FEDERAL COURT OF AUSTRALIA Commissioner of Taxation of the Commonwealth of Australia v MacArthur [2003] FCA 903 TAXES AND DUTIES – appeal from Administrative Appeals Tribunal – where taxpayer completes work in company solely owned by himself and wife – where taxpayer had past association with contractor – where entered into contracts – where Commissioner re-assessed on basis of Part IVA of Income Tax Assessment Act 1936 (Cth) – whether tax benefit obtained by taxpayer – whether benefit obtained in connection with a scheme – whether error of law. Administrative Appeals Tribunal Act 1975 (Cth) s 44 Income Tax Assessment Act 1936 (Cth) ss 177A, 177C, 177C(1), 177C(1)(a), 177D, 177F(1) Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 applied THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v PHILLIP GEORGE MACARTHUR Q 181 OF 2002 DOWSETT J 28 AUGUST 2003 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 181 OF 2002 BETWEEN: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPLICANT AND: PHILLIP GEORGE MACARTHUR RESPONDENT JUDGE: DOWSETT J DATE OF ORDER: 28 AUGUST 2003 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The matter be remitted to the Administrative Appeals Tribunal for further consideration. 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 Q181 OF 2002 BETWEEN: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPLICANT AND: PHILLIP GEORGE MACARTHUR RESPONDENT JUDGE: DOWSETT J DATE: 28 AUGUST 2003 PLACE: BRISBANE REASONS FOR JUDGMENT GENERAL 1 On 29 October 2002, the Administrative Appeals Tribunal (the "Tribunal") set aside certain decisions of the Commissioner of Taxation (the "Commissioner") disallowing objections by the respondent (the "taxpayer") against re-assessments issued by the Commissioner for the 1995/96, 1996/97 and 1997/98 tax years. Pursuant to s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (the "AAT Act") an appeal lies to this Court on a question of law. The Commissioner appeals against the Tribunal's decision. 2 The taxpayer is a civil engineer. During the tax years in question he was employed by a company, MacArthur Project Management Pty Ltd (the "company"), of which company the taxpayer and his wife were the sole shareholders. The taxpayer's wife was also employed by the company. During those years, the company entered into contracts with the Main Roads Department for the provision by the company of professional services to be supplied by the taxpayer. I set out below the findings made by the Tribunal at par 7 of its reasons (AB 656-658). In the reasons the taxpayer is referred to as the "applicant". I have amended the following extract to identify him as the "taxpayer" in order to achieve consistency with the rest of my reasons, a practice I will follow throughout my reasons where appropriate. FINDINGS OF FACT (a) (T)he taxpayer was employed by (the Main Roads Department) as a civil engineer involved in the design, construction and maintenance of roads and bridges from 1972 to 1982; (b) the taxpayer resigned from (the Main Roads Department) in 1982 and commenced contract work for Australian Development Assistance Bureau at overseas locations until 1986; (c) in 1986 the taxpayer, and his wife, returned to Australia and in September 1986 acquired a shelf company of which they became the directors for the purpose of "getting into" engineering consulting work and to facilitate superannuation arrangements; (d) the taxpayer holds two A class shares and one ordinary share in the company while his wife holds one B class share and one ordinary share – both are employees of the company and both contribute to the day-to-day conduct of company business according to their expertise and experience; (e) the business of the company was to provide project management and consulting services for which it obtained some contracts in the Northern Territory; (f) in 1987 the taxpayer, his wife and the company's business were moved to Townsville; (g) in April 1988 the company won a contract with (the Main Roads Department) and further contracts followed until September 1990; (h) from 1990 to 1995 the company undertook design construction work both on the account of its shareholders and for other parties; (i) during this time (from 1991) the company won contracts with the Queensland Department of Transport and with (the Main Roads Department) to management road and bridge construction projects in the Townsville area; (j) the work required under these contracts was for provision of services for specified road and bridge projects and involved checking contract documents, advertising of tenders, evaluation of tenders and supervision of construction on site; (k) during the relevant years the company tendered successfully for two (Main Roads Department) contracts; (l) contract CS26 for the supply of engineering consultant services from January 1994 for two years included provisions to the following effect:- (i) the company was required to nominate the personnel to perform the services contracted for and could only vary the nominated personnel with the approval of (the Main Roads Department); (ii) contrary to the standard form contract the supplementary conditions required the consultant to be located in (the Main Roads Department) premises at its district office and to have access to the following (Main Roads Department) services:- Ÿ clerical (including provision of own desk) Ÿ drafting Ÿ engineering Ÿ materials testing Ÿ surveying Ÿ quality audit; (iii) the company contracted to be paid at $48 per hour and nominated the taxpayer as the consultant setting out his professional qualifications and experience in support of the nomination; and (iv) it is clear, on the material, that the company was successful in obtaining the contract because it nominated the taxpayer as the consultant and not because of any inherent expertise on the part of the company – I am satisfied that the Department of Transport contracted on the basis that the taxpayer was the nominated consultant – Mr Mudge said in his evidence that (the Main Roads Department) looks for the particular skills required in the nominated person – in its advertisement and tender the Department called for supply of engineering consultant services but did not specify how the consultant services were to be provided; (v) the tender documents required the successful tenderer to be self-insured as to public liability, professional indemnity, and workers compensation and liable for taxation, leave entitlements, superannuation guarantee levy and workplace health and safety; (m) contract CS83 from January 1996 had similar requirements to contract CS26; (n) the company was remunerated at $48 per hour under the first contract and $49 per hour under the second contract without distinction for "overtime" hours work; (o) most aspects of the services supplied by the company for (the Main Roads Department) were actually provided by the taxpayer as an employee of the company but the taxpayer's wife also provided limited services through the taxpayer by assisting him with matters within her experience; (p) in 1996 the company entered into a contract with individuals trading as Sacilotto Engineering Services for the provision of engineering services to the company from time to time involving supervision of (the Main Roads Department) projects on behalf of the company; (q) the taxpayer's understanding of his relationship with (the Main Roads Department) was that he was not an employee of that organisation; (r) ultimate responsibility as an engineer rested with Mr Mudge as the (the Main Roads Department) engineer but the taxpayer undertook the role of engineers' representative at on-site works and in (Main Roads Department) correspondence; (s) the taxpayer's wife performed work for the company for which she had particular experience from earlier employment with (the Main Roads Department); (t) payments of fees by (the Main Roads Department) to the company were based on time sheets submitted by the company (signed by the taxpayer) to (the Main Roads Department) and based on hours worked on projects by the taxpayer. 3 The re-assessments were issued as the result of the Commissioner's having concluded that Part IVA of the Income Tax Assessment Act 1936 (Cth) (the "Assessment Act") applied to the taxpayer. Subsection 177F(1) provides as follows: Where a tax benefit has been obtained, or would but for this section be obtained, by a taxpayer in connection with a scheme to which this Part applies, the Commissioner may – (a) in the case of a tax benefit that is referable to an amount not being included in the assessable income of the taxpayer of a year of income – determine that the whole or a part of that amount shall be included in the assessable income of the taxpayer of that year of income; … and, where the Commissioner makes such a determination, he shall take such action as he considers necessary to give effect to that determination. 4 Section 177D provides: This Part applies to any scheme … where – (a) a taxpayer (in this section referred to as the "relevant taxpayer") has obtained, or would but for section 177F obtain, a tax benefit in connection with the scheme; and (b) having regard to - (i) the manner in which the scheme was entered into or carried out; (ii) the form and substance of the scheme; (iii) the time at which the scheme was entered into and the length of the period during which the scheme was carried out; (iv) the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme; (v) any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme; (vi) any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme; (vii) any other consequence for the relevant taxpayer, or for any person referred to in subparagraph (vi), of the scheme having been entered into or carried out; and (viii) the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in subparagraph (vi), it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme or of enabling the relevant taxpayer and another taxpayer or other taxpayers each to obtain a tax benefit in connection with the scheme (whether or not that person who entered into or carried out the scheme or any part of the scheme is the relevant taxpayer or is the other taxpayer or one of the other taxpayers). 5 Relevant definitions appear in s 177A as follows: 177A(1) In this Part, unless the contrary intention appears: "scheme" means: (a) any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; and (b) any scheme, plan, proposal, action, course of action or course of conduct; … . … 177A(5) A reference in this Part to a scheme or a part of a scheme being entered into or carried out by a person for a particular purpose shall be read as including a reference to the scheme or the part of the scheme being entered into or carried out by the person for 2 or more purposes of which that particular purpose is the dominant purpose. 