FEDERAL COURT OF AUSTRALIA Elias v Commissioner of Taxation [2002] FCA 1132 INCOME TAX – controlling interest superannuation arrangement – applicant applied to Commissioner for deferment of time for payment of tax under s 255-10 of the Taxation Administration Act 1953 (Cth) – applied at same time for a remission of the general interest charge under s 8AAG of the Taxation Administration Act 1953 (Cth) – Commissioner not satisfied general interest charge should be remitted – whether decision not to remit the general interest charge was a reviewable error ADMINISTRATIVE LAW – judicial review – application under ss 5(1), (2) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) for review of Commissioner's decision not to remit the general interest charge – whether unreasonable delay in making of decision – fairness as between taxpayers – allegation of unequal treatment – whether decision infected by Wednesbury unreasonableness – whether apparent bias – whether decision-maker took irrelevant considerations into account – no reviewable error Administrative Decisions (Judicial Review) Act 1977 (Cth) s 5(1), 5(2), 5(2)(b), 5(2)(f), 5(2)(g), 7, 13 Taxation Administration Act 1953 (Cth) s 8AAB(4), 8AAG, 8AAG(1), 8AAG(2), 8AAG(3), 8AAG(4), 8AAG(4)(c), 8AAG(5), 8AAG(5)(a), 8AAG(5)(b), Schedule 1 s 255-10 Income Tax Assessment Act 1936 (Cth) s 204(3) Elias v Commissioner of Taxation [2002] FCA 845 referred to Harris v Commissioner of Taxation [2001] FCA 1689 referred to Harris v Federal Commissioner of Taxation [2002] FCAFC 226 referred to Bellinz v Commissioner of Taxation (1998) 84 FCR 154 cited Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1970-1971) 127 CLR 106 cited Webb v Commissioner of Taxation (No 2) (1993) 47 FCR 394 at 404-405 cited Nestle Australia Ltd v Commissioner of Taxation (1987) 16 FCR 167 cited Glennan v Commissioner of Taxation [1999] FCA 297 applied Attorney-General (NSW) v Quin (1989-1990) 170 CLR 1 applied Sunshine Coast Broadcasters Ltd v Duncan (1988) 83 ALR 121 cited I & E Affairs v Kurtovic (1990) 21 FCR 193 cited Daihatsu Australia Pty Ltd v Deputy Commissioner of Taxation (2001) 182 ALR 239 referred to Cubillo v Commonwealth (2001) 112 FCR 455 cited Gamaethige v Minister for Immigration & Multicultural Affairs (2001) 109 FCR 424 applied Aronson and Dyer Judicial Review of Administrative Action 2nd Ed 2000 STEPHEN P ELIAS v COMMISSIONER OF TAXATION N 298 OF 2002 HELY J 13 SEPTEMBER 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 298 OF 2002 BETWEEN: STEPHEN P ELIAS APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: HELY J DATE OF ORDER: 13 SEPTEMBER 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application is dismissed with costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 298 OF 2002 BETWEEN: STEPHEN P ELIAS APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: HELY J DATE: 13 SEPTEMBER 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application under the Administrative Decisions (Judicial Review) Act 1977 (Cth)("the ADJR Act") to review the decision of the respondent ("the Commissioner") dated 19 March 2002 under s 8AAG of the Taxation Administration Act 1953 (Cth) ("the TA Act") not to remit any of the general interest charge ("GIC") accruing on a tax debt which the Commissioner claims to be due and payable by the applicant. 2 During the year ended 30 June 1999, the applicant entered into what the Commissioner describes as a "controlling interest superannuation arrangement". In the applicant's tax return for the 1999 financial year lodged on 27 April 2000, the applicant claimed a tax deduction for the contributions which he made to the superannuation fund in the year ended 30 June 1999. The surrounding circumstances are set forth in my decision in Elias v Commissioner of Taxation [2002] FCA 845, but for ease of reference, some of those circumstances are repeated here. The application for a private ruling 3 With that return the applicant applied for a private ruling as to the way in which the Income Tax Assessment Act 1936 (Cth) ("the ITAA") would operate in relation to his contributions to the superannuation fund. 4 On 7 August 2000 the Commissioner advised the applicant that he was not required to comply with the application for a private ruling and had decided not to exercise his discretion to comply. 5 On 3 November 2000 the applicant instituted proceedings in this Court to review the Commissioner's refusal to issue a private binding ruling. The applicant alleged that the Commissioner's decision as regards him did not take his individual circumstances into account, but was part of a broad policy designed to impose penalties upon him and upon others in similar circumstances. The Commissioner, through his solicitors, by letter dated 18 January 2001 specifically denied the applicant's allegation that his refusal to issue a private ruling did not take his individual circumstances into account and was part of a broad policy designed to impose penalties upon him and upon others. 6 In or about December 2001 the applicant and the Commissioner reached agreement that the Federal Court proceedings concerning the private ruling matter would be dismissed by consent, on the basis that the Commissioner would remit the applicant's tax penalties which he had imposed, and would pay the applicant's costs of the Federal Court proceedings. On 23 January 2002 the applicant received an amended assessment which remitted all penalties. The deductibility of superannuation contributions 7 On 3 December 2001 Merkel J handed down judgment in Harris v Commissioner of Taxation [2001] FCA 1689. His Honour's decision, shortly stated, was that contributions payable in relation to controlling superannuation interest arrangements in circumstances such as the present are not deductible. 8 On 8 August 2002 a Full Court in Harris v Federal Commissioner of Taxation [2002] FCAFC 226 affirmed the decision of Merkel J that no tax deductions were allowable in relation to controlling interest superannuation arrangements. Assessment 9 On 12 January 2001 a Notice of Assessment was issued to the applicant denying the claimed deduction for contributions to the superannuation fund for the 1999 year. The amount payable pursuant to the Notice of Assessment was $277,048.47 which was stated as being due for payment on 14 February 2001. Section 255-10 applications 10 By letter dated 22 December 2000 David Bonnell, solicitor, applied, on behalf of various of his clients who had entered into controlling interest superannuation arrangements, pursuant to s 255-10 of Schedule 1 to the TA Act, to defer the time at which tax assessed under Notice of Assessments issued or to be issued would become due and payable, to a later date, being the date on which each applicant lodges an objection against the relevant Notice of Assessment. By at least 31 January 2001 the applicant had been joined as a party to that application. 11 By letter dated 9 March 2001 the Commissioner refused the applications to extend the dates for payment of the tax-related liability, but in view of the delay in replying to the original requests, the Commissioner stated that he would remit the GIC from the date of the relevant assessment until 14 days after the date of the letter; that is, until 23 March 2001. 