A.R.M. Constructions Pty. Limited & Ors v. Deputy Federal Commissioner of Taxation.

Burchett J

Federal Court

Judgment date: Judgment handed down 3 April 1986.

Burchett J.

These applications concern a group of companies, and it was agreed the same considerations apply to each. They were heard together.

The applications seek review, under the Administrative Decisions (Judicial Review) Act 1977, of the decision of the Deputy Commissioner of Taxation, in each case, to refuse an extension of time pursuant to sec. 206 of the Income Tax Assessment Act 1936 for payment of a disputed assessment of income tax. Review is also sought of the refusal of the

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Deputy Commissioner to grant a substituted date or remission in respect of penalty tax due under sec. 207.

The various assessments issued on 7 and 11 March 1985, fixing dates for payment being just over 30 days after the dates of the assessments. The amounts involved were $936,440.76 (A.R.M. Constructions Pty. Limited), $383,378.26 (E. & M. Ghosn Pty. Limited), $318,512.96 (E. & M. Ghosn (Developments) Pty. Limited), and $318,363.96 (E. & M. Ghosn (Builders) Pty. Limited), a total of $1,956,695.94. Of that total, over one million dollars represented tax assessed upon the basis of a bringing into the assessable income of each company of the value of certain home units in reliance upon sec. 36 of the Act. The balance of approximately $782,000 represented penalties imposed under the former sec. 226(2).

The companies disputed the applicability to the circumstances of sec. 36, and by applications variously dated 10 and 12 April 1985, together with letters of 17 and 18 April 1985, they sought an extension in each case under sec. 206, and also requested the exercise of discretion under sec. 207. As foreshadowed in these applications, objections were lodged in the first half of May. Thereafter, on 15 May, the extensions sought were refused, and on 23 May reasons were requested under sec. 13 of the Administrative Decisions (Judicial Review) Act. On 7 June, the objections were allowed in part, i.e. to the extent that the total additional tax of $782,758 was reduced by $622,252 to $160,506, and were otherwise disallowed. A request to forward the objections as appeals to the Supreme Court of New South Wales followed on 12 June. On 22 July the reasons requested on 23 May were supplied, and the applications to this Court were filed eight days later. On 19 August, the request of 12 June having been ignored, a notice was given under sec. 189, but as at 7 November the Commissioner had still not forwarded the objections to the Supreme Court.

The applications for extension were in similar terms, and I extract the grounds set out in that of A.R.M. Constructions Pty. Limited (A.R.M.):

``1. The taxpayer is in the process of objecting against the assessment issued in respect of the increase of taxable income over that which was returned by the taxpayer and accordingly contends that there is no additional taxable income and thus no additional tax payable. This objection will be lodged with you on or before the last day for so doing if it has not already been lodged.

2. The objection will be found to be genuinely based on substantial grounds and the taxpayer avers that opinion from lawyers skilled in income tax has been given to that effect.

3. The objection has not yet been determined.

4. The taxpayer has not the necessary liquid funds to pay the tax but will have this same within a reasonable period of time and certainly by the time this dispute is determined by the appropriate authority should you not allow the taxpayer's objection. To be obliged to make such a payment would substantially restrict, if not prohibit, the taxpayer from continuing to carry on business.

5. A requirement to pay the tax liability forthwith would unfairly prejudice the taxpayer in the event that the objection succeeds. This is because the taxpayer is advised by his bankers that the necessary funds to pay the amount assessed could be borrowed at an interest rate of 14.75 per cent. This interest would not, it is suggested, be an allowable deduction to the taxpayer under any provision of the Act. If the taxpayer is successful in the objection our client will be entitled to be paid interest pursuant to the Taxation (Interest on Overpayment) Act 1983 at the rate of 14.026 per cent, which interest will be assessable income pursuant to paragraph 26(JB) of the Act, resulting in a very minimal return to the taxpayer and a loss of around 8 per cent in total.

The discrepancy of 8 per cent amounts to a substantial sum each year on the amount assessed. Your most recent annual report to Parliament highlighted the likely delays in having appeals brought before the courts and experience suggests that it would be unlikely that the final resolution of the taxpayer's liability would occur within less than five years: a total cost to the taxpayer in that event of $374,600.00.''

