• Legal database
Legal database

CTC RESOURCES NL v FC of T

Judges: Jenkinson J
Gummow J

Hill J

Court:
Full Federal Court

Judgment date: Judgment delivered 3 March 1994

Hill J

Before the Court are two applications brought by CTC Resources NL (``CTC'') in the original jurisdiction of this Court under the provisions of Division 5 of Part IVC of the Taxation Administration Act 1953 (``the Act''). By direction of the Chief Justice, pursuant to s. 20(1A) of the Federal Court of Australia Act 1976, the Court, although exercising original jurisdiction, was constituted as a Full Court.

Each of the applications concerns a private ruling made by the respondent, the Commissioner of Taxation, pursuant to the provisions of Part IVAA of the Act.

The first application (numbered NG739 of 1993) concerns a private ruling sought on 1 December 1992. That private ruling is hereafter referred to as the ``First Ruling''. The Commissioner initially took the view that the request for the ruling should not be responded to because questions asked in it related to the taxation position of Westpac Banking Corporation Limited (``Westpac''), and accordingly he declined to entertain it. Subsequently the application was relodged with the consent of Westpac endorsed upon it, in

ATC 4089

accordance with s. 14ZAG, on 21 January 1993 and a private ruling was thereafter received by CTC on 1 April 1993. CTC, being dissatisfied with the private ruling, objected to it by an objection dated 16 April 1993. That objection was disallowed by the Commissioner on 3 August 1993 and CTC then commenced the present proceedings in this Court by way of appeal against the Commissioner's objection decision, pursuant to s. 14ZZ of the Act. No objection was lodged by Westpac.

The First Ruling was limited to the year of income ended 30 June 1993. It will have been noted that by the time the Commissioner had disallowed CTC's objection, that year of income had passed. It is an agreed fact that the transaction the subject of the First Ruling was not implemented before the expiration of that year of income. The Commissioner accordingly objected to the competency of the Court to hear this first application.

On 15 May 1993 CTC lodged a further request for a ruling, this time in respect of what it referred to as a proposed arrangement in relation to the year of income ended 30 June 1994. The relevant ``proposed arrangement'' was virtually identical to that which had been the subject of the First Ruling. However, the request for the second ruling made no reference to Westpac, but referred instead to the arrangement as being one proposed to be entered into by CTC with a ``financial institution''. Certain questions posed in the application for the First Ruling, to the extent that they concerned the application of the provisions of the Income Tax Assessment Act 1936 (``the ITA Act'') to Westpac, were not, however, repeated in relation to the unnamed financial institution.

On 23 June 1993 the Commissioner forwarded to CTC a private ruling in respect of this second application. This ruling, hereafter referred to as the ``Second Ruling'', applied to the year ended 30 June 1994. CTC, being dissatisfied with that ruling, objected to it, and that objection being also disallowed on 3 August 1993, CTC appealed to this Court in respect of that second objection decision. That application is numbered NG738 of 1993.

The application for the First Ruling provided the following background information:

  • ``(a) On the 24th August 1992, CTC Resources N.L. (`CTC') received a Private Income Tax Ruling (Reference: ADVR 4026) with respect to an innovative issue of preference shares offering investors substantial cash redemptions when chosen by lot pursuant to regulation 2A of the Articles of Association of CTC.
  • (b) On or about 26th November 1991, a Director of CTC, Mr Allan Endresz, was approached by his wife's uncle Mr Graeme Arnold, seeking CTC's assistance in refraining Westpac Banking Corporation Ltd (`Westpac') from liquidating Mr Arnold's trading companies and bankrupting all family members. Accordingly, the following should be noted:
    • (i) Graeme Arnold & Sons Pty Ltd (`Arnold') owes Westpac the sum of $2.2 million (plus accrued interest) being secured by a rural property located at Berrigan NSW, personal guarantees of Mr G Arnold, his wife and four sons (all residing on the property) and company debentures.
    • (ii) Due to the severe rural recession, Arnold has been unable to service the outstanding debt whilst a sale of the property would realise no more than $900,000 at present day prices. Accordingly, a substantial shortfall would result thereby making bankruptcy a formality.
    • (iii) Pursuant to Section 63 of the Income Tax Assessment Act (`the Act'), Westpac is presently entitled to a deduction for the bad debt written off. In this regard, calculated as the difference between $2.2 million and $900,000 recoverable.
    • (iv) On the 20th December 1991, CTC presented Westpac with a debt restructuring proposal incorporating the preference share issue as previously detailed to the Australian Taxation Office. The sole objective of the proposal being to settle in full the Arnold debt, thereby avoiding liquidation and eviction of all family members from the property.
    • (v) On the 27th November 1992, Westpac finally agreed in principle to a settlement proposal. Accordingly, Westpac has requested a further Ruling prior to settlement.''

ATC 4090

The application then defined the proposed arrangement in the following terms:

  • ``(a) Westpac is owed the sum of $2.2 million by Arnold (hereinafter referred to as `the debt').
  • (b) Westpac assigns all its rights, title and interests (including but not limited to secured property and any corporate and personal guarantees) in the debt to CTC for $10,000.
  • (c) Westpac entered into a preference share transaction with CTC as follows:
    • (i) CTC makes a placement of 10,000,000 redeemable, convertible non- cumulative preference shares (`preference shares') to Westpac at an issue price of $0.23 per share for a total consideration of $2,300,000 (represented by $0.01 par value and $0.22 share premium per preference share).
    • (ii) Pursuant to Regulation 2A (copyright of CTC's Articles of Association, 10,000,000 preference shares are redeemed by CTC for a cash consideration of $2,300,000. This amount comprises $0.01 par value and $0.22 share premium.
    • (iii) The total cash redemption of $2,300,000 comprises $100,000 par value and a $2,200,000 distribution from CTC's share premium account. Pursuant to Private Ruling ADVR 4026 , CTC's share premium account is created as part of a scheme for making a distribution of moneys and is therefore a `deemed dividend'. Such a dividend may be franked.
    • (iv) The share redemption, which is deemed to be a dividend and able to be `franked', would result in Westpac receiving a dividend of $2,200,000 (with appropriate franking credits) and receiving a Section 46 rebate.
  • (d) Arnold refinances the rural property and agrees to pay CTC the sum of $650,000 . Upon receipt of same, CTC assigns all its rights, title and interests as received from Westpac in Clause (b) above to the financial institution as nominated by Arnold.''

