FARDON v FC of TJudges:
This is an appeal pursuant to s. 44 of the Administrative Appeals Tribunal Act 1975 from a decision of the Taxation Appeals Division of the Administrative Appeals Tribunal (``the Tribunal'') in which it affirmed a decision of the respondent refusing an application by the applicant under sub-section 188(1) of the Income Tax Assessment Act 1936 (``the Act'') for an extension of time for lodgement of an objection to an assessment of his taxable income for the year ending 30 June 1988.
To his income tax return for 1988, Mr Fardon attached a statement in explanation of a total of $284,918 for ``allowances, benefits etc received or granted in connection with occupation or employment'', the relevant parts of which were:
"During the year the taxpayer received out of escrow, as a consequence of services rendered as an employee, shares in APR Ltd. The market value of these shares at the relevant date was 44c per share.
Assessable income: 150,000 shares @ 44c $66,000 In addition, pursuant to Section 26AAC, the taxpayer is also assessable on APR Ltd shares received as noted above by Isitest Pty Ltd (File No. 87 569 641) 497,541 shares @ 44c $218,918 --------- $284,918." ---------
On 1 May 1989 the Australian Taxation Office issued Mr Fardon's Notice of Assessment. The total amount payable by Mr Fardon was $169,736.48.
On 7 March 1990, the following representations were made on behalf of the applicant to the respondent:
``On behalf of the taxpayer, we request that an amended assessment be issued in relation to the income year ended 30 June 1988 reducing the amounts previously included in the taxable income for the above taxpayer pursuant to the provisions of Section 26AAC of the Income Tax Assessment Act 1936 as amended (`the Act').
On 26 February 1985, a total of 2,158,470 shares in Australia Pacific Resources Ltd (`APR Ltd') were issued to the taxpayer and an associate. The terms of that issue were that those shares were to be held in escrow and released progressively as follows:DATE PERCENTAGE RELEASED 31 July 1986 10% 31 July 1987 30% 31 July 1988 30% 31 July 1989 30%
The amounts, in respect of which this request is made, represent the market value of shares released from escrow on 31 July 1987.
The basis upon which this request is made is that, subsequent to the lodgement of the returns in question, it has come to our notice that there were further restrictions on the disposal of these shares other than those associated with their issue, and accordingly, that these shares should be taken to have been acquired by the taxpayer at a later point in time when the right of the taxpayer to dispose of the shares ceased to be subject to these further restrictions.
These further restrictions arise as a result of the relationship between the taxpayer and APR Ltd. The taxpayer was a founder, chairman and chief executive of APR Ltd. During the period centered around 31 July 1987 (the date the relevant shares were released from escrow), the taxpayer was unable to sell significant numbers of shares in APR Ltd because:
- 1. From mid 1987, the taxpayer, as chief executive of APR Ltd, was actively
ATC 4341seeking finance for the company's operations. It was inconsistent for him to be selling down his holding in the company at this time as any such sale would have dramatically reduced the market price of the company's shares.
- 2. The taxpayer, on behalf of APR Ltd, was negotiating with potential investors and thus, affected by the constraints on insider trading in the Securities Industries Code. This was a sensitive issue as the price had to remain above the 50c par value in order to attract investment.
The directors of APR Ltd, knowing that the two founding directors held large numbers of shares, had previously discussed the matter of the timing of sales. They had agreed it was inadvisable, unethical or illegal to sell shares in any number at times when investment was being sought by promoting the company.
It is considered that the taxpayer was not in a position to sell shares until mid November 1987. At this time, the market value of the shares in the company was 20 cents. It is submitted that, in accordance with the provisions of Section 26AAC(15) of the Act, this is the date on which shares should have been deemed to have been acquired.
Accordingly, we request the taxpayer's assessment for the year ended 30 June 1988 be amended to reduce the market value of shares acquired under Section 26AAC of the Act to $129,508.''
The respondent wrote the following letter dated 7 June 1990 to Mr Fardon:
``Reference is made to your request of 7 March and May 1990 and you are advised that under the income tax law, a taxpayer who is dissatisfied with any assessment may give notice of objection against the assessment. The conditions attaching to this provision are that the objection must be lodged with the Taxation Office within 60 days after service of the notice of assessment and must be in writing, setting out fully and in detail the ground of the objection.
