FEDERAL COURT OF AUSTRALIA Guss v Deputy Commissioner of Taxation [2006] FCAFC 88 TAXES AND DUTIES – income tax and related legislation – Income Tax Assessment Act 1936 (Cth) – 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). Administrative Decisions (Judicial Review) Act 1977 (Cth) ss 3, 5, 6 Income Tax Assessment Act 1936 (Cth) Part IV Div 9 ss 222AGA, 222AHA, 222APB, 222APC, 222APE Attorney-General (Cth) v Queensland (1990) 25 FCR 125 cited Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 considered Carmody v Mackellar (1997) 76 FCR 115 cited Hutchins v Collins, Deputy Commissioner of Taxation (1996) 65 FCR 269 referred to DFCT v McArdle (2003) 53 ATR 302 cited DFCT v Woodhams (1999) 199 CLR 370 considered Director-General for Social Services v Chaney (1980) 31 ALR 571 referred to Evans v Friemann (1981) 53 FLR 229 considered Federal Commissioner of Taxation v Pilnara Pty Ltd (1999) 96 FCR 82 cited Forsyth v DCT (2004) 62 NSWLR 132 cited Griffith University v Tang (2005) 221 CLR 99 considered Guss v Deputy Commissioner of Taxation [2005] FCA 1499 affirmed Industrial Equity Ltd v Commissioner of Taxation (1990) 170 CLR 649 considered Pacific Century Production Pty Ltd v Watson (2001) 113 FCR 466 cited Re Excel Finance Corporation Ltd (rec and mgr apptd); Worthley v England (1994) 52 FCR 69 cited Ricegrowers Co-operative Mills Ltd v Bannerman and Trade Practices Commission (1982) 38 ALR 535 considered Ross v Costigan (1982) 59 FLR 184, cited Salerno v National Crime Authority (1997) 75 FCR 133 referred to Scharer v State of New South Wales (2001) 53 NSWLR 299 referred to Southern Farmers Group Limited v Deputy Federal Commissioner of Taxation (SA) (1989) 21 FCR 66 cited Woodhams v DCT [1998] 4 VR 309 referred to ANTONY DAVID GUSS v DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA VID 1469 OF 2005 GYLES, EDMONDS AND GREENWOOD JJ 8 JUNE 2006 SYDNEY (HEARD IN MELBOURNE) IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1469 OF 2005 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: ANTONY DAVID GUSS APPELLANT AND: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT JUDGES: GYLES, EDMONDS AND GREENWOOD JJ DATE OF ORDER: 8 JUNE 2006 WHERE MADE: SYDNEY (HEARD IN MELBOURNE) THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondent's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1469 OF 2005 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: ANTONY DAVID GUSS APPELLANT AND: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT JUDGES: GYLES, EDMONDS AND GREENWOOD JJ DATE: 8 JUNE 2006 PLACE: SYDNEY (HEARD IN MELBOURNE) REASONS FOR JUDGMENT 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 Limited 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 Limited 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 Limited v Deputy Commissioner of Taxation (above) each involved the decision to sue and, in the case of Strictly Stainless Pty Limited 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 Limited 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 issueof 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. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 8 June 2006 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1469 OF 2005 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: ANTONY DAVID GUSS APPELLANT AND: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT JUDGES: GYLES, EDMONDS AND GREENWOOD JJ DATE: 8 JUNE 2006 PLACE: SYDNEY (HEARD IN MELBOURNE) REASONS FOR JUDGMENT EDMONDS J: Introduction 19 This is an appeal from a judge of the Court (Sundberg J) dismissing as incompetent an application under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the ADJR Act') for an order of review: O 54 r 4 of the Federal Court Rules: Guss v Deputy Commissioner of Taxation [2005] FCA 1499. The basis of his Honour's conclusion that the application was incompetent appears from the final paragraph ([27]) of his Honour's reasons that neither of the decisions sought to be reviewed is 'a decision of an administrative character made … under an enactment': See the definition of the phrase 'decision to which this Act applies' in subs 3(1) and subs 5(1) of the ADJR Act. The APplication 20 The application sought an order in respect of two decisions of the respondent: '(a) [The decision] [o]n or about 28 June 2004 to issue and serve on me a Notice of Director's Liability to pay a Penalty pursuant to section 222APE of the Income Tax Assessment Act 1936 … ("the Notice") in respect to amounts said to be owing to the Respondent by Bongania Pty Ltd ["Bongania"] … ["the first decision"]. (b) [The decision] [o]n 20 July 2004 to institute against me proceedings in the Melbourne Magistrates Court being proceedings No. S01771028, alleging a debt against me by reason of a failure to comply with the Notice ["the second decision"].' 21 The application contained no grounds of review. It was supported by an affidavit of the appellant asserting that an officer of the respondent involved in making 'the decisions' was activated by bad faith. The Primary Judge 22 The learned primary judge held that the first decision was not reviewable. In his Honour's words (at [17]): '[17] … It is not a substantive determination. 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.' 23 His Honour held that the second decision was also not reviewable. In his Honour's words ([at 18]): '[18] Save that the relevant provision in the present case is s 255‑5(1) and (2) of the [Taxation Administration Act 1953 (Cth)] rather than ss 208 and 209 of the [Income Tax Assessment Act 1936 (Cth)] considered in [Golden City Car & Truck Centre Pty Ltd v Deputy Commissioner of Taxation (1999) 99 ATC 4131], the observations of Cooper J are applicable here. Sections 255‑5(1) and (2) of the TAA are equivalent in effect to s 208 and 209 of the ITAA.' The Appeal 24 The appellant's appeal is confined to his Honour's conclusion on the first decision. The notice of appeal contains five grounds: 1. The primary judge erred in finding that the respondent's decision to issue and serve a Notice of Director's Penalty pursuant to s 222APE of the Income Tax Assessment Act 1936 (Cth) ('the ITAA') ('the penalty notice') was not a reviewable decision pursuant to the Act. 2. His Honour erred in finding that the subject decision was not a substantive determination. 3. His Honour erred in finding that the subject decision was a mere procedural formality. 4. His Honour erred in not finding that the 'decision' was 'operative and determinative' to give rise to a liability pursuant to the provisions of the ITAA or the Taxation Administration Act 1953 (Cth) ('the TAA'). 5. His Honour erred in not finding that the 'decision' was conduct under the ITAA for the purposes of making a decision to which the ADJR Act applies. 25 On the hearing of the appeal the first ground was only pressed by reference to the second, third and fourth grounds and the fifth ground was, correctly in my view, abandoned. The appellant's application under the ADJR Act sought review of two decisions of the respondent – the first decision and the second decision: s 5(1) of the ADJR Act. The application did not seek review of conduct engaged in for the purpose of making a decision to which the ADJR Act applied: cf., s 6(1) of the ADJR Act. The Act is predicated on there being a true dichotomy between a decision on the one hand and conduct on the other. The Legislation and its Framework 26 The relevant legislative provisions and their framework were set out by the learned primary judge at [4] – [9] of his reasons. '[4] Division 8 of Part VI of the [ITAA] (ss 222AFA to 222AMB) is headed "Prompt recovery, through estimates and payment agreements, of certain amounts not remitted". Subdivision A – "Object and interpretation" – consists of ss 222AFA to 222AFC. Section 222AFA gives an overview of Division 8: "(1) The purpose of this Division is to enable the Commissioner to take prompt and effective action to recover amounts not remitted as required by Divisions 1AAA, 3B and 4 of this Act, or Part 2‑5 in Schedule 1 to the Taxation Administration Act 1953. (2) It does so by empowering the Commissioner to make an estimate of the amounts, and to recover the amount of the estimate. (3) Although an estimate creates a liability distinct from the underlying liability to remit