The questions upon which the ruling was sought, apart from a question as to the entitlement of Westpac to write off the difference between the face value of the $2.2 million debt and the amount of $900,000, being what was said to be the appraised value of the debt in the books of Westpac, were as follows:

  • ``(b) Upon Westpac entering into the above preference share transaction with CTC DOES CTC's Private Ruling ADVR 4026 continue to apply?
    • (i) Does the distribution from the share premium account involve sub-section 6(4) of the Act?
    • (ii) Does Section 177E of the Act (stripping of Company Profits) apply to the arrangement?
    • (iii) Does Section 46A of the Act (rebate on Dividends paid as part of Dividend Stripping operation) apply to the arrangement?
    • (iv) Does Section 46D of the Act (Dividends paid instead of Interest) apply to the arrangement?
    • (v) Given the overall nature of the transaction, will the Section 46 of the Act (Rebate on Dividends) apply to Westpac?
    • (vi) Will the dividend paid out of the Share Premium Account be frankable within the meaning of the term `frankable dividend' in paragraph (a) of Section 160APA of the Act?''

The request for ruling referred to the fact that Westpac, CTC and Mr Arnold had agreed in principle with respect to the proposal, but that acceptance of what was said to be a Westpac offer to CTC had to be made on or before 31 December 1992. There was certain correspondence attached which related to an in principle agreement on the part of Westpac and CTC.

The First Ruling contained the following summary of facts.

``Mr Allan Endresz is a director of a listed public company, CTC Resources (CTC) based in Albury. The other two directors of the company are the parents of Mr Endresz.

The uncle of Mr Endresz's wife, Graeme Arnold, has sought the assistance of Mr Endresz in relation to the financial difficulties currently being suffered by Graeme Arnold & Sons Pty Ltd. The Arnold company is currently indebted to Westpac for an amount of approximately $2 million. That debt is secured over a property with a

ATC 4091

value of $1 million. Westpac have apparently threatened to foreclose and bankrupt members of the family which guaranteed the company debt.

CTC proposes to pass franking credits to Westpac in exchange for Westpac's co- operation in satisfactorily resolving the debt problems of Graeme Arnold.

The features of the proposal are:

  • 1. Westpac acquires 1,000,000 redeemable convertible non-cumulative, preference shares issued by CTC at a price of $9.46 per share. The par value of each share is $0.01 and the premium is $9.45. Westpac therefore pay $9,460,000 to CTC.
  • 2. The shares are immediately redeemed by CTC for a cash consideration of $9.46 million (being the price paid for them). This payment of $9,460,000 comprises $10,000 in par value and a $9,450,000 distribution from CTC's share premium account.
  • 3. There is an arrangement between CTC and Westpac that the $9,460,000 investment will be immediately returned. The effect of this arrangement is that subsection 6(4) of the Income Tax Assessment Act (ITAA) (`the Act') applies to treat the $9,450,000 as a dividend. In the absence of subsection 6(4) of ITAA applying, the payment to Westpac would be tax free.
  • 4. The benefit received by Westpac is that this payment, which is treated as a dividend for tax purposes, will be fully franked. Westpac pays $9,460,000 and eventually receives the exact amount back together with about $6,000,000 worth of franking credits.
  • 5. Originally it was planned that Westpac would then accept $650,000 in full settlement of its debt of $2,000,000 and the balance would be claimed as a bad debt. However, in accordance with a letter from Professor Bernard Marks dated 5 March 1993 to Tony Long, Manager of Banking and Finance cell, Melbourne Taxation Office, Westpac will no longer be claiming a tax deduction for the difference between the face value of the debt and the amount received of $650,000.
  • 6. For supplying its services, CTC receives a `success fee' of $400,000 from Graeme Arnold & Sons Pty Ltd.
  • 7. Graeme Arnold & Sons Pty Ltd is left in the position of having paid Westpac $650,000 and CTC $400,000. It therefore has a debt level approximately equal to the value of this security.
  • 8. CTC intends to have sufficient franking credits in its accounts prior to the transaction. It appears from comments made by the solicitor for CTC, Cain and Cleeves Pty in Melbourne, that the company will obtain those credits by entering into a similar arrangement with another company. In other words CTC will acquire preference shares in another company and then have those shares redeemed. The credits `sold' to CTC will then be `passed on' to Westpac.''

The ruling, in question and answer form, was in the following terms, so far as is now relevant:

  • ``(a) Does the distribution from CTC's Share Premium Account to Westpac invoke sub-section 6(4) of the Act?
  • No, sub-section 6(4) of the Act has no application as the payment to Westpac is not from a SPA (within the meaning of the Act).
  • ...
  • (c) Does section 46A of the Act (Rebate on dividends paid as part of dividend stripping operations) apply to the arrangement?
  • Yes, section 46A of the Act applies.
  • ...
  • (e) Will Westpac be entitled to a dividend rebate pursuant to section 46 of the Act in respect of the deemed dividend of $9,450,000?
  • No, the rebate under section 46D of the Act is not available.
  • (f) Will the dividend of $9,450,000 paid out of the share premium account be frankable within the meaning of the term frankable dividend in section 160APA of the Act?
  • Yes, the amount $9,450,000 is frankable under section 160APA of the Act.''

There was forwarded with the ruling an explanation which was said not to form part of the notice of the private ruling. That explanation elaborated the Commissioner's reasons for the answers given.

ATC 4092

The application for the Second Ruling was accompanied by a letter explaining the substitution of an anonymous financial institution for Westpac. That explanation, after referring to a conference, said to have been held with officers of the Australian Taxation Office, continued, so far as is presently relevant:

``During those discussions, it was indicated to the Taxpayer's representative... that you have discussed matters with the Westpac Bank and that their legal officer had indicated to you that Westpac had no interest in pursuing the objection against the Ruling. In this regard, we have since spoken to Westpac and they have indicated to us that they are not disinterested in the matter but would prefer to stay out of negotiations at this stage. Westpac indicated that its interests would certainly be reactivated if our company was to gain a favourable Ruling from the Commissioner. The possibility of Westpac withdrawing its interest in the outcome of the objection against the Ruling was canvassed at the conference and tacit approval was given for our company to seek another Ruling by substituting `the financial institution' for Westpac in the application.''

Attached to the application for ruling was a submission to which reference will later be made.