Since the letter of 7 March 1990 which was received in this office on 13 March 1990 was not lodged within the time specified by the law, it cannot be treated as a valid objection with consequent right of review.
Nevertheless, full consideration will be given to your request and further advice will issue in due course.''
Mr Fardon received a second letter from the respondent dated 1 October 1990 which reads:
``Reference is made to your request of 7 March and 7 May 1990 and you are advised that in order that your assessment for the year ended 30 June 1988 may be reviewed, you are requested to forward the following information:
RESTRICTIONS ON DISPOSAL OF APR LTD SHARES
- a. On what legal basis were you prevented from selling any or all of the shares in Australia Pacific Resources Ltd released from escrow on 31 July 1987. Indicate the specific legislation and how any sales would have contravened such legislation.
- b. If there was no legal basis to prevent the sale of any or all of these shares on what information did you rely on to make the statement that the sale of these shares would have `... dramatically reduced the market price of the companies shares?'
- c. Did you have at the 31 July 1987, or at any time in the preceding six months while Chairman and chief executive of Australia Pacific Resources Ltd., possession of information that was not generally available but if it were, would be likely to materially affect the price of the shares released from escrow on 31 July 1987? Give details.
A reply within 28 days is requested.
On 1 November 1990 a statement was signed by the independent directors of APR Limited. The statement, signed by Lloyd S Williams and Richard G McCrossin, reads:
``We the undersigned have been non- executive independent directors of APR Limited, formerly Australia Pacific Resources Ltd, since 1984 and before the Company's public flotation in 1985.
The two founders of APR, Messrs R Fardon and W Howell, at the time of flotation held
ATC 4342between them 16.67% of the total shares of the Company as vendor shares. It was a concern to the non-executive directors, and of these gentlemen, that their shares never be sold in a way that would injure the Company by being dumped on the market, and that the two directors never take advantage of their position as Joint Managing Directors.
It was therefore readily agreed between Messrs Fardon and Howell and ourselves that after the successful float they would not sell their shareholding in the following circumstances:
- (a) while announcements were pending, or for a few days after such announcements until the market had assessed the information. This would be insider trading;
- (b) while the Company was being promoted by them as part of a fund raising effort - a common situation in small companies. It would be unethical for the chief executives to be promoting the Company to their own benefit by selling while suggesting that others consider buying.
It was further agreed that there would be suitable `plateau' or stable periods where any share sales they wished to make could be handled without hurt to the Company or unethical behaviour on their part, once the Company had grown from a speculative technology development company to a fully fledged industrial company.''
On December 3 1990, the respondent sent the following letter to the applicant's representative:
``The amendment request dated 7 March 1990, in regard of the assessment which issued in respect of the year ended 30 June 1988 has been considered but has been disallowed.
It is considered that at 31 July 1987 there was no legal restriction on your right to dispose of your shares in Australia Pacific Resources Limited, released to you from escrow on that date.
Accordingly your assessment is confirmed.''
The applicant on 28 January 1991 wrote the following letter to the respondent:
``Application for extension of time to object.
I enclose objection in respect of assessment for the year ended 30 June 1988. I request that you treat this objection as being duly lodged, notwithstanding it was not lodged within 60 days of assessment.
The grounds on which this application is made are:
1. The case is very unusual in that I am taxed a total of $260 000 over four years, the majority in the year objected to, on the value of shares that were not sold, and whose value fell away to almost nothing.
I therefore tried over time to realise capital assets to pay the tax, and finally sold all my assets other than house and car to pay off $166 500 of the assessed tax.
Only when I had sold all assets and faced bankruptcy to pay tax on money I had not earned, did I challenge the basis of the tax, in March 1990. The reply dated 3 December 1990 showed that the basis of my challenge had not been properly considered, and I was advised this is my last avenue for objecting to a ruinous tax on unearned income. The interpretation of 26AAC(15)(b) is challenged in the attached objection.
