Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Edgely Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAP 37 Hearing dates: 28 November 2014 Date of orders: 12 March 2015 Decision date: 12 March 2015 Jurisdiction: Appeal Panel Before: R L Seiden SC, Principal Member S Frost, Senior Member Decision: 1. Appeal dismissed. 2. Decision under review at first instance affirmed. Catchwords: APPEAL – Civil and Administrative Tribunal (NSW) – land tax – grouping provisions – validity of notice of assessment – jurisdiction to appeal - whether question of law – jurisdiction of Tribunal to undertake merits review where no valid notice of assessment Legislation Cited: Administrative Decisions Review Act 1997 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Land Tax Management Act 1956 (NSW) Supreme Court Act 1970 (NSW) Taxation Administration Act 1996 (NSW) Cases Cited: Allan J Heasman Pty Ltd v Commissioner of Taxation [2014] FCA 1282 Batagol v FCT (1963) 109 CLR 243 Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 Chief Commissioner of State Revenue v Print National Pty Ltd [2013] NSWCA 96; (2013) 83 NSWLR 555 Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 41 FLR 338 Drake v Minister for Ethnic Affairs (1979) 46 FLR 409 Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378 FJ Bloemen Pty Ltd v FCT [1981] HCA 27; (1981) 147 CLR 360 James v Chief Commissioner of State Revenue (No 2) [2011] NSWSC 654; (2011) 81 NSWLR 267 Kennedy v AAT & Anor [2008] FCAFC 124; (2008) 168 FCR 566 Lombard Farms Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 42 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Sunol v Collier [2012] NSWCA 14 Zubair v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 248; (2004) 139 FCR 344 Category: Principal judgment Parties: Edgely Pty Limited (Appellant) Chief Commissioner of State Revenue (Respondent) Representation: Counsel: C Robinson (Appellant) J Mitchell (Respondent) Solicitors: City Legal Solicitors (Appellant) Crown Solicitor's Office (Respondent) File Number(s): AP 14/0331 Decision under appeal Court or tribunal: New South Wales Civil and Administrative Tribunal Jurisdiction: Administrative and Equal Opportunity Division Citation: [2014] NSWCATAD 103 Date of Decision: 17 July 2014 Before: J Block, Senior Member File Number(s): 116100 REASONS FOR DECISION Background and nature of the dispute 1. This is an appeal against a decision of the Tribunal, dated 17 July 2014, concerning a land tax assessment for the 2010 year: [2014] NSWCATAD 103 (the Decision). However, as a result of the arguments put by the appellant, it is necessary to recount the circumstances surrounding assessments for earlier tax years. 2. Consequent upon an audit, commenced in November 2006, notices of assessment to land tax for the years 2002 to 2007 were issued by the respondent to the appellant on 20 September 2007. Subsequently, assessments to land tax were issued for the 2008 and 2009 years. Those assessments were paid. 3. Subsequently, the respondent determined that the appellant was part of a group of related land owners and classified the appellant as a non-concessional taxpayer. Where companies are grouped, there is a single tax free threshold: s 29 of the Land Tax Management Act 1956 (NSW). Members of a group who have been classified as non-concessional members are not entitled to the tax free threshold under the Land Tax Management Act. As a non-concessional member of a group the appellant was not entitled to the tax free threshold. Accordingly, the assessments for the years 2002 to 2009 were amended and the appellant's liability was increased. Notices of amended assessment for those years were served and objections were lodged with respect to those years. 4. On 18 January 2010 a document styled "Land Tax Assessment Notice" was issued. It stated "Land Tax in this notice has been assessed for the: 2010 Tax Year" (the 2010 notice). In this year, the appellant was treated as a concessional taxpayer and allowed the tax free threshold. This document, which the appellant refers to as a purported notice of assessment, is the focus of this appeal. The primary complaint with the notice is that it included, in an undissected sum, the amount referrable to tax for the 2010 year and also amounts payable in relation to the amendments to assessment in the earlier tax years that remained unpaid. 5. The essence of the dispute is not whether the appellant is exigible to land tax in the 2010 year, nor does it concern the quantum of the land tax liability. The parties are agreed that the correct amount of land tax for the 2010 tax year is $64,754.65. The whole debate is whether, on agreed facts as to the quantum of liability, the Decision ought to be affirmed or set aside. 