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Shell's Self Service Pty. Ltd. v. Deputy Federal Commissioner of Taxation

Judges:
Ryan J

Court:
Federal Court

Judgment date: Judgment handed down 8 March 1989.

Ryan J.

By these proceedings the applicant seeks an order of review pursuant to sec. 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth), (``the ADJR Act''). The decision of which the applicant complains was made by the Deputy Commissioner of Taxation. As set forth in a letter dated 5 March 1987 from the Australian Taxation Office, the decision was that remission of additional tax for late payment should be granted in the sum of $32,754.09, but that remission of other additional tax for late payment in the sum of $45,241.49 should not be granted. The additional tax had been incurred as a result of the late payment of outstanding tax in respect of the applicant's 1979, 1980 and 1981 assessments, in which the Commissioner had disallowed certain deductions in respect of losses carried forward.

The relevant assessment for the year ended 30 June 1979 was issued on 22 April 1980. Tax was assessed in the sum of $101,628.26 and became due and payable on 26 May 1980. On 5 May 1980, the applicant notified the Commissioner of its objection against the assessment. By letter dated 3 September 1980 the Deputy Commissioner advised the applicant that:

``Reference is made to representations in regard to a deferment pending finalization of matters in dispute.

Provided payment of the tax subject to appeal is paid to the extent of $16,232.40, the balance may be deferred until further advised by this office.

Payment of the tax subject to objection is required to the extent of $50,814.13 pending determination of the objection.

This deferment is granted subject to the imposition of additional tax for late payment calculated at the rate of 10% per annum from the due dates of the relevant assessments or the amount of tax ultimately found to be payable.''

At that time, sec. 207 of the Income Tax Assessment Act 1936 (``the Assessment Act'') provided:

``(1) If any tax remains unpaid after the time when it becomes due and payable, additional tax shall be due and payable at the rate of 10% per annum on the amount unpaid, computed from that time or, where an extension of time has been granted under section 206, from such date as the Commissioner determines, not being a date prior to the date on which the tax was originally due and payable:

Provided that the Commissioner may in any case, for reasons which he thinks sufficient, remit the additional tax or any part thereof.''

The applicant's accountants, Messrs Fordham, Williams & Co., by letter dated 17 September 1980, indicated that they were aware that in other cases the Commissioner had agreed to either:

``(a) Payment of 50% of the alleged tax owing and the balance of tax ultimately found to be payable is paid without the

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imposition of additional tax for late payment; or

(b) Deferment of payment of tax until the matter is finally determined with the imposition of additional tax for late payment.''

They suggested that, in accordance with (b), the respondent should, pursuant to sec. 206 of the Assessment Act, grant a deferment of the payment of all tax, pending determination of the objection after which the respondent could consider the imposition of additional tax for late payment. Section 206, at the relevant time, provided:

``The Commissioner may in any case grant such extension of time for payment, or permit payment to be made by such instalments and within such time as he considers the circumstances warrant; and in such case the tax shall be due and payable accordingly.''

It is common ground in these proceedings that the type of practice adverted to in (a) (above) was known as a 50/50 arrangement, or otherwise as the 50% payment and 50% deferment rule, and was supported by the discretion conferred on the Commissioner by sec. 207 of the Assessment Act to remit part or all of the additional tax. However, as shall become apparent from these reasons, the applicant and the Deputy Commissioner did not share a common understanding of how the 50/50 arrangement operated in practice. It is sufficient for present purposes to say that it allowed a taxpayer the option of avoiding any additional tax for late payment under sec. 207 by immediately paying half of the amount of tax the subject of any objection or appeal. Full recovery by the Commissioner would accordingly be stayed pending determination of the matters in dispute.

It appears that this type of arrangement was offered to the applicant in respect of its assessment for the financial year ending 30 June 1978, when it was assessed to pay an amount of $34,741.50. An objection against that assessment was disallowed and the applicant then requested the respondent to treat its objection as an appeal and forward it to the Supreme Court. Initially, in the letter dated 3 September 1980, the Deputy Commissioner had offered the applicant the option of paying an amount of $16,232.40 with the balance to be deferred pending the appeal. It is unclear whether the last paragraph of that letter (as quoted above) which advised that the deferment ``is granted subject to the imposition of additional tax...'' was applicable to the 1978 assessment or referable only to the 1979 assessment. In any event, the Deputy Commissioner, by letter dated 11 December 1980 and in response to the letter of 17 September from the applicant's accountants, advised:

``that provided payment of the account is effected to the extent of $16,232.40, the balance may be deferred without the imposition of additional tax for late payment, pending further advice by this office.''