amounts, the person liable can ensure that the Commissioner does not keep more than those amounts. (4) This Division also empowers the Commissioner to agree to a person paying off over a period liabilities under: (a) Division 1AAA, 3B or 4; or (b) this Division; or (c) Part 2‑5 in Schedule 1 to the Taxation Administration Act 1953." [5] Subdivision B – "Making, reducing and revoking estimates" – consists of ss 222AGA to 222AGG. Section 222AGA(1) provides: "If the Commissioner has reason to suspect that: (a) a person (the person liable) has become liable under a remittance provision to pay an amount to the Commissioner; and (b) the liability to pay that amount remains undischarged after the due date; the Commissioner may make what he or she thinks is a reasonable estimate of the unpaid amount of that liability." A "remittance provision" includes a provision in Schedule 1 to the Taxation Administration Act 1953 (TAA), s 16‑70, which deals with payment to the Commissioner of amounts withheld under Division 12 [of Schedule 1] to the TAA. Where the Commissioner has made an estimate, notice thereof must be given to the person liable: s 222AGB. [6] Section 222AHA(1), which is in Subdivision C – "Recovering unpaid amount of estimate" ‑ provides: "If the Commissioner makes an estimate and sends notice of it to the person liable or to the person's trustee, the person must pay to the Commissioner the amount of the estimate. This liability is called a liability to pay an estimate."' 27 I interpose that s 222AHA(2) provides: 'A liability to pay an estimate is separate and distinct from the liability to which the estimate relates. It is separate and distinct for all purposes. For example, the Commissioner may take proceedings to recover the unpaid amount of the estimate, proceedings to recover the unpaid amount of the liability to which the estimate relates, or both.' 28 His Honour continued: '[7] Division 9 (ss 222ANA to 222AQD) is headed "Penalties for directors of non‑remitting companies". Subdivision A – "Object and interpretation" ‑ consists of ss 222ANA to 222ANB. Section 222ANA gives an overview of Division 9: "(1) The purpose of this Division is to ensure that a company either meets its obligations under Division 1AAA, 3B, 4 or 8 of this Act, or under Subdivision 16-B in Schedule 1 to the Taxation Administration Act 1953 , or goes promptly into voluntary administration under Part 5.3A of the Corporations Act 2001 or into liquidation. (2) The Division imposes a duty on the directors to cause the company to do so. The duty is enforced by penalties. However, a penalty can be recovered only if the Commissioner gives written notice to the person concerned. The penalty is automatically remitted if the company meets its obligations, or goes into voluntary administration or liquidation, within 14 days after the notice is given. (3) A penalty recovered under this Division is applied towards meeting the company's obligations under the relevant Division. Conversely, amounts paid by the company reduce the amount of a penalty. (4) Sections 220AAZA, 221YHZJ and 221YR of this Act, and Part 4-15 in Schedule 1 to the Taxation Administration Act 1953, provide for the recovery of amounts payable under this Division." [8] Subdivision C – "Company failing to pay estimate under Division 8" ‑ consists of ss 222APA to 222API. The Subdivision applies if a company becomes liable under s 222AHA to pay an estimate: s 222APA. Section 222APB provides in part as follows: "(1) The persons who are directors of the company from time to time on and after the day when the Commissioner sent to the company notice of the estimate must cause the company to do at least one of the following within 14 days after that day: (a) pay to the Commissioner the amount of the estimate; (b) make an agreement with the Commissioner under section 222ALA in relation to the company's liability to pay the estimate; (c) appoint an administrator of the company under section 436A of the Corporations Act 2001; (d) begin to be wound up within the meaning of that Act. … (3) If this section is not complied with before the end of the 14 days, the persons who are directors of the company from time to time after the 14 days continue to be under the obligation imposed by subsection (1) until this section is complied with." [9] Section 222APC provides that if s 222APB is not complied with before the end of the 14 days, each person who was a director of the company at any time during that period is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the estimate. Section 222APE(1) provides in part: "The Commissioner is not entitled to recover from a person a penalty payable under this Subdivision until the end of 14 days after the Commissioner gives to the person a notice (the penalty notice) that: (a) sets out details of the unpaid amount of the estimate; and (b) if the penalty notice is given within 14 days after the Commissioner sent to the company notice of the estimate — states that at the end of those 14 days the person will become liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount unless: (i) the company's liability to pay the estimate has been discharged; or (ii) an agreement relating to that liability is in force under section 222ALA; or (iii) the company is under administration within the meaning of the Corporations Act 2001; or (iv) the company is being wound up; and … (d) states that the penalty will be remitted if, at the end of 14 days after the penalty notice is given: (i) the company's liability to pay the estimate has been discharged; or (ii) an agreement relating to that liability is in force under section 222ALA; or (iii) the company is under administration within the meaning of the Corporations Act 2001; or (iv) the company is being wound up."' 29 His Honour summarised these provisions (at [10] of his reasons) in the following way: '[10] … once a company becomes obliged to pay the amount of the estimate under s 222AHA, the provisions of Subdivision C of Div 9 (ss 222APA to s 222API) apply. The directors of the company must cause it to do at least one of the things set out in s 222APB within fourteen days after notice is given under s 222AGB. If they fail to do so, they become liable to pay a penalty: s 222APC. But the Commissioner cannot recover the penalty unless he gives notice under s 222APE which is not complied [with] within fourteen days of the giving of the notice.' 30 At [11] his Honour said: '[11] Part 4‑15 of Schedule 1 to the TAA (ss 250‑1 to 265‑65) (referred to in s 222ANA(4) of the ITAA) deals with "Collection and recovery of tax‑related liabilities and other amounts". Section 255‑5 of the TAA provides: "(1) An amount of a tax‑related liability that is due and payable: (a) is a debt due to the Commonwealth and (b) is payable to the Commissioner. (2) The Commissioner … may sue in his or her official name in a court of competent jurisdiction to recover an amount of a tax‑related liability that remains unpaid after it has become due and payable." Section 250‑10 lists various "tax‑related liabilities". One of them is "penalty under Subdivision C of Part 9 …. 222APE".' The Facts 31 The relevant facts do not appear to be in dispute and are set out at [12] of his Honour's reasons: '[12] At all relevant times the applicant was the sole director of Bongania Pty Ltd. On about 24 June 2004 the respondent estimated, pursuant to s 222AGA of the ITAA, the amount of the liability of Bongania under s 16‑70 of Schedule 1 to the TAA. The respondent sent written notice of the estimate to Bongania in accordance with s 222AGB of the ITAA. Accordingly Bongania became obliged, pursuant to s 222AHA, to pay the amount of the estimate. The applicant became obliged, pursuant to s 222APB, to cause Bongania to do at least one of the things listed in s 222APB within fourteen days. He did not do so, and accordingly he became liable, pursuant to s 222APC, to pay by way of penalty an amount equal to the unpaid amount of the estimate. On or about 28 June 2004 the respondent sent written notice to the applicant in accordance with s 222APE. A covering letter informed the applicant that action to recover the penalty would be taken without further notice if, after the end of fourteen days from the date the penalty notice is given to him, the penalty had not been remitted. On 20 July 2004 the respondent instituted proceedings in the Magistrates Court of Victoria for recovery of the unpaid amount.' Reasoning 32 Before addressing the specific grounds of appeal, it is, I think, appropriate to address the argument before the Court on the hearing of the appeal going to the proper characterisation of the 'penalty', that is, whether it is a penalty or a tax, and the effect of a penalty notice given pursuant to s 222APE on the recipient director's rights and obligations. 