Federal Court of Australia

Commissioner of Taxation v Ross (No 2) [2021] FCA 1088

ORDERS

THE COURT ORDERS THAT:

1.    There be no order as to the costs of the appeal by the Commissioner of Taxation.

2.    The Commissioner pay 95% of the taxpayers’ costs of their cross-appeal.

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

REASONS FOR JUDGMENT

DERRINGTON J:

1    This matter concerned two appeals from decisions of the Administrative Appeals Tribunal (the Tribunal) dated 6 May 2020. The first was an appeal by the Commissioner of Taxation in Commissioner of Taxation v Ross & Anor (the Appeal) and the second by the taxpayers in Ross & Anor v Commissioner of Taxation (the Cross-Appeal). On 9 July 2021, judgment was given allowing the appeals and orders were made setting aside the Tribunal’s decisions and remitting the matters to the Tribunal for a determination according to law without the hearing of further evidence: Commissioner of Taxation v Ross [2021] FCA 766 (Primary Judgment).

2    The parties were afforded an opportunity to make written submissions solely on the question of the orders for costs which ought to follow from the judgments and reasons given. The parties filed substantial written submissions directed to that question. For the reasons given below, the appropriate orders are, first, that there be no order as to the costs of the Appeal and, second, that the Commissioner pay 95% of the taxpayers’ costs of the Cross-Appeal.

The Appeal

3    The parties were in agreement that the appropriate order with respect to the Appeal is that there be no order as to costs. That followed from the Commissioner’s agreement, pursuant to the ATO Test Case Litigation Program, to fund the taxpayers’ costs of the Appeal irrespective of the outcome.

4    Nevertheless, it is apt to observe that the main issue in contention in the Appeal was important to the Commissioner, involving as it did a question as to the application of the correct onus of proof under s 14ZZK(b)(i) of the Taxation Administration Act 1953 (Cth). It might also be observed that the issues on the Appeal consumed most of the hearing and, in particular, it was the issue of whether the taxpayers’ case as advanced to the Tribunal could ever have satisfied the requisite onus which attracted most attention. Although the taxpayers strongly contested that issue, claiming that on the evidence before it the Tribunal could have upheld their objections to the Commissioner’s assessments, it was ultimately unnecessary to reach a final determination with respect to it: see Primary Judgment [172]. While that was so, the point to be made here is that the taxpayers strongly asserted at the hearing that the material before the Tribunal was sufficient to enable them to satisfy the requisite onus of proof under s 14ZZK(b)(i) and that was equally as strongly resisted by the Commissioner.

The Cross-Appeal

5    By the taxpayers’ Cross-Appeal, they alleged that the consequences of the delay of approximately two years and two months between the hearing of evidence and the delivery of the Tribunal’s reasons denied them a fair hearing. That was ultimately the sole ground of appeal which was upheld largely on the basis of the grounds identified in their Amended Notice of Cross-Appeal. It follows, so they submitted, that the ordinary rule as to costs should be applied and that they be entitled to their costs of the Cross-Appeal. They further submitted that their costs ought to be taxed, in part, on an indemnity basis from a point shortly before the hearing date.

6    In response, the Commissioner submitted that the appropriate order is that there be no order as to costs and several matters were relied upon as supporting this departure from the usual order. In the alternative, he submitted that costs ought to be awarded on an issues basis, reflecting the degree of success attained by the taxpayers in the Cross-Appeal.

Was the Commissioner responsible for the result of the Tribunal’s decision?

7    In his summary of the applicable legal principles, the Commissioner submitted that the usual order as to costs may not be appropriate “where the successful party was not wronged at the hands of the unsuccessful party”. This submission was apparently made on the basis that he was not responsible for the error identified in the Cross-Appeal, although nothing further was advanced in support of the application of that proposition in the circumstances. While the responsibility of a party for the decision from which another party appeals, or for any errors in that decision, may be a relevant consideration in some circumstances, in this case the Commissioner vigorously, albeit unsuccessfully, opposed the taxpayers’ Cross-Appeal and, by doing so, imposed upon them the substantial cost burden of prosecuting it. Prima facie, he ought to indemnify the taxpayers to some extent for the burden imposed upon them by his opposition to their appeal.

