Hutchins v Collins, Deputy Commissioner of Taxation M28/1996 [1996] HCATrans 280 (5 August 1996)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M28 of 1996

B e t w e e n -

PETER GRAEME HUTCHINS

Applicant

and

KENNETH HOWARD COLLINS, DEPUTY COMMISSIONER OF TAXATION

Respondent

Application for special leave to appeal

DAWSON J

McHUGH J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON MONDAY, 5 AUGUST 1996, AT 2.16 PM

Copyright in the High Court of Australia

MR E.N. MAGEE, QC: If the Court pleases, I appear with my learned friend, MR P.M. BORNSTEIN, for the applicant. (instructed by Jeffrey P. Salinger & Associates)

MR K.H. BELL: If the Court pleases, I appear on behalf of the respondent. (instructed by the Australian Government Solicitor)

DAWSON J: Mr Magee.

MR MAGEE: If the Court pleases, there were three point upon which the applicant seeks special leave. The first is raised by this question: is the decision by the Commissioner of Taxation to vote against the Part X scheme of the taxpayer impliedly authorised by section 8 of the Income Tax Assessment Act or by a combination of section 8 and section 208, therefore bringing it under the AD(JR) Act as being a decision, the provision for which was made in an enactment. But we say that his Honour Mr Justice Lockhart was correct in deciding that the decision was a decision to which the Act applied, leaving aside the second aspect of the case; that is whether the decision had to be final and substantive.

The second point that is raised is raised from the first, and from the way the court dealt with it below, and that is, are administrative decisions made under federal enactments not decisions to which the AD(JR) Act applies because the power to make those decisions is only authorised by the enactment in a very general way. The majority of the Full Court concluded that although this was an administrative decision, and although authority was given under the Act for that decision to be made, nonetheless, the Act did not make provision for the making of that decision, because the Act conferred the power to make the decision in a very general way.

The consequence of that would be, we contend, that a vast raft of decisions made by administrators under Acts, or authorised by Acts, would not be subject to judicial review because they could be characterised as arising only under a general administrative enactment. That is a point that goes beyond the relatively simply question of the Tax Act That is the point that has, we say, general application, because that would mean that all Acts which have general administrative powers granted to a decision maker, so that there is authority given and their administrative decisions are not covered by the review provisions of the Act.

The third point which we make is that if a decision is made, as in this case the decision was made to vote against the Part X scheme that was put forward, does the decision have to be final or operative at the time that it is made, in the sense of, does it have to finally determine whether or not the Part X scheme is accepted, or, as we say, does it only have to determine whether or not the Commissioner will vote in favour of the scheme to which the debtor has applied for their approval. And we say that, in that regard, his Honour Mr Justice Spender was correct when he said that, in effect, the decision that one has to look at is the actual decision made, and not the consequence of it, and that is a substantive decision within the meaning of Bond, because it determines finally whether or not the Commissioner will vote in favour of the Part X scheme.

One readily concedes that there may be circumstances where a decision is made by the Commissioner, and consequentially, at a meeting of creditors, the scheme is lost regardless of whether the Commissioner casts the vote one way or the other, because either numerically, or in money terms, there was sufficient to defeat the scheme without the Commissioner's vote or value. However, we contend that that is - Mr Justice Lockhart and Mr Justice Black took the view that you had to look, really, to see if the decision was operative, to what actually happened at the meeting. We say that is incorrect, an incorrect application of principles, and that what happens at the meeting may be a matter which the Court can have regard to in exercising the discretion that the Court has, under section 16 of the Act, to determine whether or not the particular decision should be reviewed.

On his Honour Mr Justice Black's analysis, it would be possible to have a decision which was of an administrative character, as this was conceded to be. It could be on a substantive issue - this is going back to the first point - which decision, in a practical sense, was final and operative, and determinative of the application by the debtor to have his debts compounded under Part X, but nonetheless, because the power to make that decision was given in a general way, it is not subject to the Act, whereas if it impliedly, or specifically was, all the elements of an administrative decision which were subject to the Act would have been present.

