COMMISSIONER OF STATE REVENUE (VIC) v ACN 005 057 349 PTY LTD

Members:
Kiefel J
Bell J
Gageler J
Keane J
Gordon J

Tribunal:
Full High Court

MEDIA NEUTRAL CITATION: [2017] HCA 6

Decision date: 8 February 2017

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Kiefel and Keane JJ

1. We agree that the appeals should be allowed for the reasons given by Bell and Gordon JJ. There are two aspects of the decision of the Court of Appeal upon which we wish to add some further observations.

Conscious maladministration

2. The Court of Appeal concluded ^[1] ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [ 2015 ] VSCA 332 at [ 4(9) ] . that the Commissioner:

" refused to perform his duty [ under s 19 ] without good reason or justification; in the circumstances of the case he has acted with conscious maladministration. "

3. Even if, as the Court of Appeal concluded, the Commissioner erred in his understanding of the effect of s 90AA of the Land Tax Act 1958 (Vic) ( " the Land Tax Act " ) upon the proper exercise of the discretion conferred on him by s 19, that misunderstanding, without more, did not justify the Court of Appeal ' s view that there had been a conscious maladministration of the Land Tax Act by the Commissioner.

4. There was no suggestion, nor any factual basis for a suggestion, that the Commissioner acted otherwise than in good faith in the exercise of his powers. It needs to be borne in mind, in this regard, that the respondent only became aware of the duplication error when it was drawn to its attention by the Commissioner; and that the Commissioner made refunds of tax incorrectly collected to the extent consistent with his view of the limits of the statutory appropriation of moneys for that purpose from the public funds of the State.

5. There was no reason to regard the Commissioner ' s refusal to exercise his discretion under s 19 in the respondent ' s favour as other than the conscientious exercise of his powers in good faith. It should not have been characterised as conscious maladministration. To apply that description to the Commissioner ' s conduct is unfair to the Commissioner. And to apply the concept of conscious maladministration to an honest mistake would drain it of its content ^[2] Cf Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at 153 – 154 [ 11 ] – [ 15 ] ; [ 2008 ] HCA 32 . . In any event, as it happens, the Commissioner was not mistaken in his understanding of the considerations bearing upon the exercise of the discretion conferred on him by s 19.

The scope of s 19

6. The Court of Appeal concluded that the Commissioner was obliged to " exercise the power under s 19 to amend and to give effect to the amendments by making a refund. " ^[3] ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [ 2015 ] VSCA 332 at [ 4(10) ] .

7. In this regard, the Court of Appeal erred in failing to appreciate, as the primary judge rightly held ^[4] ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [ 2015 ] VSC 76 at [ 106 ] . , that the statutory regime of objections ^[5] Land Tax Act, s 24A. and appeals ^[6] Land Tax Act, s 25. set out in the Land Tax Act, together with the process for claiming a refund set out in s 90AA, manifests an unmistakable legislative intention that the only scope for the Commissioner to refund money overpaid under an assessment is afforded by s 90AA(2) and (3) of the Land Tax Act. Section 92A is express confirmation of this legislative intention.

8. The expenditure of the public funds of the State of Victoria is not within the province of the judiciary; it is within the exclusive control of the legislature ^[7] Dietrich v The Queen (1992) 177 CLR 292 at 323 ; [ 1992 ] HCA 57 . See also at 303, 311, 330, 342 – 343, 349 – 350. . The Court of Appeal failed to appreciate that the scope of the Commissioner ' s authority to make a refund was both provided by, and at the same time confined to, s 90AA(6) of the Land Tax Act. The absence of any other statutory authority to make a refund from public funds meant that a refund to the respondent would have been unlawful ^[8] Auckland Harbour Board v The King [ 1924 ] AC 318 at 327. See also Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 55 [ 111 ] , 73 [ 178 ] , 113 [ 320 ] , 210 – 211 [ 601 ] ; [ 2009 ] HCA 23 ; Williams v The Commonwealth (2012) 248 CLR 156 at 179 – 180 [ 4 ] , 216 – 217 [ 83 ] , 233 [ 138 ] , 281 [ 289 ] – [ 290 ] , 359 [ 548 ] , 374 [ 597 ] ; [ 2012 ] HCA 23 ; Williams v The Commonwealth [ No 2 ] (2014) 252 CLR 416 at 455 [ 25 ] ; [ 2014 ] HCA 23 . .

9. While it may be said of s 19 that it functioned " as a mechanism to ensure the integrity of the system of tax collection under the [ Land Tax Act ] , namely, that the Commissioner collects the correct amount of tax " ^[9] ACN 005 057 349 Pty Ltd v Commissioner of State Revenue [ 2015 ] VSCA 332 at [ 4(14) ] . , that mechanism could operate only within the context of the Land Tax Act considered as a whole. In that context, the effluxion of a fixed period of time required that the prospect of recovering tax incorrectly collected must be brought to an end. The legislation thus gives effect to a policy choice to secure the certainty of the revenue after a reasonable opportunity to dispute the propriety of an exaction had been afforded to the taxpayer. That policy choice was lawfully available to the legislature.

10. The circumstance that the duplication error was an obvious error in the assessment process - once it was discovered - does not give rise to an occasion to limit the effect of the legislature ' s choice. Provisions such as s 90AA, which impose a time limit upon the recovery of tax incorrectly assessed, are familiar and readily intelligible legislative measures designed to protect the revenue. There is no good reason to strain against the ordinary and natural meaning of the language of s 90AA as giving effect to the policy choice made by the legislature. That policy choice is plainly intended to be effective even in cases where it is clear that the assessments which led to the claimed overpayments were excessive.

11. Accordingly, the circumstance that the Commissioner knew at the time of exercising the discretion conferred by s 19 that his earlier assessments were excessive was not a sufficient basis for him to disregard the terms of s 90AA. Neither the Commissioner, nor a court, is at liberty to disregard the express provisions of s 90AA and s 92A, and the absence of statutory authority to make a payment of a refund out of public funds.

12. Given that recovery by the respondent of excess land tax would have been contrary to s 90AA, and that the payment of a refund by the Commissioner was not otherwise authorised by any statutory provision permitting the Commissioner to expend public funds for that purpose, the Commissioner was right to recognise that his want of authority lawfully to make a refund from the public funds of the State was a sufficient reason to conclude that there was no utility in amending his earlier assessments.