Tourism Holdings Aust Pty Ltd v Commissioner of Taxes [2004] NTSC 34

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Tourism Holdings Aust Pty Ltd v Commissioner of Taxes [2004] NTSC 34

PARTIES: TOURISM HOLDINGS AUSTRALIA PTY LTD (ACN 001 789 957)

v

COMMISSIONER OF TAXES

TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION: SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION

FILE NO: LA 9 OF 2003 (20321824)

DELIVERED: 29 July 2004

HEARING DATES: 16 July 2004

JUDGMENT OF: RILEY J

CATCHWORDS:

TAXES AND DUTIES – Stamp duties - Objections and appeals – Appeal from decision of Commissioner – Nature and scope of – Limited by legislation – Error in Commissioner’s decision to be demonstrated – Taxpayer not prevented from making new representations to Commissioner after adverse decision – Whether evidence can be received by the court which was not available to the Commissioner when making his decision.

LEGISLATION:

Stamp Duty Act (NT)
s 9BA, 9BB, 9BB(4), 97, 101 Taxation (Administration) Act (NT)
s 35 of the Payroll Tax Act 1978 (NT)

CASES:

Crusher Holdings Pty Ltd v Commissioner of Taxes (NT) (1994) 117 FLR 485
Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes (2000) 155 FLR 146
Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes [2001] NTCA 4
Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes (2002) 23 (10) Leg Rep SL6
Plummers Border Valley Orchards Pty Ltd v Commissioner of Taxes (NT) 2002 ATC 4530
Nicholas Paspaley Properties Pty Ltd v Commissioner of Taxes (1991) 103 FLR 305
Kolotex Hosiery (Australia) Pty Ltd v Federal Commissioner of Taxation (1975) 132 CLR 535
Hepples v The Commissioner of Taxation of the Commonwealth of Australia (1991-1992) 173 CLR 492 at 539
Grain Elevators Board (Victoria) v President, Councillors and Rate-payers of the Shire of Dunmunkle (1946) 73 CLR 70
Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd (2002) 76 ALJR 1534
Commissioner of Taxes (NT) v Tourism Holdings Ltd & Anor 2002 ATC 4985
Trust Company of Australia Ltd v Commissioner of State Revenue [2003] HCA 23
John French Pty Ltd v Commissioner of Pay-Roll Tax (1984) 1 QdR 125

REPRESENTATION:

Counsel:
Appellant: D. Russell QC
Respondent: T. Anderson

Solicitors:
Appellant: Ward Keller
Respondent: Solicitor for the Northern Territory

Judgment category classification: B
Judgment ID Number: ril0415
Number of pages: 15

ril0415

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Tourism Holdings Aust Pty Ltd v Commissioner of Taxes [2004] NTSC 34
No LA 9 of 2003 (20321824)

BETWEEN:

TOURISM HOLDINGS AUSTRALIA PTY LTD (ACN 001 789 957)
Appellant

AND:

COMMISSIONER OF TAXES
Respondent

CORAM: RILEY J

REASONS FOR JUDGMENT

(Delivered 29 July 2004)