So, we say that what the Full Court has done; it has restricted Bond. Bond merely said, "Is it a decision for which provision is made under an Act?" There was no gloss beyond that, and we say, an unnecessary gloss and restriction has been put on - - -

DAWSON J: How do you draw a line? I mean, the decision to attend the meeting in the first place; a decision made in his capacity as Commissioner; why is that not an administrative decision under an enactment on your argument?

MR MAGEE: If it would satisfy the elements of being final, substantive and determining a matter - - -

DAWSON J: Well, it is just as final as the decision to vote.

MR MAGEE: If one is talking about this case, your Honour, if it is the decision not to attend, that is, to abstain from voting, that may very well be a decision to which the Act applies, and there would be nothing wrong in that, in this sense, that, let us suppose one has, not a taxpayer seeking to have a scheme approved, but let us take a creditor who is prepared to vote at a meeting, and if the scheme is accepted, the creditor gets, say, 60 cents in the dollar, and if it is not accepted, the creditor gets nothing, with enormous consequences for the creditor.

And, let us assume that the person authorised to make the decision by the Commissioner simply decides, because he does not like the taxpayer, not to vote in favour of it, or not to attend - not to attend would be a non-vote - but not to vote in favour of it; then, in those circumstances, that illustrates, we say, the importance of the question, and also throws up why it is it an administrative decision that ought to be the subject of review. In a sense, one asks, where else does a person go in circumstances where important aspects of their lives are affected?

DAWSON J: How do you distinguish between decisions made on a day to day basis in relation to administrative matters, such as whether to open a file, close a file, what to do with it, even to answer the telephone, for that matter, and decisions which, you say, are decisions made under an Act? You would not say that those sorts of decisions were - - -

MR MAGEE: Oh, no, I would not say they were at all, no. They are not - - -

DAWSON J: And yet, in the sense that they are decisions made by the Commissioner, in his capacity as Commissioner, whilst acting as Commissioner, they are made under an enactment, are they not?

MR MAGEE: But they would not be, in my submission, of an administrative character. They would be what one would call procedural. They would be matters of procedure in the manner of carrying the Act into effect, in the sense of - that is really all one can say. It is difficult because, as one says, "Where does one draw the line?" And one can see cases clearly either side of it. But we say, wherever the line is drawn, our case is on the right side of that line - this particular case. In the end, I think, the answer to your Honour's question is provided by Bond itself. If it is provided for under a statute, it is substantive and it finally determines some matter in a practical sense, then it is reviewable.

If one talks about opening a file, or ordering the teacups of a particular colour, we would say that is not final, substantive or determinative of any right of any third party who could be an applicant for review. It is a bit hard to see a person aggrieved in respect of that.

McHUGH J: There is no difference between "under an enactment" and "under an Act", and there are a line of cases, the source of which is this Court's decision in Hudson v Venderheld in which it has been held that, if you are doing something which the law, apart or altogether from a particular statute, gives you a right to do, then you are not doing it under the Act. Now, in that case, it concerned a council employee who was acting on orders from an officer of the council and in the course of his employment. This Court held that he was not doing it under the Local Government Act.

MR MAGEE: Yes, but that, with respect, your Honour, would not - in my submission, on any view the Commissioner is carrying out a function under the Act, under a combination of section 8 or 208, in seeking to recover the moneys due to the Commonwealth. That is the only source of power. He is not, as it were, in a contractual situation. What the Commissioner is seeking to do is to recover the tax due to the Commonwealth under section 8 or 208. The problem with the Tax Act in this regard is that it is spectacularly short on exactly what the - silent, on what the Commissioner can do. It does not mention schemes of arrangement. It merely says, under 208, that it may sue to recover - or whatever the section is - to recover the tax. But, in my submission, your Honour's example, in a sense, is not apposite for this case because, in this case, in my submission, the Commissioner clearly is acting under a combination of 8 or 208. There would be no other basis upon which he could otherwise recover the tax. All his powers would seem to come from the Income Tax Assessment Act.