Were the taxpayers only nominally successful in the Cross-Appeal?

8    The Commissioner also submitted that the taxpayers failed to obtain the relief they sought in the Cross-Appeal or were only nominally successful. It was submitted that because the taxpayers did not secure an order that they be at liberty to adduce further evidence on any re-hearing before the Tribunal, their victory was somewhat pyrrhic. That submission is also mistaken. The taxpayers vindicated their rights against the opposition of the Commissioner and, further, secured the return of the matter to the Tribunal in the face of strong opposition by the Commissioner. The mere fact that the re-hearing will be determined on the evidence already before the Tribunal was not a significant loss for them. As was mentioned in the Primary Judgment, although the conclusion was reached that no properly instructed Tribunal could have been satisfied, on the material, that the taxpayers discharged the prescribed onus, ultimately that finding was not necessary for the decision which was made: at [342]. Further, the taxpayers’ submissions strenuously asserted that the material could satisfy the onus. In the scheme of the appeals, the basis on which the matter was remitted was a relatively minor issue going only to the particularities of the relief to be granted. It was not, of itself, a significant issue on the basis of which an apportionment of costs might take place.

9    The Commissioner also submitted that the taxpayers failed to establish the “fundamental premise” of the Cross-Appeal, supposedly being their submission that it should be determined first on the basis that, if it was successful, the issues in the Commissioner’s Appeal would have fallen away and need not be considered. With respect, that matter was not an “issue” as that word is used and commonly understood in relation to the question of costs, nor was it a fundamental premise of the Cross-Appeal. It was merely a submission made by the taxpayers’ Counsel during the course of the hearing and, as the taxpayers’ submissions identify, it “occupied a miniscule amount of hearing time”. Its significance to the Cross-Appeal is accurately reflected in the attention devoted to it in the Primary Judgment: see at [341].

Amendment of the Cross-Appeal

10    On 16 September 2020, the taxpayers filed their Amended Notice of Cross-Appeal which recast their contentions by striking through a number of previously raised questions of law. Although the amended document advanced only one question, being whether the taxpayers had been denied a fair hearing, it was supported by a number of particulars, some of which had appeared as grounds in the earlier iteration. In these circumstances, the Commissioner submitted that the taxpayers should pay his costs occasioned by the making of the amendment and relied upon this as supporting his submissions as to the appropriate order with respect to costs. In response, the taxpayers submitted that the Commissioner’s costs relating to the Cross-Appeal to the relevant date would have been negligible and noted that he did not, at the time of the amendment, seek an order that they pay his costs thrown away. In the alternative, they submitted that if they were obliged to pay those costs that should be recognised solely by a reduction in the amount which the Commissioner is ordered to pay them. There is force in that submission and the practicalities of assessing, at this stage, the quantum of costs occasioned by the making of the amendment would be difficult and, no doubt, consume a significant and disproportionate period of time.

11    Although there is some force in the taxpayers’ submissions that the amendment involved a simple reorganisation of its case rather than a complete recasting, the amendment necessarily put the Commissioner to added expense in responding to it as well as wasted expense in considering the prior iteration of their case. There is no avoiding that conclusion and it is appropriate that some alteration be made to the final orders to take account of the consequences of the making of the amendment.

Should costs be ordered on an issues basis?

12    Although the Court has a broad discretion in the awarding of costs under s 43 of the Federal Court of Australia Act 1976 (Cth), s 43(3) specifically empowers it to make orders in relation to different parts of the proceeding. The Commissioner accepted the ordinary rule is that costs follow the event, however, he submitted that where a party has only been partially successful in obtaining the relief sought or has not succeeded on all bases for that relief, some other order might be appropriate. In this case, it was submitted that the costs of the Cross-Appeal ought to be apportioned in accordance with the parties’ respective success on the several issues or, indeed, that there be no order as to costs. In his written submissions, he purported to undertake a finding-by-finding analysis of the issues in the Cross-Appeal and identified whether the taxpayers had been successful on them. He submitted that the taxpayers were successful on nine of the issues raised as to why the delay had caused them prejudice but had failed on eight. That conclusion, he submitted, should both displace the ordinary rule as to costs and govern the apportionment in any order for costs.

