The AAT has refused the Commissioner’s application to have assessment review applications by 2 taxpayer companies dismissed. The companies are LVR (WA) Pty Ltd and CZ Holdings Pty Ltd and they are involved in the purchase, subdivision and sale of residential lots.
On 30 August 2007, the solicitor for both taxpayers filed with the Tribunal applications for review of decisions disallowing a review of their objections to notices of income tax assessment and notices of penalty. These liabilities were said to be approximately $24.5m in the case of LVR and $2.35m in the case of CZ. On 26 August 2009, the Tribunal made directions in the same terms in each of the matters. These related to the manner in which the taxpayers should (re)file their voluminous evidence, including witness statements. As a consequence, they filed 77 lever arch files of documents together with 2 witness statements in addition to those previously filed.
In July 2010, the AAT dismissed the taxpayers’ applications for review.
The matter then went on appeal to the Federal Court where, in its 6 October 2011 decision (in LVR (WA) Pty Ltd & Anor v AAT and FCT [2011] FCA 1146), the Court (Gilmour J) dismissed, under s 42A(5)(b) of the Administrative Appeals Tribunal Act 1975, the taxpayers’ applications for judicial review of the AAT’s decision of 30 July 2010 that dismissed their applications for review of the disallowance of objections to various income tax and GST assessments and penalty notices. The taxpayers’ applications were dismissed for non-compliance with directions made by the AAT on 26 August 2009 to produce various documents, proof of calculations in BASs, lists of input tax credits claimed on acquisitions in the course of subdividing and developing land, etc. These liabilities in respect of both taxpayers total approximately $26.85m.
The taxpayers appealed to the Full Federal Court from that decision. The one ground of appeal was that the primary judge erred in finding that the AAT did not improperly exercise its power conferred by s 42A(5) by reason of failing to take into account a relevant consideration, namely the responsive content of a sworn witness (Mr Schokker) Affidavit. The Full Court set aside the orders of Gilmour J and his decision and ordered that the matters to which the decision relates be referred for further consideration by the Tribunal. The ground on which the appeal succeeded was that the primary judge had not given proper consideration to the witness affidavit.1
The taxpayers filed 3 witness statements of Mr Schokker in September 2012 in replacement of all his previous statements filed in the proceedings. The taxpayers contended that what now was relevant to determining whether there had been non-compliance with the relevant directions were the 3 new statements by Mr Schokker and a statement of another person filed at the same time. The Commissioner disagreed arguing that the non-compliance with the relevant directions as found by the Tribunal in its decision of 30 July 2010 still existed and that the new evidence of Mr Schokker and the other person did not change that position.
The AAT came to the conclusion that this was “not presently an appropriate occasion in which to dismiss the application for non-compliance”. It therefore refused the Commissioner’s application for dismissal. The Tribunal directed that the applications by the taxpayers be set down for further directions.
(AAT Case [2012] AATA 928, Re LVR (WA) Pty Ltd & Anor and FCT, AAT, The Hon R D Nicholson DP, AAT Refs: 2007/4254-4258, 2007/4272-4275, 21 December 2012.)
[LTN 1, 3/1/13]
1 [FJM Comment: this is ‘legal speak’ for the fact that the AAT’s reasons for dismissing the taxpayers’ original applications, were a copy (without saying so) of the Commissioner’s submissions, which as it turned out, made no reference to some material lodged subsequently by the Applicant, that was responsive to this issue of whether the Applicant’s proceedings before the AAT should be struck out. This all lead the Full Federal Court to conclude that the AAT had not properly considered that matter and thus had not exercised its power to dismiss an Application before it. Further, the Full Federal Court held that the trial judge in the Federal Court, had erred in not picking this up.]