Vicinity Funds Re Ltd v Commissioner of State Revenue (No 2)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S ECI 2021 1838

VICINITY FUNDS RE LTD (and others according to the Schedule)	Plaintiffs
v
COMMISSIONER OF STATE REVENUE	Defendant

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JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 July 2021
DATE OF JUDGMENT:	22 October 2021
CASE MAY BE CITED AS:	Vicinity Funds RE Ltd v Commissioner of State Revenue (No 2)
MEDIUM NEUTRAL CITATION:	[2021] VSC 687

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TAXATION – Interpretation of statutes – Interpretation of rights of review or appeal of taxation liability – Where taxpayer’s objection referred to Supreme Court where Commissioner did not make determination within 90 days – Whether taxpayer may also refer matter to Victorian Civil and Administrative Tribunal after receipt of determination – Whether mandamus lies - Taxation Administration Act 1997, Part 10, ss 96, 101, 106, 109.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr D McInerney QC Ms K Chan	King & Wood Mallesons
For the Defendant	Mr R Merkel QC Mr E Nekvapil Ms R Amamoo	State Revenue Office

TABLE OF CONTENTS

Introduction and background.......................................................................................................... 1

TAA Part 10......................................................................................................................................... 5

Parties’ constructions of s 106.......................................................................................................... 8

Taxpayers....................................................................................................................................... 8
Commissioner................................................................................................................................ 9

Summary............................................................................................................................................ 10

Analysis.............................................................................................................................................. 11

Principles – Statutory Construction......................................................................................... 11
Taxpayers’ textual analysis of s 106(1)..................................................................................... 13
Historical context........................................................................................................................ 20
Part 10 as a coherent code.......................................................................................................... 24
Taxpayers’ rights and beneficial legislation............................................................................ 27
Election and waiver.................................................................................................................... 30
No duty or power in the Commissioner to make a further referral.................................... 32

HER HONOUR:

Introduction and background

Where, under Part 3 of the Taxation Administration Act 1997 (Vic) (the TAA) the Commissioner of Taxation has made an assessment of the tax liability of a taxpayer under a relevant taxing statute, the taxpayer is given such rights of objection, review and appeal from that assessment as are set out in Part 10 of that Act, including the right to lodge with the Commissioner an objection to the assessment.

This proceeding concerns s 106 of the TAA, by which a taxpayer who has lodged with the Commissioner an objection to an assessment of taxation liability, may request the Commissioner to treat its objection as an appeal and cause it to be set down for hearing in this Court, or to refer the matter to Victorian Civil and Administrative Tribunal for review. The taxpayer may, under s 106, make such a request if it is dissatisfied with the Commissioner’s determination of its objection (under s 106(1)(a)), or if the Commissioner has not yet determined the objection but 90 days have elapsed since the Commissioner received it (under s 106(1)(b)). In this case, the plaintiff Taxpayers objected to the Commissioner’s assessments. Before the Commissioner had determined their objections they requested that the Commissioner treat the objections as appeals, as provided by s 106(1)(b). The objections were set down as appeals in this Court, and the appeal proceedings were commenced.[1] The Commissioner then proceeded to determine the objections. Upon receipt of notices of the determinations, the Taxpayers requested the Commissioner to refer the matters to VCAT for review. The Commissioner did not do so. The Commissioner contends that the Taxpayers had no entitlement to request the referrals, having already elected to proceed with appeals in this Court, and that the Commissioner has no power to make the referrals.
[1]The appeal proceedings are Vicinity Funds RE Ltd & Anor v Commissioner of State Revenue S ECI 2021 0032 and Vicinity Funds RE Ltd & Ors v Commissioner of State Revenue S ECI 2021 0033. They are being managed and heard together.

By this proceeding the Taxpayers seek orders in the nature of mandamus requiring the Commissioner to now refer the matters to VCAT for review.

The resolution of the proceeding turns on the construction of s 106 of the TAA. The question is whether, where a taxpayer has under s 106(1)(b) requested the Commissioner to cause its objection to be set down as an appeal to this Court (or to refer the matter to VCAT for review), the Commissioner is obliged, pursuant to s 106(3), to refer or set down the matter (as they case may be) in response to a second request of the taxpayer purportedly made under s 106(1)(a), selecting a different forum from that chosen in the first instance.

Although the issue for determination is one of statutory construction, a brief history of the proceedings serves to contextualise the parties’ positions.

The underlying dispute concerns the duty payable on the transfer in 2018 to the Taxpayers of two parcels of land which comprise the site of what is now the Emporium shopping centre on Lonsdale Street, and the land on Bourke Street and Little Bourke Street occupied by the Myer shopping centre.[2] Interests within the corporate group of the Taxpayers acquired each parcel of land in 2007 on 299 year leases, each for annual rents of $1. The leases were accompanied by call options in favour of the Taxpayers, each exercisable for $1 during the life of the lease. The lessees acquired the leases and call options on payment of premiums of $450,000,000 and $155,000,000 respectively. The Taxpayers exercised their call options and acquired the lands in March 2018, for a consideration of $1 each.[3] In April 2018, under Part 3 of the TAA, the Commissioner assessed the liability of the Taxpayers to pay duty under the Duties Act 2000 (Vic).
[2]Each appeal concerns lands, held on several separate titles, which are each together “dutiable property” for the purposes of section 10 of the Duties Act 2000 (Vic).
[3] On the Taxpayers’ case, they became concerned, following the decision in Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (in liq) (2013) 251 CLR 592 that, if the lessor companies went into liquidation, the liquidator might disclaim the leases, and exercised their options on that basis.

The Commissioner assessed each transfer as dutiable based on a valuation of the Lonsdale Street land in the sum of $1,020,000,000, on which duty payable was $56,149,500, and of the Myer land in the sum of $480,000,000, of which $26,400,000 was payable. Dissatisfied with the assessments, the Taxpayers lodged objections[4] with the Commissioner on 6 June 2018,[5] contending that the dutiable value of each of the lands is $1.[6] In September 2020 and before the Commissioner had determined the Taxpayers’ objections, the Taxpayers requested that the Commissioner treat their objections as appeals to this Court and cause them to be set down for hearing, as provided by s 106(1)(b) of the TAA.
[4]Pursuant to s 96(1) of the TAA.
[5]Within the required 60 day period, as stipulated ss 99 of the TAA.
[6]The grounds of the taxpayers’ objection, broadly expressed, concern whether it was a proper exercise of the Commissioner’s duty, under s 22 of the Duties Act, to disregard the leases in assessing the unencumbered value of the land were it offered on the open market, where the Duties Act provides that in determining that value there must be disregarded any interest, agreement or arrangement (other than an encumbrance) granted or made in respect of the land that has the effect of reducing the value of the land (s 22(2)), but that such an interest is not to be disregarded if the Commissioner is satisfied it was not part of an arrangement or scheme to avoid duty otherwise payable on that transfer of land (s 22(3)). In assessing the dutiable value of the lands, the Commissioner disregarded the leases. The Taxpayers contend, among other things, that the leases were not interests, agreements or arrangements in respect of the lands, and that the Commissioner erred in the performing the task required of him under s 22(3).