13    However, neither the Commissioner’s preferred position that there be no order as to costs, nor his alternative position that they be apportioned on an issues basis appears to be an appropriate approach in the present circumstances. In particular, his submissions in support of those alternative positions fail to take into account the seriousness of the issues on which the taxpayers succeeded and his failed opposition to them. The sole ground ultimately relied upon in the Cross-Appeal was a broad contention that the taxpayers’ had been denied a fair hearing. This was supported by various particulars which represented the bulk of the issues in the Cross-Appeal. Although the taxpayers were not successful on all, they succeeded on a majority and on more than enough to warrant the setting aside of the Tribunal’s decision. Further, the issues on which the taxpayers did not succeed were not all wholly without merit. They had varying degrees of validity and none were close to being unarguable. In respect of some of them, the taxpayer was able to make out that the Tribunal had fallen into error, but was unable to demonstrate that it bespoke of the consequences of extreme delay. It could also not be denied that those issues provided some context to the errors which were otherwise found to have arisen from delay. Moreover, their Cross-Appeal was upheld, the Tribunal’s decisions were set aside, and the matters were remitted for reconsideration. The latter point is not insignificant. The Commissioner strongly opposed any remittal to the Tribunal and, again, that opposition failed. Given the substantive quality of the taxpayers’ success it is not an attractive proposition to diminish their entitlement to costs by reference to the issues on which they did and did not succeed.

14    The taxpayers succeeded to a significant degree and are entitled to an order for costs in their favour. This is not an appropriate case for undertaking an issue-by-issue analysis for the purpose of assessing costs. Nevertheless, there should be a small reduction to the costs which the taxpayers are entitled to recover to take into account the costs thrown away by reason of the amendment to their Notice of Cross-Appeal. I accept the taxpayers’ submission that a reduction of five percent sufficiently accommodates that issue. The order on the Cross-Appeal should, prima facie, be that the Commissioner pay 95% of the taxpayers’ costs.

Indemnity costs

15    The taxpayers seek an order that their costs of the Cross-Appeal be taxed on an indemnity basis on and from 14 February 2021. This was on the basis that an offer, which they characterised as a Calderbank letter, was made and the Commissioner unreasonably rejected it.

16    From the outset, it may be observed that the letter relied upon revealed a startling contrast between the taxpayers’ position as to the Appeal at the hearing and their apparent attitude towards it in the letter. By a letter of 12 February 2021, their solicitors wrote to the Commissioner and, on a “without prejudice save as to costs” basis, proffered the following:

Our client has instructed us to make an offer to settle these proceedings. The Respondents seek your consent to orders along the following lines:

   1.    The Applicant’s Appeal is dismissed.

2.    The Respondents’ Cross-Appeal is allowed and the matter be remitted to the Administrative Appeals Tribunal for re-hearing.

   3.    The parties bear their own costs in respect of the Cross-Appeal.

We should add that we do not have a fixed view regarding the terms relating to your client’s Appeal and are happy to discuss the precise terms of that order, and the terms of the statement required to identify the errors of law made by the Tribunal.

17    In support of their submission that the Commissioner should pay their costs on an indemnity basis, they assert that his failure to accept that offer was unreasonable: Stewart v Atco Controls Pty Ltd (in liq) (No 2) (2014) 252 CLR 331 at 334 [4]. However, the obvious and immediate difficulty is that the Commissioner’s appeal was wholly successful. Not only was it successful, it involved a matter of importance to the Commissioner as to the application of s 14ZZK(b)(i) and the operation of the onus of proof in relation to challenges to default assessments underpinned by the asset betterment test. The importance of that question to the Commissioner was underscored by his agreement to provide funding to the taxpayers for the Appeal. It is, with respect, somewhat unusual to ask the Court to draw an inference that the Commissioner unreasonably failed to accept the offer in circumstances where his refusal to do so was entirely vindicated. Not only was his rejection of the offer not unreasonable, it was entirely appropriate given the need to vindicate his position as to the Tribunal’s erroneous decision.