12 On 15 March 2001 the applicant commenced proceedings in this Court for a review of the s 255-10 decision. By letter of 27 March 2001 the Australian Government Solicitor ("the AGS") indicated that the Commissioner would reconsider the application made by Mr Elias, and by other clients of Mr Bonnell. The letter advised that immediate steps were being taken to have Mr Bonnell's clients' applications directed to a new decision-maker for consideration of the applications afresh. It was therefore suggested that the s 255-10 proceedings had become redundant, and that they should be disposed of on the basis that the original decision should be set aside, and the Commissioner should pay the applicants' costs of the application. The letter also stated: "(b) the Commissioner will undertake to the applicant that he will not commence proceedings for the recovery of the applicant's debt arising from the 1999 assessment, prior to 14 days after the forthcoming redetermination of his application under s 255-10." 13 On 27 March 2001 the applicant agreed to the proceedings being discontinued on the basis of the proposed consent orders, and on 29 March 2001 consent orders to that effect were made. 14 By letter dated 21 June 2001, written on behalf of 111 clients who had entered into controlling interest superannuation arrangements (including the applicant), Mr Bonnell applied for a deferment under s 255-10 of Schedule 1 to the TA Act of the time at which tax assessed under various assessments issued to those clients was due and payable. The letter indicated the grounds on which an extension was sought. Under the heading "F. The applicants' financial circumstances", Mr Bonnell asserted that the impact of the assessment on the applicants' financial affairs is a matter to which the Commissioner ought to have regard in making his decision under s 255-10. Mr Bonnell also listed the name and tax file number for each applicant, together with their respective controlled company and superannuation fund, and indicated that the decision-maker would have available to him all the materials within the files of the Australian Taxation Office ("the ATO") relating to the raising of the relevant assessments to each of the applicants. 15 On 23 August 2001 Mr Bonnell wrote to the Commissioner expressing his concern at the delay by the ATO in making a decision in relation to the s 255-10 applications to defer time. He requested that he be advised as to the progress of the application by the current decision-maker and that he be given the opportunity to address any issues or concerns that she or he may have before a final decision is made. 16 On 3 September 2001 the ATO informed Mr Bonnell that a major cause of the delay was a lack of information supplied by Mr Bonnell in relation to each of his clients' affairs. On 16 October 2001 Mr Bonnell wrote to the AGS rejecting that assertion. 17 On 18 October 2001 the AGS wrote to Mr Bonnell. The letter included the following: "I note that you reject a part-explanation concerning the time taken to make a decision offered by Mr O'Neill. I also note that you failed to provide in support of your application the up to date information which I had sought in my letter dated 23 April 2001 and instead sought to impose on the decision-maker an obligation to search through the ATO's records (see paragraph 95). Without limiting the scope of the material you sought to rely on (and without fully identifying it), you listed various documents at (a) to (n) at paragraph 96 of your letter relating to your 111 clients and each of their respective controlled companies and superannuation funds which you suggested the decision-maker should have regard to; ie a broad range of documents for over 300 entities. It seems to me fair to observe that this approach was not designed to assist the urgent determination of your application." The letter also advised that the Commissioner had changed his policy on the application of s 255-10. A copy of the new policy was enclosed, and Mr Bonnell was invited to make any further submissions that he wished to make in the light of the new policy. The change in policy was the subject of my decision in Elias v Commissioner of Taxation (supra). 18 By letter dated 22 October 2001 Mr Bonnell responded to the AGS' letter of 18 October 2001. Mr Bonnell's letter included the following: "My clients' application to defer time pursuant to s 255-10 of the Income Tax Assessment Act 1936 was drawn in a way that allowed the matter to be determined quickly and without the need for extraneous material. The application did not seek to rely on the individual circumstances of my clients but rather on the facts that were common to them. In my further submissions dated 21 June 2001 I addressed your client's concern that individual circumstances be relied upon by drawing your client's attention to material he already had." 19 By letter dated 30 October 2001 the AGS advised Mr Bonnell that the Commissioner proposed to make decisions on Mr Bonnell's applications for deferral on the basis of each applicant, having regard to all of the matters relied upon by Mr Bonnell on behalf of the applicants and the circumstances of each case, and not on a global basis. The AGS stated that an examination of 43 folders of documents was involved for this purpose. 20 By letter dated 29 November 2001 the Commissioner advised Mr Bonnell that the grounds upon which he relied to seek deferment of time for the payment of tax under s 255-10 on behalf of the applicant were not sufficient to warrant deferment of the time for payment, and that payment of the outstanding amount was required within 7 days, failing which recovery action would be instituted. 21 On 31 January 2002 the Commissioner provided a statement of his reasons for the s 255-10 decision. The reasons included the following: "One critical effect of granting a deferral would be that the GIC would not be payable, even if the Commissioner were to be successful. Consider two possibilities. First, if the Commissioner were to be unsuccessful in the Court then the assessment would be set aside and automatically as a matter of law no GIC would be payable; ie if the taxpayer wins there is no GIC. Second, if the Commissioner were ultimately to be successful there would be two possibilities. The first would be that GIC would ordinarily be payable. The second would be that, if a deferral were granted, no GIC would be payable. The critical question is – why should the applicant, unlike every other taxpayer, have a GIC-free period for a tax liability which is ultimately up-held by the Courts? I note that Mr Bonnell failed to address this question even though asked to do so (see paragraph 55 of his letter). Merely asserting that the applicant has merits in his dispute over the assessment, and even that his position is the better view, does not go far enough. This is an important basis for my decision." 22 An application under the ADJR Act for an order of review of the Commissioner's decision under s 255-10 of the TA Act was dismissed by me in Elias v Commissioner of Taxation (supra). The General Interest Charge ("GIC") 23 From 1 July 1999 the GIC replaced the various existing additional charges for late payment in the taxation law. Thus, for example, s 204(3) of the ITAA imposes a liability to pay the general interest charge if any of the tax which a person is liable to pay remains unpaid after the time by which the tax is due to be paid. Section 8AAB(4) of the TA Act is an index of the provisions of the ITAA that deal with liability to the GIC, and s 204 is Item 9 in that table. The amount of the GIC is worked out in accordance with the provisions of Division 1 of Part IIA of the TA Act. The GIC is penal in character inasmuch as it exceeds a commercial rate of interest, reflecting the time value of money. 