High Court judge Simon Steward has had a rocky start to his new job, with his colleagues overruling him in a series of tax cases from his time on the Federal Court.

Justice Steward, who was lauded as a revenue law expert when he took up his seat on the court in December, has had three decisions that have not withstood scrutiny by the most senior judges in the country.

Justice Simon Steward is on a losing run with his judgments from the Federal Court. Tash Sorensen

One was a trial verdict concerning the nation’s biggest phoenixing scam and the other was an appeal about an English backpacker on a working visa. On both occasions, he was reversed by the High Court.

The third was a GST case involving Travelex, in which he was part of a Full Federal Court bench that affirmed a trial judge’s ruling that the running balance account of the foreign exchange company could not be altered even if there was a mistake. The decision meant the ATO was not obliged to pay interest on a refunded GST amount of $149,020.

Being overturned on appeal is an occupational hazard for a judge, but to be overruled so consistently within the judge’s speciality area is quite unusual, and noteworthy.

The Australian Financial Review spoke to senior lawyers on condition of anonymity about Justice Steward’s decisions, but they could not identify with any certainty a pattern to the cases. One suggestion was that Justice Steward’s strict black-letter approach meant he sometimes tolerated absurdities in the application of the law.

It was that black-letter approach to the law – so called for its adherence to established case law and the words of a statute – that convinced some political and legal conservatives to back Justice Steward as the replacement for Justice Geoffrey Nettle, a fellow Victorian.

The conservatives were annoyed that three Coalition appointees – Justice Nettle, Justice Michelle Gordon and Justice James Edelman – had been part of a 4-3 majority that ruled in February 2020 that a person who passed a “Mabo test” of aboriginality could not be deported under migration laws which revoked residency for certain criminal offences.

Justice Steward spent just under three years on the Federal Court after being appointed in February 2018 by the Coalition government. At 52, he has another 18 years to serve on the High Court before he reaches the mandatory retirement age of 70.


Why are so many of this High Court judge’s decisions being reversed?


He is disqualified from being part of any High Court bench that hears appeals from his earlier decisions, either at trial or on appeal.

In two of the cases, the High Court sided with the dissenting judge in the Full Federal Court, Justice Jennifer Davies.

In the backpacker case, which was decided on November 3, the High Court said Justice Steward should not have found the ATO was justified in taxing her as an Australian resident because of a “no extra burden” clause in a convention with the UK.

In the other case, involving a labour hire magnate “Scott” Shi, Justice Steward said at trial that the ATO could not rely on a “privilege” affidavit in its investigation of his assets because of the risk of self-incrimination. Justice Davies and the High Court said it could.

Shi is accused of masterminding the nation’s biggest phoenixing scam and running up a $163 million tax debt. Phoenixing is the process by which companies are liquidated to avoid debts and then re-emerge in a similar form.

[AFR Website – New High Court Judge article – 9.11.21; Michael Pelly, Legal Editor]

 

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