Guss v. DCT

[2006] FCAFC 88
63 ATR 31

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(Judgment by: Gyles J) Court:

Judges:
Gyles JEdmonds J
Greenwood J

Subject References:
TAXES AND DUTIES
income tax and related legislation
prompt recovery, through estimates and payment agreements, of certain amounts not remitted
where Commissioner empowered to make estimate of amount
where making of estimate created liability upon company
where obligation imposed upon directors to cause company to pay estimate or enter administration or be wound up
where obligation enforced by penalty imposed upon directors
where Commissioner not entitled to recover penalty unless statutory notice given
whether decision to give notice reviewable under the Administrative Decisions (Judicial Review) Act 1977 (Cth).

Legislative References:
Administrative Decisions (Judicial Review) Act 1977 - 3; 5; 6
Income Tax Assessment Act 1936 - Part IV Div 9; 222AGA; 222AHA; 222APB; 222APC; 222APE

Case References:
Attorney-General (Cth) v Queensland - (1990) 25 FCR 125
Carmody v Mackellar - (1997) 76 FCR 115
DFCT v McArdle - (2003) 53 ATR 302
Federal Commissioner of Taxation v Pilnara Pty Ltd - (1999) 96 FCR 82
Forsyth v DCT - (2004) 62 NSWLR 132
Pacific Century Production Pty Ltd v Watson - (2001) 113 FCR 466
Re Excel Finance Corporation Ltd (rec and mgr apptd) -
Worthley v England - (1994) 52 FCR 69
Ross v Costigan - (1982) 59 FLR 184
Southern Farmers Group Ltd v Deputy Federal Commissioner of Taxation (SA) - (1989) 21 FCR 66
Australian Broadcasting Tribunal v Bond - (1990) 170 CLR 321
DFCT v Woodhams - (1999) 199 CLR 370
Evans v Friemann - (1981) 53 FLR 229
Griffith University v Tang - (2005) 221 CLR 99
Industrial Equity Ltd v Commissioner of Taxation - (1990) 170 CLR 649
Ricegrowers Co-operative Mills Ltd v Bannerman and Trade Practices Commission - (1982) 38 ALR 535
Hutchins v Collins, Deputy Commissioner of Taxation - (1996) 65 FCR 269
Director-General for Social Services v Chaney - (1980) 31 ALR 571
Salerno v National Crime Authority - (1997) 75 FCR 133
Scharer v State of New South Wales - (2001) 53 NSWLR 299
Woodhams v DCT - [1998] 4 VR 309
Guss v Deputy Commissioner of Taxation - [2005] FCA 1499

Judgment date: 8 June 2006

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Judgment by:
Gyles J

[1] This case concerns the familiar question as to whether an act done which is authorised by a statute can be described as, or involves, a decision of an administrative character made under an enactment within the meaning of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act). The circumstances which give rise to the question, the statutory provisions, the judgment below and the arguments on appeal are summarised in the reasons for judgment of Edmonds J that I have had the advantage of reading in draft. That summary is gratefully adopted, although I differ as to the result of the appeal.

[2] In my respectful opinion, the primary judge was in error in holding that the decision was not reviewable as it was not a substantive determination. His Honour said ( Guss v Deputy Commissioner of Taxation [2005] FCA 1499 at [17]):

... There is no application, inquiry or dispute that is determined by or as a result of it. It is a mere procedural formality, in the nature of a warning to the applicant that recovery proceedings will be taken unless the company's liability has been discharged or one of the other things mentioned in s 222APE(1)(b) has occurred.

