Commissioner of Stamps v Telegraph Investment Co Pty Ltd A33/1995 [1995] HCATrans 85 (30 March 1995)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Adelaide No A33 of 1994

B e t w e e n -

COMMISSIONER OF STAMPS

Applicant

and

TELEGRAPH INVESTMENT COMPANY PTY LTD and CRUDEN INVESTMENTS PTY LTD

Respondents

Application for special leave to appeal

BRENNAN J

DEANE J

DAWSON J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON THURSDAY, 30 MARCH 1995, AT 9.32 AM

Copyright in the High Court of Australia

MR J.J. DOYLE, QC, Solicitor-General for the State of South Australia: If the Court pleases, I appear with MR P.R. JACKSON for the applicant. (instructed by B.M. Selway, Crown Solicitor for South Australia)

MR B.J. SULLIVAN: May it please the Court, I appear for the respondent. (instructed by Blake Dawson Waldron)

BRENNAN J: Yes, Mr Doyle.

MR DOYLE: If the Court pleases, I propose to address brief submission on three issues: first of all, the special leave questions; secondly, the reasons why special leave should be granted and, thirdly and quite briefly, the argument for the applicant. The later part will be brief because we have endeavoured to cover that in the written submission.

As to the first point, your Honours, the special leave question, appeals under section 24 of the South Australian Stamp Duties Act 1898 have always been treated as appeals limited to questions of law on the facts found and stated in the case stated. The decision of the court in this case is that such appeals are appeals on fact and law - if I said a moment ago they have been traditionally fact and law, that was a slip; I should have said they have traditionally been appeals on law only. The decision of the court in this case was that they are to be treated as appeals on fact and law and because the court said the parties were at liberty to prove such facts, being relevant facts as they saw fit, the court came to the conclusion that in fact appeals under section 24 are appeals de novo, a full rehearing. That appears, your Honours, in the application book at page 23 about line 5 in the judgment of Justice Perry, where he says the rehearing should be a hearing de novo.

So the decision of the court, your Honours - and this is just to identify the issue - has completely transformed the nature of the appeal from a restricted appeal on law only, the appeal being determined on the facts as found and stated, to a complete rehearing and, in the complete rehearing, the case stated could have no greater function than to indicate to the court what the Commissioner has done and decided, and that is then merely a jumping-off point for a complete re-examination of the matter.

DEANE J: Does that mean, Mr Solicitor, that on your approach the tax is an incontestable tax in so far as facts are concerned?

MR DOYLE: Yes, your Honour, I think it does have that consequence and, of course, that has been one of the criticisms of the process - and I do not run away from that for a moment - and those criticisms are alluded to in the judgments. I suppose for probably 30 or 40, perhaps 50 years, it has been complained that the ability of the Commissioner to state the case means, as it has been said sometimes, that he could state an appellant out of court by stating the facts his way. So I cannot duck that point.

DEANE J: Except would there be limited room for the prerogative writs?

MR DOYLE: Yes, your Honours. Some of the Queensland cases allude to that, but it must be the case that in certain circumstances his ability to, as it were, state a case entirely his way could be controlled by prerogative writs, but I would not for a moment suggest that would give the taxpayer a lot of comfort but there are certain limits. But, of course, as we all know, it is a procedure that goes back many years to a time when probably the issues of dutiability turned almost entirely on the document. As the legislature has expanded the realm of dutiability, facts have become more important. But our point is that it is not really for the court because it sees, as it were, the procedure starting to creak to suddenly transform the nature of the appeal, that that is the function of Parliament, and what the court has really done here is, with all respect, in a kind of misguided law-reforming sense said, "We think the process needs to be changed and we are going to say it is changed."

BRENNAN J: Why is it, though, that one does not read subsection (4) as one of the methods by which the appeal conferred by subsection (3) may be prosecuted?

MR DOYLE: With respect, your Honour, good question. Authority has consistently said it is not to be read that way and even this Court did not say that. This Court itself accepted that the only mode of appeal was by way of a case stated and there is earlier authority in this State to that effect. That is in our written submission, the Corfu Clothing Case, which is referred to, I think, in paragraph 17. Your Honours will see from the cases cited in paragraph 17 that around Australia - perhaps that is going too far - but at least in three States under similar legislation it has been treated as meaning that the case stated is the exclusive means of appeal. So while if special leave were granted I suppose that point may come up for examination and may be used against us, certainly the uniform trend of authority has been in this area that the case stated is the means by which the appeal is prosecuted and the exclusive means.

So, your Honours, the special leave point we submit is, as we put in paragraph 1 of our written submission, in effect the nature of the appeal process and it raises it in a fundamental way. The respondent says, against that, that the only issue is the admissibility of evidence. That is how the respondent couches it in paragraph 1 and 2 of the respondents' summary. But in our submission it cannot be so limited because you have to ask yourself, well, if evidence gets in, where is it all going and what happens with it, and the court itself made it clear that when the evidence is in, it is in on the basis that it is for the parties to prove for the first time before the court, if they wish, the factual basis for the assessment of duty.

