Wathen and Deputy Commissioner of Taxation

[2008] AATA 223

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 223

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/429 and 431

GENERAL ADMINISTRATIVE DIVISION        )

Re             David Paul WATHEN

Applicant

AndDeputy Commissioner of Taxation

Respondent

DECISION ON JURISDICTION

TribunalProfessor GD Walker, Deputy President

Date20 March 2008

PlaceSydney

DecisionThe tribunal has no jurisdiction to hear this matter

...............[sgd]...............................

Professor GD Walker
  Deputy President

CATCHWORDS – Jurisdiction – tribunal has no general review powers – tribunal can only review those decisions in relation to which it has been given jurisdiction by statute – tribunal’s power to make stay orders under s 41 is predicated on the existence of a reviewable decision that is the subject of the application – tribunal has no jurisdiction to hear this matter.

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RELEVANT ACT/S:

Administrative Appeals Tribunal Act 1975 (the AAT Act): ss 3, 25, 41, 42A

Taxation Administration Act 1953 (TAA): ss 8AAZA, 8AAZLE, 14ZQ, 14ZZ

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CITATIONS

Eaton & Ors v Deputy Commissioner of Taxation [2006] NSWCA 283

Re Bienstein and Ombudsman [2003] 38 AAR 270

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REASONS FOR JURISDICTION DECISION

20 March 2008	Professor GD Walker, Deputy President
Summary

1.      On 29 January 2008, the applicant Mr Watham lodged with this tribunal an application for review of a decision made on 9 December 2003.  The decision is a default judgment of the District Court of New South Wales in the amount of $77,231.00, together with $463.00 costs, making a total of $77,694.

2.      At the jurisdiction hearing neither party adduced evidence.

Applicant’s submissions

3.      On behalf of the applicant, Mr McCartney explained that the applicant is a director of a company that was placed in administration in 2003, a deed of company arrangement being adopted in October 2003.  The result of the administration was that the company was to pay 15 cents in the dollar to unsecured creditors.  Of the respondent’s claimed debt of approximately $219,000, its dividend pursuant to the deed was $31,896.

4.      The respondent subsequently served on the applicant a district court statement of liquidated claim in relation to a director’s penalty notice for $77,231.  The applicant submitted that the effect of the deed and of the dividend payment is that the applicant is entitled to a deduction from the amount claimed, which would leave a balance of approximately $45,000.

5.      The respondent, however, applied the dividend payment mainly to the relevant company’s running balance, and allocated only part of it, $10,900, to the director’s penalties.  The applicant objected to the method of allocation but could not obtain from the respondent clear reasons as to why a process leading to that result had been adopted.  The first advice it had received was a notification from the respondent that he was relying of a New South Wales Court of Appeal decision, Eaton & Ors v Deputy Commissioner of Taxation [2006] NSWCA 283, which the applicant maintained was not in point.

6.      Currently the applicant is awaiting a hearing in the Federal Magistrates’ Court on a creditor’s petition in bankruptcy, brought by the respondent pursuant to a bankruptcy notice.  It was not until 6 March 2008, however, that the applicant received a decision in relation to the respondent’s manner of allocation.  The applicant has now lodged an objection to the decision of 6 March, but a decision on that objection is unlikely to be received before the bankruptcy hearing on 19 March.

7. Mr McCartney conceded that the tribunal might not have jurisdiction over the matter at this stage, but sought an order to allow the matter to remain on foot so as to prevent the making of a sequestration order. He submitted that there was a statutory basis for such an order in s 41 of the Administrative Appeals Tribunal Act 1975 (the AAT Act).

Respondent’s submissions

8.      On behalf of the respondent Ms Webster presented written and oral submissions.

9.      She submitted that the respondent understands that the applicant seeks to have reviewed the respondent’s decision to apply a certain payment made by the deed administrator of a deed of company administration for Wathen Developments Pty Ltd (Wathen Developments) against the taxation debts of Wathen Developments rather than against the debt relating to director penalties.

10.     The respondent's position is that the decision to apply payments made against taxation debts is a decision of policy.  There is no right to object to that decision nor is there any relevant provision which permits an appeal to this tribunal.  As a consequence, the tribunal does not have jurisdiction to review the decision.

11.     On 4 May 2006 a payment was made by the deed administrator of a deed of company administration to the respondent for Wathen Developments.

12.     According to the discretion exercisable by the Deputy Commissioner of Taxation (DCT), that payment was evenly apportioned across the company’s debts, being a liability on the Integrated Client Account (CAC Account) and a Pay As You Earn liability.  One of the parts comprising the debt on the CAC account was the Income Tax Withholding (ITW) liability which is the subject of the director penalty debt.  The ITW debt was reduced by the same portion as the other components of the CAC account.  The director penalty was then reduced by a corresponding amount to reflect the actual amount outstanding on the ITW debt.

13.     On 29 January 2008, the applicant applied to the tribunal for a review of that decision.

14.     By letters dated 1 February 2008, the tribunal informed the applicant that it did not think it had jurisdiction to review the relevant decision and asked the applicant to outline the relevant legislative provision allowing the tribunal to review the decision in question.

