Wilcox J

Sackville J
Sundberg J

Full Federal Court


Judgment date: 25 June 1999

Wilcox, Sackville and Sundberg JJ

On 14 May 1999 we dismissed with costs an appeal by Anthony Samuel Zizza against an order of Katz J [reported at 99 ATC 4166] affirming a decision of the Administrative Appeals Tribunal (``the Tribunal'') [reported at Case 8/98,
98 ATC 155]. The Tribunal had refused to extend the time within which to refer to it eleven decisions of the respondent, the Commissioner of Taxation (``the Commissioner''), in connection with objections to assessments of income tax. We undertook to publish reasons at a later date. These are our reasons.

The facts

2. The objection decisions relate to the eleven years of tax, 1977-78 to 1987-88 inclusive. On 9 October 1989, the Commissioner issued amended assessments under s 167 of the Income Tax Assessment Act 1936, the assessments being made on a betterment basis. The appellant lodged objections to each of the assessments on 11 December 1989. On 5 June 1992 the Australian Taxation Office (``ATO'') wrote eleven letters (one for each tax year) addressed to the appellant's solicitors, Bowen and Gerathy, referring to Mr Zizza and his objection in respect of a particular year and stating it had been ``decided to disallow your objection in full''. Each letter said:

``Your objection has been disallowed for the following reasons:

  • (i) refer to attached explanation.''

Each letter drew attention to the right, given by s 14ZZ of the Taxation Administration Act 1953, ``to either apply to the Administrative Appeals Tribunal for review of the decision or appeal to the Federal Court against the decision.''

3. There was no attachment to any of the letters. However, the eleven letters were accompanied by another letter, addressed to Bowen and Gerathy, referring to Mr Zizza, that read:

``Consideration has been given to your objections dated 11 December 1989 for review of the assessments for the years ended 30 June 1978 to 1988. It has been decided to disallow the objections and formal notices of decision are enclosed.

Repeated failure to supply requested documentation and information resulted in the disallowance of your objections. As further action was dependant on this documentation the review of your assessments was limited to the information already contained within this office.

Accordingly, your assessments are confirmed.''

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4. The appellant gave evidence to the Tribunal that Mr Gerathy showed him the letters, at about the date they bore.

5. In its reasons for decision, the Tribunal made some findings about the period between the lodgment of the notices of objection and their disallowance [98 ATC at 159].

``... The Exhibits and evidence indicate that during that period, there were negotiations and discussions between the Applicant and his then accountants and the Respondent; the Exhibits indicate furthermore a lack of co- operation on the part of the Applicant in that he failed on various occasions to attend meetings which had been arranged between himself and officers of the Respondent. It seems clear that that period was one involving some degree of frustration for the Respondent. That period is no longer relevant except insofar as it indicates, as did his failure to file returns, a general disinclination on the part of the Applicant to comply with his taxation obligations.''

6. No request was made to refer any of the objection decisions to the Tribunal within the 60 day period permitted by s 29 of the Administrative Appeals Tribunal Act 1975, as modified by s 14ZZC of the Taxation Administration Act. Instead there ensued considerable correspondence between the solicitors and ATO. During the course of that correspondence, ATO more than once referred to the appellant's right to refer the objection decisions to the Tribunal. The correspondence culminated in a letter from ATO dated 10 April 1996 that read:

``Reference is made to previous correspondence in this matter, and in particular your letter of 21 March 1996.

This office has previously explained that your client's objections against the assessments for the years ended 30 June 1978 to 30 June 1988 have been determined in accordance with the Income Tax Assessment Act and the Taxation Administration Act.

Your contention throughout your correspondence is the fact that although eleven (11) formal notices of decision dated 5 June 1992 were received by your client, there was only one covering letter giving a reason for the disallowance of the objection. You therefore allege that no substantive determination of each objection has been made.

Whether a covering letter was or was not attached to each formal notice of decision is of no consequence, as the Commissioner is under no legal obligation to give particulars to the taxpayer of the reasons for disallowing the objection. (
Robinson v DFC of T 84 ATC 4277)

Note that, if a taxpayer applies to the Administrative Appeals Tribunal for a review of a decision, the Commissioner is then required to lodge with the Tribunal a statement giving the reasons for the decision (section 14ZZF(1) of the Taxation Administration Act). Where the taxpayer appeals to the Federal Court against an objection decision the Commissioner is required to file a statement outlining the contentions and the facts and issues in the appeal.

Your client has always had the option of applying for a review of the Commissioner's decision pursuant to section 14AA of the Taxation Administration Act, although he will now be required to also make an application for an extension of time to lodge the request for a review of the objection decisions.

