FEDERAL COURT OF AUSTRALIA

R.V. Investments (Aust) Pty Ltd as Trustee of the R.V. Unit Trust v Commissioner of Taxation [2014] FCA 1169

THE COURT ORDERS THAT:

1.    The Appeal is dismissed.

2.    The Applicant is to pay the First Respondent’s costs of and incidental to the Appeal, to be taxed unless agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

REASONS FOR JUDGMENT

1.    INTRODUCTION

1    In the Administrative Appeals Tribunal (Tribunal), the applicant sought to review the decision of the first respondent, the Commissioner, disallowing the applicant’s objection against assessments of net amounts of goods and services tax (GST) and penalty assessments for the six quarterly tax periods from 1 July 2009 to 31 December 2010 (Relevant Period). The quantum of taxable supplies in the Relevant Period was not in dispute. The quantum of creditable acquisitions in the Relevant Period was in dispute. The applicant called one witness, its General Manager, Mr Denysenko, and tendered six bundles of invoices and a large archive box containing unsorted invoices.

2    Mr Denysenko’s testimony was adduced through a witness statement. He was cross-examined. There were four annexures to his witness statement. Annexure 1 listed the invoices in the six tendered bundles by reference to date, invoice number, name and amount of each invoice. For example, “24/09/2009 10571 Ford XR6 TURBO $150.00 PART”.

3    Annexure 2 listed the amount of each of the “petty cash invoices” in the large archive box. No other details were listed. It was simply a list of dollar amounts. Annexure 3 was a sub set of Annexure 2. It listed a sample of the “petty cash invoices” by reference to date, name, amount and a description of one to three words. For example,

Annexure 4 was an invoice from G & D Performance Tuning Pty Ltd in the sum of $500,500. The Commissioner conceded certain claims in Annexures 1 and 3. The Commissioner disputed all the claims in Annexure 2.

4    To the extent of those concessions, the Tribunal held that the assessments were excessive. The Tribunal’s decision varied the Commissioner’s objection decision:

(1)    For the period from 1 July 2009 to 30 September 2009, by increasing the net amount so that the refund payable to the applicant was reduced from $61,499.00 to $24,513.00;

(2)    For the period from 1 October 2009 to 31 December 2009, by decreasing the net amount so that $8,386.00 was no longer payable by the applicant and a refund of $1,740.00 was payable to the applicant;

(3)    For the period from 1 January 2010 to 31 March 2010, by decreasing the net amount so that the amount payable by the applicant was reduced from $9,164.00 to $2,086.00;

(4)    For the period from 1 April 2010 to 30 June 2010, by decreasing the net amount so that $13,938.00 was no longer payable by the applicant and a refund of $5,574.00 was payable to the applicant;

(5)    For the period from 1 July 2010 to 30 September 2010, by decreasing the net amount so that the amount payable by the applicant was reduced from $59,767.00 to $3,782.00;

(6)    For the period from 1 October 2010 to 31 December 2010, by decreasing the net amount so that the amount payable by the applicant was reduced from $13,361.00 to $12,578.00.

5    The applicant appealed. The Commissioner lodged a notice of objection to competency. The applicant lodged a supplementary notice of appeal and then an amended supplementary notice of appeal. Finally, the applicant sought leave to file a further amended supplementary notice of appeal (FASNA). The appeal has been determined on the basis that the applicant leave was granted leave to file the FASNA.

6    The FASNA identified five questions of law:

1.    Whether the Tribunal erred in failing to take account of relevant evidence establishing a foundation for the tender of the tax invoices which were not challenged by [the Commissioner] and were not referred to in the Tribunal’s reasons for decision (Unchallenged Invoices).

2.    Whether the Tribunal erred in finding that the evidence constituted by the Unchallenged Invoices tendered in support of part of the applicant’s claimed creditable acquisitions had no place in the review of a reviewable decision by the Tribunal because that evidence fell within the ambit of the maxim of res ipsa locquitor.

3.    Whether the Tribunal erred in failing to take account of relevant evidence of part of the applicant’s claimed creditable acquisitions, namely the Unchallenged Invoices and the evidence of [Mr] Denysenko in so far as it was relevant to those invoices.

4.    Whether the Tribunal took account of an irrelevant consideration, namely the subjective beliefs of the parties to the contract between G & D Performance Tuning, in deciding whether a binding agreement had been concluded.