24 Section 8AAG(1) of the TA Act provides that the Commissioner may remit all or a part of the GIC payable by a person. Sections 8AAG(2), (3), (4) and (5) provide as follows: "8AAG(2) [Overdue unpaid amounts] However, if a person is liable to pay the charge because an amount remains unpaid after the time by which it is due to be paid, the Commissioner may only remit all or a part of the charge in the circumstances set out in subsection (3), (4) or (5). 8AAG(3) [Circumstances not due to the person] The Commissioner may remit all or a part of the charge referred to in subsection (2) if the Commissioner is satisfied that: (a) the circumstances that contributed to the delay in payment were not due to, or caused directly or indirectly by, an act or omission of the person; and (b) the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances. 8AAG(4) [Where is it fair and reasonable to remit charge] The Commissioner may remit all or a part of the charge referred to in subsection (2) is the Commissioner is satisfied that: (a) the circumstances that contributed to the delay in payment were due to, or caused directly or indirectly by, an act or omission of the person; and (b) the person has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; and (c) having regard to the nature of those circumstances, it would be fair and reasonable to remit all or a part of the charge. 8AAG(5) [When Commissioner may remit charges] The Commissioner may remit all or a part of the charge referred to in subsection (2) if the Commissioner is satisfied that: (a) there are special circumstances because of which it would be fair and reasonable to remit all or a part of the charge; or (b) it is otherwise appropriate to do so." 25 Section 8AAG(5)(b) was inserted by amendment with effect from 1 July 2000. Prior to that amendment subs (5) only authorised a revision if the Commissioner was satisfied that there are special circumstances because of which it would be fair and reasonable to remit all or a part of the charge. The effect of the amendment was to give the Commissioner a broader discretion to remit the GIC than under the provision as it stood prior to the amendment. 26 The Commissioner has a general discretion under s 255-10 of Schedule 1 to defer the time at which an amount of a tax-related liability is due and payable "having regard to the circumstances of your particular case". If the Commissioner defers the time at which tax is due and payable, then the GIC only becomes payable in the event of non-payment from the extended date, subject to the power of remission given to the Commissioner under s 8AAG of the TA Act. The applications for remission of the GIC 27 By letter dated 31 January 2001 Mr Bonnell wrote to the Commissioner contending that it would be appropriate, during the interim period whilst the s 255-10 application was under consideration, that any GIC which has already accrued be remitted under s 8AAG of the TA Act. 28 On 9 March 2001, as noted above, the ATO refused to extend the dates of payment under s 255-10, but advised that: "In view of the delay in replying to your original requests the Commissioner will remit the GIC from the due date of the amended assessment until 14 days after the date of this letter." 29 As also noted above, on 15 March 2001 ADJR Act proceedings were instituted in relation to the s 255-10 decision. By letter dated 20 March 2001 Mr Bonnell requested remission of the GIC until 7 days after the date of the decision in the ADJR Act proceedings. The application was made pursuant to s 8AAG(3) and s 8AAG(5) of the TA Act. 30 On 11 April 2001 Mr Bonnell noted that his application dated 20 March 2001 sought a remission of the GIC until 7 days after the decision of the Federal Court in the ADJR Act proceedings. Those proceedings did not proceed to a hearing on the merits because the Commissioner consented to the s 255-10 decision being set aside and remitted to him for further consideration according to law. Accordingly, Mr Bonnell requested, pursuant to s 8AAG, that the Commissioner remit the GIC until 7 days after the further decision was made on the remitted application to defer time. The letter stated: "I advise that additional and supplementary grounds in support of this further remission application under s 8AAG and in support of the remitted application to defer time will be provided. I anticipate that such material will be lodged once I have been notified of the identity of the decision-maker on the remitted application to defer time." 31 On 15 May 2001 the AGS wrote to Mr Bonnell in relation to the applications to remit the GIC. The letter stated: "If your application to defer time were to be successful the date from which the GIC would be payable would automatically change; and accordingly the decision on the application to defer time may supersede the applications for remission. Accordingly it would appear to be premature at this stage to decide those applications." 32 By letter dated 16 October 2001 Mr Bonnell protested at the delay in determining his clients' requests under s 255-10. The letter continued: "At the least your client could make a remission decision under s 8AAG so that no interest will be payable until your client eventually makes the decision. This would relieve my clients from the day to day worry that the delay in making a decision causes them. As a matter of urgency, I request that your client provides a final decision on my clients' application to defer time. I also request that, in the event that the request for deferment is denied, our clients obtain a remission of interest of the General Interest Charge, pursuant to s 8AAG of the Taxation Administration Act 1953." 33 In the letter of 18 October 2001 from the AGS to Mr Bonnell, noted above, the AGS indicated that it would refer Mr Bonnell's request for a remission decision under s 8AAG to the Commissioner. 34 On 28 November 2001 Mr Bonnell demanded that the Commissioner provide him with a response to his application for the remission of interest under s 8AAG. On 29 November 2001 the AGS notified Mr Bonnell that once the Commissioner had decided all of the s 255-10 applications made on behalf of clients of Mr Bonnell, he would proceed to consider the more recent applications for remission of the GIC. Mr Bonnell responded to that advice by letter dated 18 December 2001 which included the following: "In your letter of 29 November 2001, you advised that your client will consider my clients' application for remission of interest under s 8AAG of the Taxation Administration Act 1953 once he has decided all applications for deferment of time under s 255-10. We see no reason why they can no longer be considered together and your client's decision to delay these matters further is causing further loss to my clients." It should be remembered, that so far as Mr Elias is concerned, his s 255-10 application had been refused by letter bearing the date 29 November 2001. 