[3] Authoritative guidance as to the correct approach to the question is to be obtained from the decision of the High Court in Griffith University v Tang (2005) 221 CLR 99 (Tang). That case involved the Judicial Review Act 1991 (Qld) but, at least for present purposes, the reasoning is applicable to the ADJR Act. Having said that a decision may be either required or authorised by an enactment expressly or as a matter of necessary implication, Gummow, Callinan and Heydon JJ went on to say (at [78]-[80]):

... However, whilst this requirement or authority is a necessary condition for the operation of the definition, it is not, by itself, sufficient.The decision so required or authorised must be "of an administrative character". This element of the definition casts some light on the force to be given by the phrase " under an enactment" [emphasis in original]. What is it, in the course of administration, that flows from or arises out of the decision taken so as to give that significance which has merited the legislative conferral of a right of judicial review upon those aggrieved?The answer in general terms is the affecting of legal rights and obligations. Do legal rights or duties owe in an immediate sense their existence to the decision, or depend upon the presence of the decision for their enforcement ? (cf R v Commonwealth Court of Conciliation and Arbitration ; Ex parte Barrett (1945) 70 CLR 141 at 154 ). To adapt what was said by Lehane J in Lewins ( (1996) 68 FCR 87 at 103), does the decision in question derive from the enactment the capacity to affect legal rights and obligations? Are legal rights and obligations affected not under the general law but by virtue of the statute? ( General Newspapers Pty Ltd v Telstra Corporation ; (1993) 45 FCR 164 at 169).[emphasis added]

Their Honours concluded (at [89]):

The determination of whether a decision is "made ... under an enactment" involves two criteria: first, the decision must be expressly or impliedly required or authorised by the enactment; and, secondly, the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment. [emphasis added] A decision will only be "made ... under an enactment" if both these criteria are met. It should be emphasised that this construction of the statutory definition does not require the relevant decision to affect or alter existing rights or obligations, and it will be sufficient that the enactment requires or authorises decisions from which new rights or obligations arise. [emphasis in original] Similarly, it is not necessary that the relevantly affected legal rights owe their existence to the enactment in question. Affection of rights or obligations derived from the general law or statute will suffice.

[4] Gleeson CJ (at [18]) cited with approval the following passage from the judgment of Davies AJA in Scharer v State of New South Wales (2001) 53 NSWLR 299 (at [77]):

...The crux of the issue in each case is whether the enactment has played a relevant part in affecting or effecting rights or obligations. [emphasis added] A grant of authority to do that which under the general law a person has authority to do is not regarded as sufficient.

[5] In my opinion, giving of the notice pursuant to s 222APE of the Income Tax Assessment Act 1936 (Cth) was (by virtue of s 3(2) of the ADJR Act), or necessarily involved, a decision under an enactment for the purposes of the ADJR Act. Giving of the notice is expressly authorised by the enactment. Giving of the notice is a statutory precondition to recovery of the penalty. Giving of the notice renders the recipient liable to recovery action. Absent giving of the notice, the Commissioner cannot recover the penalty. In my opinion, at the very least, the giving of the notice 'affected' legal rights or obligations of both the Commissioner and the recipient. The notice was not merely in the nature of a warning as held by the primary judge.

[6] The primary judge referred to the decision of Cooper J in Golden City Car & Truck Centre Pty Ltd v Deputy Commissioner of Taxation (1999) 56 ALD 177 ; (1999) 99 ATC 4131 and the following authorities referred to by Cooper J: Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation (unreported, Davies J, 5 November 1993); Hutchins v Collins, Deputy Commissioner of Taxation (1996) 65 FCR 269 (Hutchins); and Ruddy v Deputy Commissioner of Taxation (1998) 82 FCR 337. It is not clear that those authorities were regarded as applicable to the issue that is live on this appeal rather than to the second 'decision' in issue at first instance that is no longer pursued. The primary judge distinguished Southern Farmers Group Ltd v Deputy Federal Commissioner of Taxation (SA ) (1989) 21 FCR 66 and Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 (Bond). The primary judge was apparently not referred to Tang.

