New York Properties Pty. Ltd. v. Federal Commissioner of Taxation.

Judges:
Ryan J

Court:
Supreme Court of Queensland

Judgment date: Judgment handed down 12 July 1984.

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Ryan J.

This is an appeal by the taxpayer pursuant to sec. 196(1) of the Income Tax Assessment Act (``the Act'') from a decision of Board of Review No. 3 made on 27 May 1983. An appeal lies from a decision of the Board only if it involves a question of law. The Commissioner contends that the decision appealed from does not involve a question of law, and it is this preliminary issue alone that I have been asked to decide.

The appellant lodged a notice of objection dated 19 June 1978 in relation to its assessment for the year ended 30 June 1974. The notice of assessment is dated 21 April 1978. It claimed that the assessment should be reduced by the allowance of a deduction of $92,298 described in the adjustment sheet accompanying the assessment as share of income from Colray Land Co. and from Colray-Noird Partnership (sec. 36A election not acceptable, bad debt claim not allowed) and the allowance of the partnership loss of $13,089. The objection was disallowed on 19 July 1978 and the Commissioner's decision was referred to a Board of Review.

At the hearing before the Board, counsel for the taxpayer sought an adjournment on the ground that the appellant had not been able to date to obtain all the necessary documentation and evidence for the purpose of presenting the appeal. He tendered and relied upon a statutory declaration by his instructing solicitor, Howard Lionel Alexander, dated 3 May 1983. The application was opposed by counsel for the Commissioner.

After argument, the Chairman of the Board announced that ``after consultation with my colleagues, I have decided that the hearing should go ahead''. Counsel for the taxpayer then stated that they were unable to proceed with the appeal; they were not in a position to open or call evidence, for the reasons disclosed in Mr. Alexander's declaration and in the course of their submissions counsel for the Commissioner thereupon asked the Board to confirm the assessment. The Chairman then stated:

``As I said, the taxpayer has made no effort or is not in a position - apart from anything else - and has in fact made no effort, to relieve himself of the onus placed on him by sec. 190(b), the Board is in the position where it must confirm the Commissioner's assessment in this reference.''

The notice of appeal seeks an order that the whole of the decision of the Board of Review, that the Commissioner's assessment in respect of income derived by the appellant during the year ended 30 June 1974 be confirmed, be set aside, and that such assessment be reduced in the manner set forth in the appellant's notice of objection dated 19 June 1978.

The decision of the Board of Review was said to involve a question of law, namely, whether in the circumstances disclosed in the statutory declaration of Howard Lionel Alexander and other material placed in evidence before the Board, the Chairman of the Board should have granted the appellant's application that the hearing before the Board be adjourned for a period of approximately three weeks.

The Commissioner has submitted that the decision refusing an adjournment was not a decision of the Board but of the Chairman only. Regulation 38(5) of the Income Tax Regulations empowers the Chairman of a Board to adjourn any review from time to time as he thinks fit. The scheme of the Regulations is to leave certain procedural matters in the conduct of a review and the furnishing of evidence for determination or action by the Chairman. I am disposed to think that in exercising the powers conferred upon him under Pt. V of the Regulations, the Chairman acts for the Board and his decisions are decisions of the Board. But let it be supposed that on the contrary the decisions are those of the Chairman. On that supposition, if the Chairman refuses to adjourn a review, that refusal will not in itself constitute a decision of the Board. Even if in a practical sense the Board has no option but to act as it did in this case by giving a decision confirming the assessment, nevertheless sec. 195(1) of the Act requires that upon every reference to the Board it shall give a decision in writing. The decision confirming the assessment was the Board's decision, and not the Chairman's decision; and it is from that decision that the taxpayer has appealed, as it is entitled to do, provided that decision involves a question of law.

The question whether a decision involves a question of law was considered in
Lombardo v. F.C. of T. 79 ATC 4542 at p. 4545, where Bowen C.J. set out certain circumstances where it might be said that a ``question of law'' would be involved. Included among these were the following:

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ATC 4544

``1. If it was expressly raised and the Board made a ruling on it as a relevant factor in its decision.

2. If it is obvious from the decision or transcript of the case that the Board in arriving at its decision has misunderstood the law in some relevant particular.''

His Honour added (at p. 4546):

``For an appeal to this Court the question of law must have been `involved' in the decision of the Board. `Involvement' indicates that the question of law must have been an integral apart of the decision of the Board, adopted or rejected as a step in arriving at the final conclusion. Even if a question was raised before the Board and they gave a ruling on it in the course of the proceedings before them, it can only be `involved' in the final decision if it was relevant in it.''

It was argued for the appellant that the decision refusing the adjournment was involved in the decision confirming the assessment, because the refusal of the adjournment inevitably led, in the circumstances of the case, to the confirming of the assessment, as the appellant was otherwise unable to proceed. The answer made to this on behalf of the Commissioner was that the Board's decision to confirm the assessment followed from the taxpayer's election not to proceed on the evidence which he had and involved only the application of sec. 190(b) to the failure of the appellant to call evidence. It was said that the Chairman's earlier decision to refuse an adjournment played no part, except historically, in the decision of the Board.

