Tasty Chicks Pty Limited & Ors v Chief Commissioner of State Revenue [2011] HCATrans 255 (8 September 2011)

Last Updated: 8 September 2011

[2011] HCATrans 255

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S218 of 2011

B e t w e e n -

TASTY CHICKS PTY LIMITED

First Appellant

ANGELO TRANSPORT PTY LIMITED

Second Appellant

SOURIS HOLDINGS PTY LIMITED

Third Appellant

MINAS SOURIS

Fourth Appellant

JENNY SOURIS

Fifth Appellant

and

CHIEF COMMISSIONER OF STATE REVENUE

Respondent

FRENCH CJ
GUMMOW J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 8 SEPTEMBER 2011, AT 10.20 AM

Copyright in the High Court of Australia

____________________

FRENCH CJ: Before I call on this morning’s matters, I would like to welcome to the Bench as an observer Chief Justice Beverley McLachlin, Chief Justice of the Supreme Court of Canada, and her husband, Mr Frank McArdle, who is present in the gallery.

MR C.J. BEVAN: May it please the Court, I appear with my learned friend, MS A. TSEKOURAS, for the appellants. (instructed by Legal Ease Lawyers)

MR G.C. LINDSAY, SC: May it please the Court, I appear with MR I.C. LATHAM for the respondent. (instructed by Crown Solicitor (NSW))

FRENCH CJ: Yes, Mr Bevan.

MR BEVAN: Your Honours, could I start by taking your Honours to the text of the legislation which is to be found at appellants’ submissions Part 7 in the legislation folder at tab 1. This is an extract of Part 10 of the Taxation Administration Act (NSW). If I could take your Honours to page 2. Division 1 commences with section 86 “Objections”. It provides that a taxpayer dissatisfied with an assessment or any other decision of the Chief Commissioner under a taxation law may lodge a written objection with the Chief Commissioner. “Taxation law” is defined broadly in section 3 and for present purposes includes the Payroll Tax Act. If your Honours then go to page 4, section 91, it provides that:

The Chief Commissioner must consider an objection and either allow the objection in whole or in part or disallow the objection.

There is a note there, keeping in mind that the note is not an operative provision, but nonetheless it foreshadows provision - - -

GUMMOW J: Now, the reprint some of us have is reprint No 3 of 2007.

MR BEVAN: Yes. I am reading from 27 June 2011. Do your Honours have the - - -

GUMMOW J: Has the legislation been changed?

MR BEVAN: Does your Honour have a note to 91(1)? Yes. The folder that accompanied our submissions has been the current version.

GUMMOW J: I know, that is why I am asking you. Has it been changed since these events?

MR BEVAN: The Administration Act has not been changed. No, not since these events, your Honour. Section 91(1) requires the Commissioner to determine an objection but the note notes that:

Failure to make [an objection] within the 90-day period is a ground for review under Division 2.

When one goes to Division 2 which provides for reviews, section 96 provides that:

A taxpayer may apply to the Administrative Decisions Tribunal –

henceforth Tribunal –

for a review of a decision of the Chief Commissioner –

and subsection (3) provides a statutory election:

A taxpayer who has applied to the Supreme Court for a review under section 97 –

which I will take your Honours to in a moment –

a decision cannot apply to the Administrative Decisions Tribunal under this section –

Section 96(4) then makes certain provisions relating to the operation of the Tribunal Act in respect of a review to the Tribunal.

CRENNAN J: Is there a provision for an appeal from a decision under section 96 by the Administrative Decisions Tribunal?

MR BEVAN: Yes, 119 of the ADT Act provides an appeal on a strict question of law. That is the subject of the Court of Appeal decision in B & L Linings, which is on our list of authorities and in the course of that decision the differently constituted Court of Appeal found that it is an appeal in the strict sense.

FRENCH CJ: Your position is this an appeal de novo?

MR BEVAN: It is. If I can perhaps just interpose to say - - -

CRENNAN J: Was section 119 applicable at the time?

MR BEVAN: Of the events in this matter?

CRENNAN J: Yes.

MR BEVAN: Yes. Our case as a broad proposition is that, subject to one qualification, the State tax regime operates in a similar manner to the Commonwealth tax regime in that in the Commonwealth tax regime, in particular, under section 14ZZ(a) of the Taxation Administration Act (Cth) the taxpayer is given an election to either go to the Administrative Appeals Tribunal under (a)(i) or to the Federal Court under (a)(ii) and in both cases it is merits review. If one makes an election to go to the AAT under (a)(i), the right of appeal to the Federal Court thereafter is on a strict question of law under section 44 of the AAT Act and, in that sense, section 44 of the AAT Act serves the same purpose as section 119 of the ADT Act. So that if you make an election to go to the Tribunal, your appeal rights thereafter are on a pure question of law, but if you go to a court, in the Commonwealth context the Federal Court and in the State context the Supreme Court, our case is that it is merits review in each jurisdiction. We say section 97, which is the pivotal provision on which our appeal turns, is to be found at page 6 of tab 1 of our legislation folder. Section 97 provides that:

A taxpayer may apply to the Supreme Court for a review of a decision of the Chief Commissioner that has been the subject of an objection under Division 1 if –

Dissatisfied or 90 days has passed. Now, section 97(1)(b) is, in effect, the content of a note to 91(1) that I took your Honours to a few moments ago. It provides that, unlike the federal context, one’s right of review either to the Tribunal under 96(1)(b) or to the Supreme Court under 97(1)(b) is simply dependent upon the lodgement of an objection. The actual determination of the objection is not critical to the right of review, and that interpretation of the legislation was made clear in a case I will bring your Honours to in a moment, another Court of Appeal decision, Paspaley.

In that sense, the State legislation is different from the federal. In the federal sphere the objection, together with the assessment, is the subject matter of the review either by the AAT or the Federal Court, whereas in the State context the subject matter of the review is simply the assessment and any antecedent taxation decision which the assessment gave effect to and is not the objection, and so much is made clear from particularly the judgment of Justice Basten in Paspaley who delivered the leading judgment of the Court of Appeal.

Like section 96, section 97 contains a statutory election to either go to the Tribunal or to go to the court for merits review, and that is provided in section 97(2). Perhaps the point which the analysis in the Court of Appeal departs from the appellants’ analysis of the nature of the review is to be found in section 97(4). Section 97(4) provides that:

A review by the Supreme Court is taken to be an appeal for the purposes of the Supreme Court Act 1970 and the regulations and rules made under that Act –

That, in a reasoning sense, is the fork in the road between the appellants and the Court of Appeal and, indeed, the fork in the road between the primary judge Justice Gzell and the Court of Appeal. If I could then, just before I leave this topic - - -

KIEFEL J: Just in relation to section 97(4), it was inserted after the replacement of Part 10 which brought in sections 96 and 97, was it not? The original section 97 went through to subsection (3).

MR BEVAN: If I can put it this way, your Honour. What happened, 1 January 1997 Part 10 commenced to operate. From 1 January 1997 until 1 July 2001 the Supreme Court had an exclusive jurisdiction to review the Chief Commissioner’s decisions. In 2000 there were two enactments. One enactment repealed Part 10 of the Administration Act and enacted a new Part 10 and the purpose of the enactment of a new Part 10 was to enable the Administrative Decisions Tribunal to commence as from 1 July 2001 having a concurrent jurisdiction to review decision of the Chief Commissioner and that was when section 96 was enacted. So for four and one half years we had the Supreme Court with exclusive jurisdiction and then from 1 July 2001 the Tribunal had jurisdiction.

To answer your Honour Justice Kiefel’s question, during a few months between enactment of the amending Act and its commencement, the Rules Committee of the Supreme Court looked at the legislation and said, how is the Supreme Court going to undertake the review now if you move to this language of review?

KIEFEL J: So in the upshot, section 97(4) was inserted by Schedule 4 of the State Revenue Legislation Amendment Act 2001 and the explanatory note says:

The amendment makes it clear that such reviews are to be considered to be appeals for the purposes of the Supreme Court Act - - -

MR BEVAN: That is right, your Honour, and I will bring your Honours to the relevant second reading speech, but our contention, disputed of course, is that this enactment of 97(4) had the purpose of avoiding the need to create a separate body of rules for the conduct of reviews by the Supreme Court as from 1 July 2001 once the Tribunal acquired a concurrent jurisdiction and the concurrent jurisdiction, in our contention, is not only something that follows from a reading of 96 together with 97 because they bestow the same power of review, but it also follows from the language of the relevant second reading speech of the Treasurer, which I will take your Honours to in a moment. Just before I leave this topic, could I very briefly take your Honours to Paspaley where Justice Basten with Justice Campbell and Giles - - -

GUMMOW J: What is the citation?