35 On 20 December 2001 the AGS responded to Mr Bonnell's letter of 18 December 2001. The letter referred back to a statement in a letter from Mr Bonnell of 11 April 2001 in which he said that additional and supplementary grounds in support of the remission application under s 8AAG would be provided (see [30] above). The letter offered Mr Bonnell the opportunity to provide the additional and supplementary grounds which he had previously foreshadowed, and requested that Mr Bonnell furnish any other information, submissions or evidence upon which he wished to rely in support of the s 8AAG application. 36 Mr Bonnell responded to that letter on 15 January 2002. In that letter he drew attention to three matters. The first concerned the delay in dealing with the s 255-10 application for a period of 11 months. The delay was said to be "unconscionable and provides overwhelming grounds for remission of interest". Second, proceedings had to be instituted to compel a remission of penalties which were improperly imposed. Third, the change in the Commissioner's policy as to the circumstances in which s 255-10 applications would be considered was said to provide "further grounds for providing the remission under s 8AAG". 37 By letter dated 5 February 2002 Mr Bonnell requested that the Commissioner decide the application for remission of the GIC as a matter of priority. By letter dated 14 February 2002 the AGS advised Mr Bonnell that the Commissioner "now proposes to consider the application for remission of GIC", and that he would be advised of the decision in due course. 38 By letter dated 19 March 2002 the Commissioner notified Mr Bonnell that the grounds relied upon in respect of Mr Elias for remission of the GIC "do not warrant the exercise of discretion by the Commissioner to remit in part or in whole the amount of the GIC accrued". 39 On 23 April 2002 the decision-maker prepared a statement under s 13 of the ADJR Act in relation to his decision to refuse the application for remission of the GIC made by the applicant. The statement incorporated a report which the decision-maker prepared on 19 March 2002. That report covered the following matters: – the general principle is that the Commissioner expects that all debts, including those the subject of dispute, will be paid on time; – the decision on the request for remission of the GIC made on 20 March 2001 and 11 April 2001 were held in abeyance while the applications to defer time to pay the tax were considered. Decisions in respect of 121 taxpayers on whose behalf Mr Bonnell applied for deferral of time to pay tax were made in the period from 30 October 2001 to 28 February 2002; – the three grounds relied upon in Mr Bonnell's letter of 15 January 2002; – as to the first ground, "unconscionable delay in deciding the application made on behalf of his clients for deferral of time to pay tax", the decision-maker made the following points: · on 23 April 2001 the AGS sought more detailed information as to the financial circumstances of Mr Bonnell's clients; · Mr Bonnell's letter of 21 June 2001 did not provide information as to the financial circumstances of those clients, but referred the Commissioner to all of the materials in the ATO which bore upon that question; · a great deal of time was taken up by the decision-maker in gathering and considering 66 folders of documents which fitted the description referred to in Mr Bonnell's letter; · complaints of delay on the part of Mr Bonnell were met with retorts on behalf of the Commissioner that a major cause of the delay was lack of information supplied by Mr Bonnell; · whilst the time taken to consider the applications following the orders of 29 March 2001 was lengthy, in the circumstances, it was not unreasonable. On balance the time taken to consider and decide the requests was reasonable in all the circumstances; – whilst the GIC was remitted in the period up to 23 March 2001 by reason of antecedent delay in processing the s 255-10 application, the decision-maker was not persuaded that the circumstances would justify him in making a similar decision; – the letter of 23 April 2001 from the AGS to Mr Bonnell cautioned that the Commissioner "is not able to lead you to expect that a deferral will be granted to cover the time taken to consider the application", and the merits of the application for deferral were such that the applicant should not have anticipated that it would be successful; – as to Mr Bonnell's second ground, the decision-maker accepted that the Commissioner had agreed to remove penalties from a large number of Mr Bonnell's clients who had applied for a deferral of time. Mr Elias is one of those clients, but the decision-maker did not see how removal of a penalty should lead to the result that the GIC on the balance of the assessment should be remitted. The GIC is not payable on any penalty so removed; – as to the third ground, relating to the change of policy, in the decision-maker's view, the change in policy did not impact on the ability of the applicant to make payment or mitigate the effect of the non-payment to such an extent as to require remission of the GIC; and – on balance, the decision-maker did not find the submissions relied upon by Mr Bonnell as persuasive. 40 The decision-maker then addressed the criteria referred to in each of ss 8AAG(3), (4) and (5). The report states, in this respect: "The applicant is responsible for the delay in payment. He chose not to pay the tax that was payable and instead chose to make an unmeritorious application to defer the time for payment. He took no steps to dispute his liability but rather relied on the result of the determination of the tax appeals by Harris and Vaiasinni (Mr Vaiasinni was another of Mr Bonnell's clients who Mr Bonnell relied on as a test case for all of his clients. In this regard I refer to the fact that Mr Bonnell on behalf of Mr Vaiasinni withdrew the appeal to the Federal Court to prevent a hearing that had been fixed together with the Harris matter). The applicant had not attempted to make any payment or reduce his indebtedness or to reach any agreement in relation to payment. The impact of the assessments on the financial position of the applicant and his capacity to meet his tax liability as required is an important consideration in making a decision. Despite having been asked for it in the context of the application for deferral, Mr Bonnell failed to furnish me with any information or evidence going to establish hardship other than what was set out in his letter dated 21 June 2001. Instead I was left to accumulate the documents to which Mr Bonnell directed me. The relevant documents contained insufficient information and evidence on which I could safely make a finding about the impact of the assessments on the applicant or his current or future financial position to meet his tax liabilities. It therefore cannot be said that it is fair and reasonable to remit the GIC under this limb. The applicant has failed to demonstrate any special circumstances, or indeed provide any other reason as to why it is appropriate that the GIC be remitted. Consequently, the applicant's request for remission should be rejected." 