In that letter no reference was made to the amount outstanding in respect of the assessment of $101,628.26 in respect of the year ended 30 June 1979.

On 21 April 1981, a notice of assessment was issued to the applicant for the year ending 30 June 1980, stating that an amount of tax in the sum of $112,074.40 would become due on 25 May 1981, thereby increasing the applicant's liability to $248,444.16. Again, the applicant lodged a notice of objection and its accountants, by letter dated 29 April 1981, requested the Deputy Commissioner ``that an extension of time be granted for the payment of tax outstanding until such time as the objection has been determined''. The following response came in a letter dated 5 June 1981:

``It is confirmed that the following amounts of tax are presently outstanding to the account viz.: 

                                         $
      Year ended 30 June 1978       34,741.50
      Year ended 30 June 1979      101,628.26
      Year ended 30 June 1980      112,074.40
                                  -----------
                                  $248,444.16
                                  -----------

Provided payment of this account to the extent of $124,222.08 is effected immediately the balance may remain outstanding, without the imposition of additional tax for late payment, pending finalisation of matters in dispute.''

The applicant made no reply to this letter, nor any attempt to accept the respondent's proposal in respect of the amount outstanding

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for the 1978, 1979 and 1980 financial years. In the meantime, the applicant's tax liability had further increased as a result of an assessment to pay income tax in the sum of $34,735.12 for the year ended 30 June 1981. Again, it appears that certain losses claimed by the applicant had been disallowed and the due date for payment was 25 May 1982. As a result of the applicant's failure to respond to his letter of 5 June 1981, the Deputy Commissioner issued the following warning, by letter dated 7 July 1982:

``You are advised that unless payment of the $124,222.08 requested is forwarded forthwith, legal proceedings will commence to recover the full amount outstanding for those years in dispute.

In respect of the assessment for the year ended 30 June 1981, provided payment of $3,513.31 is made, the balance of $31,221.81, representing 50% of the tax in dispute, may be deferred until further notice is received from this office.

Additional tax for late payment continues to accrue at the rate of 10% per annum from the original due date.''

The applicant's accountants replied by letter dated 12 July in the following terms:

``We refer to your letter of 7th July and request again on behalf of the abovenamed taxpayer, that you grant pursuant to the powers granted to the Commissioner of Taxation under Section 206 of the Income Tax Assessment Act, an extension of time to pay the alleged tax due, until the matters in dispute are resolved.

Pending resolution of these matters it is requested that no legal proceedings be commenced to recover the alleged tax due.

You refer in your letter to a letter issued from your office on 5th June, 1982. We have not received this letter and would request a copy. Pending receipt of a copy of this letter it is again requested that no legal proceedings be commenced.

Your favourable consideration to these requests would be appreciated.''

On 21 September, the Commissioner disallowed the objections against assessment for the financial years ending 1979, 1980 and 1981. The applicant, by its accountants, then requested that those objections be treated as appeals and referred to the Supreme Court. (A statement of case was later referred on 23 December 1982.)

On 13 December 1982, the Income Tax Assessment Amendment Act (No. 6) 1982, received Royal Assent. By sec. 9 of that Act, subsec. (1) of sec. 207 of the Assessment Act was repealed and the following subsection was substituted:

``(1) If any tax remains unpaid after the time when it became due and payable or would, but for section 206, have become due and payable, additional tax is due and payable at the rate of 20% per annum on the amount unpaid, computed from that time or, where, under section 206, the Commissioner has granted an extension of time for payment of the tax or has permitted payment of the tax to be made by instalments, from such date as the Commissioner determines, not being a date prior to the date on which the tax was originally due and payable.

(1A) Where additional tax is due and payable by a person under sub-section (1) in relation to an amount of tax and -

  • (a) the Commissioner is satisfied that -
    • (i) the circumstances that contributed to the delay in payment of the tax were not due to, or caused directly or indirectly by, an act or omission of the person; and
    • (ii) the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances;
  • (b) the Commissioner is satisfied that -
    • (i) the circumstances that contributed to the delay in payment of the tax were due to, or caused directly or indirectly by, an act or omission of the person;
    • (ii) the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; and
    • (iii) having regard to the nature of those circumstances it would be fair and reasonable to remit the additional tax or part of the additional tax; or
  • (c) the Commissioner is satisfied that there are special circumstances by reason of which it would be fair and reasonable

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    to remit the additional tax or part of the additional tax,

the Commissioner may remit the additional tax or part of the additional tax.''