The Commissioner's right to recover tax is not suspended while an objection against the relevant assessment is considered. The Commissioner's policy on collection and recovery of tax in disputed assessment cases is stated in Taxation Ruling 2569.

This office did allow a Supreme Court action to lapse some years ago, but again this is of no consequence. The non-payment of the assessments and the resultant additional tax for late payment cannot continue. Accordingly, unless payment in full is made within fourteen days of the date of this letter, legal action will be taken without further notice.''

7. In evidence before the Tribunal, the appellant conceded that he was shown this letter by his solicitors and he read it. The date was not precisely fixed but he assented to the description ``after they received it'' apparently meaning shortly after that event. Even after receipt of the letter of 10 April 1996, there was a further 19 month delay in the appellant taking

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any action to have the objection decisions referred to the Tribunal. On 26 November 1997 he filed an application to extend the time for the making of an application to the Tribunal for a review of the objection decisions.

The Tribunal's decision

8. In its reasons for decision, the Tribunal referred to an investigation of the appellant's affairs by the New South Wales Crimes Commission between 1991 and 29 August 1995. The Tribunal accepted this investigation handicapped the appellant in respect of the proper handling of his affairs up to and including August 1995 but it pointed to the letters, before and after that date, mentioning his right of review by the AAT. Referring to the letter of 10 April 1996, the Tribunal said [98 ATC at 161-162]:

``... Even if, as may have been the case, Bowen & Gerathy considered, at any prior time that the Applicant was entitled to refrain from referring his objections to this Tribunal until the relevant annexure had been furnished, that misapprehension must have, or should have, disappeared at the time of receipt of the letter dated 10 April 1996. That letter sets out in the clearest possible terms, that whether or not a missing annexure or covering letter had been attached, the Respondent was under no legal obligation to give reasons for the disallowance of the objections and went on to repeat that the Applicant must, if so advised, refer the matter on appeal to the Administrative Appeals Tribunal. Whatever confusion there might have been in the minds of the Applicant's solicitors or the Applicant at any period prior to April 1996 must have been eliminated by the letter dated 10 April 1996. Bowen & Gerathy should have been aware that their client was obliged if so advised to refer the matters to the Tribunal regardless of the fact that there may not have been particulars as referred to in the correspondence and these Reasons. Importantly however, Mr Gerathy in his statement... does not say that he or his firm was in error, or that he misconstrued the letter dated 10 April 1996.''

9. In considering the proper exercise of its discretion concerning extension of time, the Tribunal had regard to the factors mentioned by Wilcox J in
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344. The Tribunal found the appellant had not provided an adequate explanation for his delay in applying to the Tribunal, especially for the period following receipt of the ATO's letter of 10 April 1996. The Tribunal thought it was arguable that the appellant ``rested on his rights''; certainly the respondent ``may on various occasions have formed the view that the Applicant did not intend to dispute the objection decisions for the relevant years''. In relation to prejudice, the Tribunal said [98 ATC at 165]:

``... I think that there is a possibility of real prejudice to the Respondent. This audit commenced in November 1983 and extended over a number of years. It is likely, as contended by the Respondent, that those of its officers involved in the audit and investigation of the Applicant may be required to give evidence as to how the amended assessments were finally reached; such evidence may in the light of the delay be less available than it would have been had the review been sought in time.

The Applicant has not been unfairly treated by the Respondent, who repeatedly advised him that if he wished to have the objection decisions reviewed, he should refer the matter to the Administrative Appeals Tribunal or the Federal Court. The Tribunal considers that the length of time which has elapsed would place considerable difficulties in the way of the Applicant discharging the onus of proof in disputing the assessments; this prejudice to the Applicant would affect the merits of the application considered in paragraph 23 below.''

The Tribunal discounted any ``prejudice to the general public''.

10. Turning to the merits, the Tribunal said [ 98 ATC at 165]:

``... it is possible that there is some argument to be made by the Applicant on the merits in respect at least of some of the amounts claimed by him. I have previously referred to the situation of R Pty Limited and his allegations as to the solicitor's trust account and borrowings; the Applicant in his evidence also said that the Respondent based some of its assessments on development applications which were in reality referable to his own labour. However, the fact that it is conceivable that there is some argument

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to be made on the merits in favour of the Applicant does not in my view outweigh the other considerations. Merit alone is not a sufficient ground to grant the extension; the Tribunal notes the recent decision of French J in
Mt Gibson Manager Pty Ltd v DFC of T 98 ATC 4012, dismissing an appeal from a decision of the Tribunal in which an extension of time was refused notwithstanding that the merits of the substantive application were conceded by the respondent.''