The appeal proceedings were commenced in this Court on 11 January 2021 upon the Commissioner filing the objections.[7] On 2 March 2021 the Commissioner gave written notice to the Taxpayers of the determination of their objections, disallowing them.[8] On the same day, the Commissioner advised of his intention to apply in the appeal proceedings for the determination of a separate question before the hearing of the substantive appeals, as to the nature of the appeals under s 106. The Commissioner’s summons seeking that determination was filed on 24 March 2021. The Taxpayers opposed the determination of a separate question, submitting that the appeals should proceed by way of merits review, but that the nature of the appeals ought be decided together with the appeals. On 15 April 2021 I heard the Commissioner’s application for a separate question and ordered that a separate question be tried pursuant to rule 47.04.[9] On 26 April 2021 the Commissioner filed his submissions on the separate question.
[7]Order 7 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2018 which applies in a proceeding in the Trial Division of the Supreme Court where, following a decision of the Commissioner upon an objection when the objector requests that the objection be treated as an appeal to the Court (r 7.02(a)), provides (by r 7.05) that the Commissioner shall file in the Court the objection which an objector has requested be treated as an appeal to the Court; and when the objection is filed, the objection is set down as an appeal.
[8]By s 101(2) of the TAA the Commissioner may determine an objection that is subject to a right of review or appeal at any time before the hearing of the review of appeal proceedings commences.
[9]Vicinity Funds RE Ltd v Commissioner of State Revenue [2021] VSC 200.

Three days later, on 29 April 2021, the Taxpayers, by written notice to the Commissioner, advised that they were dissatisfied with the Commissioner’s determination of their objections of 2 March 2021, and sought to request, pursuant to s 106(1)(a) of the TAA, that the Commissioner refer each matter to VCAT for review. On 4 May 2021 the Commissioner advised the Taxpayers that, in the circumstances, he considered there to be no proper basis for the exercise of power under s 106(1)(a).

Shortly before the separate question came on for hearing the Taxpayers accepted that the appeals should proceed by way of judicial review, and not merits review. On 17 May 2021 I ordered that:

The answer to the question set down to be tried as a separate question … is: Each appeal before the Court under s 106(1)(b) of the Taxation Administration Act 1997, insofar as it concerns the respondent’s state of satisfaction or nonsatisfaction under section 22(3) or, if and to the extent it arises, section 22A(2) of the Duties Act 2000, should proceed by way of judicial review.

On 28 May 2021 the Taxpayers issued the present proceeding seeking orders in the nature of a writ of mandamus directing the Commissioner, pursuant to s 106(3), to refer each of his notices of determination to VCAT for review, in response to their request made pursuant to s 106(1)(a) of the TAA. The Taxpayers also seek a declaration that once each matter is referred to it, the Tribunal will thereby be seized of jurisdiction to review the matter pursuant to s 111(1) of the TAA and s 48 of the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act). The Taxpayers made clear in their submissions in this proceeding that they wish to obtain merits review of the Commissioner’s assessments.

The Commissioner issued a summons on 9 June 2021, seeking orders that the plaintiff’s originating motion be dismissed.

TAA Part 10

The statutory context within which s 106 sits is as follows.

By s 8 of the TAA the Commissioner is empowered to make an assessment of the tax liability of a taxpayer. The Commissioner must serve a notice of assessment on the taxpayer[10] and the taxpayer must pay the amount assessed.[11]
[10]TAA s 14.
[11]As provided for in the relevant taxing statute. By s 104 of the TAA, the fact a review or appeal is pending does not affect existing taxation liability; by s 108 the taxpayer may make a request under s 106 before paying its assessed liability and the Commissioner may apply the Court for an order that such liability be paid before the determination of that review or appeal.

The taxpayer is given such rights of objection, review and appeal as are set out in Part 10 of the TAA.

Part 10 commences with s 96, by which a taxpayer may lodge with the Commissioner a written objection, if dissatisfied with an assessment.[12]
[12]Section 96(1) provides that a taxpayer may lodge a written objection if dissatisfied with an assessment (other than a compromise assessment), a valuation made for or on behalf of the Commissioner by the Valuer-General under s 21(1)(b) of the Land Tax Act 2005, or a decision of the Commissioner under the Payroll Tax Act 2007.

Section 96(2) provides in substance that no court or tribunal has jurisdiction or power to consider any question concerning an assessment or decision referred to in s 96(1), except as under Part 10 (that is, it is a privative clause).

By s 97, taxpayer must state the grounds for its objection, in writing, “fully and in detail”. By s 98, on an objection, the objector has the onus of proving the objector’s case.

By s 99, an objection must be lodged within 60 days after service of the notice of the assessment. The Commissioner may extend the time within which an objection may be lodged, and such decision is non-reviewable.[13]
[13]TAA s 100.

Section 101 provides –

(1)The Commissioner must consider an objection and either allow the objection in whole or in part or disallow the objection.
(2)The Commissioner may determine an objection that is subject to a right or review or appeal at any time before the hearing of the review or appeal proceeding commences.

As such, the Commissioner is under a duty to determine each objection, but may do so, in the case of an objection under review or appeal, at any time up until the review or appeal commences to be heard.

By s 102, the Commissioner may suspend the determination for the reasons there set out.

By s 103, the Commissioner must give written notice to the objector of the determination of the objection, including the reasons for disallowing an objection or for allowing an objection in part only.

Section 106 sits within Division 2 of Part 10 (headed “reviews and appeals”), and provides –

106 Right of Review or Appeal
(1) If –
(a)a taxpayer is dissatisfied with the Commissioner’s determination of the taxpayer's objection; or
(b)90 days (not including any period of suspension under section 102) have passed since a taxpayer’s objection was received by the Commissioner and the Commissioner has not determined the objection

the taxpayer, in writing, may request the Commissioner to refer the matter to the Tribunal[14] or to treat the objection as an appeal and cause it to be set down for hearing at the next sittings of the Supreme Court.
[14]Tribunal is defined by TAA s 3 to mean the VCAT.

(2) The taxpayer’s request—
(a) in the circumstances referred to in subsection (1)(a), must be made within 60 days after the date of service on the taxpayer of the notice of the Commissioner's determination of the objection; or
(b) in the circumstances referred to in subsection (1)(b), may be made at any time after the 90 day period (not including any period of suspension under section 102).

(3)Subject to section 107, within 60 days after the request, the Commissioner must refer the matter for review or cause the objection to be set down for hearing accordingly.

By s 107 the Commissioner may require the taxpayer to give further and better particulars of the objection, within 30 days after receiving a request to refer a matter or treat an objection as an appeal. If particulars are given, the Commissioner is not bound to refer the matter or cause the objection to be set down for hearing until 30 days after the Commissioner has received “full details” of the objection, and where particulars are not given, the Commissioner must not refer the matter or cause the objection to be set down for hearing.

Section 109 concerns the grounds of review or appeal and provides –

On a review or 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 –
unless the Court or Tribunal otherwise orders.

By s 110, the taxpayer has the onus of proving the taxpayer’s case on a review or appeal.

Section 111 concerns referrals to the Tribunal. By s 111(1) the Tribunal must review a matter referred to it and, subject to s 111(2), may confirm, reduce, increase or vary the assessment or decision. The powers of the Tribunal provided by s 111 are in addition to its powers and functions under the TAA and the VCAT Act.[15]
[15]TAA s 111(4).

Section 112 concerns appeals to this Court and provides that on the hearing of an appeal the Court may make any order it thinks fit and may by order confirm, reduce, increase or vary the assessment or decision.

Subject to the provisions concerning the refund of amounts and payment of interest following successful objections, reviews or appeals, the Commissioner is required by s 114 to take any action necessary to give effect to a decision on review or appeal, once it becomes final.

Parties’ constructions of s 106
Taxpayers

The Taxpayers submitted that the Commissioner is required by s 106(3) of TAA to refer a matter when requested to do so by a taxpayer (or to cause it to be set down for hearing as the case may be), provided that the conditions set out in s 106(1) and 106(2) have been met, and whenever they have been met.

The taxpayer may make a request in one of two circumstances. The first is prescribed by s 106(1)(a), namely where a taxpayer is dissatisfied with the Commissioner’s determination of its objection. In that case the taxpayer must make the request within 60 days after the date of service on the taxpayer of the Commissioner’s determination of the objection. The second is prescribed by s 106(1)(b), namely where 90 days have passed since the taxpayer’s objection was received by the Commissioner, and he has not determined the objection. In that case, the taxpayer’s request may be made at any time after the 90 day period. Pursuant to s 106(3), once the taxpayer makes a request in accordance with s 106(1)(a) or s 106(1)(b), the Commissioner is bound to refer the matter to VCAT or cause it to be set down as an appeal.