[1] This is a preliminary application arising out of an appeal from a decision of the Commissioner of Taxes made on 19 September 2003. At that time the Commissioner allowed in part the objection of Tourism Holdings Australia Pty Ltd (the appellant) against an assessment of stamp duty made on 11 May 2001. The assessment of stamp duty related to the sale of the Britz international rental business to the appellant and another. The sale included business assets within the Northern Territory and included what is described as the Australian goodwill attached to the business.
[2] The parties are in agreement that the value of the Australian goodwill attached to the sale and purchase of the Britz business was $46,469,744. The question which arises is to what extent that goodwill is subject to duty for the purposes of the Stamp Duty Act (NT). Section 9BA of the Taxation (Administration) Act (NT) was, at the relevant time, in the following terms:
“Where, in the opinion of the Commissioner, dutiable property is wholly or partly situated in the Territory or is wholly or partly related to a business undertaking carried on in the Territory, stamp duty shall be assessed in respect of that proportion of the dutiable property situated in the Territory or related to the business undertaking carried on in the Territory.”
[3] The dispute between the parties revolves around the extent to which the goodwill, which is “dutiable property” pursuant to s 4 of that Act, was “dutiable property situated in the Territory or related to the business undertaking carried on in the Territory”. The Commissioner made his assessment of stamp duty and the appellant has objected to that assessment.
[4] The grounds of appeal are set out in the notice dated 17 October 2003. In summary the appellant claims that the Commissioner wrongly based his assessment of the value of “dutiable property” upon an apportionment of the total value of intellectual property rights and goodwill by applying to the total value of those assets the proportion of the Territory revenues of the business to the total Australian revenues. It is claimed that such an apportionment did not accurately identify the value of the dutiable property for the purposes of the Taxation (Administration) Act (NT) or the Stamp Duty Act (NT).
[5] On 13 November 2003 Bailey J made consent orders which included a requirement that the parties file an agreed statement of facts or, failing agreement, affidavits as to the relevant facts within an identified period. An order was also made that the appellant file any statement of expert evidence upon which it proposed to rely by a certain date. On 15 January 2004 Mildren J made a further consent order excusing the parties from compliance with those obligations.
[6] The preliminary issue to be resolved relates to the nature of the hearing and in particular the evidence (if any) that is to be received in an appeal of this nature. It is the contention of the Commissioner that the materials to be considered on the hearing are limited to the materials which were before the Commissioner at the time the Commissioner made his decision and the court should not receive new evidence. On the other hand the appellant contends that additional material may be received and relied upon. In particular it is the contention of the appellant that a report by Paul Carter, who is a chartered accountant with PriceWaterhouseCoopers, should be received into evidence. That report discusses the nature of the goodwill of the Britz business and includes the opinion of Mr Carter as to the portion of the goodwill situated in the Territory for the purpose of assessing duty.
[7] The appeal to this Court is permitted by operation of s 101 of the Taxation (Administration) Act. The section is in the following terms:
“(1) An objector who is dissatisfied with a decision of the Commissioner on his objection may, within 30 days after service on him of notice of that decision or within such further time as the Commissioner may allow, appeal to the Supreme Court.
(2) On appeal –
(a) the appeal shall be limited to the grounds stated in the objection and
(b) the burden of proving that any assessment objected to is excessive lies on the objector.
(3) If a person’s liability or assessment has been reduced on an objection, the reduced liability or assessment shall be the liability or assessment appealed against.”
[8] Section 101 of the Taxation (Administration) Act is in pari materia with s 35 of the Payroll Tax Act 1978 (NT), a provision dealt with in various cases that have come before this court over the years. In those cases it was held that the scope of the appeal available under s 35 of the Payroll Tax Act is limited to examining the propriety of the Commissioner’s decision on the basis of the material before the Commissioner and the court will not admit evidence on the hearing of the appeal. The right of appeal and the scope of appeal established by that provision was described as being narrowly focused: Crusher Holdings Pty Ltd v Commissioner of Taxes (NT) (1994) 117 FLR 485; Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes (2000) 155 FLR 146 and, on appeal, [2001] NTCA 4 and (2002) 23 (10) Leg Rep SL6; Plummers Border Valley Orchards Pty Ltd v Commissioner of Taxes (NT) 2002 ATC 4530.
[9] A similar conclusion was reached in relation to s 101 of the Taxation (Administration) Act 1978 (NT) in the earlier stamp duty case of Nicholas Paspaley Properties Pty Ltd v Commissioner of Taxes (1991) 103 FLR 305 where Angel J observed (at 307):