MR BEVAN: That is [2008] NSWCA 184. For some reason it is unreported.

KIEFEL J: You are going to come back to the second reading speech, are you?

MR BEVAN: I am coming back, your Honour. By way of preamble, before I direct attention to Paspaley, the critical provisions, to put them in context, in paragraph 22 Justice Basten noted that:

It was assumed for present purposes that the Taxation Administration Act in its present form applied and that no question arose as to the nature of the review available in this Court, pursuant to s 75A of the Supreme Court Act 1970 (NSW). The powers of the Court include the power to make an assessment or decision in lieu of that made by the Chief Commissioner or to remit the matter to the Chief Commissioner: s 101(1).

In that sense, there was no direct challenge in Paspaley to the nature of the review, but nonetheless it arose in the course of determining the relevant privative provision; that is 103A in the Taxation Administration Act which is set out by Justice Basten at the top of the next page, 24. Then, relevantly, at paragraph 26 his Honour notes that:

26. Because the Taxation Administration Act tax is itself a “taxation law” (see s 4), any decision under the Taxation Administration Act itself is liable to fall within s 103A(1) . . .

27 Importantly, the review provided by s 97 (consistently with s 96) is limited to a decision “that has been the subject of an objection under Division 1”: s 97(1). Accordingly, a decision to which an objection cannot be taken, and a decision to which an objection has not been taken, will not fall within the scope of s 97 (providing a review by this Court) . . .

28 It is also important to note that the right of review under s 97 is given by reference to the operative decision of the Chief Commissioner and not to a ruling made on an objection.

And necessarily that follows from 97(1)(b) where you have a right of review even if the Commissioner fails or declines to make an objection decision. Then jumping down two lines –

it is the initial decision which is the subject matter of the review. Consistently, the parties are not limited to the grounds of the objection in relation to the application for review: s 100(2). Further, it is the original assessment or other decision which is confirmed, revoked or replaced –

in the actual orders the court makes, which is 101(1)(a) and (b).

GUMMOW J: You are relying on section 97(4)?

MR BEVAN: Sorry, your Honour?

GUMMOW J: You are emphasising section 97(4) of the Administration Act?

MR BEVAN: I am explaining its importing of the Supreme Court rules and how the Court of Appeal came to determine that the word “review” is to be read as “appeal” and that appeal means an appeal in its strict sense.

GUMMOW J: Do you then say that 97(4) picks up section 75A of the Supreme Court Act?

MR BEVAN: It does.

GUMMOW J: Well, that has subsection (4) which says 75A is subject to any Act.

MR BEVAN: That is right.

GUMMOW J: That would include section 101 of the Administration Act, would it not?

MR BEVAN: That is right, that is part of our case. Coupled with subsection (5) which the Commissioner reads is, in effect, a code for a rehearing and we say subsection (5) is not a code. It just simply says if you have had a hearing, then you get a rehearing, but we say that does not exclude a rehearing in the sense of a hearing on the merits simply because you have not had a hearing because it is common ground between us that the process that the Commissioner goes through - - -

GUMMOW J: But what is the relationship between section 101 and 75A(5) and it talks about a rehearing.

MR BEVAN: It does. We simply say that insofar as the Court of Appeal said you only get a rehearing if you had a hearing in the first instance and what the Commissioner does is not a hearing in the first instance, we say that is not a code for a rehearing. It just means that at the very least if you had a hearing at first instance, then you get a rehearing on appeal. Now, our case is we get a hearing anyway because, as your Honour rightly points out, subsection (4) says it is subject to any Act and we say it is not only subject to 101, which has quite extensive powers in the course of conducting a review by the court, but we would go back to section 97(1) itself and the terminology used, which is a review.

KIEFEL J: But is there anything in section 101 which suggests a rehearing as distinct from a hearing de novo but without further evidence?

MR BEVAN: No. Section 101(1)(b) is the critical provision which, in effect, says on a review the Supreme Court can, in effect, stand in the shoes of the Commissioner and make whatever decisions he makes and we say 101 informs the nature of the review as much as the word “review”, keeping in mind the body of case law in the last two decades in this Court that are picked up in paragraph 42 of the appellants’ submissions.

CRENNAN J: If you go to appeal book 203 to paragraph 32 of his Honour Justice Handley’s judgment, he considers the powers of the Court under section 101 and about at the midpoint of that paragraph he says:

Those powers are appropriate whether the appeal is one in its strict and proper sense or a rehearing.

Now, do you challenge that?

MR BEVAN: We do. We have challenged that in writing and we challenge that - - -

CRENNAN J: What do you say about how one should read section 101, the powers set out at (1)(a) to (1)(e)?

MR BEVAN: Section 101, we say, is antithetical to a strict right of appeal. If there were a strict right of appeal and if error is demonstrated, then the proper course is to remit them out to the decision-maker to do it again, not to stand in the shoes of the decision-maker and do it again at the court level. If the court is, in effect - - -

CRENNAN J: That is a reference to (d), is it not? You are now speaking about (d)? I mean, some might say that evokes legal review rather than merits review.

MR BEVAN: Sure. There is a power to remit, but the critical provision which we would place emphasis on and which Justice Gzell placed the emphasis on not only in this case first instance but in Affinity Health is:

(b) make an assessment or other decision in place of the assessment or other decision to which the application relates –

Section 3(1) of the Act defines “assessment” as an assessment made by the Supreme Court as well as an assessment made by the Chief Commissioner. Now, we say that power and other decisions would include a decision to, in this case, de-group. We say that is antithetical to strict judicial review.

CRENNAN J: That evokes merits review.

MR BEVAN: It does.

FRENCH CJ: Are we not in the territory here of a distinction between jurisdiction and power, that if the grant of jurisdiction under the Taxation Administration Act is limited to an appeal in the strict sense on its proper construction, you cannot invoke 75A, can you, to convert that into another kind of jurisdiction, that is an appeal de novo or by way of rehearing?

MR BEVAN: That is right.

FRENCH CJ: You do not contend that?

MR BEVAN: No, we do not. We say the nature of the Supreme Court’s jurisdiction follows from the intentional choice of the word “review” in 97(1).

FRENCH CJ: You rest your case upon the construction of section 97 as conferring a jurisdiction by way of appeal de novo?

MR BEVAN: That is right, in identical terms to that which was bestowed in 96 on the Tribunal. Keeping in mind that the antecedent jurisdiction, which was nonetheless merits review, an exclusive jurisdiction to merits review, was in the language of appeal and before that – this is the four and a half year period under the original Part 10 – before that under sections 32 and 32A of the Payroll Tax Act it was then taken as being merits review and used the language of appeal. So that the move to strict judicial review, strict review on the materials before the decision-maker, first occurred in December last year when the Court of Appeal handed down its decision.

FRENCH CJ: The point is on that threshold question. Section 75A is not any help because you are looking at 97.

MR BEVAN: That is right, and I am simply pointing out that 97(4) was enacted for procedural purposes. In effect, the Parliament decided, after consultation with the Rules Committee of the Supreme Court, that rather than create a completely new body of rules to deal with a review, as distinct from an appeal, we will simply import the appeal rules as if it were an appeal, and 97(4) has a purely procedural role. It does not undercut or undermine the bestowal of jurisdiction in 97(1) when read with 101.

FRENCH CJ: The word “appeal” covers a number of species.

MR BEVAN: That is right.

CRENNAN J: The real conundrum, I think, arises out of the tension between 101(1)(b) and 101(1)(d) because (b) points you in the direction of merits review and (d) points you in the direction of legal review.