11. Finally, the Tribunal expressed the view that a grant of extension of time might ``be unfair to other people who have delayed their appeals for lengthy periods and have little or no regard for the statutory limit''. The Tribunal concluded [98 ATC at 166]:

``The delay in this matter is so long and the explanations in respect thereof are so weak (where there are explanations at all) and the evidence of the Applicant himself is so unreliable, that this is not in the view of the Tribunal a proper case for the grant of his application. Accordingly the application is refused.''

The primary judge's decision

12. At the hearing of his application for review of the Tribunal's decision, the appellant argued many points, most of which do not arise before us. We need not refer to the primary judge's reasoning at this stage; it is enough to say his Honour was not persuaded the Tribunal had erred in law. He dismissed the application for review.

The application of Hunter Valley Developments

13. The Tribunal's reasons for decision leave us with the impression that it has become common for members of the Tribunal to evaluate applications for extension of time under s 29(7) of the Administrative Appeals Tribunal Act, in relation to taxation objection decisions, by reference to the principles summarised in Hunter Valley Developments. This is not in itself an error of law but it ought always be remembered that case concerned an application under the Administrative Decisions (Judicial Review) Act 1977. There will often be material differences between decisions made under that Act and objection decisions under the Taxation Administration Act. Rarely will the latter decisions have the public implications found in many ADJR decisions. Moreover, at 348, Wilcox J pointed out the principles he summarised were intended ``to guide, not in any exhaustive manner, the exercise of the court's discretion''. It would be an error to regard the summary as complete, or to treat each of the six principles it contains as necessarily applicable to any particular application for extension of time, especially an application under different legislation. We agree with observations to this effect recently stated by Hill J in
Brown v FC of T 99 ATC 4516 at 4523-4524 [33-41]; [1999] FCA 563 at [ 33-41]. We make no comment on the decision in the case, which is the subject of an appeal.

The reason for further delay

14. The first submission put by counsel for the appellant is that the Tribunal fell into error of law in making a finding about the reason for delay that was so unreasonable that no reasonable person could make that finding: see
Associated Provincial Picture Houses v Wednesbury Corporation [1948] 1 KB 223. The relevant finding concerned the delay in applying for review, in respect of which the Tribunal said [98 ATC at 163-164]:

``... Given that this case involves a delay of over five years and a taxpayer who does not appear to have ever taken his taxation obligations seriously, an adequate explanation of delay is in this case not a requirement that the Tribunal should lightly forgo. In this particular instance, the delay is unacceptable and there is no proper or indeed adequate or, in some respects, any explanation of the delay. In particular in this context, the Applicant should not on any basis have delayed past April 1996; similarly the delay after information was obtained under the Freedom of Information Act in June 1997, and for which there is no explanation at all, is unacceptable. There is only one reasonable inference and that is that the Applicant seeks further delay in respect of these already long-overdue assessments.''

Counsel for the appellant say the last sentence was unreasonable, in the Wednesbury sense. They argue it is inconsistent with Mr Zizza's evidence that Bowen and Gerathy were instructed on 29 November 1993 to refer the objections to the Tribunal, that the Tribunal advanced no logical reason for the appellant seeking further delay and that it ignored

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correspondence between Bowen and Gerathy and ATO after April 1996.

15. We do not think these arguments establish Wednesbury unreasonableness. At the most they may raise doubts about the accuracy of a factual finding made by the Tribunal. In
Bromley London Borough City Council v Greater London Council [1983] 1 AC 768 at 821, Lord Diplock restated the Wednesbury principle in a way that emphasises it will usually be concerned with decisions lacking any logical foundation. He referred to ``decisions that, looked at objectively, are so devoid of any plausible justification that no reasonable body of persons could have reached them''. In the present case there was justification for the Tribunal's inference of deliberate delay. Although ATO had pointed out to the solicitors on many occasions, over several years, that Mr Zizza's proper remedy was to seek review by the Tribunal or to appeal to this Court, he had neglected to do so. His neglect continued even after the Crimes Commission investigation ceased to be an impediment. As to motivation for delay, ATO was taking recovery action. Mr Zizza may have thought procrastination would provide him some respite.

16. The argument advanced on behalf of Mr Zizza upon this first submission raises only matters of fact, in relation to which there is no right of appeal to this Court: see s 44 of the Administrative Appeals Tribunal Act.

