CATCHWORDS

ADMINISTRATIVE LAW - JUDICIAL REVIEW - INCOME TAX -  decision of Taxation Relief Board - application for review of decision - extension of time - principles guiding court's discretion -  whether applicants have made decision maker aware that finality of decision is contested - whether there has been any prejudice to respondent - whether Taxation Relief Board had power to grant relief under s 265 Income Tax Assessment Act 1936 (Cth) - whether power conferred by s 265 is mandatory - release of taxpayers from liability in cases of serious hardship - whether word 'may' is mandatory or permissive - whether decision of Taxation Relief Board was so unreasonable no reasonable person could have come to it - Wednesbury unreasonableness - whether Taxation Relief Board applied a policy inflexibly - whether policy must be consistent with statute.

Administrative Decisions (Judicial Review) Act, 1977 (Cth) ss 5, 11

Income Tax Assessment Act, 1936 (Cth) s 265

Land Tax Assessment Act, 1910

Hickey & Ors v Australian Telecommunications Commission (1983) 47 ALR 517

Wedesweiller & Ors v Cole & Ors (1983) 47 ALR 528

Pozniak v Minister for Health & Ors (Burchett J, 14 March 1986, unreported)

Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344

Ralkon Agricultural Co Pty Limited v Aboriginal Development Commission  (1982) 43 ALR 535 at 550

Lucic v Nolan (1982) 45 ALR 411 at 416

Duff v Freijah (1982) 62 FLR 280

Doyle v Chief of General Staff (1982) 42 ALR 283

Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 571

Ward v Williams (1955) 92 CLR 496

Collector of Customs v Pozzolanic Enterprises Pty Ltd  (1993) 43 FCR 280

Yim v IRT (1994) 54 FCR 186

Politis v Commissioner of Taxation (Cth) (1988) 16 ALD 707

PSA v Federated Clerks Union (1991) 173 CLR 132 at 157

Webb v Deputy Commissioner of Taxation 93 ATC 5123 at 5132

Julius v Bishop of Oxford (1988) LR 5 AC 214

Finance Facilities Pty Limited v Federal Commissioner of Taxation (1971) 127 CLR 106

                             2.

Re Gleeson (1907) VLR 368

Commissioner of State Revenue v Royal Insurance Australia Limited (1994) 69 ALJR 51

R v Trebilco & Ors; Ex parte F.S. Falkiner & Sons Limited (1936) 56 CLR 20

Powell v Evreniades & Ors (1989) 89 ATC 4,415

Van Grieken v Veilands & Ors 91 ATC 4423

Rollo v Morrow & Ors 92 ATC 4364

Australian Broadcasting Tribunal v Bond & Ors (1990) 170 CLR 321

Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223

Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24

Attorney-General (NSW) v Quin (1990) 170 CLR 1

Stringer v Minister of Housing and Local Government [1970] 1 WLR 1281 at 1298

Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634

PHILIP JOHN CHRISTIAN CORLETTE & ANOR v RUSSELL MacKENZIE & ORS

No. NG803 of 1994

Beazley J

1 September 1995

Sydney

IN THE FEDERAL COURT OF AUSTRALIA )

                                  )    No. NG803 of 1994

NEW SOUTH WALES DISTRICT REGISTRY )

                                  )

GENERAL DIVISION                  )

                   BETWEEN:      PHILIP JOHN CHRISTIAN CORLETTE

                                  First Applicant

                                  SUSAN JANE CORLETTE

                                  Second Applicant

                   AND:          RUSSELL MACKENZIE

                                  First Respondent

                                  ROSS ADDISON

                                  Second Respondent

                                  PETER JOHNSON

                                  Third Respondent

CORAM:    BEAZLEY J

PLACE:    SYDNEY

DATE:     1 September 1995

                      MINUTES OF ORDERS

The Court orders that:

1.   The application be dismissed.

2.   The applicants pay the respondents' costs of the application.

Note:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )

                                  )    No. NG803 of 1994

NEW SOUTH WALES DISTRICT REGISTRY )

                                  )

GENERAL DIVISION                  )