MR BEVAN: That is quite right, your Honour, but remember, your Honour, that this is the Tribunal as well and it is common ground that the Tribunal undertakes merits review in a completely different way. It takes into account government policy, it does not apply the rules of evidence, it is on another planet in terms of the way in which the process occurs, but it has the same powers. It can remit rather than making a new decision. One of the drafting strengths, if I could put it that way, of the appellants’ case is that what we rely on for the Supreme Court applies for the Tribunal and if a provision is said to not provide the Supreme Court with merits review or does not provide the Supreme Court with the powers of the Chief Commissioner on review, then the same result must apply for the Tribunal because we either have 96 and 97 with mirror bestowals of jurisdiction or we have 101 which is a joint bestowal of power.

KIEFEL J: Do you read section 101 then as a provision which is intended to address jurisdictions which might differ and thus what is contained in paragraphs (a) to (e) are to be referable, where appropriate, to a court or Tribunal, having regard to the jurisdiction otherwise bestowed upon them?

MR BEVAN: That is certainly one approach, but I can tell your Honour that in a practical sense there are cases where the Tribunal remits a matter. I was in a matter only a few months ago, a stamp duty case, where because of problems with the valuation evidence the Tribunal remitted the matter to Commissioner to do it again because he said, “Your valuer from the Department of Lands got it wrong.” There are cases in which the Tribunal cannot complete the matter for want of evidence and what the Parliament has done, in our contention, is to give, consistently with the purpose of creating concurrent jurisdictions as from 1 July 2001, the court and the Tribunal the same powers to dispose of the controversy between the parties on that review.

To perhaps take your Honour’s point a little bit further, 101(2) actually is a recognition that the Tribunal’s powers are different to the court’s powers because 101(2) ensures that a number of aspects of the process by which a review occurs in the Tribunal is not overridden by 101(1), and a good example there is 101(2)(b), “section 88” which is the jurisdiction to award costs. What Parliament is doing there is to say, well, the court and the Tribunal will have the same powers on review, but insofar as we are giving the Tribunal power to make costs orders in 101(1)(e), we do not want that to undermine the policy in section 88 of ADT Act which provides that costs will only be awarded in exceptional cases.

BELL J: Just returning for a moment to the issue that the Chief Justice raised with you, which is Justice Handley’s distinction between the question of the conferral of powers and the separate and anterior issue of jurisdiction. Why, when provision was being made for a merits review before the Tribunal which merits review would be subject, amongst other things, to consideration in arriving at the correct and preferable decision of government policy, why would one not think that the jurisdiction of the Supreme Court in the proceeding, described as a review in 97(1) but then clarified in (4) as an appeal, was not intended to be a merits review mirroring the provision of the ample merits review now conferred on the Tribunal?

MR BEVAN: To some extent what I am about to say in answer to your Honour’s question is borne out by the second reading speeches which I will take your Honour to in a moment, but our contention would be that when one makes the election in 96(2) or 97(2) to go court or Tribunal, one is presumed to understand that the nature of the review in each jurisdiction will be slightly different, the process will be slightly different and the factors that will be taken into account will be slightly different. So that if one goes to the Tribunal, one can have a review which takes into account government policy, whereas if one goes to the court, one is looking purely at legal principles as applied to facts found by the court.

We say that the fact that the review is undertaken in a different way in each jurisdiction does not deny the existence of that jurisdiction in the court and the same proposition would apply in the Commonwealth context where the AAT undertakes reviews in a completely different manner to the Federal Court. It takes into account factors which the Federal Court cannot take into account, but that does not deny the Federal Court a merits review jurisdiction if one makes an election under 14ZZ(a) to go to the court rather than the Tribunal. It just means that the nature of the review is different and there are other consequences as well. If one loses in the Tribunal, one does not ordinarily pay costs. That is not the case in the court. It now may be an appropriate time to take your Honours to the second reading speeches.

FRENCH CJ: You rely upon these to demonstrate, what, the purpose of the provision or the content of the term “review”?

MR BEVAN: To confirm that “review” bears its ordinary meaning and that the bestowal of a jurisdiction to review in 97(1) is not undercut by the enactment of 97(4) which imports a purely procedural mechanism for the manner of the conduct of that review once the legislation moved from the language of appeal to the language of review. If I could first take your Honours to the second reading speech, Hansard, 30 October 1996. This is Mr Knight at page 5593 and this was a speech on the second reading of the Taxation Administration (Consequential Amendments) Bill and at 5593 Mr Knight explained that the Bill was the forerunner of a “program of micro-economic reform of State taxes” and he then foreshadowed the rewriting of the Stamp Duties Act in New South Wales which was then to be part of a “cross-jurisdictional project involving” other States. Then, with particular reference to this Bill, at page 5594 Mr Knight said:

The bill introduces legislation which will standardise administrative provisions applying to revenue Acts imposing debits tax, land tax, payroll tax, parking space levies and health insurance levies. It will also be extended to stamp duties and financial institutions duty legislation when the cross-jurisdictional stamp duties rewrite has been completed.

Then at the end of page 5594 and the top of page 5595 Mr Knight said:

Under the provisions of the bill, the chief commissioner will be required to provide written notice of the decision with reasons where the objection has been disallowed or only allowed in part. Where the chief commissioner has not issued a notice of decision within 90 days after receipt of the objection, the objector may choose to proceed directly with an appeal to the Supreme Court. This is a new concept placing a discipline on the chief commissioner to deal with objections expeditiously.

If I could then turn to the second reading speech, Hansard, 13 November 1996. This is the second reading of the Taxation Administration (Consequential Amendments) Bill. The Treasurer, Mr Egan, said:

The administrative provisions currently contained in various tax statues are inconsistent, creating inequity for taxpayers and uncertainly for their advisers. However, by applying the same administrative provisions across these statutes, the Bill will significantly reduce compliance costs for the taxpayers of New South Wales.

If I could then take your Honours to the second reading speech, Hansard, 1 October 2000. This is again Mr Egan, the Treasurer, speaking in support of the Administrative Decisions Tribunal Legislation Amendment (Revenue) Bill. This is the Bill which created the revenue division of the Tribunal to undertake reviews of the decisions of the Chief Commissioner. At page 8934 the Treasurer said:

This bill amends the Administrative Decisions Tribunal Act 1997 to create a Revenue Division of the Administrative Decisions Tribunal and to provide for its constitution . . . The amendments to the Taxation Administration Act 1996 are made to confer jurisdiction on the Administrative Decisions Tribunal with respect to review of decision of the Chief Commissioner of State Revenue made pursuant to the taxation laws set out in the Act –

Then starting on the next paragraph:

The bill contains replacement provisions for the existing section 86 and part 10, division 2, of the Taxation Administration Act, rather than attempting to make ad hoc amendments to a large number of the existing provisions. In redrafting these provisions, the principle that decisions of the Chief Commissioner should be subject to external review has been retained –

Then if I could go down two paragraphs to the paragraph commencing “Taxpayers whose time for lodging” and go to the third sentence there:

The bill provides that the jurisdiction of the Administrative Decisions Tribunal to review decisions of the Chief Commissioner is to be concurrent with the existing jurisdiction of the Supreme Court to review such decisions.

Just pausing there for the moment, at that time the Supreme Court exercised merits review, had for four and one half years. If I could then go down three paragraphs below that, that is the paragraph commencing:

It is anticipated that, by conferring concurrent jurisdiction on the Administrative Decisions Tribunal and the Supreme Court, taxpayers who are presently deterred from pursing a review of the Chief Commissioner’s decision past the objection stage because of the complexity, expense and delay associated with Supreme Court proceedings will take advantage of access to the cheap and flexible review mechanisms offered by the Administrative Decisions Tribunal. Conversely, those taxpayers who wish to access to judicial expertise of the Supreme Court because their particular matter involves highly technical and difficult legal issues or because the amount of tax in issue is substantial can do so.