Section 15 of the amending Act is also relevant:

``15 Notwithstanding the amendment made by this Act to section 207 of the Principal Act, where, in relation to an amount of additional tax that is payable, or will become payable, by a taxpayer under that section in relation to an amount of tax payable under an assessment against which an objection has been lodged under section 185 of the Principal Act, the Commissioner has, before the commencement of this Act, entered into an agreement or arrangement with the taxpayer, or otherwise indicated his intention to the taxpayer, to remit the whole or a part of the additional tax, either unconditionally or subject to conditions, sub-section 207(1A) of the Principal Act as amended by this Act does not apply in relation to that additional tax but the Commissioner may, for reasons that he thinks sufficient, remit that additional tax or any part of that additional tax.''

There was no further communication between the parties until 20 December 1982, when Mr Price Williams of Fordham, Williams & Co. spoke with Mr Martin Tayler, a recovery officer in the Australian Taxation Office. In discussing the recent amendments to the Assessment Act, Mr Tayler stated, in effect, that the Australian Taxation Office was still prepared to offer to the applicant a 50/50 arrangement as it had in the past. Mr Tayler also said that if the applicant accepted the offer, payment of $124,077.44 would be required by 27 December 1982. This amount represented half of the outstanding tax in respect of the 1979, 1980 and 1981 tax years. The amount of $124,222.08 which has previously been referred to represented half of the outstanding tax in respect of the 1978, 1979 and 1980 tax years. There is evidence to the effect that the appeal to the Supreme Court against the assessment for the financial year ending 30 June 1978 was heard at some time between July and December 1982 and was successful.

Mr Williams replied that he would seek instructions from the applicant and report back to Mr Tayler before the end of the week.

After obtaining instructions from the applicant, Mr Williams told Mr Tayler on the following day that the applicant was willing to pay the sum of $124,077.44, but that it could not do so within seven days. He requested the Deputy Commissioner to extend the time for payment to mid-January 1983.

Mr Tayler has deposed that ``[b]ecause I was not prepared to commit the Australian Taxation Office to such an arrangement I asked Mr Williams to put his counter-offer in writing, setting out exactly when it was envisaged that the Applicant would pay the sum of $124,077.44... I said to Mr Williams that any such counter-offer may be considered, but that I could give no guarantee that the counter-offer would be accepted.''

On 31 December 1982, the Deputy Commissioner received from Fordham, Williams & Co. a letter dated 21 December 1982 which read, in part:

``We are writing to confirm todays telephone conversation regarding the abovenamed taxpayer and arrangements to pay the outstanding tax.

We would ask you to confirm that provided $124,077.44 is paid during the week commencing 17th January, 1983 the balance may remain outstanding without the imposition of additional tax for late payment, pending finalization of the matters in dispute.

The directors of the company have made arrangements to visit their bank early in January and are confident that funds will become available by the specified time.

We look forward to receiving your confirmation of these arrangements.''

Early in January, Mr Tayler sought instructions from Mr Damien Hynes who is the manager of the Deferred Tax Unit, and, in accordance with those instructions, he sent a letter dated 7 January 1983, which read, in part:

``You are advised that the representations contained in your letter have been considered and payment of $124,077.44 will be accepted on or before 17 January 1983.

However, in view of the recent legislation which was given royal assent on 13

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December 1982, such an arrangement whereby interest does not accrue can no longer be entered into by this office. The Tax Agents Circular No. 4 of 1982 will explain this in more detail.

Accordingly, the above arrangement will be subject to the accrual of additional tax for late payment at the rate of 10% per annum from the original due date until 14 February 1983, at which time the interest rate will increase to 20% per annum.''

Mr Williams telephoned Mr Tayler on 11 January. He complained that the decision to impose penalty interest on the outstanding amount was not in accordance with what he had thought to be the Deputy Commissioner's earlier advice that he would extend the time for payment. Mr Tayler replied that his earlier offer of a ``50/50 arrangement'' had required payment by 27 December 1982, and, as this had not been made, the offer was no longer open, because the Melbourne office had no power to further extend the time for payment. He also said that the request made in the applicant's letter of 21 December had been considered as promised, but that it had been rejected after consultation with Mr Hynes and a Mr Paul Noone, the officer handling the case.