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These grounds were supplemented by the letter of 17 April which enclosed a balance sheet and accounts as at 15 March 1985, and referred to a legal opinion, previously supplied, to the effect that any appeal would be successful. The Deputy Commissioner was asked to take into account the applicants' ``very good prospects of success disputing these assessments''. The letter went on to seek a determination under sec. 207, and in that regard drew attention to the nature of the impost exacted by that section as a penalty, and not merely interest, citing
F.C. of T. v. Trautwein (1936) 56 C.L.R. 211 at pp. 216-217 and
Re Dymond (1958-1959) 101 C.L.R. 11 at p. 21. (That sec. 207 does provide for a penalty was shortly afterwards reasserted in
D.F.C. of T. v. D.T.R. Securities Pty. Ltd. 85 ATC 4251.)

The balance sheets and accounts supported the claims of lack of ``the necessary liquid funds to pay the tax''. In the case of A.R.M., the profit and loss statement for the period to 15 March 1985 showed a loss of $128,825 and accumulated losses of $419,461. The loss for the previous period, to 30 June 1984, was shown as $89,149. The only gross income for the period to 15 March 1985 was rent in the sum of $223,144, and by far the largest expense was interest in the sum of $242,940. The balance sheet showed fixed assets being land and buildings at historical cost totalling $2,507,624 and total non-current liabilities being secured loans of $2,370,000. There were also some current liabilities.

The historical cost method employed left open the question what was the market value of the assets in March 1985. Various arguments were put to me as to what should be inferred. It was accepted that all the buildings were fairly new, the oldest being about seven years old. But the applications for extension did not assert an inadequacy of assets: they asserted a lack of liquidity. Bearing in mind that the assessments were not based on income received in the form of cash, but on the value of stock (being the units) under sec. 36, that the companies were showing substantial losses, that they were already indebted as has been indicated, and the amount of the interest already payable in relation to gross income, it is difficult to avoid the conclusion that payment of the tax assessments (of nearly $2 million at the date extensions were refused) could not be made without either immediate sale, or the incurring of substantial borrowing costs and ultimate sale, of at least a substantial part of the assets utilised in the companies' businesses.

The decisions of 15 May 1985 were in the following terms (subject to insignificant variations of detail):

``Reference is made to your correspondence of 10 and 17 April 1985 seeking a substituted due date for payment of the abovementioned tax and remission of relevant late payment penalty tied, broadly, to the time of resolution of the issues in respect of which objections were to be lodged.

Careful consideration has been given to the matters raised in your correspondence and the information provided in the supporting documentation. Your application has, however, been refused. The tax as shown in the notices of assessment remains payable on the due date specified and continues to attract additional tax for late payment from that date.

Subject to the objections having been validly lodged there are, however, grounds for an extension of time for payment of part of the tax outstanding. Ordinarily, it would be expected that a request for such an extension would be on the basis that, within 14 days of the date of this letter the company has paid at least one-half of the tax (including additional tax under section 226 of the Income Tax Assessment Act) attributable to the matter at issue, together with any tax that would remain payable irrespective of the result of the objections.

Such an extension will be on the basis that legal action for recovery of the amount held in abeyance will be deferred pending determination of the relevant objection but, if the matter is not resolved in the company's favour, any amount ultimately held to be payable will attract additional tax for late payment calculated from the original due date.''

The sec. 13 statement of 22 July 1985, after referring to the Administrative Decisions (Judicial Review) Act, read as follows (subject again to variations of detail, including of course the names of the particular taxpayer companies):

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``The findings on material questions of fact were:

  • (a) Subject to the payment of 50% of the tax in dispute (including additional tax under section 226 of the Income Tax Assessment Act 1936 (the Act)), the circumstances, particularly the fact that objections had been lodged against the assessments, did warrant an extension of time to pay the balance of the tax due.
  • (b) The circumstances did not warrant the granting of an extended date due and payable for the purposes of sub-section 207(1) of the Act.

The evidence or other material on which these findings were based were:

  • (c) Letter dated 17 April 1985 requesting an extension of time to pay tax pursuant to section 206 of the Act which was accompanied by -
    • (i) a Balance Sheet as at 15 March 1985;
    • (ii) an Income and Expenditure Statement for the period 1 July 1984 to 15 March 1985.
  • (d) Letter dated 18 April 1985 enclosing a statement by the company's accountant, Loftus and Associates Pty. (sic)
  • (e) Notices of objection dated 8 May 1985 against the amended income tax assessments of A.R.M. Constructions Pty. Ltd. for the years ended 30 June 1981, 1982 and 1983.
  • (f) The Commissioner's Taxation Ruling (sic) Nos I.T. 2091 and I.T. 2156 setting out the guidelines in respect of the collection and recovery of tax in cases of disputed assessment, including requests for extensions of time for payment under section 206 of the Act.