Although the Taxpayers’ application for judicial review is, as it must be, directed to the duty of the Commissioner under s 106(3), the Taxpayers’ argument concentrated on the rights of the taxpayer to make requests to the Commissioner that it said were conferred by ss 106(1)(a) and 106(1)(b), on which requests, it was submitted, the Commissioner is by s 106(3) bound to act.

The Taxpayers construed ss 106(1)(a) and 106(1)(b) as conferring on them two “distinct entitlements” to request that a matter be treated as an appeal to this Court or be referred to VCAT for review – one where the Commissioner has determined the objection, which they characterised as an “informed entitlement”, and the other, where the Commissioner has not done so, which they characterised as an “uninformed entitlement”. The gravamen of their case was that the exercise of one entitlement did not preclude the later exercise of the other; by the exercise of one entitlement, the other does not cease to exist. Although the submission rested on the co-existence of two “entitlements” in the taxpayer to make a request of the Commissioner, the point of the submission was establish specifically that by making a request under s 106(1)(b), the taxpayer was not precluded from later making a request under s 106(1)(a), on which the Commissioner would be obliged to act.

In this case, then, once the Commissioner determined the Taxpayers’ objections in March 2021 and the Taxpayers requested that the Commissioner refer the matter to VCAT within the 60 days allowed by s 106(1)(a), all of the statutory prerequisites for the imposition of a duty on the Commissioner under s 106(3) had been met and the Commissioner was obliged to refer the matter, irrespective of the fact that the appeal proceedings had been commenced in this Court as a result of the Commissioner performing his duty to act on the Taxpayers’ earlier request for the setting down of an appeal, made under s 106(1)(b). Mandamus lies because the Commissioner has refused to perform that duty. The Taxpayers said that their application was made out on that basis and in one sense nothing more need be said, although they elaborated upon their grounds in the ways discussed below.

Commissioner

The Commissioner submitted that properly analysed, section s 106(1) provides a dual pathway which presents the taxpayer with a binary choice as to the forum for the review of the Commissioner’s assessments, being the Tribunal or the Supreme Court. Part 10 of the TAA provides the taxpayer with an election between the Court or the Tribunal, to resolve the controversy created by the taxpayer’s objection to the Commissioner’s assessment under s 96. The controversy, and the path to its resolution, arises in the following way:

(a) First, if more than 90 days have elapsed since the lodging of the taxpayers’ objection, the taxpayer may either request the Commissioner to refer the matter or have the objection set down as an appeal in this Court by making a request under s 106(1)(b), or await the Commissioner’s determination before making any request for an appeal or review. If the Commissioner determines the objection within 90 days the occasion for the taxpayer making that choice will not arise.

(b) Second, when making a request under s 106(1)(a) or s 106(1)(b), the taxpayer must elect whether to request a referral to the Tribunal, or that the objection be treated as an appeal and set down for hearing in the Supreme Court.

Although s 106(1) may present the taxpayer with a choice, as the Commissioner put it, the path through Part 10 is linear. Parliament has not intended that a taxpayer can elect to pursue one route and then if it does not like where that route is headed, change its mind and choose that other route as well as, or instead of, the route previously chosen. In this case, once the Commissioner caused the objections to be set down for hearing in this Court, the Taxpayers, having made an election to request that their objections be so treated as appeals, were not entitled to make a further election to have the matters referred to VCAT. The Commissioner, having caused the matters to be set down in this Court, has no power to refer to VCAT the matters comprising the same objections. Furthermore, the Court has no jurisdiction or power to grant an order in the nature of a writ of mandamus directing the Commissioner to so act.

Separately, the Commissioner submitted that the grant of an order in the nature of mandamus is discretionary, and in the circumstances even if s 106 is to be construed as the Taxpayers contend, the order should be refused.

The parties’ submissions, and the reasons given in support of the parties’ respective constructions of s 106 are considered further below.

Summary

For the reasons that follow, the Taxpayers’ application for an order in the nature of mandamus is refused, and its originating motion for judicial review will be dismissed. Having caused the Taxpayers’ objections to be set down as appeals in this Court pursuant to requests made by the Taxpayers under s 106(1)(b), the Commissioner was not under a duty to refer the matters to VCAT consequent upon requests purportedly made under s 106(1)(a), and had no power to make such referrals. Section 106 did not confer on the Taxpayers two “distinct entitlements” to seek an appeal or review in the sense that they were entitled to successively exercise those entitlements, requiring the Commissioner to set their objections down as an appeal in this Court, and then requiring him to refers the matters to VCAT.

The conclusion I have reached turns on the construction of s 106. It is unnecessary in the circumstances to determine the Commissioner’s alternative argument that if the Taxpayer’s construction of the provision is correct, mandamus should nevertheless be refused on discretionary grounds.

Analysis
Principles – Statutory Construction

The Taxpayers and the Commissioner emphasised the importance of the statutory text and statutory context respectively, and characterised the other’s submission as privileging context at the expense of the text, or ignoring statutory context. The governing principles are well understood but they bear recalling. Briefly but not exhaustively, they are:

(a) A statutory provision should be construed so that it is consistent with the language and purpose of all of the provisions of the statute – its meaning must be determined by reference to the language of the statute viewed as a whole.[16]
[16]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, [69] (McHugh, Gummow, Kirby and Hayne JJ).

(b) The context of a disputed statutory provision is to be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise. Context in this sense is to be understood in its widest sense and includes the existing state of the law and the mischief which the statute was intended to remedy.[17]
[17]CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey, Gummow JJ).

(c) When considering context it is essential to recall why it is to be considered. As the High Court said in Commissioner of Taxation v Consolidated Media Holdings,

“[T]he task of statutory construction must begin with a consideration of the [statutory] text”. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.[18]
[18]Commissioner of Taxation v Consolidated Media Holdings Ltd (202) 250 CLR 503, [93] (French CJ, Hayne, Crennan, Bell and Gageler JJ) (citation omitted).

(d) As to the relationship between text and context, as Edelman J explained in SAS Trustee Corporation v Miles,

[T]his Court [has] said that the task of statutory construction must begin and end with the text of the statute. That statement does not mean that the text of a statute must be interpreted only according to the range of semantic meanings of the individual words. It means only that the interpretation of a statute, like any other legal instrument, is an interpretation of its words. Those words are interpreted in their context and light of their purpose although legal rules can sometimes exclude or restrict the use of some context. In ascertaining the reasonably intended meaning of Parliament context is, literally, those matters to be considered (simultaneously) together with the text. Context can give words an interpretation that is the opposite of their ordinary meaning and grammatical sense. Context can also permit a construction of the words that excludes their application to matters than would have fallen within the application of their literal meaning. However, as with contractual interpretation, “the clearer the natural meaning the more difficult it is to justify departing from it”, so too in statutory interpretation “questions of degree arise” and it will be more difficult to displace an interpretation that “has a powerful advantage in ordinary meaning and grammatical sense”.[19]
[19]SAS Trustee Corporation v Miles (2018) 265 CLR 137 [64] (citations omitted).

(e) A particular expression of the requirement to have regard to context is that every part of an Act must be read as part of the whole. As Mason J said in K&S Lake City Freighters,

… to read [a] section in isolation from the enactment of which it forms a part is to offend against the cardinal rule of statutory interpretation that requires the words of a statute to be read in their context … Problems of legal interpretation are not solved satisfactorily by ritual incantations which emphasize the clarity of meaning which words have in isolation, divorced from their context.[20]
[20]K&S Lake City Freighters v Gordon & Gotch Ltd (1985) 157 CLR 309, 315.