6. The dispute relates to the fact that the 2010 notice does not, on the front page, isolate and identify an amount for the 2010 year. In the appellant's contention the notice is a single page document and the amount of land tax assessment solely for the 2010 year does not appear on the notice. The appellant contends that to the extent the figures appear in material that accompanied the notice of assessment, this does not remedy the alleged defect in the notice. 7. The appellant also contends that the alleged defect in the notice of assessment dated January 2010 affects the assessment for the 2010 year. The primary contention is that until a valid notice is served (i.e., one that accurately reflects the assessment made), there is no assessment. Alternatively, if there is an assessment, it necessarily includes the amounts outstanding for earlier years (as they are incorporated in the 2010 notice) and therefore the amounts that relate to the earlier years are reviewable by the Tribunal. An additional contention, in the event that there is held to be an assessment which incorporates the earlier years, relates to the denial of concessional status to the appellant, in those earlier years. The decision below at first instance 1. At first instance, the Tribunal rejected the argument advanced by the then applicant that the 2010 notice was invalid, on the grounds that the respondent had impermissibly rolled into it other amounts said to be referrable to earlier years of tax. The Tribunal held that the 2010 notice included at [19]: … on the cover page an amount, expressed to be due and payable, that was the sum of the assessment for the 2010 land tax year and those amounts still due and unpaid from assessments of previous land tax years. This was made plain on the face of the assessment. 1. The Tribunal held at [21]-[22] that the requirements of s 14 and s 15 of the Land Tax Management Act (that the 2010 notice contain details of the taxable value of the land, the land tax payable and the land value) were satisfied: that material was in the supporting material which made up part of the 2010 notice. Further, the Tribunal held at [23] that there was no prohibition in the Land Tax Management Act or the Taxation Administration Act 1996 (NSW) (TAA) against including reference to other outstanding amounts, referable to earlier land tax years, in a notice of assessment. 2. The Tribunal rejected a related argument that there was reflected in the 2010 notice, simply because earlier amounts had been included, assessments or reassessments in respect of the earlier years. Further, the Tribunal rejected the submission that the insertion of a fresh due date on the cover page somehow reset the interest payable in respect of assessments arising from earlier land tax years: at [24]-[25]. 3. The Tribunal held that with respect to the earlier years, it had no jurisdiction, as either no objections to the assessments had been lodged with the respondent, or no application for review of the assessments relating to those years had been filed, in accordance with s 96 of the TAA: at [6]. 4. Finally, the Tribunal rejected the then applicant's contention that the respondent had erred in his decision to group related companies and deny concessional status to the then applicant, thereby denying the applicant the land tax threshold: at [26]. Jurisdiction to appeal 1. Section 80(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (the Act) provides that an appeal against an internally appealable decision may be made to the Appeal Panel. An internally appealable decision is defined in s 32 of the Act to include a general decision made by the Tribunal. A general decision is defined in s 29 of the Act as a decision made in the exercise of the Tribunal's general jurisdiction which is, in turn, ascertained by reference to legislation other than the Act. In this case, the Tribunal's general jurisdiction was enlivened by s 96 of the TAA, which provides that a taxpayer may apply to the Tribunal for a review of a decision of the respondent that has been the subject of an objection. 2. At first instance, the Tribunal identified the decision under review as the disallowance by the respondent of the appellant's objection. However, as s 96 of the TAA prescribes, the decision under review is the decision the subject of the objection: see too Chief Commissioner of State Revenue v Paspaley [2008] NSWCA 184 at [28]. In other words, the decision under review was the assessment the subject of the objection. The parties agreed that nothing turns on this, so far as the Appeal Panel's jurisdiction is concerned. A decision is defined in s 5(2) of the Act, to include a decision made in purported exercise of a function conferred under this Act. Accordingly, the Decision at first instance is an appealable decision. 