5.    Whether the Tribunal erred in finding that the contract between G & D Performance Tuning and the applicant was void for uncertainty and therefore not binding.

7    The Commissioner challenged the competency of the appeal on the basis that these “questions” were in substance challenges to findings of fact and did not disclose a question of law.

8    These reasons for judgment will consider the relevant provisions of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act), the “Unchallenged Invoices” and then turn to consider each “question of law”. In considering each “question of law”, the Commissioner’s challenge to competency will be addressed.

2.    GST ACT – CREDITABLE ACQUISITIONS

9    Section 11-5 of the GST Act provides:

You make a creditable acquisition if:

(a)    you acquire anything solely or partly for a *creditable purpose; and

(b)    the supply of the thing to you is a *taxable supply; and

(c)    you provide, or are liable to provide, *consideration for the supply; and

(d)    you are *registered, or *required to be registered.

10    Section 11-15 of the GST Act, entitled Meaning of creditable purpose, relevantly provides:

(1)    You acquire a thing for a creditable purpose to the extent that you acquire it in *carrying on your *enterprise.

(2)    However, you do not acquire the thing for a creditable purpose to the extent that:

(a)    the acquisition relates to making supplies that would be *input taxed; or

(b)    the acquisition is of a private or domestic nature.

…

11    Subsection 69-5(1) of the GST Act provides that an acquisition is not a creditable acquisition to the extent that it is a non-deductible expense. Subsection 69-5(3)(f) then relevantly provides that an acquisition is a non-deductible expense if it is not deductible under Div 8 of the Income Tax Assessment Act 1997 (Cth) (ITAA 97) because of, inter alia, Div 32 of the ITAA 97 (Entertainment expenses).

12    Subsection 29-10(3)(a) of the GST Act relevantly provides that an input tax credit is not attributable to a tax period if you do not hold a tax invoice for a creditable acquisition when you give to the Commissioner a GST return for that tax period.

3.    “UNCHALLENGED INVOICES”

13    The “Unchallenged Invoices” are a significant aspect of the appeal. What then are they? The “Unchallenged Invoices” do not include the invoices conceded by the Commissioner and accepted by the Tribunal: see [3]-[4] above. Unsurprisingly, those invoices were not the subject of appeal. Only the “Unchallenged Invoices” the subject of Annexure 2 are the subject of appeal.

14    As noted earlier, Annexure 2 listed the amounts of the “petty cash invoices” that were included in the large archive box of unsorted invoices: see the Tribunal’s Reasons at [82] and above at [3]. The Annexure did not provide dates or other details of the claimed creditable acquisitions. According to the applicant’s calculations, the “Unchallenged Invoices” total $92,245 out of the total of approximately $346,883 listed in Annexure 2.

15    Next, the date of each petty cash amount was unclear. The applicant simply apportioned the total petty cash amounts equally across the six quarterly tax periods because it did not know the dates of the acquisitions.

16    Before the Tribunal, the applicant submitted that the Tribunal must be satisfied that the applicant had discharged its burden of proving that the amounts of the petty cash invoices were creditable acquisitions through the invoices and the onus then shifted to the Commissioner to satisfy the Tribunal that they were not creditable acquisitions: Tribunal’s Reasons at [55]. The Commissioner submitted before the Tribunal that the amounts in Annexure 2, and therefore the amounts claimed in respect of the petty cash invoices that were not included in Annexure 3, should be rejected in their entirety. In these circumstances, the Commissioner submitted, and I accept, that the applicant is not correct to describe them as “unchallenged” invoices.

17    It was the applicant, not the Commissioner, that had the burden of proving that each assessment was excessive: s 14ZZK of the Taxation Administration Act 1953 (Cth). It failed to discharge that burden. That is not surprising given the state of the “Unchallenged Invoices” and the evidence given by the applicant’s only witness, Mr Denysenko.

18    Mr Denysenko admitted that he had not “gone through” all of the invoices listed in Annexure 1. When asked what Annexure 2 was during cross-examination, Mr Denysenko said that he did not know what it was other than to say that it had numbers on it. He did not know what it represented. Despite that, he repeated that his witness statement was true and correct because his staff would have done it and it was true and correct. None of the staff members were called to give evidence. Further, Mr Denysenko did not obtain any advice as to which items, such as presents for the staff members’ children, entertainment and alcohol, the applicant could claim as creditable acquisitions.