                   BETWEEN:      PHILIP JOHN CHRISTIAN CORLETTE

                                  First Applicant

                                  SUSAN JANE CORLETTE

                                  Second Applicant

                   AND:          RUSSELL MACKENZIE

                                  First Respondent

                                  ROSS ADDISON

                                  Second Respondent

                                  PETER JOHNSON

                                  Third Respondent

CORAM:    BEAZLEY J

PLACE:    SYDNEY

DATE:     1 September 1995

                    REASONS FOR JUDGMENT

BEAZLEY J:    This is an application under the Administrative Decisions (Judicial Review) Act, 1977 (Cth) (the ADJR Act) to review two decisions of the Taxation Relief Board (the Board), dated 27 May 1992 (the first decision) and 20 October 1994 (the second decision) refusing the applicants' applications under s 265 of the Income Tax Assessment Act, 1936 (Cth) for release from their taxation liability assessed for the 1986, 1987 and 1988 tax years in the case of the first applicant and for the 1985, 1987 and 1988 tax years in the case of the
second applicant. The respondents constituted the Board which made the second decision.  It is unclear whether they constituted the Board for the first decision, although no defence on that ground was pursued by the respondents.

Background

The applicants had, over a period of years, bought and sold and rebought shares in a company, Strategic Capital Corporation Limited (Strategic).  The taxation liabilities for the years in question arose out of the assessment for income tax of the profits made by the applicants on the resale of the shares in the years of income specified.  The applicants had borrowed monies from Equiticorp Financial Services Ltd (Equiticorp) to finance the acquisition of the shares.  The profits on the resale of shares were used in part to repay some of the borrowings from Equiticorp.  The balance, or a substantial portion thereof, was used for the purchase of further shares in Strategic.  Strategic went into liquidation in 1992, by which time its shares were valueless.  At the time the applicants made application for release from their taxation liability, their major liability apart from tax was to Equiticorp in the sum of $570,000 plus interest.

The applicants made their first applications for release under s 265 in late 1991.  On 27 May 1992, the Board, in the first decisions, rejected the applications. In doing so it stated, in separate, but identical letters to each applicant: 

     "The Board has examined all the information which has been supplied and was satisfied that you would
be caused serious hardship.   However, the Board was not satisfied that the granting of relief would alleviate that hardship, given your other debtors. Accordingly the Board cannot grant you relief from your tax liability."

The reference to the "other debtors" was undoubtedly a reference to Equiticorp. 

On 22 September 1993, the applicants again applied to the Board for release from their liabilities to pay income tax in respect of the same income tax years.  In his application, the first applicant stated:

     "I request the Board to reconsider [the 27 May 1992] decision, on the basis that I believe that [Equiticorp] has abandoned any claim against me because of (i) the complexity of its own affairs; (ii) lack of funds; and (iii) the belief that it would be unable to recover anything from me in any event.  I have not heard from it since I received its letter dated 30 August, 1991"

By letters dated 20 May 1994 (the 20 May decisions) the applicants were advised that their applications were again rejected.  The Board informed the applicants in its letters that the liquidator of Equiticorp had indicated that the applicants could "still be pursued for the amount...owe[d]" to that company.

The applicants' solicitor requested the Board to advise him of the material which had been relied upon in making the determination.  The Board did so by letter dated 14 June 1994. On 24 June 1994, the applicants' solicitor wrote to the Board, stating the applicants believed they had been denied natural
justice as the Board had considered documents which the applicants "had never seen and had never been given an opportunity to challenge or to answer".  It appears that these documents included documents from Equiticorp.  The solicitor requested that the Board revoke or vacate its decision and give the applicants a proper opportunity to address the material in the documents upon which the Board based its findings. 

On the 12 August 1994, the Board advised that it was prepared to reconsider its 20 May 1994 decisions and that the applicants could lodge further material in support of their applications.  On 31 August 1994, the applicants furnished the Board with an opinion of David Bennett QC in respect of their  liability to Equiticorp.  I should state that unless otherwise indicated, matters stated in these reasons in relation to the Equiticorp borrowings are derived from that advice.  Mr Bennett QC advised that the monies owed by the applicants to Equiticorp either directly as a debtor, or, in the case of the second applicant as a guarantor, were, or shortly would be statute barred, the last loan becoming statute barred on about 25 December 1994.  He also advised that the first loan taken out was already statute barred and that the only other loan taken out would become statute barred at the end of September 1994.

