McDonald & Anor v Commissioner of Taxation C7/2001 [2002] HCATrans 229 (3 May 2002)

IN THE HIGH COURT OF AUSTRALIA

Registry

Canberra No C7 of 2001

B e t w e e n -

IAN McDONALD

First Applicant

LESLEY McDONALD

Second Applicant

and

COMMISSIONER OF TAXATION

Respondent

Application for special leave to appeal

GAUDRON J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 3 MAY 2002, AT 10.00 AM

Copyright in the High Court of Australia

MR G.C. CORR: May it please the Court, I appear for the applicant in this matter. (instructed by Powrie & Co)

MR C.M. ERSKINE: May it please the Court, I appear for the respondent. (instructed by the Australian Government Solicitor)

GAUDRON J: Yes, Mr Corr.

MR CORR: Thank you, your Honour. It is quite brief. This matter just comes down to evidence: what evidence there was before the AAT as to - - -

GAUDRON J: Well, that does not sound like a promising matter for the grant of special leave in that case, does it?

MR CORR: And, more importantly, your Honour, how the Federal Court should deal with the evidence as dealt with by the AAT, how it reviews findings of the AAT. It is submitted that when matter comes before the Federal Court, it is not for the Federal Court just to say, "The AAT has made this decision and the determination as to what evidence is applicable, and we are bound by it." We would say that there is still - - -

GAUDRON J: But it must, to a certain extent, because it can only entertain proceedings involving an error of law.

MR CORR: That is correct.

GAUDRON J: So you have to assert, do you not, that there was an error of law in the approach taken by the AAT and that the Federal Court failed to detect it?

MR CORR: Yes, that is correct.

GAUDRON J: Well, what is the error of law?

MR CORR: The error of law is that the Tribunal completely miscarried in determining when the contract occurred and that it did not take into account the evidence given, not just by Mr McDonald, but by the two solicitors who were involved, as well.

GAUDRON J: But what is the error of law? What happened was the solicitors said they did not know why this had happened.

MR CORR: Yes.

GAUDRON J: There was not much dispute about the primary facts, was there?

MR CORR: No, that is correct.

GAUDRON J: The question was whether it was to be inferred from all the evidence that the real date of the contract - - -

MR CORR: It was either 13 September, which was before the entry in place of capital gains - - -

GAUDRON J: Yes, or the day on which the contracts were actually signed - - -

MR CORR: Yes, that is correct.

GAUDRON J: - - - which was 30 October.

MR CORR: Yes.

GAUDRON J: Where is the error of law in making one inference rather than another from the agreed primary facts, particularly where the inference will ultimately depend on issues of credibility?

MR CORR: The error was that, as well as assessing Mr McDonald, they also had to take into account the other evidence. The other evidence which was put by the solicitors was tending more to the support of Mr McDonald. It is not purely on how Mr McDonald - but the entirety of the evidence that - - -

KIRBY J: Yes, but the impression of what Mr McDonald said was a factor in the decision of the AAT.

MR CORR: Yes, that is correct.

KIRBY J: Once that is there, it is very difficult for an appeal court to override the drawing of the inferences by the primary judge, according to the orthodox rulings of this Court on that question.

MR CORR: Yes, certainly, and that is certainly the case, whether it is a tribunal or a judge at first instance.

KIRBY J: Well, that is a hurdle for you to overcome. First of all, it appears to be simply a factual matter, and that would not normally attract special leave.

MR CORR: No.

KIRBY J: And when we go into the facts, it appears to rest, in part, at least, on credibility questions. That is a second bridge you have to cross, so - - -

MR CORR: The leaping of those - - -

KIRBY J: What hangs on this? What are we talking of in terms of the tax?

MR CORR: I think it is less than 100,000, definitely. I think it was about 70,000-odd altogether.

KIRBY J: Well, it is important for your clients, but they must be told, and they would understand, that the High Court of Australia cannot deal with every case. We do deal with matters that involve an apparent injustice, but here it is simply a factual dispute. It was different inferences that could be drawn, and the Tribunal had before them a witness whom they did not prefer. So it is very difficult to ask us to go into the matter.

MR CORR: Yes. My clients have been informed about the entire procedure of this Court, your Honour, and the requirements.

KIRBY J: I am sure they have been. I understand. I mean, when you are on the cusp of it, it is so close. I can understand their feeling about it, but we have to look at it as a matter of principle for the work of the Court.

MR CORR: Yes. The special leave point is to how an appeal court will look at questions of credibility coming from a tribunal - - -

GAUDRON J: But on what basis can they, because, you see, they can only look at questions of law? The statute so provides.

MR CORR: Yes, that is correct.

GAUDRON J: The AAT statute so provides.

MR CORR: And to that extent, yes, it does create a situation where it appears that determinations of tribunals are of greater weight than of courts at first instance in many cases.

KIRBY J: If you had a case where there was a strongly arguable factual case with a very strong apparent ill-balance between the inference and the conclusion, in all of the facts and the logic, there would be no one on the High Court who would be more interested to get into that than I, but this is not such a case.

MR CORR: Yes, I have seen your Honour's decisions in Earthline, et cetera.

KIRBY J: I am sure you have.

MR CORR: It may well be that this is one case where the factual issues are not quite as clear as they would be tending towards the grant of special leave. However, the issue itself is one which does need to be determined as to how courts of appeal will deal with determinations of credibility. The immigration cases to which Justice Finn referred at first instance I think can be distinguished. They tend to be cases where the tribunals are looking at subjective determinations - whether a person is actually perceiving themselves to be at threat, or how matters are affecting them personally - as opposed to objective circumstances, as in this particular case, and a tribunal making determinations on credibility, which then go back to a different set of circumstances, whereas, in the immigration cases, it is that credibility itself which is the matter which has to be determined.