18    It is not unfair to also observe that the alleged “offer” made in the letter of 12 February 2021 was ambiguous. In order for a Calderbank letter to have any substantive effect, it must be certain: Facton Ltd (formerly known as G-Star Raw Denim KFT) v SEO (2011) 91 IPR 135 at 146 – 147 [55]. Here, the purported offer appears to have been no more than an offer to negotiate. Further, as the Commissioner’s submissions identify, it was made at a very late stage and expired on the last business day prior to the hearing of the appeals before this Court. That is an extremely late point in time in which to make an offer of this nature. It can also be observed that the so-called offer required complete capitulation by the Commissioner in relation to the outcome of the appeals and, in the circumstances, cannot be regarded as a “genuine offer” which the Commissioner, acting reasonably, might have been able to accept.

19    The taxpayers also submitted that, as appears by the final paragraph of the part quoted above, their solicitors were prepared to negotiate with the Commissioner about the terms of the offer. In particular, they were prepared to discuss the terms of a statement which was required to identify the errors of law made by the Tribunal in relation to the Appeal. Seemingly, the taxpayers’ real complaint based upon the letter is that the Commissioner unreasonably failed to enter into negotiations to reach some alternative agreement as to how the Appeal and the Cross-Appeal should be resolved.

20    With respect, the principles relating to the making of orders for indemnity costs ought never to descend into an analysis of the nature and extent of negotiations between parties or whether any negotiations were sufficient or otherwise properly pursued. That would be entirely inappropriate and almost certainly result in extensive satellite litigation. If a party wishes to make an offer to resolve an action in order to protect themselves with respect to costs, it should do so in clear and precise terms and let any refusal by the other party speak for itself. Here an offer was made which invited the Commissioner agree to the dismissal of his Appeal in which he ultimately succeeded, and he rejected it. There is nothing in that scenario which might be regarded as unreasonable. The Commissioner’s refusal to enter into further negotiations in relation to the alleged offer is irrelevant to the question of costs.

21    Although the Commissioner made further submissions on this point, the above is more than sufficient to reject the application for indemnity costs based on the refusal to accept the purported offer. Each one of the matters identified are, of themselves, sufficient. The most obvious point is that the offer included a proposal for the dismissing of the Commissioner’s Appeal (in which he ultimately succeeded) and, that being so, the refusal of the Commissioner to capitulate could not, on any view, be unreasonable.

22    It follows that there is no basis on which the Court should make an order that the taxpayers’ costs be taxed on an indemnity basis.

23    As an aside, it is somewhat disturbing to observe the overtures made by the solicitors for the taxpayers in relation to the Commissioner’s Appeal. It appears they were prepared to concede the Commissioner’s Appeal and, indeed, were prepared to be party to a statement acknowledging the existence of certain errors of law in the Tribunal’s decision. That might be compared with their robust and vigorous defence of the Commissioner’s Appeal at the hearing before the Court.

Other matters raised in the taxpayers’ submissions

Costs of re-hearing before the Tribunal

24    By paragraph 6 of the Amended Notice of Cross-Appeal, the taxpayers sought the grant of a certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) in respect of the costs of any new “trial”. However, they now accept that such a certificate is not available as the proceedings in the Tribunal did not answer the description of “a cause of a civil nature”: Kunz v Commissioner of Taxation (1996) 62 FCR 345; De Domenico v Marshall (No 2) (2001) 107 FCR 11. Nevertheless, they submitted that this position is somewhat anomalous and there is no reason why a re-hearing before the Tribunal ought to be excluded from that Act in circumstances such as the present. Therefore, in lieu of the grant of a certificate, they sought the making of a statement by the Court that might assist them in an application to the Attorney-General pursuant to s 69 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) for legal assistance in relation to the hearings on remittal to the Tribunal.

25    There is no doubt that the extraordinary delay between the hearing of the evidence before the Tribunal and its subsequent decision denied the taxpayers a fair hearing in respect of their appeals from the Commissioner’s default assessments: see Primary Judgment [328]. Although it was not argued in the course of the appeals, one is left with the suspicion that the delay also impeded the Tribunal’s application of the onus of proof which was the subject of the Appeal by the Commissioner. It is very difficult to escape the conclusion that, had the delay not occurred, the Tribunal may well have reached the correct conclusion and rendered the appeals unnecessary. It would follow that the Tribunal’s delay not only prejudiced the taxpayers but had the consequence of imposing upon them the financial burden of any re-hearing of the matters on remittal to the Tribunal.