In other words, the delay in my objecting to an assessment is due mainly to my trying to pay the tax in the first place, and then to a delay from March to December 1990 in getting a reply from the tax department.
2. The greater part of my tax liability over recent years is due to taxation on shares issued to me in Australia Pacific Resources Limited in 1985, and taxable under 26AAC. The shares, taxable value and tax liability are set out in the attached table. The company is now APR Limited (APR) and is delisted.
3. Though I should have sold shares on or about the time they came out of escrow each year, I did not receive notification until May 1988 that the shares were subject to 26AAC. This was long after the shares released in 1986 and 1987 should have been sold, and after the crash of
ATC 43431987 reduced the value of the shares to half the value on which tax was now assessed.
The tax liability was equivalent to my total assets, was far greater than I could pay out of my salary, so I had to try to realise all of my other assets and retain some security.
Soon after getting the assessment in May 1988 I was retrenched (in August) after the takeover of APR. As an unemployed person, the maintenance of some assets was crucial.
4. An agreed special off-market sale of APR shares, sufficient to pay the tax, and notified to the board of APR (I was then chairman and joint managing director) fell through because the buyer went into liquidation. This wasted 6 months.
Attempts to capitalise on certain minerals and new technology know how failed during 1988/89 due to the hopeless climate for raising capital. But because I could never pay the tax out of any likely salary, I had to try, despite accumulating interest on the tax.
By the beginning of 1990 I had no further options, and had sold all of my assets including superannuation an (sic) termination payments, to pay off $166 500 of the tax liability. I could not pay the remainder, since accumulating to $65 365.
5. In March, 1990, after discussion, I asked my accountants to query the assessment, and got a reply only in December 1990.
6. The whole situation leads me to object to the basic assessment for the year 1988, because in that year there was a further restriction on the sale of the shares, over and above the escrow restrictions, and imposed at the same time as the escrow restrictions. That is the basis of the attached objection.
In the light of these unusual circumstances, where there has been no attempt at evasion and only a long and crippling attempt to pay the tax on my part, I request an extension of time to object.''
The relevant provisions of the Act are:
``185(1) A taxpayer dissatisfied with any assessment under this Act may, within 60 days after service of the notice of assessment, lodge with the Commissioner an objection in writing against the assessment stating fully and in detail the grounds on which he relies.
186 The Commissioner shall consider the objection, and may either disallow it, or allow it either wholly or in part, and shall serve the taxpayer by post or otherwise with written notice of his decision.
187 A taxpayer who is dissatisfied with a decision under section 186 on an objection by the taxpayer may, within 60 days after service on the taxpayer of notice of the decision, lodge with the Commissioner, in writing, either-
- (a) a request to refer the decision to the Tribunal; or
- (b) a request to refer the decision to the Federal Court.
188(1) Where the period for the lodgment by a taxpayer of an objection against an assessment has ended, the taxpayer may, notwithstanding that the period has ended, send the objection to the Commissioner together with an application in writing requesting the Commissioner to treat the objection as having been duly lodged.
188(2) Where the period for the lodgment by the taxpayer of a request under section 187 has ended, the taxpayer may, notwithstanding that the period has ended, send the request to the Commissioner together with an application in writing asking that the request be treated as having been duly lodged.
188(3) An application under sub-section (1) or (2) shall state fully and in detail the circumstances concerning, and the reasons for, the failure by the taxpayer to lodge the objection or request as required by this Act.
188A(1) The Commissioner shall consider each application made under sub-section 188(1) and may grant or refuse the application.
188A(2) The Commissioner shall give to the taxpayer who made the application notice in writing of the decision on the application.
188A(3) A taxpayer who is dissatisfied with a decision under sub-section (1) in respect of an application made by the taxpayer may apply to the Tribunal for review of the decision.
188A(4) Where an application under sub- section 188(1) has been granted, the taxpayer who made the application shall, for the purposes of this Part, be treated as having duly lodged the objection to which the application relates.''
