FEDERAL COURT OF AUSTRALIA JUDICIAL REVIEW – Character of decision - whether decision not to amend or not to waive – whether decision not to amend taxation assessment excluded from operation of Administrative Decisions (Judicial Review) Act 1977 by par (e) of Sch 1 of Administrative Decisions (Judicial Review) Act 1977 – whether the exercise of a general administrative power to waive an assessment is a "decision" within meaning of Administrative Decisions (Judicial Review) Act 1977. INCOME TAX – Assessments – where applicants seeking judicial review of a decision by respondent not to amend or not to waive taxation assessment – whether respondent has a duty to treat taxpayers in similar situations in a like manner – whether respondent has a general administrative power wide enough to enable him to waive an assessment. PRACTICE – Notices of objection to competency – whether filed outside time period prescribed by O 54 r 4 – whether notices of objection to competency meritorious – whether court should extend time pursuant to O 3 r 3. Taxation (Unpaid Company Tax) Assessment Act 1982 (Cth) s 5(4), s 6(18) Income Tax Assessment Act 1936 (Cth) s 260, 265, s 8, s 208, s 209 Administrative Decisions (Judicial Review) Act 1977 (Cth) s 5, 6, par (3), Sch 1 Federal Court Rules (Cth) O 54 r 4; O 3 r 3 Pickering & Ors v Federal Commissioner of Taxation (1997) 97 ATC 4893, considered Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, considered Constable Holdings Pty Ltd v Federal Commissioner of Taxation (1987) 72 ALR 265, considered Precision Pools Pty Ltd v Federal Commissioner of Taxation (1992) 92 ATC, considered Hutchins v Deputy Federal Commissioner of Taxation (1996) 96 ATC 4372, followed Penelope G Pickering v Deputy Commissioner of Taxation QG 153 of 1997 Carmel M Pickering v Deputy Commissioner of Taxation QG 154 of 1997 Melanie A Pickering v Deputy Commissioner of Taxation QG 155 of 1997 Jamieson L Pickering v Deputy Commissioner of Taxation QG 160 of 1997 Dowsett J Brisbane 30 September 1998 IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 153 of 1997 BETWEEN: PENELOPE G PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 154 of 1997 BETWEEN: CARMEL M PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 155 of 1997 BETWEEN: MELANIE A PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 160 of 1997 BETWEEN: JAMIESON L PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent DOWSETT J JUDGE(S): DATE OF ORDER: 30 SEPTEMBER 1998 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The respondent is to give verified discovery of all documents relevant to the exercise of the discretion pursuant to s 5(4) of the Taxation (Unpaid Company Tax) Assessment Act 1982 on or before the 30 October 1998. 2. The applicant is to inspect documents in the week commencing the 22 November 1998 in the office of the Australian Government Solicitor Brisbane. 3. Pursuant to O 3 r 3, time is extended to permit the respondent to apply pursuant to O 54 r 4 to object to the competency of that part of the applicant's application for judicial review as relates to a review of a "decision" made under the Income Tax Assessment Act 1936. 4. That such parts of those applications for judicial review brought by the applicants pursuant to the order of Cooper J, as refer to the respondent having made a decision under the Income Tax Assessment Act 1936 (as amended), be struck out. 4. Costs are to be costs in the cause. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 153 of 1997 BETWEEN: PENELOPE G PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 154 of 1997 BETWEEN: CARMEL M PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 155 of 1997 BETWEEN: MELANIE A PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG 160 of 1997 BETWEEN: JAMIESON L PICKERING Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent JUDGE(S): DOWSETT J DATE: 30 SEPTEMBER 1998 PLACE: BRISBANE REASONS FOR JUDGMENT The rather involved facts giving rise to these applications appear in detail in the reasons of Cooper J in application QG 207 of 1996, published on 5 September, 1997. See Pickering & Ors v Federal Commissioner of Taxation (1997) 97 ATC 4893 at pp 4894-7. For present purposes it is sufficient to summarize the matter. The applicant, Carmel Pickering is married to Lawrence Pickering, although they are separated. They have 5 children. Three of them, Melanie, Jamieson and Penelope, are also applicants. The other children are Toni and Stephanie. The four applicants, Toni and Stephanie, were all assessed to taxation pursuant to the Taxation (Unpaid Company Tax) Assessment Act 1982 (Cth) (the "TUCT Act"), as a result of their involvement with two companies, Gingpicker Promotions Pty Ltd and YUP Productions Pty Ltd. These assessments related to the tax years ended 30 June, 1977, 30 June, 1978, 30 June, 1979 and 30 June, 1980 and were in connection with primary and secondary taxable amounts of Gingpicker and secondary taxable amounts of YUP. In addition, they were assessed to income tax for the year ended 30 June, 1980 in reliance upon the provisions of s 260 of the Income Tax Assessment Act 1936 (Cth) (the "s 260 assessments"), apparently upon the basis that the use of the company