33 While I am not sure that anything turns on this from the point of view of the resolution of the ultimate issue, the appellant argued that the penalty was, in essence, the imposition of a tax on the appellant director. The respondent, on the other hand, contended that it was a true penalty and not a tax. 34 The issue of whether the penalty imposed by s 222AOC (the Subdivision B counterpart of s 222APC in Subdivision C) was a penalty or a tax was considered by the Victorian Court of Appeal in Woodhams v DCT [1998] 4 VR 309 and Phillips JA, with whom Tadgell JA and Batt JA agreed, concluded that it was a penalty and not a tax (at 321, 322). There is no reason to think that the same conclusion should not be reached with respect to the penalty imposed by s 222APC. 35 The appellant argued that the giving of the penalty notice affected legal rights or obligations of the recipient director in the sense that service of such a notice is a statutory pre-condition to recovery of the penalty. 36 The respondent argued that the purpose of the penalty notice was to inform the recipient director of the matters set out in pars (a), (b) and (d) or, alternatively (a), (c) and (d) of s 222APE(1). It was further contended on behalf of the respondent that the notice does not confer, alter or affect legal rights or obligations of the recipient director, in the sense that the notice does not: (a) require any compliance, or payment, by the director. The obligation to cause the company to meet its obligations or do one of the other things arises under s 222APB; (b) create a liability to pay a penalty. Liability is imposed by s 222APC and arises as a consequence of the failure of the director to comply with s 222APB within the time prescribed; (c) create a right of action in the respondent. The right of action arises under s 222APC and s 255-5 of the TAA. 37 Reliance was placed by the respondent on what was said by the High Court in DFCT v Woodhams (1999) 199 CLR 370 at [34] – [36] in relation to s 222AOE, which is the Subdivision B counterpart of s 222APE in Subdivision C: '[34] The primary source of guidance as to the statutory purpose of the notice before action required by s 222AOE is to be found in s 222ANA. Division 9 seeks to achieve the object that either the deducted amounts are remitted or paid to the Commissioner or the company is promptly taken out of the control of the directors and dealt with under the insolvency laws. [35] The notice in question is addressed to a director of the company. Such a person will ordinarily have access to information concerning the company's liabilities. The notice does not create a liability to pay a penalty, and if there is to be action to recover the penalty under s 221R it will be taken in the appropriate civil jurisdiction. In that event, the rules of court will require the elements of the cause of action to be pleaded and particularised in the ordinary way. A notice before action is not intended to serve the purpose of a statement of claim. [36] The first purpose of the notice is to inform the recipient of the unpaid amount of the company's liability under the remittance provisions, and of the recipient's liability to a penalty in the same amount. The second purpose, consistently with s 222ANA, is to inform the recipient of the alternative courses available, as set out in s 222AOE(b), which will result in remission of the penalty, the object being to encourage the recipient to take such steps as are necessary to bring about the result that one or other of those courses is followed.' See too DFCT v McArdle (2003) 53 ATR 302 at 306 [14], [15], per Davies JA, with whom Williams JA and Gerrard JA agreed; Forsyth v DCT (2004) 62 NSWLR 132 per Spigelman CJ at [42], [46] and [47]. 38 In my view, the giving of the penalty notice does not confer, alter or affect legal rights or obligations of the recipient director. The fact it removes a bar in the way of the respondent to take recovery action is, in my view, procedural and irrelevant to the ultimate issue. 39 In saying that a decision must be a substantive determination before it is reviewable under the ADJR Act, his Honour undoubtedly had in mind what was said in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 337 per Mason CJ that an '… essential quality of a reviewable decision is that it be a substantive determination'. A little later the Chief Justice explained what he meant by way of contrast with a procedural determination: 'To take an example, the refusal by a decision-maker of an application for an adjournment in the course of an administrative hearing would not constitute a reviewable decision, being a procedural matter not resolving a substantive issue and lacking the quality of finality.' 40 While it was concerned with the Judicial Review Act 1991 (Qld), recently in Griffith University v Tang [2005] 213 ALR 724, Gummow, Callinan and Heydon JJ said (at [89]): '[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. 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. 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.' 41 On the view I take, the first of these criteria is satisfied in the present case, but the second is not. When their Honours said: '… the decision must itself confer, alter or otherwise affect legal rights or obligations …', they could only be speaking from the point of view of the person who is 'aggrieved by [the] decision …', not the decision-maker. 42 The assertion that his Honour erred in not finding that the first decision was operative and determinative to give rise to a liability pursuant to the provisions of the ITAA or the TAA is again a reference to what was said by Mason CJ in Bond, supra, where the Chief Justice said (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.' 43 I do not find this extract from his Honour's judgment to be as helpful in resolving the ultimate issue on the facts of this case, as it appears to have been in resolving the ultimate issue on the facts in Bond. Here, the giving of the notice did not operate to give rise to a liability on the part of the appellant. No liability existed on the part of the appellant after the giving of the notice that did not exist prior to the giving of the notice by reason of the operation of s 222APC. The notice did not itself create any liability for the appellant; nor did it affect any existing right of the appellant, or create any right or obligation in the appellant going forward. 44 It follows, in my view, that none of the grounds of appeal can be sustained and the appeal must be dismissed. The appellant must pay the respondent's costs of the appeal. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. Associate: Dated: 8 June 2006 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 1469 OF 2005 ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA BETWEEN: ANTONY DAVID GUSS APPELLANT AND: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT JUDGE: GYLES, EDMONDS AND GREENWOOD JJ DATE: 8 JUNE 2006 PLACE: SYDNEY (HEARD IN MELBOURNE) REASONS FOR JUDGMENT GREENWOOD J Introduction 45 This appeal involves answering the question of whether the giving of a penalty notice by the respondent pursuant to ss 222APE(1) of the Income Tax Assessment Act 1936 (Cth) ('ITA Act') to the applicant concerning a liability in the applicant arising under s 222APC of the ITA Act arising out of an undischarged liability to the respondent by a company of which the applicant is a director, is a decision to which the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('ADJR Act') applies. 46 His Honour Justice Sundberg took the view that the ADJR Act had no application to the decision in question and dismissed as incompetent an application for an order of review. His Honour took the view that the respondent's election to give the applicant a notice on or about 28 June 2004 under the subsection was not the expression of a decision of an administrative character made or required to be made under an enactment. 