Pursuant to s. 188A(1) of the Act, the respondent wrote a letter to the applicant dated 25 June 1991, which contained the following paragraphs:
``NOTICE OF DECISION ON APPLICATION UNDER SUBSECTION 188(1) OF THE INCOME TAX ASSESSMENT ACT 1936
The application dated 28 January 1991 for an extension of time to lodge an objection against the assessment which issued on 1 May 1989 in respect of the year ended 30 June 1988 has been considered and disallowed for the following reason(s):
It is considered that the 1st precondition to the exercise of the discretion to grant an extension of time is that the applicant provide an acceptable explanation of the delay and show it is fair and equitable in all the circumstances to extend the time.
It is considered that you do not have an acceptable explanation of your delay in exercising your right to object to your assessment as you did not consider or alert this office of your intention to contest the finality of the assessment until over 10 months after the issue of that assessment. Also it can not be considered fair and equitable to grant further rights to review the assessment on the basis that you are facing bankruptcy proceedings, as these proceedings do not directly relate to the Commissioner's decision to accept your return as lodged and issue an assessment based on your own declaration in the return.''
On 19 July 1991, under s. 188A(3), the applicant applied to the Administrative Appeals Tribunal for a review of the respondent's decision. The application took the form of a covering letter to the respondent and an enclosure being the following letter to the Administrative Appeals Tribunal:
``On 28 January 1991 I applied for an extension of time to make objection against certain of my taxation assessments, and on 25 June 1991 the Deputy Commissioner of Taxation replied disallowing the objection. My application and their reply are attached. My original application was in handwriting.
I apply for review on the following grounds:
1. The ATO has treated my appeals in a cavalier fashion and on the basis of assumptions, not the Act. I have reasonable grounds under the Act for an extension of time to object.
2. The grounds of my objection are strong enough to be tested, if disallowed by the ATO, by the independent Tribunal, and not to allow them to be heard, by denying extension of time to make them, is a denial of justice.
1. As argued below, the letter of reply indicates a cavalier consideration of my application, as does the original reply to an earlier request for amendment of my assessment. These replies, and the occasions when my tax assessor has phoned me to discuss their actions against me, indicate that the ATO has made up its mind long ago on the matter and in fact no correspondence is being seriously entered into. I wish to put in train the appeals that will at last allow me an independent hearing before the Administrative Appeals Tribunal.
Why did I delay in making an objection? I made the case that my situation is unusual in that I am taxed a very large amount on income I never in fact earned. I could not pay the tax if I sold all my possessions and assets and left myself unemployed and destitute. In an attempt to gain the money, and stay solvent and able to support the family, I tried for a long time to cash in on my industrial and mining knowhow, to realise intellectual assets and so pay the tax.
This was an honest approach, and rather than indicating a proclivity to tax dodging, was the reverse. My accountants and others can verify the intensity and stress with which I went about this task
ATC 4345with very little, but some, chance of success.
My tax officer says I have been avoiding paying my tax for long enough, hence their court case and summary treatment of my appeals. Nothing could be less true. My career for several years, and to a large extent my future, has been ruined by attempts to pay the tax. Any tardiness is due to no money to pay any more.
The time taken in this exercise, from my assessments under 26AAC in May 1988 and May 1989 until the application by my accountants for an amendment in March 1990, is a function of the size of the tax assessment ($230,000), the fact that it was assessed on income I had not received and so could not have set aside money to pay the tax, and of the time it took to try to realise knowhow assets. All this time I assumed that the assessment worked out by my accountants in discussion with the ATO was valid. I have since learnt otherwise.
Only when I could not raise any such money, and had sold all except my house and car and paid $166 500 of the tax, did I review the original assessments. The tax department and my accountants had assumed that only escrow restrictions on the sale of my shares were restrictions under section 26AAC(15)(b). But there were other just as strong restrictions, and that section refers to `Any restrictions'. So I had a good case for one group of the shares not to be assessed as they had been. In March 1990 we applied for an amended assessment, and when that request was rejected, I applied for an extension of time to make an objection.
I claim that it is justifiable for a taxpayer to try to pay his taxes first, then to look more closely at the basis of the assessment when he is wiped out. Then, if he has a case that justified review, to be able to get a review. It was a mistake to ask for the amendment in March 1990, rather than lodge an objection forthwith, but the basis of the amendment or the objection is the same and deserves an independent hearing.