Now, that paragraph, I would hope, answers the question that your Honour Justice Bell asked me a little while ago. If I could then simply observe that Mr Egan on 11 April 2001 in making the second reading speech in support of the State Revenue Legislation Amendment Bill made similar statements but with particular reference to the enactment of section 97(4). If I could take your Honours to the Hansard for 11 April 2001, page 13535. The paragraph commencing, “A taxpayer who is dissatisfied,” this explains the rationale for the picking up of Part 51A of the Supreme Court Rules for the conduct of a review by the Supreme Court:

A taxpayer who is dissatisfied with the assessment of a tax liability has the right to have the matter reviewed by the Administrative Decisions Tribunal or the Supreme Court. Recent amendments to the Taxation Administration Act to allow review by the Tribunal also changed the right to appeal to the Supreme Court to a right to a review by the Supreme Court. Part 51A of the Supreme Court rules provides the mechanism for an appeal to the Supreme Court. The Supreme Court rules committee has advised that a review is separate and distinct from an appeal, and is therefore not subject to part 51A. The above amendments therefore inadvertently changed the appeal rights of taxpayers, as the intention is to provide the right of appeal as an alternative to a review of the chief commissioner’s decision. The bill will restore the application of part 51A of the Supreme Court rules, which will avoid the need for new rules to be promulgated regarding reviews. Information obtained in the administration of a taxation law can be used by the chief commissioner in the administration of other taxation laws.

We say that is the rationale for the enactment of 97(4). It did no more than ensure that what the Supreme Court had been doing prior to 1 July 2001 in accordance with the Supreme Court Rules would continue to occur under the Supreme Court Rules and that there was no intention to, by the picking up of those rules, convert a review as ordinarily understood into a strict right of appeal. Appended to our written outline, your Honours, is a copy of the Macquarie Dictionary and we place reliance on the fifth, seventh, tenth and fourteenth ordinary meaning of the word “review”. We say that ordinary meaning of “review” was not intended to be cut down by the mechanism of picking up Part 51A of the Supreme Court Rules via the last minute enactment of section 97(4). The way the Court of Appeal approached the matter, and the analysis starts at AB 197, paragraph 14, where the Court of Appeal said:

The Court should therefore determine at the outset the nature of the appeal under s 97 of the Administration Act.

That was because the Commissioner had given notice that he wanted to challenge the correctness of the primary judge’s earlier decision in Affinity Health where he had earlier held that under section 97 when read with section 101 the Supreme Court exercised merits review of the Commissioner’s decisions. In paragraph 17 at the foot of page 197, the Court of Appeal was aware that prior to the bestowal of jurisdiction on the Tribunal as from 1 July 2001 the court exercised an exclusive right of review. So much is noted in the first sentence of paragraph 17, and then the change as from 1 July 2001 was noted. Their Honours then set out the terms of 101, and at paragraph 18 their Honours held that:

Thus the Supreme Court on an appeal and the Tribunal on a review have identical powers, a matter on which Gzell J placed considerable reliance [both] in Affinity Health and in this case.

Now, the first point we make, your Honours, is that at this stage in the reasoning process the court is trying to ascertain what is the nature of the review, but from the very outset, at paragraph 14 the court is using a language of appeal and that persists in 17, it is picked up in 18 and in 18 it is used in contradistinction to a right of review in the Tribunal and it would seem that even at this early stage in the characterisation process, the Court of Appeal have already fixed on the right of review in the Supreme Court as being a right of appeal rather than a right of review, notwithstanding the acknowledgement back at – back at 17 there is a notation that sections 96 and 97 in their present form took effect from 1 July 2001.

In 15 the court sets out the relevant terms of 97 in contradistinction to 96 and notes that, without actually formally acknowledging it but at least in recital of the terms of the legislation, sets out legislation which in its terms contains relevantly identical styles of jurisdiction, mainly in the language of review and namely by reference to the lodgement of an objection irrespective of the decision on the objection, but that seems to have been lost by 18 and the whole analysis occurs in a mindset of appeal. That persists in 19 “Parliament did not spell out the nature of the appeal” as distinct from acknowledgement that there is no spelling out of the nature of the review.

Then what we contend is a problem in the reasoning process, a bigger problem, starts at 19 because keeping in mind that this is an exercise in characterising the Supreme Court’s jurisdiction, but it is done by reference to the manner in which the Tribunal undertakes its review because 19 then recites the terms of section 63 of the Tribunal Act which sets out the way in which the Tribunal - - -

KIEFEL J: Do you say that his Honour approached the question by applying a presumption that there must be a difference between the jurisdiction given to each of the court and the Tribunal?

MR BEVAN: What we say the Court of Appeal had done is rather than recognise and indeed embrace the language of 96 and 97 which contains a relevantly identical bestowal of jurisdiction and to move forward from there, two things have happened. Firstly, because the historical language up until 1 July 2001 was in the language of appeal, notwithstanding that that meant merits review, the court seems to have maintained that appeal jurisdiction, even though it was a de novo hearing, as if it were a point of reference and then has looked at the nature of the jurisdiction in the Tribunal under section 63 and used that to inform the nature of the grant of power on the Supreme Court and - - -

KIEFEL J: Could I just interrupt you there. Are you saying that the Court of Appeal, Justice Handley, misunderstood the previous grant of jurisdiction to the Supreme Court under the term “appeal” but which was, I think, under section 100 not limited to grounds of objection and therefore wider than an appeal, that is, an appeal on error?

MR BEVAN: His Honour has certainly misunderstood the previous jurisdiction.

KIEFEL J: He has assumed that it was an appeal in the strict sense.

MR BEVAN: Yes. I think that is probably what explains - - -

KIEFEL J: One has to infer that; it is not made clear.

MR BEVAN: Yes. I think that is probably why he starts the whole exercise at paragraph 14 in the language of appeal because, as I have already explained to your Honours, the raison d’être - - -

GUMMOW J: That seems to ignore the heading put in, I think it was by Act 72 of 2000. You took us to one of the reading speeches for that. That put a new heading in Part 10, did it not, “Objections and Reviews”? The word “appeal” is not used anywhere in the Part now.

MR BEVAN: That is quite right, your Honour.

FRENCH CJ: Could I ask about the significance of section 100(2) and (3). “Grounds of objection” contemplates matters of both law and fact, and characterisation I suppose, and subsection (3) which talks about onus is not readily applicable to making out a case of error of law.

MR BEVAN: That is quite right.

FRENCH CJ: Was any reliance placed on those two subsections in characterisation of the review?

MR BEVAN: Not in the Court of Appeal, but we had pointed out in our written submissions that if one – we pointed out a number of things. Firstly, that if you have an onus of establishing facts, that is antithetical to strict judicial review and, secondly, and it is a point which probably has two limbs, by giving both parties, not that just party with the onus of proof, but both parties a right to depart from grounds of objection, you are necessarily throwing the whole controversy before the Chief Commissioner open for debate in either the court or the Tribunal and that the proposition that the grounds of objection do not limit the nature of a review are also antithetical to the - - -

FRENCH CJ: There may be two ways of reading it. One way of reading it would say that is intended to leave open the possibility of raising new issues of or contentions of fact and contentions of law, but on the other hand it might be consistent with the proposition that if it is an appeal limited to error of law, you can raise new questions of law notwithstanding what was set out in your objections. But that provision, of course, applies both to the Tribunal and to the Supreme Court.

MR BEVAN: Yes, quite right. The point we would make which we have developed in our written submissions is that the State context is slightly different to the federal in the sense that – and I have to say, this follows from the difference between the two jurisdictions in respect to the subject matter of the review because the objection is part of the subject matter of the review in the Commonwealth area together with the assessment and under the Taxation Administration Act (Cth) one is limited to grounds of objection unless the court or the Tribunal allows an amendment. Whereas in the State context we would say the recognition that one is not limited to the grounds of objection is a recognition that in some cases the court has no objection decision because for whatever reason under 96(1)(b) or 97(1)(b) the Chief Commissioner has not determined the objection and it would therefore not be appropriate to be limiting either party to grounds of objection when there has been no formal decision on it by the relevant decision-maker, the Chief Commissioner in this case.

Now, a reading of the whole of 100, that is both grounds of objection and onus of establishing the taxpayer’s case, in our submission, is inconsistent with a strict right of appeal. We have also made this point in writing, your Honours, that another distinction between the Commonwealth and the State jurisdictions is that because the subject matter of the review is at the very least an assessment and in some cases, relevantly this case, an antecedent decision to de-group the appellants in this case. There is not always a decision under review which has been the subject of anything other than a formal decision-making process and anything other than a process which does not involve reasons because in this case one would have some material which would have been obtained during a tax audit to support a de-grouping decision, but in many cases the decision under review is a decision to stamp a document or a decision to raise an assessment for land tax based on one document from the taxpayer which is an annual land tax return.