26    I make the foregoing observations only for the purpose of assisting any relevant decision-maker were any application to be made under s 69 of the AAT Act. As a result of the extensive appeal process before me, I apprehend that I am somewhat uniquely placed to make them. However, I do so recognising that the power in s 69 is vested in the Attorney-General alone and the observations made do not, in any way, seek to influence the outcome of any application.

27    I hasten to add that I make no observation as to the cause of the delay in the delivery of the decisions by the Tribunal. As a body hearing and determining administrative appeals, it processes an enormous number of matters, many of which are urgent and it cannot be surprising that, from time to time, the less pressing matters are not attended to with the swiftness with which they might ideally have been.

Terms of remittals

28    In their written submissions, the taxpayers included a section by which arguments were advanced that one of the substantive orders previously made in respect of the appeals be varied. Specifically, it was submitted that Order 4 of the Court’s orders made on 9 July 2021 ought to be varied to remove the restriction on the hearing of further evidence upon remittal of the matters to the Tribunal. It was claimed that the Court’s power to do so lay within the scope of the “liberty to apply” order also contained in the orders of 9 July 2021.

29    No leave was sought or granted for the taxpayers to make submissions on this question and it was inappropriate of them to do so: NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at 159 [192]; Sea Fish Tasmania Pelagic Pty Ltd v Burke, Minister for the Sustainability, Environment, Water, Population and Communities [2013] FCA 782 [2] – [4]; Jordan v Goldspring [2021] NSWSC 7 [33] – [35]. For the reasons given in those cases, the practice of making unauthorised submissions to the Court ought to be deprecated in the strongest terms. It was no excuse that the submissions were purportedly made to thwart an argument on appeal that they ought to have applied to this Court under the order granting them “liberty to apply” instead of appealing the imposition of the condition. Indeed, the taxpayers adduced correspondence from the Commissioner’s representatives in which they stated his position as being that “liberty to apply” did not afford a basis for the Court to receive submissions as to the removal of the condition.

30    Even if leave were to be sought and granted, the order granting the parties “liberty to apply” included in the orders made on the handing down of the decision does not permit the parties to return to the Court to seek a variation of the orders previously made. Such liberty is only for the purposes of “working out” the final orders: Sarks v Cassegrain (2015) 321 ALR 28 [31] and [36]; Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201 (Australian Hardboards) at 213 – 215 [50] – [56]; Abigroup Ltd v Abignano (1992) 39 FCR 74 at 88. It cannot be used to alter the substance of a final order that has already been made: Australian Hardboards at 214 [52] and the cases there cited.

31    The taxpayers appeared to also submit that this Court retained jurisdiction to re-open its judgment in the appeals and to grant them a re-hearing on the issue of whether there should be a restriction on the hearing of further evidence upon remittal of the matters to the Tribunal. However, that jurisdiction, where it arises, only subsists so long as a judgment or final orders have not been entered: Federal Court Rules 2011 (Cth) (Rules), r 39.04; Davis v Insolvency and Trustee Service Australia (No 2) (2011) 190 FCR 437 at 439 [4] – [5]. The issue which the taxpayers sought to re-argue was determined by the final orders made in this matter on 9 July 2021 which were duly entered on that date: Rules, rr 39.32, 39.35. See also Director of Consumer Affairs Victoria v Gibson (No 4) [2018] FCA 1868 [40] – [49]. There is therefore no jurisdiction to vary those orders.

32    In any case, although a denial of procedural fairness may provide a basis for re-opening a judgment: Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 (Autodesk (No 2)) at 309 per Brennan J; the taxpayers’ submissions do not establish that there was any such denial. The taxpayers’ complaint is that they were not afforded the opportunity to respond to the argument identified in the Primary Judgment at paragraphs [344] to [347] as supporting the imposition of the restriction on the hearing of further evidence. With respect, that complaint overstates the Court’s obligation to afford them procedural fairness insofar as it suggests that the parties were entitled to be specifically put on notice, at a granular level, of any matter which the Court might take into account in determining whether to permit them to lead further evidence at a re-hearing or to leave that matter to the discretion of the Tribunal. For the reasons set out below, that was not the case at least in the circumstances of these appeals.