I therefore appeal against the Deputy Commissioner's decision that my actions, and the circumstances of this case, were not `an acceptable explanation of your delay in exercising your right to object'.
Their reply can only mean that it is not acceptable to try to pay your tax first, but it is acceptable to try to reduce tax by legal means first. I appeal that assumption.
Further, the appeal provisions of the Act clearly recognise that new considerations might be unearthed after the initial 60 days to object have gone by. They give no guidance whether the new insights might occur soon after 60 days or long after. I challenge the assumption that it can only be soon after, because that does not appear in the Act. Surely, without such guidance, there is no case to be made that the extension of time can only be in extreme cases. Surely a reasonable case is all that is required. My case is unusual, is a matter of extreme severity to me, and my delay had good reason.
And all the time, the real question must be, is the assessment fair and just? My advice is that my objection has strength, and I have rejected trivial grounds of appeal. Why does the Deputy Commissioner go to this extent to prevent my objection being heard independently? They have long decided my case, and are interested not in reviewing it but in prosecuting me to recover the assessed amounts (I am not assuming this is so - they are telling me so). But that assessment is precisely what is not certain until it is decided independently.
In the concurrent case against me in the court, to recover the tax owing and that I cannot pay, the Commissioner's statement as to the validity of the assessment is evidence of its validity, under the Act. But that cannot be assumed in the matter under discussion, here, as the ATO seems to do.
The Deputy Commissioner, in his letter of 25 June 1991, then goes on: `Also, it can not be considered fair and equitable to grant further rights to review the assessment on the basis that you are facing bankruptcy proceedings...'. I agree with their reasons for so deciding. The trouble is, I did not appeal on such a basis, in writing or in their telephone calls to me.
As a quite separate issue, I am asking them to stay their avowed rush to bankrupt me in court proceedings until the appeals to The Administrative Appeals Tribunal for extension of time, and if necessary against an adverse ruling, are heard. But I have not asked that I be granted an extension of time to object on the basis that I am facing bankruptcy proceedings.
This is what I mean by cavalier. They are judging issues on the basis of assumptions, not on anything in the Act, and not even paying attention to what I am saying, or in this case, not saying to them. I am caught under a technicality of the Act that has ruined me and bids fair to bankrupt me, which is their intention often stated to me. But I appeal to have the whole thing determined independently. If I am to be wiped out, let it be on the basis of the Act, not the whims and assumptions of the ATO.
2. The question whether to grant an extension of time to have an objection heard, being a matter of discretion, can realistically be judged only by reference to the objection itself. If the objection is strong, then it is an injustice to not grant an extension of time when provision is made for it by the Act. If the objection is weak, then the extension of time is a waste of effort.
I appeal to the Tribunal, if it considers it appropriate, to consider the objection, as to whether it has strength to justify going on. At a hearing I can discuss the restrictions placed on the original issue of the shares, the strong prohibition against my selling shares in the period from 31 July 1987 to mid-November 1987, and present Board Minutes and witnesses if necessary to verify my statements. If my case can be substantiated, does it have legal strength?
A reading of section 26AAC(15)(b) suggests the ATO in its ruling of December 1990, discussed in the attached objection, was relying, not on the Act itself, but on the assumption that escrow restrictions are the only restrictions under the Act. The reason for this is not far to find: In most schemes for staff share issues caught under 26AAC, escrow provisions are the only restrictions in fact.
We have an exceptional case where the numbers of shares involved were high enough, in a small company, to affect the market; where chief executives were not free to sell when they were promoting the company, on ethical and public perception grounds; and especially not when the share price had to be 50c or above; and where there were no side deals or arrangements whereby the executives could offload the shares, ethically or otherwise. Above all, we had binding agreements with the non-executive directors not to do so.
Confronted with a case where the restrictions were other than escrow ones, the ATO does not want to admit that they exist, for obvious reasons. I ask for the Act to be applied, not the wish of the ATO to raise revenue by applying their simplifying assumptions.''
After a hearing in September at which the applicant, who appeared in person, gave evidence, the Tribunal published its Reasons for Decision on 22 November 1991.