19    Why did the applicant contend the invoices were unchallenged? The basis of that submission was the “failure” of the Commissioner to cross-examine Mr Denysenko on each invoice the subject of Annexure 2, which contained 1,872 amounts, representing 1,872 unsorted invoices, or on his evidence in support of their tender. That submission is rejected. As noted above, Mr Denysenko was cross-examined about the amounts listed in Annexure 2 and his evidence was that he did not know what Annexure 2 was. It is therefore unsurprising that Mr Denysenko was not cross-examined specifically on every one of the 1,872 amounts representing 1,872 unsorted invoices. As the Commissioner submitted, “[s]uch an exercise would have taken days, if not weeks, and incurred substantial costs out of proportion to what was at stake”. The proposition that the Commissioner must be taken to have conceded that an invoice evidences a creditable acquisition because Mr Denysenko was not cross-examined on the specific invoice is without foundation.

20    The Tribunal also rejected the applicant’s submission that the “Unchallenged Invoices” “spoke for themselves”. On this appeal, the applicant submitted:

17.    A document can be put in evidence as a chattel - a substance such as paper bearing inscriptions - or as a statement constituted by the inscription on the face of the document: J D Heydon, Cross on Evidence, 9th ed. Generally, a document treated as a statement will constitute testimonial evidence: J D Heydon, Cross on Evidence, 9th ed., p 50‐51 ([1265]). Its contents cannot be proven without being tendered: Macdonnell v Evans (1852) 11 CB 930; 138 ER 742 and, once tendered, the document will speak for itself: Karounos v Flavel (1984) 9 ACLR 66 at 77.

18.    The proposition that documents in evidence speak for themselves finds expression in the common law rule that an interrogatory as to the content of an existing document will generally be disallowed because the document speaks for itself and therefore that document constitutes the best evidence of what it has to say: Winterbottom v Vardon & Sons Ltd [1921] SASR 364; Chan v Minister for Immigration and Ethnic Affairs (1983) 49 ALR 593. See discussion in Ritchies Uniform Civil Procedure NSW at [22.1.50]; applied in Bonnaci Winward (Vic) Pty Ltd v Project Planning and Management Pty Ltd & Ors per O’Bryan J, unreported, Supreme Court of Victoria on 22 and 31 May 1996 at 4. It is reflected, as well, in the parol evidence rule which requires that the only evidence which may be adduced as to the terms of certain transactions recorded in a document, is the evidence constituted by that document speaking for itself: J D Heydon, Cross on Evidence, 9th ed., p 1347‐1359 ([39145]‐[39205]).

19.    Nevertheless, a document will not always speak for itself. The tribunal of fact must be “able to proceed, by evidence or assumption, on a basis reflecting what a document is, how it was created, and whether it was a final version”: ASIC v Rich [2009] NSWSC 1229 at [434]‐[435]. These are questions going to the authenticity of the document: whether the document is what it is claimed to be: ASIC v Rich [2005] NSWSC 417 at [118]. Where a document is a business record, its authenticity can be established by the evidence of a person participating in the conduct of the business who can recognise that document as one of the records of the business: National Australia Bank v Rusu (1999) 47 NSWLR 309 at 312 and analysis of the decision at ASIC v Rich [2005] NSWSC 417 at [99]; see also discussion at [117]‐[121].

20.    Many examples can be found in the case law where courts have made findings in reliance upon documents speaking for themselves. In Norcast Sarl v Bradken Ltd (No 2) [2013] FCA 235 at [64] and [142] Gordon J found documents evidencing emails spoke for themselves. In Australian Competition and Consumer Commission v Baxter Health Care Pty Ltd [2005] FCA 581 at [467] Allsop J preferred the evidence of marketing and strategy documents speaking for themselves to the general manager’s testimony regarding those documents. …

21.    In this case, Mr Denysenko’s evidence established the authenticity of the Unchallenged Invoices. He testified to being the general manager of [the applicant], and he testified that the invoices were provided to the applicant contemporaneously with the supply of goods. His evidence shows that he recognised those documents as records of the applicant’s business. The information contained in the documents in combination with Mr Denysenko’s supporting evidence enabled the Tribunal to proceed on the basis that the Unchallenged Invoices were in fact tax invoices, in their final version, prepared by suppliers in relation to their supply of items to the applicant.