structures was avoided against the respondent by virtue of that section. Under the TUCT Act, the respondent has a discretion pursuant to s 5(4) to conclude that it is "unreasonable that the primary taxable amount should be taken to exist or to have existed" in relation to a particular person, in which case the primary taxable amount "shall not be taken to exist or have existed in relation to (that) person." There is a similar discretion conferred by s 6(18) in respect of secondary taxable amounts. On 23 November, 1994 the respondent indicated that he had exercised his discretion under s 5(4) to release Stephanie from tax liability under the TUCT Act. He did not say that he had exercised the discretion under s 6(18), although Cooper J, in the earlier application, proceeded upon the basis that he had done so. It was not suggested in argument that I should proceed on any other basis. In the letter of 23 November, 1994 the respondent also indicated that Stephanie's s 260 assessment would be "amended to nil". I understand that this has occurred. Toni has been similarly released from liability under the TUCT Act and from her s 260 assessment. On 23 January, 1995 Mr R J Huntington applied to the respondent on behalf of Mrs Pickering, Melanie and Jamieson for relief from their various liabilities. There were two applications on behalf of each of them. The first requested "that the assessment issued … under the Taxation (Unpaid Company Tax) Assessment Act be reduced to nil." The second requested relief pursuant to s 265 of the Income Tax Assessment Act from payment of the assessments under the TUCT Act on the grounds that:- "A. The extraction of payment of any part of the amount due will entail hardship in that the taxpayer does not have funds to pay any part of the amount assessed. B. The taxpayer is in such financial circumstances that the extraction of payment will cause hardship." Mr Huntington also asked the respondent to, "Please forward to this office formal documents for release from payment of income tax for completion by the taxpayer." The respondent replied on 1 February, 1995 enclosing appropriate documents for an application pursuant to s 265. At the same time, the respondent indicated, with respect to the TUCT Act assessments, that any request for amendment was out of time, but that he would treat the applications as applications for waiver pursuant to s 5(4). Recovery action was to be deferred until the applications for release were received. On 2 February, 1996 the respondent informed the applicants that he declined to grant waivers pursuant to sub-section 5(4). In the proceedings before Cooper J, it was assumed that similar applications had been made on behalf of Penelope. Following his Honour's judgment, Penelope's legal advisers discovered that no such applications had been made. Obviously, there had therefore been no decision contrary to her interests. In those circumstances, relevant applications were made on 25 September, 1997. These applications have not been dealt with by the Respondent. The only significance of this is that Penelope's current application is pursuant to s 6 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the "ADJR Act") whilst the other applicants proceed pursuant to s 5. On 5 December, 1996 the applicants applied for various orders designed to establish that all assessments were void. Mr Pickering had received similar assessments, and he was also an applicant in those proceedings. The respondent sought to have the application struck out, substantially upon the basis that the validity of the assessments could not be attacked in light of the evidentiary provisions of the taxation legislation. These were the proceedings before Cooper J. His Honour upheld this argument and, for reasons which are not presently relevant, this led to the dismissal of Mr Pickering's claim. However his Honour considered that the present applicants might have a basis for seeking judicial review of the respondent's decisions evidenced by the letters of 2 February, 1996. Accordingly, the present applicants were given leave to deliver a fresh statement of claim. It seems that this course was not taken and that instead, the applicants brought the present applications. Cooper J did not deal with the s 260 assessments. The applicants' leave to deliver an amended statement of claim related only to "the respondent's decisions contained in or evidenced by the respondent's letters of 2 February, 1996". Prima facie, these letters dealt only with the assessments under the TUCT Act. This may be why the applicants chose to make the present applications in which they seek to challenge both the assessments under the TUCT Act and the s 260 assessments. In effect, the applicants' case before Cooper J and in support of the present applications was, and is that the respondent was obliged to treat each of them in the same way as Toni and Stephanie were treated. As much appears from paragraphs 13 and 15 of the applications on behalf of Carmel, Melanie and Jamieson and paragraph 15 of Penelope's application. In so far as the present applications seek to attack the respondent's decision concerning the TUCT Act assessments, the respondent does not