Paragraphs 4-13 of the reasons were [Case Y57,
91 ATC 493 at 495]:
"4. On the basis of the evidence before me, I find the facts to be as set out in this and the following four paragraphs. The applicant was one of the two founders of A Limited, and one of his main duties was to attract finance for the company by selling the unissued shares. On 26 February 1985, a total of 2,158,470 shares in A Limited were issued to the applicant and the other founder of the company, Mr B. The terms of that issue were that those shares were to be held in escrow and be released progressively as follows:
'Date Number Percentage Shares Released 31 July 1986 215,847 10% 31 July 1987 647,541 30% 31 July 1988 647,541 30% 31 July 1989 647,541 30%'
5. The applicant's taxation return for the year ending 30 June 1988 included a declaration that his assessable income for the year included $284,918 as the market value of shares acquired by him in July 1987
ATC 4347from A Limited for services rendered as an employee. An assessment issued to him on 1 May 1989. The last day provided by section 185 of the Act for the lodging of an objection to that assessment was 30 June 1989.
6. The Board of A Limited had resolved on 20 August 1987 `that it would be inappropriate for directors to sell any of their shareholdings in the company during a promotional phase'. The applicant and Mr B were actively promoting the company from July to November 1987. After the market crash of October 1987 the shares dropped from 60 to 20 cents. Long drawn out negotiations for a take-over of the company were unsuccessful, and the shares became worthless.
7. The applicant considered that he was not in a position to sell the shares while their value was high, because of the agreement which had been made. On the basis that this constituted an additional restriction on the right to dispose of the shares, and accordingly they should be taken to have been acquired only when that restriction ceased to operate in November 1987, his accountants wrote to the respondent on 7 March 1990 requesting an amended assessment. Correspondence and meetings ensued, culminating in the applicant's seeking to lodge an objection to the assessment on 28 January 1991.
8. Because the shares had lost value and he did not have the money to pay the tax, the applicant endeavoured to, as he said, realise on his intellectual assets, by setting up a fresh undertaking. Only when this proved impossible did he turn to selling other assets which enabled him to pay a substantial proportion of the tax. The respondent has commenced proceedings in the Supreme Court to recover the balance. The applicant now wishes to have the opportunity to pursue the submission raised in the letter of 7 March 1990 referred to above. He had not been aware of that ground of objection at the time when the period for lodging an objection expired.
Hunter Valley Developments Pty Ltd and Others v Cohen (1984) 7 ALD 315, Wilcox J considered the principles applicable in the consideration of an application to extend time for the lodging of an application for review under section 5 of the Administrative Decisions (Judicial Review) Act 1977. Those principles have frequently been adopted in this Tribunal as an appropriate basis for consideration of similar applications under the AAT Act. (See for example
Re Bonavia and Secretary, Department of Social Security (1985) 9 ALD 97,
Re Commonwealth Scientific and Industrial Research Organisation and Barbara (1987) 11 ALD 447, Case X75,
90 ATC 558.) His Honour said (at 319-321):
`Section 11 of the Administrative Decisions (Judicial Review) Act does not set out any criteria by reference to which the court's decision to extend time for an application for review under s 5 is to be exercised.
Already there have been a number of decisions of judges of this court, all sitting at first instance, dealing with the approach proper to be taken. They differ a little, both in language and in emphasis, but I venture to suggest that from them may be distilled the following principles to guide, not in any exhaustive manner, the exercise of the court's discretion:
- (a) Although the section does not, in terms, place any onus of proof upon an applicant for extension an application has to be made. Special circumstances need not be shown but the court will not grant the application unless positively satisfied that it is proper to do so. The ``prescribed period'' of 28 days is not to be ignored:
Ralkon v Aboriginal Development Commission (1982) 43 ALR 535 at 550. Indeed it is the prima facie rule that proceedings commenced outside that period will not be entertained
Lucic v Nolan (1982) 45 ALR 411 at 416. It is a precondition to the exercise of discretion in his favour that the applicant for extension show an ``acceptable explanation of the delay'' and that it is ``fair and equitable in the circumstances'' to extend time: Duff at 485;
Chapman v Reilly (unreported, Neaves J, 9 December 1983, at 7).