When the Second Ruling was received it dealt with four only of the questions asked, but not with another four questions that had been asked in the second application. The Commissioner indicated that he had not answered the other questions because there was no ascertainable ``other person'' to whom a tax law would apply, and these unanswered questions were concerned rather with the liability for tax of the financial institution than with that of CTC. The ruling states, as ``an assumption'', that it is given solely on the basis of the information provided in the application and the arrangement described in it. That is not an assumption of the kind to which s. 14ZAQ refers. It is a shorthand statement of the facts upon which the ruling is given. The questions posed, so far as is now relevant, were as follows:

  • ``(1) Does the distribution from the share premium account to the financial institution invoke the provisions of sub-section 6(4) of the Income Tax Assessment [Act] 1936 (`the Act') to `deem' such distribution a `dividend' for the purposes of the Act?
  • (2) Will the deemed dividend of $9,450,000 distributed by CTC Resources NL to the financial institution from the share premium account be `frankable' within the meaning of the term `frankable dividend' in section 160APA of the Act?
  • (3) Does section 160APHA of the Act apply to the transactions''

.

The ruling, so far as is now relevant, provides as follows:

``1. No. Subsection 6(4) of the Act does not deem the distribution from the share premium account to be a dividend for the purposes of the Act. We take the view that any construction of subsection 6(4) must preserve the cooperation between it and paragraph (d) of the definition of `dividend'. The two provisions must be construed in a way which allows them to co-exist with each other.

Paragraph (d) of the definition of dividend and subsection 6(4) were introduced into the Income Tax Assessment Act by Income Tax Assessment Bill (No. 4) of 1967. In the Explanatory Memorandum to that Bill the then Treasurer said that subsection 6(4) was meant to qualify the operations of the new paragraph (d) definition of `dividend'. He said that subsection 6(4) was designed as a safeguard against special arrangements which may be entered into for the purpose of exploiting the proposed exemption of distributions out of share premium accounts. Subsection 6(4) was intended to apply where a share premium account is created as part of a scheme for making a tax-free distribution of money or other property to shareholders.

In our opinion it is reasonable to infer from the comments of the Treasurer and the fact that the designated role of subsection 6(4) is to qualify paragraph (d) of the definition of `dividend', that an agreement as contemplated by subsection 6(4) must provide an outcome which is at variance with that contemplated by paragraph (d) of the definition of `dividend'. If this was not so then the paragraph (d) definition of `dividend' would be rendered irrelevant. We believe that our view of the interrelationship of subsection 6(4) and paragraph (d) finds

ATC 4093

support in the decision of the Full High Court in
FCT v. Lutovi Investments Pty Ltd 78 ATC 4708 .

In the present case the agreement or arrangement is one pursuant to which redeemable preference shares are to be issued by CTC to a financial institution at a very large premium (in relation to the par value of the share) which premium is to be credited to a share premium account. Those shares are subsequently to be redeemed by CTC for the identical sum paid for them comprising $10,000 par value and $9.46m from the share premium account. In our view this is not an agreement or arrangement which corrupts the stated effect of paragraph (d) of the definition of `dividend'. In that case it is not an agreement or arrangement as provided for in subsection 6(4) and therefore the proposed payment of $9.46m out of the share premium account back to the financial institution would not be a `dividend' as defined in section 6(4) of the Act.

2. Because of the answer to 1. above, the payment made by CTC to the financial institution would not be a `frankable dividend' within the meaning of that term in section 160APHA of the Act.

3. No. Because of our answer to 1. above, we do not consider the arrangement to be part of a dividend stripping operation.''

The legislative framework

The Act confers upon a person the right to apply to the Commissioner for a private ruling upon the way in which, in the Commissioner's opinion, a tax law would apply to the applicant in respect of a year of income in relation to a particular arrangement: s. 14ZAF. In the present case the relevant tax law was the ITA Act. Ordinarily, the application will concern the applicant's liability for tax in a particular year or years of income. However, there is no reason to suppose that s. 14ZAF is limited to rulings concerning the applicant's tax liability. An applicant might, for example, seek a ruling upon that applicant's obligations under the relevant tax law, for example, in respect of keeping of records or the fulfilment of other obligations imposed by the tax law.

The word ``arrangement'' to which s. 14ZAF refers is widely defined in s. 14ZAAA and includes, inter alia , a proposal or course of action. By virtue of the definition of ``tax law'' contained in s. 14ZAAA, the ability to obtain a private ruling under the Act is limited to the obtaining of a private ruling in respect of an income tax law or a fringe benefits tax law, as those expressions are also defined in s. 14ZAAA.

Application for a ruling may be sought in respect of the way in which the tax law applies to some person other than the applicant in respect of a particular year of income in relation to a particular arrangement. But in such a case it is necessary to have the written consent of that other person before the ruling can proceed: s. 14ZAG. It was pursuant to this section that CTC raised questions as to the operation of the Act in respect of Westpac in the application for the First Ruling.

An arrangement in respect of which a ruling may be given may be an arrangement already carried out, an arrangement that is in the course of being carried out, or an arrangement that is merely proposed: s. 14ZAI. Correlatively the relevant year of income may be a past year, the current year, or a future year. In the present cases, the arrangement was merely proposed. The first ruling dealt with the 1993 year of income; the second the 1994 year.

Application for a ruling is required to be in a form approved by the Commissioner and to be accompanied by relevant information and documents as required by the Commissioner: s. 14ZAJ. If the Commissioner is of the view that there is a need for further information before the ruling can be given, he must request the applicant to supply that information: s. 14ZAM. Further, if the Commissioner is of the view that the correctness of the ruling depended upon an assumption about either a future event or some ``other matter'', the Commissioner is empowered to either decline to make the ruling or to make such of the assumptions as the Commissioner considers to be the most appropriate: s. 14ZAQ. Subject to this the Commissioner must give the ruling, unless the case is one which falls within s. 14ZAN: s. 14ZAL(1). Even though the case falls within s. 14ZAN, the Commissioner may, nevertheless, except in a case not presently relevant, give a ruling: s. 14ZAL(2).

Among the circumstances in which the Commissioner is not required to provide a ruling, are cases where the application is ``frivolous or vexatious'' or concerns an

ATC 4094

arrangement which has not been carried out, but further is not seriously contemplated. Even in such cases the Commissioner, it would seem, may proceed to provide a ruling. All s. 14ZAN purports to do is remove the obligation to give a ruling imposed on him by s. 14ZAL(1), see s. 14ZAL(2).