(Original emphasis.)

21    The applicant’s submission is misconceived. The rules of evidence do not apply in the Tribunal: s 33(1)(c) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act). The applicant bore the onus of establishing that each acquisition was a creditable acquisition. For each acquisition, the applicant had to establish, amongst, other things that each acquisition was made in carrying on an enterprise and was deductible: ss 11-5(a), 11-15(1) and 11-15(2) of the GST Act at [9]-[10] above. For the reasons explained in sections 4-8 below, the applicant failed.

4.    QUESTION OF LAW – OBJECTION TO COMPETENCY

22    Section 44(1) of the AAT Act provides that a party to a proceeding before the Tribunal may appeal to the Court on a question of law from a decision of the Tribunal. Rule 33.12(2)(b) of the Federal Court Rules 2011 (Cth) provides that the notice of appeal must state the precise question or questions of law to be raised on the appeal. “[A] question to be raised on an appeal from the Tribunal should be stated with precision as a pure question of law”: Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232 at [18].

23    As will become evident, none of the applicant’s “questions” raises a question of law arising from the decision of the Tribunal. Each question is in substance a challenge to the Tribunal’s findings of fact: see, for example, Federal Commissioner of Taxation v Crown Insurance Services Ltd (2012) 207 FCR 247. Each question will be addressed in turn.

5.    QUESTION 1

24    Question 1 identified by the applicant was whether the Tribunal erred in failing to take account of “relevant evidence establishing a foundation for the tender” of the “Unchallenged Invoices”. That question fails on a number of bases. It does not disclose a question of law.

25    First, it mischaracterises what happened before the Tribunal. The Tribunal did not fail to take account of the evidence of Mr Denysenko. On the contrary. It took the evidence of Mr Denysenko into account, it analysed that evidence and then concluded, properly, that the applicant had failed to discharge the burden that it bore in relation to the claimed creditable acquisitions: see [14]-[19] above and the Tribunal’s Reasons at [78]-[83], [160]-[163], [165]-[178] and [238]-[242] by way of example.

26    The Tribunal’s analysis and conclusion was unsurprising. The Tribunal found that Mr Denysenko’s oral evidence about Annexure 2 was somewhat different from his witness statement: Tribunal’s Reasons at [78] and [79]. As noted earlier, the Tribunal also found that Mr Denysenko did not know what Annexure 2 represented, and despite that, repeated that his witness statement was true and correct: Tribunal’s Reasons at [124]. Further, due to discrepancies in Mr Denysenko’s evidence, whether they be regarded as inconsistencies or contradictions, the Tribunal found that it must treat Mr Denysenko’s evidence with caution: Tribunal’s Reasons at [178].

27    Second, the consideration of, and weight to be accorded to, the evidence adduced by the applicant is a matter for the Tribunal: Bell v Commissioner of Taxation [2012] FCA 1042 at [83]. Question 1 impermissibly seeks to challenge the weight to be accorded to Mr Denysenko’s evidence. That is the function of the Tribunal, not the Court.

28    Third, Question 1 invites the Court to examine the evidence before the Tribunal and to conduct a rehearing with respect to important aspects of the controversy that came before the Tribunal for determination. That invitation is not a question of law: Comcare v Etheridge (2006) 149 FCR 522 at [29] and Price Street Professional Centre Pty Ltd v Commissioner of Taxation (2007) 243 ALR 728 at [28]-[29].

29    Fourth, even if contrary to the view formed, Question 1 was a question of law, the question would fail for the following reasons:

(1)    The applicant tendered six bundles of invoices, an archive box of unsorted invoices and a witness statement by Mr Denysenko, with the amounts of the invoices listed in Annexure 2 to that statement. When asked what Annexure 2 was, Mr Denysenko said that he did not know what it was other than to say that it had numbers on it: see [1], [3], and [18] above;

(2)    The applicant did not tender any financial records as evidence of its creditable acquisitions: Tribunal’s Reasons at [84];

