Vauban v The Commissioner of State Revenue
[2021] TASSC 40
•16 August 2021
[2021] TASSC 40
COURT: SUPREME COURT OF TASMANIA
CITATION: Vauban v The Commissioner of State Revenue [2021] TASSC 40
PARTIES: VAUBAN PTY LTD
v
THE COMMISSIONER OF STATE REVENUE
FILE NO: 30/2021
DELIVERED ON: 16 August 2021
DELIVERED AT: Hobart
HEARING DATE: 16 August 2021
JUDGMENT OF: Martin AJ
CATCHWORDS:
Appeal – General principles – Right of appeal – When appeal lies – Error of law – Distinction between question of law and question of fact – Appeal dismissed as finding of fact by magistrate and no question of law involved.
Aust Dig Appeal [21]
Taxes and Duties – Land tax – Returns and assessments – Discretion as to reassessment – Objection to reassessment – Ground raised outside ambit of grounds upon which the objection was disallowed – Appeal dismissed.
Aust Dig Taxes and Duties [1999-2000]
REPRESENTATION:
Counsel:
Appellant: C Groves
Respondent: D Osz
Solicitors:
Appellant: Dobson Mitchell Allport
Respondent: Office of the Solicitor-General
Judgment Number: [2021] TASSC 40
Number of paragraphs: 37
Serial No 40/2021
File No 30/2021
VAUBAN PTY LTD v THE COMMISSIONER OF STATE REVENUE
REASONS FOR JUDGMENT MARTIN AJ
16 August 2021
Introduction
By an application filed in the Magistrates Court on 4 January 2019, pursuant to s 89 of the Taxation Administration Act 1997 (the TA Act) and s 17 of the Magistrates Court (Administrative Appeals Division) Act 2001 (the MCAAD Act), the appellant sought a review of a decision of the Commissioner of State Revenue (the respondent) disallowing objections raised by the appellant in relation to reassessments and an assessment of land tax in connection with a property at 91 King Street, Sandy Bay. Prior to the substantive hearing, the appellant sought a number of interlocutory orders striking out specific paragraphs of the respondent's facts and contentions which had been filed in response to the application for review.
Chief Magistrate Geason refused the application to strike out the impugned paragraphs. The appellant appeals against that decision, essentially on the basis that the learned Chief Magistrate "erred in law" by failing to apply s 90(b) of the TA Act to limit the respondent's case on review to the grounds on which the respondent disallowed the appellant's objections to the reassessment.
At the conclusion of submissions I dismissed the appeal. I now set out my reasons for dismissing the appeal.
Background
A summary of the background to the determinations by the respondent, which were the subject of objections by the appellant, is provided in the respondent's written submissions:
"4The applicant is a trustee of the 'Gypsy Trust' and the 'Austerlitz Superannuation Fund'. In that capacity, it holds a property at 91 King Street in Sandy Bay for the Trust (Trust property), and a property at 61 Princess Street for the Fund (the Fund property).
5On 6 September 2018, following a land tax investigation concerning the appellant's the Trust property, the respondent determined that he had incorrectly classified it as principal residence land for the purposes of the Land Tax Act 2000 (Tas) (LT Act).
6On the same date, the respondent reassessed the applicant for land tax for the 2013 – 2014 to 2017 – 2018 (inclusive) financial years.
7On 13 September 2018, the appellant objected to the reassessments on certain grounds.
8On 2 October 2018, the respondent assessed the applicant for land tax for the 2018 – 2019 financial years.
9On 10 October 2018, the appellant objected to the assessment on substantially the same grounds as those in its objection to the respondent's reassessments (albeit, with some minor differences)." [Original emphasis.] [Footnotes omitted.]