By letter dated 12 January 1983, Fordham, Williams & Co. made a submission to the Deputy Commissioner. It set out the events which had occurred since 21 December 1982, and proceeded:

``We confirmed we would make the necessary arrangements to have the moneys paid to your office by the week commencing 17th January and notwithstanding your letter of 7th January, we now enclose the taxpayer's cheque for $124,077.44 in good faith and again request that this amount be accepted in accordance with the terms set out in our letter of 21st December. In support of this request we make the following submissions:

  • 1. No indication was given that head office did not allow any discretion in this matter and we were left with the distinct impression that an extension of the proposal was capable of being considered by Melbourne and in fact, this would be done.
  • 2. The objection for 1978 has now been allowed in full which supports the taxpayer's contention that the objection against the disallowance of prior year losses has merit and should be resolved in the taxpayer's favour.
  • 3. The taxpayer has been fully co-operative in providing any information requested promptly and has gone out of his way to ensure that no delays occur in resolving this matter.
  • 4. The delays in bringing this matter to the Court for hearing are not the fault of the taxpayer. We understand that all the papers regarding this matter have been to Canberra on more than one occasion and that delays in having this matter listed are within your department.
  • 5. The taxpayer is anxious to have this matter resolved as soon as possible and we should be pleased to receive any suggestions as to how we may assist to have the matter listed for hearing at the earliest possible date.
  • 6. The taxpayer was given the impression that provided he agreed to a certain course of action insofar as arrangements to pay part of the tax (which he has now done) consideration would be given to remitting the late payment penalties on the balance (which has not been done).

We trust in light of the facts you will accept this cheque pursuant to the terms of our letter of 21st December. We look forward to receiving your favourable ruling in this matter.''

Along with the cheque for $124,077.44 there was, on an assumption that the Melbourne office had no discretion to deal with the matter, a request that the submission be referred to the Head Office in Canberra.

The decision not to enter into a 50/50 arrangement was made on or about 1 March 1983, which appears from the following notation of that date on the applicant's file in the Australian Taxation Office:

``The offer which was put to the coy. on 20/12/82 which would have allowed interest free deferment provided payment was made by 27/12/82 placed the coy. in a preferential position. To the best of my knowledge no other Victorian taxpayer was offered such an arrangement. I do not believe that

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anything has been said or done which would justify the agent believing that we would extend the required date for payment.

I support Mr Hynes' recommendation. The coy. should be advised by phone of decision and that the matter has not been referred to H.O. The decision should then be confirmed in writing.''

The notation suggests that the decision was made within the Melbourne office without reference to Canberra.

Accordingly, on 11 March 1983 the Deputy Commissioner notified the applicant's accountants that he confirmed his advice of 7 January that the payment of the outstanding sum of $122,077.44 would be deferred pending the hearing of the appeal to the Supreme Court, but that it would attract additional tax for late payment.

On 1 August 1984, the applicant's appeal in respect of the assessments for the years 1979, 1980 and 1981 was dismissed by Tadgell J. in the Supreme Court of Victoria. The applicant then paid $124,077.44 on 7 August, which was the balance of the tax in dispute. The additional tax which had accrued to that date and which had remained outstanding amounted in all to $77,995.58, being comprised of:

  • 1. $46,241.49; being an amount which had accrued from the due dates for payment until 13 January 1983, in respect of which an amount of $1,000 had been paid by the applicant on 21 November 1983.
  • 2. $32,754.09; being an amount calculated on the balance outstanding from 14 January to 7 August 1984.

A notice for this amount was issued under sec. 204 of the Act.

On 26 February 1986, Mr Williams and the solicitor acting for the applicant, Mr Mapleback, met with Messrs Thurling and Johnson, who were officers employed in the recovery section of the Australian Taxation Office, for the purpose of making further submissions for the remission of the outstanding amount. They there raised the following grounds as support for that claim:

  • 1. That Mr Tayler had failed to advise that 27 December 1982 was the final date on which the applicant could avail itself of a 50/50 arrangement and that this amounted to an innocent misrepresentation.
  • 2. That Mr Williams had been led to believe that it was within the Department's discretion to enter into a 50/50 arrangement upon receipt of a written request.
  • 3. That the written request to extend the time for payment dated 21 December 1982 had not been received by the Department until 31 December. Accordingly, the applicant had had no chance of discovering the real situation and making payment by 27 December.

Despite these submissions, the Deputy Commissioner refused to accede to the applicant's request and he informed the applicant, through its accountants, of this decision by letter dated 27 March 1986.