I consider that it is too narrow a view of what is involved in the Board's decision in this case to say that it consisted of only two steps: First, that the appellant had not called any evidence to discharge the onus lying upon him of proving that the assessment was excessive; and secondly, that in consequence the assessment must be confirmed. It was an integral part of the Board's decision that the appellant was not entitled to an adjournment to enable evidence to be placed before it. It does not appear to me to matter whether that conclusion was one reached by the Board itself or accepted by the Board in consequence of a decision by its Chairman. If in arriving at the decision to reject the application for an adjournment, and in consequence thereof arriving at its ultimate decision to dismiss the appeal, the Board could be said to have misapplied the law, it seems to me that a question of law would be involved in its decision.

The issue is, therefore, whether the decision to refuse the application involved a question of law in the sense of a question of law that was genuinely arguable, as Wickham J. expressed it in
F.C. of T. v. Coleman 78 ATC 4355 at p. 4358. See also
F.C. of T. v. Moody 81 ATC 4199 at p. 4202; (1981) Qd.R. 272 at p. 276, where Connolly J. refers to the need to raise a contestable proposition of law, to use the language of Dixon J. in
D.F.C. of T. v. Miller (1946) 73 C.L.R. 93 at p. 103.

It is well settled by several English decisions that failure to grant an adjournment may constitute a miscarriage of justice which necessarily involves an error of law on which an appeal may be founded. The principle is stated in
Dick v. Liller (1943) 1 K.B. 497;
Rose v. Humbles (1970) 1 W.L.R. 1061, (1972) 1 W.L.R. 33 (Court of Appeal);
Priddle v. Fisher & Sons (1968) 1 W.L.R. 1478; and
Ottley v. Morris (1979) 1 All E.R. 65. In Priddle v. Fisher & Sons, at p. 1481, Lord Parker C.J. said that it is clear that the exercise of a judicial discretion on wrong principles amounts to a point of law.

Is it, then, a contestable proposition of law that the Board was wrong in law in refusing an adjournment? The grounds for arguing that it was are set out in the notice of appeal, and include the following:

``2. that the appellant should not have been compelled to proceed with the hearing before the Board on 3 and 4 May 1983 in circumstances where:

• (a) on the uncontradicted evidence before the Board:
  • (i) the appellant was unable to proceed with the hearing before the Board for the reason that it had been unable to obtain all relevant documentation and evidence for the purpose of the hearing;
  • (ii) were the adjournment which was sought refused, the appellant would be seriously prejudiced;
• (b) on the uncontradicted evidence before the Board, such inability on the

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  ATC 4545

  part of the appellant arose without fault on its part, and there were reasonable grounds for believing that such further documentation and evidence would be obtained were a short adjournment granted;
• (c) there was no evidence of any possible prejudice to the Commissioner were the adjournment sought granted;
• (d) the appellant undertook to pay any costs incurred by the Commissioner by reason of such adjournment were the adjournment granted;

3. the decision of the Board was given:

• (a) without consideration of the merits of the matter referred to it;
• (b) without the appellant's having been given any reasonable opportunity to present its case;.''

The critical matter is that set out as in 2(b) above in
E.G. and H. Nominees Pty. Ltd. v. General Mutual Insurance Co. Ltd. (1976) 50 A.L.J.R. 460, Barwick C.J., with whose judgment the other members of the Court concurred, considered an appeal based upon a claim that the refusal of an adjournment was an improper and unjust exercise of judicial discretion. He pointed out that the trial Judge ``had nothing before him which would furnish any encouragement to conclude that there was some solid matter which then existed and which, if produced, could be regarded as possibly influencing the course of the hearing''. Accordingly, he said that he was ``quite unable to conclude that the refusal of the adjournment, having regard to the material or lack of it before him, was an unjust or an improper exercise of the Judge's undoubted discretion to adjourn or not to adjourn the hearing. The wisdom of refusing a short adjournment is not a matter with which we are concerned''.

The Chairman of the Board announced that the Board would not accede to the request that the matter be adjourned after examining the declaration by Mr. Alexander. I accept fully the statements made by Mr. Alexander in para. 9 of his declaration, but I am unable to find in that declaration anything which goes beyond an assertion that given a short adjournment he may be able to find other documents which may be relevant to some issue in the appeal. The only possible qualification to that is contained in para. 8(c), where it is said that Mr. Alexander believes that chartered accountants in Hong Kong hold other documents or copy documents which are of relevance, such as directors' minutes of Noird Ltd. and its books of account, which they had earlier declined to make available to him but which he believed they might be willing to make available to him. But even in this case nothing appears on the face of the declaration to indicate the relevance of the material it was hoped to obtain, or otherwise to establish ``any solid matter which then existed and which if produced could be regarded as possibly influencing the course of the hearing''.

A Board of Review is required to deal with cases before it in a judicial spirit:
Sutton v. F.C. of T. (1959) 100 C.L.R. 518 at p. 523. However, I can find nothing to show that the Board wrongly exercised its discretion to refuse an adjournment in this case; accordingly its decision does not appear to me to involve a question of law. At most it could be said that it would have been a more appropriate exercise of the Board's discretion to have granted a short adjournment in view of the consequences to the appellant of refusing the adjournment and the undertaking as to costs. However, a Court is not concerned with the question whether the discretion was exercised in the most appropriate way. It is concerned only with the question whether it was exercised in accordance with law. The appeal must therefore fail.