6 Subsection 177C(1) provides: Subject to this section, a reference in this Part to the obtaining by a taxpayer of a tax benefit in connection with a scheme shall be read as a reference to – (a) an amount not being included in the assessable income of the taxpayer of a year of income where that amount would have been included, or might reasonably be expected to have been included, in the assessable income of the taxpayer of that year of income if the scheme had not been entered into or carried out; … and, for the purposes of this Part, the amount of the tax benefit shall be taken to be - (c) in a case to which paragraph (a) applies – the amount referred to in that paragraph; … . 7 Other provisions permit adjustment for allowable deductions. It is not presently necessary to discuss those matters. 8 Subsection 177F(1) contemplates: Ÿ A tax benefit obtained by a relevant taxpayer; and Ÿ That such benefit was obtained in connection with a scheme to which Part IVA applies. 9 There will be a tax benefit if an amount has not been included in the assessable income of the taxpayer where that amount would have been included, or might reasonably have been expected to have been included, if the scheme had not been entered into or carried out. 10 The scheme will be a scheme to which Part IVA applies if the persons entering into the scheme did so for the dominant purpose of enabling the taxpayer to obtain a tax benefit in connection with the scheme, having regard to the various considerations set out in s 177D. 11 In the Tribunal, the Commissioner submitted that the relevant scheme was constituted by: (i) The use of (the company) controlled by the taxpayer and his wife, to supply the personal services of the taxpayer to (the Main Roads Department). (ii) The taxpayer's employment by (the company) to provide those consultancy services to (the Main Roads Department). (iii) The employment of the taxpayer's wife as an employee of the company and the payment of a salary to her which was not commensurate with the duties performed. (iv) The payment by (the company) of superannuation contributions in respect of the taxpayer and his wife. (v) The generation of surplus income in (the company). (vi) The accumulation and retention of surplus income by (the company). (vii) The distribution of part of that retained income to the taxpayer's wife as and by way of dividend payments. (viii) The payment by (the company) of a salary to the taxpayer which was substantially less than the amount paid by (the Main Roads Department) for the provision of his personal services. (c) The taxpayer obtained a tax benefit as defined in s177C in relation to each of the years of income ended 30 June 1996, 1997, and 1998, where personal services income derived by (the company) under the contracts would have instead been derived by the taxpayer if the scheme had not been entered into or carried out. (d) The tax benefits derived were the amounts of personal services income derived by (the company), instead of by the taxpayer, less emoluments paid by (the company) to the taxpayer and previously returned as the taxpayer's assessable income. … The amounts of the tax benefits for each respective year are as follows: a. 1996: $62,347; b. 1997: $74,907; c. 1998: $77,143. 12 The AAT concluded (at AB 659 par 8) that: The arrangements between the company and (the Main Roads Department) as evidenced by the written contracts are arrangements within the definition of "scheme" in section 177A of the Act. 13 There is no challenge to this finding. In par 7 of his submissions on appeal, the Commissioner makes it clear that the asserted tax benefits were "…amounts derived by the company under two specific contracts…". At pars 10 - 14 the Tribunal addressed the question of whether there was a tax benefit as follows: 10. Section 177C(1)(a) determines what is a tax benefit as an amount not being included in the assessable income of the taxpayer where that amount would have been included, or might reasonably be expected to have been included, in that assessable income if the scheme had not been entered into or carried out. 11. If the company had not entered into the contracts with (the Main Roads Department) there would be no relevant assessable income to be considered unless it is somehow assumed that the taxpayer had a subsisting contract of employment with (the Main Roads Department). There is, however, nothing in the material to suggest that there was a contract of employment. Certainly an officious bystander may have come to the conclusion that the taxpayer appeared to be an employee but the contract between the company and (the Main Roads Department) denies that to be the case because it specifically makes the company liable for the taxpayer's entitlements of employment as an employee of the company. 12. The fact of the taxpayer's employment with (the Main Roads Department) until 1982 but not thereafter, distinguishes this case from cases where an employee seeks to change the contract of employment to a contract for service. It might be thought to be clear in such a case that a tax benefit arises under the scheme. 