The applicant sought a statement of reasons for the decision under sec. 13 of the [ADJR] Act, which was provided by the Deputy Commissioner on 21 July 1986. That statement contained, in one of three prefatory paragraphs, the following statement about the effect of the amendments to the Assessment Act made by Act No. 123 of 1982:

``The amendments made on 13 December 1982 set out (in section 207(1A)) the circumstances in which the Commissioner could remit additional tax for late payment imposed by section 207(1). Having regard to the limitations imposed upon the Commissioner's power of remission the former administrative practice, which allowed arrangements to be made upon the basis that if one half of a disputed debt was paid payment of the other half was deferred free of additional tax, was terminated. Recognising administrative practicalities, transitional arrangements were adopted which allowed any taxpayer who, prior to 13 December 1982, had agreed to pay one half of disputed tax, until 27 December 1982 to make payment.''

There then followed a series of findings on material questions of fact which did not differ significantly from those already set out in these reasons. The statement concluded:

``The reasons for the decision not to remit the additional tax for late payment were:

  • (o) The taxpayer had on a number of occasions ignored invitations... to enter

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    into an arrangement free of the imposition of additional tax for late payment.
  • (p) In the conversation which took place on 21 December 1982 the company was not advised that its proposal, to pay one half of the income tax outstanding by mid January 1983 with the balance to remain outstanding free of the imposition of additional tax pending the resolution of matters then in dispute, was approved.
  • (q) Statements by Mr Mapleback (solicitor) and Mr Williams (accountant) that, had the taxpayer fully understood the significance of payment by 27 December 1982, the taxpayer would have found funds with which to pay by that date, contradicted verbal advice given by Mr Williams, on 21 December 1982, that the taxpayer could not make the required payment before mid January 1983.
  • (r) In as much as the request was based upon a claim that an officer was negligent in failing to explain the full implications of the amended legislation, no conduct on the part of the Commissioner could operate as an estoppel against the operation of the Act.
  • (s) The Commissioner is not satisfied as to any of the matters of which he must be satisfied before he is permitted to remit the additional tax (section 207(1A)).
  • (t) The taxpayer offered no grounds which would justify remission of that part of the additional tax which had accrued up to 13 January.''

By application filed 26 August 1986, the applicant sought a review of the Deputy Commissioner's decision not to remit any of the outstanding tax. That application, number VG 318 of 1986, was subsequently discontinued by the applicant on 6 April 1987 after the Deputy Commissioner had advised by letter dated 5 March 1987 that:

``[T]he decision of 27 March 1986 not to remit additional tax for late payment under s. 207 of the Income Tax Assessment Act 1936... has been reviewed, and the taxpayer will be accorded a partial remission of $32,754.09.

The amount of $32,754.09 consists of additional tax which accrued after 13 January 1983, the date upon which the amount of $124,077.44 (being one-half of the primary tax in dispute with this office) was paid. The balance of additional tax, an amount of $45,241.49, remains outstanding in the taxpayer's account. The amount of $45,241.49 consists of additional tax which accrued from the due dates for payment until 13 January 1983.

The decision to grant the taxpayer a partial remission of additional tax for late payment has made [sic] in view of an apparent misunderstanding arising from telephone discussions on 20 and 21 December 1982 between Mr Tayler of this office and Mr Price Williams of Fordham Williams and Co.

The taxpayer has offered no grounds which would justify remission of that part of the additional tax which had accrued up to 13 January 1983.''

The present application seeks a review of that decision to remit only part of the outstanding tax.

Reasons for the later decision to remit only part of the additional tax have been set out in an affidavit sworn 2 July 1987 by Christopher John Richard Adams who, at the relevant time, was the director (outstanding taxes) in charge of the recovery section within the Australian Taxation Office. In para. 2, 3 and 4 of that affidavit Mr Adams deposed:

``2. Representations were made by the Applicant's solicitors, Messrs Akehurst, Friend and Allaway on or about the 10th day of February 1987 to remit additional tax for late payment totalling $77,995.58.

3. As the Director (Outstanding Taxes) the question of remission was referred for direction. After careful examination of the Applicant's file, the request was acceded to in part. Of the total amount of $77,995.58, an amount of $32,754.09 was remitted. The amount of $32,754.09 consisted of additional tax for late payment which accrued after the 13th day of January 1983, the date upon which an amount of $124,077.44 primary tax (being one half of the primary tax then in dispute) was paid.