(3)    Paul & Paul Pty Ltd, trading as Carsmart, also conducted business from the same premises as the applicant at 10-12 Plunkett Road, Dandenong for most of the Relevant Period: Tribunal’s Reasons at [15]-[16] and [174]. Paul & Paul Pty Ltd bought and sold cars, both wholesale and retail: Tribunal’s Reasons at [15]. Mr Denysenko’s son, Mr Mykola Denysenko, was a director of Paul & Paul Pty Ltd from 27 November 2007 to 1 July 2010. Mr Denysenko’s partner, Ms Rosa Villella, subsequently became a director of Paul & Paul Pty Ltd, which changed its name to Foton Dandenong Pty Ltd: Tribunal’s Reasons at [14]. Mr Denysenko gave evidence before the Tribunal that all receipts and expenses of Paul & Paul Pty Ltd went through the ANZ bank account of the applicant, even though Paul & Paul Pty Ltd invoices specified that payment be made into a NAB bank account: Tribunal’s Reasons at [85]-[86]. There was no system to separate businesses of the applicant and Paul & Paul Pty Ltd, or business and private expenditure: Tribunal’s Reasons at [286];

(4)    The applicant’s ANZ bank account was also used for private purposes: Tribunal’s Reasons at [213]. Deposits of borrowings made and rental income derived by Ms Villella and other family members were deposited into that account.

30    In short, the evidence before the Tribunal demonstrated that the transactions of the applicant, Paul & Paul Pty Ltd and private transactions of Ms Rosa Villella and other family members were all intermingled, with no contemporaneous business records produced to the Tribunal: Tribunal’s Reasons at [282]-[286]. In the absence of business records, it was not possible for the Tribunal to trace whether payments had been made, and if so, which source they came from: Tribunal’s Reasons at [283]. Finally, the Tribunal found that a substantial number of the petty cash invoices were clearly not creditable acquisitions. These included, for example, farm / horse related fees, a Powerball ticket, a TAB ticket, games, household fixtures, fittings and goods and other personal items: Tribunal’s Reasons at [179]-[237]. Some of these claims were conceded by the applicant: Tribunal’s Reasons at [22].

31    The applicant submitted that the petty cash invoices “spoke for themselves”: see [20] above. A petty cash invoice “says” that an entity sold a good or service for a price on a particular date. It did not identify who made the acquisition or for what purpose. As the Commissioner rhetorically asked “did the mere production of the petty cash invoices to the Tribunal discharge the applicant’s burden of proving that it had made creditable acquisitions in the amounts of the invoices?” The answer to that question is “no”.

32    The applicant was required to prove in relation to each amount claimed that it was a creditable acquisition. That required the applicant to prove, amongst other things, that it provided, or was liable to provide, consideration for the supply and that the acquisition was for a creditable purpose: s 11-5 of the GST Act at [9] above. That required the applicant to establish that it acquired the goods or services in carrying on its enterprise and it was not a “non-deductible expense”: ss 11-15 and 69-5 of the GST Act at [10]-[11] above. The petty cash invoices on their own did not and could not establish those facts.

33    It was therefore unsurprising that the Tribunal was not satisfied of the matters required to establish creditable acquisitions in respect of each petty cash invoice. The applicant produced no accounting records, multiple businesses were conducted by related persons from the same premises, those businesses used the same bank account for receipts and payments, and personal transactions were conducted from the applicant’s bank account. Finally, there were numerous examples of claims made in respect of the petty cash invoices that were found not to be creditable acquisitions.

34    Mr Denysenko’s evidence did not bridge the gaping hole. His evidence did not establish the authenticity of the petty cash invoices. No less importantly, regardless of the authenticity of the invoices, the applicant failed to establish that the transactions related to the invoices were creditable acquisitions.

35    For those reasons, the applicant’s submission that the witness statement of Mr Denysenko, his evidence in chief, and the details on the face of each invoice were sufficient to prove (1) that the applicant acquired the goods or services in carrying on its enterprise, and (2) the applicant provided or was liable to provide consideration for the supplies, is rejected.

36    The Tribunal made no error in concluding, and was right to conclude, that the applicant had failed to discharge its burden of proving creditable acquisitions in relation to the petty cash invoice amounts totalling $92,245 sought to be established in this appeal.

37    Question 1 of the notice of appeal is rejected.

6.    QUESTION 2

38    Question 2 identified by the applicant was whether the Tribunal erred in finding that the “Unchallenged Invoices” had no place in the review of a reviewable decision by the Tribunal because that evidence fell within the ambit of the maxim res ipsa locquitor. Again, this question fails on a number of bases. It does not disclose a question of law.