The reasons for the decision not to grant an extension of time pursuant to section 206 of the Act were: -

  • (g) Applying the Commissioner's guidelines to the circumstances of the case -
    • (i) the company did not pay 50 per cent of the tax in dispute;
    • (ii) there were insufficient grounds for concluding that the company was unable to pay the tax on or before the due date;
    • (iii) there were no exceptional circumstances which warranted granting an extended date due and payable for the purposes of sub-section 207(1) of the Act; and
    • (iv) there were no other reasons which justified a departure from the above guidelines.''

Counsel for the applicants pointed out that the sec. 13 statement refers to the letters of 17 and 18 April, but not to the original application of 10 April. Nor does it refer to the opinion, previously forwarded, to which the Deputy Commissioner's attention was sought to be directed by the letter of 17 April. Indeed it makes no mention of the argument put by the applicants that the objections had specially good prospects of success. Although the sec. 13 reasons do refer to the objections as part of the material on which findings were based, the terms of the original refusal of 15 May suggest no more than the fact of their lodgement could have been considered. For reference is made to them obliquely, as follows: ``The issues in respect of which objections were to be lodged'' and again, ``Subject to the objections having been validly lodged''.

The essence of the applicants' case is that material matters which the Deputy Commissioner was bound in law to take into account, were omitted from consideration, namely, that immediate payment would endanger or curtail the business of each applicant by the exaction of a huge sum, considered relatively to the size of the enterprise, in circumstances in which it was very probable the assessment would ultimately be set aside. It was argued there is a difference between a case of an assessment upon the regular income of a taxpayer, who has received the money upon which the tax is claimed and from which he can pay it, and a case, such as the present, where the assessment relates to no moneys received, and payment could require total or partial liquidation of the enterprise. In the latter situation, it was submitted the Deputy Commissioner must consider the strength of the contentions raised in the objection, and reference was made to the judgment of Brennan

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J. in
Brayson Motors Pty. Ltd. v. F.C. of T. 83 ATC 4124 at p. 4130, to which I shall return.

It was accepted by counsel for the Commissioner that there is, as regards the appeals to be brought to the Supreme Court, a genuine dispute. The contrary, of course, could not have been suggested in respect of the objections as they stood at 15 May, when the extensions sought were refused, since three weeks later the objections were allowed to a substantial extent. I think it is plain the decisions to refuse extensions must stand or fall as at the date they were made. At that date, it must have been known or readily ascertainable that the objections were about to be dealt with, since the Commissioner's guidelines, which are referred to in the reasons under sec. 13, make it clear there is a fixed rule of priority determining the order of consideration of objections. If the Deputy Commissioner had regarded himself as bound to make some assessment of the prospects of the objections in these cases, he could either have ascertained the determination which was about to issue, or that in a mere three weeks it would be available. Given relevance, and having regard to the departmental delays at every stage of this matter, a deliberate refusal to wait three weeks before making a decision of the gravity of that involved here is not really to be entertained. I think it is much more probable that no consideration was given to the strength of the applicants' cases against the assessments. The result was that the decisions to refuse extensions insisted upon a requirement of immediate payment, in the circumstances of hardship previously stated, of $622,000 which three weeks later it was acknowledged should not have been claimed.

But did the Deputy Commissioner take into account the claim that payment in the circumstances, the companies not having the necessary liquidity, ``would substantially restrict, if not prohibit, (each) taxpayer from continuing to carry on business''? There is no finding in the reasons under sec. 13 that he rejected the validity of this proposition as a reasonable forecast. It is not mentioned. Although, before me, the Deputy Commissioner by his counsel emphasized that the applicants had asserted their ability to raise the money, relying, not on inability, but on the gravity of the consequences, in his sec. 13 reasons he specifically finds ``there were insufficient grounds for concluding that the company was unable to pay the tax on or before the due date'', and says nothing at all of the claimed consequences. Inability not being asserted, this looks very like a complete misconception of the issue, or else a blind application of the guidelines, which do discuss claims of inability, in a case which their terms do not expressly cover. At all events there is no reference, as a matter taken into account, to the likely effects upon the businesses of the companies of the required almost immediate payments, or to the claim made on their behalf in respect of that matter.