The ruling has to be served upon the applicant: s. 14ZAR, and must set out the matters ruled upon, identifying the relevant person affected, the tax law, the year of income and the arrangement to which the ruling relates. It must also identify the assumptions made: s. 14ZAS.

The right to object against a ruling is conferred by s. 14ZAZA(1) upon ``a rulee who is dissatisfied with a private ruling''. The expression ``rulee'', in relation to a private ruling, is defined in s. 14ZAA as meaning the person the application to whom of a tax law is the subject of the ruling. Thus, in respect of the First Ruling, where a part of the ruling related only to the application of the ITA Act to Westpac, the expression ``rulee'' would, in respect of that part, include Westpac and Westpac only. Where, however, the questions in the rulings concern the application of the ITA Act to CTC, then it is CTC who is the rulee. The objection is to proceed in the same manner as an objection against a taxation assessment, that is to say, the procedure is to follow that now contained in Part IVC of the Act, the private ruling being treated, for the purpose of that Part, as being a ``taxation decision''.

If there is no appeal against the private ruling, or in the event that there is an unsuccessful appeal, the ruling is, by virtue of s. 170BB of the ITA Act, given the force of law. Thus s. 170BB(3) provides:

``Subject to sections 170BC, 170BG and 170BH, if:

  • (a) there is a private ruling on the way in which an income tax law applies to a person in respect of a year of income in relation to an arrangement (`ruled way'); and
  • (b) that law applies to that person in respect of that year in relation to that arrangement in a different way; and
  • (c) the amount of final tax under an assessment in relation to that person would (apart from this section and section 170BC) exceed what it would have been if that law applied in the ruled way;

the assessment and amount of final tax must be what they would be if that law applied in the ruled way.''

A similar result follows in respect of a ruling to the extent to which it is altered on appeal, by virtue of s. 170BH, once the Court's order has become final.

Protection is sought to be given to private rulings against collateral challenge by virtue of the provisions of ss. 15AA and 15AB of the Act and production of a notice of a private ruling or document purporting to be a copy of such a notice signed by the Commissioner is made conclusive evidence of the proper making of the ruling. The Commissioner in the present case eschewed the tender of a document complying with s. 15AB of the Act and accordingly we are relieved of the necessity to consider either the operation of that section or the extent to which that section may affect the validity of the legislative scheme.

The procedure for objections and appeals against objection decisions relating to private rulings has, as already noted, been amalgamated with that relevant to appeals against tax assessments now contained in Part IVC of the Act. For present purposes, however, it is to be noted that the right to appeal to this Court, so far as it concerns a private ruling, is to be found in s. 14ZZ, which relevantly provides:

``If the person is dissatisfied with the Commissioner's objection decision, the person may:

  • (a) if the decision is both a reviewable objection decision and an appealable objection decision - either:
    • (i) apply to the AAT for review of the decision; or
    • (ii) appeal to the Federal Court against the decision;...''

Where the appeal is brought to this Court, s. 14ZZO provides as follows:

``In proceedings on an appeal under section 14ZZ to the Federal Court against an appealable objection decision:

  • (a) the appellant is, unless the Court orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates; and

    ATC 4095

  • (b) the appellant has the burden of proving that:
    • (i) if the taxation decision concerned is an assessment (other than a franking assessment) - the assessment is excessive; or
    • (ii) if the taxation decision concerned is a franking assessment - the assessment is incorrect; or
    • (iii) in any other case - the taxation decision should not have been made or should have been made differently.''

I may interpolate that having regard to the statutory issue posed by s. 14ZZO, the reference to ``burden of proof'' seems singularly inapt.

The Court's powers on an appeal are described in s. 14ZZP of the Act as being to:

``make such order in relation to the decision as it thinks fit, including an order confirming or varying the decision.''

Under that section the Court could vary the ruling if of the view that the ruling should have been made differently or could set the ruling aside and refer the request for ruling back to the Commissioner if further facts be necessary. The Court, if of the view that the ruling was correct in all the circumstances, would make an order confirming the objection decision.

Reference must finally be made to the very important provisions of s. 14ZVA of the ITA Act which provide:

``If there has been a taxation objection against a private ruling, then the right of objection against an assessment relating to the matter ruled is limited to a right to object on grounds that neither were, nor could have been, grounds for the taxation objection against the ruling.''

The obvious policy behind s. 14ZVA is that a taxpayer must object to the ruling itself and if the ruling has not been objected to, is bound by it. The taxpayer has no further right to object later should the transaction have been entered into and the Commissioner assess in accordance with the ruling. In this way s. 14ZVA complements the provisions of s. 170BB, to which reference has already been made.

In summary, therefore, a taxpayer may seek the opinion of the Commissioner, inter alia , upon an arrangement proposed to be entered into in the future. Based on information supplied to the Commissioner and any assumption that the Commissioner may make, the Commissioner is, subject to certain exceptions, required to give a ruling which then is given the force of law, but subject to the right of the person applying for the ruling to object to it. In other words, a ruling may operate to overrule the real effect of an income tax law once that ruling becomes final and no longer subject to appeal.

The Court's jurisdiction

A preliminary question which was the subject of argument was whether the determination of the objection decisions the subject of the present application involved the determination of a ``matter'' within Chapter III of the Commonwealth Constitution. Notices having been served under s. 39B of the Judiciary Act 1903 only the Commonwealth sought to intervene.

At the heart of this argument was the question whether the Court was being required to determine issues which were merely hypothetical or moot being raised in the context of determining the taxation outcome of conduct which might never be entered into. Both parties and the Commonwealth Crown Solicitor intervening submitted that the legislation conferring upon the Court jurisdiction to hear the application was valid. No one argued that the question whether the Court had jurisdiction was in these circumstances itself not a ``matter'' within Part III.

It may be argued, as Gummow J argues, that while, if there be a controversy between the parties as to the existence of jurisdiction, the Court could determine that controversy as a ``matter'' (as to which there can be no doubt) in the absence of a controversy no ``matter'' arises for the Court to determine. I understand the force of that argument. Taken to its logical conclusion the question whether there is or is not a ``matter'', itself involves an issue whether that question involves a ``matter''. No controversy arose as to that question for the parties tacitly acquiesced that there was and all argued for the validity of the jurisdiction.

I think the preferable course is to deal with the issue as the High Court did in Attorney- General for the State of New South Wales: Ex rel McKellar v The Commonwealth of Australia & Ors (1976-1977) 139 CLR 527 and the Full Court of this Court did in
FC of T v Offshore

ATC 4096

Oil NL 80 ATC 4457 ; (1980) 49 FLR 159 . In the former case the Attorney-General initially claimed declarations that certain sections, including s. 10 of the Representation Act 1905 (Cth), were invalid. Gibbs J directed questions to be argued before the Full Court including a question whether s. 10 was a valid law of the Parliament.