- (b) Action taken by the applicant, other than by making an application for review under the Act, is relevant to the consideration of the question whether an acceptable explanation for the delay has been furnished. A distinction is to be
ATC 4348made between the case of a person who, by non-curial means, has continued to make the decision-maker aware that he contests the finality of the decision (who has not ``rested on his rights'': Per Fisher J in
Doyle v Chief of Staff (1982) 42 ALR 283 at 287) and a case where the decision-maker was allowed to believe that the matter was finally concluded. Compare Doyle, Chapman, Ralkon and
Douglas v Allen unreported (Morling J, 3 April 1984, at 18) with Lucic at 414-15 and
Hickey v Australian Telecommunications Commission (1983) 48 ALR 517 at 519. The reasons for this distinction are not only the ``need for finality in disputes'' (see Lucic at 410) but also the ``fading from memory'' problem referred to in
Wedesweiller v Cole (1983) 47 ALR 528.
- (c) Any prejudice to the respondent including any prejudice in defending the proceedings occasioned by the delay is a material factor militating against the grant of an extension: see Doyle at 287, Duff at 484-5, Hickey at 525-7 and Wedesweiller at 533-4.
- (d) However, the mere absence of prejudice is not enough to justify the grant of an extension: Douglas at 18; Lucic at 416; Hickey at 523. In this context, public considerations often intrude (Lucic, Hickey). A delay which may result, if the application is successful, in the unsettling of other people (Ralkon at 550, Becerra at 12-13) or of established practices (Douglas at 19) is likely to prove fatal to the application.
- (e) The merits of the substantial application are properly to be taken into account in considering whether an extension of time should be granted: Lucic at 417, Chapman at 6.
- (f) Considerations of fairness as between the applicants and other persons otherwise in a like position are relevant to the manner of exercise of the court's discretion: Wedesweiller at 534-5.
In considering the authorities it is, I believe, important to bear in mind the point made by Sheppard J in Wedesweiller at 531, relating to the diversity of decisions of which review may be sought under the Act: ``... there will be some cases which may be decided upon considerations which affect only the immediate parties. It will be appropriate to consider whether the delay which has taken place has been satisfactorily explained, the prejudice which may be caused to an applicant by the refusal of an application, the prejudice which may be suffered by the government or a particular department if the application is granted and, generally, what the justice of the case requires. In other cases wider considerations will be involved''.
He went on to mention the reference to public interest made by Fitzgerald J in Lucic at 416.
It is in relation to the former category of cases, ie those ``which affect only the immediate parties'' that the approach adopted by Bray CJ in
Lovatt v LeGall (1975) 10 SASR 479 at 485 in respect of private litigation but adopted in this context in both Doyle at 287 and Duff at 485, is apposite namely: ``If the defendant has suffered no prejudice, as when he was well within the limitation period of the plaintiff's claim, or where excess period of time is small, or where he cannot show that he has lost anything by reason of the delay, it may well be that the court will not find it difficult to come to the conclusion that it is fair and equitable in the circumstances to grant extension''.
By contrast, in cases involving public administration, especially day to day matters such as personnel management, the public interest may well dictate refusal of an extension even after only a short delay.'
10. The explanations given by the applicant for the delay in lodging his objection were first, that before turning his mind to the possibility of objecting he had devoted his efforts to endeavouring to put himself in a position where he would be able to pay the whole of the tax assessed; and second, that it was some time before he had become aware of the ground for objection on which he now seeks to rely. While I appreciate the difficulty of his position in the matter, I do not consider that those matters justify the delay. He was well aware of the difficulties of his position at the time when the assessment issued, and was at that time advised by a substantial and experienced
ATC 4349firm of accountants. The lodging of an objection would not in any way have interfered with his ability to continue with the other activities which he described.
11. It was almost nine months before the respondent was made aware that the applicant was not `resting on his rights'. The respondent's representative submitted that should this application be granted the respondent would be prejudiced in his proceedings to recover the balance of the tax, and in his dealings with Mr B. I accept that submission.