On 20 October 1994, the Board advised that it was not prepared to grant the applicants a release from payment of their taxation liabilities, notwithstanding the additional information they had provided in support of their application.  The letter continued:

     "...

     The Board acknowledged the advice of Mr DMJ Bennett of Counsel.  However, it was not prepared to reverse its earlier decision because the opinion you forwarded only reflected one side of the argument.  It did not reflect the views of Equiticorp Financial Services Ltd (In Liquidation) (Receiver and Manager Appointed).

     The Board was not satisfied that Equiticorp Financial Services Ltd (In Liquidation) (Receiver and Manager Appointed) does not intend to pursue its debt, or indeed, that it is precluded from pursuing that debt.  The Board would have contacted the receiver/manager to either confirm there was no intention to pursue the debt or that the receiver/manager was precluded from doing so, but both you and your representative, Mr Teen, indicated strong opposition to such action.

     You would be aware that a Board is not prepared to grant a release in situations where it was perceived the granting of the release would benefit other creditors in an insolvency.   You should now contact the Debt collection area of the Chatswood Taxation Office to discuss payment of your liabilities."

Application for extension of time

The application to review the second decision was brought within the time prescribed by s 11 of the ADJR Act.   However, the application to review the first decision was nearly 3 years out of time.  The applicants thus seek an order extending the time within which that application might be made until the date of the filing of the application, that is, 18 November 1994.

Counsel for the respondents objected to an extension of time.
She submitted that there was no evidence to support the application for an extension and, in any event, the first applications for release had been completely overtaken by the second applications.

The principles governing the granting of an extension of time are well established.  Relevantly, for the purposes of this case, the time limit prescribed by the Act for the commencement of proceedings is 28 days: s 11(1)(c) and (iii). The Court may extend that time: s 11(1)(c).  The Court has a broad discretion in determining whether to do so, unconstrained by any particular consideration such as the existence of "special circumstances": Hickey & Ors v Australian Telecommunications Commission (1983) 47 ALR 517; Wedesweiller & Ors v Cole & Ors (1983) 47 ALR 528; Pozniak v Minister for Health & Ors (Burchett J, 14 March 1986, unreported); Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344.  In Hunter Valley Developments, Wilcox J set out the general considerations which would usually guide the Court in the exercise of that discretion.  His Honour's "guidelines" have been widely accepted and applied.  Of particular relevance to this case is the principle that the prima facie time limit specified in s 11 must be observed, unless the applicant gives an acceptable explanation of the delay: see also Ralkon Agricultural Co Pty Limited v Aboriginal Development Commission (1982) 43 ALR 535 at 550; Lucic v Nolan (1982) 45 ALR 411 at 416; Duff v Freijah (1982) 62 FLR 280.  In this case there is no explanation of the delay and the delay is substantial.

Another relevant factor is whether the actions of the applicant have made the decision-maker aware that the applicant contests the finality of the decision, for example by some non curial process: see also Doyle v Chief of General Staff (1982) 42 ALR 283 at 287.  In this case the applicants did nothing for a period of 16 months when they lodged their fresh applications.  In my opinion, this step lacked the timeliness which is implicit in this being a favourable factor for the grant of an extension of time.

The question of whether there has been any prejudice to the respondent must be considered.  In this regard the words of Lockhart J at 523 in Hickey (supra) are worth noting:

     "Applications for enlargement of time to bring applications under the Judicial Review Act are not merely inter partes adversary proceedings.  Questions of public interest are involved.  Delay by an applicant in bringing his application is relevant.  What weight the court should give to mere delay unaccompanied by prejudice, if there could be such a case under the Judicial Review Act, is entirely a matter for the court to determine in the particular case, but delay unaccompanied by prejudice is not necessarily to be placed to one side as irrelevant or as not operating against the success of the applicant's case."