There was some argument, which was not pursued - it might have been raised at first instance, your Honour, but I did not appear at first instance - but it may be involved with the executive power of the Commonwealth, but that seemed to have been abandoned and I do not want to trespass on it, but it was sort of canvassed at that stage but, in my submission, if the decision of the Court of Appeal was left to stand, however difficult it is to draw the line, important rights of citizens, decisions that have important bearings on citizens' lives, would not be the subject of review, and I have given the example of the creditor and, indeed, the example of the bankrupt himself. A person may be made bankrupt in circumstances where the effective decision not to vote was made capriciously and in bad faith. Where does he go? This Act was designed to cover precisely that. This Court said in Bond it should be given a very wide interpretation - - -

KIRBY J: You have two things going for you, as it seems to me. The first is that, arguably, the decision has a wide implication and, secondly, that there is.....unsatisfactory result in the fact that the Full Court had different majorities on different points, but what is your answer to the point that Justice Spender makes at the end of his reasons, at page 46, where he says that it really would lack utility to review the decision in this case? So, if that is so, then this would not be a good vehicle to test the point that you want to advance.

MR MAGEE: Your Honour, I do not think his Honour was actually dealing with the merits of this case. I think the point his Honour was making was this that, if, in a particular case - his Honour was dealing with the issue of whether or not you look at the substantial effect of the decision at the day the decision is made, or at the day that the meeting is held, and his Honour said, and we endorse this, as a practical common sense matter, what would happen is that - and I will just read from page 45:

if the decision to case a vote in a certain way was a decision made under an enactment (contrary to my view), it would be amenable to review. But, if having regard to the extent of the Commonwealth debt and the number and amount of the other debts, the decision by the Commissioner to case a vote in a particular way would not have had any material effect -

he did not say "would not have had", but "if it would not have had" material effect, then, you would not allow a review. We contend that is correct, that what you do is, you look at the decisions and say, "Well, look is it amenable to an Act?", and use that in the wider sense, and then exercise the discretion under 16 to say whether or not the Court would review it. And, to some extent, that gets over the problems of opening files and, in the Full Court, we were talking about the colours of teacups, but it is the same sort of - one always sees the problem, but, in my submission, the Court has answered the question about teacups and files in Bond.

So, your Honour Justice Kirby, I think that what was happening there, his Honour was alluding to that which we rely on, that, sensibly, one should make the jurisdiction for review wide, and make the review discretion, as it were, control the silly applications, and that provides a sensible basis, rather than, as it were, looking at merits and where it came from, and just excluding lots of decisions from the operation of the Act, and leaving people to seek whatever redress they could under, say, I do not know - 39B of the Judiciary Act, or something like that - then you would start the development of a parallel system. There would be some decisions under the Act which were reviewable, and some for which you would have to go elsewhere, both of which may have enormous consequences on individuals. In fact, the decision given under the general power, particularly in an Act like the Income Tax Assessment Act, may have enormous implications for the individual. His Honour, at page 46, was not dealing with the actual factual circumstances of this particular place.

KIRBY J: It seems remarkable, 20 years after the commencement of the Administrative Appeals Tribunal Act, that this issue has not been sorted out.

MR MAGEE: Yes, your Honour, it is, and - - -

KIRBY J: Maybe there is no ultimate answer and we have just got to classify each case.

MR MAGEE: I think, your Honour, that there are - I keep coming back to Bond. I think that Bond is a decision which provides a sensible basis and test, when coupled with section 16, giving the Court that discretion.

DAWSON J: The test being that it is final and operative?

MR MAGEE: The test being, yes - is the decision final and operative? Is it administrative in character; is it substantive; is it final and operative? There is an argument about what "final and operative" means, but that would seem to be the correct test, and then, look at particular decisions for review with an eye to section 16, but do not, as it were, shrink the operation of the Act by saying that federal statutes that have general administrative provisions, are not - powers exercised under those enactments are not subject to the Act.

KIRBY J: Just help me once again; what is the implication of the differential majorities in the Full Federal Court for the operation of the Administrative Appeals Tribunal Act in your submission, because that may be a special leave issue?

MR MAGEE: His Honour Mr Justice Lockhart concluded that it was an implied authorisation and, therefore, subject to the Act, prima facie. However, he found that it was not final and substantive, because one had to wait and see the vote.

KIRBY J: I realise that, but what is the implication of this decision for administrative decisions generally, under the Act?

MR MAGEE: The implication for decisions under the Act is that federal enactments which authorise decisions under a general power are not subject to judicial review under the Act. That is the general implication. Federal enactments which authorise decisions to be made are not subject to the Act because of - if the power to make those decisions is given by a general enactment. And that is the point.

