PARTIES: McDONALD'S AUSTRALIA LIMITED (ACN 000 697 763)
v
THE COMMISSIONER OF TAXES
TITLE OF COURT: SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION: SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY
JURISDICTION
FILE NO: LA13 of 1999
#DATE 6:9:2000
DELIVERED: 6 September 2000
HEARING DATES: 24 August 2000
JUDGMENT OF: RILEY J
Appellant: M.B.Manetta
Respondent: R. Webb
Solicitors:
Appellant: Ward Keller
Respondent: Morgan Buckley
Judgment category classification: B
Judgment ID Number: ril0019
Number of pages: 12
ril0019
IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
No. LA13 of 1999
BETWEEN:
McDONALD'S AUSTRALIA LIMITED (ACN 000 697 763)
Appellant
AND:
THE COMMISSIONER OF TAXES
Respondent
CORAM: RILEY J
(Delivered 6 September 2000)
[2] At the same time McDonald's Australia Limited entered into a licence
agreement with the same parties for the same periods in which there was granted
to the licensee "the right, licence and privilege to adopt and use the
McDonald's system in the restaurant subject to the terms, covenants and
conditions contained herein".
[3] On or about 14 August 1997 the respondent issued assessments for stamp duty
payable in respect of each of the licence agreements in the amounts of: Jomek Investments Pty Ltd $26,750
Galaxie Pty Ltd $18,800
[4] Each of the assessments was addressed to McDonald's
Australia Limited. I am told, and accept, that McDonald's Australia Limited
paid each of the amounts assessed as being due. The capacity in which it made
payment (ie as an authorised agent or in its own right or in some other
capacity) was not made clear.
[5] However the evidence available to me suggests that McDonald's Australia
Limited was acting on behalf of the licensees in dealing with the Commissioner
of Taxes. For example McDonald's Australia Limited wrote to the Commissioner of
Taxes, in a letter dated 21 May 1997, seeking "the valuation methodology" used
to value each restaurant and observing that in the absence of this information
"it is simply impossible for our franchisees to take advice or to comment on
your valuations". The letter went on to say: [6] That letter was responded to by the Commissioner of Taxes
setting out options for the future of the matter including that, "the
Commissioner's valuations be accepted by you on behalf of your franchisees
...". It would seem clear that in the period leading up to the assessments
being issued the parties regarded McDonald's Australia Limited as acting on
behalf of the licensees.
[7] On or about 17 September 1997 objections to the assessments were lodged
with the respondent by McDonald's Australia Limited who claimed to be "a person
who is aggrieved by such assessment". By letter dated 29 September 1999
the respondent disallowed the objections. When the Commissioner dealt with the
objections he observed that McDonald's Australia Limited was not the person
aggrieved and that the objections did not comply with s 100 of the Act.
He noted that there had been an application by the legal representatives of
McDonald's Australia Limited to add Top End Enterprises Pty Ltd, Jomek
Investments Pty Ltd and Galaxie Pty Ltd as objectors for the purposes of the
objections, but stated that there was no statutory basis upon which that could
occur. No point is taken regarding that matter in the proceedings before me.
The respondent went on to consider the grounds upon which the objection was
made and rejected each objection.
[8] McDonald's Australia Limited then appealed to this Court. In so doing it
relied upon the same grounds as had been the subject of the objection to the
respondent. Those grounds are as follows: (2) If the licence agreements are leases, then they are not leases of land
in the Northern Territory of Australia and are not dutiable at all either
pursuant to item 12 of Schedule 1 of the Stamp Duty Act or otherwise
pursuant to Schedule 1 of the Act.
(3) Alternatively, if the licence agreements are conveyances, then the
assessed value of the dutiable property the subject of the licence agreements
is too high and does not reflect the true value of the rights licensed by the
appellant to each of the licensees.
The Standing of the Appellant
[9] The respondent submitted that the appeal in this matter is incompetent
because the appellant lacked standing. In particular it submitted that the
right of appeal created by the Taxation (Administration) Act is to be
found in s 101 of the Act and is limited to "an objector who is
dissatisfied with a decision of the Commissioner". The reference to "an
objector" refers back to s 100(1) of the Act which permits "a person who
is aggrieved by an assessment made in relation to him" to lodge with the
Commissioner an objection in writing to the assessment. It was submitted that
the appellant was not such a person.
[10] The right of objection and the right of appeal are conferred by the
statute. Any consideration of the nature of those rights and the standing of a
person to exercise the rights must be considered in the context provided by the
legislation. This involves a consideration of the scope and the purpose of the
legislation: CTC Resources NL v Commissioner of Taxation (1994) 48 FCR
397 at 405. In order to consider the question of standing it is therefore
necessary to look at the scheme of the Taxation (Administration) Act.
[11] The Act provides that a person who is liable with respect to an instrument
chargeable with duty shall cause it to be duly stamped or lodge the instrument
with the Commissioner for assessment. In relation to a conveyance the duty
imposed is payable by the conveyee (s 50).