See also Lucic at 416. 

In this case there was no evidence of any prejudice to the respondents.  However, I am of the opinion that the length of the delay, unexplained as it is, is such that an extension of time ought not be granted.

Challenge to the second decisions

Counsel for the applicants submitted that the Board's second decisions were wrong in law on three bases.  First, the Board misconstrued s 265 by finding it had no power to grant relief in the circumstances which it found existed.  Secondly, the Board had construed s 265 as conferring a discretion, where, upon its proper construction the section had a mandatory operation once the pre-conditions which enlivened its operation were found to exist.  Thirdly (and assuming the rejection of the first and second submissions) the Board had regard to criteria which was extraneous to the Act.  The decision was thus bad in the Wednesbury sense.  An alternative submission was put that the Board had applied a general policy in an inflexible way:  Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 571.  This is, in fact, a separate ground, distinct from the challenge that the decision was Wednesbury unreasonable.

Finding of absence of power

Counsel for the applicants submitted that the Board, having found that it was not satisfied that the granting of relief would alleviate the applicants' serious hardship, held that it had no power to grant relief under s 265.  It was submitted that this finding was based on a misconstruction of the section and thus involved an error of law.  I agree that if that is what the Board did, there would be an error of law.  However, the submission requires that the 20 October 1994 letter be read as incorporating the Board's 27 May 1992 letter, in which it stated that it "was not satisfied that the granting of relief would alleviate...hardship, given your other debtors.  Accordingly, the Board cannot grant you relief from your tax liability" (emphasis added).  It also requires that, by the emphasised words, the Board was stating that it did not have the power to grant the relief. 

There is nothing in the language or contents of the 20 October 1994 letter to suggest it should be read as incorporating the 27 May 1992 letters.  The 20 October 1994 letter recorded a separate determination, made in respect of fresh applications, based on additional material to that available to the Board for the purposes of the first determination.  The only possible reference to the 27 May 1992 letter is the Board's statement that it "was not prepared to reverse its earlier decision".  That, however, is not a reference to the letter, but to its earlier decision.   In its 20 October letter, the Board stated:

     "You would be aware that a Board is not prepared to grant a release in [the] situation."

In my opinion, this language reflects the application of policy.  It does not indicate absence of power.

In any event, I am of the opinion that the letters of 27 May 1992 should not be interpreted in the way suggested.  The court is not concerned with "looseness [of] language" or "unhappy phrasing" used by a Tribunal or decision maker.  Nor
does it approach the construction of a decision "minutely and finely with an eye keenly attuned to the perception of error": see Collector of Customs v Pozzolanic Enterprises Pty Ltd  (1993) 43 FCR 280 at 287; Yim v IRT (1994) 54 FCR 186 at 189;  Politis v Commissioner of Taxation (Cth) (1988) 16 ALD 707 at 708.  Although the Board stated it "could not" grant relief, I am of the opinion that it meant it in the sense that it did not intend to grant relief.  That is different from finding an absence of power.  Accordingly, I reject the first submission.

Whether the power conferred by s 265 is mandatory

Counsel for the applicants submitted that upon the proper construction of s 265, the Board was compelled to grant relief to the applicants once it found there was serious hardship.

Section 265 provides:

     "In any case where it is shown to the satisfaction of [the] Board...that-

     (a)  a taxpayer has suffered such a loss or is in such circumstances;

     ...

     that the exaction of the full amount of tax will entail serious hardship, the Board may release the taxpayer...wholly or in part from his liability, and the Commissioner may make such entries and alterations in the assessment as are necessary for that purpose."

It was submitted that the following factors pointed to the requirements of the section being mandatory once the pre-
condition for the exercise of power had been established: (i)the power to grant relief was vested in a non-judicial body; (ii) s 265 was a provision for the benefit of a specific class of persons who satisfied a prescribed criteria; (iii) the language of the section was all encompassing and there was nothing in its provisions to indicate that any factor other than "serious hardship" was relevant.  See Ward v Williams (1955) 92 CLR 496; PSA v Federated Clerks Union (1991) 173 CLR 132 at 157; Webb v Deputy Commissioner of Taxation 93 ATC 5123 at 5132.