47 I have had the benefit of reading draft reasons for judgment formulated by Edmonds J which identify the background facts, the statutory provisions and which provide an analysis of the reasons of his Honour Justice Sundberg in dismissing the application. I have also had the benefit of reading the draft reasons for judgment formulated by his Honour Justice Gyles. 48 In my view, the decision on the part of the respondent to issue the notice is not a decision of an administrative character for the purposes of the ADJR Act. Background 49 For the purposes of these reasons, I do not propose to set out the provisions of the legislation usefully dealt with by Edmonds J. The foundation facts are that the addressee of the notice, Mr Guss was at all material times the sole director of a company called Bongania Pty Ltd ('Bongania'). On 24 June 2004, the respondent made an estimate of the amount of an undischarged liability on the part of Bongania to the Commissioner under a remittance provision of the ITA Act. In making that estimate, the Commissioner exercised a power conferred by ss 222AGA(1) of the ITA Act to make, in the circumstances of the section, a reasonable estimate of the unpaid amount of the liability of Bongania. 50 In making that estimate, the Commissioner was entitled to have regard to anything the Commissioner thought relevant and some examples of relevant information are contained in ss 222AGA(2). 51 Having made the estimate, the Commissioner was by force of s 222AGB under an obligation to send written notice of the estimate to Bongania. On or about 24 June 2004, the respondent sent written notice of the estimate to the company. 52 Having made the estimate and sent notice of it to Bongania, a liability arose in Bongania to 'pay to the Commissioner the amount of the estimate': ss 222AHA(1). The subsection describes the liability thus arising as 'a liability to pay an estimate'. 53 Subsection 222APB(1) cast an obligation upon Mr Guss as the sole director of Bongania to cause the company to do one of four possible things within 14 days after the day on which the Commissioner sent Bongania notice of the estimate. Those four choices involved paying the Commissioner the amount of the estimate, making an agreement with the Commissioner for payment of Bongania's liability, appointing an administrator to Bongania under s 436A of the Corporations Act 2001 (Cth) or taking steps to begin the winding up of Bongania under the Corporations Act. If subs (1) was not complied with within the time limited, Mr Guss by operation of subs (3) continued to be under the obligation cast upon him by subs (1). 54 Section 222APC gives rise to a certain consequence for Mr Guss. It provides that if s 222APB is not complied with before the expiration of the 14 day period stipulated by s 222APB(1), each person who is a director of the company at any time during the 14 days is liable to pay to the Commissioner, by way of a penalty, an amount equal to the unpaid amount of the estimate. 55 On or about 28 June 2004, the respondent sent a notice to Mr Guss pursuant to s 222APE setting out details of the unpaid amount of the estimate. The notice is described as 'a penalty notice'. Subsection 222APE(1) provides: 'The Commissioner is not entitled to recover from a person a penalty payable under this Subdivision until the end of 14 days after the Commissioner gives to the person a notice ("the penalty notice") that: (a) sets out details of the unpaid amount of the estimate; and (b) … … and (d).' (Emphasis added) Subparagraphs (a) and (b) of the subsection deal with the following situation. If the penalty notice, as here, is given within 14 days after the Commissioner sends notice of the estimate to the company, the notice must state that at the expiration of 14 days, the addressee will become liable to pay an amount equal to the unpaid estimate by way of a penalty unless the company's liability has been discharged, an agreement is in force with the Commissioner, the company is under administration or is being wound up. The penalty notice must state that the penalty will be remitted if, at the end of 14 days after the giving of the penalty notice, one of the previous four things has occurred. 56 Section 222APC gives rise to the liability on the part of Mr Guss upon the event of non-compliance by Bongania with s 222APB. 57 That liability is a debt due to the Commonwealth in an amount equal to the unpaid amount of the Commissioner's estimate as a 'tax‑related liability' for the purposes of the Taxation Administration Act 1953 (Cth) ('the Act'): see Part 4–15 of Schedule 1 to the Act (ss 250‑1 to 265-65) and s 255-5 and s 250-10 of the Act. The debt is due and payable upon the occurrence of the event contemplated by the section. The Commissioner has an entitlement to be paid the debt so due and sue in a court of competent jurisdiction to recover the amount of the debt that remains unpaid after it has become due and payable (s 255-5(2) of the Act). In the ordinary course of events, the Commissioner in exercising powers for the purpose of the Act and the administration of the ITA Act, would seek to exercise enforcement or take recovery steps to secure payment of the debt due to the Commonwealth. By subsection 222APE(1), the Commissioner is not entitled to recover the amount of the liability until the expiration of 14 days after the giving of a notice which meets the statutory requirements. In the absence of a notice under the subsection, a director would have a complete answer to any enforcement proceeding for recovery of the debt. The Capacity to Affect Legal Rights and Obligations 58 In that sense, it seems to me that the decision affects legal rights and obligations albeit primarily an entitlement on the part of the Commissioner rather than Mr Guss. In Griffith University v Tang (2005) 221 CLR 99, the question for determination was whether a decision of Griffith University to exclude Ms Tang from the PhD candidature program conducted by the University was a decision made under the Griffith University Act 1998 (Cth). Their Honours Gleeson CJ and, in a separate joint judgment, Gummow, Callinan and Heydon JJ concluded that it was not. In the joint judgment, their Honours observed that there is conceptual risk in analysing the elements of a 'decision', 'of an administrative character' and made 'under an enactment' separately because notions inherent in each inform the other collectively. In particular, the question of whether a decision in question is a 'decision of an administrative character' informs whether the decision is one 'made under an enactment'. 59 In addressing the notion of whether a decision is 'of an administrative character', their Honours, Gummow, Callinan and Heydon JJ in the joint judgment, said this at [79] and [80]: '[79] 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". 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? [80] 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? [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 [Australian National University v 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) 60 It is important to keep in mind the precise question their Honours were seeking to elucidate in reflecting upon the 'affecting of legal rights and obligations' arising out of the decision. That question was whether the particular decision of the University to exclude Ms Tang, derived from the enactment (that is, Griffith University Act 1998), the capacity to affect legal rights and obligations so as to lead logically to the conclusion that the decision was 'made under an enactment'. The conjunction of the 'affect upon legal rights and obligations' (or the capacity to so affect) and the derivation of that affect from an enactment under which the decision is made, gives rise to the justiciable significance contemplated by their Honours that merits a right of judicial review in those aggrieved. 61 The answer to the question as a matter of general principle is reflected at [80] of their Honour's reasons. At [89], their Honours said this: '[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. 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. 