The appellant's grounds of objection to the respondent's reassessments and assessment (the reassessments) are also summarised in the respondent's written submissions:
"10In summary, the appellant's grounds of objection in respect of the respondent's reassessments and assessment were that:
(1) the reassessments and assessments are each unauthorised by or contrary to law, and are therefore invalid or void;
(2) the reassessments and the assessment are each not authorised under the LT Act;
(3) the reassessment for the 2013 – 2104 financial year is ultra vires as it was issued in excess of five years from the date of the initial assessment and/or because it relates to a liability that was incurred five years prior to the date of the reassessment;
(4) the Trust Property has, at all material times, been entitled to be classified as principal residence land for the purposes of the LT Act because, for the reasons it specifies, the appellant's trust was a fixed trust;
(5) as the Trust Property is principal residence land, the Fund property is the only general land property owned by the appellant such that the Trust Property's assessed land value should not be aggregated with the assessed land value of the Fund property;
(6) in consequence of (5), the land tax assessed in respect of the Fund property is excessive and must be reduced and
(7) further and in the alternative, if the Trust Property did not constitute principal residence land for the purposes of the LT Act throughout the financial years concerned, it is taken to be principal residence land by virtue of the respondent's conduct. As a consequence of that conduct, it is unlawful for the respondent to levy tax because:
(a)it is unconscionable at common law or by statute; and/or
(b)the respondent is estopped from doing so; and
(c)the company, if it had reasonable notice, would in consultation with Mr Andrew James Abbott SC have taken 'whatever action was necessary to expunge or reduce to maximum extent possible …' any tax liability." [Footnotes omitted.]
The respondent's disallowance of the appellant's objections was conveyed in a lengthy letter dated 8 November 2018. The respondent outlined the appellant's grounds of objection and then set out the history of classifications relating to the property in issue, and the process undertaken that led to the retrospective reclassification of the property and reassessments. After identifying the legislation conferring power on the respondent to conduct reassessments of tax, in essence the respondent informed the appellant of the respondent's determination that the reassessments were authorised by the legislation and were valid. The respondent asserted that the trust property was not entitled to principal residence land classification, and that the trust in question is not a fixed trust for the purposes of the relevant legislation.
The respondent's letter of 8 November 2018 also dealt with the appellant's objection based on alleged unconscionable conduct and estoppel, which assertions were denied by the respondent.
Before the Chief Magistrate and in this Court, the appellant argued that on the review before the Chief Magistrate, aspects of the respondent's written case impermissibly raise grounds outside the ambit of the grounds upon which the objection was disallowed (as identified in the letter of 8 November 2018). The appellant relies on s 90 of the TA Act as prohibiting the respondent from mounting a case outside the grounds on which the objections were disallowed:
"90 Grounds of review or appeal
Unless the Magistrates Court (Administrative Appeals Division) or Supreme Court otherwise orders, on a review or an appeal –
(a)the taxpayer's case is limited to the grounds of the objection; and
(b)the Commissioner's case is limited to the grounds on which the objection was disallowed."
The appellant's right of appeal against the decision of the Chief Magistrate is found in s 47 of the MCAAD Act which provides that the decision of a magistrate on an application for review is "final", but a party may appeal to the Supreme Court "on a question of law":
"47 Appeals to Supreme Court from decisions of Court
(1) Except as provided otherwise in this section or any other enactment, a decision of the Court in respect of an application for review under this Act is final.
(2) A party to a proceeding before the Court may appeal to the Supreme Court, on a question of law, from a decision of the Court in that proceeding."
In the substantive proceedings in the magistrates court, the parties filed statements of facts and contentions. It is necessary to identify the specific paragraphs to which exception is taken by the appellant.
Paragraph 12
Paragraph 12 of the respondent's facts and contentions is as follows:
"12 Despite this amendment, the applicant did not apply to the Commissioner for a determination that the Trust property was principal residence land for any particular financial year. The Commissioner also did not, at any material time prior to 2018, question the correctness of the Trust property's classification."
The amendment to which par 12 referred was identified in par 11:
"11 On 1 July 2002, s 6(4)(a) of the LT Act was amended by s 24(b) of the Taxation Legislation (Miscellaneous Amendments and Repeal) Act 2002 (Tas). It introduced the requirement that a company demonstrate that it 'beneficially own[s]' lands in order that it attracts principal residence classification 'for a financial year'."