In Ward v Williams (1955) 92 CLR 496 the Court was required to determine whether the use of the word "may" in s 66 of the Public Health Act, 1902 (Cth) was truly permissive or whether its requirements were mandatory.  The Court stated at 505:

     "...the real intention of the legislature...must be ascertained and that in ascertaining it you begin with a prima facie presumption that permissive or facultative expressions operate according to their ordinary natural meaning..."The question whether a Judge, or a public officer, to whom a power is given by such words is bound to use it upon any particular occasion, or in any particular manner, must be solved aliunde, and, in general, it is to be solved from the context, from the particular provisions, or from the general scope and objects of the enactment  conferring the power - per Lord Selborne:  Julius v Bishop of Oxford (1880) LR 5 AC 214 at 235.  One situation in which the conclusion is justified that a duty to exercise the power or authority falls upon the officer on whom it is conferred is described by Lord Cairns in his speech in the same case.  His Lordship spoke of certain cases and said of them "[they] appear to decide nothing more than this:  that where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the Legislature of the conditions upon which they
are entitled to call for its exercise, that power ought to be exercised, and the Court will require it to be exercised."

In Finance Facilities Pty Limited v Federal Commissioner of Taxation (1971) 127 CLR 106 the Commissioner of Taxation had contended that the provisions of s 46(3) of the Income Tax Assessment Act which provided that the Commissioner "may allow...a private company...a further rebate in its assessment" imported a true discretion.  Windeyer J, in applying Ward v Williams stated at 134:

     "While Parliament uses the English language the word "may" in a statute means may.   Used of a person having an official position, it is a word of permission, an authority to do something which otherwise he could not lawfully do.  If the scope of the permission be not circumscribed by context or circumstances, it enables the doing, or abstaining from doing, at discretion, of the thing so authorised...However, that general proposition is irrelevant in this case.   Here the scope of the permission or power given is circumscribed.  Conditions precedent for its exercise are specified as alternatives.  The question then is, must the permitted power be exercised if one of those conditions be fulfilled?

     This does not depend on the abstract meaning of the word "may" but of whether the particular context of words and circumstance make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the "may" becomes a "must".  Illustrative cases go back to 1663...Today it is enough to cite Julius v Bishop of Oxford (1880) LR 5 AC 214; and add in this Court Ward v Williams (1955) 92 CLR 496 at pp 505-506."

The same question arose in Commissioner of State Revenue v Royal Insurance Australia Limited (1994) 69 ALJR 51.  Brennan J referred both to Ward v Williams and Finance Facilities stating at 66:

     "The question whether the repository of a discretionary power is under a duty to exercise the power depends upon the intention of the legislature as revealed in the language of the statute and, in ascertaining that intention, there is a prima facie presumption "that permissive or facultative expressions operate according to their ordinary natural meaning":  Ward v Williams (1955) 92 CLR 496 at 505.  Therefore, if the facultative term "may" is used in the creation of a power, it does not in itself impose a duty to exercise the power but such a duty may be found in the statutory context in which the power is created.  Thus, where a power is conditioned upon the existence of an event or upon the formation of a particular opinion by the repository of the power, the condition may sometimes be taken to specify the circumstances in which the power must be exercised:  Finance Facilities Pty Limited v Federal Commissioner of Taxation (1971) 127 CLR 106 at 134-135."

Counsel for the applicants submitted first, that s 265 is intended to benefit specified individuals and the exercise of the power is conditioned upon the existence of a specified circumstance, namely serious hardship; secondly, the power is reposed in a board and not a court or other judicial or quasi judicial body; and thirdly, the language of the section was all encompassing.  Accordingly, it was submitted, the power conferred by s 265 falls within the principles enunciated in Ward v Williams, Finance Facilities, and Royal Insurance, such that it must be exercised where the preconditions for its operation are made out, as is the case here.  