41 Thus, the Commissioner was not satisfied that the GIC should be remitted under any of ss 8AAG(3), (4) or (5). The grounds on which review is sought 42 The Further Amended Application for an Order of Review alleges that various errors were made in the decision-making process which are reviewable under various subsections of ss 5(1) and 5(2) of the ADJR Act. The relief sought is an order quashing the decision dated 19 March 2002 not to remit any of the GIC accruing on the applicant's tax debt, and an order remitting the matter to the Commissioner, through a different officer, to exercise its powers under s 8AAG of the TA Act in accordance with the law, and with directions: (i) that: (a) the circumstances that contributed to the delay in payment were not due to, or caused directly or indirectly by, an act or omission of the applicant; and (b) the applicant has taken reasonable action to mitigate, or mitigate the effects of, those circumstances; and (ii) further, or alternatively, that: (a) there are special circumstances because of which it would be fair and reasonable to remit all or a part of the charge; or (b) it is otherwise appropriate to do so. 43 In the alternative, an order is sought directing the Commissioner, through a different officer, to exercise its powers under s 8AAG of the TA Act in accordance with the law. 44 It is convenient to make some observations as to the operation of s 8AAG(3), (4) and (5) of the TA Act, before turning to the particular grounds on which it is said that an order of review should be made. 45 Section 8AAG(3) and s 8AAG(4) are true alternatives. Section 8AAG(5) is intended to cover cases which are not within subs (3) or subs (4): Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1970-1971) 127 CLR 106, 138. The ambit of the discretion open to the Commissioner depends upon which subsection he is proceeding under. The discretion broadens as one moves down the section and is at its broadest when one reaches s 8AAG(5)(b), where the Commissioner may remit all or a part of the GIC if the Commissioner is satisfied that it is "otherwise appropriate" to do so. 46 If the Commissioner is satisfied as to the matters referred to in one of the subsections, then the Commissioner is required to remit all or part of the GIC. Use of the expression "the Commissioner may remit" the GIC if satisfied as to specified matters does not confer a residual discretion not to remit all or part of the GIC even if the Commissioner is satisfied as to those matters: Webb v Commissioner of Taxation (No 2) (1993) 47 FCR 394 at 404-405. 47 Section 8AAG(4)(c) and s 8AAG(5)(a) each requires the Commissioner to be satisfied that it would be "fair and reasonable" to remit all or a part of the GIC. In determining the issue whether it would be fair and reasonable to remit the GIC, the Commissioner is entitled to take into account in the exercise of that discretion the policy of the TA Act that additional tax is payable as at a certain date. That is a matter to be weighed in determining the fairness and reasonableness of remission: Webb v Commissioner of Taxation (supra) at p 405. Responsibility for non-payment of tax 48 As noted above, the decision-maker found that the applicant was responsible for the delay in the payment of tax. He stated that the applicant chose not to pay the tax that was payable, and instead chose to make an unmeritorious application to defer the time for payment. This finding is said to be infected by reviewable error as the decision-maker was either unaware of, or alternatively, failed to take into account, the terms of the Commissioner's offer contained in the letter of 27 March 2001 summarised in par [12] above. In the applicant's submission the applicant did not pay the tax on the due date "at the invitation of the Commissioner as some recompense for the Commissioner's wrongful actions". 49 This submission exaggerates the effect of the offer which the Commissioner made, and the arrangement which he entered into. At no stage did the Commissioner extend the time for payment of the tax, or represent that he was likely to grant such an extension. In the AGS' letter of 23 April 2001 Mr Bonnell was specifically cautioned against expecting that a deferral would be granted to cover the time taken to consider the s 255-10 application. The tax debt remained due and payable, and the GIC continued to accrue; all the Commissioner did was to agree to refrain from commencing proceedings until the new s 255-10 decision was made. The assertion that the offer contained in the letter of 27 March 2001 was some recompense for wrongful actions on the part of the Commissioner is without evidentiary foundation. 50 In those circumstances, there is no error, let alone a reviewable error, in the decision-maker's finding that the applicant was responsible for the delay in payment. That being so, there was no basis on which the Commissioner could properly exercise the s 8AAG(3) discretion in favour of the applicant. The Commissioner could only act, if at all, under s 8AAG(4) or s 8AAG(5). 51 The second precondition to the power of remission conferred by s 8AAG(4) is that the Commissioner is satisfied that the applicant has taken reasonable action to mitigate, or to mitigate the effects of, the circumstances that contributed to the delay in payment. The decision-maker found that the applicant had not attempted to make any payment or reduce his indebtedness or to reach any agreement in relation to payment of the tax in question. The decision-maker was thus not satisfied of the matters referred to in s 8AAG(4)(b). That conclusion was sufficient to disentitle the applicant to a remission under s 8AAG(4). However, the decision-maker went on to consider s 8AAG(4)(c). He said that he had insufficient information about the applicant's financial position to make a finding as to the financial impact of the assessment on the applicant, hence it cannot be said that it was "fair and reasonable" to remit the GIC under this section. 52 The applicant complains that the decision-maker has effectively introduced a hardship criterion into s 8AAG(4) and that the decision-maker was not entitled to refuse to consider an application simply because it failed to comply with a qualification which the decision-maker had devised: Nestle Australia Ltd v Commissioner of Taxation (1987) 16 FCR 167, 185. There are two answers to this complaint. First, having regard to the decision-maker's conclusion in relation to s 8AAG(4)(b) it was not necessary for him to consider s 8AAG(4)(c). Any error made in relation to s 8AAG(4)(c) is thus immaterial. Second, whether or not the applicant lacked the financial capability to meet his tax liability is a relevant factor, as it may go to whether impecuniosity contributed to the delay in payment of tax so as to make it "fair and reasonable" to remit all or part of the GIC. In having regard to this matter the decision-maker was addressing the statutory criteria, rather than introducing an extraneous consideration. 