33    First, the form of the orders which the Court might make upon the determination of the appeals was squarely in issue: AAT Act, s 44(4). Sub-section 44(5) expands upon the orders which may be made on appeal and, in particular, expressly permits the Court to make an order allowing or disallowing the hearing of further evidence upon remittal to the Tribunal. The remittal order can also be silent as to the issue in which case it would be open to the Tribunal, in its discretion, to permit the parties to adduce further evidence.

34    In their Amended Notice of Cross-Appeal, the taxpayers had sought an order that the matters be remitted to the Tribunal for re-hearing. The Commissioner sought the same in the Appeal in the alternative to an order affirming his objection decisions. Each party also included the usual prayer for further or other relief. These positions were not developed in the written submissions filed before the hearing, nor did the parties submit that the issue of the making of any orders ought to be deferred until the appeals had been determined. It followed that if the Court determined that the matters were to be remitted, it had to determine the terms on which such remittal ought to occur, including whether to permit the parties to lead further evidence at a re-hearing or to leave the matter to the discretion of the Tribunal. It was incumbent upon them to make any submissions in relation to it in their written submissions or at the hearing.

35    Second, it is apparent that the parties did not proceed at the hearing on the basis that it was agreed that, if the matters were to be remitted, then there would be no restriction as to the hearing of further evidence upon remittal. In particular, Mr Hack QC for the taxpayers made the following submission at the hearing:

MR HACK: … The other thing I wanted to say, too, about if the matter goes back, we would urge your Honour not to put on any restraints to it in terms of, you know, what is to happen again if it’s to be a rehearing. Those matters, we submit, are best left to the good sense of the tribunal.

A number of years have passed since the events in question took place. Yes, it is the fact that Mr Ross is now deceased, but there may be things that have changed as to the facts with the effluxion of time. Moreover, it does rather seem that if the matter goes back to the tribunal, the Commissioner is going to approach it on an entirely different basis the second time, and your Honour ought not handicap Ms Ross from the way in which she conducts her case. Your Honour can sensibly leave those sorts of decisions to the tribunal. A fortiori, if your Honour decides the question on a basis that the tribunal failed to properly discharge its jurisdiction and its decision-making function miscarried.

(Emphasis added).

When the hearing was ultimately re-opened for an unrelated purpose, Mr Hack QC made a similar submission as follows:

MR HACK: - - - where these are matters of factual judgment. You know, obviously if the matter goes back to the tribunal MFI1 will have to be reworked. There is probably much that needs to be done which is why if the matter goes back I would certainly be inviting your Honour to send it back with the direction that – not that it be confined to the evidence already there, given the years that have elapsed, but it be left to the discretion of the tribunal member conducting the hearing as to whether and to what extent further evidence is to be called.

36    So, on any view, the terms on which the matters might be remitted to the Tribunal was in issue. The Commissioner’s primary position at the hearing was that it would be futile to remit the matters to the Tribunal. However, it was acknowledged in the course of the hearing by Ms Wheatley QC for the Commissioner that, if the Commissioner’s contentions concerning the Tribunal’s decisions as to the remission of penalties were accepted, then those matters must be remitted, but without the hearing of further evidence. No submissions was made as to whether, if all of the matters were to be remitted to the Tribunal, the parties ought to be restricted to the existing evidence at any re-hearing. While the absence of such a submission possibly complicates matters, it cannot be inferred that if there were a broader remittal of all of the matters to the Tribunal, the Commissioner necessarily accepted that it would be on the basis that further evidence could be heard. There was no agreement between the parties that any such remittal would be on terms that there be no restriction as to the hearing of further evidence.