Between the time the proceedings were commenced and the time of argument it seems that any controversy regarding s. 10 disappeared.

All the judgments contain a discussion on the validity of s. 10 and all judges answered the question reserved for the Full Court. Stephen J (at 559-560) expressed the opinion that although the parties were unanimous in urging the validity of s. 20, the question having been squarely raised by the question stated, it should be answered. Jacobs J (at 567) said:

``The Court is placed in an unusual situation in relation to question (iv) in that no argument to the contrary of an affirmative answer has been presented. It might be arguable on the present state of authority ( In re Judiciary Act and Navigation Act ) that there is no `matter' before the Court which raises this question, but I would be loath to reach such a conclusion. It is most convenient that this Court should be able to be called on and should have a discretion to determine questions of this kind respecting the validity of legislation and in many ways I regard the conclusion in In re Judiciary Act and Navigation Act as regrettable, unless it does no more than affect the manner of bringing such questions before the Court.''

There being no amendment to the original writ his Honour proceeded to answer the question.

In FC of T v Offshore Oil NL (supra) in the course of a tax appeal against certain assessments of the appellant the Supreme Court heard and determined whether it had any jurisdiction to entertain the appeals, deciding that it did giving judgment on the preliminary point. An appeal was lodged to the Full Court of this Court. There was a question whether this Court had jurisdiction to hear the appeal as the orders appeared to have been made by the Supreme Court under s. 199(1) of the Income Tax Assessment Act 1936 and there was a question whether they constituted a final order. None of the parties to the appeal decided to contest the jurisdiction of this Court. Franki and Lockhart JJ were of the view that the Court did have jurisdiction, the former giving reasons. Deane J said that he entertained doubt on the matter but in the circumstances bowed to the views of the other members of the Court. None of their Honours expressed the view that the Court should refuse to deal with the matter.

Like Jacobs J in McKellar I think that it is convenient to express my opinion, especially as it was fully argued by the Commonwealth Crown Solicitor and counsel for the Commissioner of Taxation.

Early in its history the High Court refused to give declaratory relief where to do so involved hypothetical questions of law, such as the validity of certain provision of the Trade Marks Act 1905 when the application for registration under that Act had been withdrawn. In so doing the Court adopted the approach of the Privy Council in
Attorney-General for Ontario v The Hamilton Street Railway Co [1903] AC 524 and of the Supreme Court of the United States in
California v San Pablo and Tulare Railroad Co (1892) 149 US 308 . In the latter case Gray J, delivering the opinion of the Court, said (at 314), in a passage cited with approval by the High Court, that the duty of the Court was:

``limited to determining rights of persons or of property, which are actually controverted in the particular case before it... But the court is not empowered to decide moot questions or abstract propositions... which cannot affect the result as to the thing in issue in the case before it.''

(See
Bruce & Anor v The Commonwealth Trade Marks Label Association & Ors (1907) 4 CLR 1569 at 1571 .)

The cases cited in Bruce perhaps left open the question whether the refusal to consider a hypothetical question involved merely the exercise of a discretion in a matter in which the Court otherwise had jurisdiction or turned upon a lack of jurisdiction, although the passage cited from the judgment of the United States Supreme Court spoke in terms of ``power''. If but a matter of discretion, Bruce's case may be seen as a precursor to the now well-established principle that it is a requirement of any court exercising jurisdiction to grant declaratory relief that:

``The question must be a real and not a theoretical question; the person raising it

ATC 4097

must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest to oppose the declaration sought.''

(
Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448 per Lord Dunedin, cited with approval in
Forster v Jododex Australia Pty Ltd & Anor (1972) 127 CLR 421 at 437-438 per Gibbs J.)

In In re The Judiciary Act and The Navigation Act (1921) 29 CLR 257, the High Court held that insofar as Part XII of the Judiciary Act purported to confer upon that Court jurisdiction to determine questions of law referred to it otherwise than by real parties to a controversy, that Act was invalid. That case has been cited since 1921 in a large number of cases and never doubted. It is upon it that a submission that a Federal Court has no jurisdiction to decide the legal consequences of steps which might or might not be taken in the future turns. Accordingly it is important to consider not only what was said in that case, but the context in which the case was decided.

Under the then provisions of Part XII of the Judiciary Act the Governor-General was empowered to refer to the High Court for determination any question of law as to the validity of any Act or enactment of the Commonwealth Parliament. All available justices of the High Court were then required to hear and determine the question or questions referred. The Court's determination was to be more than a ``mere advisory opinion''. It was intended, so the majority of the High Court said, that it be an authoritative declaration of the law.

The issue before the Court was whether a reference under Part XII involved a ``matter'' within the meaning of s. 76 of the Constitution. The Court rejected a submission that ``matter'' meant no more than ``legal proceeding''. Rather it meant the ``subject matter for determination in a legal proceeding''. At 265-266 Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ said:

``In our opinion there can be no matter within the meaning of the section unless there is some immediate right, duty or liability to be established by the determination of the Court. If the matter exists, the Legislature may no doubt prescribe the means by which the determination of the Court is to be obtained, and for that purpose may, we think, adopt any existing method of legal procedure or invent a new one. But it cannot authorize this Court to make a declaration of the law divorced from any attempt to administer that law.''

After a consideration of the various views expressed in
State of South Australia v State of Victoria (1911) 12 CLR 667 as to the meaning of the word ``matter'' in s. 75 the judgment continued (at 266-267):

``All these opinions indicate that a matter under the judicature provisions of the Constitution must involve some right or privilege or protection given by law, or the prevention, redress or punishment of some act inhibited by law. The adjudication of the Court may be sought in proceedings inter partes or ex parte , or, if Courts had the requisite jurisdiction, even in those administrative proceedings with reference to the custody, residence and management of the affairs of infants or lunatics. But we can find nothing in Chapter III of the Constitution to lend colour to the view that Parliament can confer power or jurisdiction upon the High Court to determine abstract questions of law without the right or duty of any body or person being involved.''