DAWSON J: If a party were to avail itself of the prerogative writs, would that mean that the question of fact would be tried upon the prerogative writ procedure?

MR DOYLE: Not in our submission. The prerogative writs could broadly be used in two ways: first of all, if a party wanted to challenge the validity of the assessment in the sense - say the party said it was not really the Commissioner who made this assessment or the person who purported to make this assessment had no authority from the Commission to do it. You could strike at the validity of the assessment in that sense. Other than that, in my respectful submission, the prerogative writ might strike at a situation where the Commissioner had purported to state facts which a party could show he simply had no ability, as a matter of law, to include because, for instance, perhaps possibly if they were absolutely impossible facts or facts that the party could demonstrate the Commissioner had not had before him when he made his assessment. But, in our respectful submission, while it is difficult to foresee all eventualities, it is hard to see how the prerogative writ could become a means of trying the facts.

I should add, your Honours, these points that your Honours are raising with me are not, as it were, new in the sense that they tend to be canvassed in some of the older cases like Cuming Campbell in 1940 where the Victorian Full Court touched on the possible use of the prerogative writs and the Queensland Full Court has also.

BRENNAN J: Mr Solicitor, are the statutes in Queensland and Victoria couched in terms which are materially the same as subsections 3 and 4, other than the use of the word "ground"?

MR DOYLE: Queensland, yes, your Honour; Victoria, no longer. It used to be but is not any longer. In our - - -

DEANE J: But it was for Cuming Campbell, was it?

MR DOYLE: Of course, your Honour, yes. I am not sure when Victoria changed. I think it is relatively recently, in the last perhaps four or five years, but Queensland is the only State now the same as us. In our summary we said that Western Australia was, but having looked at it again, I think I have to back away from that. The Western Australian procedure, while it does have the case stated, seems on reflection to use it more as a kind of advisory case stated and not as the exclusive means of appeal.

So we submit, your Honours, the point is, in a fundamental sense, the nature of the appeal and, as the court itself acknowledged, this was the first time it had ever been argued or held that the parties could re-litigate the facts. So it is a very significant decision in the sense that after many years the Full Court has now said that the manner in which all of these appeals have been conducted in the past has been misguided and the appeals are of a different nature.

As to why special leave should be granted, the point I just made - it is a decision which goes to the very heart of the appellate process. This is a procedure under an important revenue Act in this State, your Honours, the Stamp Duties Act, and the procedure of appeal is used quite frequently. So it is not as if it is a procedure that is only before the courts on rare occasions. It is relevant to the Stamp Duties Act in Queensland and the approach of the court - and I cannot put it any higher than this - may well be relevant to other legislation in other places where the case stated is used, because the court seems to say that if there is a reference to appeal by case stated that generally that will mean a full appeal on fact and law. I have to put in that qualification "generally" because in the end you will have to look at the particular Act. But that was the tenor of what the court held.

On the question of whether special leave should be granted, the respondent has drawn attention to a project undertaken by, I gather, a number of bodies interested in stamp duty law with the co-operation of a number of governments to review stamp duty law, including appellate procedures. In our respectful submission, all one can say is that may or may not in due course produce relevant changes, but it would be, in our respectful submission, not right for this Court to say that because there is a review of the legislation under way which might at some stage produce changes, special leave should be granted.

On the third issue, your Honours, of whether our case is an arguable one, I just want to make two or three points to emphasise what we have put in our written summary on that point. There is a substantial body of authority, your Honours, which we have put in our written summary to the effect that a case stated is, in its nature, a procedure by which what I will call the stating body states the facts as found and then poses questions of law and what I will call the answering body, the one who receives the case stated, had no power at all to find facts, not even to draw inferences. It merely answers the question of law.

The main cases are in paragraph 18 of our written summary and they include cases in this Court and in particular, in the third of those cases, which I do not need to read from, Reg v Rigby, the Court stated the matter in general terms, drawing on cases from a number of different areas: stamp duty areas, land valuation appeals, traditional old style appeals from lower courts to higher courts, but the Court treated the case stated as being a well-known procedure, as - perhaps one cannot say always, but as generally conforming to that process and that function, and it drew no distinction between revenue areas and other areas and, in particular, it drew no distinction between cases stated by a lower court to a higher court or, as here, by what one could call an administrative official to a court. It treated the case stated as a recognisable type of procedure. So our submission is, in broad, without wanting to argue the point through, that there is a lot of authority to support the approach which we took and, as paragraph 20 of our summary shows, that authority has been applied specifically in the area of stamp duties.