12. The substantive argument on which the applicant seeks to rely depends on the provisions of sub-section 26AAC(15) of the Act as it stood at the relevant time. That provision read:
- (a) a taxpayer acquires a share in a company under a scheme for the acquisition of shares by employees; and
- (b) by reason of any conditions or restrictions (being conditions or restrictions applicable only to shares in the company acquired under such a scheme) attached to, or to the issue of, the share... the right of the taxpayer to dispose of the share is restricted...
the acquisition of the share by the taxpayer shall be deemed for the purposes of this section to have taken place at the time when the right of the taxpayer to dispose of the share ceases to be so restricted... or the time immediately before the taxpayer disposes of the share, whichever first happens.'
Taking into account only the passage in brackets in paragraph (b) of that sub-section, I would have doubt as to the viability of that argument.
13. For all of these reasons, I have formed the view that considering the matter in the light of the principles enunciated by Wilcox J in Hunter Valley it is not appropriate to treat the applicant's objection as having been duly lodged. The decision under review will be affirmed."
On 30 December 1991, Mr Fardon in person, filed a Notice of Appeal which reads:
``1. Take notice that the applicant appeals from the decision of the Taxation Appeals Division of the Administrative Appeals Tribunal constituted by Mrs RA Balmford, Senior Member, given on 22 November 1991 at Melbourne, whereby the Tribunal decided that it affirms the decision under review.
2. The questions of law raised on the appeal are numerous and are set out herein.
3. Orders sought are set out herein.
4. Grounds relied upon are as set out herein.''
The attached document sets out in summary form and then in a detailed ten page document, the questions of law said to be raised on the appeal. The summary reads:
``THE QUESTIONS OF LAW RAISED ON THE APPEAL:
1. At question is the grant of an extension of time to lodge an objection, long after the statutory date, but nevertheless permissible in law if sufficient reason is given. The decision rests not only on the validity of the reasons for delay, but also, according to authority quoted by the Tribunal, on the balance of prejudice to either party resulting from the decision, on the substantive issue, and `generally, what the justice of the case requires'. Substantial omissions, demonstrable bias, or legal errors that affect the balance are serious questions of law.
Questions of law arising from the decision of the Tribunal are surprisingly many. We supply the case in support of the long list:
- (a) Omissions in reviewing the case, which are shown to be serious because they result in serious errors in judging both the extension of time and the substantive matter. All of the omitted material could be stated briefly.
- (b) Demonstrable bias in setting out evidence, in the application of the prior authority to the case, especially in the matters of justice and relative prejudice to the parties, and in examining the case of the applicant for flaws, but not the case of the respondent for obvious legal flaws.
- (c) Failure to apply, or correctly apply, the criteria set out by the prior authority quoted.
- (d) Failure to judge the case on its merits where important matters particular to the case are not explicitly covered by the prior authority quoted.
- (e) Specific errors in law in the few opinions on which the decision is based.
- (f) Leaning on irrelevancies.
- (g) Giving too cursory a glance at the substantive matter, which is crucial in this case.
2. In summary, omission, bias and error on a scale such as to make the decision of the Tribunal invalid. Without such bias, omission and error, the case lends itself to the opposite decision, and to the giving of the orders sought.''
The following orders were sought by the applicant:
``1. That the decisions of the Commissioner of Taxation and of the Administrative Appeals Tribunal in this case be overturned.
2. That the extension of time for the applicant to lodge an objection with the Commissioner of Taxation be granted.
3. That the Commissioner of Taxation be directed, in considering the objection of the applicant, to interpret Sub-Section 26AAC(15)(b) of the Tax Act in accordance with its actual wording.
4. That the presentation of the applicant at the hearing of the Tribunal on 6 September 1991 be considered part of his case in objection.
5. Any other orders necessary to give effect to these orders.''
The applicant appeared in person in support of his appeal and relied upon the points set out in his Notice of Appeal, except that he asked that his mention of ``bias'' should be read as referring to ``error''.
As clearly revealed by its reasons set out above, the Tribunal made findings of fact which were properly open to it on the evidence. Its discretionary decision was made by the application to those facts of the relevant legal principles which it carefully considered. It made no error of law. The appeal is dismissed with costs.