Higgins J, dissenting, pointed out the utility of the Court being able to make such determinations, a view which obviously appealed to the 1928 Royal Commission on the Constitution which proposed an amendment to the Constitution to permit the High Court to give ``advisory opinions''. Subsequent proposals to confer upon the Court advisory jurisdiction, announced by the Senate Standing Committee on Constitutional and Legal Affairs in 1977 and the Standing Committee of the Australian Constitutional Convention in 1981, similarly failed to attract support (see Current Topics - The High Court and advisory opinions - a new revised proposal 56 ALJ 2-3).

As Mr Stephen Crawshaw in an article, ``The High Court of Australia and Advisory Opinions'' (1977) 51 ALJ 112 points out, the inconvenience of the attitude of the High Court has in practice been mitigated by a willingness by the Court to give declaratory relief in circumstances where it might have been argued

ATC 4098

that the Court was presented with an abstract matter. (See too Foster M ``The Declaratory Judgement in Australia and the United States'' in (1957-1958) 1 Melbourne University Law Review, 207 and 347 at 391.) So, the Court has entertained applications at the suit of the Attorneys-General of the States as to the constitutionality of legislation (
Attorney- General for Victoria v The Commonwealth (1935) 52 CLR 533 ), or by the Attorneys- General for the States against the Commonwealth or each other, eg
The Commonwealth v State of Queensland (1920) 29 CLR 1 ;
State of Tasmania & Anor v State of Victoria & Anor (1934-1935) 52 CLR 157 . Likewise the Court has entertained proceedings for declaration brought by private parties against the Commonwealth challenging legislation. Famous examples cited by Crawshaw include
Australian Communist Party & Ors v The Commonwealth & Ors (1950-1951) 83 CLR 1 and the Bank Nationalisation case,
Bank of New South Wales & Ors v The Commonwealth & Ors (1948) 76 CLR 1 .

In granting declaratory relief, the Court has not refused to entertain jurisdiction on the basis that the case concerned a proposed future transaction:
Toowoomba Foundry Pty Ltd v The Commonwealth & Ors (1945) 71 CLR 545 at 570 per Latham CJ and
The Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1971-1972) 126 CLR 297 at 305 per Barwick CJ. As the passages cited indicate, there will be no impediment to the jurisdiction of the Court being exercised where the plaintiff desires and intends to do that which the law challenged seeks to make illegal, or where the circumstances are such that the plaintiff will ``probably'' engage in the conduct sought to be proscribed. In the relevant sense such a case is not hypothetical.

A perusal of the case law suggests that a case will be ``hypothetical'', and in consequence involve no ``matter'' where there is no controversy between parties, where the decision has no legal or practical consequences upon the plaintiff or where either party might ignore the result. The Court must also be apprised of, or find, the facts necessary to determine the controversy.

The conferral upon a federal court of judicial power presupposes that there must be a controversy between the parties:
Huddart, Parker & Co Pty Ltd v Moorehead (1908) 8 CLR 330 at 357 per Griffith CJ. The power to decide controversies is, as Brennan J observed in
Harris v Caladine (1990-1991) 172 CLR 84 at 107 , ``at the heart of judicial power''. It may be argued that in In re The Judiciary Act and The Navigation Act there was no real controversy at the time the referral to the High Court occurred and thus no real question of the exercise of judicial power arose: cf
R v Kirby & Ors ; Ex parte Boilermakers' Society of Australia (1955-1956) 94 CLR 254 at 272-273 per Dixon CJ, McTiernan, Fullagar and Kitto JJ and on appeal to the Privy Council, sub nom
Attorney-General for Australia v R [1957] AC 288 at 316 . The argument is, however, inconsistent with the views of the majority in In re The Judiciary Act and The Navigation Act , as is pointed out by Jacobs J in
The Commonwealth of Australia v Queensland & Anor (1975) 134 CLR 298 at 327 . In any event, it is clear that the case stands for a proposition wider than that the giving of an advisory opinion is not an exercise of judicial power.

A case having no practical or legal consequences between the parties will obviously be of mere academic interest only and on any view of the matter hypothetical; cf
Saffron v The Queen (1953) 88 CLR 523 , but see Mellifont v Attorney-General for the State of Queensland (1991) 173 CLR 289. Thus if the result of the case can not determine rights or liabilities which are litigated or affected, but is merely advisory, it will be hypothetical and not involve a ``matter'': Saffron at 528 per Dixon CJ. Although Saffron was ultimately overruled in Mellifont v Attorney-General (supra at 305-306), it may be doubted whether the principle stated above (at least in the context of civil cases) was thereby affected. The Mellifont case is discussed subsequently.

A case where there are practical, although not legal consequences, may, however, not be hypothetical: cf
Ainsworth & Anor v Criminal Justice Commission (1991-1992) 175 CLR 564 at 582 per Mason CJ, Dawson, Toohey and Gaudron JJ. Closely related will be the class of case where the result of the case is one which may be ignored. Thus in
Minister for Immigration and Ethnic Affairs (Cth) v Pochi (1981) 55 ALJR 706 , a majority of the High Court, in rescinding a grant of special leave to appeal, said (at 708-709):

ATC 4099

``This Court should not be placed in a position where the substance of a decision which it has affirmed can be overridden by ministerial fiat and the reasons for its judgment may be treated by the Minister as no more than advice which he is at liberty to disregard.''

A question will be hypothetical in the relevant sense if the outcome depends upon facts which remain in doubt or have not yet been decided. So in
Australian Commonwealth Shipping Board & Anor v Federated Seamen's Union of Australasia (1925) 36 CLR 442 Isaacs J said (at 451):

``It is abundantly established by cases of the highest authority that a Court does not give judgments on hypothetical facts. That is fundamentally not the function of any ordinary Court. Of this Court, resting on a statutory basis (the Constitution), that is so in a special degree, as is seen by the decision in In re Judiciary and Navigation Acts . But quite apart from that special position, the ordinary jurisdiction of a Court does not extend to answering questions as problems of law dependent on facts yet unascertained.''

It follows from what I have said that the determination of the legal outcome of a proposed course of action where all the facts relevant to that proposed course of action are known, will not be hypothetical in the relevant sense. This is particularly so having regard to the fact that failure to appeal or the outcome of an appeal will govern the rights and obligations of the taxpayer in respect of that proposed transaction thereafter, whatever the income tax law might otherwise provide: cf
R v Humby ; Ex parte Rooney (1973) 129 CLR 231 at 243-244 per Stephen J, 249-250 per Mason J. There is, in a very real sense, an immediate right or duty established by the determination of the Court and the outcome of the appeal will be relevant to the administration of the tax laws by the Commissioner, vis a vis , that taxpayer by reference to that proposed transaction. To adopt the language of the submission made by the Commonwealth Attorney-General, the ruling once final:

``operates like an Order-in Council... directed to a specific Company in relation to a future transaction of a description falling within the terms of the Order-in-Council.''