In its reply to the respondent's statement of facts and contentions, the appellant submitted that par 12 amounted to "a new allegation the relevance of which is unclear". Further, the appellant submitted that the allegation "is clearly not the fact if regard is had to the course of dealings prior to the enactment of the LTA, that is to say, it is clear that an application for principal residence status was made by the Trust and accepted by the respondent prior to 2000, which led to express recognition by the respondent that the land was principal residence land".
In written submissions to this Court, the appellant submitted there is no reference in the respondent's rejection letter of 8 November 2018 to the allegation of fact found in par 12. The appellant contended that the fact asserted in par 12, if permitted to be proved, would be of limited relevance.
In the context of the background circumstances leading to the reassessments, in my view the objection to par 12 is misconceived. Over the years, the land in question was subject to different classifications and an exemption from land tax. In the relevant period, the legislative amendment identified at par 11 occurred and, in the letter of 8 November 2018 disallowing the objections, the respondent referred to the history and to the continuation of the exemption notwithstanding the amendment in 2002. The respondent commented upon the failure of both the respondent and the appellant to question the correctness of the classification following the amendment:
"You were not informed by the Commissioner or the Treasurer that the exemption previously available for trust held property under the LITA was considerably stricter under the Act nor that the Property would not be eligible for an exemption or principal residence land classification under the new legislation from 1 July 2002. Neither yourself nor Vauban conducted any review of the new legislation to confirm that correct treatment of the Property for the purposes of the Act.
The principal residence land classification applied to the Property for the purposes of the Act in the 2001/02 financial year then continued to apply in subsequent financial years and it is apparent that neither yourself, Vauban or the Commissioner questioned the correctness of this classification at any material time prior to 2018 (including subsequent to the 2002 amendments to subsection 6(4)(a) which restricted the ability of (trustee) companies to obtain a principal residence land classification)."
The respondent's letter of 8 November 2018 then dealt chronologically with the events concerned with the investigation by the respondent that led to a retrospective reclassification. It is apparent from the history outlined in the respondent's letter that the appellant did not apply for a determination that the property was principal residence land, and the respondent did not, prior to 2018, question the correctness of the property's classification. The statements in par 12 merely reflect the fact of the matter and the facts set out in the respondent's letter of 8 November 2018.
Alert to the appellant's contention that the addition of par 12 was prohibited by the operation of s 90 of the TA Act, the Chief Magistrate made a finding of fact that the respondent was "not seeking to add a fact or ground in relation to the review" through the inclusion of par 12. That finding of fact does not involve a question of law for the purposes of s 47 of the MCAAD Act, and the appeal in this regard is incompetent.
In addition, in my view the Chief Magistrate's finding of fact is correct. Further, on the hearing of the appeal counsel for the respondent confirmed that par 12 is merely a statement of historical fact, and not a statement of a ground on which the respondent asserts a magistrate should dismiss the application for review.
Paragraphs 56-61
Objection is taken to pars 56-61 of the respondent's statement of facts and contentions:
56 It is principally submitted, of course, that because s 19(1) does not confer any discretion upon the Commissioner the applicant's contention, in this regard, is misconceived. Nevertheless, it is submitted further, or in the alternative, that the applicant's un-ironic maintenance of this contention reveals another powerful reason why s 19(1) does not confer a discretion on the Commissioner; and what is more, why, even if it did, such a discretion would not be exercised in the applicant's favour.
57 This can be discerned having comparative regard to a legislative provision in Commonwealth legislation which authorises the Commonwealth Commissioner of Taxation to release an individual taxpayer, or a trustee of a deceased estate, from the liability to meet a taxation debt if that taxation debt would cause serious hardship. Section 340-5(3) of sch 1 to the Tax Administration Act 1953 (Cth) provides, to this end, that:
The Commissioner may release you, in whole or in part, from the liability if you are an entity specified in the column headed "Entity" of the following table and the condition specified in the column headed "Condition" of the table is satisfied.
Entity and condition Item Entity Condition 1 an individual you would suffer serious hardship if you were required to satisfy the liability
2 a trustee of the estate of a deceased individual the dependants of the deceased individual would suffer serious hardship if you were required to satisfy the liability
As can be seen, the exercise of the discretion confided by s 340-5 of that Act requires precisely the kind of evaluative exercise adverted to at para 52 of this statement. As demonstrated at para 50, the Commissioner is required to undertake a similar – albeit more general – evaluative exercise under certain sections of the TA Act.
