The Federal Court has set aside an AAT decision that had allowed a married couple who live in Mauritius to give evidence in a tax case by video link.
The AAT had allowed the couple to give their oral evidence in a tax case by video link – Re The Overseas Applicants and FCT[2014] AATA 788. They had been issued with assessments and amended assessments totaling several million dollars. The Tribunal decided to allow the applicants to give their oral evidence by video link pursuant to s 35A of the Administrative Appeals Tribunal Act 1975. In the Tribunal’s view, “in balancing the competing considerations and determining what is fair and just to the parties, I have decided that [the applicants] should be given a reasonable opportunity to present their cases and that permitting them to give oral evidence by video link is an appropriate course”.
The Federal Court came to the view that the AAT fell into jurisdictional error in 2 particular respects:
- First, in the circumstances of the present case, the Court said it was a jurisdictional error (ie an error of law which affected the exercise of power) for the AAT to take into account, or give any weight to, the refusal of the taxpayers to come to Australia if they did not receive an assurance that a DPO (Departure Prohibition Order) would not be issued by the Commissioner to prevent, or delay, them from leaving immediately.
- Secondly, the further consequence of the above jurisdictional error was that the AAT denied to the Commissioner a reasonable opportunity to present his case by removing the opportunity for effective cross-examination. The Court said that was a denial of procedural fairness in a general sense and would also represent a failure to conduct the proceedings in accordance with s39 of the AAT Act.
Although the Court did not accept other challenges to the AAT decision made by the Commissioner, it said this was “one of those rare, or exceptional, cases where the Court should intervene at an interlocutory stage to correct jurisdictional error and address injustice between the parties”.
The Court set aside the order made by the AAT. The Court said the AAT need not deal further with the particular application, which was before it. If a further application is made which merits consideration and raises different issues, the Court said the AAT would “no doubt follow its usual procedures, bearing this judgment in mind”. If the taxpayers do not appear at the hearing to be cross-examined on their affidavits, the Court said the AAT will need to deal with the proceedings, and make its rulings and decision, in that light.
(FCT v Seymour [2015] FCA 320, Federal Court, Buchanan J, 7 April 2015)
ATO summary
The Federal Court this afternoon handed down the attached favourable decision for the ATO on an application under section 39B of the Judiciary Act challenging an AAT decision to permit the respondents to give evidence by video link. The ground being that the AAT had committed jurisdictional error.
The taxpayers in question resided in Mauritius, and opposed attendance in Australia on the fear of arrest or being prevented from leaving.
His Honour, Buchanan J found that the AAT had fallen into error in two particular respects.
(1) The AAT ought not have given weight to the taxpayers’ refusal to come to Australia on the absence of an assurance by the Commissioner that he would not issue a departure prohibition order; and
(2) The use of a video link would have denied the Commissioner the reasonable opportunity of effective cross-examination.
[ATO LPR 7/4/15]
Section 39 of the AAT Act
39. Submissions–Divisions other than Security Division and Social Services and Child Support Division
(1) Subject to sections 35, 26 and 36B, the Tribunal shall ensure that every party to a proceeding before the Tribunal is given a reasonable opportunity to present his or her case and, in particular, to inspect any documents to which the Tribunal proposes to have regard in reaching a decision in the proceeding and to make submissions in relation to those documents.
(2) This section does not apply to:
(a) a proceeding in the Security Division to which section 39A applies; or
(b) a proceeding in the Social Services and Child Support Division (see section 39AA).
(3) This section does not limit subsection 25(4A) (Tribunal may determine scope of review).
FJM Note
Often the AAT has allowed witnesses to give evidence by telephone (which makes cross-examination even harder than by video link). I’m not sure why this is all of a sudden a denial of procedural fairness and jurisdictional error. I hope this is not giving the Commissioner special latitude.
Taxpayer appeals to Full Federal Court
The taxpayers have appealed to the Full Federal Court against the decision in FCT v Seymour [2015] FCA 320. In that case, the Federal Court had set aside an AAT decision that had allowed a married couple who live in Mauritius to give evidence in a tax case by video link. The Federal Court came to the view that the AAT had fell into jurisdictional error in 2 particular respects.
[LTN 68, 13/4/15]