3. By s 80(2) of the Act, an appeal from an internally appealable decision lies, as of right on any question of law or, with the leave of the Appeal Panel, on any other grounds. The appellant is not seeking leave to appeal. 4. It is necessary that a question of law be stated with precision, as an appellant's right to appeal to the Appeal Panel arises from the question of law and is the subject matter of the appeal. This was recently highlighted by the Court of Appeal, in the context of an appeal from a decision of the Appeal Panel to the Supreme Court, in Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378: see in particular Leeming JA at [3] and White J at [22]. The difficulties in formulating a question of law are referred to by Leeming JA at [4] to [6]. The importance of the question of law was the subject of extensive consideration by the Appeal Panel in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [11] and [13]. We return to this below. The notice of appeal 1. The grounds of appeal here are as follows: 1. The Tribunal erred in failing to set aside a Notice of Assessment for the 2010 Land Tax Year which on its face included amounts of Land tax other than the tax assessed for the 2010 Land Tax Year; The Tribunal erred when Block s.m. misdirected himself as to: 2. the meaning of "assessment" and "reassessment" for the purposes of the Land Tax legislation; 3. the requirements of a valid Notice of Assessment of Land Tax; Having found that the 2010 Notice of Assessment of Land Tax was valid, the Tribunal erred when Block s.m.: 4. found that the tribunal had no jurisdiction in connection with amounts assessed in prior years, which were included in the amount due and payable in the 2010 Notice of Assessment of Land Tax; 5. found that the Applicant could not challenge in all particulars, the amount said to be due and payable for Land tax on the face of the Notice of Assessment for the 2010 Land Tax year; 6. failed to consider whether the Respondent had power to amend the original assessments of Land tax in prior years after the tax had been paid by the Applicant, the Applicant having made "full and true disclosure"; 7. failed to consider whether the Respondent had power to reverse its decision that the Applicant was a "concessional" taxpayer; 8. failed to consider whether the Respondent had any reason to reverse its decision that the Applicant was a "concessional" taxpayer; 9. failed to consider whether the Respondent had given any adequate reason, or any reason at all, for its decision to reverse the Applicant's treatment as a "concessional" taxpayer. Contentions of the parties on questions of law 1. With respect to Grounds 1 to 3, the appellant contends that the questions of law relate to the construction of the statutory provisions concerning assessment and reassessment and also to the requirements of a valid notice of assessment. The appellant contends that on the facts found, it was not open to conclude that a valid notice of assessment for the 2010 tax year had been served. As this was a necessary precondition to the making of an assessment, it was not open to conclude that there was a valid assessment for that year. Put another way, the questions of law said to arise are whether, on the facts as found, there is a notice of assessment and an assessment for the 2010 year. 2. In relation to Grounds 4 to 9, concerning the Tribunal's conclusion that there was no jurisdiction to review earlier years, the appellant, in effect, contends that if the 2010 notice validly included earlier years' liabilities then so did the assessment for the 2010 tax year. The appellant contends that the Tribunal erred in concluding that the assessments for the earlier years were not the subject of the review. This was said to raise questions of law involving both the scope of the Tribunal's jurisdiction and the construction of the provisions concerning assessment and reassessment. 3. On the other hand, the respondent contends that the grounds of appeal assume a foundation of facts inconsistent with the facts found by the Tribunal and accordingly, raise questions of fact or mixed questions of fact and law. The respondent contends that the grounds of appeal have, at their heart, the proposition that the 2010 notice did not state the taxable value of the land and the land tax payable thereon and was therefore not in accordance with s 14 of the Land Tax Management Act and in any event, was inconsistent with the assessment actually made, by the undifferentiated inclusion of the amounts owing in the earlier years. However, the Tribunal held at [21] to [22] that the 2010 notice complied with ss 