However, there is authority to the contrary.  In R v Trebilco & Ors; Ex parte F.S. Falkiner & Sons Limited (1936) 56 CLR 20, the Court held that  s 66(1) of the Land Tax Assessment Act, 1910 conferred a discretion upon the Board set up under that
Act to deal with applications for relief from taxation liability imposed by that Act.  It is useful in the first instance to refer to the provisions of s 66 which were there under consideration:

     "66.   In any case where it is shown to the satisfaction of a board...-

     (a)  that a taxpayer liable to pay land tax has become bankrupt or insolvent, or has suffered such a loss that the exaction of the full amount of tax would entail serious hardship;

     (b)  that, by reason of drought or adverse reasons or other adverse conditions, the returns from any land owned by the taxpayer upon which he carried on agricultural or pastoral pursuits have been seriously impaired;  or

     (c)  that, owing to low prices in respect of primary products the income derived from the land the subject of land tax has been so reduced that the taxpayer is unable to pay the whole of the tax out of his income derived in the financial year for which the land tax is assessed, and that the financial position of the taxpayer is such that the exaction of the full amount of land tax would entail serious hardship, the board may release such taxpayer wholly or in part from his liability for land tax or for land tax in respect of any particular land the returns from which have been so impaired, and the commissioner shall make such alterations in the amount of tax payable and shall make such refund of tax already paid as is necessary to give effect to the decision of the board."

It will be noted that subpara (a) is in virtually identical terms to s 265.  The High Court held that s 66 was permissive in its operation.  Latham CJ stated at 27:

     "Even if the conditions under which the authority of the Board can be exercised are shown to exist, the board is not bound to exercise its authority in favour of the taxpayer.  This is settled by the
decision of this court in Ex parte Falkiner (1929) 35 ALR 303, where Knox CJ said:

          "The board has an absolute discretion, even if those matters" (i.e., conditions a or b) "are proved, to say that in its opinion the relief should not be granted."

          Isaacs J. added:

          "I think that the only right of the taxpayer under this section is to have a chance of getting the discretion of the board exercised in his favour.""

Dixon J stated at 32:

     "A power given by the word 'may' in such a provision must, I think, be understood as discretionary.  It confers a discretion to release, or not to release, the taxpayer according to the board's opinion of the justice of the case.

     ...

     ...the sub-section gives no information as to the considerations by which an exercise of the discretion is to be guided.  The nature of those considerations must be gathered from the scope and object of the provision.

     ...

     ...where no limits are expressly imposed by the legislature on an administrative discretion, the questions what are, and what are not, legitimate considerations for its exercise must always be disputable and open to wide differences of opinion.  But, nevertheless, in theory a legal right exists to compel an exercise of the discretion on grounds which are not extraneous and irrelevant to its purpose."

In Powell v Evreniades & Ors (1989) 89 ATC 4415, Hill J considered that Trebilco governed the construction of s 265.  His Honour stated at 4422 and 4423:

     "In the absence of authority, I should have thought that there was something to be said for the view that [in s 265]...the word "may" is not used in the sense of giving yet another discretion...

     The matter however is not free from authority.  The High Court considered the construction of a similar provision, sec. 66(1) of the Land Tax Assessment Act 1910-1934 (Cth) in The King v Trebilco; ex parte F.S. Falkiner & Sons Ltd (1936) 56 CLR 20.  It might be noted that McTiernan J who dissented in Finance Facilities did so relying upon Trebilco although the majority made no reference to the earlier case."

His Honour concluded at 4423-4424:

     "It follows from Trebilco that in the course of consideration of the release of tax under sec. 265 the Board may consider not only such matters as go to the issue of serious hardship but also other matters which in the discretion of the Board may be relevant, those other matters being merely proscribed by the general principle that the discretion must be exercised bona fide and for the purposes for which it was conferred, there being jurisdiction in this Court to intervene if in the overall exercise of the discretion the Board does take into account considerations which, having regard to the purposes served by sec. 265, can be seen to be irrelevant."

Powell's case was referred to by the Full Court of this Court in Van Grieken v Veilands & Ors (1991) 91 ATC 4865.   In Rollo v Morrow & Ors (1992) 92 ATC 4364, Gummow J noted that the applicant accepted, on the basis of Powell and Van Grieken that a finding of serious hardship did not oblige the Board to exercise its discretion in favour of the applicant.