58 So far as the exercise of any hypothetical discretion to forgive the applicant's land tax liability is concerned then, respectfully, it is worth recalling the relevant evidence in this application. On 7 September 2018, Mr Abbott wrote to Mr Nathan Read at the Department of Treasury and Finance saying, to this end, that:
'30K is a lot of money to me. To illustrate the point, last year as I approached retirement I acquired from the US a cased pair of Arrieta Siglo shotguns in 28 gauge and 410. They were right handed and had to be restocked in Victoria to fit me in left hand configuration. It was all a lot of trouble but I saved $50K off the new price ex-Spain (and the price ex-UK, for the same thing made by Holland Holland, would have been over $200K) and also some delay. They owe me all up about $32K; slightly more than the amount which you now claim for exactly nothing and on no reasonable basis.'
59 It is apparent from this passage that although it is the applicant that is liable for the land tax, it is Mr Abbott that ultimately has to make good, as he has done, that liability. In light of the circumstances Mr Abbott discloses, even accepting a discretion similar to that in s 340-5(3) existed in s 19(1) of the TA Act, it is difficult to see how it could be said he would 'suffer serious hardship if … required to satisfy [the applicant's land tax] liability.'
60 It is observed that it is not to the point that the applicant was mistakenly assessed as not being liable for land tax over an extended period of time. The whole purpose of the five-year reassessment regime under the TA Act is to collect or remit taxes that for one or other reason were wrongly collected or not collected at all. The applicant just happens to fall into the latter category, and has, irrespective of the outcome of this application, substantially benefited from the Commissioner's mistake between the 2000–2001 to 2012–2013 financial years. Any suggestion that the reassessment was, for whatever reason, 'unjust' or 'unfair' trades no currency with taxation recovery. As Gleeson CJ and Gummow and Hayne JJ made clear in Commissioner of Taxation v Ryan, in an Act that sets down a scheme for taxation recovery:
'… the question for decision is what are the circumstances in which an amended assessment may lawfully be issued? That question is not answered by asserting the existence of any "policy" or "general intention" unless that policy or intention is to be found reflected in the provision of the Act. Appeals to general notions of fairness or justice do no more than attempt to mask the absence of any foundation in the legislation for the conclusion which is asserted.'
61 Accordingly, it is submitted that, even if there was any discretion on the part of the Commissioner not to exercise his powers under ss 18(1) and 19(1) of the TA Act, on no basis would the applicant be an appropriate candidate for the exercise of any apparent discretion."
The basis of the appellant's objection to the inclusion of pars 56-61 is identified in pars 32-34 of the appellant's written submissions:
"32 The respondent by the impugned paragraphs seeks to circumscribe any discretion of the respondent by or by reference to the detailed federally legislated requisites for the exercise by the Federal Commissioner of Taxation of his discretion to relieve a taxpayer against liability to discharge a federal tax assessment regularly made in the ordinary course of events under federal tax law.
33 There is no reference to the assertions made by the Commissioner by these paragraphs in the objections rejection letter; as set out above, the objections rejections letter relevantly confined the respondent's position to the ground that there was no discretion to exercise. The appellant submits that it follows that these impugned paragraphs cannot ground the Commissioner's case for rejecting the objections and must be struck out.
34 The appellant adds, ex abundanti cautela, that these paragraphs are sharply inconsistent with the conclusion of the objections rejection letter, quoted above at paragraph 11, and, it is submitted, cannot stand with it. Rather, the respondent is bound to his conclusion by section 90(b) of the TAA."
This submission is without substance. The inclusion of these paragraphs has been brought about by the way in which the appellant has advanced the case before the magistrate.