By sec. 13(1) of the Administrative Decisions (Judicial Review) Act, the ``reasons'' are required to consist of ``a statement in writing setting out the findings on material questions of fact, referring to the evidence or other material on which those findings were based and giving the reasons for the decision''.

Section 13 is a crucial provision designed to ensure that the basis upon which a decision is made is able to be seen, so that its legality can be determined. It should not be viewed by any decision-maker as a threat to be evaded by a camouflage of obscurity. All it requires to be set out is a statement of the matters the administrator must have considered in making the decision in the first place - what he found the facts to be, what material he considered in arriving at those findings, and the reasons for his ultimate decision.

It would be wrong for courts to construe reasons in any overly critical spirit, forgetful that they are the reasons of an administrator, not of the draftsman of an Act. But it would be as bad to betray the aims of the Administrative Decisions (Judicial Review) Act, by ignoring what has been required by the Parliament to be disclosed in the interests of just and lawful (and not merely unassailable) administration.

In the present cases, the statement of reasons has been unnecessarily obfuscated by a restatement of the decisions themselves under the heading which purports to refer to the findings on material questions of fact. The findings on questions of fact are only found incorporated in the reasons for the decision. There is no reference at all to the evidence or other material on which any finding was based, but only a purported list of all the documents which were before the decision-maker. Had

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applications been made under sec. 13(7) for further and better particulars of the statements, they must have been granted (cf.
Re Palmer and Minister for the Capital Territory (1978) 23 A.L.R. 196;
Ralkon Agricultural Co. Pty. Ltd. v. Aboriginal Development Commission (1982) 43 A.L.R. 535 at p. 547; and
Ansett Transport Industries (Operations) Pty. Ltd. v. Wraith (1983) 48 A.L.R. 500), but it is not surprising, having regard to the continuing penalties under sec. 207, that the delays inherent in such a course were not attractive to the applicants. In any case, the obligation under sec. 13 rests upon the Deputy Commissioner, not the applicants.

That obligation demands the furnishing of reasons which make intelligible the true basis of the decision. What is required has been explained by Woodward J. in Ansett Transport Industries (Operations) Pty. Ltd. v. Wraith (supra) at p. 507 as follows:

``The passages from judgments which are conveniently brought together in Re Palmer and Minister for the Capital Territory (1978) 23 A.L.R. 196 at 206-7; 1 ALD 183 at 193-4, serve to confirm my view that s 13(1) of the Judicial Review Act requires the decision-maker to explain his decision in a way which will enable a person aggrieved to say, in effect: `Even though I may not agree with it, I now understand why the decision went against me. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law, which is worth challenging.'

This requires that the decision-maker should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute), and the reasoning processes which led him to those conclusions. He should do so in clear and unambiguous language, not in vague generalities or the formal language of legislation. The appropriate length of the statement covering such matters will depend upon considerations such as the nature and importance of the decision, its complexity and the time available to formulate the statement. Often those factors may suggest a brief statement of one or two pages only.''

Woodward J. referred also (at pp. 507-508) to:

``the general policy of the Judicial Review Act, which clearly intends that persons aggrieved by administrative decisions which adversely affect them should have full opportunity to show, if they can, that such decisions, have been improperly reached.''

He added:

``They can only do this if they know how the decisions were in fact reached.''

Elliott v. London Borough of Southwark (1976) 2 All E.R. 781 at p. 791 James L.J., speaking for the Court of Appeal, said:

``The duty to give reasons pursuant to statute is a responsible one and cannot be discharged by the use of vague general words which are not sufficient to bring to the mind of the recipient a clear understanding of why his request for a rehabilitation order is being refused.''

This passage and others to similar effect are collected in Re Palmer and Minister for the Capital Territory (supra, at pp. 205-207). See also Ralkon Agricultural Co. Pty. Ltd. v. Aboriginal Development Commission (supra, at p. 546),
Collins v. Repatriation Commission (1980) 32 A.L.R. 581 at pp. 594-595;
Clark v. Wellington Rent Appeal Board (1975) 2 N.Z.L.R. 24 at pp. 26-27; and
Dalton v. D.F.C. of T. 85 ATC 4476 at pp. 4483-4484; (1985) 60 A.L.R. 783 at p. 792.