Counsel for the applicant submitted however that Hill J was wrong to consider himself constrained by Trebilco, which, he said, was distinguishable and was not in accord with the principles stated in Ward v Williams and the later decisions of Finance Facilities and Commissioner for State Revenue v Royal Insurance Australia Ltd.  He submitted that, although s 66 of the Land Tax Assessment Act and s 265 both appeared in taxing statutes and both gave a power to relieve from the liability to pay tax, the two provisions were very different.  Although s 66(1)(a) was in identical terms to s 256, s 66 (1) (b) and (c) specified two other circumstances which, if found to exist, enlivened the operation of the section.  It was submitted that, in any given case, the question of whether either of those two paragraphs had been satisfied could involve an evaluation or judgment by the decision maker of a variety of circumstances in respect of which there could be different views.  It was more likely therefore, that where such an evaluation process was involved, the power conferred was discretionary.  However, in s 265, there was a single all encompassing criterion which enlivened the operation of the section.  It was submitted that this indicated there were no other matters relevant.  It followed, according to the submission, that the section should be given a mandatory operation once the specified criterion of serious hardship was found to exist.

I do not agree that the distinction between the two sections sought to be drawn by counsel for the applicants exists.  The exercise of power conferred by s 66 was predicated upon a finding that one of three distinct factual circumstances existed.  The High Court found that once a finding of fact had been made which fell into one of the three subsections, the Board had a discretion whether to provide relief to the taxpayer.  The exercise of power conferred by s 265 is predicated upon the existence of a single factual circumstance, similar to that specified in s 66(1)(a).  A finding of whether serious hardship would be entailed involves an evaluation of all material placed before the Board and the exercise of judgment in the fact finding process, no different to that called for by s 66(1)(a) in particular, and s 66 in general.  In my opinion, Hill J was correct in considering that the decision in Trebilco should be applied to the construction of s 256.  Accordingly, I reject the second proposition.  It is not necessary therefore to consider the factors derived from Ward v Williams which were said to indicate that the section had a mandatory operation.  It should be observed, however, that the factors referred to in Ward v Williams are not prescriptive.  They are factors which indicate that a prima facie permissive provision may have a mandatory operation.  I, for one, do not consider that there is anything in the nature or scope of the statute, nor in the language of s 265, which displaces its prima facie permissive operation.  

Wednesbury unreasonableness and application of an inflexible policy

It was next submitted that the Board erred in placing reliance on the existence of the Equiticorp debt because: (i) the debt does not exist; (ii) if the court was to hold the debt did exist, the Board had failed to achieve its purpose; (iii) the
Board's consideration was entirely misconceived with the consequence that the refusal of relief put the applicants "under the very cloud of which they complain", namely bankruptcy.  The refusal had the further effect that the decision did not go to the protection of the revenue as only a small amount would ever be recovered.  The overall result it was submitted was "classic Wednesbury review".  Alternatively, it was submitted that the Board had applied an inflexible policy decision:  Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577.

The first of these factors can be disposed of quickly.  The application before the court is made under s 5 of the ADJR Act, which provides for review of a decision made under an enactment.  It does not provide for the review of facts found by the Tribunal:  see Waterford v Commonwealth (1989) 163 CLR 54.

The second and third issues are formulated on the basis that the court will find the Equiticorp debt to exist.  That is not the court's function on this application.  The correct approach is to consider whether the Board's decision discloses reviewable error given that it found that the debt existed.  It was submitted that the decision to refuse relief was unreasonable as it would not only compel the result which the applicants were seeking to avoid namely, bankruptcy, it also failed to achieve the purpose which the Board itself sought to achieve, namely, protection of the revenue, as there was only $20,000 worth of assets available to satisfy a large taxation debt, as well as the Equiticorp debt.