As discussed, the decision of the respondent was conveyed to the appellant by letter of 8 November 2018. The respondent was dealing with the grounds of objection to the reassessments set out in a letter from the appellant to the respondent dated 10 October 2018 (and an earlier objection dated 13 September 2018). The appellant claimed that each of the assessments was invalid and void for want of compliance with the law because at all material times the property was, or was taken to be, "principal residence land and therefore exempt from tax". The specific grounds of objection asserted a number of facts related to ownership and use of the land as the basis for a finding that the assessments were unauthorised by law and contrary to law. The letter then identified an alternative that "if the home did not constitute principal residence land as alleged, which is denied, it is taken to be principal residence land by reason of the conduct of the Crown". A number of historical facts were then set out, including the failure of the respondent to give notice and warning of an intention to change the classification of the property. The appellant's letter then asserted that the conduct of the respondent was unconscionable, with the consequence that the respondent was "estopped" by his conduct from reclassifying the property.
Not surprisingly, in disallowing the objection, the respondent dealt with the appellant's assertion based on estoppel. In rejecting that claim, the respondent advised the appellant of the respondent's view that the respondent cannot "fetter his responsibility to perform statutory duties or exercise statutory functions including with respect to the assessment and reassessment of tax", and that the doctrine of estoppel "is incapable of operating in the circumstances of this matter to prevent the Commissioner from issuing the Reassessments or Assessment".
In this context, the respondent addressed the obligation of the tax payer:
"Whilst the above sufficiently addresses your suggestion that the Commissioner is estopped from issuing the Reassessments, I would add that many of the matters you rely upon in support of your claim for estoppel appear somewhat misconstrued in the context of a revenue authority. As a matter of law, the obligation is upon the taxpayer not only to pay the correct amount of tax but also to ascertain what, if anything, .their land tax liabilities are (Gunasti v Chief Commissioner ofState Revenue [2012] NSWADT 218); Consequently, your insistence that the Commissioner failed or refused to give such advice or to inform or warn Vauban of a change to the legislation overlooks the reality that the obligation is on the taxpayer to correctly discharge their land tax liabilities.
The taxpayer's obligation to ascertain the extent of their land tax liabilities seems particularly relevant in circumstances where a legislative enactment previously relied upon is repealed and replaced by another, as did the Act with respect to the LITA. In this regard, it is never appropriate to assume what the law is and it does not seem unreasonable to expect a taxpayer, particularly one who is an experienced legal practitioner, who was exercising reasonable care in connection with their taxation obligations to have, at some time over the 17 year period the Act has been in force, conducted at least a cursory review of the new legislation in order to determine the extent of any potential liability. However, it is apparent from your letter to the Commissioner of 24 July 2018 that neither Vauban or yourself conducted any review of the Act at any material time."
The respondent's letter then commented on the number of properties in respect of which the respondent was required to assess land tax, and dealt with the suggestion that the respondent had failed to retain, and take proper account of, documentary evidence of the appellant's dealings in 1996. The respondent then addressed the question of a discretion, an issue which had not been raised in the objection by the appellant, but which the respondent added "for the sake of completeness":
"For the sake of completeness, I also advise that the Commissioner is not afforded a discretion not to raise a reassessment of land tax (where the same is conducted within the parameters of the TAA) in circumstances where it is subsequently identified that tax was initially assessed incorrectly. To this end and notwithstanding that the Commissioner's power to issue a reassessment in subsection 19(2) of the TAA is predicated upon the word 'may', the word 'may' when used in a revenue context is frequently obligatory. As stated by Jervis CJ in Macdougall v Paterson [1851] EngR 970, which decision was affirmed by the High Court in Finance Facilities Pty Ltd v FCT [1971] HCA 12:
'The word "may" is merely used to confer the authority: and the authority ·must be exercised, if the circumstances are such as to call for its exercise'.
The above was applied in a land tax context in Gunasti's case (supra) where Member Block held:
'Once the Act rendered the Applicant liable to "tax" - defined as a tax duty or levy under a taxation law - the circumstances required the Chief Commissioner to act. To do otherwise would cause the Chief Commissioner to fail in giving effect to ... the taxation law.'
