ.

CATCHWORDS

Administrative Law - procedural fairness - whether communications between Australian Taxation Office and Taxation Relief Board generated a reasonable suspicion of unfairness - whether supply of factual information to Board without knowledge of one party a denial of procedural fairness - whether letter written by one member of the Board a decision of the Board.

Administrative Decisions (Judicial Review) Act 1977 (Cth)

Income Tax Assessment Act 1936 (Cth): s.265

HEARING

SYDNEY

#DATE 3:10:1991

Counsel and Solicitors S.J. McMillan instructed by
for Appellant: J.W. Walker and D.K.L. Raphael

Counsel and Solicitors R.M. Henderson instructed by the
for Respondents: Australian Government Solicitor

ORDER

The appeal be dismissed.

The appellant pay the respondents' costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The appellant, Mr Anthony Van Grieken, appeals against the judgment of a judge of this court, Gummow J., dismissing an application brought by him to this court under the provisions of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("the ADJR Act").

1. The application sought review of what were said to be three decisions of the respondents or one or more of them, they being at the relevant times the Chairman and other members of the Taxation Relief Board established pursuant to s.265 of the Income Tax Assessment Act 1936 (Cth) ("the Act"). The decisions challenged were a decision made on 9 May 1990 and communicated to the appellant on 14 May 1990, and two further alleged decisions being decisions communicated to the appellant by letters dated 17 August 1990 and 25 September 1990.

2. The May 1990 decision refused the appellant relief from his liability to pay income tax in the sum of $19,660.99 in respect of the years of income 1978-1985 respectively. The August and September 1990 alleged decisions arose out of requests by the appellant that the original decision be reconsidered. It seems that after receipt of the letter of 14 May 1990 the appellant had written to the Chairman on 16 May 1990 stating that he had an excess of income over expenditure of only $26.00 per fortnight and that after selling his house and paying out his mortgage he would be left with only $113,000 out of which he would be lucky to purchase an old one bedroom unit. The Board apparently reconsidered the matter, having examined the additional information furnished, and again denied the application for relief. The appellant replied with a letter of 27 August 1990, requesting further reconsideration and disputing a conclusion made by the Board but not putting to the Board any fresh matter.

3. The result was a letter dated 25 September 1990 from the Chairman to the appellant, the material part of which as set out in his Honour's judgment read as follows:
   

"The Taxation Relief Board (`the Board') considered your application on 9 May 1990. You requested that your application be reconsidered. This was done on 10 August 1990 but the Board's decision has not changed. On 27 August 1990 you requested that your application be considered a third time.

Relief can only be granted if the Board is satisfied that serious hardship will be caused by payment of the tax. You own your current home in which you have significant equity. You were aware of your tax liability when tax assessments issued from 1981 to 1985 and did not pay the debts. In December 1987 you took out a private consolidation loan to clear your debts but did not include your tax debt. On your figures you have an excess of income over expenditure. You are proposing to sell your house in December and buy a smaller house or unit. You are currently paying interest on a loan of $157,000. If you sell your house you would not have to meet these repayments. You will have the capacity to pay your tax debt. The Board cannot grant you relief."

1. The application brought under the ADJR Act was made on a number of grounds which are canvassed in his Honour's judgment. Before us only three matters were argued, although the appellant made a "formal" submission that by considering the assets of the appellant's family and family company the Board had taken into account irrelevant matters. While no argument was addressed to this submission, it must be said that, having regard to the general discretion given to the Board under s.265, it cannot be irrelevant to consider what the judge below in his judgment referred to as "the financial affairs of the taxpayer, including his financial relations with the other members of his household, and with any family company."

2. The appellant submitted:
   

1. That, it being clear that communications had taken place between officers of the Australian Taxation Office and members or others employed by the Board (there was no evidence as to the precise ambit of these communications) the decisions were vitiated because the existence of these communications generated in an assumed informed observer a reasonable suspicion of unfairness. Reference was made, inter alia, to: Re JRL: Ex parte CJL (1986) 161 CLR 342 at 346; Minister of Aboriginal Affairs v Peko-Wallsend Limited

(1986) 162 CLR 24 at 58 per Brennan J. and Cains v Jenkins

(1979) 42 FLR 188 at 194 per J.B. Sweeney and St John JJ.