“Counsel before me were agreed as to the nature of this appeal. … it is, as a first step, incumbent on the appellant to show that the Commissioner erred in some way in reaching his opinion on the material before him; and on error being shown, the appeal is thereafter to proceed de novo on the materials before the court.”
[10] The approach adopted by the courts in relation to the provisions referred to in those cases was not challenged in this matter. Rather, the appellant sought to distinguish the present case on the basis that each of the abovementioned decisions concerned provisions where “the taxable fact was the opinion of the Commissioner”. It was submitted that:
“Since the question was whether or not that opinion was correct, the question had to be determined by reference to the material before the Commissioner and for that reason further material was not relevant: see per Gibbs J in Kolotex Hosiery (Australia) Pty Ltd v Federal Commissioner of Taxation (1975) 132 CLR 535 at 568.”
[11] The appellant submitted that the authorities to which I have referred are limited in their application to the special circumstance of a taxable fact which is constituted by the Commissioner’s opinion. It was contended that s 9BA of the Taxation (Administration) Act does not have that effect. It was submitted that the words of the section meant what they say and that is: “It is the actual facts rather than the Commissioner’s opinion about that that is the taxable fact”. The thrust of the submission is that s 9BA involves a two-stage process. The first part of that process, which is described by the appellant as “the threshold question” and is the only part dependent on the Commissioner’s opinion, is the forming of an opinion that a business is carried on both inside and outside the Northern Territory. In the present case that is not in dispute. The second part of the process is found in the balance of the section which prescribes a consequence of that opinion having been formed. The consequence is that “stamp duty shall be assessed in respect of that proportion of the dutiable property situated in the Territory or related to the business undertaking carried on in the Territory”. The appellant submits that this is a question of fact and there is no reason to imply a construction of the provision which makes the taxable fact the Commissioner’s opinion.
[12] Section 101 of the Taxation (Administration) Act allows an appeal by an objector “who is dissatisfied with a decision of the Commissioner”. The question in the present matter is whether there was one decision made by the Commissioner under s 9BA of the Act or whether there were two decisions resulting in rights of appeal with different characteristics. Was there one decision (as to whether there was dutiable property situated in or related to a business undertaking carried on in the Territory) where the parties are limited to the materials before the Commissioner, and then another decision (as to the proportion of the dutiable property so situated in or related to the Territory) where the parties may introduce further evidence on appeal? Alternatively was there simply one decision of the Commissioner?
[13] The Commissioner submits that in a case such as this, where some of the Australian goodwill of the business may not be related to the carrying on of a business in the Territory, the Commissioner is to determine the proportion of the Australian goodwill that is dutiable within the Territory. The Commissioner forms his opinion on the basis of all of the information provided to him, including that provided by the appellant. It is artificial to suggest, as the appellant does, that the Commissioner must firstly determine that part of the goodwill is related to the undertaking of business in the Territory but to then refrain from identifying or forming any opinion as to what part. The fact that there is “dutiable property” consisting of goodwill by definition demonstrates that there must be at least some such property situated in the Territory or related to a business undertaking carried on in the Territory. The opinion referred to in s 9BA is a single opinion which must relate to the issue of proportion, that is, whether the whole, or what part, is situated in or related to a business undertaking carried on in the Territory and therefore subject to assessment for stamp duty.
[14] If the submission of the appellant be accepted, the words preceding the words “stamp duty” in the section would be unnecessary. There would be no need for the Commissioner to form an opinion of the limited kind suggested by the appellant. Such an opinion would add nothing to the operation of the provision. The section would be more aptly worded:
“Stamp duty shall be assessed in respect of the proportion of the dutiable property situated in the Territory or related to the business undertaking carried on in the Territory.”
[15] The wording of s 9BA lends support to the interpretation of the section urged by the Commissioner. Section 9BA requires that stamp duty shall be assessed in respect of “that” proportion of the dutiable property situated in or related to the Territory. This is a reference back to the opinion of the Commissioner as to the presence of the dutiable property so situated or related. If a different and separate decision was to be made as to the relevant proportion one would expect the section to provide that duty shall be assessed in respect of “the” proportion of the dutiable property situated in or related to the Territory.