It is there that I think the divergence is, from the immigration cases. It is another step which a tribunal and/or a court has to make. Once a person, in immigration cases, is shown not to have any credibility in relation to the likelihood of persecution, that is the end of the matter. In this particular instance, and in a number of taxation matters, and other matters, the tribunal will make a determination about credibility and then apply it back to the facts. If there is an error there, in the way in which that is applied in relation to all the facts, there, we say, the problem arises. I am aware of - - -

GAUDRON J: Well, what is the error, though, that you say was made?

KIRBY J: And error of law.

MR CORR: That the Tribunal itself, I think, in the original appeal, it was stated as being, did not take relevant factors into account and took irrelevant factors into account. However, during the argument - and it is clear from the judgments - the question of Wednesbury unreasonableness arose and that is where I think - - -

GAUDRON J: The arguments where? Where did Wednesbury unreasonableness arise?

MR CORR: I think that was both in the - - -

KIRBY J: One of these days, we will get a better expression for Wednesbury. I mean, it is amazing that 50 years or 60 years later we are still taking about that cinema in Wednesbury in England.

MR CORR: Yes, and I do not think anyone ever - - -

KIRBY J: Outsiders would not understand the way the law does this. Why do we not call it "utter unreasonableness"?

GAUDRON J: "Unreasonableness" will do, I should have thought. If it is unreasonable - - -

KIRBY J: No, it has to be very unreasonable.

GAUDRON J: - - - you do not need degrees.

MR CORR: Well, it is a question whether you can have a moderately unreasonable - but believe that - - -

GAUDRON J: Or even reasonably unreasonable.

KIRBY J: Which is what some judges are all the time.

MR CORR: I will refrain from any comment on that, your Honour.

KIRBY J: It might be wise.

MR CORR: I am, occasionally.

GAUDRON J: But if you take us to the Tribunal's decision and tell us where you say the error is, because, for my part, I do not really see one at this stage.

MR CORR: Yes. I think I could only reiterate the - - -

KIRBY J: I do remember seeing the reference to Wednesbury unreasonableness.

MR CORR: My friend indicates at page 30 in the application book, which would be in Justice Finn's original decision, under 14. Yes, I am not certain my friend has pushed me to this position because of a desire for me to state that Justice Finn said:

The submission as to Wednesbury unreasonableness in the circumstances of this appeal can only be described as desperate.

But it was certainly - - -

KIRBY J: Is that not the point, that if we got a case where it was strongly arguable, then that is the case in which the High Court would look into how all the credibility principles apply in tribunals, and whether, sometimes, that can amount to a Wednesbury unreasonable case, but this is not - - -

GAUDRON J: And even then whether it is an error of law.

KIRBY J: Well, that may be elevated in a particular case to an error of law.

MR CORR: Yes, certainly. The question is, your Honour, whether - - -

KIRBY J: This is not such a case.

MR CORR: - - - even though it is always desirable to get the perfect fact situation, it is rare for that to arise, and that it is probably better for the Court to lay down determinations in a situation for guidance of tribunals from now on, so that if in the instance of such matters arising, then the tribunals and the appellate courts are guided. I understand what your Honour says. It does appear to be just purely on a factual situation, but that is what we are presented with in this case.

KIRBY J: Well, that is what you are presented with, and that is what we do not want to be presented with, because the Act, as Justice Gaudron pointed out, limits you to appeal on a point of law.

MR CORR: Yes, that is correct.

KIRBY J: So a factual point or an evidentiary point - not enough. Do not blame us. That is the Federal Parliament. It is in the statute.

MR CORR: Yes. It is a question of when you get into the failure to deal with the facts properly, when that, in fact, does get to the unreasonableness point. It is something which really does need some clarification. Unreasonableness has swung backwards and forwards in the administrative law, that it did seem to breach a bloom a number of years back, and was cut back, to some extent, in Wu Shan Liang. But there is still a question as to a tribunal dealing with a matter, rather than a purely administrative official, as to what is unreasonable.

KIRBY J: We get so many immigration cases nowadays, which we cannot send elsewhere -and some of them are really very much at the cusp, in terms of factual issues - that I am sure the issue will present. It does not really present in your case, I am afraid.

MR CORR: Yes. I can only reiterate, your Honour, that - - -

KIRBY J: I know you draw a distinction between the "well-founded fear" and that that is essentially subjective, but it will throw up the legal problem.

MR CORR: Yes. Your Honours, unless I can be of any further assistance, those would be my submissions, unless there is a fire alarm going.

KIRBY J: I think you have said everything that can be said in the matter.

MR CORR: Thank you, your Honour.

GAUDRON J: Thank you, Mr Corr. We need not trouble you, Mr Erskine.

The question raised by this application is essentially, if not solely, a question of fact. Indeed, as counsel for the applicant properly said, the case comes down to the evidence before the Administrative Appeals Tribunal. On this account it raises no question of general principle suitable to attract the grant of special leave. Moreover, we see no error in the approach taken by the Administrative Appeals Tribunal or subsequently in the Federal Court. Accordingly, special leave must be refused.

We note the applicant's written submission with respect to costs. However, we see no reason to depart from the Court's usual practice. Accordingly, special leave is refused with costs.

AT 10.15 AM THE MATTER WAS CONCLUDED