(f) As to the nature of the task on which the Court is engaged when construing statute, as Gageler J said in Esso Australia v Australian Workers Union,

Difficult though it is, the constructional choice can and must be made in the application of workaday interpretive methodology. Nothing simpler or more sophisticated is involved than attempting sympathetically to determine which construction of the contested statutory text better fits the context of the statutory scheme of which that text forms part.[21]

(g) As to taxing statutes, as the High Court said in Alcan v Commissioner of Territory Revenue, they ‘… do not form a class of their own to which different rules of construction apply; they are to be construed by application of … settled principles… [T]he fact that a statute is a taxing Act … is part of the context and is therefore relevant to construing the Act in accordance with those settled principles’.[22]

[21]Esso Australia Pty Ltd v Australian Workers Union (2017) 263 CLR 551, [71].

[22]Alcan (NT) Alumina) Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, [57] (Hayne, Heydon, Crennan and Kiefel JJ).

For the reasons discussed below, this case does not turn on resolving any apparent tension between the text of s 106 of the TAA and its immediate or broader context, or on any ‘reading down’ of the ordinary or natural meaning of the language chosen by the legislature. There are a number of textual and contextual indicators that consistently and cumulatively identify the Commissioner’s construction as an unforced reading of the text that is sympathetic to its context. The same cannot be said of the Taxpayers’ construction.

Taxpayers’ textual analysis of s 106(1)

The Taxpayers advanced a textual analysis of s 106(1) which was put this way: first, the word, ‘or’ appears between its paragraphs (a) and (b), which means that those paragraphs must be read in parallel, not cumulatively. Next, s 106(1) begins with the word, ‘if’, which, together with the ‘parallel alternatives’ in paragraphs (a) and (b), requires that the subsection will apply whenever the conditions in either paragraph (a) or paragraph (b) are satisfied. Thus, s 106(1)(a), so read, provides,

If a taxpayer is dissatisfied with the Commissioner’s determination of the taxpayer’s objection … the taxpayer, in writing, may request the Commissioner to refer the matter to the Tribunal or treat the objection as an appeal and cause it to be set down for hearing at the next sittings of the Supreme Court.

By that analysis, the Taxpayers submitted that their reading of s 106 as conferring on the taxpayer two distinct entitlements to make a request to the Commissioner, was supported by a natural and grammatical reading of the statutory text. The argument was concentrated on the ‘entitlement’ of taxpayers to make a request of the Commissioner in the separate ways provided by ss 106(1)(a) and 106(1)(b). Once an entitlement conferred by those paragraphs was exercised, the rest would follow in that by s 106(3) the Commissioner is bound to act on any request made by a taxpayer under s 106(1).

The Taxpayers’ textual analysis stated the obvious: that s 106(1) provides two alternative grounds upon which a taxpayer may seek a referral or an appeal, and that satisfaction of the condition set out in either of the paragraphs of s 106(1) is a sufficient basis on which the taxpayer may make a request to the Commissioner. That is true as far as it goes, but does not establish the conclusion for which the Taxpayers contend. To point to the word ‘or’ as disjunctive is to do no more than to name its grammatical role in separating two alternatives. Moreover, to identify that the statute specifies two alternative bases on which a taxpayer may make a request for referral or the setting down of an appeal does not, without more, establish that having made a request on one basis, the taxpayer must be entitled to make a further request should the conditions specified for the alternative basis subsequently become satisfied. That conclusion is not compelled by the language of s 106(1). Tellingly, in order to reach the conclusion advanced by their textual analysis, the Taxpayers substituted the word, ‘whenever’ for the statutory conjunction ‘if’, in s 106(1). ‘Whenever’ may be read as a condition and when so used, ‘if’ and ‘whenever’ may be grammatical cognates. But the words may bear different meanings, depending on their contextual use. ‘Whenever’ may be read as every or any time.[23] The Taxpayers sought to read the word ‘if’ in s 106(1) in that way.
[23]The Macquarie Dictionary gives ‘at whatever time; at any time when’; the Oxford English Dictionary elaborates as follows: ‘At any time when; every time that, as often as. In a qualifying (conditional) clause, the meaning becomes: At whatever time, no matter when’.

Whether the section is required to be read in that way could not be properly answered by reference to that part of s 106 on which the Taxpayers’ submission concentrated. The Taxpayers rested their submission in part on a parsing of the syntactical formula evident in s 106(1), ‘if A then X, or if B then X’, extracted and read in isolation from its context. An abstract reading of that part of the text in this way might suggest that the Taxpayers’ reading is open. However, it does not, even by itself, compel the conclusion that that reading is required. More fundamentally, that analysis is simply not capable of establishing that, read as a whole, the natural and grammatical meaning of the statutory text is as the Taxpayers contend. In this respect the difficulty with the Taxpayers’ textual argument was two-fold. First, that part of the text that it addressed was too sparse to yield the meaning advanced. Second and relatedly, the construction did not reflect a considered analysis of the whole of s 106, let alone the broader statutory context comprising Part 10 of the TAA.

It is evident that the function of s 106(1) is to lay down the conditions for, or the circumstances in which, the taxpayer may make a request to the Commissioner. It is true, as the Taxpayers say, that the factual preconditions in ss 106(1)(a) and 106(1)(b) are different. However, importantly, they are conditions to exercising the same substantive entitlement that s 106 provides, namely to make a request to the Commissioner to do one of two things – to treat the objection as an appeal and have it set down for hearing in the Supreme Court, or to refer the matter to VCAT. In that way, ss 106(1)(a) and 106(1)(b) provide alternative means of arriving at one common end. Once the conditions specified in either s 106(1)(a) or s 106(1)(b) are met, the same outcome results (the taxpayer may make a request to the Commissioner for referral or the setting down of an appeal). The fact the subsection specifies two different sets of conditions for the taxpayer’s requesting the Commissioner to make a referral or set down an appeal, does by not by any necessary reading of the natural and ordinary sense of the text, mean that the taxpayer has two distinct ‘entitlements’ to exercise the right to make that request of the Commissioner by traversing each alternative pathway to that same outcome. In one sense it is correct to describe ss 106(1)(a) and 106(1)(b) as those parts of s 106 that entitle the taxpayer to request a review or appeal, by setting out what conditions must be met in order for such a request to be made. However, what the text does not itself suggest is the gloss for which the Taxpayers contended, namely that the ‘entitlements’ are intended to be such that the exercise of one cannot preclude the exercise of the other at a subsequent time.

For the reasons discussed below, a reading of s 106(1) as conferring entitlements in this way does not sit comfortably with the immediate and wider statutory context within which s 106(1) rests. Before turning to the statutory context it is convenient to consider the Taxpayers’ further arguments in support of that reading.

The Taxpayers submitted that construing the statute as confining the taxpayer to a single exercise of a choice between a review or appeal, was to read down or deprive the taxpayer of rights that the legislature intended to confer on the taxpayer. The result of that reading, so the submission went, would be that where the taxpayer makes request to the Commissioner in the circumstances provided by s 106(1)(b), the taxpayer is forced to proceed with that choice if it is not permitted to make a second request once in receipt of the Commissioner’s determination.

The Taxpayers’ construction rested largely (although not wholly) on the difference between the conditions set by ss 106(1)(a) and 106(1)(b). Section 106(1)(a) was said to permit the exercise of an ‘informed entitlement’ in that when a taxpayer seeks a referral or appeal after the delivery of the Commissioner’s determination of its objection, the taxpayer is informed of the Commissioner’s determination and the reasons for it,[24] but when the taxpayer seeks referral or appeal under s 106(1)(b), the taxpayer does not have the benefit of the determination. In that way, the character of the ‘entitlement’ to be exercised under s 106(1)(a) is different in character to entitlement conferred by s 106(1)(b).
[24]TAA s 103 requires that the Commissioner give notice to the objector of the objection, and in that notice, give the reasons for disallowing an objection or for allowing an objection in part only.