[16] Further, this view of the effect of the legislation is supported by the terms of s 9BB of the Act which commenced after the date of the agreement the subject of these proceedings. Section 9BA was not amended at that time. Section 9BB is narrower in application than s 9BA. Section 9BB provides a formula for the apportioning of dutiable property in circumstances where a business is carried on in the Territory and elsewhere. Section 9BB(4) then permits the Commissioner to “determine the proportion of dutiable property on another basis if satisfied that the other basis would be more appropriate in the particular circumstances”. This reflects an acknowledgment that the Commissioner has a discretion under s 9BB.
[17] The use of amendments to Acts to assist in the interpretation of pre-amendment provisions is an exercise calling for circumspection and great care: Hepples v The Commissioner of Taxation of the Commonwealth of Australia (1991-1992) 173 CLR 492 at 539; Grain Elevators Board (Victoria) v President, Councillors and Rate-payers of the Shire of Dunmunkle (1946) 73 CLR 70 at 86; Commissioner of State Revenue v Pioneer Concrete (Vic) Pty Ltd (2002) 76 ALJR 1534; and Trust Company of Australia Ltd v Commissioner of State Revenue [2003] HCA 23. However in the circumstances of the present case there would be an inconsistency between the operation of s 9BA (as it now is and has been throughout) and the new s 9BB if the interpretation urged by the appellant is adopted. The appellant contends that under s 9BA there is no discretion vested in the Commissioner in relation to determining the proportion of the dutiable property situated in or related to the Territory. Section 9BB(4) proceeds on the basis that the Commissioner has, in the circumstances provided for in that section, a discretion to determine the proportion of the dutiable property situated in or related to the Territory. Those provisions will be inconsistent with each other if I adopt the approach urged by the appellant.
[18] The “opinion of the Commissioner” referred to in s 9BA of the Taxation (Administration) Act is not to be confined in the manner suggested by the appellant. The opinion extends to and includes the identification of “that proportion of the dutiable property situated in the Territory or related to the business undertaking carried on in the Territory”. The suggested basis for distinguishing this case from the situation dealt with in Crusher Holdings Pty Ltd v Commissioner of Taxes (NT), Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxation, Plummers Border Valley Orchard Pty Ltd v Commissioner of Taxes (NT) and Nicholas Paspaley Properties Pty Ltd v Commissioner of Taxes has not been made out.
[19] In my view the decision making process contemplated by s 9BA of the Act is not to be separated into its component parts as submitted by the appellant. The section provides for the assessment of stamp duty in relation to dutiable property. The assessment is dependent upon the Commissioner forming an opinion as to the presence of dutiable property within or related to the Territory and, where the property is partly situated in the Territory or partly related to a business undertaking carried on in the Territory, as to the proportion so situated or related. The issue of apportionment in such circumstances is a matter of opinion and, by virtue of the scheme, the relevant opinion is that of the Commissioner.
[20] It is for the Commissioner to form an opinion as to the relevant proportions and he does so based upon the material placed before him, including that received from the appellant. In my view, if an appellant wishes to challenge the decision of the Commissioner, he must do so based upon the material before the Commissioner at the time the decision was made. The reasoning in Crusher Holdings Pty Ltd v Commissioner of Taxes (NT) and Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes has application in these circumstances. The nature of the appeal available to the appellant in this case is of the kind available to the appellants in those cases.
[21] The appellant submitted that in the event of such a ruling the report of Mr Carter was still able to be received into evidence. It was submitted that upon a finding of error on the part of the Commissioner the appellant was then able to introduce evidence, such as the Carter Report, when the matter is further considered by the Court. Reference was made to Nicholas Paspaley Properties Pty Ltd v Commissioner of Taxes and Kolotex Hosiery (Australia) Pty Ltd v Federal Commissioner of Taxation. I was urged by the appellant not to follow the Northern Territory cases of Crusher Holdings Pty Ltd v Commissioner of Taxes (NT), Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes and Plummers Border Valley Orchard Pty Ltd v Commissioner of Taxes on this point as, it was said, those cases are out of line with the decision in the High Court and decisions in other jurisdictions.
[22] As has been noted above, in Nicholas Paspaley Properties Pty Ltd v Commissioner of Taxes Angel J observed that “on error being shown, the appeal is thereafter to proceed de novo on the materials before the court”. However, as the appellant acknowledges, there was no argument before his Honour on the issue and his Honour simply adopted the approach that had been agreed by counsel before him.
[23] I do not accept the submission of the appellant that there is a clear line of authority in other jurisdictions. The authorities were addressed in detail by BF Martin CJ in Crusher Holdings Pty Ltd v Commissioner of Taxes (NT) (at 490-494) in relation to s 35 of the Payroll Tax Act 1978 (NT). He referred to the observations of Gibbs J and of Stephen J in Kolotex Hosiery (Australia) Pty Ltd v Federal Commissioner of Taxation, to the majority decision of the Full Court of the Supreme Court of Queensland in John French Pty Ltd v Commissioner of Pay-Roll Tax (1984) 1 QdR 125 and to the other decisions now referred to by the appellant. His assessment of those cases was not criticised before me. His Honour went on to say (at 494):