Your Honours, the Full Court distinguished the decision of the High Court in Mack, displaying what we would respectfully submit was a degree of athleticism here. It focussed on the fact that in the New South Wales Act the Commissioner had to include the grounds of his decision and said, well, that is not in the South Australian Act and that is a material difference. In our respectful submission, there is really just nothing in that point. First of all, it is implicit in the nature of a case stated that the stater of the case will do that. A case stated that did not say anything about the basis upon which the question arose would be a very strange case stated and, in our respectful submission, would properly be sent back by the court to the stating body, calling upon that body to state relevant finding of facts and grounds.

So, first of all, the use of the word "grounds" in the New South Wales legislation was doing no more than making explicit what is in any event implicit in the procedure. Secondly, one of the bases for the court's decision here seems to have been that the procedure followed by the Commissioner is necessarily inquisitorial, there is not a court hearing, and that the Commissioner can state the facts the way he sees them and the court cannot review them. But, of course, in Mack's Case that was still the position. In other words, even if grounds were stated by the Commissioner in New South Wales under that section, still his procedure leading to those grounds being stated was inquisitorial, still the Court could not review them, and so it is not as if, in the New South Wales Act, the requirement to state grounds led anywhere or led to any different result. So we do submit that the distinction which the court drew, while it is a distinction of words, it was lacking in substance and it does not lead anywhere in terms of the result.

The court also declined to follow the decision of the Victorian Full Court in Cuming Campbell. In our respectful submission, while it was not bound by that decision, that was a carefully thought out decision and the court addressed, in the Victorian case, all the points which the Full Court dealt with. So that is another reason why, in our submission, special leave should be granted.

So, for those reasons, we submit that the matter raises in a fundamental way the nature of the appeal. It is a point of some significance in this State and potentially elsewhere and we have, we would submit, a reasonably arguable case supported by authority and therefore it is appropriate for this Court to grant special leave. May it please the Court.

BRENNAN J: Thank you, Mr Solicitor. Mr Sullivan.

MR SULLIVAN: Thank you, Your Honour. Dealing firstly with the point raised by my learned friend in relation to the nature of the appeal, and joining that with another point made about the potential significance of this question to Queensland, we would point out that in two of the Queensland cases, O'Sullivan's Case, referred to in our outline at paragraph 14, and in a decision which I apologise is not referred to in the outline, but it is referred to by the Full Court, the decision in Quetel, in both of those cases it was contemplated by the Queensland courts - - -

BRENNAN J: Can you give us the references to those cases. That is (1984 1 Qd R 212 and - - -

MR SULLIVAN: Yes, O'Sullivan, as your Honour said, and the decision in Quetel is referred to at page 13 of the application book, (1991) 22 ATR 551. In the passages, your Honours, that are referred to at page 13 of the application book, firstly at about line 10, there is the passage where the court referred to a matter in which, by consent, a question had been referred to one of the members of the Full Court to decide, as a referee, and in the Quetel decision, at about line 37, it is said that:

it may be necessary to have a consideration of the issues of fact by a single judge of this court before the Full Court embarks upon the legal questions.

So my learned friend has put that this may be significant to Queensland but it seems that in the Queensland legislation it has been contemplated that questions of fact may have to be dealt with.

In our submission, it will often be the case, particularly in more complicated commercial transactions which may now arise, that issues of fact will arise which may have to be dealt with in a way that cannot satisfactorily be disposed of by a stated case procedure. In the decision in Quetel - I am sorry, your Honours, I cannot locate the passage, but there is an earlier passage in Quetel near the commencement of the judgment where it was noted that the stated case was one which annexed a very large volume of documents and the observation was made that in those circumstances it was inevitably necessary - perhaps not inevitably necessary, but it would be necessary for the court to address questions of fact. It was not, having regard to the nature of the transaction and the volume of documents, a matter in which facts could be adequately stated by the stated case procedure. The stated case in this matter is not before your Honours, but it is again one in which there is a very large volume of documents annexed. In that respect it is similar to Quetel.

Your Honours, it has long been recognised, as we have indicated in the outline at paragraph 19, that the stated case procedure is an unsatisfactory method of dealing with stamp duty disputes. The applicant's view of the legislation is that factual issues are incapable of being addressed in a stamp duty appeal. The Full Court, having considered carefully those matters, decided that it was not prepared to accept the unsatisfactory result flowing from that interpretation of the legislation. My learned friend suggested that it had long been accepted in South Australia that that was the position. In response to that we would observe that that may have been taken as a matter of assumption in the conduct of South Australian appeals but there was no decided case which was to that effect and the Full Court, when it considered this issue in South Australia, had in effect an open field before it.