[7] The only Full Court judgment of those referred to by the primary judge was Hutchins. The 'decision' at issue was a decision of the Deputy Commissioner to vote against a motion put to a meeting of the appellant's creditors convened under Pt X of the Bankruptcy Act 1966 (Cth) as it then stood. The motion was for a special resolution that the creditors accept a composition of the appellant's debts. The motion failed. It would have been carried if the Commonwealth had either voted for the motion or abstained from voting. Some remarks about the decision in Hutchins were made in the joint judgment in Tang. In the first place, their Honours indicated (at [68]-[69]) that the adoption of a proximate source test, such as applied by Black CJ in that case, was not appropriate. Their Honours went on to say (at [84]):

...However, Black CJ also based his decision on the sound ground that "the decision was not given statutory effect by the sections relied upon" ( (1996) 65 FCR 269 at 273). Lockhart J ( (1996) 65 FCR 269 at 277) said that the decision to vote could not have conferred any benefit or imposed any disadvantage when it was made; any affection of legal rights arose from the cumulative effect of the votes later cast against the special resolution at the meeting of creditors.

The reasoning in Hutchins is of little relevance to the present problem.

[8] The cases of Golden City Car & Truck Centre Pty Ltd v Deputy Commissioner of Taxation (above), Ruddy v Deputy Commissioner of Taxation (above) and Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation (above) each involved the decision to sue and, in the case of Strictly Stainless Pty Ltd v Deputy Commissioner of Taxation (above), the refusal of an offer to compromise. They provide little useful guidance in the present context. I shall refer to Bond and Southern Farmers Group Ltd v Deputy Federal Commissioner of Taxation (SA ) (above) separately. Nothing in the authorities referred to by the primary judge causes me to change my opinion that the decision to issue the notice affected legal rights or obligations and so meets the second criterion in Tang.

[9] It may be that the primary judge did not regard the decision as being 'deliberative' in the sense discussed by Greenwood J in his reasons, which I have had the advantage of reading in draft. There are echoes in the primary judgment of the following passage from the judgment of Mason CJ in Bond (at 337):

... a reviewable "decision" is one for which provision is made by or under a statute. That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.

[10] That passage must be read in context. The Australian Broadcasting Tribunal was conducting a public inquiry at which parties appeared and were represented. The question was whether the broadcasting licences of certain companies should be cancelled. One issue along the way to the substantive decision was whether or not Mr Alan Bond was a fit and proper person to be associated with a licensee. Counsel assisting the Tribunal presented the case for cancellation. The companies opposed that case. That proceeding was effectively an inter partes determination.

[11] However, many administrative decisions are authorised or required by a statute which involve no determination of an issue in that sense. The operative decision is solely whether to act or not to act and may be wholly unilateral. This was such a case. The decision to issue the notice was a final determination of that question. Whilst, in a loose sense, it was a step along the way to recovery of tax, it was, and is properly regarded as, a discrete and independent step complete in itself that is expressly provided for by the statute.

[12] The point can be simply illustrated by taking a case decided shortly after Bond in which all of the justices who sat in Bond participated. Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649 concerned a challenge under the ADJR Act to the issue of notices by the Deputy Commissioner of Taxation pursuant to s 263 and s 264 of the Income Tax Assessment Act 1936 (Cth). The only 'decision' in question was whether or not to issue the notices. There was no other 'deliberation' involved. The decision was entirely unilateral. What is more, as is the case here, the notices did not decide any question of ultimate liability for tax - that depended upon assessment. The notices were ancillary to the process of assessment and collection of tax. Mason CJ, Brennan, Deane, Dawson, Toohey and McHugh JJ said (at 662):

Review of the respondents' decisions is sought within the A.D.(J.R.) Act. It was not disputed that a decision to invoke a power conferred by either s 263 or s 264 of the Act is a decision made under an enactment, hence a decision to which the A.D.(J.R.) Act applies.

[13] The same reasoning would apply in relation to a notice issued pursuant to s 264A of the Income Tax Assessment Act 1936 (Cth) ( Federal Commissioner of Taxation v Pilnara Pty Ltd (1999) 96 FCR 82); the issue of listening device warrants ( Carmody v Mackellar (1997) 76 FCR 115); the issue of other forms of warrant and other investigative action ( Salerno v National Crime Authority (1997) 75 FCR 133, particularly at 137-139); an order into quarantine ( Pacific Century Production Pty Ltd v Watson (2001) 113 FCR 466); and an order for examination under the Corporations Law ( Re Excel Finance Corporation Ltd (rec and mgr apptd ); Worthley v England ; (1994) 52 FCR 69) amongst many examples. In my opinion the primary judge could have gained assistance from the decision in Southern Farmers Group Ltd v Deputy Federal Commissioner of Taxation (SA ) (above), a case involving a s 263 notice, to which he was referred.