It follows equally from what I have said that if there were no proposed transaction, or if the facts relevant to the transaction were not known and in either case the Court were required to give an opinion on the taxation effects of a transaction, a different result could follow.

In the first of the two applications it will be noted that whatever might have been the intention of the applicant at the time it requested a ruling, by the time the applicant came to appeal against the disallowance of his objection to the ruling, the year of income in respect of which the ruling was sought had passed. Thus if the Court were required to determine now the tax consequences of a transaction which could never be entered into the Court would be required to give a sterile opinion of law. There would be no ``matter'' within the Constitution.

Two arguments were raised to avoid this consequence. First, it was submitted that because the ruling could affect future rulings this was sufficient to constitute a ``matter'' within the Constitution. Reliance was placed upon the decision of the High Court in Mellifont (supra). Secondly, it was submitted that in such a case the applicant lacked standing as being neither a ``rulee'' as defined, nor a ``person dissatisfied'' with a ruling so that the Court was not required to assume jurisdiction and in consequence the validity of the legislative scheme was saved.

It is unnecessary to consider in detail the first submission. It suffices to say that although in Mellifont the former accused could not again be charged upon the same indictment as that in respect of which the questions of law had been reserved, the reservation of those questions arose in the course of proceedings between the parties: the relevant matter was the subject- matter of the original proceedings (see per Mason CJ, Deane, Dawson, Gaudron and McHugh JJ at 305). The emphasis placed by their Honours (at 305) upon the criminal nature of the initial proceedings and the fact that the procedure involved was the ``standard procedure'' for correcting an error of law in criminal proceedings without exposing the accused to double jeopardy, may also distinguish that case from the present.

A simpler ground for upholding validity is that the scheme of the Act contemplates both that as at the time the ruling is given and as at the time the appeal to this Court is instituted,

ATC 4100

there will be a transaction proposed to be entered into (if not a transaction already entered into) which is capable of having taxation consequences. The Commissioner's power to rule depends, in the case of a proposed arrangement, upon there being a person to whom the relevant tax law ``would apply... in relation to'' the arrangement: s. 14ZAF of the Act. That section and s. 14ZAG make it clear that there is no power in the Commissioner to rule in respect of the taxation consequences of a transaction to some hypothetical person. The right of objection is, by s. 14ZAZA of the Act, conferred upon a ``rulee'' who is ``dissatisfied''. A ``rulee'' must, by force of the definition of that expression in s. 14ZAA(1), be a person to whom the tax law is capable of applying. Although the general power to seek a review of or to appeal from objection decisions is expressed by s. 14ZZ to apply to a ``person'' rather than a ``rulee'', the requirement that that person be ``dissatisfied'' remains.

There is no definition of ``dissatisfied'' in this context but the word must bear more than its ordinary dictionary meaning of ``displeased with'' or ``not contented with''. More is required than mere lack of satisfaction with the objection decision. It can hardly be said that a university lecturer, learning of the disallowance of an objection by a public company of which he or she was neither a director or shareholder, could, because he or she was not happy with the objection decision, refer the matter to the Court, thus binding the Court to hear and determine an appeal in the original jurisdiction of the Court. The existence of the constitutional requirement that a federal court's jurisdiction be limited to a ``matter'' requires that the word ``dissatisfied'' be interpreted in a way which would lead to the legislation being valid, rather than in a way which would lead to its being struck down:
Davies and Jones v State of Western Australia (1905) 2 CLR 29 at 43 per Griffith CJ.

In my opinion a person will only be ``dissatisfied'' in the relevant sense if that person is a person to whom the ``ruling'' is still capable of having legal effect. In the case of a ruling relating to a proposed arrangement, that means that the arrangement must be one which, if entered into, will fall within the ruling. If the ruling relates to a year of income which has passed before the appeal is instituted (or perhaps before the appeal has been heard) so that the ruling cannot affect the taxation liability of a putative appellant, that person, no matter how discontented, will not be a ``person dissatisfied''.

It may be that s. 14ZAQ is beyond power in purporting to permit the Commissioner to make assumptions of future facts or ``other matters'' which then must be taken into account by the Court in an appeal. If there be facts relevant to the making of the ruling, these will, in the first instance, be supplied by the taxpayer, and if deficient the Commissioner may require additional facts to be supplied to supplement those already given: s. 14ZAM. The Court is not empowered in exercising its jurisdiction to find facts and if the facts were inadequate would be obliged to refer the matter back to the Commissioner to exercise the power given to him under s. 14ZAM. As presently advised I doubt the ability of the Court to draw inferences from the given facts, but if the Court had that power there is a big difference between the drawing of inferences and the making of assumptions. The Court is given the statutory task of deciding whether the objection decision ought to have been made differently: s. 14ZZO, or in other words, whether the ruling is wrong. In so doing the Court must rely upon the facts stated in the ruling in coming to its conclusion. But to empower the Commissioner to make assumptions (it must be presumed that the only assumptions contemplated are assumptions of fact the Commissioner could hardly make assumptions of law which would render the ruling useless) and then to require the Court to rule upon assumed facts would, in my view, involve the Court in being forced to decide a question of law on facts not put forward by the taxpayer as relevant to the proposed arrangement. Facts assumed by the Commissioner, albeit that the assumption made is that which the Commissioner under s. 14ZAQ considers the most appropriate, may bear no real relationship to the actual facts upon which the ruling is sought. However, that question does not arise for decision here. Neither ruling proceeds upon any real assumption.

It follows, in my view, that in respect of Application NG739 of 1993 (the First Ruling) the appeal was not validly instituted and the Commissioner's objection to competency must be upheld.

The same argument is not available, however, in respect of the Second Ruling.