[12] When the instrument has been lodged the Commissioner either adjudges that
duty is not payable or, if he adjudges that duty is payable, he assesses the
amount of the duty. He is then obliged to "inform the person lodging the
instrument" of the assessment. It is upon that assessment that the appeals
provisions of the Act take effect.
[13] By virtue of s 100 of the Act a person who is aggrieved by an
assessment made in relation to him under the Act may lodge with the
Commissioner an objection in writing to the assessment. The objection is
required to include full details of the grounds upon which the objector relies.
The Commissioner is then required to consider the objection and may either
disallow it or allow it in whole or in part. Thereafter an objector who is
dissatisfied with the decision of the Commissioner is by operation of
s 101, entitled to appeal to the Supreme Court on grounds limited to the
grounds stated in the objection. The lodging of the appeal does not
immediately affect liability for the assessment.
[14] It will be noted that s 100 of the Taxation (Administration)
Act allows a "person who is aggrieved" to lodge an objection. An appeal to
the Supreme Court is then allowed to an objector who is "dissatisfied" with the
decision of the Commissioner. In CTC Resources NL v Commissioner of
Taxation (1994) 48 FCR 397 the Full Court of the Federal Court dealt with a
similar provision in the Taxation (Administration) Act (Cwth). In that
case s 14ZZ of the Act provided for an appeal to the Court where "the
person is dissatisfied with the Commissioner's objection decision". In
considering who may be "dissatisfied" for the purposes of that provision
Gummow J observed (p408): [15] It was the submission of the respondent that McDonald's
Australia Limited did not satisfy the requirement that it be an objector or
that it was dissatisfied with the decision of the Commissioner. Rectification
of the decision of the Commissioner would not alter the position of the
appellant at all. Its only interest would be in relation to a collateral
commercial purpose. It was not "dissatisfied" with the decision in any
relevant sense.
[16] As to whether McDonald's Australia Limited could be "an objector", the
submission of the respondent was that the scheme of the Act gave rise to two
prerequisites for an objection under s 100(1) of the Act namely:
(a) there must be an assessment made in relation to the person; and
(b) that person must be aggrieved by the assessment.
So much must follow from the wording of the section. It was submitted that the
appellant in these proceedings did not fulfil either prerequisite.
[17] Firstly it was submitted that the assessment was not made in relation to
the appellant but rather was made in relation to the persons chargeable with
the duty on the relevant instruments being Top End Enterprises Pty Ltd, Jomek
Investments Pty Ltd and Galaxie Pty Ltd. This was so even though the notices
of assessment were sent to and paid by the appellant.
[18] Further it was said that the appellant was not a "person aggrieved" by the
assessments because it was not liable to make payments pursuant to the
assessments. Liability for such payment rested with Top End Enterprises Pty
Ltd, Jomek Investments Pty Ltd and Galaxie Pty Ltd respectively. It was
submitted that, for a person to be aggrieved, his grievance must relate to "an
assessment made in relation to him".
[19] The expression "a person who is aggrieved" is a familiar expression found
in many statutes. As Lockhart J observed in Ogle v Strickland
(1987) 13 FCR 306 at 310, the words are "flexible words which derive their
meaning and take their colour from the context in which they appear and the
nature of the particular statute concerned".
[20] It has been said that the expression is to be interpreted liberally
although that must depend upon the statutory context. In Ogle v
Strickland (supra at 311) Lockhart J said: [21] A requirement of the Taxation (Administration) Act
for there to be an appeal to this Court is that there be an objector who is
dissatisfied with a decision of the Commissioner on his objection. In order to
become "an objector" the person must have been "a person who is aggrieved by an
assessment made in relation to him". It follows that the expression "person
who is aggrieved" in the context of this legislation is qualified by the
additional requirement that such a person must also have had an assessment made
"in relation to him". The existence of such a person is a jurisdictional fact
determining the application initially of s 100(1) and then of s 101
of the Act.
[22] In the present matters the Commissioner submits that there was no
assessment made "in relation to" McDonald's Australia Limited upon which to
ground an objection or any subsequent appeal.
[23] Section 50 of the Act makes it clear that duty imposed upon a conveyance
is payable by the conveyee. In the circumstances of these matters if there is
a conveyance (as the Commissioner held) the conveyees are Top End Enterprises
Pty Ltd, Jomek Investments Pty Ltd and Galaxie Pty Ltd respectively. The fact
that any obligation to pay the duty assessed fell upon those licensees is
reinforced by the contractual arrangements entered into between the parties.
Paragraph 18.12 of each licence agreement made it clear that the licensee shall
bear "all legal and other costs and expenses of preparing, stamping and
registering this agreement and the lease ...".
[24] Once an assessment is made under the Act s 9(1)(b) provides that the
duty is due and payable "by the person liable to pay it" at a time determined
in accordance with that section. In this case the person liable to pay the
duty is, in each case, the relevant licensee. Once the duty becomes due and
payable it is a debt due to the Territory and recoverable in a court of
competent jurisdiction by operation of s 106 of the Act.