Double counting the delay

17. Counsel for Mr Zizza argue the Tribunal erred in law in double counting the factor of delay. They say the Tribunal took into account Mr Zizza's delay in lodging his application for extension of time when considering the first of the Hunter Valley Developments issues; that is, whether the appellant had given an acceptable explanation for the delay. They assert the Tribunal then took the same delay into account in examining the third Hunter Valley Developments issue, namely whether delay had occasioned prejudice to the Commissioner. In support of their submission, they call in aid an observation of Katz J at first instance [99 ATC at 4171] that the decision of von Doussa J in
Windschuttle v DFC of T 93 ATC 4992; (1993) 46 FCR 235:

``... appears to me to provide some support for an argument that, if the fact of delay by an applicant for an extension of time is held to make relevant against the applicant in all of the circumstances the first of the Hunter Valley Developments principles, it would be legally erroneous for that fact alone also to be held to make relevant against the applicant in all of the circumstances the third of the Hunter Valley Developments principles - the argument would presumably be that the third principle was an irrelevant consideration in the circumstances or that a decision to refuse an extension of time taking into account against the applicant the third principle was unreasonable in the `Wednesbury' sense in the circumstances.''

18. Although Katz J lucidly articulated the argument, he declined to accept it. His Honour held the Tribunal did not err in law in relation to the third Hunter Valley Developments factor. He pointed out that von Doussa J had referred to the risk of double counting in Windschuttle only in the context of expressing concern ``if prejudice had been inferred simply from the fact of delay''. Katz J pointed out that, under some circumstances, delay may found an inference of prejudice and cited the observation of McHugh J in
Brisbane South Regional Health Authority v Taylor (1996) Aust Torts Reports ¶81-402 at 63,637; (1996) 186 CLR 541 at 556: ``the long delay gave rise to a general presumption of prejudice''.

19. We see no element of double counting in the Tribunal's assessment of Mr Zizza's case. In considering the first Hunter Valley Developments factor, the Tribunal limited itself to the period after April 1996. Although it may have been generous to Mr Zizza to do so, the Tribunal ignored the delay between the date of the Commissioner's objection decisions, 5 June 1992, and 10 April 1996; primarily on the ground that Mr Zizza had been impeded in pursuing the matter of the taxation objections by the activities of the Crimes Commission. The Tribunal then asked itself whether an acceptable explanation had been provided for the 19 month delay between April 1996 and the application to the Tribunal in November 1997. It found against Mr Zizza on this issue. That finding was one tending against the grant of an extension of time; though, of course, it was a finding about only one factor and needed to be taken into account along with findings about other factors, some of which might favour Mr Zizza. When the Tribunal turned to the third factor, it examined whether the Commissioner

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would be prejudiced in contesting the review application by the delay that had occurred since the assessments on a betterment basis in 1989. This was not a matter of imputing blame to Mr Zizza, but simply of looking at the possibility of a fair hearing occurring, having regard to the delay. As we have said in para 9 above, the Tribunal found, as a matter of fact, that officers involved in the audit and investigation of Mr Zizza's affairs might be required to give evidence concerning the computation of the amended assessments and their evidence ``may in the light of the delay be less available than it would have been had the review been sought in time''. Although counsel for the appellant criticise that finding, it is a finding of fact. It exhibits no error of law or ``double counting''. The delay that had occurred not only called for explanation; it was a factor the Tribunal was entitled to regard as relevant to prejudice.

Inference of possible prejudice

20. Counsel for the appellant say the Commissioner's failure to call specific evidence of prejudice should have caused the Tribunal to infer there was no prejudice. They cite
Jones v Dunkel (1959) 101 CLR 298, as applied in
ARM Constructions v DFC of T (1986) 65 ALR 343 at 351.

21. In our opinion, the possibility of prejudice was a matter of fact, for the Tribunal to weigh. The Tribunal did not find the delay would prejudice the Commissioner. It merely pointed to the likelihood of the officers being required to evidence and the possibility that their evidence might now be less available than if the review had been sought in time. It is difficult to see how any fact-finder could be more specific than that or what evidence might usefully have been given on that subject at the stage of an application for extension of time.


22. Counsel argue the Tribunal failed to give sufficient weight to its conclusion that the appellant's case had some merit. This puts the Tribunal's conclusion about merit too highly. The Tribunal said ``it is possible that there is some argument to be made by the Applicant on the merits in respect at least of some of the amounts claimed by him''. However, weight was a matter for the Tribunal to determine. Wednesbury unreasonableness aside, and that is not suggested in relation to this argument, even an inappropriate decision about the weight to be given to a finding about a particular factor is not an error of law.


23. The appellant failed to demonstrate that Katz J erred in holding the Tribunal did not err in law and, accordingly, in dismissing the application made to the Court under s 44 of the Administrative Appeals Tribunal Act. It was for that reason we dismissed the appeal.


1. The appeal be dismissed.

2. The appellant, Anthony Samuel Zizza, pay the costs incurred in connection with the appeal by the respondent, the Commissioner of Taxation.

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