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.' 62 In the application of those principles, although the committees of the University depended for their existence and powers upon delegations by the University Council under the Act, the exclusion decision was not made under the Act. The decision had no impact upon matters to which the enactment gave legal force and effect. 63 In this case, the legal right or entitlement of the Commissioner to recover the amount of the debt due to him is the subject of an absolute prohibition until a notice satisfying the statutory requirements is given under the section to the addressee and a period of 14 days expires after the Commissioner has given the penalty notice. Legal rights and entitlements in the Commissioner to seek recovery of the debt in a court of competent jurisdiction depend upon the presence of the decision to give the penalty notice. 64 Consistent with the views of their Honours, it seems difficult to conclude that the decision to issue the penalty notice is not a decision 'of an administrative character made under an enactment' having regard to the conjunction of the decision, the rights and obligations to which the enactment gives force, ss 222APE(1) and the capacity to affect legal rights and obligations. Should the Commissioner wish to free himself from the statutory prohibition erected against him by the section, he must give Mr Guss the penalty notice and in that sense the notice is made or required to be made under the ITA Act. 65 A question arises as to whether the giving of the penalty notice which removes the prohibition upon the entitlement of the Commissioner is a relevant effect or whether the decision must affect the legal rights or obligations of Mr Guss. Mr Guss has no right to receive a penalty notice. The failure to give a penalty notice, in effect, immunizes Mr Guss from recovery proceedings. However, the continuing obligation of Mr Guss to pay the debt remains to be discharged from the moment it arises. The giving of or failure to give the penalty notice would no doubt affect the disposition of the addressee to discharge the obligation. Since no recovery action could be competent without the giving of the notice (and the expiration of the time limited by the notice), the obligation to pay the debt may well not be discharged without the giving of the notice. In that practical sense, the giving of the notice has an effect upon the obligation arising in Mr Guss to pay the debt due to the Commonwealth. 66 It is true that the challenged decision to give the penalty notice does not effect the content of the obligation or the legal character of the obligation as a debt due to the Commonwealth or give rise to a liability that does not otherwise arise under the ITA Act. However, it seems to me that the decision to issue the penalty notice has an effect upon the rights and entitlements of the Commissioner and a practical affect upon the legal obligation of the addressee to pay the debt due to the Commonwealth as that obligation is unlikely to be discharged by a director of a defaulting company, without the notice. 67 In Deputy Commissioner of Taxation v Woodhams (1999) 199 CLR 370 at 384, their Honours Gleeson CJ, McHugh, Gummow, Kirby and Callinan JJ described in a way entirely applicable to a penalty notice pursuant to s 222APE, the purpose of a notice of this kind. Their Honours observed that such a notice does not create a liability in the addressee to pay an amount by way of penalty. The source of the liability here is s 222APC. The question of whether a decision is one of an administrative character made under an enactment is not simply to be determined by whether legal rights and obligations owe their existence to the statutory instrument but also whether a decision to issue the notice derives from the statute the capacity to effect legal rights and obligations. Since the decision to give the penalty notice does have the relevant affect, the entirely correct recognition that the penalty notice is not the source of the liability is not, it seems to me, necessarily decisive of the incompetence of the application for an order of review. 68 It seems to me the decision to issue a penalty notice derived from ss 222APE(1) the capacity to effect legal rights and obligations that, in this case, involved a right in the Commissioner to recover a debt due to the Commonwealth and an obligation of Mr Guss to discharge that debt. That obligation arose under the ITA Act and the capacity or entitlement of the Commissioner to recover the debt was made dependent upon the giving of the notice and the expiration of the relevant time. 69 For the reasons identified at [6] to [8] of the reasons for judgment of Gyles J, I am not satisfied that the authorities relied upon by the primary judge establish that the decision to give the penalty notice was merely procedural or did not, having regard to what I have already said, have the capacity to affect legal rights and obligations of the parties. I am not satisfied that it is a sound approach to characterise the decision to give the penalty notice as a 'conclusion reached as a step along the way' in the sense contemplated by Mason CJ at 337 in Australian Broadcasting Tribunal v Bond & Ors (1990) 170 CLR 321 at 337. A 'Decision' of an Administrative Character 70 Mindful of the important cautionary observations of their Honours in the joint judgment in Griffith University v Tang (supra) concerning the risks necessarily inherent in a disjunctive consideration of each element comprising the expression 'a decision of an administrative character made or required to be made under an enactment', it nevertheless remains important to consider the true colour of the phrase 'decision of an administrative character' and in particular whether the decision to give a penalty notice is a 'decision' for the purposes of the ADJR Act. Just as 'decision of an administrative character' casts light on the force to be given to the phrase 'under an enactment', the deliberative processes inherent in administrative decision‑making crystallising in a final and conclusive decision informs the force to be given to the notion of a 'decision' for the purposes of the ADJR Act. Plainly enough, the decision by the responsible officer of the respondent is a decision in the sense that the officer turned his (in this case) mind to the giving of the notice. There is no suggestion that the penalty notice is incompetent in the sense that it lacked authority. However, a question arises as to whether the decision to give the penalty notice involved a decision 'reflecting something in the nature of a determination of an application, inquiry or dispute or, in the words of Deane J, "a determination effectively resolving an actual substantive issue"': Australian Broadcasting Tribunal v Bond (supra) per Mason CJ at 336. Recognising that the notion of a decision for the purposes of the ADJR Act has a 'relatively limited field of operation' (Australian Broadcasting Tribunal v Bond, per Mason CJ at 336), a question arises whether the decision, the subject of the present application, is a decision that attracts the operation of the ADJR Act. 71 Only two matters were required to be determined by the decision‑maker in giving the penalty notice under ss 222APE(1). First, whether an estimate had been made by the Commissioner under ss 222AGA(1) of the ITA Act and notice of that estimate given to Bongania. Secondly, whether Mr Antony David Guss was, at the material time, a director of Bongania. Since the same decision‑maker gave both notices, he was the source of the knowledge as to the first. No further inquiry or assessment of fact was required. The determination of the material fact that Mr Guss was, at the relevant time, a director of Bongania, did not give rise to any element of analysis, weighing of competing considerations by reference to any statutory criteria, assessments of the weight or balance to be struck in examining a body of fact or contention, the assessment of the proper application of policy considerations, the evaluation of conflicting merits or other such matters. It simply involved examining the records of the Australian Securities and Investment Commission to isolate, based upon returns Bongania was required to lodge for just such a purpose, whether Mr Antony David Guss was recorded as a director of that company. 