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4. The balance of additional tax, an amount of $45,241.49 consisting of additional tax which had accrued from the due dates for payment until the 13th day of January 1983, remained outstanding on the Applicant's account. The only ground given by the Applicant why remission should be granted in relation to the additional tax which had accrued up to the 13th day of January 1983 was that such additional tax could not be recovered as a matter of law. I did not consider that this ground was sufficient and justify [sic] any further remission of additional tax for late payment.''

After identifying all of the documentary material which he had examined in coming to his decision, Mr Adams gave these reasons for it:

``6. My reasons for the decision to remit only part of the additional tax for late payment are as follows:

  • (a) In deciding to remit the amount (viz. $32,754.09) which accrued after the 13th day of January 1983, I took into account the facts that even though in the conversation which took place on the 21st day of December 1982 the Applicant was not advised that its proposal to pay 50% of the primary tax by mid-January 1983 would result in additional tax ceasing to accrue on the balance outstanding, until resolution of the matters in dispute; the Applicant was not advised, on the other hand, that a failure to pay by the 27th day of December 1982 would result in the taxpayer losing the opportunity to enter into an arrangement to pay 50% of the tax in dispute and in return additional tax would cease to accrue on the balance outstanding, until resolution of the matter in dispute.
  • (b) In deciding not to remit the amount (viz. $45,241.49) which accrued prior to the 13th day of January 1983, I took into account the facts that:
    • (i) The Applicant did not avail himself of several written offers made to him to pay 50% of the tax outstanding on the condition that additional tax for late payment would cease to accrue on the balance outstanding;
    • (ii) It was never represented or intended that these offers were to have any effect on the accrual of additional tax for late payment which had accrued prior to the Applicant accepting the offer and making the part payment. In that regard, I crave leave to refer to the letter of 5 June 1981 [to the] Applicant and the letter of 21 December 1982 from the Applicant being part of Exhibits CJR A1(b) and (c).
    • (iii) The question of whether the additional tax could not be recovered as a matter of law was not a valid matter to be taken into consideration in determining whether remission pursuant to section 207(1A) should be granted.
    • (iv) In as much as the request was based upon a claim that an officer was negligent in failing to explain the full implications of the amended legislation, I did not consider that the officer had failed to explain the full implications or otherwise been negligent and I did not consider the officer's conduct did or could estop the Respondent from administering the Act in accordance with its terms.
    • (v) The Commissioner is not fully satisfied as to any of the matters of which he must be satisfied before he is permitted to remit the additional tax in full (section 207(1A)).
    • (vi) The Applicant offered us [no] grounds which would justify remission of that part of the additional tax which had accrued up to 13 January 1983.''

That decision, as notified by the letter of 5 March 1987, is the subject of the later application under the ADJR Act on the following grounds:

``1. The decision involved the improper exercise of the powers conferred by the Income Tax Assessment Act 1936 (as amended) (`the Act') and section 15 of the Income Tax Assessment Amendment Act (No. 6) 1982 (`the amending Act').

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PARTICULARS

  • (a) The decision-maker erroneously exercised his discretion in making the decision pursuant to s. 207(1A) of the Act.
  • (b) The decision-maker erroneously failed to make the decision pursuant to s. 15 of the amending Act.
  • (c) The decision-maker took into account (inter alia) the following irrelevant considerations:
    • (i) that the Applicant did not avail himself of several written offers made to him to pay 50% of the tax outstanding;
    • (ii) that the sum of $124,077.44 was not paid before 27th December 1982.
  • (d) The decision-maker wrongly considered that the only ground given by the Applicant as to why remission should be granted in respect of the additional tax which had accrued pursuant to s. 207 of the Act up to 13th January 1983 was that such additional tax could not be recovered as a matter of law and failed to take into account the matters set out in the Application for Review No. VG 318 of 1986 and the supporting affidavits.
  • (e) The decision-maker wrongly considered that the fact that additional tax could not be recovered as a matter of law was not a valid matter to take into consideration.
  • (f) The Applicant refers to and repeats the particulars subjoined to paragraphs 1 and 2 of the Application.
  • (g) The decision-maker failed to take into account the fact that on 21st December 1982 the Respondent advised the Applicant that discretions which would be exercised prior to 27th December 1982 would not be exercised after that date.
  • (h) In taking into account that the sum of $124,077.44 was not paid before 27th December 1982 the decision-maker exercised a discretionary power in accordance with a rule of policy without regard to the merits of the case.

2. The decision was not authorised by the enactment, namely s. 207(1A) of the Act, pursuant to which it was purported to be made.