[14] The notion that a special form of deliberative adjudication is required for a 'decision' to be subject to the ADJR Act is contrary to the effect of s 3(2) of that Act which provides:

(2)

In this Act, a reference to the making of a decision includes a reference to:

(a)

making, suspending, revoking or refusing to make an order, award or determination;

(b)

giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission;

(c)

issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;

(d)

imposing a condition or restriction;

(e)

making a declaration, demand or requirement;

(f)

retaining, or refusing to deliver up, an article; or

(g)

doing or refusing to do any other act or thing;

and a reference to a failure to make a decision shall be construed accordingly.

What has taken place here might be seen as coming within each of (c), (e) and (g). The real point, however, is that this subsection is a clear indication that a unilateral act, that necessarily involves a prior decision to act, is a 'decision'.[ 15 ] In a passage cited with approval in Salerno v National Crime Authority (above) (at 138) Fox ACJ said in Evans v Friemann (1981) 53 FLR 229 (at 223):

The making of a decision by a person is a mental process, which may be communicated orally or in writing, or be apparent from action taken or not taken. The making of the decision might precede, by a very short, or by a long period, communication, or manifestation. There are many variables ...In ordinary usage, the special feature of a decision is its conclusiveness, or finality for the time being , and this is to be contrasted with the thought or consideration which precedes it. On the other hand a decision is not the same as a conclusion; the former normally has an objective, while the latter is more commonly associated with the end result of a process of thinking without the formation of an intention concerning future conduct. It would not be possible, even if the attempt were wise, to substitute a judicial exegesis for the word the legislature has used. For present purposes at least, it seems to me to amount to something of significance which is reasonably definite, which is final and conclusive for immediate purposes at least , which is manifested in some way, which emanates from an authoritative or responsible source, and which materially affects another person or persons.[emphasis added]

[16] To similar effect is the following passage from the judgment of Northrop J in Ricegrowers Co-operative Mills Ltd v Bannerman and Trade Practices Commission (1982) 38 ALR 535 (at 544):

In the present case, I do not find it necessary to give any definitive meaning to the word 'decision' appearing in s 13(1) of the Judicial Review Act. The mere thought processes taking place in the mind of the person when considering whether or how to exercise a power or to perform a duty of an administrative character under an enactment do not, in my opinion, constitute a decision. In addition to thought processes, there must be some overt act by which the conclusions reached as a result of those thought processes are manifested. The manifestation may take many different forms. It may take the form of a verbal or written communication of the conclusion to the person affected. It may take the form of action taken to give effect to the conclusion. It may take the form of no action being taken when otherwise a definite action would have been taken. In the present case, the conclusion reached by the Chairman of the Commission was that a notice under s 155 of the Trade Practices Act be served on Ricegrowers. The manifestation of that conclusion took the form of the service of the s 155 notice on Ricegrowers. I do not need to decide whether the issue of a s 155 notice is a sufficient manifestation to constitute a decision prior to that notice being served on the person to whom it is directed. It is sufficient to say that in the present case the notice was in fact served. In my opinion the determination by the Chairman to serve the s 155 notice on Ricegrowers carried into effect by the service of that notice, constitutes a decision within the meaning of that word where it appears in s 13(1) of the Judicial Review Act.[emphasis added]

[17] Giving of the notice in the present case necessarily involved a deliberate decision to do so. It matters not that the decision to act may have been easily made and difficult to challenge. It was a 'decision' under an enactment satisfying both criterion laid down by the High Court in Tang. There is no reason to require satisfaction of another criterion.

[18] I would allow the appeal, set aside the order dismissing the proceeding and in lieu thereof dismiss the motion and remit the proceeding to the docket judge; and order that the costs of the appeal and of the motion be applicant's costs in the cause.