Counsel for the respondent suggested the statement, under the heading ``The reasons for the decision'', that ``there were no exceptional circumstances which warranted granting an extended date due and payable'', could be regarded as a finding that in fact no special circumstance existed. This argument not only ignored the Delphic ambiguity of the statement actually made, evading like the oracle the duty of enlightenment to which James L.J. referred, and leaving it uncertain whether it was the circumstances which were negatived or their claimed effect, but also overlooked the limiting words ``for the purposes of sub-section 207(1) of the Act'', which at least make it clear the passage has no relevance to sec. 206.

It has been held that the failure to include a matter in a statement of reasons under sec. 13 may justify a court in inferring as a fact that the matter was not taken into account:
Sullivan v. Department of Transport (1978) 20 A.L.R. 323 at pp. 349, 352-353; Collins v. Repatriation

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(1980) 32 A.L.R. 581 at p. 595;
Bowman v. Repatriation Commission (1981) 34 A.L.R. 556 at p. 562; and
Nestle Australia Limited v. D.F.C. of T. 86 ATC 4130 at p. 4133. This proposition is consistent with the view, recently affirmed by the High Court in
Public Service Board of N.S.W. v. Osmond (1986) 4 Leg. Rep. 1 at p. 2, that ``if the decision-maker does not give any reason for his decision, the court may be able to infer that he had no good reason''.

Doubtless, whether the inference will be drawn in a particular case will depend upon all the circumstances. Where, as here, the decision-maker chooses to give no evidence, the ordinary rule in
Jones v. Dunkel (1958-1959) 101 C.L.R. 298 will enable the Court more confidently to draw the inference. (I note that in some reported cases officers of the Taxation Department have given evidence of the factors taken into account in decisions under sec. 206 and 207 -
Ahern v. D.F.C. of T. 86 ATC 4023;
Thurecht & Ors v. D.F.C. of T. 84 ATC 4480.) In the present case, a matter also to be considered is the absence of any reference, under the heading requiring mention of ``evidence or other material'', to the companies' taxation returns, which I think would probably have been referred to had there been any examination of the impact of payment upon the businesses of the companies. In all the circumstances, I do not think there was any such examination. I should add that there is authority that material in the Taxation Office file must be regarded as available to the decision-maker: Nestle Australia Limited v. D.F.C. of T. 86 ATC 4130 at p. 4135.

The problem remains whether the Deputy Commissioner was bound to consider the questions I have found he did not consider. (See
Sean Investments Pty. Ltd. v. MacKellar (1981) 38 A.L.R. 363 at p. 375; Ahern v. D.F.C. of T. 86 ATC 4023 at pp. 4030-4031.) The statutory scheme, of which sec. 204-209 are key provisions, is framed to ensure that the due collection of the revenue is not frustrated. It has been criticised as harsh, but I do not think the Act evinces an intention that it should operate harshly. The object of the wide discretions, which are an integral part of the scheme, is to prevent its operating harshly in those cases where its automatic application would have that effect.

In sec. 204, the tax is made payable on the thirtieth day after service of the notice of assessment only if a discretion is not exercised to fix a date, and that discretion is clearly intended to allow flexibility for a case where substantial time is reasonably required, since the sole limitation upon it is that the taxpayer may not be given less time than the statute would otherwise grant him. Yet it was seen by the legislature that, even so, the discretion in sec. 204 might be insufficient to prevent the Act bearing down harshly upon a taxpayer in a particular case; therefore a further discretion to soften its impact was inserted in sec. 206, and in sec. 207 the automatic penalty for non-payment was made subject to still a further discretionary relaxation.

In the light of the purpose which the discretion under sec. 206 serves, it seems to me a claim by a taxpayer, who genuinely disputes the imposition of the tax, that payment on the due date would wholly or partly abolish his business, is a claim which the Commissioner of Taxation is bound to consider. Perhaps this is especially so where the tax was not assessed on moneys actually received, from which it would have been reasonable to expect a readier capacity to pay (cf. the Nestle case, supra, at p. 4133). The guidelines themselves, though read literally they look to a stark question of ability to pay, can be construed sufficiently generously to conform to my view of the Commissioner's duty: Thurecht v. D.F.C. of T., supra, at p. 4499.

In Brayson Motors Pty. Ltd. v. F.C. of T. 83 ATC 4124 at p. 4130, Brennan J. considered an application for interlocutory relief against a very large sales tax assessment pending hearing of an appeal. He said:

``To refuse injunctive relief, in practical terms, spells the end of the plaintiff's business. To grant injunctive relief, in practical terms, diminishes the prospect of recovery by the Commissioner.