ATC 4101

Counsel for the Commissioner sought at the hearing to object to the competency of the second application on the ground that as a matter of fact there was no arrangement proposed to be entered into by CTC. I have no doubt that it is again inherent in the concept of a ``person dissatisfied'', that at the time an appeal is entered into there must be an arrangement into which that person in fact proposes to enter and the taxation effect of which on that person is the subject of the ruling. Whether the person appealing to the Court is a person dissatisfied is a jurisdictional fact which the Court may determine. The Court is not required to determine an abstract question if it should turn out that in truth the arrangement was no longer proposed, or never had been proposed. Section 14ZAN(h) empowers the Commissioner to decline to give a ruling where he forms the view in respect of a proposed arrangement that it is not seriously contemplated. That power was not exercised by the Commissioner in the present case. Ordinarily the fact that there is an appeal of a later objection decision in respect of a ruling will, absent any other evidence, lead to the inference that at the time the appeal is brought (and at the time of hearing) the arrangement is still proposed. But if the Commissioner challenges the competency of the Court to hear the appeal, the Court will determine whether as a matter of fact the arrangement is still proposed and if not will dismiss the appeal as incompetent.

In the present case, however, the objection to competency was, it would seem, a last minute decision, in respect of which no evidence was sought to be adduced on behalf of the Commissioner. The only evidence thus before us was CTC's statement that the arrangement was proposed. The mere fact that the party to the transaction the subject of the Second Ruling was unnamed does not lead to the conclusion that there was no proposed arrangement. Anonymity rather than hypotheticality might explain the form the second request for ruling took. Ultimately counsel for the Commissioner withdrew the objection, except so far as it depended upon the fact that the party to the second transaction was unnamed. The attack on the competency of the second application must, in the absence of evidence challenging the taxpayer's assertion that the transaction was proposed, therefore fail.

It now becomes necessary to consider shortly the issues raised in the ruling. In so doing the practical difficulties inherent in the scheme for obtaining the views of the Court upon the ruling become most apparent.

Each of the three questions answered in the Second Ruling are predicated upon the question whether there has been a ``dividend'' within the meaning of s. 6 of the ITA Act. Section 6(1) provides relevantly as follows:

```dividend' includes -

  • (a) any distribution made by a company to any of its shareholders, whether in money or other property;
  • (b) any amount credited by a company to any of its shareholders as shareholders and
  • (c)...

but does not include -

  • (d) moneys paid or credited by a company to a shareholder or any other property distributed by a company to shareholders (not being moneys or other property to which this paragraph, by reason of subsection (4), does not apply), where the amount of the moneys paid or credited, or the amount of the value of the property, is debited against an amount standing to the credit of a share premium account of the company;''

.

Sub-section (4) then provides:

``Subject to sub-section (5), where, in pursuance of or as part of an agreement or an arrangement, whether oral or in writing, being an agreement or arrangement made after the commencement of this sub- section -

  • (a) a company issues shares at a premium, being a premium in respect of which the company credits an amount to a share premium account of the company; and
  • (b) the company pays or credits any moneys, or distributes any other property, to shareholders in the company and the amount of the moneys so paid or credited or the amount of the value of the property so distributed is debited against an amount standing to the credit of that share premium account,

paragraph (d) of the definition of `dividend' in subsection (1) does not apply to the

ATC 4102

moneys so paid or credited or to the property so distributed.''

It is clear from a perusal of these provisions that it is critical to the applicant's case that there be an allotment of shares by the financial institution under the proposed arrangement and that there have been moneys credited to a share premium account of the applicant, out of which moneys are paid or credited to the financial institution. Whether that will be the case will involve both questions of fact and questions of law.

The application for ruling which sets out the facts to be taken into account in making the ruling states that the transaction is entered into:

``in compliance with the `Terms of Issue' and procedures as set out in Regulation 2A of the Taxpayer's Memorandum & Articles of Association (`Reg 2A').''

In fact at no time was the Commissioner supplied with the proposed terms of issue of the shares. Accompanying the application for ruling (and for present purposes taken to form part of it) was a document entitled ``Submission in support of request for private ruling''. That document, while not attaching a copy of the articles of association of the applicant, contains extracts from the articles. As to the terms of issue it refers to a ``prospectus'' to be issued and summarises the terms of issue. It refers to the moneys forming part of the ``Bonus Pool'' and not paid from time to time to holders of preference shares as being:

``held by the Taxpayer on trust for those holders of Preference shares... who redeem their Preference Shares...''

Although the material supplied to the Court did contain a copy of Regulation 2A, it is not clear whether this regulation was before the Commissioner at the time of the ruling. Even if available for us to consider, it adds nothing to CTC's case.

It would seem likely that the financial institution might require that at no time could the applicant in fact utilise the funds provided by way of subscription money for any purpose other than to redeem the shares. That this is contemplated might be said to flow from the fact that the subscription for the shares by the financial institution and the redemption of those shares are part of the same transaction. Indeed it is an integral part of the applicant's argument that there is a dividend paid by the applicant to the financial institution and that the redemption was part of the arrangement for subscription of those shares.

A question immediately arises whether the subscription moneys ever became part of the funds of the company or whether the moneys were at all times held by the company for the financial institution. If the latter, then there could, for reasons other than those taken into account by the Commissioner in giving the ruling, be no dividend. This question depends upon knowing the precise terms of the proposed arrangement between the financial institution and the applicant, the intentions of the parties and the terms of issue of the shares and relevant provisions of the articles of association. None of these matters are known to us. To attempt to decide the issue without this information would be unprofitable, for the consequence of the Court's decision is intended by the Act to decide the taxation outcome between the parties in the 1994 year of income (if the arrangement in fact be entered into). This intention could only be carried out if all the facts of the actual arrangement entered into accord with those of the proposed arrangement ruled upon.

In these circumstances the Court can do no more than refer the matter back to the Commissioner to exercise his powers under s. 14ZAM of the Act to obtain further facts concerning the proposed arrangement which will bear upon the issue whether the subscription moneys, and particularly the share premium proposed to be paid by the financial institution to the applicant, are ever proposed to become the property of the applicant available to it for its own purposes. Without that information the ruling should not have been made. Since ultimately the ruling must set out the ``matter ruled on'', it seems to me that the ruling, as it presently stands, would need to be set aside and the outcome of the Commissioner's factual enquiry stated in a new ruling.

Accordingly, I agree with the orders in each application proposed by Gummow J.

Proceedings No. NG738 of 1993

THE COURT ORDERS THAT:

(1) The objection decision dated 4 August 1993 be set aside.

(2) The applicant's objection against private ruling No. 5588 be remitted to the respondent for determination according to law.

ATC 4103

(3) There be no order as to costs.

Proceeding No. NG739 of 1993

THE COURT ORDERS THAT:

(1) The appeal be dismissed as incompetent.

(2) The applicant pay the costs of the respondent.


Back to top

This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.