There are several difficulties with that interpretation of s 106.

First, where the option to make a request arises under s 106(1)(b) because the Commissioner has not determined the objection within 90 days of receiving it, and whether the taxpayer proceeds under s 106(1)(b) or decides to wait until receiving the determination before making a request (and at that time choosing between an appeal to the Court or a referral to the Tribunal) is entirely a matter for the taxpayer. If the taxpayer decides to wait, once the determination is received the taxpayer has 60 days within which to make a request to the Commissioner. Contrary to the Plaintiffs’ submission, the taxpayer is not “forced” to proceed in the absence of a determination. The taxpayer may do so, but is not required to do so.

Second, although the Commissioner’s determination of the objection sets out the Commissioner’s case,[25] the Taxpayers’ submission mischaracterises the significance of the determination in the scheme established by Part 10 of the TAA.
[25]TAA s 109 confines the taxpayers’ case on review or appeal to the grounds of the objection, and confines Commissioner’s case on a review or appeal to the grounds on which the objection was disallowed, unless the Court otherwise orders.

Relevantly, Part 10 works in this way. The taxpayer is afforded the right to object to an assessment of tax liability made by the Commissioner (or to a decision of the kind described in s 96(1)). Pursuant to s 96(2), no court or tribunal may consider ‘any question concerning an assessment or decision referred to in sub-section (1))’ except as provided by Part 10. It is the Commissioner’s assessment (or decision, as the case may be) that may be confirmed, reduced, increased or varied by the Tribunal or the Court, in accordance with ss 111 and 112. The taxpayer’s objection responds then to the Commissioner’s assessment or decision, and it is the objection that is the foundation for the process which leads to a review of, or an appeal from, that assessment or decision.

In that process, the taxpayer bears the onus of proving the taxpayer’s case (whether on objection or on review or appeal[26]). On a review or appeal, the taxpayer’s case is limited to the grounds of the objection, subject to the court otherwise ordering.[27] The taxpayer is required to state its grounds for objecting ‘fully and in detail’.[28] After receiving a request to refer a matter or treat an objection as an appeal, the Commissioner may require the taxpayer to give further and better particulars of the objection, is not bound to refer the matter or cause the objection to be set down for hearing until after the Commissioner has received ‘full details’ of the objection, and where particulars are not given, the Commissioner must not refer the matter or cause the objection to be set down for hearing.[29] Particulars may be sought whether the request for referral or setting down is made under s 106(1)(a) or s 106(1)(b) – that is, even where the Commissioner has determined the objection before the request is made.
[26]TAA ss 98 and 110.
[27]TAA s 109.
[28]TAA s 97.
[29]TAA s 107.

It is the objection that is treated as an appeal and set down in this Court. The subject of referral to the Tribunal is described in s 106(1) as ‘the matter’ and is undefined. The Taxpayers submitted that the word ‘matter’ was of no real significance and simply meant ‘the thing that is referred to the Tribunal’. The Commissioner submitted that ‘matter’ in s 106(1) should be read as a reference to the matter comprising the taxpayer’s objection to the Commissioner’s assessment and the Commissioner’s determination of that objection, whether the determination is given before or after the taxpayer’s request. Both parties are correct. It is the Tribunal’s function to step into the shoes of the Commissioner[30] so as to remake the original tax assessment, in which it will necessarily consider the objection and, as an affirmative response, the determination. However, it is also true to say that the ‘matter’ is the thing that is referred to the Tribunal which is to be distinguished from an appeal.[31] The meaning attributed to the word ‘matter’ is not determinative of the construction issue.
[30]Conte Mechanical and Electrical Services Pty Ltd v Commissioner of State Revenue (2011) 85 ATR 120 at 122–3 [2], [3] (Pagone J).
[31]See, eg, Frontlink Pty Ltd v Commissioner of State Revenue [2017] VSC 121, [61] (Kennedy J) where her Honour (in passing) described the matter as the ‘the disputed objection’.

In this context it is not correct to say, as the Taxpayers do, that without the benefit of the Commissioner’s determination the taxpayer is relevantly uniformed when deciding whether to seek a review in the Tribunal or to have the objection treated as an appeal before the Court. The taxpayer is taken by Part 10 to be relevantly informed, whether or not in possession of the Commissioner’s determination of the taxpayer’s objection. So much is clear from the requirement that the taxpayer state its grounds fully and in detail in its objection (providing full particulars if requested to do so), which grounds define and limit the taxpayer’s case on appeal or review. As a practical matter, the Commissioner’s determination will inform the taxpayer of the Commissioner’s response to its objection and will in turn (together with the taxpayer’s objection) define the scope of the issues to be determined or considered on the appeal or review. However, both the limits and the detail of the taxpayer’s case are set by the terms of the taxpayer’s objection, and within the scheme created by Part 10, the taxpayer is responding to the Commissioner’s assessment, and not to the Commissioner’s determination of the objection which it necessarily precedes. I accept the Commissioner’s submission that the determination fulfils a role that is akin to a defence in this scheme, once the objection is set down as an appeal or once the matter is referred to the Tribunal for review.

There is nothing in the making of a determination which changes the nature of the appeal or review, or of the issue, which is the correctness of the assessment the subject of the objection. Indeed, s 101(2) explicitly provides that the Commissioner may determine an objection that is subject to a right or review or appeal, at any time before the hearing of the review or appeal proceedings commences. That provision ensures that, whether the determination is made before or after a matter is referred to the Tribunal or set down as an appeal in this Court, both the objection and the determination will be before the Court or the Tribunal. As the Commissioner submitted, s 101(2) indicates a clear legislative intention that a determination is a step along the chosen path under s 106(1), and not an event that enlivens a ‘right’ in the taxpayer to make a different choice of forum.

Third, the existence of both ss 106(1)(a) and 106(1)(b) has the consequence that where the circumstances described in s 106(1)(b) arise the taxpayer will have a choice to make, namely whether to request a referral to the Tribunal or the setting down of an appeal, or whether to wait until the Commissioner has determined the objection, at which point the Taxpayer will have 60 days within which to make a request for a referral or appeal. The occasion for exercising a choice will only arise, however, when the Commissioner has not determined an objection within 90 days of receiving it. Where the Commissioner does make a determination within 90 days, the ‘entitlement’ in s 106(1)(b) will never arise. The fact that the occasion for the taxpayer making a request arises in this way, by happenstance as it were, depending upon when the Commissioner determines the taxpayer’s objection, undermines the characterisation of ss 106(1)(a) and 106(1)(b) as provisions intended by the legislature to confer on the taxpayer rights that it is entitled to exercise successively.

Historical context

The Taxpayers submitted that the construction for which they contend was reinforced by its statutory history. The Taxpayers made this submission which they said was supported by reference to the history of the current s 106 (sitting within Part 10):

The TAA did not by its terms evince an intention to deprive the taxpayer of an entitlement to seek referral once finally in possession of a decision on the objection and able, for the first time, to exercise its informed entitlement.

That proposition cannot be drawn from the statutory history.