2. That there had been a denial of procedural fairness to the appellant in that without the knowledge of the appellant, information had been supplied to the Board by the Commissioner and also at the request of the Commissioner by the appellant's accountant.

3. That the third decision, at least, had admittedly been made by one member only of the Board, Mr Veilands, and accordingly was not a valid decision of the Board.

1. The relevant provisions of s.265 of the Act as set out in his Honour's judgment are as follows:
   

"265 (1) In any case where it is shown to the satisfaction of a Board consisting of the Commissioner, the Secretary to the Department of Finance and the Comptroller-General of Customs or of such substitutes for all or any of them as the Minister appoints from time to time that -

(a) a taxpayer has suffered such a loss or is in such circumstances; or

(b) owing to the death of a person, who, if he had lived, would have been liable to pay tax, the dependants of that person are in such circumstances, that the exaction of the full amount of tax will entail serious hardship, the Board may release the taxpayer or the trustee of the estate of the deceased person (as the case may be) wholly or in part from his liability, and the Commissioner may make such entries and alterations in the assessments as are necessary for that purpose.

(2) The Commissioner or his substitute shall be Chairman of the Board, and the decision of the majority shall prevail.

(3) Where an application is made for release in respect of an amount of tax if that amount is not less than $10,000, the Board shall, and if that amount is less than $10,000, the Board may refer the application to the Tribunal and notify the applicant in writing of its having done so.

(4) The President of the Tribunal shall designate the Registrar or a Deputy Registrar of the Tribunal to be a designated person

(a) for the purposes of dealing with the application; or

(b) for the purposes of dealing with applications under this section included in a specified class of applications.

(5) The applicant may appear before the designated person or the designated person may require the applicant to appear before him, either in person or by a representative, and the designated person may examine the applicant or his representative upon oath or affirmation concerning any statements which the applicant has, or desires to have, placed before the Board constituted by this section.

(6) The designated person shall be assisted in his examination of the applicant by an officer employed in the Australian Taxation Office who is a qualified accountant.

(7) The designated person may permit the taxpayer to be assisted at the examination by such persons as the designated person considers the circumstances justify.

(8) A record shall be made of the information elicited by the designated person during his examination.

(9) The designated person shall -

(a) submit a report to the Board constituted under this section upon the facts disclosed by his examination, together with the record referred to in sub-section (8); and

(b) draw the attention of that Board to facts that, in his opinion, have a particular bearing upon the application. ...

(11) In any case where the amount of the liability does not exceed $500, the powers conferred by sub-section (1) on the Board specified in that sub-section may be exercised by the Commissioner.

..."

1. The High Court in R v Trebilco; Ex parte FS. Falkiner and Sons Ltd (1936) 56 CLR 20 considered the comparable provisions to s.265 in the Land Tax Assessment Act 1910 (Cth). The provisions of s.265 themselves were the subject of discussion in the judgment in Powell v Evreniades (1989) 21 FCR 252. The parties were in agreement as to the matters of principle discussed in Trebilco and also in Powell so that there is no need to refer in any detail to what is there said. Accordingly, we turn to consider briefly each of these submissions.
   1. Communications between officers of the Australian Taxation Office and members of the Board.

2. In the judgment appealed against, Gummow J. accepted a submission that the day to day carriage of applications to the Board would be conducted by officers employed in the Australian Taxation Office. This, it was submitted, involved a fundamental misconception of the role of the Commissioner and the relationship of the Commissioner with the Board.

3. It will have been noted that the Commissioner is himself a person appointed by Statute to the Board, in the absence, at least, of substitutes being appointed. Of course, as a practical matter, substitutes for each of the statutory office holders referred to in s.265(1) are appointed. For example, Mr Veilands, is, so it was said from the bar table, an officer of the Australian Taxation Office. However, the substitute for the Commissioner is to be Chairman. No provision is made in the legislation dealing with how applications are to be made to the Board, nor as to the staffing of the Board, other than the reference in sub-sec.(6) to an officer employed by the Australian Taxation Office who is a qualified accountant. It is probably inevitable that the Board would call upon some assistance from officers of the Australian Taxation Office (at least for clerical or administrative tasks) and indeed this may be desirable in order to preserve the secrecy of the taxpayer's affairs under s.16 of the Act.