53 If the applicant is unable to establish reviewable error in relation to s 8AAG(3) or (4), then he has to make a case of reviewable error in relation to s 8AAG(5). The discretion given to the decision-maker under s 8AAG(5) is much broader than that given by the preceding subsections, and for the reasons which I explained in Elias v Commissioner of Taxation (supra) it becomes more difficult for an applicant to make out a case that the decision-maker failed to take into account relevant circumstances or took into account irrelevant circumstances when the statutory discretion is largely unconfined. Delay in the making of the decision 54 The applicant submits that I should infer that the decision-maker considered that he was bound by law to deal with the s 255-10 application before dealing with the s 8AAG application. That is said to be a legal error which occasioned serious delay in dealing with the s 8AAG application. The applicant submits that the decision-maker, in making his s 8AAG decision, was "blind to his own delay" in refusing to consider the s 8AAG applications until he had dealt with the applications made under s 255-10. In the applicant's submission, the matter should be remitted to a decision-maker to consider the s 8AAG remission applications having regard to the serious delay and loss caused solely by this error. 55 This submission should be rejected for a number of reasons. First, unreasonable delay in the making of a decision may enliven the jurisdiction of the Court under s 7 of the ADJR Act. However, delay in the making of a decision is not a ground of review of the decision once the decision has been made. Second, there is no basis for an inference that the decision-maker regarded himself as legally bound to deal with the s 255-10 applications before dealing with the s 8AAG applications. The AGS' letter of 15 May 2001, and other correspondence on this issue, indicates that the decision-maker adopted the course which he did because he considered it to be a convenient course to adopt in the circumstances. At least initially, the applicant acquiesced in the course proposed. Even if the decision-maker was mistaken in the view which he formed in this respect, that would not provide a basis for judicial review of his ultimate decision. Third, it cannot be said that the decision-maker was "blind to his own delay," as the decision-maker was plainly aware that he had postponed deciding the s 8AAG requests until after he had made the s 255-10 decisions. Fourth, the "delay" which Mr Bonnell put forward as being relevant in his letter of 15 January 2002 was the delay for a period of about 11 months in dealing with the s 255-10 applications. The decision-maker addressed this issue and came to the conclusion that whilst the time taken to consider those applications was lengthy, it was not unreasonable having regard to the particular circumstances of the case. The applicant cannot complain if the decision-maker concentrated upon the delay which the applicant had put forward as being relevant to the determination: Glennan v Commissioner of Taxation [1999] FCA 297 at [77] – [83]. 56 Even if there were inexcusable delay in dealing with the s 255-10 or s 8AAG applications, that would not justify the taxpayer in not paying the assessed tax on the date on which it was due for payment. The longer the tax remained unpaid, the greater the GIC that the decision-maker was being asked to remit. By leaving the tax unpaid, the applicant was causative of his own loss. Fairness as between taxpayers 57 The applicant referred me to the decision of the Full Court in Bellinz v Commissioner of Taxation (1998) 84 FCR 154. At FCR 166, the Court quoted a statement by Lord Scarman in the Small Businesses Case, where his Lordship said: "I am persuaded that the modern case law recognises the legal duty owed by the revenue to the general body of the taxpayers to treat taxpayers fairly; to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise; to ensure that there are no favourites and no sacrificial victims." And at 167 the Court said: "It is unnecessary to refer to the numerous other cases, many from areas outside revenue, which were cited to the Court in support of the submission that equality of treatment of taxpayers is an aspect of unreasonableness of decision making. There is little difficulty in accepting that, where a decision-maker, including the Commissioner of Taxation, has a discretion, a principle of fairness will require that that discretion be exercised in a way that does not discriminate against taxpayers: … The same principle may be said to permit judicial review in matters of administration or procedure where a decision-maker acts unfairly by discriminating between different categories of persons." (citations omitted) 58 By a letter dated 26 April 2001 to the AGS, Mr Bonnell noted that the Prime Minister had been reported as announcing a moratorium "on recovery of tax in these matters". The Commissioner's position on interest and penalties was reported at the same time. Mr Bonnell sought details of the moratorium and of the Commissioner's "relaxed view of penalties and interest as reported". By letter of 26 April 2001 the AGS replied that the arrangements "announced last week are only applicable to matters involving particular aggressive tax planning schemes". The AGS was instructed that they were not applicable to Mr Bonnell's clients. 59 On 26 April 2001 the AGS forwarded a copy of the relevant media release to Mr Bonnell. Under the heading: "Tax Office reduces interest applying to some mass marketed 'tax effective' schemes debts" the following appears: "The Tax Office today announced that it will reduce the interest payable on tax debts relating to some investments in mass marketed, so-called 'tax effective' schemes to further assist people caught up by the aggressive marketing of those arrangements. Tax Commissioner Michael Carmody said the Tax Office, subject to investors meeting certain criteria, will reduce the interest rate to reflect the time value of money (currently 5.86%) rather than the full General Interest Charge (currently 13.86%) normally applying to tax debts under the law." Under the heading "Tax Effective Investment Schemes" the following appears: "These initiatives apply to mass marketed, so-called tax effective schemes. These are schemes sold by way of prospectuses and excluded offers, including agriculture, entertainment and franchise schemes. They do not apply to employee benefit arrangements and financing products (linked bonds and capital protected products) where very different circumstances apply. For example, EBAs entail a high level of investor control. Financing products are generally purchased by sophisticated higher wealth individuals." It was common ground that the controlling interest superannuation arrangements is an employee benefit arrangement or "EBA". 60 By letter dated 23 August 2001 Mr Bonnell complained about the delay in dealing with the s 255-10 applications. He said that "persons who entered into tax avoidance schemes in relation to agricultural matters are in a position that his clients can only envy. They know that no enforcement action will be taken against them and that they have been the subject of a remission of the GIC (even though their individual circumstances have not been considered)". 61 In the applicant's submission, a duty of fairness underlies the exercise of any administrative decision, and it was incumbent on the decision-maker to consider whether the applicant was deserving of the same benignant treatment as was extended to participants in the mass marketed schemes referred to in the ATO's media release referred to in par [59] above. The applicant submits that the decision-maker had to consider whether it is fair that the taxpayer should be treated in a different way from the participants in those schemes, yet he failed to do so. This failure is said to enliven the operation of s 5(2)(b) of the ADJR Act (failure to take relevant considerations into account) as well as s 5(2)(f) (acting in accordance with a rule or policy without regard to the merits of the applicant's case). 