13. That is not the case on the facts of this case. While there is clearly a scheme in this case there is, just as clearly, no tax benefit that can be determined in accordance with section 177C(1) of the Act. There is no basis for finding that if the scheme had not been entered into or carried out an amount would have been included in the assessable income of the taxpayer. 14. I am satisfied that if the scheme had not been entered into there would be no relevant amount which could be included in assessable income of the company nor any relevant amount that could be included in the assessable income of the taxpayer. There was no tax benefit. I am not satisfied that if the company had not entered into the arrangements with (the Main Roads Department) that the taxpayer would have or may reasonably be expected to have entered into a scheme with (the Main Roads Department) whereby the taxpayer derived fees payable under such a supposed contract. 14 The Commissioner criticises the Tribunal's decision upon the basis that it wrongly applied what is described as the "antecedent transaction doctrine". This seems to mean that the Tribunal proceeded upon the basis that Part IVA would only apply if it were shown that the scheme in question replaced some prior transaction. I do not consider this to be a fair criticism of the Tribunal's reasons, although I agree that par 11 may be a little opaque. Paragraph 12 makes its meaning clear. In pars 11 and 12, the Tribunal contemplates a situation in which an employee or contractor terminates existing arrangements and causes a company to employ him to perform the same duties pursuant to a contract between that company and the former employer. The Tribunal considered, correctly, that in such a case, the Commissioner's position for the purposes of Part IVA would be stronger than in circumstances where there was no such history. Paragraph 11 should be understood as a finding that there was, in fact, a contract between the company and the Main Roads Department, and that the taxpayer was, in fact, employed by the company and not by the Department. 15 The Commissioner also submits that the Tribunal misunderstood the identified tax benefit upon which he relied. At par 19 of the Commissioner's submissions before me, he submits: 19. However, the (Commissioner) does not submit that the (taxpayer) would necessarily have been an employee of (the Main Roads Department), but for the scheme. All the (Commissioner) submits is that, but for the scheme, the (taxpayer) might reasonably have been expected to have earned income produced from a particular type of activity – that is, the provision of personal services. 20. It must be reasonable to hypothesise that, if the (taxpayer) had not contracted in the name of his company for this work, he would have contracted in his own name. No evidence was run to show that there was another possibility, despite the (taxpayer) bearing the onus of showing that the assessments were excessive. 21. In short, the Tribunal was wrong to have construed s177C(1)(a) as requiring, in the circumstances of this case, that there be an antecedent employment relationship before it could be concluded that there was a tax benefit (as identified by the (Commissioner)). 16 Paragraph 21 again misrepresents the Tribunal's findings. 17 Paragraphs 19 and 20 are arguably mutually inconsistent. In par 19 the Commissioner submits that absent the scheme, the taxpayer might reasonably have been expected to earn income from the provision of personal services, not necessarily derived from the Main Roads Department. In par 20, however, the Commissioner submits that, had the taxpayer not contracted in the name of his company for "this work", he would have contracted in his own name. Footnote 18, which relates to this paragraph, is a little confusing because of the reference to the State Transport Department (rather than the Main Roads Department), but it suggests that in par 20, the focus is the provision of services to the relevant department. Paragraph 19 also appears to be inconsistent with the summary of argument before the Tribunal which is set out above and par 7 of his submissions on appeal to which I have previously referred. Clearly, before the Tribunal, the Commissioner asserted that absent the company, the taxpayer would have contracted personally with the Main Roads Department and that the tax benefit was to be identified by reference to amounts payable under the departmental contracts. 18 The test prescribed by par 177C(1)(a) does not require that the relevant tax benefit reflect a particular amount included in the taxable income of another entity. It requires only identification of an amount not included in the taxpayer's assessable income. In many cases that amount may be quantified by reference to an amount actually received by another entity, but that need not always be the case. As much is established by the decision of the High Court in Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 at 424. In that case the taxpayers had deposited a substantial amount of money with a bank ("EPBCL") in the Cook Islands at a rate of interest which was lower than that obtainable in Australia. However tax payable in the Cook Islands on interest derived there was substantially lower than that payable in Australia on interest derived here. It seems that the taxpayers were not, absent the application of Part IVA, liable