Accordingly, I am satisfied that the Commissioner is incapable of being estopped from performing his statutory functions and he is required, regardless of any prior representations, not only to assess liabilities but also to reassess any liabilities that were incorrectly assessed initially provided any such reassessment is conducted within the parameters of the TAA."
It was against this background of the respondent having first raised the question of a discretion not to issue a reassessment of land tax, "for the sake of completeness", that the appellant chose to introduce the issue of discretion into the proceedings in the Magistrates Court. The appellant made that choice notwithstanding that it had not mentioned the issue of discretion in its letter of objection dated 10 October 2018. In the application filed in the magistrates court on 4 January 2019, the appellant set out the reasons for the application:
"REASONS FOR APPLICATION:
By a Notice of Determination of decision made by letter to the Applicant dated 8 November 2018 the Commissioner wrongly disallowed two objections made in writing against the assessment of land tax, each of which should have been allowed in full or alternatively in part on one or more of the grounds therein set forth. The first objection is dated and was made on 13 September 2018 against the retrospective levy of 5 years' land tax on the principal place of residence of Andrew James Abbott at 91 King St Sandy Bay and the retrospective increase of 5 years' land tax on the dwelling at 61 Princes St Sandy Bay held by the Applicant qua trustee of the Austerlitz Superannuation Fund. The second objection is dated and was made on 9 October 2018 against the assessment of land tax on King St and the increased assessment of land tax on Princes St for the 2019 financial year. The increases in relation to Princes St result from it being wrongly grouped with King St and the effect of denial of the benefit of the progressive scale. The retrospective assessments resulted from the egregious abuse by the respondent of his discretion confided by s19(2) of the TAA, which could not have been so exercised by any person in the respondent's position acting reasonably. [My emphasis.]
The issue of the respondent's discretion was further advanced by the appellant in the appellant's statement of facts and contentions filed in the Magistrates Court. The written statement asserted:
"Overarching Submissions
8It is submitted that, in the premises just pleaded, the conduct of the Commissioner in making the reassessments at least for the relevant prior years revolts the senses, and should only be determined to be correct in law if that is clear beyond sensible question. It is submitted that the contrary is the case, that is to say, that the position correct in law is that:
(a)the Commissioner was not and is not obliged to retrospectively reassess the land tax payable for the relevant prior years but on the contrary had, and the Court has a discretion not to do so which clearly ought to be exercised in the applicant's favour presently at least in relation to the relevant prior years;
(b)the Commissioner had, and the Court has, a discretion to retrospectively reassess the land tax payable for the 2018 year and to assess the land tax payable for the 2019 year, which ought to be exercised in the applicant's favour for those years;
…" [Footnotes omitted.]
It is apparent from this overview of the history of the proceedings that the appellant did not base its objection to the reassessment on a failure of the respondent to exercise a discretion not to reassess the classification or not impose additional land tax. The objection centred on estoppel did not include an assertion that the respondent possessed such a discretion and should have exercised it. It was the respondent, in disallowing the objection, who first mentioned the question of discretion, to dismiss it, "for the sake of completeness". The appellant picked up the question of discretion and included it in its case before the magistrate. If either party is caught by the operation of s 90(b) in this context, it is the appellant and not the respondent.
In respect of pars 56-61 of the respondent's facts and contentions, the Chief Magistrate made a finding of fact that the matters contained in those paragraphs amounted to submissions which were not "outside the grounds of objection and reasons for the rejection". No question of law is involved and this aspect of the appeal is also incompetent.
In addition, the appellant having raised the issue of discretion in the application for review, it is quite appropriate for the respondent to answer the appellant's case by asserting not only the absence of a discretion, but in the alternative a case that if the discretion existed, it would not be exercised in the appellant's favour. Bearing in mind the manner in which the issue of discretion has arisen in the current proceedings, if necessary I would not hesitate to grant leave to the respondent pursuant to s 90.
Withdrawal of concession – paragraph 73
Paragraph 73 of the respondent's statement of facts and contentions is as follows:
"Moreover, although nothing turns on the matter, it is equally astonishing that the applicant, in relying so heavily on cl 10(b)(ii), overlooks that it expressly only has effect 'where a Guardian is named in the Schedule' to the trust deed. As it happens, no Guardian is named in that schedule. Therefore, the applicant's contentions to this end are not only wrong as a matter of legal principle, but also unsustainable as a matter of fact."