14 and 15 of the Land Tax Management Act. 4. To counter this, the appellant contended that the Tribunal erred in construing the 2010 notice as incorporating the supporting material and cited FJ Bloemen Pty Ltd v FCT [1981] HCA 27; (1981) 147 CLR 360 at 372 for the proposition that, at law, a notice is separate from its supporting materials and accordingly there is an anterior question of law as to what constitutes the notice. Grounds 1 to 3 1. In Lombard Farms Pty Ltd v Chief Commissioner of State Revenue [2013] NSWADTAP 42 at [9] to [23] the Appeal Panel considered the distinction between questions of law and fact. Where what is alleged is that the facts as found are incapable of satisfying the statutory provision, a question of law arises. Further, where the question involves construction of the statute, a question of law arises. 2. Accepting, for the moment, that the appellant is correct and that Grounds 1 to 3 are based on the facts as found (which we note is disputed by the respondent), the questions of law which arise are: whether the 2010 notice could constitute a valid notice of assessment and whether a valid notice of assessment was a necessary requirement for a valid assessment. 3. Nevertheless, that is not the end of the inquiry. The questions of law must arise in the appeal. As noted by the Court of Appeal in Ferella, the questions of law are the subject matter of the appeal. These questions do not arise in the appeal for the following reasons. 4. In essence, the appellant's primary contention is that the 2010 notice was fatally flawed and unless and until there was a valid notice there could be no valid assessment and the Tribunal erred in not so holding. 5. The questions of law (assuming them to be so) posed by the appellant concern the Tribunal's jurisdiction and function, where what is alleged is that there is no valid assessment. The parties were invited to address the Appeal Panel on this issue. In addition to referring to Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 41 FLR 338 (which is longstanding authority for the proposition that the Tribunal has jurisdiction to review an invalid decision), the appellant referred the Appeal Panel to Zubair v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 248; (2004) 139 FCR 344 and particularly the passage at [24]: 24 In the light of those remarks, in our judgment the appropriate starting point is the provisions of the Act itself. In Jadwan Pty Ltd v Secretary, Department of Health and Aged Care (2003) 204 ALR 55; [2003] FCAFC 288, Gray and Downes JJ at 68, [42] said: In our view Bhardwaj cannot be taken to be authority for a universal proposition that jurisdictional error on the part of a decision-maker will lead to the decision having no consequences whatsoever. All that it shows is that the legal and factual consequences of the decision, if any, will depend on the particular statute. As McHugh, Gummow, Kirby and Hayne JJ said in Project Blue Sky Inc v Australian Broadcasting Authority (1988) 194 CLR 355 at 388 – 399: An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with a condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. 1. Brian Lawlor is also authority for the proposition that the role of a Tribunal, such as this Tribunal, is to engage in merits review of a decision. The Tribunal's task is not to inquire as to the validity of a decision or whether it is infected with legal error. So much may be readily accepted. The Act, through its expanded definition of decision, in s 5, provides that a reviewable decision includes a purported decision and one made in excess of power. 2. Accordingly, the Tribunal need not assure itself of the validity of a decision before engaging in merits review. 3. The respondent, in his submission filed on this issue, reiterated his position that there were no questions of law, for the reason that the grounds assumed facts contrary to the findings of the Tribunal. Further, the respondent highlighted that the Tribunal has no power to declare the assessment invalid: it has no powers akin to those of s 69 of the Supreme Court Act 1970 (NSW): see too James v Chief Commissioner of State Revenue (No 2) [2011] NSWSC 654; (2011) 81 NSWLR 267, an application for declaratory relief, brought in the Supreme Court. 4. Finally, the respondent contends that the Tribunal has jurisdiction to review a decision which has been the subject of an objection: s 96 TAA. The appellant has, in effect, conceded by objecting, that there was in fact an assessment. 