72 In one sense, it is of no matter to the Commissioner whether Mr Guss or his wife, neighbour or any other person is a director of Bongania at the material time. All that matters is the giving of a penalty notice to the person who occupies the office at the material time and who is the subject of a liability under the Act by force of s 222APC (or a potential liability subject to the remission of the penalty in the circumstances contemplated by ss 222APE(1)). Of course, once Mr Guss is identified as the relevant person by reason of the Australian Securities and Investment Commission's records, it is critical that the penalty notice is addressed and given to the individual who corresponds with those details because the penalty notice has the capacity to affect the bilateral legal rights and obligations of the Commissioner and that particular individual. Importantly, the question of whether the Commissioner, in exercising the power conferred by ss 222AGA(1), reached a "reasonable estimate" of the amount of the undischarged liability of Bongania to the Commissioner under a remittance provision of the ITA Act or whether, for the purposes of ss 222AGA(2), the Commissioner took into account relevant considerations as the Commissioner was required so to do, is something which no doubt required the relevant measure of deliberation, assessment of statutory criteria and evaluation of particular facts so far as that decision affected Bongania. 73 The provisions of the ITA Act confer certain defences and entitlements upon the company in relation to a notice addressed to it. However, the decision the subject of the challenge in these proceedings is a decision to issue a notice under ss 222APE(1), to Mr Guss. Does that decision reflect the characteristics of a decision for the purposes of the ADJR Act? 74 In Australian Broadcasting Tribunal v Bond, Mason CJ, with whom Brennan and Deane JJ agreed, considered that a decision must reflect something in the nature of a resolution or determination of matters the subject of inquiry or dispute and those matters ought to reflect an actual issue of substance. His Honour considered the examples of the subject matter listed in s 3(2) of the ADJR Act and characterised those matters as 'also indicative of a decision having the character or quality of finality, an outcome reflecting something in the nature of a determination of an application, inquiry or dispute' at 336. His Honour regarded the characterisation of that subject matter as indicative of the essential notion inherent in the primary sense in which the term 'decision' is used in the ADJR Act and also observed that an 'essential quality of a reviewable decision is that it be a substantive determination' at 337. 75 It seems to me, consistent with authority, that a 'decision of an administrative character' in its primary sense (leaving aside for the moment the extended meaning of the term by force of s 3(2) of the ADJR Act) must exhibit two central features. First, there must be a determination, a resolution, a position taken, a judgment made by a decision‑maker. Secondly, that determination must be the emanation of a consideration by the decision‑maker or structural organs of an organisation charged with making a determination, of a matter of substance that necessarily involves some feature of deliberation, assessment or analysis that, in the ordinary course, would comprehend those facets of decision‑making behaviour described at [71]. 76 In a number of cases in the Federal Court of Australia, considerable important intellectual effort has been engaged in seeking to plot the point on the continuum at which a decision arose. Was the 'decision' the overt act of communication such as the despatch of a letter, the making of a ruling, the granting of a bylaw, the issue of a notice or, was the decision to be found in the pre‑existing deliberative behaviour or 'mental process' (Evans v Friemann (1981) 53 FLR 229 at 233, per Fox ACJ) or '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' (Ricegrowers Cooperative Mills Ltd v Bannerman and Trade Practices Commission (1981) 38 ALR 535 at 544 per Northrop J). In Ricegrowers, Northrop J took the view that a decision for the purpose of the ADJR Act must reflect a conjunction of such thought processes and 'some overt act by which the conclusions reached as a result of those thought processes are manifested'. His Honour further observed at 544 that: '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 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.' 77 His Honour also said at page 544: 'I do not need to decide whether the issue of an 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.' 78 The point of immediate relevance is that the giving and service of the notice under s 155 of the Trade Practices Act 1974 (Cth) reflected both a determination of the chairman and the overt act of the giving of the notice. In other words, the giving of the notice, taken as the decision, was the emanation of a very important evaluation and deliberation of those facts and circumstances which caused the chairman to have 'a reason to believe' that Ricegrowers may have information going to the question of whether a contravention of the Trade Practices Acthad occurred which enabled a determination to be made and thus a valid notice to issue. Although the notice was the expression of the decision, it reflected two essential features. First, an evaluation of the critical statutory matters leading to the determination and the overt act of giving and serving the notice. Their Honours, Bowen CJ, Franki and Northrop JJ found it unnecessary to decide the precise content of the 'decision' because the schedule to the ADJR Act operated to exempt the subject matter from the operation of the Act and, accordingly, the Commission was not required to provide reasons for the decision pursuant to s 13(1) of the ADJR Act. 79 In Evans v Friemann (supra), the question was whether a written notification from the Secretary of the Board of Examiners advising Mr Evans that he had passed one and failed two written examinations required of a candidate for admission as a patent‑attorney, was susceptible to challenge as a decision for the purposes of the ADJR Act. His Honour examined the notion of a 'decision' and the 'making of a decision' and concluded that the subject matter of the evaluation was something of significance which led to a reasonably definite, final and conclusive (for immediate purposes) determination expressed in the letter from the Secretary but arising out of the processes of evaluation of the candidate's papers. In Salerno v National Crime Authority & Ors (1997) 75 FCR 133 at 138, their Honours von Doussa, Drummond and Mansfield JJ, observed that the formulation in Bond and Attorney‑General (Cth) v Queensland (1990) 25 FCR 125 of the characteristic of finality or operative effect which a determination must have, could be traced to the judgment of Fox ACJ in Evans v Friemann. 80 In 1980, his Honour Justice Deane, in Director‑General for Social Services v Chaney (1980) 31 ALR 571, as a member of a Full Court comprised of Northrop, Deane and Fisher JJ, considered the notions inherent in the meaning of the word 'decision' in the context of s 44(1) of the Administrative Appeals Tribunal Act 1975. His Honour found the definition of the term in the legislation of little assistance and expressed these observations: 'The word "'decision" is a word of indeterminate meaning. In some contexts, it can refer to the mental process of making up one's mind. In the context of judicial or administrative proceedings, the word will ordinarily refer to an announced or published ruling or adjudication. In such a context, the word "'decision" may be apt to include the determination of any question of substance or procedure, including, for example, rulings on procedural questions such as whether particular evidence should be received, or the meaning of the word may be limited to a determination effectively resolving an actual substantive issue. When the word "decision" has the last mentioned limited meaning it can refer to any such determination whether final or indeterminate (see, eg, Registrar of Workers' Compensation Commission v FAI Insurances Ltd [1977] 1 NSWLR 422 at 448) or be limited to referring only to a determination which effectively disposes to the matter in hand (see, eg,Winter v Winter (1933) NZLR 289 at 295; Penniel v Driffill [1980] WAR 30 at 32)." 