to Australian tax on interest derived in the Cook Islands. The tax saving exceeded the loss incurred as a result of the unfavourable interest rate. 19 Brennan CJ, Dawson, Toohey, Gaudron, Gummow and Kirby JJ observed at 423-4: The taxpayers submit that the Full Court erred in holding that, if the scheme had not been entered into or carried out, an amount of income from the use of the sum on deposit would have been, or could reasonably be expected to have been, included in the assessable incomes of the taxpayers for the year of income. They submit that there is no possible way of knowing whether the amount actually derived from the investment, or any other particular amount, would have been included in the assessable income of the taxpayers had they chosen not to make the investment that they did. It is said that, if the taxpayers had not entered into the scheme, there would have been no interest and no amount would have been included in assessable income with the result that the definition of "tax benefit" set out above makes no sense in the context of the present case. The submission turns upon the use in par (a) of s 177C(1) of the expression "an amount not being included". This applies where, but for the scheme, "that amount" would have been included in the assessable income or might reasonably have been expected to be so included. The submission is that the reference in this case is to the amount of interest actually received from EPBCL after the imposition of withholding tax. It is said that without the scheme there would have been no investment in EPBCL, that amount would not have existed, and par (a) of s 177C(1) would have had no subject matter upon which to operate. In our view, the amount to which par (a) refers as not being included in the assessable income of the taxpayer is identified more generally than the taxpayers would have it. The paragraph speaks of the amount produced from a particular source or activity. In the present case, this was the investment of $40 million and its employment to generate a return to the taxpayers. It is sufficient that at least the amount in question might reasonably have been included in the assessable income had the scheme not been entered into or carried out. Section 177D presents the question whether, having regard to the eight categories of matter identified in par (b), posited as objective facts, in the present case a reasonable person would conclude that the taxpayers entered into the scheme for the dominant purpose of enabling each to obtain a "tax benefit" in the necessary sense. A particular application of the definition provision of "tax benefit" in s 177C(1) thus involves consideration of the particular materials answering the various categories in par (b) of s 177D. The taxpayers were determined to place the $40 million in short-term investment for the balance of the then current financial year. The reasonable expectation is that, in the absence of any other acceptable alternative proposal for "off-shore" investment at interest, the taxpayers would have invested the funds, for the balance of the financial year, in Australia. The amount derived from that investment then would have been included in the assessable income of the taxpayers. The interest rate in the Cook Islands was 4.5 per cent below applicable bank rates in Australia. It reasonably could be concluded that the amount the taxpayers would have received on the Australian investment would have been not less than the amount of interest in fact received from the investment with EPBCL. Accordingly, there is no error adverse to the taxpayers in identifying the amount of the "tax benefit" as an amount equal to the interest less the Cook Islands withholding tax. In other words, the proper inquiry is as to what may have occurred had the scheme not been adopted and as to any amount which might, in those circumstances have been included in the taxpayer's assessable income. In the present case, the contracts with the Main Roads Department were identified as aspects of the scheme, but the relevant tax benefits need not have been tied to notional contracts that the taxpayer may have entered in to with the Department. The Commissioner might well have postulated that the taxpayer would have continued to practise his profession in his own name, deriving income from retainers received from various unidentified entities, possibly, but not necessarily including the Main Roads Department. 20 Nevertheless, it seems that in the Tribunal, the Commissioner identified the relevant tax benefit by reference to amounts which might have been received from that source by the taxpayer, had he contracted personally with the Department. That this was also the basis of his decision to disallow the objections as appears from the reasons given for that decision at AB 247 as follows: The parties intended that the transactions took effect according to their tenor and that the legal source of the income was via the contracts entered into for the provision of personal services between (the Main Roads Department) and (the company). However, the tax benefit obtained by (the taxpayer) arose through (his) being engaged by (the company) at a salary level far less than commensurate with the degree of (his) services provided. It is considered that but for the scheme the amounts of gross income received by the company would have been included in (the taxpayer's) assessable income. Even on the basis that (the Main Roads Department) required incorporation by contractors in order to obtain contract work, it would be reasonable to expect that (the taxpayer) would have received that income from the company in the form of a salary, at least of an amount which reflected the true value of (his) worth to the company. 