We would also observe, as we have pointed out in our outline of argument, that the stated case procedure as used in stamp duty appeals in not truly reflective of what is generally recognised as the classical stated case. We have set out at paragraph 12, at the top of page 4, a definition taken from Wharton's Law Lexicon, a publication that was current at about the time that the decision in Cuming Campbell was handed down by the Victorian Full Court and, as that definition suggests, the facts as stated in a stated case procedure are normally either agreed or determined by some impartial person. That clearly does not occur in a stamp duty appeal.

DAWSON J: But if you adopt the procedure which the Full Court says is the correct procedure, really the case stated is reduced to a pleading, is it not?

MR SULLIVAN: The Commissioner's pleading, your Honour, yes.

DAWSON J: That is all it is.

MR SULLIVAN: Yes, your Honour.

DAWSON J: That does not seem to be the procedure which is envisaged by the legislation, does it, unless one has a very creative view of the legislation.

MR SULLIVAN: In our submission that is so, your Honour. The Full Court in South Australia - - -

BRENNAN J: It would be open to a court then to make a finding of fact contrary to the facts stated in the case.

MR SULLIVAN: In our submission, yes, your Honour.

BRENNAN J: Is it right to say that the practice under the South Australian statute as defined in this case would be at variance with the Queensland practice?

MR SULLIVAN: In our submission, no, your Honour, on the basis that in the decisions of O'Sullivan and Quetel it is recognised that there may arise circumstances in which it is necessary for the court to determine issues of fact and that is consistent with the finding of the Full Court in this case.

BRENNAN J: And do you support the distinction which the Full Court made in this case in relation to Mack's Case?

MR SULLIVAN: We do, your Honour, and we would also point out that in Cuming Campbell, which concerned Victorian legislation which was at that time in similar form to the legislation under consideration here, the Full Court of Victoria also thought the decision in Mack to be distinguishable upon the basis of differences in the legislation. That appears from the decision of the Full Court in Cuming Campbell [1940] VicLawRp 27; (1940) VLR 153, at page 164 at about point 2 of the page, Justice O'Bryan said:

In my opinion the language of sections 32 and 33 of the Victorian Stamps Act is so different from the language of secs. 17 and 18 of the New South Wales Stamps Act that the actual decision in Mack's Case is distinguishable from the case under consideration.

BRENNAN J: It is the next sentence which is significant, is it not?

MR SULLIVAN: Yes, your Honour. We would also point out, though, that with respect to the decision arrived at in Cuming Campbell, it was clearly arrived at after some hesitation and with a great deal of reservation. Justice O'Bryan said, at page 164, in the last paragraph that his conclusions was arrived at with some hesitation. At page 165 he said "The result is an unsatisfactory one" and that he had come to the conclusion "with some reluctance". Justice Lowe, who agreed with Justice O'Bryan, also said briefly at page 159 that:

I do not regard the position so disclosed as a satisfactory one -

The position is, therefore, that while Cuming Campbell was distinguished by the Full Court, it was a case that, in any event, given the considerable reluctance with which those conclusions were arrived at, should not be taken as a particularly powerful precedent.

My learned friend suggested that the decision in this case may be taken to have significance for stated case procedures generally. In our submission, that is not so. The Full Court expressly recognised in its judgment at page 20, at about line 30, that the description of this as being a case stated was a misnomer. In our submission, it is clear that the decision arrived at as to the procedure to be adopted in stamp duty appeals is one which, on the decision of the Full Court, clearly has significance only to the area of stamp duty and only having regard to the particular provisions of section 24 of the legislation. There would be no warrant, having regard to the emphasis upon the conclusion being arrived at as a matter of statutory construction, for giving it a broader operation in relation to cases stated - - -

DAWSON J: It is not really a misnomer at all, is it; it is just that the case stated is stated by the wrong person, that is to say not an impartial person.

MR SULLIVAN: Yes, that is so, your Honour. Whether that qualifies as a misnaming the procedure is, I suppose, a matter of linguistics or semantics. In our submission, it is evident from the document annexed to our summary of argument that it is highly likely that this procedure will have a short life expectancy in South Australia and that is a relevant matter to take into account. I well remember from my own personal experience that in 1984, I think it was, in the Australian Guarantee Corporation matter, special leave was granted to the Commissioner of Taxation to appeal from the decision of the Full Federal Court and once an announcement was made that legislative change was proposed which ultimately led to the enactment of division 16E, special leave was revoked in that case.

Finally, in our submission, there is little in the way of fairness and equity to support the upholding of a procedure that produces the peculiar result of litigation where one of the parties, but one of the parties only, has the ability to state the facts upon which the litigation shall be decided and to do so in a manner which is unexaminable by the court and incontestable by the other party. If it please the Court, those are our submissions.

BRENNAN J: We need not trouble you, Mr Solicitor. There will be a grant of special leave in this case.

AT 10.04 AM THE MATTER WAS CONCLUDED