CRENNAN J: Just speaking of documents, do we have in the appeal book a copy of the agreement which was the subject of consideration in relation to the de-grouping decision, refusal to de-group?

MR BEVAN: No, the only documents that are in the appeal book are the Commissioner’s assessments, the objection, the objection decision and the audit report. We did not put the substantive documents in. We thought it would be inappropriate because the grant of special leave limited us to debating the nature of the review, and if that succeeds then we go back to the Court of Appeal to go into the substance of the application of the de-grouping provisions rather than having it dealt with here, so we did not - - -

CRENNAN J: So just the construction point here and then a remitter if you succeed?

MR BEVAN: Yes, that is what we understood was the terms of the grant of aid, and I can see Justice Gummow nodding. We did not want to burden your Honours with documents that are properly the consideration of a differently constituted Court of Appeal if we - - -

GUMMOW J: It would then be for the Court of Appeal to enter onto the broader questions that Mr Justice Gzell looked at.

MR BEVAN: That is right.

FRENCH CJ: Does the nature of the review change at all according to the character of the decision which is under review? I mean, with de-grouping you seem to have a combination of evaluative decisions embodied in such terms as substantially independently of and substantially connected with, then a state of mind that is satisfaction coupled with a discretion that is made by order.

MR BEVAN: Yes. The short answer to that is, no, for two reasons. Section 97(1) read with 101 is a bestowal of jurisdiction for all of the decisions of the Chief Commissioner once they have been made the subject of an objection. There is no qualification, there is no cause to allow the process of characterisation in the nature of the review to be affected by the nature of the decision because it does not in its terms say that, and - - -

CRENNAN J: You still have the privative provision, I suppose.

MR BEVAN: That is quite right, and that is the subject of the judgment - - -

CRENNAN J: Section 103A.

MR BEVAN: Yes, which Justice Basten looked at with Justices Giles and Campbell agreeing in Paspaley, to which I have taken your Honours.

FRENCH CJ: The “may by order” is the kind of executive release of an unlikely Giris Case.

MR BEVAN: That is correct, your Honour. The other reason I give the answer to your Honour the Chief Justice’s question is that part of our case – and I will come to this when I deal with the Affinity Health issue – is that our contention is that Avon Downs and that line of territory does not apply in the State context and that in that sense there is a difference between the nature of the merits review which the Federal Court would exercise under 14ZZA of the Taxation Administration Act (Cth) and the nature of the review that the Supreme Court would undertake.

We say that if one were appealing a decision under either the 1936 or the 1997 Income Tax Assessment Act and if what I might term the business end of the decision were penalties and remission of GIC or some other decision which turns on the state of satisfaction of the Commissioner one would go to the ADT rather than the Federal Court. Ordinarily one would go to the Federal Court if the challenge to the primary tax assessment is a question of objective facts and those aspects of the decision or the assessment which turn on the Commissioner’s state of mind follow the event of the decision on the objective facts.

But we say for the reasons that Justice Gzell gave, both in this case and in Affinity Health, that is not the case in the State context because - and I will develop this a little bit further later in the morning - but we say that when one looks at the rationale for Avon Downs, which is to be found in - not so much in Avon Downs but in the decision of the Full Court of this Court a few years earlier in MacCormick where Sir Owen Dixon explained that the inability to go into re-exercising the Commissioner’s discretions turns on the fact that it arises under federal legislation in pari materia, and for the reasons that Justice Gzell gave, both in Affinity Health and in this case at first instance, we say that has no application in the State context (a) for the reason that the, we say, the separation of powers doctrine does not apply to the States, and secondly - - -

CRENNAN J: But is not the short answer that the legislation is different?

MR BEVAN: It is, and that is what I was about to say. We just simply look at 97, we look at 101 and there is nothing in 97(1) and there is 101(1) that in any way impinges or qualifies the bestowal of power by virtue of the nature of the decision under review. The nature of the decision under review simply does not inform the bestowal of power and again we come back to the case law over the last two decades from this Court which is summarised in paragraph 42 of our written submissions where we point out that one must simply allow the language of the bestowal of judicial power on a court to operate according to its terms and not to imply in it restrictions which are not supported by the literal terms of the bestowal of that jurisdiction.

GUMMOW J: Is there any equivalent in the payroll tax legislation, for example, to the traditional provision in the federal legislation as to the conclusive nature of an assessment? It is that provision which underlies a lot of the federal decisions, I think.

MR BEVAN: I have to say, and your Honour is talking about 177, that line of territory in the federal Act - - -

GUMMOW J: Yes.

FRENCH CJ: Section 199 of the Taxation Administration Act.

MR BEVAN: Yes. I think probably the critical provision, we would have said, which restricts one from attacking the validity of the Commissioner’s assessment is 103A, which is the privative provision, because 103A - and keep in mind this was ratio in Paspaley - provides that:

No court or tribunal . . . has jurisdiction or power to consider any question concerning an assessment or other decision of the Chief Commissioner under a taxation law . . . except as provided by this Part.

“This Part” means you either satisfy 96(1) by lodging an objection, do not worry about whether it is decided, or you satisfy the requirements of 97(1) for review, do not worry about whether your objection has been decided. Although there is a note there about preservation of the inherent jurisdiction of the court, and that certainly was part of the decision of Justice Gzell at first instance in Paspaley, which we have not brought with us, but that was the subject of an observation by Justice Basten with the remainder of the court agreeing with his Honour at – and I think I have already taken your Honours to it but I will take your Honours to it again – Paspaley which is, again, unreported unfortunately, [2008] NSWCA 184. At paragraph 30 Justice Basten said in the second sentence:

If an objection were to be lodged, but rejected, there would appear to be statutory power to review the decision to refuse permission to lodge out of time an objection to an assessment.

Then relevantly –

That would mean that a general review would be available under ss 96 or 97, a conclusion which would suggest strongly that such decisions were not to be treated differently for the purpose of the privative clause in s 103A from other decisions which might be subject to review.

Now, the reason his Honour made that statement was because in Paspaley, at first instance, Justice Gzell had held, essentially upholding a submission from me, that if there were no power to challenge under 103A there was power to challenge by way of judicial review. If one goes a little bit further down, paragraph 34, about the middle of the paragraph, Justice Basten, again delivering the judgment of the court, said:

The Chief Commissioner took the position that a refusal of permission under s 90(3) was not a “decision” for the purposes of s 86(1)(b). It was not, therefore, a decision to which objection could be taken. The Chief Commissioner accepted, however, that it was not a “decision” for the purposes of s 103A(1), and accordingly it was reviewable under s 69 of the Supreme Court Act. (That, of course, would be a review limited to jurisdictional error or error on the face of the record and not the full review available under s 97 of the Taxation Administration Act.)

FRENCH CJ: There is no falling foul of Kirk.

MR BEVAN: No, predated of course. We thought about putting that on the list but we thought better of it.

FRENCH CJ: You have enough there.

GUMMOW J: What does the note mean?

MR BEVAN: It is not operative.

FRENCH CJ: It is a bit hard to relate it to the rest of this?

GUMMOW J: Not very...... It is really section 69 of the Supreme Court Act these days, is it not?

MR BEVAN: Yes, it is, and that is why I took your Honour to paragraph 34. Now, I do not know that we are going to be paying much in the way of dividends going to sections 19, 19(2) or 75A of the Supreme Court Act any further. We simply say in concluding this aspect of the case on appeal for the appellants that 97(1) in bestowing a power of review on the Supreme Court ought be interpreted under its ordinary terms. We say that it is important in giving 97(1) its ordinary meaning that that is exactly the same terminology that was used to bestow jurisdiction on the Tribunal, which its common ground involves merits review.

The final point we make is that we also place a great deal of reliance on section 3(1)(b) of the Administration Act which provides an assessment, includes an assessment made by the Supreme Court in a review under section 97 so that Parliament has, we would say, put it beyond doubt that

once the court’s jurisdiction is invoked the court is as much a part of the assessment process as the - - -

GUMMOW J: The definition of assessment?