presently challenge their competency, perhaps because Cooper J, in effect, suggested that such applications might be fairly arguable. However the respondent challenges the competency of the applications for judicial review of his alleged failure to waive or otherwise nullify the s 260 assessments. His argument is, in effect, as follows:- (a) The applicants complain that they have been treated differently from Stephanie and Toni. (b) In so far as concerns the s 260 assessments, the respondent's decision in the case of each of Stephanie and Toni was to amend the relevant assessment to nil. (c) The applicants' complaints must therefore be that the respondent has refused to amend each of their s 260 assessments to nil. (d) Such refusals are excluded from the operation of the ADJR Act by par (e) of Sch 1 to that Act. (e) It therefore follows that the applicants' challenges to the s 260 assessments must fail. The applicants respond to this argument in two ways. Firstly, they submit that the challenge to competency is out of time in that the challenge was made beyond the period prescribed by O 54 r 4. I will return to this matter at a later stage. Secondly, they submit that the respondent's decision with respect to each of Stephanie and Toni's s 260 assessments is not properly characterised as an amendment of the relevant assessment. It is said that it was rather the exercise of some other power to waive an assessment, probably derived from s 8 (the general administration section), s 208 (tax is a debt due to the Commonwealth) and s 209 (the Commissioner may sue for a tax debt by action in his own name). It is argued that a decision exercising or declining to exercise such a power is not excluded from the operation of the ADJR Act. The respondent submits in answer to this argument that there is no general power to waive an assessment or alternatively, that the exercise of any such power is not a reviewable decision for reasons akin to those discussed by Mason CJ in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at pp 335-8. He also denies that the applicants sought the exercise of any other discretion or power and that he exercised or declined to exercise same. It is difficult to see why the respondent's purported amendment of Stephanie and Toni's s 260 assessments should be characterised as the exercise of some power other than that of amendment. The applicants point to the decision of Beaumont J in Constable Holdings Pty Ltd v Federal Commissioner of Taxation (1987) 72 ALR 265. In that case, his Honour was concerned with the refusal by the Commissioner to exercise a discretion to allow a further period for dissolution of a company in which the taxpayer held shares. The exercise of that discretion in favour of the taxpayer would have resulted in a decrease in its exposure to taxation. Beaumont J said at page 268:- "The settled course of authority in this area has recognised a clear distinction between, on the one hand, a decision which "affects" liability for tax and, on the other, a decision, exempt under para (e) of Sch 1, which deals with the calculation of that liability … In my opinion, the present case falls into the former, rather than the latter, category … … In considering an application for an extension of time under Section 47(2B)(b), the respondent is exercising an administrative function which is divorced, in character, from his assessment functions. Both in form and in substance, a request under this provision for an extension of the period of dissolution is something different from the process making or leading up to the making of an assessment. The application of the time limit specified in Section 47(2B)(b) may well be essential to the charging operation of Section 47(2B). But it does not follow that the grant or refusal of an extension of that time limit can accurately be described as a decision making or forming part of the process of making, or leading up to the making of an assessment or calculation of tax." I cannot see how that distinction can be applied to the present case in such a way as to assist the applicants. The respondent's actions in connection with Stephanie and Toni's s 260 assessments clearly involved amendment of those assessments. There is no basis for doubting his authority to proceed in that way, nor is there any doubt that a refusal to amend is excluded from the operation of the ADJR Act by the express terms of par (e) of Sch 1. If parity of treatment is necessary, it can only be achieved by a similar exercise of the power to amend the applicants' s 260 assessments. Assuming that the letters of 23 January, 1995 should be taken as requesting that course, the respondent's refusal could only be a refusal to amend each assessment. Such a refusal is exempt from review pursuant to the ADJR Act. In fact, I doubt whether amendment of the s 260 assessments was ever sought. The requests were to amend the TUCT Act assessments. It may be argued that the respondent ought to have understood those requests in a broad sense to include requests for "consequential" amendments to the s 260 assessments similar to those made to Stephanie and Toni's assessments. It is not necessary to decide that question. It is also