39    First, it mischaracterises what happened before the Tribunal. The Tribunal did not find that the invoices “had no place in the review”. In dealing with the applicant’s submission that the invoices “spoke for themselves” and that the onus shifted to the Commissioner to show which invoices failed to satisfy the criteria for a creditable acquisition, the Tribunal found that the maxim res ipsa loquitur can have no place in the review of a reviewable objection decision. That finding is correct.

40    Further, contrary to the stated basis of Question 2, the Tribunal did not find that the doctrine of res ipsa loquitur has application. The Tribunal found the opposite: Tribunal’s Reasons at [65]-[77].

41    Second, the applicant may not misconstrue the effect of the Tribunal’s decision, extract a question of law from that misconstruction and put that as a question of law before the Court on appeal: Repatriation Commission v Goulding [2008] FCA 1858 at [20].

42    Third, and no less importantly, the applicant’s submission that the petty cash invoices “spoke for themselves” again seeks to invite the Court to examine the evidence before the Tribunal and to conduct a rehearing with respect to important aspects of the controversy that came before the Tribunal for determination. That is impermissible: see [28] above.

43    Fourth, even if contrary to the view formed, Question 2 was a question of law, the question would fail for the reasons set out at [29(1)]-[29(4)] above.

44    Question 2 of the notice of appeal is rejected.

7.    QUESTION 3

45    The applicant identified Question 3 to be whether the Tribunal did not take into account the Unchallenged Invoices and the evidence of Mr Denysenko in relation to those invoices. This has been addressed in relation to Question 1: see [24]-[36] above. It is dismissed for the same reasons.

46    Question 3 of the notice of appeal is rejected.

8.    QUESTIONS 4 AND 5 – G & D PERFORMANCE TUNING PTY LTD

47    Questions 4 and 5 relate to the applicant’s claim of a creditable acquisition from G & D Performance Tuning Pty Ltd in the amount of $500,500 (including GST). The applicant relied on an invoice and a stocktake document, together with the testimony of Mr Denysenko.

48    The Tribunal found that:

(1)    There was no written agreement between the applicant and G & D Performance Tuning Pty Ltd: Tribunal’s Reasons at [95];

(2)    The directors of G & D Performance Tuning Pty Ltd at the relevant time were sons of Mr Denysenko: Tribunal’s Reasons at [18] and [95];

(3)    The principal place of business of G & D Performance Tuning Pty Ltd at the relevant time was 10 Plunkett Road, Dandenong, which was the same as the applicant’s place of business: Tribunal’s Reasons at [17] and [174];

(4)    Mr Denysenko said that he and his sons had worked out the figure on the invoice: Tribunal’s Reasons at [93];

(5)    Mr Denyskeno never paid the invoice. Mr Denysenko said that the applicant never paid the invoice for 2 reasons. The first was that he and his sons agreed that the applicant would pay it when it got the money together. At the time, they were not able to pay. The second reason was that there was a dispute between them over the stock when it was presented: Tribunal’s Reasons at [95];

(6)    No demand for payment was ever made by, or on behalf of, G & D Performance Tuning Pty Ltd: Tribunal’s Reasons at [231].

49    The Tribunal found that it was not satisfied, after consideration of the evidence, that the applicant was ever liable to pay $500,500 to G & D Performance Tuning Pty Ltd: Tribunal’s Reasons at [231].

8.1    Question 4

50    Question 4 identified by the applicant was whether the Tribunal took account of an irrelevant consideration, namely the subjective beliefs of the parties to the contract between the applicant and G & D Performance Tuning Pty Ltd, in deciding whether a binding agreement had been concluded. That question is rejected on a number of bases. It does not disclose a question of law.

51    First, it proceeds on a mischaracterisation of the Tribunal’s reasons. The Tribunal did not take into account the subjective beliefs of the parties. On the contrary, the Tribunal found that it did not have sufficient evidence to make a finding as to whether the parties believed, on reasonable grounds, that a binding agreement had been concluded: Tribunal’s Reasons at [231]. That finding was unsurprising. There was no written agreement. The applicant did not adduce evidence of what was said between Mr Denysenko and his sons to constitute the contract. The applicant did not call either of Mr Denysenko’s sons to give evidence. The Tribunal’s finding was therefore necessarily based on an assessment of Mr Denysenko’s evidence, the invoice and the stocktake document.