Relevantly, the Stamps Act 1958 (Vic) originally provided that a person dissatisfied with an assessment of duty under that Act could appeal to the Court.[32] From 1978 the Stamps Act included an objection process, providing that a person dissatisfied with an objection decision could request either referral to the Victorian Taxation Board of Review (which was subsequently replaced by the Appeal Tribunal and later VCAT), or an appeal to this Court.[33] The process for which the Stamps Act provided was that a referral to the Tribunal (or the setting down of an objection as an appeal to this Court) may be sought by the taxpayer after the Commissioner had determined the taxpayer’s objection. Since the introduction of the alternative forms of review of the Commissioner’s assessment of the taxpayers’ liability (review by a tribunal or an appeal to the Court) the taxpayer has had the opportunity to choose between those fora and to make a request to the Commissioner accordingly. However, in the predecessor provisions to s 106[34] the taxpayer had to await the provision of a determination before it could request that the dispute be referred to the Court or Tribunal.
[32]Stamps Act 1958 (Vic) (as made), s 33. See also similarly drafted provisions in predecessor legislation going back to The Stamp Duties Act 1879 (Vic), s 41.
[33]Taxation Appeals Act 1972 (Vic) s 19; Victorian Government Gazette, No 72, 9 August 1978, 2573; Administrative Appeals Tribunal Act 1984 (Vic) s 78(1); Tribunals and Licensing Authorities (Miscellaneous Amendments) Act 1998 (Vic) s 311, Sch 1 item 82.1; Stamps Act 1958 (Vic) ss 33A, 33B.
[34]Relevantly to this context, Stamps Act 1958 (Vic) s 33B; see also Land Tax Act 1958 (Vic) s 25 and Pay-roll Tax Act 1971 (Vic) s 33.

The alternate rights of referral under s 106(1) were introduced in their present form in the TAA as first written. Before the introduction of the TAA the legislation (the Stamps Act 1958 which was replaced by the Duties Act 2000) did not provide any timeframe within which the Commissioner must make a determination. The opportunity for the taxpayer to decide whether and in which forum it wished to have the assessment reviewed would arise once the determination was made, whenever that might be. The TAA, which provided a new single tax review and appeal process, was intended (amongst its other objects) to remedy the mischief this caused in delaying the resolution of tax disputes.[35] The method by which it did so was to introduce s 106(1)(b), allowing the taxpayer to request a referral where 90 days have passed since its objection was lodged.
[35]Victoria, Parliamentary Debates, Legislative Assembly, 10 April 1997, 654 (Stockdale). Although the cognate Commonwealth legislation, the Taxation Administration Act 1953 (Cth) similarly provides a timeframe within which the Commissioner may decide an objection, before which the taxpayer may proceed to review or appeal without waiting further, it operates differently: s 14ZYA of that Act deems the failure to decide an objection, within 60 days of a notice to so decide furnished by the taxpayer, to be an ‘objection decision’, referable to a court or the Administrative Appeals Tribunal at the taxpayer’s election. However, the federal Commissioner is not bound to this deemed decision as his ‘case’ in the way as is the Victorian Commissioner.

As discussed earlier, the addition of s 106(1)(b) does not deprive the taxpayer of anything. The taxpayer may choose to wait until the Commissioner has determined the objection, before making a request for a referral or the setting down of an appeal. If the taxpayer elects to wait, its position, and the opportunity for review afforded to it, is no different from that provided under the earlier legislation. Compared with its previous position (before the introduction of s 106(1)(b)) the taxpayer losses nothing by the provision of the option to request a referral or appeal without waiting for a determination.

The Taxpayers sought to make much of the information asymmetry said to prevail where the taxpayer elects, as they did, to seek a referral or review, under s 106(1)(b). To illustrate the point they submitted that they had been disadvantaged in the conduct of their objection in this case because of the dilatoriness of the Commissioner, who should not be able to benefit from his own delay. The attribution of fault or cause in the chronology of this proceeding was contested. That question of fact does not determine the statutory construction question (and nor was it put that way). Any information asymmetry must be seen in the context of the significance of the objection within the scheme provided by Part 10, which limits the taxpayer’s grounds on appeal or review and which must in all cases be formulated without the benefit of the determination, as discussed. But in any case, any lack of information in the Taxpayers at the point of their decision to seek an appeal under s 106(1)(b) was a function of the choice that they made to proceed when they did.

The Taxpayers characterised the amendment affording the taxpayer the right to request a referral or appeal after the elapse of 90 days as one which was beneficial to the taxpayer by placing a ‘time limit’ on the Commissioner to make a determination. The language of ‘time limit’ is used in the extrinsic materials to refer to the 90 day limit, and in introducing the legislation the Treasurer said that the purpose of the 90 day time limit was to place a ‘stricter requirement on the Commissioner to deal with objections expeditiously’.[36] However, within the statute, the only true time limit for the Commissioner’s determination is in s 101(2), that is, before the first hearing of the review or appeal after a referral. The 90 day period in s 106(1)(b) functions in two ways: it allows the taxpayer to proceed to an appeal or referral without awaiting the Commissioner’s determination, and it brings the hard time limit in s 101(2) into play by bringing the Commissioner before the Court or Tribunal, where his determination (which defines the limits of his case under s 109) must be made before the hearing commences.
[36]Victoria, Parliamentary Debates, Legislative Assembly, 10 April 1997, 654 (Stockdale).

The Taxpayer’s real complaint was that s 106(1)(b) is to be read beneficially but its operation is not beneficial enough unless it is given the construction for which they contended. As they put it, it would be strange to confer on the taxpayer the ability to expedite the proceeding but to require them to do so without the benefit of a determination. That is in fact what the statute does, and there nothing in the statutory text or context to suggest that it is strange or improbable that it does so. It is correct to say that s 106(1)(b) is in a general sense beneficial to the taxpayer, but, given the textual and contextual indications discussed, characterising it in that way is insufficient to support the argument that it must be read as affording the taxpayer an opportunity to request a referral or review after the elapse of 90 days and then to re-make that decision with a second request for referral or review, after the determination has been made. It is instructive that with the introduction of the TAA which included s 106(1) in its current form, the remaining provisions of Part 10, which exclusively govern the hearing and determination of questions concerning the objection, do not change when a taxpayer takes one or the other option. In either circumstance, the taxpayer’s case will be limited to its objection, and the Commissioner’s case will be limited to his determination, and the Court or Tribunal will hear those cases in deciding the appropriate or lawful assessment. Plainly, then, the option presented to the taxpayer is to proceed with a referral in advance of a determination being made, which determination must ultimately be provided as the case against it.

Part 10 as a coherent code

The conclusion that the legislature did not intend, by s 106(1), to confer on the taxpayer a right to make more than one request for a referral or the setting down of an appeal is fortified when attention is paid to the nature of the right conferred on the taxpayer by s 106(1), which is a right to make a request to the Commissioner by choosing between two different and inconsistent alternatives – to have the matter referred to the Tribunal or to treat the objection as an appeal and have it set down for hearing in the Supreme Court.

That review or appeal are alternatives between which the taxpayer must elect is made plain by the language of s 106(1) (‘…refer the matter to the Tribunal or treat the objection as an appeal and cause it to be set down…’) which is repeated in s 106(3). ‘Review’ and ‘appeal’ are presented as alternatives throughout Part 10.[37] That they are in substance, distinct and alternative processes, hardly needs elaboration.[38]
[37]See ss 107, 108, 109, 110, 114, 115, 116.
[38]See, for example, VCAT Act ss 51, 98, 109 governing process in the Tribunal.

Furthermore, by force of s 106(3), the taxpayer’s request for a referral or the setting down of an appeal has the consequence that the Commissioner is required to act in accordance with the request, within 60 days. Once the Commissioner acts, if a referral is made, the Tribunal is required by s 111 to review the matter. The referral will equally operate as a conferral of review jurisdiction on the Tribunal by s 48 of its Act. If the taxpayer’s objection is set down as an appeal, the Court is seized of jurisdiction upon the filing of the documents and the effecting of the processes for which the Chapter II rules provide.