37    Third, there was no default or “usual” position that it be left to the discretion of the Tribunal whether to receive further evidence at any re-hearing such that, if the Court proposed to depart from that position, it had to put the parties on notice. The terms of ss 44(4) and (5) do not support the existence of such a position. One might also observe that, as the appeal to this Court is only “on a question of law”: Haritos v Commissioner of Taxation (2015) 233 FCR 315 at 341 – 342 [62]; it would not necessarily follow that the correction of a relevant error by this Court should result in a de novo hearing before the Tribunal on all questions of law and fact. Even if a default position did exist, the taxpayers did not proceed at the hearing on the basis that the Court was not proposing to depart from it. Again, this is apparent from Mr Hack QC’s submissions in oral argument recorded above.

38    Fourth, having been seized of the issue as to whether there should be a restriction as to the hearing of further evidence in relation to some or all of the matters upon their remittal to the Tribunal, it fell to the Court to determine it. The hearing was the forum for the parties to make submissions as to the matters which they contended ought to be taken into account in determining that issue. Nevertheless, the fact that neither side in the appeals made more than meagre submissions in relation to it did not operate to restrict the Court as to the matters which it might take into account. The discretion in s 44(4) is untrammelled and necessarily to be exercised in the circumstances of the case. The parties, each represented by Senior and Junior Counsel, were entitled to identify those integers which might tilt the balance in their favour, but the Court is not limited to the issues on which they rely. Within appropriate limits, if some point in response to or in addition to the argument put forward on any issue is apparent to the Court, it may take it into account in making its decision. As has been observed, “Judges are more than mere selectors between rival views – they are entitled to and do think for themselves”: Saif Ali v Sydney Mitchell & Co [1980] AC 198 at 212. See also Autodesk (No 2) at 317 per Dawson J. It is not necessarily incumbent upon the Court to put the parties on notice of such matters in order to afford them the opportunity to respond to them: Parker v Comptroller-General of Customs (2009) 83 ALJR 494 at 517 [137]. If that were the case, courts would be overloaded with re-opened hearings in order to provide parties, at a granular level, notice of and an opportunity to respond to every minute issue which occurs to the Court in the course of preparing its reasons for judgment. Such an obligation would be all the more burdensome in the context of factually complex matters where the Court may not reach its primary factual findings and conclusions until after the hearing.

39    Fifth, although the matters identified at paragraphs [344] to [347] were not matters raised by the Commissioner in support of a submission that further evidence should not be permitted at a re-hearing of the matters upon their remittal to the Tribunal, it was not necessary to afford the taxpayers a specific opportunity to respond to them. In the Primary Judgment, having determined that the matters were to be remitted, consideration was then given to whether further evidence should be heard: at [344] – [348]. It was noted that there was no clear reason why the taxpayers should be permitted to lead further evidence: at [344]; nor had they indicated what further evidence they would wish to adduce: at [345]. This latter point was significant because the matters concerned factual circumstances which arose prior to the earlier hearings before the Tribunal and, therefore, any new evidence was necessarily evidence which could have been obtained for those hearings. It was also not demonstrated that the potential for credit findings necessitated the taxpayers having the ability to lead further evidence: at [346]. Finally, reference was made to the inconsistency between the taxpayers strenuously arguing that their evidence before the Tribunal was more than adequate to satisfy the onus under s 14ZZK(b)(i) and them seeking the opportunity to lead further evidence: at [347]. Ultimately, it was determined that the circumstances did not warrant the hearing of further evidence: at [348].

40    The observations at paragraphs [344] and [345] themselves concerned the paucity of submissions from the parties as to the issue. It is absurd to suggest that a court has an obligation to put a party on notice as to the deficiencies in their submissions and then afford them an opportunity to fortify them. The further point, that any additional evidence the taxpayers proposed to adduce could have been obtained for the earlier hearing, is a point on which they had made submissions. As recorded above, Mr Hack QC had submitted that “there may be things that have changed as to the facts with the effluxion of time”. It was not necessary to inform them that I proposed to disagree with that submission. The remaining factors discussed in paragraphs [346] and [347] were matters which self-evident and had been touched upon in the course of the submissions in the Cross-Appeal.

41    It is no longer open to the Court to vary its orders on the basis which the taxpayers contended. There is simply no power to do so and, even if there were, it would not be appropriate to exercise it in the circumstances of this case. The taxpayers’ request that I do so is rejected.

Associate:

Dated:    9 September 2021

SCHEDULE OF PARTIES