3. The decision involved an error of law namely that it was erroneously made pursuant to s. 207(1A) of the Act.''

It will be seen that the principal complaint raised on behalf of the applicant on this application is that in reviewing the decision whether to remit the penalty tax, the Deputy Commissioner proceeded under sec. 207(1A) of the Assessment Act as amended, instead of exercising the wider discretion conferred by sec. 207(1) as in force before 13 December 1982. To determine whether that complaint has been made out requires the Court to construe sec. 15 of Act No. 123 of 1982 which I have already reproduced.

In my view, the effect of that transitional provision is to preserve to the Commissioner the wider discretion conferred by sec. 207(1) of the Assessment Act, as in force before 13 December 1982, in respect of all assessments the subject of pending objections at that date in respect of which the Commissioner had, at any time before 13 December 1982, entered into an agreement or arrangement to remit the whole or part of the additional tax, or otherwise indicated his intention to grant such a remission.

Mr Whelan of counsel for the Deputy Commissioner contended first that the expression in sec. 15 of the amending Act, ``... or otherwise indicated his intention to remit the whole or a part of the additional tax'' should be read as limited to an indication of intention by the Commissioner ``so as to bind himself in some way so it would be misleading for the taxpayer if the ground rules were then to be changed beneath him''.

Pursuant to sec. 15AB of the Acts Interpretation Act 1901, reliance was placed in support of this first contention, on behalf of the Deputy Commissioner, on certain passages from the supplementary explanatory memorandum which was circulated before the passage of the Bill for the amending Act. At p. 7 of that memorandum it was recited:

``Arrangements entered into by the Commissioner, prior to the date on which the amendments proposed by this Bill become law, to remit additional tax in disputed liability cases will not be

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overturned and will be allowed to continue according to their terms.''

Then at p. 17 it was indicated of the clause which became sec. 15 of the amending Act:

``Clause 15 will, however, retain for the Commissioner a general authority to remit an amount of late payment penalty in any case where, prior to the date on which the Bill becomes law, he has entered into an arrangement with a taxpayer to remit additional tax in respect of an amount of assessed income tax that has remained unpaid pending the resolution of a disputed assessment. In other words, these existing arrangements will not be overturned and will be allowed to continue according to their terms.''

Those passages manifest an intention to preserve agreements and arrangements into which the Commissioner had entered before the date on which the Bill should become law. However, they throw no light on what was intended to be achieved by the reference in cl. 15 to the Commissioner having ``otherwise indicated his intention to the taxpayer, to remit the whole or a part of the additional tax''. To confine the application of cl. 15 to the arrangements described in the explanatory memorandum would be to render the words which I have just quoted surplusage. Section 15AB of the Acts Interpretation Act could only require that extraordinary result if the explanatory memorandum were regarded as an exhaustive statement of the legislative intention underlying cl. 15. I do not so regard it.

If the indication of intention contemplated by sec. 15 be limited to one which has given rise to an obligation or estoppel legally binding on the Commissioner, it adds nothing to the alternative basis for the operation of sec. 15 of the amending Act, i.e. the Commissioner's having entered into an agreement or arrangement with the taxpayer to remit some additional tax either unconditionally or subject to conditions. I consider that upon the indication having been given before 13 December 1982, sec. 15 of the amending Act applied, even if the taxpayer had not acted on the indication to his detriment or at all.

It was next argued on behalf of the Deputy Commissioner that the use of the perfect tense, ``has otherwise indicated an intention'', signifies a requirement that the intention should still have subsisted at the date of commencement of the amending Act. Accordingly, so it was argued, any indication of intention to remit additional tax which accompanied an offer to a taxpayer was no longer operative for the purposes of sec. 15 of the amending Act if the offer had been rejected or had lapsed before 13 December 1982. It is true that the use of the perfect tense denotes an action which is complete at the date on which it is viewed, but the action contemplated by the relevant part of sec. 15 is that of the Commissioner indicating.

I therefore discern no temporal limitation on the operation of that part of the section other than the requirement for an indication to have been given at some time in respect of additional tax referable to tax payable under an assessment to which an objection remained ``live'' on 13 December 1982. Had the legislature intended to confine the operation of sec. 15 to concluded agreements or arrangements, or offers to remit additional tax which remained open on 13 December 1982, it would have been easy enough to say so. Of course, the fact that a taxpayer has rejected or failed to respond to an indication by the Commissioner of an intention to grant some remission may well influence the Commissioner in the exercise of the discretion preserved by sec. 15 of the amending Act to grant a smaller remission or no remission at all. However, that does not mean that the Commissioner is relieved altogether of the need to exercise the discretion.