The consequence of the Taxpayers’ construction of s 106(1) as conferring ‘distinct entitlements’ to request a review or appeal, is that the taxpayer is entitled to re-exercise a choice already made, between two fundamentally different and inconsistent alternatives for reviewing the assessment of its tax liability. The further consequence is that where the taxpayer makes a request for a referral once an appeal has already been set down (or requests an appeal after a referral has been made) two distinct bodies, with different powers and functions, would have the jurisdiction and power to resolve the same controversy in respect of the same subject matter, in parallel but with different hearing and review procedures.

As the Commissioner submitted, the Taxpayers’ construction raises but does not answer a series of questions about how review and appeal proceedings existing in parallel ought be approached. As the Commissioner’s submissions asked rhetorically, would the appeal proceedings march in tandem with the Tribunal proceeding and if so, could a taxpayer use that device to explore the benefits of both fora simultaneously? The Taxpayers recognised the difficulty with their position by indicating that if a referral were made, once the Tribunal is seized of jurisdiction they would elect not to pursue the appeal proceedings. The Commissioner indicated that in that event, he would contend that only the appeal proceeding in this Court ought be pursued. The Taxpayers’ indication does not grapple with the consequences of their construction.

The Taxpayers’ construction posits that the legislature intended to permit the generation of the real practical difficulties that may arise from the existence of parallel proceedings in different jurisdictions,[39] without supplying any mechanism for dealing with those difficulties, and without any textual indication in part 10 of the TAA, as to how the kind of conflicts that may arise on the Taxpayer’s construction, ought be resolved in accordance with the statutory scheme.
[39]See generally, Hocking v Medical Review Board of Australia [1024] ACTSC 48, [102]; [119]-[129].

That construction is improbable for parliament to have intended, in the context of Part 10 of the TAA, which can be properly characterised as a single cohesive framework for the determination of challenges to the assessment of state tax liability. It is no answer to point, as the Taxpayers did, to the breadth of the Court’s inherent powers to deal generally with competing or overlapping proceedings in different jurisdictions.[40] To submit that the Court would find a way to manage the consequences of accepting the Taxpayers’ construction is to avoid the construction question rather than to address it. Similarly, the Taxpayers argued it was not an abuse of process to initiate proceedings in respect of the same dispute in different fora, where the two fora offer different remedies. This may be so in some contexts but does not meaningfully contribute to the task of construing the statute.
[40]See, eg, Commissioner of Stamps (SA) v Telegraph Investment Co Pty Ltd (1995) 184 CLR 453 (Commissioner of Stamps), 464 (Brennan CJ, Dawson and Toohey JJ).

As the Commissioner correctly submitted, s 96(2) establishes Part 10 as an exclusive code for the resolution of Victorian tax disputes. That code consists of the carefully worked out language of Part 10. The effect of the privative clause is that a taxpayer may not challenge their assessment in any other way, for instance by seeking restitution on a common count. As it was put in the Second Reading Speech for the Taxation Administration Bill which enacted the TAA, the framework established by Part 10 ousts other processes, including ordinary judicial review, for a simplified process which is designed to be streamlined and efficient.[41]
[41]Victoria, Parliamentary Debates, Legislative Assembly, 10 April 1997, 651-652, 654 (Stockdale).

In this framework, no provision is made for two parallel referrals to be made, each of which enjoins the receiving body, Court and Tribunal, to decide it. No provision is made for there being two possible and potentially conflicting decisions on a single assessment.

The Taxpayers failed to grapple with the fact that their construction of s 106 would be conducive to the duplication of disputes, and in circumstances in which the making of a determination by the Commissioner does not alter the statutory task for the Tribunal or Court. In each case, that task is to determine the appropriate or lawful assessment and confirm or vary the original assessment accordingly. The determination, by s 109, will assist the Court or Tribunal in that task by providing the Commissioner’s case for the assessment (unless he negates the dispute by allowing the objection in full). The determination cannot, in this statutory framework, be sensibly read as the locus of a fresh dispute for referral.

Just because a reading is improbable or inconvenient does not mean that it is wrong, and it is not the Court’s function to ‘attempt to overcome unintended consequences of the intended operation of a provision by construing the provision as if it had a meaning the Parliament did not intend it to have’.[42] However, where two meanings are open, the Court should prefer the meaning that avoids an improbable or unreasonable consequences.[43] Having regard to the articulation of a detailed and carefully worked out scheme for the review and appeal of tax liabilities that has the features already discussed, I consider that it is improbable that the legislature intended to permit the taxpayer to re-exercise a choice of forum for review without providing explicitly for its consequences. Furthermore, for the reasons discussed, even if the Taxpayers’ reading of the text could be described as open, it is not a reading that is required by the ordinary and natural meaning of the text. The Commissioners’ reading is by contrast a constructional choice that sympathetically fits the statutory text within the statutory scheme of which it forms part.[44]
[42]Esso Australia Pty Ltd v Australian Workers Union (2017) 263 CLR 551, [52] (Kiefel CJ, Keane, Nettle and Edelman JJ).
[43]See, eg, CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).
[44]Esso Australia Pty Ltd v Australian Workers Union (2017) 263 CLR 551, [71] (Gageler J).

Taxpayers’ rights and beneficial legislation

The Taxpayers’ ‘distinct entitlement’ characterisation of s 106(1), discussed above, was linked to a broader rights-based argument. They submitted their reading s 106 should be preferred because it is a broader reading of a beneficial provision. By reference to the wider context of s 106 it was apparent that the Commissioner is largely in control of the process of review of the assessment of liability to taxation, and that the taxpayer’s choice of forum is one of the few rights afforded it in the scheme of Part 10. The Taxpayers emphasised the fact that most of the provisions of Part 10 place power in the hands of the Commissioner: the Commissioner alone may allow objections to be lodged out of time, which decision is expressly unreviewable; the Commissioner alone may delay making an assessment or acting on a request for referral by demanding particulars; and the Commissioner is the sole person who may set objections down as appeals in this Court.

It was said that the Commissioner, charged with the administration of the state taxation regime, should be held strictly to his duty, including by the enforcement of fulsome procedures for review. In support of the submission that s 106 should not be construed so as to ‘read down’ the taxpayer’s rights of review, the Taxpayers emphasised these passages from Commissioner of Stamps v Telegraph Investment Co:

… to adopt the construction for which the Commissioner contends would be to preclude the taxpayer from placing disputed matters before the court. The unfairness of that result is obvious. It would be to deny taxpayers access to the courts for the proper determination of their rights and for a statute to do that would, in our view, require clear and unambiguous words. [45]
…
… legislation which empowers an officer of a State, such as the Commissioner, to assess ex parte a liability to pay an impost upon satisfaction of specified criteria, but which requires the taxpayer to pay the duty and conditions its recovery upon success in a court proceeding in which the taxpayer is restricted in proving the case that the criteria of liability were not satisfied, must be clearly expressed in ‘unmistakable and unambiguous language’.[46]

[45]Commissioner of Stamps, 465 (Brennan CJ, Dawson and Toohey JJ) (citations omitted).

[46]Ibid 467-468 (McHugh and Gummow JJ) (citations omitted).