52    Mr Denysenko’s evidence was vague, uncertain, inconsistent and uncorroborated. In his witness statement (at [7], [9] and [10]), Mr Denysenko said he received an invoice in September 2009 “purportedly for the supply of automotive parts to the Applicant”. He also said that the payment terms were flexible and that “there is no question whatsoever that these invoices were not due for payment as at 31 December 2009.” In the absence of any evidence of the conversation or conversations constituting the alleged contract, the basis of the applicant’s alleged obligation to pay was and remained uncertain. Then, in cross-examination, Mr Denysenko said that he and his sons worked out the figure that was on the invoice, payment of the invoice was dependent on “when that (sic) we got the money or whenever we kicked up a little bit…”, that the stock had not been “presented” when the invoice was created and when the stock was presented it was rejected. At its highest, the applicant’s case was that the goods the subject of the invoice existed at the time of the invoice because they were the subject of the stocktake document. That is insufficient.

53    There were other evidentiary issues. Both the applicant’s business and G & D Performance Tuning Pty Ltd’s business were conducted on the same premises. Why would the applicant dispute a liability that he had purportedly determined himself in relation to stock at the applicant’s premises? The Tribunal was best placed to assess the credibility of Mr Denysenko’s oral testimony.

54    The applicant’s submission that so long as “the language employed by the parties is not ‘so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular intention’ the contract cannot be held to be void or uncertain or meaningless”, goes nowhere because the applicant did not adduce any evidence of the language used in the conversations constituting the alleged contract: see [51] above. Rather, Mr Denysenko gave vague and inconsistent evidence of what he considered to be the applicant’s obligation to pay. The applicant did not prove whether it was intended by Mr Denysenko and his sons that the applicant would have a present obligation to pay $500,500 payable at an unspecified time in the future or whether it was intended that an obligation to pay would only arise on “presentation” of the goods to the satisfaction of the applicant or when the applicant had sufficient money to pay or when both of those conditions were satisfied. The alleged contract was arguably so vague that it was not binding: Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 130.

55    Even if, contrary to the Tribunal’s finding, there was a binding contract between the applicant and G & D Performance Tuning Pty Ltd, the evidence did not establish a presently existing liability at the relevant time, being at the end of the quarterly tax period on 30 September 2009. A contingent liability is not sufficient to satisfy the requirements of s 11-5(c) of the GST Act, that you provide, or are liable to provide, consideration for the supply: see [9] above. The provision requires a presently existing liability – a debt: cf Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492 and Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation (1981) 144 CLR 616. A potential liability, subject to delivery of the goods or a condition of “when … we got the money or whenever we kicked up a little bit…”, is not a presently existing liability.

56    Finally, the question again impermissibly invites the Court to examine and consider the weight to be accorded to evidence before the Tribunal, including the oral evidence of Mr Denysenko. That is not a question of law. That is an impermissible challenge to a finding of fact.

57    Question 4 of the notice of appeal is rejected.

8.2    Question 5

58    Question 5 identified by the applicant was whether the Tribunal erred in finding that the contract between G & D Performance Tuning Pty Ltd and the applicant was void for uncertainty and therefore not binding.

59    The Tribunal was not satisfied, after consideration of the evidence, that the applicant was ever liable to pay $500,500 to G & D Performance Tuning Pty Ltd: Tribunal’s Reasons at [231]. As outlined above, that was a finding of fact reached after weighing up uncertain purported contractual terms, no evidence from the other party, no time specified for payment, Mr Denysenko’s evidence that the applicant would pay “when… we got the money or whenever we kicked up a little bit…”, no demand for payment ever being made and no evidence of specific deliveries, but only evidence that the goods that were delivered by G & D Performance Tuning Pty Ltd were rejected by the applicant.

60    It is not an error of law to make a finding of fact with which a court may disagree. A mixed question of fact and law is not a question of law: National Australia Bank v Georgoulas [2013] FCA 1412 at [46].

61    Question 5 of the notice of appeal is rejected.

9.    CONCLUSION

62    The appeal is dismissed with costs.

Associate:

Dated:    5 November 2014