MR BEVAN: Yes, in section 3(1) of the Administration Act. The court is no different in a review to either the Tribunal or the Chief Commissioner himself. If I could then ask your Honours to turn to appeal book 203. This is where Avon Downs is dealt with. Now, Avon Downs, in a sense, has a life of its own in this appeal because, not only do we say that it is antithetical to the conclusion in 32, but the right of review under 97 is, to quote their Honours in the Court of Appeal:

not a rehearing or a hearing de novo –

but rather is –

an appeal in its “right and proper sense” –

We say a couple of things. The first is that what the court is doing in 33 is irreconcilable with what has occurred in 32 because Avon Downs and, before it, MacCormick, owes its – the principles enunciated by Sir Owen Dixon in each of those cases – owes its rationale to merits review because if you have an appeal stricto sensu you do not have the opportunity to apply Avon Downs.

Avon Downs was applied by Sir Owen Dixon in an income tax appeal, a review on the merits. A couple of years before that his Honour explained the rationale for it in MacCormick’s Case and MacCormick’s Case was a decision of the Full Court of this Court in a stated case under section 35 of the Gift Duty Assessment Act (Cth) and - - -

FRENCH CJ: Mr Bevan, we might just stop you there for a moment and hear what Mr Lindsay has to say in relation to the points you have put thus far.

MR BEVAN: If your Honour please.

MR LINDSAY: The point at which I would commence is that we do not accept my friend’s contention that there was a merits review in the Supreme Court prior to 2001. He said that a number of times, but the original enactment of the Tax Administration Act 1996 provided for one right of appeal, that was to the Supreme Court. Section 96 not only used the language of appeal. He said the taxpayer may appeal to the Supreme Court, that is in subsection (1). In subsection (2) it contrasted the concept of an appeal with the concept of a review. Subsection (2) provided that:

No person or body has jurisdiction or power to conduct a review or hear an appeal –

et cetera. So that we do not accept that there was a merits review in the Supreme Court at any time.

KIEFEL J: What about section 100?

MR LINDSAY: As it is now or as it was then?

KIEFEL J: In that Act, that the cases on an appeal are not limited to the grounds of the objection.

MR LINDSAY: Well, there is a similar provision now.

KIEFEL J: Yes, there is.

MR LINDSAY: We say that does not bear upon the nature of the process, if I can put it that way.

KIEFEL J: And likewise section 101, the onus of proof provisions.

MR LINDSAY: Well, again, our contention is that that does not bear upon the nature of the appeal or the process because it is a matter of proving the case not necessarily by reference to evidence. My friend’s assumption is that it is directed only to evidence.

KIEFEL J: But if you are not limited to the grounds of objection, the court would have to review the position with the taxpayer and what could have been considered by the Commissioner so, in a sense, the court has to position itself to make the decision the Commissioner could have made.

MR LINDSAY: at this point I might take a step back and draw attention to one of the problems in this area in dealing with labels. The fundamental difference between us, whether one talks about an appeal or a review, is really whether or not displacement of a decision of the Chief Commissioner requires establishment of error, and I use the word “establishment” to move away from the word “appeal”. One could call it a review and still have the fact that one would need to take into account whether or not there was an error, and I have endeavoured in our outline of argument to make that point and to refer to a Court of Appeal decision relating to internal appeals or reviews within the Supreme Court. It is not one thing or the other. We need to be very careful, in my submission - - -

FRENCH CJ: Review certainly is a vessel into which you can pour different content depending on statutory context. For example, a review under the Extradition Act where you are limited to the materials that were before the magistrate and so forth.

MR LINDSAY: That sort of observation is apt, both in relation to the word “appeal” and in relation to the word “review”. It is necessary to have regard to the context in each case and be very careful about it because they are labels we all, certainly on this side of the Bar table, tend to throw about without regard to particular context. So we say that those provisions relating to non-limitation of the grounds of objection in relation to the proof of a case really do not bear upon the nature of the decision-making process, if I can put it that way.

CRENNAN J: What about the apparent concurrency of the reviews under section 96 and section 97?

MR LINDSAY: If you look at the two second reading speeches that we both refer to, although I think we refer to different versions of them in Hansard, the word “concurrent” really falls into the same difficulty as general usage of the words “appeal” and “review” and the process - - -

CRENNAN J: The sections internally require an election to be made.

MR LINDSAY: They do; they do require an election and you can go now under one route or the other and they are, in that sense, concurrent. You can choose and they can operate there, but it is an election which is binding on you. The 2000 Act that spoke of concurrency really brought everybody up short when they realised what was involved and so we got the 2001 Act and that is where we got section 97(4) and, in our submission, the critical features of the legislation and the process are really section 97(4), which brings into play the Supreme Court Act, section 19 and section 75A, those provisions collectively being indicative of an appeal which is a word, whatever its usage - - -

CRENNAN J: But then you have section 75A(4) which takes you back to the Act, and then you have this conundrum about section 101.

MR LINDSAY: If I may, one step at a time, without avoiding any of that, section 19 of the Supreme Court Act tells us that section 75A applies. Section 75A, in broad terms, is indicative of a need to prove or establish error. Section 75A(4) certainly refers us back to the legislation, and section 75A(7) also says that additional evidence can be - - -

FRENCH CJ: That rather tracks a little 44A of the AAT Act, but it does not tell you much about the grant of jurisdiction in the Tax Administration Act itself, does it? I mean, 75A has a wide range of application and there was some discussion of this in Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390, at paragraph 26 and following. But it cannot really, as an ancillary provision, convert a grant of one kind of jurisdiction into a grant of another kind of jurisdiction, can it?

MR LINDSAY: I am not suggesting otherwise but even in the way your Honour puts the point to me there is an assumption about what is ancillary or what is essential. If there is a degree of uncertainty derived from just looking at section 97(4), section 19 and section 75A, which we would contend is not a problem, but if there is, that is where it is very significant, in our submission, to see the contrast on the face of the Tax Administration Act between section 96 and 97 and the nature of the process that is contemplated in section 96.

That is a process that involves, critically, section 63(1) which talks about a merits review and section 64 which is not a provision that one would ordinarily imagine having any application to a court context. So that, in our submission, the two critical features are sections 97(4) and then the provisions of the ADT Act picked up by section 96 - they are, in our submission, strong signposts in the direction that we would invite the Court to go.

One needs, also, to bear in mind the nature of the two decision-making bodies. The ADT, when it was given revenue jurisdiction had a revenue division established and it is possible that the people appointed to that revenue decision to decide these matters can be accountants or people with that sort of specialty, whereas the Supreme Court is entirely judicial. So that, in our submission, is a factor that points towards the distinction, there being a distinction and then the nature of the distinction between sections 96 and 97.

When it comes to section 101, which is really the core provision that was relied upon by Justice Gzell both in Affinity and in the proceedings below, in our submission the Court of Appeal was correct to say that section 101(1) is capable of having application, whatever the outcome or whatever the nature of the decision-maker.

In our submission, the Court of Appeal was correct to say that the character of the process under section 96 or 97 is anterior to the making of orders under section 101 and the breadth of the orders given under – or allowed under section 101 caters for a full range of possibilities that might emerge in all sorts of proceedings. It may be, for example, that there is some arithmetical error identified in an assessment when proceedings are before the Supreme Court and that might be the subject of an assessment – substituted assessment being made by the court. One cannot anticipate the range of problems that may emerge, but, in our submission, those problems can be dealt with however they emerge, but section 101 does not affect the differences for which we contend between sections 96 and 97.

BELL J: Coming back to the terms of section 97, which is the critical provision in terms of the conferral of jurisdiction, if it were the intention to confer on the Supreme Court a right of appeal as distinct from a right of review concurrent with that bestowed on the Tribunal, it is a curious way to go about it, and when one turns to subsection (4), it says that:

A review by the Supreme Court is taken to be an appeal for the purposes of the Supreme Court Act 1970 and the regulations and rules made under that Act –

Then when one goes to the extrinsic material, one sees some force to the contention that Mr Bevan makes concerning the reasons for the inclusion of subsection (4).

MR LINDSAY: Mr Bevan’s submissions are predicated on a false assumption, in our contention, in that he starts from the proposition that the Supreme Court had merits review jurisdiction, and we do not accept that. One wonders why it was necessary or appropriate to use the word “appeal” in any event if it was no more than review by another name. In our submission, the use of the word “appeal” in section 97(4) is of critical significance, as is the fact that via section 19 of the Supreme Court Act section 75A is picked up.