21 It is clear from the taxpayer's outline of argument that he has proceeded upon that understanding of the Commissioner's position. In those circumstances it would be inappropriate, in this appeal, to allow the Commissioner to depart from that position, if that is what he intends to do. Clearly, the Tribunal understood the Commissioner's argument to be as I have indicated. In its reasons it recognised that this was not a situation in which there was any relevant pre-existing contractual relationship with the Department. In par 13 it concluded that there was "…no tax benefit that can be determined in accordance with s 177C(1)…". It is not clear what is meant by the word "determined" in this context. In the next sentence it is suggested that there was "…no basis for finding that if the scheme had not been entered into or carried out an amount would have been included…" in the taxpayer's assessable income. It was not necessary to find that such an amount would have been included. It was necessary only to find that such an amount "…would have been included, or might reasonably be expected to have been included…" in such income. 22 In par 14, the Tribunal concluded that: … if the scheme had not been entered into there would be no relevant amount which could be included in assessable income of the company nor any relevant amount that could be included in the assessable income of the taxpayer. 23 This seems to mean that there was simply no possibility that any amount identifiable on the evidence could have been so included. It may be explained by the further statement that: I am not satisfied that if the company had not entered into the arrangements with (the Main Roads Department) that the taxpayer would have or may reasonably be expected to have entered into a scheme with (the Main Roads Department) whereby the taxpayer derived fees payable under such a supposed contract. 24 No reasons are offered for this conclusion. In particular the Tribunal did not address the fact that the Main Roads Department had been willing to enter into a contract with the company pursuant to which the taxpayer was to perform the work in question, nor that the taxpayer or his wife presumably negotiated the agreements on behalf of the company. There seems to have been no suggestion that the Main Roads Department treated the company (as opposed to the taxpayer) as being the party with which it wished to contract. There may well have been other factors associated with the prior relationship between the company, the taxpayer and the Department which were relevant to this question, but these were, in my view, the primary facts upon which the Commissioner relied in seeking to demonstrate that there were relevant tax benefits. 25 There was every reason to expect that in the absence of the company, the taxpayer would have continued to practise his profession in his own name. It was quite possible that in so doing, he would have entered into contracts with the Department. The Tribunal's failure to deal with this possibility suggests to me that it misunderstood the appropriate question for consideration. It is likely that it proceeded upon the basis that it had to be satisfied that absent the company, the taxpayer would have entered into personal contracts with the Department. Despite its accurate statement of the relevant provisions of the Assessment Act, it is clear that it did not consider whether the taxpayer might reasonably have been expected to contract with the Department. Specific evidence of that possibility was not necessary. It was an available inference from the evidence to which I have referred. 26 In those circumstances the appeal should be allowed and the matter remitted to the Administrative Appeals Tribunal for further consideration. The Commissioner has submitted that a differently constituted Tribunal should consider the matter. He makes this submission upon the basis that the member who previously dealt with the matter obviously formed a favourable view of the credibility of the taxpayer and perhaps his wife. That may be so, but such credibility was not relevant to these proceedings. I can see no reason to believe that the member could not properly dispose of the matter, having regard to these reasons. I am not necessarily suggesting that he should continue in the matter, but I see no reason why he should not. The question can safely be left to the internal procedures normally adopted within the Tribunal. 27 The Commissioner in his written submissions reserved his right to apply for costs. I will hear submissions after publication of these reasons. I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate: Dated: 28 August 2003 Counsel for the Applicant: Mr J Logan SC & Mr D Marks Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr R Gotterson QC & Mr M Robertson Solicitor for the Respondent: Mark Stevenson, Solicitor Date of Hearing: 5 June 2003 Date of Judgment: 28 August 2003