In this situation, the strength of the case made by the plaintiff on this application is the chief factor for consideration, for that determines which claim to legal rights is more likely to be unjustly defeated - either by refusing or by granting the injunction, as the case may be.''

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If that statement were to be applied to the present circumstances, it would need to be added that there is here nothing to suggest an extension of time would diminish the Commissioner's prospects of recovery.

Although in an ``ordinary case'' it has been held the Commissioner is not bound to ``formulate a prediction as to the ultimate outcome of the matter'' (
Barina Corp. Ltd. v. D.F.C. of T. 85 ATC 4186 at p. 4196), the earlier decisions of Ahern v. D.F.C. of T. 83 ATC 4698 at pp. 4706 and 4708, and Thurecht & Ors v. D.F.C. of T. 84 ATC 4480 at pp. 4486 and 4500, do in my opinion support the application to the present circumstances of the reasoning of Brennan J. cited above. I think the Deputy Commissioner was bound to consider the merits of these objections.

It is unnecessary to consider whether, under sec. 5(2)(g) of the Administrative Decisions (Judicial Review) Act, which was relied on, I should have held it ``so unreasonable that no reasonable person could have so exercised the power'' to insist on payment without delay, at the risk of ``substantially restrict(ing), if not prohibit(ing) the taxpayer from continuing to carry on business'', and without making any finding discounting that risk, at a time when the department's priority system must have indicated that a decision, which might greatly reduce (as it did) the liability, was about to be made.

A separate argument was advanced, for the companies, that error of law was involved, or such unreasonableness as to fall within sec. 5(2)(g), in the refusal of any palliation of the effect of sec. 207. In substance the argument was that the Deputy Commissioner had treated sec. 207 as if it provided merely for compensatory interest instead of the penalty it really exacts. A penalty, it was urged, cannot be appropriate where it would be unreasonable to expect the payment the penalty is intended to enforce. Here, for reasons already discussed, as well as for an additional reason, the applicants submitted it would be unreasonable to expect payment while the liability to the tax remains in genuine dispute. The additional reason asserted relates to the delays of the Commissioner in complying with his obligations in respect of the companies' appeals. It was his obligation to refer the objections to the Supreme Court ``forthwith'' upon the requests made last June: Ahern's case (the earlier one), supra, at p. 4707; Barina Corporation case, supra, at p. 4189; and the Nestle case, supra, at pp. 4132-4133. The applicants argued there could be no basis for the imposition of a penal, and not merely compensatory, rate of interest upon them during a period when the Commissioner's own breach of obligation was preventing their appeals being heard.

Effect might well be given to these arguments in a tribunal charge to decide upon the merits; certainly the cases I have cited suggest this might be so. Perhaps the arguments would gain more ready acceptance in a case where the application sought expressly a partial remission from the penal rate imposed by sec. 207 to a commercial rate of interest. The present applications sought rather a delayed date of commencement for the running of interest. I think there is a distinction between a permissible degree of rigour in order to encourage the payment of taxes, and an impermissible levy incapable in the circumstances of serving any such purpose. But the application of that distinction requires the facts to be fully found, and I have already commented on the inadequacy of the sec. 13 reasons. In
Australian Machinery & Investment Co. Ltd. v. D.F.C. of T. (1946) 8 A.T.D. 81 at p. 98, Starke J. thought it unfair that a taxpayer, whose partially successful appeal had reduced significantly a substantial assessment, should have to pay penalty interest on the balance. This would support the companies' contention, at least for the period up to the partial allowance of their objections. The majority of the High Court, in the case cited, took a different view of what was there involved. Dixon and McTiernan JJ. held that the penalty interest was appropriate for a special reason, i.e. because of an aspect of the conduct of the appellant. The difference of opinion between the Judges illustrates the significance of the precise view taken of the facts. But while the Australian Machinery & Investment Co. case throws some light on factors which may affect the imposition of penalty interest, it was not a decision concerned with the nature of penalty interest or with judicial review of the kind provided by the Administrative Decisions (Judicial Review) Act. As, in each of the present applications, the whole matter will, in any case, have to be remitted for reconsideration, I do not think it is

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necessary to pursue the present discussion further.

The orders of the Court, in each application, will be that the decisions under sec. 206 and 207 of the Income Tax Assessment Act be set aside and the applications the subject of those decisions be remitted for further consideration according to law, and that the respondent pay the applicants' costs.

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