The appellant advanced the following contentions:
· In issue is whether or not a particular trust constitutes a fixed trust for the purposes of an exemption under the Land Tax Act.
· In the submission advanced by the appellant, "one aspect of the argument in relation to the trust being a fixed trust … is whether or not the trustee is bound under clause 10 of the trust deed relevantly to not exercise its discretionary power under clause 6 to advance the trust fund prior to the vesting day 'in such a manner as to impair or diminish the expectations of' the sole remaining specified beneficiary".
· As to clause 10 with which par 73 of the respondent's statement of facts is concerned, the appellant submitted:
"The appellant further submits that clause 10 of the trust deed contains a drafting error patent on its face. Read literally, the clause mistakenly makes the constraint on the trustee's power of advancement contingent upon a guardian being named in the schedule to the trust deed, in circumstances in which there has been no such guardian from the outset. The clear intention, the appellant contends, is to constrain the trustee's power irrespective of the appointment of a guardian. This interpretation was expressly conceded by the Commissioner by the objections rejection letter at footnote 14 (Court Book, p 26).
Paragraph 73 of the respondent's statement of facts and contentions (Court Book, p 94) argues to the contrary by asserting that a ground upon which this aspect of the appellant's argument is to be rejected is because it is defeated by the literal terms of clause 10."
The appellant submitted that the respondent is bound by s 90(b) of the TA Act to the concession made in footnote 14, and it is not now permissible for the respondent to take the point against the appellant "that the discretion of the trustee to advance the trust fund is not constrained by the interpretation adopted by the respondent in the objections rejection letter".
As to the "concession", the relevant part of the respondent's letter disallowing the objection is as follows:
"With respect to clause 10 of the Deed, whilst clause 6(a) of the Deed, which provides for distributions of capital to any beneficiary, is expressed to be subject to clause 10 and clause 10(b)(ii) seeks to prevent the trustee from exercising its discretionary powers 'in such a manner as to impair or diminish the expectations of any Specified Beneficiary ... pursuant to clause 4 hereof', I do not consider that clause 10(b) converts, or is capable of converting, the Gypsy Trust into a fixed trust.
With reference to the above and whilst I have some reservations as to whether or not clause 10(b) of the Deed is capable of applying in the circumstances of this matter,14 clause 10(b)(ii) does not in fact prevent the trustee from making discretionary distributions of capital as you maintain; it simply requires that any discretion to make such distributions be exercised in such a manner as to be cognisant of the expectations of yourself as the last Specified Beneficiary. Accordingly, it is not the case that there is no discretion in the trustee to vary the quantum of the beneficiaries' interests to income or capital and, as a result, I am not satisfied the Gypsy Trust constitutes (or is capable of being construed as) a fixed trust as identified in Vegners (supra)."
Footnote 14, upon which the appellant relies as amounting to a concession by the respondent that the appellant's interpretation is correct, was in the following terms:
"The operation of subclause 10(b) of the Deed is stated to apply only 'where a Guardian is named in the Schedule' and no Guardian is named in the Schedule. I assume, and will proceed on the basis that, this is in error and that subclause 10(b)(i) was meant to apply where a Guardian is named in the Schedule and that subclause 10(b)(ii) was meant to apply in all circumstances where no Guardian is named in the Schedule."
The Chief Magistrate found, correctly, that in footnote 14 the respondent was not conceding that the construction for which the appellant contended was correct. The respondent merely assumed a particular state of affairs favourable to the appellant for the purpose of responding to the appellant's objections. In any event, as the Chief Magistrate found, par 73 does not express a ground of objection. It amounts to no more than a submission in response to the appellant's contentions. This view of the magistrate was confirmed by the respondent during the hearing of the appeal. Counsel for the respondent agreed that par 73 does not express a ground of objection on which a magistrate should dismiss the application for review. The Chief Magistrate made findings of fact and no question of law is involved.
For these reasons, the appeal was dismissed.
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