submitted that whatever the basis of the power exercised in the case of Stephanie and Toni, the respondent has power pursuant to s 8 and, perhaps, ss 208 and 209 to do whatever is necessary to effect equality of treatment as between the applicants on one hand and Stephanie and Toni on the other, and that such power ought to have been exercised in their favour. In Precision Pools Pty Ltd v Federal Commissioner of Taxation (1992) 92 ATC 4549 at p 4558, Spender J observed in respect of a provision in other taxing legislation similar to s 8, that it confers a wide power, including the power to compromise proceedings. As much also follows from the decision of the Full Court in Hutchins v Deputy Federal Commissioner of Taxation (1996) 96 ATC 4372. The latter decision establishes that specific acts done in the exercise of such a general power do not necessarily attract the operation of the ADJR Act. As Black CJ said at p 4375:- "Where, however, the authorization is very general it is difficult to see how an assessment may be said to make provision for a decision in the sense in which that expression was used by Mason CJ in Bond (at p 337)." See also the observations of Spender J at p. 4380. Lockhart J expressed a rather different opinion at p 4378, but I am bound by the majority view. Assuming that the respondent's general administrative power is wide enough to enable him, acting bona fide in exercise of that power, to "waive" an assessment, the legislation does not "make provision" for such a decision. His decision not to do so is therefore not reviewable pursuant to the ADJR Act. In any event, there is no reason to conclude that simply because the respondent exercised his power to amend Stephanie and Toni's assessments, he should therefore exercise some other discretion so as to bring about the same result. Different discretions usually involve different considerations. The principle identified by Cooper J appears to be that a discretion should be exercised consistently. It does not follow that different discretions must be exercised so as to produce outcomes which are the same. Further, there is no evidence that the respondent was ever asked to exercise any such discretion or that he declined to do so. I should record that I do not understand the applicants to seek review of any decision pursuant to s 265. That section does not confer jurisdiction upon the respondent, save in the limited circumstances set out in s 265(11). Further, the correspondence indicates that neither the applicants nor the respondent considered that any application had been made under that section. The applicants asked that the respondent forward relevant documents to them. The respondent did so, but those matters have gone no further. Subject to the question of time, the respondent's objections to competency should be allowed in so far as concerns the applications by Carmel, Melanie and Jamieson. Although Penelope's application is cast in the form of an attack upon conduct or proposed conduct, it appears really to be an attempt to prevent the making of an adverse decision. See Australian Broadcasting Tribunal v Bond at pp 342-3. It is difficult to construe the application as seeking to enforce procedural requirements. In any event, whether it is the proposed decision or the conduct leading, or likely to lead to that decision which is under attack, that decision would not be one to which the Act applies for the reasons already given. In those circumstances, Penelope's application must share the same fate as the others. That leaves for consideration the question of time. Although the notices of objection were well out of time, it is clear that they have merit. In those circumstances, no good point would be served by allowing the applications to proceed in so far as they concern the s 260 assessments unless the delay has caused some detriment to the applicants. They argue that they will be deprived of the benefit of discovery which might assist them in characterizing the power exercised by the respondent in connection with the s 260 assessments. I cannot see how this is relevant. A competent application depends upon there being a decision which is open to review. If the decision in question is not open to review, an incompetent application to review that decision may not be used as a basis for discovery in the hope that a reviewable decision will be disclosed. The respondent's delay in objecting to competency did not cause detriment to the applicants in this respect. The applicants also assert that review of the TUCT Act assessments may result in amendment of the s 260 assessments. If so, that will be because the respondent is moved to exercise his discretion to amend those assessments. That possibility is not relevant for present purposes. I would extend time pursuant to O 3 r 3. I will hear further submissions as to the appropriate orders. I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett Associate: Dated: 30 September 1998 Counsel for the Applicant: Mr Clutterbuck Solicitor for the Applicant: Business Development Lawyers Counsel for the Respondent: Mr Brabazon Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 18 September 1998 Date of Judgment: 30 September 1998