15.     In a letter dated 12 February 2008, the applicant wrote to the tribunal giving further details of the decision that he wished to be reviewed but did not specify the enactment allowing the tribunal to review the decision.

16. Under subsection 25(4) of the AAT Act, the tribunal has the power to review "any decision in respect of which application is made to it under any enactment".

17.     Pursuant to section 14ZZ of the Taxation Administration Act 1953 (TAA) if a person is dissatisfied with the Commissioner's "reviewable objection decision", that person may apply to the tribunal for review of the decision.

18. Section 14ZQ of the TAA states that an objection may be made against an assessment, determination, notice or decision or a failure to make a private ruling, if a provision of an act or regulations provides a person may object.

19. The provisions governing the attribution of debts against taxpayer’s liabilities are found in ss 8AAZA and 8AAZLE of the TAA. These provisions give the DCT complete discretion as to where a payment or credit will be applied against a taxpayer’s liability.

20.     The Australian Taxation Office’s (ATO) policy with respect to the allocation of payments or credits to a taxation liability is found in Part B, Chapter 7 of the ATO Receivables Policy.  In particular, para 7B.3.12 requires that where dividends are received of less than 100 cents in the dollar from insolvency administrators, the debt is allocated on a pro-rata basis.  They are apportioned to each tax related liability that formed the commissioner’s claim in the administration that gave rise to that dividend.  Where director penalties are involved the commissioner will apportion dividends according to normal policy.  The balance of the unpaid amount subject to director penalties can then be clarified.

21.     The respondent submitted that there is no provision of an act or regulations allowing for an objection to be made against the exercise of the DCT’s discretion to apply a payment against certain taxation liabilities and not others.  There is therefore no objection decision that can be reviewed by the tribunal.

22.     The respondent was also not aware of any enactment that allows an appeal directly to the tribunal for review of the relevant decision.

23.     For these reasons, the respondent submitted this matter should be dismissed for want of jurisdiction.

24. In reply, Mr McCartney argued that the applicant might have taken a different course if he had been able to obtain an explanation of the respondent’s position earlier. He submitted that by applying a policy that was not disclosed until after receiving the dividend under the deed, the respondent was engaging in unconscionable conduct. His client had been induced to place the company into administration at great cost. The respondent had accepted payment of 15 cents in the dollar pursuant to the deed, and justice required that the dividend should become the total of the debt owed. On a narrow view, the tribunal did not have jurisdiction, but on a broader view, the respondent’s inequitable conduct justified the tribunal in making an order under s 41 of the AAT Act.

Consideration

25. This tribunal has no general review powers. It may review only those decisions in relation to which it has been given jurisdiction by statute. Under s 25 of the AAT Act, an enactment may provide for the review of decisions made under that or another enactment. In determining whether it has jurisdiction to review a decision, the tribunal must consider three matters:

§whether the enactment confers jurisdiction;

§whether a “decision” has been taken; and

§whether that decision has been taken under the enactment conferring jurisdiction.

26.     In this case only the first of these matters is relevant.

27. The enactments that may confer jurisdiction on the tribunal are defined by s 3 of the AAT Act to mean (federal) acts, territory ordinances (other than those of the Australian Capital Territory and the Northern Territory) and statutory instruments made under an act or an ordinance. Where an enactment provides for the review of decisions, it is required to specify the person or persons to whose decision the provision applies: s 25(3)(a).

28.     This tribunal has the power and responsibility to determine whether it has jurisdiction to review a particular decision.  It is not necessary for the Act conferring jurisdiction to characterise the jurisdictional issue as a reviewable decision.

29.     Having no general review power, the tribunal has taken a careful approach to interpreting provisions conferring jurisdiction on it.  Where an enactment conferring jurisdiction on the tribunal enumerates the decisions that can be reviewed, the omission of a decision is interpreted in accordance with the expressio unius principle and decisions not listed are not reviewable: see Re Bienstein and Commonwealth Ombudsman [2003] 38 AAR 270.

30. The applicant concedes that the tribunal does not have jurisdiction in this case, at least on a “narrow view”. In his application the applicant stated that the decision that he sought to have reviewed was a decision of the New South Wales District Court. It was not suggested that the legislation constituting that court provides that its judgments can be reviewed by this tribunal in the manner provided for by s 25 of the AAT Act. Nor could it, as s 3 makes it clear that only federal statutes can confer jurisdiction on the tribunal.

31. The tribunal’s power to make stay orders under s 41 is predicated on the existence of a reviewable decision that is the subject of the application (s 41(1)). In deciding an application under s 41, the tribunal might give weight to any evidence of unconscionable conduct by a party, but the existence of such conduct (of which there is no evidence in the present case) does not suffice to give the tribunal jurisdiction. Only an express conferral of power pursuant to s 25 can do that.

32. I am therefore satisfied that the tribunal has no jurisdiction to hear the matter and the application is dismissed pursuant to s 42A(4) of the AAT Act.

I certify that the 32 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President

Signed:   ...........................[sgd]...............................................
               R. Wallace, Associate

Date/s of Jurisdiction Hearing:         10 March 2008
Date of Decision:  20 March 2008
Solicitor for the Applicant:                  G McCartney, Simmons & McCartney
Solicitor for the Respondent:             E Webster, ATO Legal Services