Their Honours in the Full Court, his Honour Mr Justice Black and Mr Justice Spender, rely to some extent on the General Newspapers Case. General Newspapers Case did not create a new test, and that is, is the decision given statutory force and effect by the statute itself, so that, one looks to see, in some part of the statute, some provision giving a particular decision statutory effect. If one looks at General Newspapers, that was concerned to draw a distinction between decisions made under the general law, for example, contracts, and decisions made under administrative acts on the other hand, and indeed, in the General Newspapers Case, the court specifically said that you answer the question, "Is it given statutory effect?" by the answer to the question, "Is it a decision for which provision is made under the Act?" There is no separate add-on, as it were. Provision is made for it under the Act, and then, secondly, do you say to say to yourself, as a quite separate test, "Is this decision given statutory force by virtue of the Act?" In fact, in General Newspapers, what the court said was, if it is a decision to which the Act applies, then it is given statutory force by that fact.

In my submission, this is an appropriate vehicle, because the facts clearly illustrate the points and is of utility to my client. If the Court pleases.

DAWSON J: Mr Bell.

MR BELL: Having regard to the way the matter has now been argued, can I make two general points and then address the specific grounds upon which special leave is now sought? The two general points I make are that the general principles governing whether a decision is one made under an enactment have been laid down authoritatively in Bonds Case. Those principles are clear; they are sensible and they are unchallenged.

DAWSON J: What do you say they are?

MR BELL: The principles are that a decision is not made under an enactment unless provision is made for it in some necessary, positive sense, and, secondly, unless the decision is final, operative and substantive. Those principles, in my submission, have been - and this is the second point - applied in the instant case in a way that is unexceptional, though two judges of the Federal Court differed from each other with respect to their application in these particular circumstances. It is not, in my submission, a special leave point, that there might have been a difference of view about the application of a general principle in a - - -

KIRBY J: You say that the fact that there were differential majorities is simply a recognition of the fact that with the test established in Bond there are going to be different opinions, sometimes where the borderline lies?

MR BELL: Yes, precisely, your Honour. And, your Honour made the observation correctly, in my respectful submission, that the application of the test necessarily must be worked out on a case by case basis. This case has some odd features, but that simply underscores the fact that - - -

DAWSON J: What are they? It does not look very odd to me.

MR BELL: The oddity of a decision being challenged to vote at a meeting when the final vote is the one that counts, that is, in terms of operative effect; a challenge being brought against a decision taken under another Act where the authority lies in a former Act; and possibly the difference of opinion between two of the judges of the Federal Court. But, none of those things, in my submission, undermine the clarity of the unchallenged principle stated in Bond's Case. Therefore there is, in my submission, no special leave point.

As now argued, the applicant now states that there are other special leave points to the one originally argued. The first is the question whether or not a decision impliedly authorised by way of combination under sections 8 and 208 is one that is reviewable under the Act, and it is clear that the Full Court accepted that decisions impliedly authorised - - -

DAWSON J: I do not think we need trouble you any further, Mr Bell. Mr Magee?

MR MAGEE: Your Honours, one is still left with the Full Court decision that has added a gloss to Bond, and the gloss still remains that you can have decisions made, authorised by an Act which are final and determinative, to which the Judicial Review Act does not apply. In my submission that remains - that would be the state of the law - - -

KIRBY J: That is going to be so anyway, given that Bond states a principle that will have to be worked out in each case.

MR MAGEE: Well, I am not sure, with respect - I agree that it is to be worked out in each case. It is the actual gloss that has been - the law now is - at least, as the Federal Court would say - that this general enactment provision means a decision made under that, no matter what its consequences, is simply not reviewable. If the Court pleases.

DAWSON J: Thank you, Mr Magee.

The principles to be applied in this case are not in doubt and the result is merely the application of those principles to the facts of the case. No special leave point arises and accordingly special leave will be refused.

MR BELL: I apply for costs, your Honour.

DAWSON J: Can you say anything about that, Mr Magee?

MR MAGEE: I cannot say anything, your Honour.

DAWSON J: Refused with costs.

AT 2.41 PM THE MATTER WAS CONCLUDED