[25] The obligation to lodge instruments for assessment of duty rests upon the
person liable to pay that duty by virtue of s 85 of the Act. As I have
observed above that is each licensee. The appellant pointed out that the
assessments in these cases were in fact addressed to McDonald's Australia
Limited. The form of the document is to be seen in tabs 2A, 2B and 2C of
Exhibit A1. Those documents contain the heading McDonald's Australia Limited
and a lodgment number and thereafter appear the details of the assessment
referring to the licensee as the first party and McDonald's Australia Limited
as the second party. The fact that the document is addressed to McDonald's
Australia Limited probably results from the requirement contained in s 92
of the Act that the Commissioner shall inform the person "lodging the
instrument" of the assessment. In these cases the documents were lodged by
McDonald's Australia Limited on behalf of the licensees.
[26] The mere fact that the assessment documents were sent to McDonald's
Australia Limited does not provide a basis for concluding that the assessments
were made "in relation to" McDonald's Australia Limited.
[27] Thereafter the Commissioner corresponded with the legal representatives of
the appellant. In the course of that correspondence the legal representatives
referred to clause 18.12 of the licence agreement and noted that the individual
licensees were responsible for "all legal and other costs and expenses".
Further, in the earlier correspondence referred to above, McDonald's Australia
Limited made observations to the same effect. I am informed, and I accept,
that McDonald's Australia Limited paid the sum of $72,310 (being the total of
the three assessments) on or about 15 September 1997. The circumstances
in which that payment came to be made by McDonald's Australia Limited were not
explained. The mere fact of payment by McDonald's Australia Limited does not
alter the position that the assessment was not made in relation to it.
[28] Mr Manetta, who appeared on behalf of McDonald's Australia Limited,
submitted that the notices of assessment that issued in relation to the licence
agreements were assessments made in relation to McDonald's. He submitted
that: [29] This submission ignores the fact that McDonald's Australia
Limited had no interest in the matter and no obligation was imposed upon it.
Both as a matter of statute and of contract the obligations in relation to duty
fell upon the individual licensees. The fact that McDonald's Australia Limited
has assumed for itself a role in lodging the instrument and paying duty
assessed cannot create in it the statutory rights which are reserved to the
individual licensees. If McDonald's Australia Limited has paid monies under
some form of mistake on its part then its remedies lie elsewhere than by way of
objection and appeal under the Act.
[30] In these cases the assessments were made in relation to the licensees.
They were not made in relation to McDonald's Australia Limited. No statutory
or other liability or obligation rested upon McDonald's Australia Limited at
all.
[31] The only interest that McDonald's Australia Limited has in this matter
arises indirectly from it being a party to each licence agreement. Any other
interest would be for some collateral commercial purpose of McDonald's
Australia Limited and, as Gummow J observed, that is not sufficient to
amount to "dissatisfaction" in the relevant sense.
[32] In all of the circumstances I find that McDonald's Australia Limited is
not "a person who is aggrieved by an assessment made in relation to him" for
the purposes of s 100 of the Act. Further it is not "an objector who is
dissatisfied with a decision of the Commissioner" for the purposes of
s 101(1) of the Act. McDonald's Australia Limited is without standing and
the appeal must be dismissed.
[33] I will hear the parties as to the appropriate orders and costs.
Real property - leases - licences - stamp duty
Counsel:Top End Enterprises Pty Ltd $26,750
"Finally, so that we might be in a position to fully set out for
our franchisees the options they now face (because it is they as small local
business people who will be paying any stamp duty levied or costs of the
objection process), we would be grateful if you could set out for us, based on
your valuer's valuations, the exact total stamp duty liability for each
licensee for the McDonald's franchise leases and licences already submitted for
stamping."
(1) The licence agreements are bare licences and not conveyances.
"In my view, if regard is had to the context in which s 14ZZ
appears, in its operation upon the jurisdiction of this Court, then the
"dissatisfaction" of the person initiating the proceeding is of the following
nature. It is a dissatisfaction with the absence of a favourable decision upon
the objection which would, if now rectified by the Court, place the party in
the position for the administration of the taxation laws which should have
applied if the ruling had been made by the Commissioner in the terms sought. A
mere curiosity or interest in having a formal ruling by the Commissioner for
some collateral commercial purpose of the applicant is not sufficient to amount
to "dissatisfaction" in the relevant sense."
"It is important not to shackle the interpretation of these
expressions by importing concepts from other statutes in which they appear
involving different subject matter and objects, especially when the expressions
have received judicial interpretation not intended to have general application
or, indeed, application beyond the particular words in the particular context
of the particular statute concerned."
"But it is certainly, at the very least, an assessment made in
relation to McDonald's. It is an assessment of the instrument which, having
been issued to McDonald's and addressed to McDonald's with a demand for
payment, is an assessment made in relation to McDonald's. And McDonald's is
aggrieved because McDonald's has paid the money. It's neither here nor there
whether McDonald's has paid the money as agent for somebody else, or from its
own funds, with a contractual right to an indemnity down the track. That's not
the Commissioner's concern. The fact that we have paid the funds is a
sufficient grievance. We want them back. We want the money back."