5. As noted in Sunol v Collier [2012] NSWCA 14 in relation to the Tribunal's opinion on the constitutional validity of State legislation; the Tribunal may be persuaded, as a result of its opinion, not to make an order, but it does not have jurisdiction to determine the validity of a State Act: at [20]. Here the Tribunal has jurisdiction to review an assessment or purported assessment and to form the correct and preferable decision on the merits, but it does not have jurisdiction to declare that the purported assessment is invalid or legally flawed. 6. By analogy, a question of jurisdictional error in relation to the Commissioner of Taxation's powers of assessment is incapable of being raised in the Administrative Appeals Tribunal (the AAT) on a review of an objection decision to an assessment under Commonwealth legislation. In Kennedy v AAT & Anor [2008] FCAFC 124; (2008) 168 FCR 566 at [22]-[23] the Full Federal Court put this as follows: More recently, in Minister for Immigration and Multicultural and Indigenous Affairs v Ahmed (2005) 143 FCR 314 at 323, the Full Federal Court observed that the judgment as to the validity of a Minister's actions is for the courts, not for an administrative body such as a Tribunal: see also Zubair v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 139 FCR 344. Accordingly, if the Tribunal in this case were to make an administrative ruling that the Commissioner's assessments were valid, this would not take effect as a binding determination of law, and the Commissioner would remain entitled to collect tax pursuant to the assessments subject to any determination by a court that those assessments were not valid. 1. This was recently considered in Allan J Heasman Pty Ltd v Commissioner of Taxation [2014] FCA 1282 and Jagot J said at [57]: Provided the Commissioner has purported to make an assessment (and a related objection decision) the Pt IVC review power is available. This is so whether or not the assessment is valid or invalid. In the Pt IVC review the issue is whether the assessment is excessive. That does not encompass the question whether the assessment is valid or not. 1. Her Honour held (at [70]) that a question of law relating to whether the Commissioner of Taxation had power to amend an assessment, did not arise in an appeal on a question of law from a review of the objection decision by the Tribunal. 2. The Appeal Panel is satisfied that the Tribunal may review an invalid decision, but its role is to perform merits review, irrespective of whether it is reviewing an alleged invalid decision. The Tribunal's task is to determine the correct or preferable decision and not to be concerned with errors of law in the decision: Drake v Minister for Ethnic Affairs (1979) 46 FLR 409 at 419. This is true even where an assessment might otherwise be defective on the grounds of jurisdictional error, provided the assessment purports to have been made in exercise of powers conferred by the relevant statute: Kennedy v AAT & Anor [2008] FCAFC 124; (2008) 168 FCR 566; Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 41 FLR 338 at 343-344. 3. The Appellant has raised questions which go to the validity of the assessment or notice of assessment and accordingly such questions are not the subject of review by the Tribunal because they are not relevant to its task. The question for the Tribunal concerned the correct quantum of liability for the assessment which had been the subject of an objection and objection decision: s 96 of the TAA. The parties have agreed upon a figure for the 2010 year, and so the questions posed by the Appellant do not arise in the appeal. 4. If we are wrong in this and for the reason that it is relevant to Grounds 4 to 9, we note that nevertheless we see no error of law in the Tribunal's conclusion. Even if an assessment to land tax is only complete on service of a notice of assessment there has been service of the 2010 notice. It is noted that Batagol v FCT (1963) 109 CLR 243 and FJ Bloemen Pty Ltd v FCT [1981] HCA 27; (1981) 147 CLR 360 are both authority for the proposition that in relation to income tax, until service of a notice of assessment, the assessment itself is not complete. Sections 14 and 15 direct the Chief Commissioner to make an assessment of land tax and prescribe what must be in the notice. 5. The appellant contends that, properly read, the 2010 notice either identifies the 2010 liability far in excess of the acknowledged liability, or impermissibly includes reassessments of earlier years' liabilities. In either case, it is submitted that it is an invalid notice of assessment and its service could not have constituted valid completion of the assessment process. 