81 Justice Deane's notion that a decision ought to reflect a determination effectively resolving an actual substantive issue, was adopted by Mason CJ in Australian Broadcasting Corporation v Bond (supra) in explaining the characteristics of a 'decision' for the purposes of the ADJR Act in defining the 'relatively limited field of operation' of that term. The notion of a resolution or a determination bringing a substantive issue to finality was contrasted with a procedural step which exhibited none of those characteristics and might properly be described as merely a conclusion reached along the way in the course of reasoning leading to an ultimate decision. His Honour, Mason CJ, expressed the view at 338, consistent with the opinion expressed by Ellicott J in Ross v Costigan (1982) 59 FLR 184 that the word 'decision' means an ultimate or operative determination. However, his Honour observed at 338 that to characterise a reviewable decision as one reflecting an ultimate or operative determination does not mean that antecedent conclusions or findings which contribute to the ultimate or operative decisions are beyond reach. A review of the ultimate or operative decision will necessarily 'expose for consideration the reasons which are given for the making of the decision and the processes by which it is made'. 82 It seems to me that what follows from these observations is that the resolution of an issue (particularly an issue of substance) leading to an operative determination must necessarily engage a process of reasoning. In order for a decision to attract the operation of the ADJR Act as a 'decision' of an administrative character, the decision must reflect a conjunction of these features (see also [75]). If an immediately final decision reflected in the issue of a penalty notice does not exhibit the characteristics of a resolution or a determination of a matter in issue deriving from a process of reasoning whether that resolution engages a complex or an entirely unsophisticated process of reasoning, there is no 'decision' for the purposes of the ADJR Act, in this primary sense of the word. 83 Notices issued under the much litigated ss 263 and 264 of the ITA Act are said to be illustrations of the issue of a notice which attracts the operation of the ADJR Act even though those notices are issued unilaterally by the Commissioner and are the exercise of the power untrammelled by any deliberative process. In Industrial Equity Limited v Deputy Commissioner of Taxation (1990) 170 CLR 649, Industrial Equity Limited ('IEL') and Bankers Trust Australia Ltd ('Bankers Trust') sought to set aside a decision made by the Deputy Commissioner of Taxation and an officer of the Deputy Commissioner, Mr Crawley, to issue a document to another officer of the Deputy Commissioner, Mr Carroll, authorising that officer to exercise a right of full and free access to premises occupied by Bankers Trust and documents held by Bankers Trust. IEL also sought to set aside decisions of the Deputy Commissioner requiring IEL to produce particular records for inspection. Those orders were sought by way of order of review pursuant to the ADJR Act. Each application for an order of review resolved ultimately into a question of whether the exercise of the power was for a purpose under the ITA Act. 84 In those proceedings, it was not disputed that a decision to invoke the power under ss 263 and 264 is a decision to which the ADJR Act applies. That concession seems entirely correct as the decision to invoke the power was an operative determination of a matter of substance involving a deliberative consideration of matters central to the exercise of the power. In that sense, the issue of the notices under the sections was the emanation of a quite serious deliberative process. At 655, their Honours Mason CJ and Brennan, Deane, Dawson, Toohey and McHugh JJ described the features or factual matrix of that deliberation in these terms: '… Mr Crawley said that the Commissioner of Taxation "was and is conducting an audit" into the taxation affairs of IEL and associated entities for the period 1 July 1984 to 30 June 1988; that IEL was a client of Bankers Trust during the period; that Mr Crawley believed Bankers Trust held records relevant to the affairs of IEL during the period in question; that Mr Crawley believed gaining access to those papers would assist in the taxation audit; and that: "It is most important that the Commissioner be in possession of all the material facts and information necessary to determine the taxation liability of Industrial Equity Ltd and associated entities".' 85 Southern Farmers Group Limited v Deputy Commissioner of Taxation & Ors (1989) 21 FCR 66 is to similar effect. 86 Having considered those matters, the decision‑maker reached an operative resolution or determination as the emanation of a deliberative process directed to the relevance and utility of the notices in the conduct of the particular tax audit of the taxation affairs of IEL, and issued the notices. 87 To similar effect is the decision in Salerno v National Crime Authority (supra) where the Full Court of the Federal Court (von Doussa, Drummond and Mansfield JJ) concluded that a decision of the National Crime Authority ('NCA') to utilise a general warrant (pursuant to s 67 of the Summary Offences Act 1953 (SA)) as the basis of a power to enter and search premises and seize material was a determination of sufficient operative effect, materially affecting the legal rights of the addressee of the warrant so as to constitute a 'decision' for the purposes of the ADJR Act. The determination to utilise the warrant was grounded upon an evaluation of those facts and circumstances which enabled a proper warrant to issue. A warrant under the section could not issue without the NCA first being satisfied of the relationship between the conduct of the respondent to the warrant and the investigation in question. A further question involved the utility of the general warrant for the purposes of investigations undertaken by the NCA. No warrant could issue as a unilateral step on the part of the decision‑maker without undertaking not only a deliberative process leading to the issue of the warrant but a careful and responsible deliberative process. 88 It is true that there are many examples in the authorities of a notice being issued or an instrument being brought into existence affecting legal rights and obligations which is taken to be the decision of the decision‑maker. However, in each of those cases the issue of the notice or the instrument is a decision because it reflects an operative determination or resolution of a question in issue (normally of substance) arising out of a process of deliberative evaluation of relevant facts and circumstances upon which the issue of the instrument or notice is predicated. His Honour Justice Gyles in his draft reasons for judgment has identified a number of authorities concerning notices and instruments (such as warrants) which are examples of a unilateral decision not exhibiting any element of deliberation. However, it seems to me that these examples cited by his Honour are, with respect, consistent with the principle identified at [75] and [82] of these reasons. 89 For example, the decision of the Full Court of the Federal Court in Federal Commissioner of Taxation v Pilnara Pty Ltd (1999) 96 FCR 82 involved a question concerning the validity of a notice issued by the Commissioner pursuant to s 264A of the ITA Act. That section conferred a power upon the Commissioner to issue a notice requiring the provision of information or documents relevant to the assessment of a taxpayer being documents outside Australia and information within the knowledge of a person outside Australia. In order for the Commissioner to issue a valid notice, that is, make a valid decision, it was necessary for the Commissioner subjectively to hold the relevant belief concerning a range of particular matters and also for there to be an objective reason for that belief. The issue of the notice was, in every sense, an operative determination arising out of a process of deliberative evaluation of the matters required to be considered upon which the issue of the notice depended. 