GUMMOW J: Is?

MR LINDSAY: Is picked up.

GUMMOW J: By section?

MR LINDSAY: Section 75A is picked up by section 19(2)(a) of the Supreme Court Act.

BELL J: Why, on your construction in section 97(1), is there a reference to a right of review in circumstances where the previous legislation provided for a right characterised as an appeal? Then one gets the new Part 10 with its heading “Objections and reviews”, and one has conferred on the Supreme Court a power characterised as a review, but then described in subsection (4) as something that is to be taken to be an appeal for the purposes that include the provisions of the Supreme Court Rules. When one looks at that scheme, can I take up with you the question of why the use of review, on your construction?

MR LINDSAY: It gets down to the difficulty with these labels. It is possible to describe an appeal as a review by way of appeal just as it is possible to distinguish between appeals in a strict sense and appeals by way of rehearing. They are all infinitely variable terms. That is why one has to come back to the - - -

FRENCH CJ: Questions of statute.

MR LINDSAY: Exactly, and one has to come back to the context. It is quite plain, in my submission, from the two sets of second reading speeches that it was not thought that the existing right of appeal to the Supreme Court was being altered and so the word “review” in subsection (1) of section 97 was not fully appreciated in terms of its implications.

BELL J: Were you going to take us to an earlier decision of the Court of Appeal with respect to the nature of the jurisdiction conferred on the Act before the - - -

MR LINDSAY: I speak subject to correction, but I do not think there is such - - -

BELL J: I am sorry, I thought you - - -

MR LINDSAY: No. My point was if one looks at the terms of section 96 of the Taxation Administration Act as initially enacted, in its terms it not only uses the language of appeal, but in subsection (2) it distinguishes between a review and an appeal. A point that I have endeavoured to make in our outline of argument is that even though the content of an appeal and the content of a review might be different from time to time, there is this persistent distinction between the two.

CRENNAN J: I think in Affinity, just to go back to the powers under section 101 for a moment, I think I if I recollect correctly, it was recorded that the Commissioner accepted in Affinity that the power in 101(1)(b), insofar as it may illuminate the jurisdiction under section 97, was not consistent with his construction of 97, that is to say the construction you are advancing today.

MR LINDSAY: I have not reflected on that. I cannot respond to that save to say that the - - -

CRENNAN J: I mean, the point being though it is merits review and these powers are bestowed on the court as well as the Tribunal.

MR LINDSAY: We would, with respect, take issue with that characterisation of paragraph (b). In our submission, paragraph (b) does not necessarily invoke merits review. One ultimately then goes back to the earlier words in subsection (1) dealing with the application for review may do certain things and we say that kicks in at the end of the process whether the process is under section 96 or under 97.

GUMMOW J: Have we got the text of the Administration Act as it was first enacted in 1996? I cannot find it at the moment.

MR LINDSAY: I thought we had, but I am not sure we do.

BELL J: Have we not got it behind tab 1?

KIEFEL J: Tab 2 I think is the appellants’ - - -

CRENNAN J: It is the superseded provisions.

GUMMOW J: We have bits and pieces of it, as usual.

MR LINDSAY: On page 13 of my friend’s folder, appellants’ submissions, et cetera - - -

GUMMOW J: Well the heading of Part 10 in those days was “Objections and appeals”. Division 2 was headed “Appeals”.

CRENNAN J: Powers are set out at section 102.

GUMMOW J: There was no melding with the administrative structure.

MR LINDSAY: No. The problem, if it is a problem, emerged because of the creation of the revenue division of the ADT, the Tribunal.

GUMMOW J: And the replacement of the concept of appeal with a general review, encompass both. Ordinarily one would think that the change was made for some purpose.

MR LINDSAY: That drives us back to section 97(4) and what one makes of that and it drives us back to the distinction between sections 96 and 97 in terms of the way the proceedings would operate. The Tribunal option was intended to be – I suppose, even court proceedings are intended to be cheap and effective.

FRENCH CJ: There is no authority which has determined the characterisation of the appeals under the original form of the - - -

MR LINDSAY: I do not think so, no. I am not - - -

FRENCH CJ: I notice you have the equivalent of the non-limitation of grounds for objection, the onus provisions, in sections 100 and 101 in the original print.

KIEFEL J: That is what we were discussing earlier.

MR LINDSAY: Yes, your Honour. If your Honours look at the second reading speech, I think the one relating to the 2000 Act, your Honours will see that part of the motivation of the legislation bringing into play the Tribunal was to maintain consistency with a number of other States that have introduced similar administrative provisions in recent years and then also there is a reference to similar concurrent jurisdiction is available in relation to like matters in Victoria and federally. So, although each legislative scheme needs to be viewed in its own terms and context, it is plain, in our submission, that the general idea was to have a relatively informal process under a Tribunal procedure and a more formal one under a court procedure.

KIEFEL J: Were you referring to the second reading speech to the 2000 amendments to the - - -

MR LINDSAY: Yes, I was.

KIEFEL J: My note of it at 7375 of the second reading speech suggests that the reference really was to the administrative processes within the Office of State Revenue that it was referring to. It is the objection process itself rather than the review process or appeal process.

MR LINDSAY: If you go further down in our bundle which has a different version of the speeches, it is behind tab 2(b) and it is at page 81. In terms of the bundle, we are dealing here with a version of the second reading speech that was given by Mr McManus and in the bundle, at page 79, you see at about point 7 of the page the reference to the jurisdiction of the Tribunal:

to be concurrent with the existing jurisdiction of the Supreme Court –

Then there is some part of the speech that my friend, I think, drew attention to. Then at the bottom of page 80 there is a paragraph commencing:

Conversely, those taxpayers who wish to access the judicial expertise –

et cetera.

GUMMOW J: How does that help us?

MR LINDSAY: And then over the page at the top of page 81:

Similar concurrent jurisdiction is available in relation to like matters in Victoria and federally.

KIEFEL J: My comment, Mr Lindsay, was really directed to your discussion earlier that this was to bring in line some process which is found in other States relating to Tribunals, whereas the reference to the other States at the top of page 80 is in relation to the internal processes of the Office of State Revenue.

MR LINDSAY: I accept that correction. So that, in our submission, when one looks at the process of what happened, the intention was to recognise that there was an existing process, I will use the neutral word, in the Supreme Court. It was not intended to change that. When, before the 2000 Act came into operation, it was appreciated via the Supreme Court Rules Committee there was a problem. They introduced section 97(4) and that made it plain, in our submission, that the intention was to maintain an appeal process and the appeal process, in our submission, as one sees from the original form of section 96, was a process that was different from the concept of a review, but, in any event, in our submission, there is a difference between an appeal and a review and the appeal is more clearly one that requires proof of error and the proof of error is the main difference between us.

Now, my friend locates the rationale and the justification for the principles in Avon Downs in federal law. In our submission, and this is the difference between us, that is not correct. The approach taken to what might broadly be described as discretionary decisions, or state of mind decisions, in our submission, the approach taken with those is more broadly based and it follows from the nature of the decision under challenge, depending, as it does, on the state of mind of the original decision-maker. The point of difference between Mr Bevan and myself is that he has contended to your Honours this morning that there is no difference, if you like, in the appeal process or the decision-making process, depending on the nature of the decision under challenge, and we say there is a difference.

FRENCH CJ: The use of the terminology “appeal”, of course, in this context must misdirect us from the fact that the exercise at first instance is an exercise of original jurisdiction because it is a direct review of an administrative decision. That is why often you see in Federal Court judgments quotation marks around the word “appeal” in this sort of setting.

MR LINDSAY: Your Honour probably needs to put quotation marks around the word “review” as well until we get to the end of the process and we decide what they both mean in the context because at the end of the day it is so easy for all of us to slip into that language, but that is the core question.

In our submission, the critical question is whether or not in section 97 proceedings to displace a decision of the Chief Commissioner, it is necessary to establish, using a neutral word again, the existence of an error affecting the decision and whether or not there was an error depends on the nature of the decision under challenge and, in our submission, that is really what is being said by the Court of Appeal in particularly paragraphs 33 and 36 of Justice Handley’s judgment.