I am reinforced in the construction which I have adopted of sec. 15 by the consideration that it is a transitional provision designed to preserve for a limited class of taxpayers the more ample discretion previously reposed in the Commissioner by sec. 207(1) of the Assessment Act. In accordance with the principle enunciated, e.g. in
Burt v. F.C. of T. (1912) 15 C.L.R. 469 at p. 482, any serious doubt as to which of two interpretations should be adopted ought to be resolved in favour of that which extends the benefit to the wider class of taxpayers.

It is clear that the Commissioner had, by the letter of 5 June 1981, indicated an intention to remit additional tax in respect of the tax payable by the applicant on the assessments for the 1978, 1979 and 1980 tax years, subject to the condition specified in that letter that the

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taxpayer immediately pay the sum of $124,222.08. Accordingly, on the construction which I have adopted of sec. 15 of the amending Act, the Commissioner was bound after 13 December 1982 to consider whether, for reasons he might think fit, he should remit the additional tax payable by the applicant in respect of those years or any part of that additional tax. It is equally clear that the Deputy Commissioner, when he made the decision of 27 March 1986 for which a statement of reasons was provided on 21 July 1986, considered that he was required to apply sec. 207(1A) of the Assessment Act as amended, and not sec. 15 of the amending Act or sec. 207(1) of the Assessment Act before its amendment, in deciding whether to remit any additional tax payable by the taxpayer in respect of the 1978, 1979 and 1980 tax years. As emerges from subpara. 6(b)(v) of his affidavit quoted at p. 4242 of these reasons, that misapprehension remained when Mr Adams came to review the earlier decision whether to remit all or any part of the additional tax. It follows, therefore, that the applicant has made out what I have identified as its principal complaint, that in terms of sec. 5(1)(f) of the ADJR Act, the decision of 27 March 1986 involved an error of law.

Mr Whelan, for the Deputy Commissioner, argued that, even if the applicant had made out one of the grounds on which it sought review under the ADJR Act, relief should be refused as an exercise of the discretion implicit in sec. 16(1) of that Act because the applicant had received everything by way of remission of additional tax which it had requested. He referred to
Excell v. Harris (1983) 51 A.L.R. 137 where an applicant for promotion to a temporary position of senior teacher established that ``the Promotions Appeal Board failed to conduct its proceedings in accordance with the dictates of fairness which the applicable principles of law require'' (at p. 165.2). However, Neaves J. declined to grant relief because, by the date of his judgment, the temporary appointment to which the applicant aspired had only a matter of a few weeks to run. By contrast, the amplitude of the benefit which the present applicant could achieve if the Commissioner's discretion were exercised as favourably to the applicant as it could be, has not been cut down by the effluxion of time. Nor are there present in this case considerations of the kind which would have led Woodward J. to have exercised his discretion adversely to the applicant in
Visy Board Pty. Ltd. v. Attorney-General (Cth) & Anor (1983) 51 A.L.R. 705 had his Honour found a prima facie case for relief made out. Nor can I discern in this case any factors like those which
Peko-Wallsend Ltd. v. Minister for Aboriginal Affairs & Anor (1985) 59 A.L.R. 51 provided a basis for the exercise by this Court of its discretion to refuse relief, notwithstanding that a ground afforded by the ADJR Act for review of the decision had been made out.

Mr Whelan also referred to several cases where a discretion analogous to that conferred by sec. 16 of the ADJR Act has been invoked as justifying a refusal to order the issue of one or other of the prerogative writs. Those authorities which included
R. v. Wasley; Ex parte Frankel (1914) V.L.R. 635 and
Reg. v. Aston University Senate (1969) 2 Q.B. 538 serve as a useful reminder that this Court should not automatically quash or set aside a decision upon finding that it has been vitiated by an error of law. It is also necessary to have regard to the conduct of the applicant for review including any delay in bringing the proceedings or acquiescence in the decision-maker's error. As well, it may be appropriate to examine whether, on further consideration, the decision-maker could reasonably come to some other decision more favourable to the applicant for review. In the present case there is nothing in the conduct of the applicant which disentitles it to reconsideration of its request for remission of the additional tax. Nor can I conclude that on such a reconsideration no result other than a remission of $32,754.09 would reasonably be open to the Deputy Commissioner.

Accordingly, I order that the Deputy Commissioner's decision of 5 March 1987 be set aside and the matter to which the decision relates be referred to the respondent for further consideration. The respondent must pay the applicant's costs.


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