90 The same position obtains in respect of the warrants issued under the Customs Act 1901 (Cth) and the Telecommunications (Interception) Act 1979 (Cth) in Carmody v McKellar & Ors (1997) 76 FCR 115 (Black CJ, Lindgren and Sackville JJ) where particular connecting factors had to be assessed and a view formed before the warrants could issue. In Pacific Century Production Pty Ltd v Watson (2001) 113 FCR 466 (Whitlam, Dowsett and Stone JJ) the decision to order into quarantine all citrus and grape plants, plant material and plant products located on a particular property under s 35 of the Quarantine Act 1908 (Cth) was the emanation of deliberative evaluation of the conduct of the appellant company in smuggling plant cuttings into Australia and the grafting of those cuttings to plants at the relevant property. The decision did not issue as a unilateral determination divorced from any operative determination upon important deliberative matters upon which the exercise of the power depended. 91 There may be very few circumstances of administrative decision‑making where there is no evident operative determination or resolution emanating from an engaged process of reasoning or a consideration of particular facts and circumstances the resolution of which are required to enable a document, notice or instrument to issue as the overt manifestation of the decision. 92 It seems to me that the issue of a penalty notice to Mr Guss is one such decision. 93 The pre‑existing and independent decision on the part of the Commissioner to make and serve an estimate of the amount of the undischarged liability on the part of the company to the Commissioner under a remittance provision of the ITA Act is of an entirely different character. The bilateral relationship between the Commissioner and Bongania does involve deliberative considerations and the Act itself makes express provision for the considerations the Commissioner must take into account and particular steps open to Bongania in responding to such an estimate. 94 The decision under challenge in these proceedings to issue the penalty notice does not involve any of those considerations and is secondary in nature. It represents a consequential but independent decision to issue a notice to a man who occupied the position of director of the company at the material time and is the subject of a liability to the Commonwealth by operation of the ITA Act. The effect of the penalty notice is to remove (upon the expiration of the relevant time) the prohibition upon enforcement proceedings. In those proceedings, the Commissioner must establish the debt due to the Commonwealth. In that forum, the defendant is entitled to raise any matter that relevantly answers the Commissioner's claim. The process contemplated by the ITA Act is that the Commissioner will seek to recover debts due to the Commonwealth by taking enforcement proceedings once the constraint of the prohibition no longer applies. The Extended Definition of a Decision 95 Section 5(1) of the ADJR Act gives standing to a person aggrieved by a decision of an administrative character made, proposed to be made or required to be made under a relevant enactment, to seek an order of review on particular grounds. Section 3(2) of the ADJR Act provides that a reference to the 'making of a decision' includes a reference to seven classes of particular subject matter. They are: '(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 commission; (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 is to be construed accordingly.' 96 As Fox ACJ observed in Evans v Friemann (supra) at 233, the classes of subject matter in s 3(2) 'place emphasis upon the manifestation, that is, on the conduct from which the making of a "decision" will be presumed. In this sense, the subsection could be said to be largely evidentiary in effect'. In that sense, it is not necessary so far as the seven classes of conduct are concerned, to identify whether the decision is the act comprehended by s 3(2) or some other pre‑existing deliberative outcome of which the act is the overt manifestation. The making of a decision includes each class of conduct. 97 However, s 3(2) has the effect that a reference to the making of a decision includes a reference to the seven classes of subject matter. Section 3(2) does not bring each class of conduct within the scope of a 'decision' unless engaging in the nominated subject matter also involves an operative determination of a matter in issue derived from an engaged process of reasoning. The act falling within s 3(2) must be the emanation of a deliberative process of the kind described at paragraphs [75] and [82] reflecting the characteristics identified by his Honour the Chief Justice in Australian Broadcasting Tribunal v Bond (supra). His Honour, at 336, gave consideration to the characterisation of the subject matter in s 3(2) and relied upon that characterisation as indicative of the meaning of 'decision' in its primary sense. The extended inclusive reference to the making of a decision does not have the effect that an act relied upon as presumptive evidence of the decision can be relied upon as a decision for the purpose of the ADJR Act notwithstanding that the act within s 3(2) fails to exhibit the essential features of a decision in the primary sense of the term. In other words, if the act relied upon is not an operative determination of a matter of substance emanating from a deliberative process of reasoning, sophisticated or unsophisticated, there is no decision for the purposes of the ADJR Act. 98 If, however, it is, then the act within s 3(2) is thedecision. 99 As to the extended definition, Mason CJ said this in Australian Broadcasting Tribunal v Bond (supra) at 336 in considering the essential elements of a 'decision': 'Secondly, the examples of a decision listed in the extended definition contained in s 3(2) are also indicative of a decision having the character or quality of finality, an outcome reflecting something in the nature of a determination of an application, inquiry or dispute …' (see the extended observations at [62] of these reasons). 100 At 337 in relation to s 3(2) and specifically s 3(2)(g), his Honour the Chief Justice said this: 'Another essential quality of a reviewable decision is that it be a substantive determination. With the exception of s 3(2)(g), the instances of decision mentioned in s 3(2) are all substantive in character. Moreover, the provisions in sub-ss (1), (2), (3) and (5) of s 3 point to a substantive determination. In this context the reference in s 3(2)(g) to "doing or refusing to do any other act or thing" (emphasis added) should be read as a reference to the exercise or refusal of exercise a substantive power.' 101 Consistent with his Honour's observations, a decision for the purposes of the extended definition must reflect those features described in these reasons. 102 The decision to issue the notice is not a 'decision' which is susceptible of an order of review. The decision to issue the penalty notice flows from a clinical fact that Mr Antony David Guss was a director of Bongania at the material time and by operation of s 222APC a liability would arise in him upon non-compliance by Bongania with s 222APB within the time limited by the section. No process of reasoning, even a rudimentary process, was involved in the election to give a penalty notice to Mr Guss. 103 As to the submission of the appellant that the imposition of a liability upon the appellant director to pay an amount equal to the unpaid amount of the estimate 'by way of a penalty' is, in essence, the imposition of a tax, I adopt the reasoning of Edmonds J on that question and am satisfied the amount of the tax is a true penalty. 104 Accordingly, I would dismiss the appeal and order the appellant to pay the respondent's costs of the appeal. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 8 June 2006 Counsel for the Appellant: Mr D Dealehr Mr L M F Watts Solicitor for the Appellant: Poulton Elliott & Grey Counsel for the Respondent: Ms D Harding Solicitor for the Respondent: ATO Legal Services Branch Date of Hearing: 10 May 2006 Date of Judgment: 8 June 2006