4. Be that as it may, it is simply not true to say that any communication that may pass between the Board and an officer of the Australian Taxation Office, on whatever topic, could operate to vitiate a decision made by the Board. An administrative decision-making Board stands in a completely different position from the judge in Re JRL No doubt if officers of the Australian Taxation Office could be shown to be endeavouring to influence the outcome of the Board's deliberations by putting forward matters prejudicial to the applicant without the knowledge of the applicant or giving him the opportunity to be heard, a denial of natural justice would occur, but such a case involves something more than the mere fact that communications passed between the Board and the Australian Taxation Office.

5. The only evidence of known communications to which the appellant could point was a letter written to the appellant's accountant which indicated that the Board was about to come to its decision in the application and requested the supply of certain information. While it may be inferred that a member or members of the Board may well have conveyed that information to the officer employed in the Australian Taxation Office who wrote the letter, no suggestion of procedural unfairness or bias can be thought to arise out of it.

6. The composition and function of the Board may be a matter of criticism. It can be argued that the Commissioner, charged statutorily as he is with the collection of revenue, would be a strange arbiter for the giving of relief from tax, and that he is, by being made a member (or by his substitute being made a member), as well as being statutorily made chairman of the Board, placed in a position of conflict. But it is the legislature which has placed the Commissioner in this position, and if there is to be a change to a system more apparently fair on its face, that will be likewise a matter for the legislature.
   2. Denial of Natural Justice

7. It was submitted that the appellant was denied natural justice, in the sense of procedural fairness, in two ways. First, it was said that the Commissioner had forwarded to the Board a "statement of case" unbeknown to the appellant, and that accordingly the appellant had not had the opportunity to answer the matters in it. Second, it was said that information was forwarded at the request of an officer of the Australian Taxation Office by the appellant's accountant, and the taking of this information into account involved a denial of natural justice.

8. Conformably with the decision in Powell it was accepted that the rules of natural justice apply to the deliberations of the Board, so that in an appropriate case procedural fairness requires that the applicant be given an opportunity to respond to matters that might be put against him: cf Kioa v West (1985) 159 CLR 550. But this does not mean that when material is supplied by the taxpayer himself (through his accountant) the taxpayer must be given the opportunity to be heard, particularly when that material consists of financial accounts. Nor does it mean that a decision will be vitiated when, unbeknown to the taxpayer, information is provided by the Commissioner which, as was the case here, was factual and not in any way adverse to the taxpayer. This was the very distinction dealt with by the High Court in Kioa v West (supra).

9. In the present case, the information in the statement of case included details of the assessments involved, details of the assessable income of the appellant, details of writs that had been issued for recovery of the tax and judgments obtained, and a note of a conversation with the appellant in which he had indicated that he had applied for extensions of time for payment of the liability and that his applications had been refused. There was also, in an accompanying letter, a reference to bankruptcy proceedings that were pending against the appellant. It was never suggested by the appellant below that any of this information was false. It was not specifically referred to by the Board in its statement under s.13 of the ADJR Act of its reasons for decision as having been taken into account. When such information is furnished to a decision-maker in the present circumstances, there can be no obligation to afford a taxpayer an opportunity to answer that which requires no answer.
   3. The Third Decision

10. This third submission can be dealt with briefly. It is evident from the letter of September 1990 that Mr Veilands did not purport to make any decision on behalf of the Board at all. The appellant had not supplied any new information from which he sought to persuade the Board that hardship existed. What the appellant sought to do was persuade the Board for the second time to reconsider its original May decision. Mr Veilands was, in those circumstances, under no obligation to refer the appellant's request to the Board, the matter having been considered twice by that time. Mr Veilands' letter does not constitute a decision of the Board, and accordingly cannot be the subject of review under the ADJR Act. Had it been the decision of the Board, then there would have been no doubt that the Board could not act by one member alone.

11. Accordingly, the appeal must be dismissed and the appellant must pay the respondents' costs of it.