Dealing with the matters that have been put by Mr Bevan in this section of the argument, I think there is only one other matter that I need to engage. In our submission, the Court of Appeal’s judgment in Paspaley does not determine anything that we have to do here. One needs to bear in mind that although it may well be true to say that in making a decision on “appeal” or “review”, one needs to identify the subject matter of the decision under appeal. The case that was put against the Chief Commissioner in the Supreme Court proceedings was one that focused pretty clearly on what the present appellants regarded or characterised as a continuing refusal to exercise a de-grouping power, and that appears in the summons which is reproduced in the appeal book and, in particular, it appears in paragraph 2 on page 6. If your Honours look at the chronology of what happened, there was an audit - - -

GUMMOW J: What does all this go to, Mr Lindsay?

MR LINDSAY: In our submission, Paspaley has no bearing, ultimately, on the questions to be determined in this case and that is essentially the point that we made there. I think I have engaged each of the points that has been urged against us.

FRENCH CJ: Thank you, Mr Lindsay. Mr Bevan, anything in reply on the points that Mr Lindsay has made, please?

MR BEVAN: Your Honours, we are criticised for making an assumption as to antecedent merits review before 1 July 2001. Could we take your Honours back to paragraph 17 of the Court of Appeal’s decision, which is AB 197. The paragraph commences:

Section 96 in the 1996 Act provided for an appeal to the Supreme Court and there was no right to a review by the Tribunal.

If we just pause there for the moment, if the respondent is correct and what existed prior to 1 July 2000 for the four and a half year period between the enactment of the first version of Part 10, that was the very commencement of the Taxation Administration Act, and the commencement of the new Part 10 on 1 July 2001 was an appeal in its strict sense and having regard to the acknowledgement made by the Court of Appeal in the first sentence of paragraph 17, it means that there was no merits review at all for a four and a half year period before the Tribunal was given a concurrent jurisdiction - - -

FRENCH CJ: Is that a constructional argument?

MR BEVAN: No, I am just simply saying that if you take that proposition to its logical conclusion, it means that because of the use of the word “appeal” one only had a strict right of appeal for that four and a half years and that merits review commenced for the first time in either body, Tribunal or the court, on 1 July 2001. In Affinity Health 2005 ATC 4637, at paragraph 50 Justice Gzell in the course of his reasoning to determine that Avon Downs has no present application and in looking at the historical position - - -

GUMMOW J: I think he is referring to the not very happy history in New South Wales that there is very limited access to challenge the Commissioner’s rulings through the old stated case procedure.

MR BEVAN: That is right. In paragraph 50, looking at the position for the enactment of the first Part 10, his Honour, reciting from the judgment of Justice Sperling in Lee’s Case said:

At the time of the decision in Lee –

that was 1999 –

the Stamp Duties Act 1920, s 124A was in the following terms:

“(1) An appeal to the Supreme Court under this Part is by way of rehearing of the original objection to the Chief Commissioner and is limited to the grounds of the original objection.

If one goes to the - - -

KIEFEL J: This is what you were going to say is in the same terms as section 32A to the Payroll Tax Act before 1996, which is at tab 1, I think, of your - - -

MR BEVAN: No, it is a bit further up.

KIEFEL J: No, tab 6, I am sorry, of your statutory provisions.

MR BEVAN: Yes, your Honour is reading my mind. The old Part 6 which operated until 1 January 1997 when the original Part 10 commenced in the present context, that is the Payroll Tax Act. The right of objection was given in section 32 and the right of appeal is 32A, which is at page 48 of our legislation folder. Section 32A(1):

An appeal to the Supreme Court under this Part is by way of rehearing of the original objection to the Chief Commissioner and is limited to the grounds of the original objection.

Our contention is that when the original Part 10 commenced to operate on 1 January 1997 – and that is to be found at tab 2 of our legislation folder, your Honours – the right of appeal was given there in the original section 96, that is page 13 of tab 2. Section 96 – and this is that four and one half year period before the current Part 10 commenced to operate, in 96(1):

A taxpayer may appeal to the Supreme Court –

and then it sets out the preconditions to the right of review. Subsection (2):

No person or body has jurisdiction or power to conduct a review or hear an appeal –

So that is the original privative provision that is now found in 103A. Section 100 provides that the parties “are not limited to the grounds of objection”. Section 101 provides that:

the appellant has the onus of proving the appellants’ case.

Section 102, which is in terms slightly different to the present 101, provides that:

On an appeal, the Supreme Court may do any one or more of the following:

(a) confirm or revoke the assessment . . .

(b) make an assessment or decision in place of the assessment or decision to which the appeal relates –

Now, 102(b) is relevantly indistinguishable from the current 101(1)(b) and our contention is that prior to 1 July 2001, that is the four and a half year period during which the original Part 10 of the Administration Act operated, there was nonetheless a general right of review, notwithstanding the use of the language of appeal because the proposition that the parties are free to on the appeal to choose whatever grounds of objection they determine to rely on and that there is an evidentiary onus on the taxpayer in 101, we say would be inconsistent with a strict right of appeal during that four and a half year period.

Our contention is that when the legislation moved to the language of review, it did not change the nature of review. What it did was it simply adopted a mechanism for bestowing jurisdiction to review on the court and the Tribunal in like terms and our contention is that the change in language had no necessary change in the nature of the jurisdiction bestowed. If I could perhaps just very briefly go to Affinity. Affinity was originally dealt with by Justice Gzell in the judgment under appeal in this matter at page - - -

FRENCH CJ: Sorry, is this by way of reply?

MR BEVAN: Yes, I am simply dealing with my learned friend’s question in answer to Justice Crennan about - - -

CRENNAN J: The Commissioner’s argument, I think, is set out at paragraph 56 which we can read.

MR BEVAN: Yes, if your Honours please. I do not think there is anything else I need to say in reply, your Honours.

FRENCH CJ: Thank you, Mr Bevan. Yes.

MR BEVAN: If I could then - - -

FRENCH CJ: Your voice had a tone of finality about it which misled me. Or what they call closure, I think.

MR BEVAN: If I could perhaps just deal with our last two points which are the House v The King point and the remittal point.

GUMMOW J: House v The King?

MR BEVAN: Yes. We say that the Court of Appeal, in order to re-exercise the discretion to de-group, had to find error on the part of Justice Gzell because the decision was discretionary.

FRENCH CJ: This assumes that the Court of Appeal was correct in its characterisation of the process. What is the premise on which you put this argument?

MR BEVAN: I must confess, if the Court of Appeal were wrong, we say there has been a miscarriage and the non-jurisdictional aspects of the Commissioner’s appeal to the Court of Appeal need to be remitted. Additionally, if required, we would say that because the decision under review is a discretionary decision, that is the decision to de-group, there must have been a finding on the part of the Court of Appeal that Justice Gzell fell into error in some principle way.

GUMMOW J: I think you are straying into the grounds in which you did not get a grant actually. If the Court of Appeal, as you would put it, erred because it misconstrued the nature of a jurisdiction exercised by Justice Gzell and therefore misconstrued its appeal, it would have to look at it again, and you could then agitate these matters I suppose.

MR BEVAN: Yes. We only mention House v The King because it was in that part of the application book which was picked up in the grant of special leave and took the view that perhaps we should address submissions to it.

BELL J: There is an issue between you and Mr Lindsay about that. You are now on 2(d) of your written submissions and Mr Lindsay says it is outside the grant.

MR BEVAN: That is right, but we took the view that it was referred to in the relevant part of the application book and obviously we are in your Honour’s hands as to whether or not we are within or without the terms of our grant. If we are in the terms of the grant, the simple proposition is that we say error was not found and if error was not found, then the Court of Appeal fell into error, quite apart from its characterisation of the nature of the review.

FRENCH CJ: Yes. Well, I think, Mr Bevan, the Court is of the view that it will consider the matter on the basis of the arguments put so far.

MR BEVAN: If your Honour please.

FRENCH CJ: We will, I think, unless you have anything else strictly in reply to what Mr Lindsay said - - -

MR BEVAN: No, that was it, your Honour.

FRENCH CJ: Thank you. The Court will adjourn until 2.15 pm on Monday, 26 September 2011 in Adelaide.

AT 12.18 PM THE MATTER WAS ADJOURNED