An administrative decision may be quashed if the decision is so unreasonable no reasonable person could have come to it: see Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223; Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24.  In Peko-Wallsend, Mason J emphasised the limited role of a court reviewing the exercise of administrative action.   A court, on review, is not permitted to substitute its own decision for that of the administrator.  However, his Honour continued at 41:

     "It follows that, in the absence of any statutory indication of the weight to be given to various considerations, it is generally for the decision-maker and not the court to determine the appropriate weight to be given to the matters which are required to be taken into account in exercising the statutory power...I say "generally" because both principle and authority indicate that in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is "manifestly unreasonable".   This ground of review was considered by Lord Greene MR in Wednesbury Corporation [1948] 1 KB at pp230, 233-234, in which his Lordship said that it would only be made out if it were shown that the decision was so unreasonable that no reasonable person could have come to it.  This ground is now expressed in ss 5(2)(g) and 6(2)(g) of the AD(JR) Act in these terms...However, in its application, there has been considerable diversity in the readiness with which courts have found the test to be satisfied...But guidance may be found in the close analogy between judicial review of administrative action and appellate review of a judicial discretion.  In the context of the latter,
it has been held that an appellate court may review a discretionary judgment that has failed to give proper weight to a particular matter, but it will be slow to do so because a mere preference for a different result will not suffice...So too in the context of administrative law, a court should proceed with caution when reviewing an administrative decision on the ground that it does not given proper weight to relevant factors, lest it exceed its supervisory role by reviewing the decision on its merits."

In Attorney-General (NSW) v Quin (1990) 170 CLR 1 Brennan J said at 36-7:

     "Properly applied, Wednesbury unreasonableness leaves the merits of a decision or action unaffected unless the decision or action is such as to amount to an abuse of power: Nottinghamshire County Council v Secretary of State for the Environment [1986] AC 240, at p249...As Professor Wade explains (Administrative Law, 6th ed. (1988), p407) in a passage cited with approval in Reg v Boundary Commission; Ex parte Foot [1983] QB 600, at p626:

          "The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the court must not usurp the discretion of the public authority which Parliament appointed to take the decision.""

I do not agree that the decision in this case is unreasonable in the Wednesbury sense.  A decision not to exercise a discretion is not unreasonable simply because its consequence is that the party seeking its exercise is in the same position the party otherwise would have, or was likely to have been in, had the exercise of the discretion not been sought.  Nor is the decision, of necessity, unreasonable, because its effect is the declaration of a small, or even nominal dividend, should the applicants be declared bankrupt.  The Board was entitled to give such weight to relevant matters as it
considered appropriate.  I do not consider that it gave excessive weight to those factors so as to be susceptible of review.

That leaves for final consideration whether the Board applied a policy inflexibly, without regard to the merits.  It is a well established principle of administrative law that a Minister may implement policy as a guide in the exercise of a statutory discretion, provided the policy is consistent with the statute:  Stringer v Minister of Housing and Local Government [1970] 1 WLR 1281 at 1298.  In Re Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 Brennan J said at 640:

     "There are powerful considerations in favour of a Minister adopting a guiding policy.  It can serve to focus attention on the purpose which the exercise of the discretion is calculated to achieve, and thereby to assist the Minister and others to see more clearly, in each case, the desirability of exercising the power in one way or another.  Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy.  By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process."

In my opinion, there is nothing in the Board's decision to indicate that it offended this principle.  There was no evidence that the Board did apply policy.  However, it was entitled to do so and the language of the 20 October 1994 letters bears the hallmark of the application of policy.  Assuming that it did so, the policy was consistent with the
Income Tax Assessment Act, 1936 (Cth) which, after all, is an Act for the imposition and collection of taxation.  Accordingly, I am of the opinion that the applicants also fail on this ground.   It follows that the application should be dismissed and the applicants pay the respondents' costs.

I certify that this and the preceding 22 pages

are a true copy of the Reasons for Judgment

of the Honourable Justice Beazley.

Associate:

Dated:    1 September 1995

                         APPEARANCES

Counsel for the Applicant:            Mr David Libling

Solicitors for the Applicant:              S.A. Teen

Counsel for the Respondent:           Ms Rhonda Henderson

Solicitors for the Respondent:        Australian Government

                                      Solicitor

Date of hearing:                      2 May 1995