“There is no authority binding on this Court regarding the receipt of evidence on this type of appeal, other than that prescribed by the Rules. It is upon the basis of the material before the Commissioner alone that the Court is to determine whether or not the Commissioner erred in such a manner as to enable the court to set his decision aside and determine the question for itself. There is no warrant for receiving evidence beyond that. It is up to the taxpayer to satisfy the Commissioner on the material available to the Commissioner, and, in the event that an error is found in his reasons, giving rise to a review of the material by the Court, there should be no opportunity to enhance the submission or introduce any new basis for it. Taxpayers ought to be bound by their submissions to the Commissioner. After all, the taxpayer is in possession of all the relevant facts. There is nothing to prohibit successive applications for exclusion, even in relation to the same period of time if it was thought that there was material omitted from a submission which on reflection should have been included, or omitted by oversight. Accordingly, if the Court finds a relevant error on the part of the Commissioner, it will review the original material for itself and determine the question upon that material alone.”
[24] In relation to appeals under s 101 of the Taxation (Administration) Act there is also an ability to make successive applications to the Commissioner. Indeed, that has occurred in this case. Although, by virtue of s 97 of the Act, there is a limitation period of three years during which the Commissioner is able to amend the assessment “as he thinks necessary”, successive applications may be made within that period. The Commissioner is obliged to consider whether to exercise his discretion under the section: Commissioner of Taxes (NT) v Tourism Holdings Ltd & Anor 2002 ATC 4985.
[25] When the issue of the nature of appeal under s 35 of the Payroll Tax Act came before me in Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes I was asked not to follow Crusher Holdings Pty Ltd v Commissioner of Taxes (NT). My attention was directed to the same series of cases as is now referred to by the appellant and I discussed those cases. I then went on to say (at 151):
“Having reviewed the cases relied upon by Mr McDonald I agree that their effect is to leave open the issue of the possibility of further evidence being considered on an appeal, once an error of the kind referred to by Dixon J in Avon Downs Pty Ltd v Commissioner of Taxation (Cth) has been demonstrated. However it does not follow that Martin CJ was wrong in ruling that further evidence should not be received. Of the cases referred to the only case which specifically permitted the calling of fresh evidence in circumstances similar to those applicable in this case was Kolotex Hosiery (Australia) Pty Ltd v Commissioner of Taxation (Cth) and there the matter was not argued.
Miss Webb for the respondent referred me to authorities dealing with judicial comity and in particular to La Macchia v Minister for Primary Industries and Energy (1992) 110 ALR 201 at 204 per Burchett J, Attorney-General v Wurrabadlumba (1990) 101 FLR 414 at 417 per Asche CJ and Commonwealth v Skonis Housing and Development (NT) [1993] NTSC 38 at [7] per Mildren J. It is clear that I should not depart from the decision in Crusher Holdings Pty Ltd v Commissioner of Taxes (NT) unless I am convinced that the decision was clearly wrong.
As Martin CJ observed the matter is not the subject of binding authority. The cases in which the issue has been addressed in other jurisdictions do not provide clear guidance. Whilst competing views may be open as to how a court should proceed after it has been demonstrated that the Commissioner has erred, the observations of Martin CJ have force in relation to the Northern Territory legislation. I am not satisfied the decision is wrong. In this matter I propose to proceed in a manner consistent with the rulings of Martin CJ in Crusher Holdings Pty Ltd v Commissioner of Taxes (NT).”
[26] The decision in Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes was referred to the Court of Appeal in a case of the same name at [2001] NTCA 4. One of the grounds of appeal was that error was made in the “preliminary ruling that no further evidence could be received or tendered even if an error of law by the respondent had been demonstrated”. In the course of her judgment in the Court of Appeal Thomas J noted that the approach in the court below had been to follow the ruling of BF Martin CJ in Crusher Holdings Pty Ltd v Commissioner of Taxes (NT) and she commented that “there was no challenge to this latter decision before this Court”. Martin CJ agreed with Thomas J and Angel J observed that he agreed “with Riley J and the reasons of Thomas J for dismissing the appeal”. Whilst the approach at first instance was not the subject of criticism, it would seem it was not addressed in detail before the Court of Appeal.
[27] Although the cases of Crusher Holdings Pty Ltd v Commissioner of Taxes (NT) and Ngurratjuta Pmara Ntjara Aboriginal Corporation v Commissioner of Taxes deal with the appeal provided for in s 35 of the Payroll Tax Act (NT) it was not submitted that there was any relevant difference in wording or context between that provision and the terms of s 101 of the Taxation (Administration) Act (NT). No basis for distinguishing between the two was identified. I see no reason to depart from the earlier ruling.
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