62 In the respondent's submission, the applicant's case in this respect assumes that there is a duty of substantive fairness in administrative decision-making that can be enforced by the Court to avoid administrative injustice, but that is not the law: in Attorney-General (NSW) v Quin (1989-1990) 170 CLR 1 at 36, Brennan J, having spoken of the limited role of a Court in judicial review said: "[i]f, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error." 63 The subject of judicial review arising from unequal treatment by administrators of persons in a like position is discussed in Aronson and Dyer, Judicial Review of Administrative Action 2nd Ed 2000 at pp 292-294. In Sunshine Coast Broadcasters Ltd v Duncan (1988) 83 ALR 121 Pincus J accepted that inconsistent treatment between persons in a like position could enliven the operation of s 5(2)(j) of the ADJR Act (abuse of power) where there was no reason for the discrimination. See also I & E Affairs v Kurtovic (1990) 21 FCR 193 at 220 per Gummow J. The authorities in this area were reviewed by Lehane J in Daihatsu Australia Pty Ltd v Deputy Commissioner of Taxation (2001) 182 ALR 239 at 255-261. At ALR 258, his Honour said that it was evident from Bellinz (supra) that the Court was inclined to treat discriminatory treatment, for which no reason is apparent or is advanced, as a form of irrational decision-making and reviewable on that basis. 64 In the present case the applicant has not established that there was any irrationality in treating participants in the mass marketed schemes more benignly than the participants in EBAs. The media release refers to the two groups, and to the fact that one group will receive more favourable treatment than the other, and explains why there is to be differential treatment between the two. In the view of those who published the media release, the two groups are to be treated differently because members of one may be expected to be more financially sophisticated than the members of the other. It has not been shown that the reason assigned for the differential treatment is without foundation. 65 The applicant did not advance this matter in the applicant's letter of 15 January 2002 as being a matter which ought to be taken into account in making a decision whether or not to remit the GIC which the applicant was liable to pay. Nor is it a matter which is "made compulsorily relevant" by the ITAA or the TA Act such that the decision-maker was obliged to enquire into the issue for himself. Accordingly, the applicant has not established any reviewable error on the part of the decision-maker in failing to consider this question. Nor has the applicant otherwise established that the decision refusing to remit the GIC in the case of the applicant was irrational having regard to the terms of the media release. All that the applicant has established is that the Commissioner has announced that cases which, in the opinion of the Commissioner, are different, will be treated differently. Wednesbury unreasonableness 66 This ground of review is now expressed in s 5(2)(g) of the ADJR Act in terms of an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power. In Cubillo v Commonwealth (2001) 112 FCR 455 at 521 the Full Court made the following observations in relation to Wednesbury unreasonableness: " … a decision will be vitiated by Wednesbury unreasonableness, only if no decision-maker, acting reasonably, could have made that decision or if it is shown that the decision was so unreasonable that no reasonable person could have come to it. In applying this standard a court must proceed with caution lest it exceed its supervisory role by reviewing the decision on the merits: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 41-42, per Mason J; Attorney General (NSW) v Quin (1990) 170 CLR 1 at 36-37, per Brennan J. It is not enough to show that another decision-maker might have reached a different result or even that the court takes the view that a different decision would have been more appropriate: Minister for Immigration & Multicultural Affairs v Eshetu (1999) 197 CLR 611 at 626-627, per Gleeson CJ and McHugh J; Friends of Hinchinbrook Society Inc v Minister for Environment (No 2)(1997) 69 FCR 28 at 59-65, per Sackville J." 67 The applicant relied upon the following matters as establishing that the decision to refuse to remit the GIC was so unreasonable that no reasonable person could have exercised the s 8AAG power in that way: · the s 8AAG application was made in March 2001 for a remission until 14 days after a new decision on s 255-10 was made; · the applicant had reached an agreement with the Commissioner that the Commissioner would not seek recovery of the tax debt until the s 255-10 application was made; · the s 255-10 application was made subsequently on 21 June 2001; · no reasonable decision-maker could commence a consideration of the s 255-10 application until the Commissioner's flawed policy had changed (on 1 July 2001) and the applicant was notified of the change and asked to make submissions in relation to it (October 2001); · the Commissioner was aware that the applicant disputed his tax liability; · the Commissioner was improperly seeking to frustrate the applicant's attempts to dispute his tax liability by refusing to issue a private ruling; · the Commissioner was improperly seeking to impose penalties on the applicant; · the Commissioner was at the time seeking to have his longstanding administrative practice concerning the tax liability overturned in the Courts; · the applicant made repeated requests for a decision to be made on his s 8AAG application; · the decision-maker chose to delay considering the applicant's s 8AAG application until January 2002; · no reasonable decision-maker could attribute his choice to delay to the fault of the applicant. In short, if the decision-maker was burdened with too much work in respect of other taxpayers, then it was open to him, as foreshadowed by the Commissioner, to appoint further decision-makers; · there was only a one month delay between the decision-maker commencing a consideration of the s 8AAG application and making the decision in February 2002; · the decision-maker never requested in the context of the s 8AAG application any further financial information from the applicant; · the Commissioner had remitted the GIC as a result of a 3 month delay in properly dealing with the applicant's original s 255-10 application; and · the Commissioner issued a blanket remission of the GIC to thousands of participants in mass marketed schemes. 68 The applicant also submitted that he is not a dilatory taxpayer; he took a view of the law which, at the time of his contributions to the superannuation fund, was consistent with the Commissioner's longstanding practice of allowing such contributions as a deduction. The applicant further submitted that: · he disclosed his tax affairs to the Commissioner by seeking a private ruling; · since that time he has been subject to what the Commissioner has conceded has been an improper attempt to punish him, actual penalties levied against him, and an administrative decision which was conceded to be flawed only shortly before a Federal Court hearing; and · he has now been subject to a delay of approximately 12 months, despite many requests for his application to be dealt with as a priority, in relation to an application not to be further penalised by the GIC until his application is properly dealt with by the Commissioner. 