Although Commissioner of Stamps was decided on a question of statutory construction, the principle extracted above is of general application.[47] It is instructive to recall the issue in dispute in that case. There, the Commissioner of Stamps had formed an opinion on his own motion pursuant to s 23 of the Stamp Duties Act 1923 (SA) that a deed was chargeable with stamp duty and had assessed the duty payable by the appellants, who appealed to the Supreme Court and required the Commissioner to state and sign a case pursuant to s 24(4) of that Act. The appellants had sought and obtained leave from the Supreme Court to file affidavits deposing to further facts not set out in the case stated. The question on appeal before the High Court was whether the appellant taxpayers should have leave to file affidavits on the appeal, setting out the facts surrounding the transaction on which duty had been assessed.[48] The Commissioner’s case was that the only procedure by which dissatisfied taxpayers could bring their complaint before the Supreme Court was by the ‘case stated’ procedure, in relation to which the court could not admit further evidence.[49] The taxpayers contended that if they were denied the opportunity to lead evidence of the relevant contested facts the result would be that duty will have been extracted where, by law, it was not exigible in that the taxpayers were denied the right to resist the assessment by proving in the courts that the criteria of liability had not been satisfied.[50] The High Court held that the case stated procedure had no application in that case, and that the case stated procedure did not exhaust the content of the taxpayer’s right to appeal to the Supreme Court. An appeal was available by way of re-hearing de novo, on which the taxpayers were permitted to adduce evidence.[51] Although the question was decided on the construction of the Stamps Act, the plurality made reference to the principles set out in the first part of the extract above, and said that it fortified their conclusion reached by way of statutory construction, that an appeal was available, apart from the case stated procedure.[52]
[47]See also, eg, Commissioner of State Revenue (Vic) v ACN 005 057 349 Pty Ltd (2017) 261 CLR 509, [58].
[48]Commissioner of Stamps, 459.
[49]Ibid, 455, 460, 476.
[50]Ibid, 465, 466.
[51]Ibid, 464, 465, 480, 481.
[52]Ibid, 464, 465.

Reference to those facts places in context the interpretive principles concerning incontestable taxes which, in state legislation, express the principle of legality.[53] In this case, those principles do not assist the Taxpayers. Read as the Commissioner contends (and as I consider it ought to read), s 106 and Part 10 of the TAA do not result in an incontestable tax or deny taxpayers access to the courts in any relevant sense. Indeed, read that way, s 106 affords the taxpayer two fora for review, between which the taxpayer may choose. It allows the taxpayer to make that choice with the benefit of the Commissioner’s determination if the taxpayer wishes, the cost of which is the preparedness to await the determination. That course of action, provided by s 106(1)(a), is the same course of action that has been available to taxpayers since the amendments made to various taxation statutes by the Taxation Appeals Act 1972.[54] Section 106(1)(b) allows the taxpayer to accelerate the process, it just does not do so as fulsomely as the Taxpayers would prefer.
[53]Ibid, 467-468.
[54]Which Act introduced s 33B to the Stamps Act 1958 and cognate provisions in other taxation statutes and which took effect from 1 September 1978 (Victorian Government Gazette, No 72, 9 August 1978, 2573).

Part 10 creates a coherent scheme for review or appeal, within which the rights of each party are to some extent and in particular ways are constrained. To say that Part 10 is beneficial to taxpayers is simply to recognise that it plays a remedial function in allowing the taxpayer to seek review or appeal of its assessment of tax liability. But reference to the general function of the statute is not sufficient to displace the clear import of the statutory terms.

The Taxpayers also sought to draw some support for their asserted entitlement from s 40 of the Interpretation of Legislation Act 1984 (Vic), by submitting that the TAA displays no contrary intention to the rule there stated that a statutory duty, such as that in s 106(3), must be performed as required from time to time. Simply put, the legislation does evince a contrary intention for the reasons set out above: the taxpayer has one choice to make, and once made there is no provision for it to be made again; from that point, properly construed, there is no further power or duty in the Commissioner under s 106.

Election and waiver

As Croft J said in Nationwide Towing, s 106 provides a ‘dual pathway approach to the provision of mechanisms to enable a taxpayer to review or appeal assessments [of the kind which] has been maintained, consistently, in Victorian legislation’.[55] As discussed, I accept the Commissioner’s submission that the Taxpayer is presented with a binary choice of forum for the review of assessments, being the Supreme Court or the Tribunal. The taxpayer may not re-traverse the pathway by exercising a different choice of forum, having alighted upon its chosen course. The Commissioner expressed that choice in the language of election in the sense that Part 10 of the TAA provides the Taxpayer with an election between the Tribunal or the Court. In this case, the appeals were filed pursuant to an election constituted by the request of the Taxpayers under s 106(1)(b), and they had no entitlement to make a further election under s 106(1)(a), and the Commissioner had no power to refer a matter comprising the same objection to the Tribunal under s 106(1)(a). I accept that that is an appropriate description of the way in which the statute operates. The Commissioner went on to submit that that construction was ‘consistent with and warranted by the common law doctrine of election’. It is true that s 106 presents a choice between inconsistent rights (to appeal or to seek review) and that once a choice is made the alternative not chosen is no longer available. That scheme might be seen as consistent with the common doctrine of election, but the outcome is a result of the statutory scheme itself (that it is how it is intended to operate) and not a consequence of the separate operation of the application of common law election. On the proper construction of the statute, I cannot see that there is any separate work for election to do. The authorities on which the Commissioner relied were not of assistance in this respect.[56]
[55]Nationwide Towing and Transport Pty Ltd v Commissioner of State Revenue (2018) 108 ATR 1, 23, [45]-[46].
[56]The Commissioner said Kabourakis v Medical Practitioners Board [2006] VSCA 310 was the case closest to this case. The court in Kabourakis was concerned with the very different question of an attempt by a statutory tribunal to revisit its own decision for the correction of non-jurisdictional error (at [48], [54]).

The Taxpayers responded to the election point by submitting that a taxpayer who does not have the benefit of a determination is not put to an election between the ‘independent entitlements’ in ss 106(1)(a) and 106(1)(b), because the doctrine of election only applies where two true alternatives exist at the time at which the election is said to have been made. The proposition that ss 106(1)(a) and 106(1)(b) are not true alternatives in that sense may be accepted, but the election analysis is misplaced – both generally and because it concentrates only on the choice presented by s 106(1)(b) when it arises, without regard to the ultimate end to which that choice is directed, namely the exercise of a choice as to the forum in which the Commissioner’s assessment may be reviewed.

Separately, the Commissioner submitted that by accepting that the appeal before this Court must proceed by way of judicial review, the Taxpayers waived their rights to now argue for a different form of relief. The point was not developed at length. It is not apparent that there is any question of waiver in this case; on the Commissioner’s case it is hard to see how there is any work for the doctrine of waiver to do, and if the Taxpayers’ construction were correct, they would be entitled to proceed as they have.

It is unnecessary to consider these issues further.

No duty or power in the Commissioner to make a further referral

When consideration is given to the whole of s 106 within its statutory context, it is clear that, by providing a means by which the taxpayer may request a referral for review or an appeal where the Commissioner has not determined an objection within 90 days, the legislature did not intend to create a regime of ‘distinct entitlements’ such that the taxpayer can twice elect between an appeal and a review. It is accordingly also clear that the Commissioner, having discharged his duty under s 106(3) to act on a taxpayer’s request, is not compelled or empowered to act on a subsequent request. The Taxpayers’ reading has the difficulties discussed. The alternative reading is a coherent and contextual reading of the text, which is also consistent with its purpose and history.

To express the conclusion in terms of the question posed at paragraph 4 above, where a taxpayer has, under s 106(1)(b), requested the Commissioner to cause its objection to be set down as an appeal to this Court (or to refer the matter to the Tribunal for review), the Commissioner is not obliged, pursuant to s 106(3), to refer or set down the matter (as they case may be) in response to a second request of the taxpayer purportedly made under s 106(1)(a), selecting a different forum from that chosen in the first instance.

It follows from the above, that upon performing his duty under s 106(3) to set down the appeals in January 2021 in response to the Taxpayers’ requests made under s 106(1)(b), the Commissioner’s function under s 106 was spent. There was no proper basis for the exercise of power under s 106(1)(a). It must also follow that there is no proper basis on which to grant the relief sought in the motion for judicial review.

SCHEDULE

Vicinity Funds RE Ltd (ACN 084 098 180)

First plaintiff

Reco Bourke Private Limited

Second plaintiff

The Trust Company Ltd (ACN 004 027 749)

Third plaintiff

Commissioner of State Revenue

Defendant

[2021] VSC 687

22 October 2021