6. The Appeal Panel rejects the contention that the 2010 notice is not a notice of assessment for the 2010 land tax year. The notice, in terms, incorporated the accompanying supporting information by stating on the front page "Assessment summary (refer to enclosed supporting information)". The particulars required by the Land Tax Management Act, such as land value and taxable land value appear in the enclosed information as does a breakdown of the amounts due. There was no dispute that a notice may permissibly include other information. In this case it included details of other amounts outstanding. Accordingly, a notice of assessment in respect of the 2010 year was served. 7. Even if the notice did not correctly reflect the assessment made, this does not vitiate the assessment: see for instance Allan J Heasman Pty Ltd v Commissioner of Taxation [2014] FCA 1282 at [65] where it was held that a notice styled notice of amended assessment could not change the character of the assessment from being what it was, an original assessment. 8. In conclusion, Grounds 1 to 3 do not raise a question of law addressed to the quantum of the assessment and in fact the parties are agreed that land tax is exigible and the parties are agreed as to the amount. Accordingly, the questions do not arise. In the event this is incorrect, there is nevertheless no error of law disclosed in the Tribunal's reasons that the 2010 notice and the assessment for that year were correct. The Tribunal's only error lay in identifying the decision under review as the objection decision, when it was the underlying assessment that was the object of review. As stated earlier, nothing turns on that. Grounds 4 to 9 1. Grounds 4 to 9 concern an alternative basis upon which the appellant founded its case. In the event the notice of assessment for 2010 and its underlying assessment were valid, then it was contended that questions concerning jurisdiction of the Tribunal and questions concerning the construction of the respondent's powers to reassess earlier years arose. This was for the reason, so it was contended, that the 2010 notice incorporated amounts outstanding for earlier years and must reflect the reassessment of those earlier years, or the inclusion of those amounts in the 2010 notice, incorporated the earlier liabilities into the 2010 assessment itself. 2. The appellant contends that these grounds raise the questions of what constitutes an assessment and what are its particulars and the scope of review at first instance. In effect, the appellant contends that the Tribunal failed to exercise its jurisdiction. The respondent contends that these grounds are at odds with the factual findings at first instance. 3. The appellant contends that the Tribunal's errors go to the heart of what is an assessment, reassessment and their particulars. The appellant contends that properly construed the assessment, the subject of the review, included the quantum of liability for the earlier years. In particular, the decision to treat the appellant as a non-concessional taxpayer was reviewable in the proceedings because it was an element going to liability in relation to the earlier years and the liability for earlier years was reviewable because it had been incorporated into the 2010 notice and by necessary implication the assessment for the 2010 tax year. 4. We have concluded above that the 2010 notice is a notice with respect to the assessment to land tax for the 2010 land tax year. It is not a notice with respect to the earlier years. The supporting materials (which were incorporated expressly into the 2010 notice) particularise amounts for the 2010 year and amounts for earlier years. There is no incorporation of earlier amounts to the 2010 assessment. Accordingly, Grounds 4 to 9 do not arise. Conclusion 1. As a Tribunal of merits review, the validity of the decision under review was not the subject of review at first instance. For this reason the questions arising from Grounds 1 to 3 do not arise on this appeal. Grounds 4 to 9 were couched in the event the Appeal Panel was satisfied that the assessments the subject of review included assessments or reassessments for earlier years' liabilities. The Appeal Panel is satisfied that the 2010 notice did not have that effect. 2. The appeal must accordingly be dismissed. 3. One further matter must be addressed and that relates to the appropriate orders to be made. Whilst the appeal is to be dismissed, the original orders of the Tribunal to affirm the respondent's objection decision ought not stand. In lieu, we propose to affirm the decision under review; i.e., the respondent's assessment to land tax for the 2010 year in the sum of $64,754.65. As interest arises by operation of the TAA, we make no orders with respect to interest, or the other amounts alleged to be owing in respect of earlier years. Orders 1. Appeal dismissed. 2. Decision under review at first instance affirmed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 March 2015