69 In those circumstances, the applicant submits that no reasonable decision-maker, having regard to subs 8AAG(3) could have made the decision that was made. Alternatively, the applicant submits that no reasonable decision-maker, having regard to subs 8AAG(5), could have made the decision that was made. 70 Insofar as these submissions are directed towards s 8AAG(3), they are largely misconceived because remission of the GIC under that subsection is dependent upon the Commissioner's satisfaction as to the matters referred to in subs (a) and (b). If the Commissioner was satisfied as to those matters (which he was not), there is no residual discretion to refuse to remit the GIC, and little if any room for notions of Wednesbury unreasonableness. The submissions do not focus upon whether the Commissioner's lack of satisfaction in this respect involved reviewable error. 71 The submissions make allegations of improper conduct on the part of the Commissioner and refer to alleged concessions on the part of the Commissioner that improper attempts have been made by the Commissioner to punish the applicant or levy penalties against him. None of these allegations is made good by the evidence. I have already found that delay in considering the s 8AAG decision does not provide a ground for the review of that decision once the decision has been made. The decision-maker specifically addressed the question as to whether he should follow the precedent established on 9 March 2001 of remitting the GIC by reason of antecedent delay in the consideration of the application, but decided that he should not do so. That was a matter for the decision-maker to determine. I have also decided that it has not been established that the different treatment accorded to the participants in mass marketed schemes in terms of the media release referred to in par [59] above leads to a conclusion that the s 8AAG decision was unreasonable in the Wednesbury or statutory sense. 72 The applicant's submissions on Wednesbury unreasonableness impermissibly invite the Court to embark upon a merits review of the primary decision. The applicant has not established that the decision under review is one which is irrational or illogical, nor has it been established that the decision is not one that could reasonably be arrived at by any reasonable decision-making process: see Gamaethige v Minister for Immigration & Multicultural Affairs (2001) 109 FCR 424 at [10], per Hill J. This ground on which review is sought is not made out. Apparent bias 73 In par [21] above I have extracted a portion of the Statement of Reasons for the s 255-10 decision. The applicant contends that this indicates that the decision-maker had prejudged the applicant's s 8AAG application, and that in the circumstances it was an error of law for the Commissioner to have the same decision-maker make both decisions. Decision-makers are human, so it is submitted, and although it is "possible" that the same decision-maker could treat the two matters entirely separately, it is "unreasonable" to expect that to be so. 74 The practical result which the taxpayers sought to achieve, namely relief from the GIC in the period following the date fixed for payment of the tax, could have been achieved either by a s 255-10 deferment of the date on which tax became payable, or by means of a s 8AAG remission of the GIC which accrued between the due date and some later date, such as, for example, the date of payment. The submission that different decision-makers should have been appointed to determine the s 255-10 application and the s 8AAG application differs from the stance which the applicant adopted at the time. In Mr Bonnell's letter of 18 December 2001 (see par [34] above) he asserted that there was no reason why the s 8AAG and s 255-10 applications could not be considered together. 75 There is no reason why two applications should be treated entirely separately if they are not entirely separate. There is or may be at least a considerable overlap between matters which would be relevant to the exercise of the s 255-10 discretion, and matters that would be relevant to the s 8AAG discretion. It may well be that if a taxpayer could not persuade a decision-maker to exercise the s 255-10 discretion in his favour, then he would be unlikely to be successful in achieving the same result through the medium of s 8AAG. But that does not mean that the applications should be considered by different decision-makers, or that the consequence of determining one application is disqualification from determining the other. 76 The claim for review on the ground of apparent bias fails for two reasons. First, it has not been established that the s 255-10 application and the s 8AAG application were applications which should be treated distinctly and considered separately. The fact that they are overlapping applications lodged on behalf of the same taxpayer, and designed to produce equivalent results, suggests that the contrary is so. Second, if and insofar as there are factors which were particularly germane to the determination of the s 8AAG application, it has not been established that the decision-maker had a "closed mind" in relation to those matters. The way in which the decision-maker in fact proceeded suggests to the contrary of that proposition. 77 Ultimately the application was refused because the decision-maker did not accept Mr Bonnell's submissions and found that the applicant was responsible for the delay in payment of his tax; made no part payment; did not reach any agreement as to payment; did not satisfy the decision-maker upon issues relating to his capacity to pay or hardship; and did not satisfy the decision-maker there were special circumstances, nor that there was any other reason why the GIC should be remitted. Relevant/irrelevant considerations 78 Whether circumstances are "special" in terms of s 8AAG(5)(a) or whether it is "otherwise appropriate" to remit the GIC in terms of s 8AAG(5)(b) are matters which are largely left to the decision-maker to determine, except insofar as there may be found in the subject matter, scope and purpose of the legislation some implied limitation on the factors to which the decision-maker may legitimately have regard, or some implied obligation to take particular factors into account. 79 The applicant's submission that the decision-maker failed to take into account particular matters, or took into account irrelevant matters, pays insufficient regard to the fact that the largely unconfined discretion given to the decision-maker under s 8AAG(5) had the result that it was for the decision-maker to select the matters which he regarded as being relevant to his determination, subject to the limitations earlier referred to. Conclusion 80 The application should be dismissed with costs. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely. Associate: Dated: 13 September 2002 Counsel for the Applicant: Mr M Robertson Solicitor for the Applicant: David Bonnell & Associates Counsel for the Respondent: Mr G Johnson Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 3 September 2002 Date of Judgment: 13 September 2002